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Here’s What I Got From the Rich and The Rest of Us (Cornel West and Tavis Smiley)

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To adapt a line from Bridesmaids, “At first, I did not know that The Rich and the Rest of Us was a book. I thought it was a very long rant that had no point.”

What I wanted from The Rich And The Rest Of Us: A Poverty Manifesto was an examination of US policy and culture that explained why the US is so lopsided in its wealth and what other countries have done to reduce extreme inequities in wealth (such as Brazil). I wanted to understand what people who are not of extreme wealth or extreme poverty can do to better understand their economy and have an impact on their local economies. I wanted a healthy mix of analysis and history along with some feel-good “action lists” that would remind individuals they still have power, our choices matter, and organization of ourselves and our resources, above all, can create powerful instruments that change what’s normal or what has always been.

Maybe I expected too much.

What I got out of The Rich and the Rest of Us was an endless tirade against corporate fat cats, the mega-rich, the massively rich, and a pervading sense that half of the country is one paycheck (or less) away from utter poverty. While I have no doubt that we are in hard times for a large percentage of Americans, many of us live paycheck to paycheck (You can count me in there, if I wasn’t getting my next paycheck I would be screwed) and wages are stagnant compared to the cost of living, what I don’t agree with is the sense of hopelessness and desperation that West and Smiley try to inject into each person’s story. Each person who they interview is presented as a tragedy. Some parts are left unexplained, key parts of a story which might explain why a person is in poverty, and details about generations of poverty and lack of education are glossed over so that West and Smiley can editorialize all over this book. I am already sympathetic to the cause. In fact, I wager 99% (get it??) of the people who would read West and Smiley’s book are already sympathetic to the cause: we all want to alleviate poverty in this country, we want to give people opportunities and the dignity of a living wage. You don’t need to jam it down my throat that people have it rough out there and people who have been proven to be irresponsible or downright fraudulent during the downturn have received little punishment. I know all that already.

My question is how do we address these problems? What can we change? Why is healthcare prohibitively expensive? Why does a hospital stay have the potential to bankrupt someone? How do we lower housing costs? Can we reduce our transportation costs with better public transportation? Is online education a tool for people to become masters of their own destiny? Should people become more self-sufficient through home gardening and raising our own chickens? I like creative ideas and I think there is plenty out there we can do. We should address problems within our government openly and honestly, but also understand government’s limitations and maybe stop complaining so much (I’m looking at you, KPFK). 

A few details that got me all wound up:

  • Fuzzy math: In one section an increase in poverty rates was “the largest poverty rate increase in years” at 2.3%. And then just a few pages later, the “draconian welfare-to-work reform bill” of the Clinton era was tidily denounced for having “reduced poverty by only 2.5%”. West and Smiley: you’re making people who care about social causes look bad and also stupid.
  • Suze Orman was described as an “acclaimed personal finance expert”. Clearly not doing your research…
  • The authors talk about “personal responsibility” in quotation marks. I know the political implications but really, personal responsibility shouldn’t be considered a bad thing.

There was one great section in this book with ideas on how to reduce poverty. One such idea was for more tenants to become landlords, perhaps pooling resources to buy a small apartment complex and offer shared resources like transportation and a community garden. That sounds so cool! I like the idea of the combined purchasing power of a group and the ability of that group to pay itself in terms of the repaying the mortgage and having an asset of real property. That section on action and ideas was way too short.

I want to learn more about society, policy and be excited about starting conversations with people about why the US is great and why we have the capacity to grow and be stronger than ever. Unfortunately, the conversation gets way too polarized right away and it’s easy to pick a side. The only way we’ll make a difference is by getting rid of the sides and asking questions that aren’t being asked right now. Is the question really “Is Obamacare a good thing” or would it be better to ask “Why are healthcare costs rising much faster than any other factor in the US?” and “What are the structures in place that make insurance providers so entrenched in our national healthcare dialogue? Is it like this in every country? Have we looked at how other countries provide care and how we compare?”

I know you mean well, West and Smiley, but the radio shows and tours seem to be more your forte. My next related book review will be A People’s History of the United States.

Permanent Frugality is Good for the 99% (Occupy Wall Street in Your Everyday Life)

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Taken October 15, 2011 at the Occupy LA Protest near City Hall.

(If you need a primer on Occupy Wall Street and what it’s protesting, check this out.)

Retailers are concerned that the American consumer has permanently changed his/her ways.  Take this recent article in the Wall Street Journal:

“They are trading down, consolidating shopping trips to save on gas and generally not spending a lot on discretionary purchases,” (Target CEO and Chairman) Mr. Steinhafel said.

That’s the best news I’ve heard all week!  It may not have happened by choice, but a state of permanent frugality is actually very good for the average consumer.  Why else would the media make it sound like a bad thing?  The media needs to sell stuff constantly.  Journalism today is sponsored by advertising, and digital advertising is even more cutthroat than traditional advertising in print and media (Advertiser: Your website is only getting 1 million page views a day? Sorry, LA Times, we’re moving to TMZ!).  So the media wants you to think that frugal shoppers are bad for the economy.  Wrong, frugal shoppers are bad for retailers.  They also want you to think that a positive savings rate is bad for the economy, because it means consumers are saving more than they earn.  Wrong, a positive savings rate is CRUCIAL for providing for you and your family in an emergency, not a credit card.  They might not ever directly state it, but it is certainly implied that times must be good when Americans are spending more than they can afford, even though that is most certainly right before a bubble is about to burst.

Remember, “Consumer spending fuels around 70 percent of U.S. economic activity.”  That means that instead of getting riled up about one-day boycotts that don’t work, permanently changing the way we shop and spend our precious, non-inflation adjusted wages, can have a real impact on the corporations that many people feel frustrated with.  Change will come from both sides of the issue: we as consumers will have a bigger impact by showing restraint, not being affected by advertising, and corporations will take notice as sales will not grow by forcing an idea on to the consumer through incessant advertising.

I have been very tweet-happy regarding Occupy Wall Street and Occupy LA.  I’m just pumped to see Americans speaking out against the stark stratification in our society and I appreciate the movement’s strong opposition to being classified as left/right, liberal/conservative.  Those words and those parties have zero meaning to a regular person, and that’s why this movement is resonating with those of us who have never identified with a political party but are still on Team People and/or Team Common Sense.  As the movement grows, the people will realize that financial clout and media clout are needed to make this into a real movement, and changing the things we “need” is a direct statement of our power and influence as a group.

Finally, Yahoo! commenters are always the most colorful.  I read this comment recently:

Dearest 99%: This is how STUPID you 99% peasants are. You pay us $100+/mo for cable. You pay us $100+/month for cell service. You get a new $200 phone every frickin’ year. You go out to restaurants 7 days/week. You buy unnecessary apps…you go to sports games whose players don’t give a rat’s #$%$ about the fans…you pay the $4/gallon gas…shall we go on? We have a right to increase costs and profit from that. YOU DON’T LIKE IT, DON’T BUY IT!!! It’s that simple, you peasant-#$%$, peasant! We OWN you! Now get the flick off our street and go the flick home! Sincerely, the 1%

I thought it was illuminating because it shows how the 1% look down on the 99%, and yet there is a simple way out: less spending. It reminds me of the report that came out earlier this year by the Heritage Foundation about poor Americans having televisions and microwaves that Bill O’Reilly cited as evidence that they are not really that bad off.  Normally, I won’t even bother wasting space on people like Bill O’Reilly, but that particular argument comes up often and it’s important to understand.  Is having a refrigerator the same as being able to afford healthy foods and fresh fruits at a nearby full-service grocery store?  Is having a television the same as having access to a well-rounded public education that offers your children access to rigorous academics, arts, sports and a safe haven before and after school?  Is having a cell phone the same as having access to medical care that will be vital to providing preventive care that encourages exercise, a good diet and treats illnesses early on rather than later when they become more costly and complicated matters?

Yeah, I didn’t think so either.  But you gotta give it to O’Reilly for continuing to defend his dim-witted opinions to the death.  He can’t stop now.  He’d look like a loser!

What do you think? Will spending less and frugality on the part of the average consumer have an effect on the direction of American society?

Pardon the Interruption, from BLACKONOMIC$

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Note: Thank you to Mr. Jim Clingman from Blackonomics.com for allowing me to repost his article here! It was well-written and addressed to the black community in America, and everyone can relate to the powerful distractions that clamor to devour our time and our minds.  Check out his website if you want more where that came from!

Considering the fact that Black people are so entrenched in the distractions of this world, I think it’s appropriate that I beg your pardon, Black America, in order to get a few important points across. Although for 16 years now I have sounded the economic alarm via this newspaper column, four books, and numerous speaking engagements, it is shameful that we have failed to act upon the messages of our ancestors and contemporaries. There is still a need to “capture” our attention when it comes to economic empowerment. Seems we have to be tricked, embarrassed, and beat-up before we start running for true freedom. So can you spare a few moments to read this missive, Black America? I beg your pardon for the interruption.

Pardon the interruption of your sports conversations, brothers and sisters, but you are in big trouble. The players, coaches, and team owners have their millions and are very secure; your team is not even in the game.

Pardon the interruption to your anger or euphoria, and your inconsequential rhetoric on Libya; Black folks in this country are unemployed in some areas as high as 50%. You are still being discriminated against when it comes to access to business, contracts, capital, and justice.

Pardon the interruption of your obsession with Will and Jada splitting up, Kanye and Jay Z’s new album, and Tiger’s golf game, multi-millionaires every one of them. You are trying to pay your rent, hold on to your homes, and feed your families.

Pardon the interruption to your wondering who will win the dancing and singing contests on television. You are doing the unemployment line-dance (“Now walk it out, y’all”) and singing “Stormy Monday” Blues in response to your current economic condition.

Pardon the interruption to your unceasing and loyal dedication to making everyone else in this country wealthy by buying their stuff and boycotting your own. Even with nearly $1 trillion in annual aggregate income, the wealth of Black people is 20 times less than that of whites.

Pardon the interruption to your fascination with other folks’ hair. Paying hundreds of dollars for someone else’s hair, as if God didn’t know what He was doing when He gave you yours, is only exceeded on the ridiculous scale by the dollars it takes for you to “get it done.”

Pardon the interruption to your penchant to have the best of everything, even at the highest prices. You are so silly to brag about how much you pay for things, while others brag about how little they pay for the same items. You love to go to bars and order whatever Champagne or Vodka some rapper might be drinking – even at hundreds of dollars per bottle. Only top-shelf for Black folks, despite the fact that you don’t make or distribute most of the products you purchase. Veblen’s “Conspicuous Consumption” concept ain’t got nothin’ on you.

Pardon the interruption to your shooting and robbing one another. It’s not enough for you to be under assault by outsiders, you feel compelled to take out your frustrations on yourselves rather than work together for your own benefit. Young people running rampant, wielding guns and having no trepidation at firing them at one another, at the police, or anyone they come across, speaks volumes about the overall condition of your families, your leadership, and your collective internal integrity.

Pardon the interruption of your meaningless conversations about Republicans and Democrats, Liberals and Conservatives, MSNBC and Fox News, and your preference of one talking-head over the other. They have their six and seven-figure salaries and can “talk” about your problems all day long. What do you have, and where will all the talk get you?

Pardon this interruption to your complacency, your apathy, your fear, your doubt, your perceived helplessness, hopelessness, and powerlessness. Pardon this interruption to your stream of consciousness, your psyche, and your apparent overwhelming desire to shut out reality. Pardon this interruption to your indifference and unresponsiveness to the life and death issues you face. Pardon this interruption to your proclivity toward the temporal, trivial, and the trifling things of this world. Pardon this interruption of your inclination to allow the silly and symbolic to take precedence over the serious and substantive. Pardon this interruption of your desire to continue majoring in the minors and getting caught-up in practices that matter little in the larger scheme of things.

Yes, pardon the interruption, Black America, but I just had to shake you once again; I just had to try to awaken you once again. I love you too much to let you stay in your comatose state, a state of inactivity and numbness. I care too much about our children’s future to sit back and not speak out about our condition and not get involved in initiatives to improve our situation. I respect our elders and ancestors too much to ignore their sacrifices for our economic freedom, some having died “on their way to freedom.” Are you on your way?

So, once again, for the umpteenth time, pardon my interruption of whatever you are hiding from or running from or afraid of. I hope you will forgive my intrusion into your fantasy world. But most of all, I hope you will move beyond the mundane and heed this call for appropriate action to economically empower yourself and our people.

-James Clingman, author of Blackonomics: The Way to Psychological and Economic Freedom for African Americans

Weekly Picks from the Web: Did I Say Wealthiest 1 Percent? Make that 0.1 Percent!

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I wrote earlier this year about how income inequality in the US, which has increased dramatically in the last two decades, is finally getting some attention.  Watch this video from PBS for more coverage on this topic and how the scales continue to tip…in favor of the richest 0.1 percent of Americans!

On a similar topic, here’s an in-depth article on a huge housing bargain opportunity, but only for connected investors of course.  I highly recommend reading all of Roger Arnold’s articles.  He covers the financial markets but is much more concerned with the greater political and economic forces influencing them than most authors.

How to Talk to Your Kids About Money (Based on Your Income Level)

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Let’s put off buying those new sneakers so we can start you in a brokerage account. Doesn’t that sound exciting?

In case you couldn’t tell, I’m not a very serious person.  I always liked Margot Fonteyn’s quote, “Take your work seriously, but never yourself.”  I like it because I never take myself seriously, and most of the time I don’t take my work seriously either.  So it works out, you know what I mean?

But for the past year or so, it’s been the serious work of my life to get out of debt.  I like that I am seeing tangible results.  I am at the lowest debt level that I have been at any time in the past two years.  I am reading books that are motivating me to stay on the path of reasonable spending and being on the lookout for opportunities, like The Richest Man in Babylon.   And since I spend a lot of time working on my getting-out-of-debt plan, I also end up talking about debt and money with almost everyone I come across.  Which got me to thinking about how money was discussed with me as I was growing up and how I would talk to my own future kids about money and its significance.   I think about my future kids a lot.  Is that weird?  I want the best for them but I also want them to be thoughtful and caring people.  So I think about how I would bring up money without making it the most important thing in their lives, but rather making it a tool to achieve what they want in life.  It’s a good idea for everyone to talk to their kids about money instead of letting them simply absorb the bad habits or strange inclinations of their parents.  Kids are always observing and they understand a lot more about money than their parents may realize.  It’s worth it to give them a few tips so that they can avoid some of the mistakes we all make.  But the thing about it is, you wouldn’t talk to your kids the same way about money if you were making $20,000 per year versus $200,000 per year or $2 million per year.  The basic principles would be the same, but I think you may consider tweaking some of those ideas based on your income level.

(I know it’s dangerous to generalize, so I am only describing how I would talk to my kids at each of these income levels, and only once they are older, between 10 and 12.)

How to Talk to Your Kids About Money (Based on Your Income Level)

Parents’ Annual Income: $20,000 per year or less

Basic Message:  Please be the beacon that brings us out of this crushing poverty.

Look kids, we don’t want you to have to work for minimum wage just so you can live a soulless existence where you have lost the will to dream and are forced to frequent check cashing stores and get ripped off at every turn.  You’re going to have to work really hard to get out of this socioeconomic level.  Education will be a big part of it.  We’re not going to buy you fancy clothes just because the other neighborhood kids are wearing them.  You’ll have to push yourself when we’re at work, and think of money as something to save, earn and eventually invest.  We’re going to support you in everything you want to do (that’s legal) but we won’t be able to put you in all the classes and sports we want to.  When you get a little older, you’ll see other kids acting a little wild.  The other kids might be able to afford to mess up and get DUIs or blow money on drinking binges, but you don’t have that luxury.  Little setbacks for those kids would be big setbacks for you.  The world doesn’t care if you push yourself and learn and take as much as you can from it.  Only you can care.  And we promise to give you anything we can, and be happy when you become independent and able to support yourself and even us, if you want.  But take care of yourself first.

 

Parents’ Annual Income:  $20,000 to $80,000 per year

Here is the income range of the majority of households.  It’s a pretty big range, and parents in this range can have wildly different money habits.

Here’s what I promise to do:

  • Get my kids involved in sports (actually true for every income level).
  • Encourage them to choose an art/music/other activity to also learn and develop.
  • Tell them why sports are going to help them all through their life.
  • Give them an allowance, help them set up a savings account.
  • Have them set goals once they are in middle school (12 and up) so if they want to buy a car, go to college, or take a cool summer trip, figure out how they can pay for it.  Dave Ramsey has some good ideas on this on his radio show, and he usually advises parents to “match”.   If they save $100 for their car, you’ll give them $100 match.

Here’s what I will not do:

  •  Subtly envy those who have more than me and thus encourage envious behaviors in my kids.
  • Make money the major stress factor in our lives.  Of course, that’s where I am at right now, but that’s why I am changing my behavior so that my future kids aren’t stressed out by money when they are first becoming aware of abstract ideas.  (Funny side story:  My boss has a grandchild who is 9 and he told her, “Grandma, you’re rich.”  She asked, “Why do you say that?”  He responded, “Because you have cable and we don’t.”  Kids kill me.)

Parents’ Annual Income:  $80,000 to $170,000 per year

Another big portion of the population falls into this income range.  Although most of the kids in this range will receive the education that was so important in the first income range, and participate in the sports/activities that are a priority in the second income range, I think what brings it all together is making sure kids don’t feel entitled.  Even though this is a pretty good income level, I want my kids to be motivated to go out and explore the world, discover what they want to do and how they might help their communities.  I think understanding money, saving, and how it will help them do what they want is going to be an important part of that.

Parents’ Annual Income:  $170,000+ per year

The key thing to avoid at this income range is complacency.  It’s still easy to be in a high level of debt even with an excellent income, so as a parent I would want to make sure my child knows that we have a great opportunity to save and invest.  Budgeting and the philosophy of living well below how we could be living will put our values before a bunch of stuff.  We’ll be lucky enough to travel to international destinations but the kids would be involved in choosing a place, understanding how much we’re spending, and setting limits for how much to spend each day.  There are lots of great opportunities at this income level, but also lots of ways to blow through money with hardly a thought, and I want to encourage the former and avoid the latter.

*Exception: $1 million+ per year

Basic Message:  You can do anything, but you can’t do nothing. (That’s a paraphrased Warren Buffett quote)

We’ve been given a lot in life.  Well, you’ve been given a lot in life.  I wanted to get a lot in life and I went out and got it.  Yeah, I stomped on some people’s heads to get here.  But now we have an obligation to society, and I don’t want you to value your money any less just because you didn’t work for it.  I want you to live in comfort, but I also want you to consider the value of money and how you can use the money we have for real uses, whether it’s charitable or a business enterprise that’s going to provide for you and your family.  It’s not our place to flash our money around and pretend like it’s completely trivial when it defines our whole lifestyle.  No.  We are not those people.  Fortune comes and goes, but your character stays the same.  I will help you do whatever you want to do.  I promise not to dress you in head-to-toe Gucci at age 4 and scar you for life.

 

Bottom Line

At the end of the day, it’s really what the parents do and how they act that will effect what attitudes their children take about money and everything else.  No matter how much or how little you make, you can encourage your kids to view money differently than how it is portrayed in a consumer-driven, hypermedia society.  You can help them along the way and show them good behavior, but it will be their decision in the end.

Here’s a little additional reading about the traits that shape us:

 6 Clues to Character

What do you think?  How would you talk about money with your kids?