Much has been talked about concerning the disconnect that GOP presidential candidate Mitt Romney has with the average income earner in this country. His gaffes are now legendary and have become grist for late night comedy and for political left wing websites and blogs who aim to cast him as the wealthy elitist he is; not fit to represent the 99% whose incomes average just under $50,000 a year.
Some who support Romney and his accumulation of great wealth claim that this does not disenfranchise him from most Americans or protest that this charge is an exaggeration. The aspirations to have such great wealth may be a common denominator amongst most free market minded people but the reality is much more in tune with the facts that reveal only a small percentage of Americans will ever acquire such great wealth.
To drive this point home, a recently published article in Bloomberg has demonstrated how people like Romney with their greater wealth actually live in a world that many others may dream of but few live in – the world of the wealthiest 1%. If ever these people at anytime in their life ever experienced the struggles most people face, especially in such tough economic times as these, they have surely removed them from their consciousness. Their understanding of the world we live in is molded by what they read in Barron’s, The Wall Street Journal, the financial sections of major newspapers at the NY Times and The Washington Post and even Bloomberg’s that reported a despairing situation for many Wall Street income earners.
The fact too that some of these people have to side step a homeless person sleeping in front of the entrance to their Wall Street office is more a nuisance to them than a reminder that few of their fellow citizens really do lead the lives they do. But now some who have lived luxurious lifestyles may be getting that sense of desperation that their lower-earning brethren deal with each day as job security and wages seem to slip away for many, if only temporarily.
Facing a slump in revenue from investment banking and trading, Wall Street firms have trimmed 2011 discretionary pay. At Goldman Sachs Group Inc. (GS) and Barclays Capital, the cuts were at least 25 percent. Morgan Stanley (MS) capped cash bonuses at $125,000, and Deutsche Bank AG (DBK) increased the percentage of deferred pay.
Wall Street’s cash bonus pool fell by 14 percent last year to $19.7 billion, the lowest since 2008, according to projections by New York state Comptroller Thomas DiNapoli.
“It’s a disaster,” said Ilana Weinstein, chief executive officer of New York-based search firm IDW Group LLC. “The entire construct of compensation has changed.” SOURCE
Do you feel the pain for people like those at Morgan Stanley who can rely on getting no more than $125,000 for their bonuses? No, neither can I. $125,000 is two and half times the average income for most Americans.
Most people can only dream of Wall Street’s shrinking paychecks. Median household income in 2010 was $49,445, according to the U.S. Census Bureau, lower than the previous year and less than 1 percent of Goldman Sachs CEO Lloyd Blankfein’s $7 million restricted-stock bonus for 2011. The percentage of Americans living in poverty climbed to 15.1 percent, the highest in almost two decades.
The sacrifices some of these well-healed people are faced with will bring you to tears. Not for what they will be doing without but for the simple reason that they haven’t got a clue that such wants and desires they’ve become accustomed to don’t even begin to exist in the world of families that strive to feed their children two nutritious meals each day, keep the utilities on so they won’t freeze in the winter and swelter in the summer and who have little to no hope that college for their kids and a comfortable retirement lies in their futures.
Some examples, described in Max Abelson’s story in Bloomberg, of how these wealthy people view their futures are like that of Andrew Schiff, director of marketing for broker-dealer Euro Pacific Capital Inc who makes a salary of $350,000 before bonuses but is now fretting that he will not be able to cover the bills to pay for “his family’s private-school tuition, a Kent, Connecticut summer rental and the upgrade they would like from their 1,200-square- foot Brooklyn duplex.”
“I feel stuck,” Schiff said. “The New York that I wanted to have is still just beyond my reach.” He seems unaware that this comment mocks the millions of people who live in ghettoes and low-rent districts, not only in New York but across the country, having expressed a similar desire to pull themselves above their utter poverty. The Schiffs of this world might blame those very poor for their own plight but as he and others of his ilk are discovering, things beyond their control effect a family’s income and the ability to fight it often bares little fruit.
And who can’t feel the pain of “Wall Street headhunter Daniel Arbeeny who averages about $500,000 in good years, when his ‘income has gone down tremendously.’ On a recent Sunday, he drove to Fairway Market in the Red Hook section of Brooklyn to buy discounted salmon for $5.99 a pound.” How degrading it must be to mingle with the “small people” who eat this more inferior grade of salmon.
But these examples are but a condition that we all face when the lifestyle we’ve become accustomed to slowly begins to fade away. The family of four who were making $50,000 a year will have to change their diets and plans for an evening at the movies or dinner out now that dad has lost his job and their sole source of income will come from mom’s paycheck as a day care worker in a local facility for the aging. But even her job is in jeopardy as the state threatens to reduce funding for this refuge of last resort for elder people who live strictly off of their meager social security checks.
What really leaps up off the page of Abelson’s article, for me at least, is the comment made by Alan Dlugash, a partner at accounting firm Marks Paneth & Shron LLP in New York who specializes in financial planning for the wealthy, when he says that “People who don’t have money don’t understand the stress. Could you imagine what it’s like to say I got three kids in private school, I have to think about pulling them out? How do you do that?”
Let those comments sink in for a minute and after the shock and anger subsides, allow the laughter and pity to take over. Dlugash’s comments point out the very factor why most of us feel that Romney’s wealth and those like him alienate them from everyday working Americans.
The wealthy one-percent feel helpless when they can’t afford to send their kids to expensive prep schools, purchase a new Mercedes-Benz or take their annual European Cruise. The rest who struggle at or below the poverty level understand that they may not be able to provide adequate health care for their kids, put gas in the ten year old vehicle that is in bad need of repair and update the clothing hand-me-downs that many siblings share with each other. But somehow, in the minds of very wealthy people, this stress is incomparable to that which would deprive Buffy and Tad from an education that is as much centered on social status as it is growth opportunities for them and their parents.
The appalling arrogance of Dlugash’s comment displays the growing division in real life terms between the have and have-nots in this country. To suggest as some have that those who support the ideas of the Occupy Wall Street people are guilty of creating unfounded class warfare is to totally miss what people like Romney, Schiff, Arbeeny and Dlugash are really all about. The comfort level they have achieved and endured for years has buffered them from most of those within the lower 99%.
To put in perspective the difference between income and wealth, consider that to be in the top 1 percent of income earners, a household needs an adjusted gross income of at least $380,000, or 11 times the median household adjusted gross income of $33,000. But to be in the top 1 percent of wealthy Americans, a household needs a net worth of almost $14 million—225 times that of the median family net worth of just $62,000 in 2009. And the richest 1 percent of Americans owns an even greater share of wealth than of income. SOURCE
They have developed a mindset that doesn’t fully grasp that their good fortune has likely been the result of the advantages that are absent in the lives of most Americans – growing up as children of wealthy parents. Charles Murray with the American Enterprise Institute points this out in his Op-ed piece in the NY Times.
“The haves in our society are increasingly cocooned in a system that makes it easy for their children to continue to be haves. Recognizing that, and acting to diminish the artificial advantages of the new upper class — especially if that class takes the lead in advocating these reforms — could be an important affirmation of American ideals.”
For those who have scratched and clawed their way to the top without the aid of a wealthy legacy it appears they too have closed themselves off to a world where opportunities are few and far between and to the strongest go the spoils.
The prospects of fulfilling that American Dream have slowly disappeared over the last few decades and as more and more wealth is accumulated in fewer and fewer hands the future becomes bleak for those children whose middle-income family upbringing offered hope for them. The fact that some of those who have reached the heights of material ownership and are now seeing that they too may soon become victims of an economic system going south seems indicative that we are indeed heading for a crisis that easily reflects a class warfare.
The attitude of these wealthy Wall Street financiers reported in Abelson’s Bloomberg piece displays for all who are paying attention that there is a different construct by which they lead their lives versus the rest of the country. The writing is on the wall for those who can read it. Clearly those like the Schiffs, Arbeenys and Dlugashes have yet to see that our futures our inexorably tied together. Their hope unfortunately lies in a leadership guided by a Mitt Romney who has never known what it’s like to be in real want and need.
Until we try to establish a system that works purposefully to insure a rising tide lifts all boats, the growing income disparity will continue and power will be concentrated in the hands of a few. These few power brokers increasingly lay outside the control measures of a democracy that is becoming more and more suited by design for their needs than “we the people” it was originally intended.