In a conversation with my colleague Gail Collins last week, Stevens argued that just because a couple earns $400,000 a year combined, they don't necessarily live the kind of lifestyle that would be described as “wealthy.” “They're saving money to put their kids through college, they're driving a Camry if they have a car, and they're wondering why eggs are so expensive.”
“Indeed,” Collins said, and that was the most interesting part of the exchange.
The online left relentlessly bashed Henderson for days after he made the remarks 12 years ago, but a left-leaning New York Times columnist essentially conceded the point. A right-wing economist To lightly poke fun at Stevens' remarks: How have liberals become so used to the idea that $400,000 a year (more than 98% of the population earns) is actually just a middle-class income?
A recent essay by Stevens and Collins' colleague, Ross Douthat at The New York Times, offers one answer: These people are wealthy by any standard, and they spend their money on things only the wealthy can afford, like living in or near the best school districts and amenity-rich big cities. But they are wealthy in a strangely modern way, in the context of a meritocracy in which elites must earn their status anew every day.
Compared to the old system, which survived on inherited wealth and social status, they are insecure and many worry about their offspring being relegated to the lower class, so they spend almost all of their vast disposable income on preparing their children to be star athletes in the next competition.
(This is mostly a parental issue. It's rare to hear a childless couple making $400,000 a year claim that they're just regular middle-class people.)
One way to deal with this anxiety is to embrace it and work to build what's called generational wealth, so that our kids don't have to wake up at 4 a.m. wondering where their next college check is coming from. Another is to look for political solutions, which may be one of the reasons why the highly educated have turned to the Democrats.
Unfortunately, generational wealth is an impossible dream for even the most highly educated people because it is so attractive. It is a race for scarce admissions spots at a limited number of highly selective universities (and the schools that get you to those universities) that act as gatekeepers for the 2%, 3%, and 10%. This zero-sum bidding war will eat up whatever extra money the average professional can make, because there is always another tutor, another consultant, another education program, something else you can do to give your child a chance at a good school and a good life.
Through the magic of market competition, the price of that exclusive access will always be set at the maximum that the poorest members of that class can barely afford for private school tuition or a nicely located home. Moreover, because the income distribution among high-income earners resembles a pyramid with a wide base and a narrow top, most people in this class are more like desperate strivers who have zeroed out their 401(k)s, crammed their kids into houses that are too small, and borrowed as much as they can from family, than the lucky few near the top who can write huge checks without hesitation.
It is no wonder they feel trapped, and it is no surprise that this group of people are increasingly warming to the parties that have historically promised to protect us from the harsh demands of a market economy. The problem with this particular political solution is that government fails to provide them with what they crave: a low-effort way to ensure that their children are never left behind in their world.
There's no shame in wanting this: what self-respecting mammal doesn't want to give their children at least as much as they have? At the median household income, this is a semi-reasonable demand, because here, median-level public goods are all the government needs to provide. But governments can't give everyone above-average doctors, schools, job satisfaction, or earning potential; and in a democracy, they can't promise to secure those things for the children of those who already have them.
Thus, the insoluble dilemma of the poor 2 percent: If you'd be satisfied knowing your kids were living a safe but ordinary life running a suburban Walmart, the government could probably guarantee that. And with a steady six-figure income, you could prepare your kids for that world without government help. But if you were satisfied with a stable, ordinary life, you probably wouldn't have delayed gratification by working overtime for decades to join the 2 percent.
