Friday, October 7, 2011

What the "Lesser Rich" Do: Create Jobs

My wife and I are among what I've heard one economist call "the lesser rich." We are in the top ten percent of households, but we are not wealthy. We don't drive luxury cars, live in a McMansion, or even own a big screen television. My computer is several years old, our phones are not "smart phones," and we've never been on a cruise. Yet, according to the statistics, we are "rich." I'm sure that explains why my last clothing purchase was a $9.99 pair of store-brand Khakis from Target.

Where do you fall in the eyes of political leaders (and the public to whom they are pandering):
http://www.census.gov/compendia/statab/2012/tables/12s0694.pdf

Less than $10,0007.3%
$10,000 to $29,99923.3%
$30,000 to $59,99927.5%
$60,000 to $74,99910.1%
$75,000 to $99,99911.5%
$100,000 to $149,99911.9%
$150,000 to $199,9994.4%
$200,000 to $249,9991.8%
$250,000 and More 2.0%

More than half of U.S. households (58.1%) have combined incomes of less than $60,000. Two-thirds fall under the $75,000 per-year income cap the Internal Revenue Service recognizes as the top of the "middle class." Traditionally, the top quintile to quarter of households are considered the "upper class" and the top ten percent are the "wealthy." The top ten percent starts at approximately $130,000, combined annual household income.

Unsurprisingly, most of the households in the top ten percent are married couples. The bottom of the income distribution is dominated by single individuals. The bottom quintile is also younger and less educated. This makes sense: you tend to earn more later in life, and education doesn't hurt. The odds of two college graduates being in the top ten percent? More than 90 percent of married graduates (four-year degrees or better) are in the top quintile. Naturally, they also dominate the top half of that quintile.

So, what do my wife and I do with this amazing income? Like most of the lesser rich, those slightly outside the middle class using the IRS standards, we create jobs.

My wife and I are renovating an old house, as we did in Minneapolis before moving. This improves a neighborhood by keeping older homes habitable. We maintain the tax base by not letting our home fall into decay.

New appliances (washer, drier, range, refrigerator), new flooring, new windows, and even the paint we have purchased all represent money circulating through the economy. Our house was built in the mid-1950s. It needs some TLC. The house consumes most of our "extra" income. Still, I have a little bit extra most months.

The money I spend on my one or two meals eaten out each week? Most of that goes to a family-owned restaurant I love. That money has been spent on an expansion. The family bought an old location and is renovating the interior.

We do save some money, too. That money goes into banks that make loans to other people and small businesses, so even our saving helps the economy.

I wonder if that would shock the Occupy Wall Street crowd? My students don't realize many among them are from the "rich" families they dislike. It is interesting how hard it is to recognize your own place in the income scale. Of course, you can't live like a billionaire on $80,000 in New York, Chicago, Los Angeles, or San Francisco. Yet, those cities and others are where most of the "rich" live. Even $150,000 isn't extravagant in many urban areas.

Yes, there are two percent of households over $250,000 — which is precisely why "taxing the rich" cannot and will not generate the revenues people imagine. Take every dime from the top two percent and you barely fund three months' of federal spending. That doesn't include the state and local taxes these families pay, from sales taxes to local property taxes. Also, I always remind readers that "income" is not "wealth." The wealthy often have no incomes at all so any changes to the income tax won't matter to them.

My professorial colleagues at the university don't consider themselves rich. Most will swear they are middle class. I know where my wife and I fall in the income distribution. I started near the bottom and am now near the top, statistically. It was a lot of work, and we had some stumbles along the way to this point. But, the work was worth it. I plan to keep working, too, to take a step or two higher.

I love what I do, and that happens to generate a good income. I tell my students they need to do what they love, so they do it better than anyone else. Making money isn't about being dishonest, mean, cruel, or anything else. Most of the rich in this country are hard-working people. They went to college, a substantial number of them going into debt and taking risks, all for a secure life.

That secure life means contributing to the economy. Turns out, we need to buy a new heater. We're doing our part to help the economy struggle ahead. And next year, I'll have to replace my Jeep before it hits 200K miles. I won't be buying a BMW or Lexus, either. I'll be buying another mid-range, decent, practical vehicle for a family. That's how you save money for a better retirement. Yep, we greedy lesser rich with our extravagant lives.

Sticking to the Issues, Not a Candidate

Following my last post, a friend asked if I was "coming out" as a Republican. No. That's not going to happen, since I am deeply offended by the influence of the religious conservatives within the GOP. I have no interest in supporting candidates or a party that isn't willing to "live and let live" on most social issues. But, I'm also not going to embrace a party that wants to regulate an even broader range of behaviors I consider to be personal choices. If I want a greasy burger or a buttery croissant, leave me alone. "Sin tax" is one of the more idiotic phrases in government revenue collection.

Given a choice, I am more likely to support and even work for "conservative" Democrats, but I'd also consider a "liberal" Republican. However, I tend to focus on issues as a scholar and adviser rather than individuals. I don't like or trust politicians, but I can support a cause.

If you want me to collect data and report on the rhetoric necessary to promote gay rights and tolerance, I'm right there to help. From equal opportunity to opposition to the death penalty, I'm willing to crunch numbers and analyze public discourse. But if you want me to back a candidate? Forget it. I will help with an issue, but not personal campaign. Sorry, but I don't trust anyone with a desire to "serve" the public. I've watched too many idealistic people sell out and become part of the problem.

Government is the problem. Corporatism is the problem. If it is a large organization, it cannot be trusted. That's not because people are inherently bad or that corporations and government are "evil" in some way. Large groups simply lose the ability to connect to individuals. The larger a group, the weaker its link to ethics and the shared values of a community.

We try too hard to place people in "left/right" boxes, when most of us — myself included — are "independent" and not particularly loyal to a political party. We find issues we support, at most, and try to decide based on those how (or even if) we will vote in elections.

I'm a union member, an educator, an agnostic, an equal opportunity advocate, and more. Statically, I should be a "progressive" voter, but that's not going to happen. I was young once, but I learned from my mistakes. Today, I am also an entrepreneur and an advocate of personal freedom. Leave me alone, is my rallying cry. Don't tell me how to live and don't try to protect me from myself.

I've been asked if I would work for a politician because we share an interest in some issues. No, I politely responded, because I don't get involved in party politics. I generally, and reluctantly, vote against extremists, but I haven't voted for a candidate in many, many years. I'd rather stick to the issues so I'm not disappointed by whatever idiocy a candidate will commit once in office. Both parties want to dictate their values to others. Admittedly, I have values I wish where forced upon society regardless of popular support or a lack thereof. We would all be tyrants, sadly, but with different beliefs we'd attempt to codify.

It isn't that there are not well-intentioned Democrats or Republicans, but those elected have a way of turning into party loyalists. I'd rather not be disappointed by making the mistake of believing in a candidate.

Monday, October 3, 2011

An Outsider Inside Academia

For the last few years, I have found myself using the phrase "I am not a social conservative" before explaining my positions on a number issues. The last thing an academic within some disciplines wants is to be accused of being a conservative. It would be career suicide within some university humanities departments to be a self-identified Republican, and I cannot imagine being an outspoken "Tea Party" supporter within some fields. You might as well admit you also don't want publications, conference invitations, and the all-important tenure.

I'm a free-market capitalist, vehemently opposed to both crony capitalism and overzealous central planning. We have allowed the elite to control both government and commerce, strangling the true free market. Big companies get the regulations they want, while pretending to oppose them. It costs pennies per customer for McDonald's to comply with laws regulating nutritional disclosures, but that same law costs dollars per customer for a small regional restaurant. Government is now picking winners and losers in the economy, and that worries me.

My "liberal" and "progressive" colleagues have an odd distrust of government, while believing the "right people" can somehow magically, centrally, plan a better society. The contradiction is lost on many progressives. Central planning never has and never will work as intended. In large organizations, including the massive government, the workers start to argue they have no responsibility, no connection to the decisions made at the center of power. "Just following procedure" isn't far from "Just following orders" in my mind.

Planning gone bad in business is, eventually, punished by stockholders and the free market in our system. Bad planning by government? They simply redefine the desired results. Government gone bad isn't easy to correct, which is why I'd rather have government do as little as necessary. I'm willing to debate what is necessary, but I'm not willing to expand the role of government to meet desires — it should only deal with needs.

Adam Smith believed in the rule of law, the legal process, and a sense of common good. He was not, contrary to some mythology, a radical laissez-faire capitalist. He believed you needed a sense of social responsibility for capitalism to succeed. We've lost that sense of responsibility for the most ironic of reasons: government involvement in "helping" everyone. On the left, there is a sense that we can and should let government deal with serious social ills. On the right, a resentment of government starts to sound foolish, as problems are now too large for many local charities to address.

Government has "freed us" of personal responsibility for our neighbors, killing what Smith and later free-market economists considered an essential safety net to compensate for the competitive nature of capitalism. A sad result, since government has demonstrated it cannot end poverty, improve education from afar, or effectively regulate risky behaviors.

In current parlance, I'm a pragmatic libertarian, not a laissez-faire purist committed to the temple of Ayn Rand — someone I consider as much an intellectual moron and lousy human as Karl Marx was. It is sad that the left can point to Rand's private life as "evidence" of her flaws, but they don't admit the human flaws and idiotic ideas of the progressives past.

I reject where some ill-conceived "progressive ideals" have taken us in the past. The belief that the smart people can engineer a better tomorrow if we simply let the think tanks and brilliant bureaucrats set policy is demonstrably flawed. Some examples of "progressive ideas" gone wrong include eugenics, prohibition, farm market orders, price controls, and even early support for Mussolini and Lenin. I don't know how anyone can read a complete biography of Woodrow Wilson and not rethink the progressive movement's origins.

Prohibition backfired, a progressive idea to improve the health of the nation. Recent mandates to post calorie counts on menus? They've also backfired according to several studies: people consume more and less healthy foods in cities with calorie posting laws. There are clearly limits to how useful government "help" can be when it comes to our personal lives. The "war on drugs" proves this, too. It has definitely backfired, while providing a lot of jobs in law enforcement and corrections.

You can't be a libertarian, though. Not in academia. Suggest reading Liberal Fascism and you'll be ridiculed by the "open minded" university elites. I know, because I've made the mistake of asserting there were and are intellectually grounded conservative and libertarian writers. William F. Buckley, Jr., William Safire, Victor Davis Hanson, Friedrich Hayek, Ludwig von Mises, and Milton Friedman should all be considered intellectually worthy by academics, regardless of viewpoint. For the "masses" I would add P.J. O'Rourke and John Stossel. Caricaturing conservatives and libertarians is intellectually lazy — and common in academic circles.

This weekend, I attended an academic conference at which the speakers mentioned Cornel West, Saul Alinsky, and John Dewey. They talked about "progressive ideals" and education, focused more on political activism than actually teaching students more effectively. But, dare to ask why they are so focused on politics instead of actual pedagogy and you will be told, as I was, that it is our duty to help students think clearly. What these academics really mean is that "good" thinkers, the best students, will graduate with homogeneous political views: those of the progressives.

Marx wrote that not all workers were worth the same, but his personal elitism is an inconvenient truth. Plus, he thought academics and scholars were among the more valuable people, so I suppose that makes his views acceptable in academic circles. Chomsky has established a multi-million dollar trust to avoid taxes and protect his fortune. Michael Moore runs a non-union film set, famously denying health coverage to employees at one point. The heros of progressivism are no better (or worse) than any other men and women, which is precisely why I reject the notion "better minds" can plan something better.

Instead, they will simply create something that puts them in charge and gives them the perks of power.

I've had a colleague state that if I were really smart, I'd realize why "we" should be in charge. I am smart — and I know that such elitism is precisely why "we" shouldn't be trusted with power. Academic elites on the left imagine themselves wiser and better than other Americans. We don't trust voters, except when they vote the way we desire, after all we are the smartest men and women.

When I sit among faculty, I'm accustomed to hearing insults against "rednecks" and "Nascar morons." I've heard insults against religious blue-collar workers. I've listened silently while elite faculty, those with tenure and standing, explain how dumb the parents of students are and how we have to "correct" how students were raised by their families. Too often, I sit in conference audiences listening to presenters complain about capitalism and wealth, without for a moment recognizing the big private universities where they are coddled were founded by and continue to be supported by wealthy donors.

To avoid conflict, I try to avoid being considered part of the unwashed masses, part of the rabble without intelligence. I know how vile some people can be when they learn I've owned businesses and don't consider making money a bad thing. Of course, most professors I know want to be paid more and believe they should also receive merit pay and other incentives. They are capitalists in denial, but they'll tell you that they are merely seeking fair compensation for their special skills. They are nothing like those corporate types!

I am not a progressive. I am not a modern liberal. In my profession — within my specific discipline — I am surrounded by a politically correct little club of elites. I can only express views that reflect their values, or I risk being ostracized.

Someone will surely ask what about this blog. I don't know. I'm sure someone in academia will find it and decide I don't belong at a university. With my views, only a limited number of university departments are likely to embrace me as an equal among faculty members.

A friend has suggested I belong in a business school. Maybe that is the final destination. I do not know. I am wondering how to be true to myself while somehow surviving inside the Ivory Towers.