Tom Stanley from millionaire next door: why we have "inequities" (percentage, wealthiest)

[Costaexpress]

America: Where Millionaires are Self Made

Recently a fellow asked me about my impressions of French economist Thomas Piketty's new book, Capital in the Twenty-first Century. I have not read the book, but I've read comments about it including a recent interview with the author. He postulates the existence and forecasts the growth of inequality in terms of the concentration of wealth and income.

In the introduction to the interview, there was an interesting statement: "hard work will matter less, inherited wealth more." Really? Added up the entire annual realized income of those households in the $10M and over category the total would be over $300 billion. What percent of this amount is derived from trusts and estates? The answer is 1.3%. This percentage even doubled or tripled would hardly qualify America as a country where inherited wealth "mattered more."

It appears from the interview that both Mr. Piketty and the interviewer are using income and wealth as synonymous terms. They are not. In my thirty plus years of surveying and studying millionaires, I have consistently found that 80 to 86% are self made. That also applies to decamillionaires. In 1982 according to Forbes about 38% of America's wealthiest people were self made. In 2012, the percentage jumped to 70%.

In a recent blog, I cite what many consider to be the most exhaustive study of socioeconomic mobility in America. Professors Chetty of Harvard and Saez of Cal-Berkeley studied about 50 million federal income tax returns of parents and their adult children. Part of this study as mentioned in The Wall Street Journal stated that:

The odds of a child moving up the economic ladder have remained the same for about the past three decades . . . that contradicts the narrative in Washington that economic mobility has declined in recent years.

Economic opportunities abound in this country. Yet most Americans are not wealthy. It is easy to blame the so-called inequities in our economy. But it is more about the fact that Americans spend all or most of their income on things that have little or no lasting value! They lack the discipline required to accumulate wealth. Most households are on a treadmill of working and consuming. The typical American household has a median annual realized income within the $50,000 to under $75,000 bracket. Only 6.3% of these people have any realized capital gains income. Thus an update is in order. Remember what I wrote in The Millionaire Next Door: big hat, no cattle. And now the update: no capital, no capital gains.

[mysticaltyger]

What we need more of in the U.S. is more of what Amy Chua and Jed Rubenfeld call The Triple Package

Amazon.com: triple package

They basically say the more people reject the values of liberal, post 1960s America, the more likely they are to be financially successful.

[freemkt]

Yes, economic opportunities to abound in this country. But to become wealhy you need to have either (1) the right skills, (2) capital, or (3) access to capital.

[Costaexpress]

Originally Posted by mysticaltyger

What we need more of in the U.S. is more of what Amy Chua and Jed Rubenfeld call The Triple Package

Amazon.com: triple package

They basically say the more people reject the values of liberal, post 1960s America, the more likely they are to be financially successful.

Bingo. That's the truth. Successful, effective immigrants in this country often do not adopt the liberal principles in their actions. In fact most successful people, not just immigrants, do not adopt such principles. They may however brag about these principles, especially the successful people on the left. But you look at their actions.

Many figure out a raise for themselves and then turn around telling everyone else "you don't deserve a raise." Every successful person who went through struggles, nearly everyone of these, understand it. The rules of success have little to do with partisanship. They have always been there and remain little changed.

Americans have been steered away from these rules by years of prosperity and complacency. At various tech companies I have worked at, you often see a large number of interviewees from countries like India and China. Opportunities abound and these are the prepared minds. Most of them have visa restrictions. It makes you wonder where native born Americans are. Yes, many Americans say they don't have the skills. But these immigrants didn't even have the visa to come here not long ago. They developed these skills while living in conditions Americans have not seen or personally experienced.

It is actually not strange that many of these jobs go to the ones from less privileged backgrounds with better skills. It is precisely because of these people's internal drive that propelled them to succeed. You look at the young generations of countries like china, you begin to see much more spoiled people; their prosperity isn't really helping their rigor and achievements. Many universities now say that Chinese undergraduate students aren't as hardworking as the old school graduate students. Don't these new people have more resources? But abundance is what kills the spirit. There is an achievement gap between the privileged and the unprivileged.

The privileged strivers could do amazingly with their abundant resources. But few strive at that level.
The unprivileged strivers move a much bigger distance. These are the hard working ones actually doing the most valuable work, contributing to communities, raising families, feeding older people, while trying to save for their retirement.
The unprivileged who don't want to make an effort don't get much upward mobility. They blame the rich. They laugh at their strivers counterparts, as if these people must fantasize of becoming billionaires.

In America, the privileged few want the poor to remain financially illiterate so the poor can buy the rich's crap and make the rich richer. The rich don't pay tax anyways. It's the unprivileged strivers who then pay for the poor to spend more to get the rich richer. The unprivileged strivers are the tax payers. In today's America, neither party speaks for them.

The truth is that opportunities and fortune go to the prepared minds, and often go to the less privileged strivers.

[PortCharlotteNewbie]

you just described corporate welfare in a global sense.