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April 02, 2007

The Deserves and the Deserves-Nots

Over at the investing megasite TheStreet.com -- which, fun fact, Marty Peretz founded -- there's a wonderfully revealing article explaining the "10 Reasons You're Not a Millionaire."  Here are the 10:

1. You care what your neighbors think.
2. You aren't patient.
3. You have bad habits.
4. You have no goals.
5. You haven't prepared.
6. You try to make the quick buck.
7. You rely on others to take care of your money.
8. You invest in things you don't understand.
9. You're financially afraid.
10. You ignore your finances.

And those are copy-and-pastes, not my interpretations.  In other words, you're not a millionaire because you suck.  Because you're un-virtuous.  Because you could be doing better, but aren't.  It's not because you work a low-wage service sector job, or because Jenny needed orthodontics work and your classification as a contractor doesn't come with dental insurance, or because your division was outsourced.  No, it's because you're a failure.  Because you're impatient, and lazy, and fearful, and slovenly, and self-conscious.  And, the flip side is, all those folks who are millionaires didn't get there by luck, or because they were born into a good family that could provide them with SAT prep and a private education.  They're millionaires because they deserve to be.  That's the key.  We used to talk about the haves and the have-nots.  Now it's the deserves and the deserves-nots.

April 2, 2007 in Inequality | Permalink

Comments

Im afraid this is just silly. Youve neglected the articles intended audience entirely. It's a little like taking Gamepro over the coals because they listed the Ps3 as an essential must have and not a good education.

Posted by: the invisible pimp hand | Apr 2, 2007 7:45:16 AM

If you have enough of an income that the investment advice at TheStreet.com applies to you, then these critiques of "Why You're Not A Millionaire" (or, more to he point, the implied advice of "How to Become a Millionaire") probably do apply to you.

If you're starting an investment portfolio and are buying a house and at the end of your career want to have a net worth of $1 million-- yeah, pretty much "don't do those things." This pretty much applies to anyone with an investment portfolio and a house.

Some of this advice can be found in book form at The Millionaire Next Door.

Posted by: Constantine | Apr 2, 2007 8:19:14 AM

Whether you wish to be a millionaire or not, those 10 items are important to anyone's financial life. It *does* pay to have good habits. It *does* pay to pay attention to your finances and it *does* pay to have goals. Dean-0 has done everyone a favor by linking to The Millionaire Next Door in the comment above.

Posted by: Fred Jones | Apr 2, 2007 8:29:22 AM

first graf: "The reason why you aren't a millionaire (or on your way to becoming one) is really quite simple. You probably assume it's because you aren't earning enough money, but the truth is that for most people, whether or not you become a millionaire has very little to do with the amount of money you make. "

Do most people really read TheStreet.com!?

Posted by: Ezra | Apr 2, 2007 8:37:52 AM

As we are reminded year in and year out (with things like the Forbes 400), the main reason you're not a millionaire... is because your parents weren't millionaires. Most wealth is inherited. If you are not a wastrel or crazy (or wildly fertile), chances are you can modestly grow a small fortune, or at least maintain it and pass it along to your heirs.

I would dispute the sense that this is somehow new - America has a long tradition of its self-made millionaires justifying themselves as something besides lucky - they define themselves as smarter, better risk-takers, doers... anything to provide a sense that their achievements are more than luck and being in the right place at the right time. One of America's unique classist issues is that we really cannot understand why anyone would be satisfied with just what they have - the American Dream more or less requires a fundamental dissatisfaction (I can do better, have more, move up, etc) with one's circumstance. The flip side of that is that we persist in selling a classist resentment at being told we have failed if we do not, in fact, become millionaires (or otherwise wildly successful). It's not what this article says about what you would need to do to become a millionaire - by being unscrupulous, and risk taking, and not getting way into debt, you could likely make more money - it's the fact that the notion that "you're a failure" is actually not explicitly stated. That's a take-away borne of the class feeling we have in this country. Nobody says you've failed (or perhaps, more to the point, nobody thinks that he or she has failed). Why do we persist in believing that society believes that to be the case? Because, deep down, we know we should want that. It's pretty messed up, if you think about it.

Posted by: weboy | Apr 2, 2007 8:40:38 AM

It would be easier to be a millionaire if you had wealthier parents or a higher paying job or many other things that are not the case. Given your present circumstances, following the listed rules should increase your wealth.

These are sensible rules, at least until the revolution comes.

Posted by: richard | Apr 2, 2007 8:52:19 AM

At one time, I really wanted to be rich and was stressing over it. A wealthier and wiser friend pulled me aside and had me list all of the things financial that I wanted on a yellow pad. Couple of vacations a year, retirement secured, passive investment income, nice car and house, etc. After I was done, we did some projections and it showed that everything that I *really* wanted could be accomplished on a couple of hundred thousand dollars a year (in the South)with some planning. How many boats can you ski behind at one time, anyway?

Posted by: Fred Jones | Apr 2, 2007 9:15:42 AM

A lot of folks here are calling these rules "sensible" and they are. They're sensible like a rule stating "you shouldn't hit your mother in the face". In other words, they're fluff.

The real problem with this list and similar ones is that they help perpetuate the myth that the rich are rich because of some inherent virtue or work ethic. This is patently false. Most rich are rich because they were born into rich families.

The end goal is to have this economic class = virtue meme spread (which it already has) so that it can be used to justify economic policies which increase the current economic inequality and therefore make it even harder for the non-rich to get rich no matter how virtuous they are.

So, no matter how quaint and nice these rules are, they're a distraction from the real issues.

Posted by: gonzoknife | Apr 2, 2007 9:26:35 AM

These are sensible rules, at least until the revolution comes.

I don't think anyone disputes that it's sensible to have goals and be prepared. These aren't senseless statements.

The point is that thestreet presents these rules as the primary ways in which millionaires are made. That's ludicrous - as any quality study will show, millionaires are made by already-existing connections and power relations, particularly those deriving from already existing wealth. There's no question that good financial acumen plays a role, but it plays a small one. Thestreet is trying to blow this up into the largest role.

As Ezra's list of examples shows, the problem here is that thestreet is creating the conditions for one to believe that people with less wealth, less financial stability, deserve their situation in the same way that the wealthy fundamentally deserve their wealth due to their financial acumen. I find that position ethically indefensible.

(I'll add, if I may, that it's also a position that conflicts deeply with the clear, stated ethics of the New Testament gospels.

Blessed are ye poor: for yours is the kingdom of God. Blessed are ye that hunger now: for ye shall be filled. Blessed are ye that weep now: for ye shall laugh. Blessed are ye, when men shall hate you, and when they shall separate you from their company, and reproach you, and cast out your name as evil, for the Son of man's sake. Rejoice in that day, and leap for joy: for behold, your reward is great in heaven; for in the same manner did their fathers unto the prophets. But woe unto you that are rich! for ye have received your consolation. Woe unto you, ye that are full now! for ye shall hunger. Woe unto you, ye that laugh now! for ye shall mourn and weep. Woe unto you, when all men shall speak well of you! for in the same manner did their fathers to the false prophets.

Posted by: DivGuy | Apr 2, 2007 9:31:01 AM

Somehow this makes you an anti-semite. Somehow, not sure how. Marty Peretz logic at work.

Posted by: Marty Feretz | Apr 2, 2007 9:36:53 AM

Note that the #1 reason on their own list is "you aren't ruthless enough". They don't put it in exactly those words, of course. But that's what it is.

I suspect that, if pressed, they would admit that working a low-wage job and having a family are "bad habits" that hold you back from being a millionaire. And being born to non-wealthy parents who couldn't afford Harvard Business School is "not preparing".

Posted by: Chris | Apr 2, 2007 9:43:07 AM

The point is that thestreet presents these rules as the primary ways in which millionaires are made. That's ludicrous

This isn't going to be the primary way most people work out their careers. However, I'd argue that this is the primary way people accumulate a net worth of over $1 million by the end of their careers. The number of people with tens or hundreds of millions of dollars in wealth is very small. The number of people who live modest lifestyles on an upper-middle class income and invest the rest very wisely is far larger.

millionaires are made by already-existing connections and power relations, particularly those deriving from already existing wealth.

Insofar as that is true, those connections, power-relations, and already existing wealth are quite modest ones, mostly related to access to a university education and/or a stable family willing to help get a small business off the ground. In short, something you'd find in most two-parent middle class family units and even many single-(custodial)-parent ones.

Posted by: Constantine | Apr 2, 2007 9:54:28 AM

Note that the #1 reason on their own list is "you aren't ruthless enough". They don't put it in exactly those words, of course. But that's what it is.

Really? How does this:

You Care What Your Neighbors Think: If you're competing against them and their material possessions, you're wasting your hard-earned money on toys to impress them instead of building your wealth.

Translate to "you aren't ruthless enough" ?

Posted by: Constantine | Apr 2, 2007 9:57:21 AM

Choices have consequences. If people want to be rich, they should have the foresight to choose to be born into a rich family.

Posted by: WB Reeves | Apr 2, 2007 10:18:42 AM

You can lead a horse to water, but you can't make him drink.

You can have free public education, easy college loans and grants, cheap SBA loans, etc. but it's up to the individual to make use of them.

In the interests of justice, we have decided that no one starves or goes without shelter. So also have we decided that these tools for success are to be made available to all. That is the limit of our responsibility. The rest is up to the individual.

To whine that everyone is not a millionaire is ludicrous. There will always be differences in culture, intelligence, emotional makeup, etc. that will cause people to succeed or fail. What else can we do? Give everyone a guarantee?

Posted by: Fred Jones | Apr 2, 2007 10:30:22 AM

TheStreet.com, like MotleyFool and all the other sites like it, not to mention MSNBC and Jim Cramer and the like, have a vested interest in you thinking you're only a step or two or ten away from living the high life. So, really, if you're not a millionaire its because you're not paying enough attention to TheStreet, MotleyFool, MSNBC, and Jim Cramer. Of course, it is also true that TheStreet doesn't care about the working poor who don't have enough money to pay their heating bills, let alone invest. So you have to go into those sites assuming they are targetting the middle to upper middle class primarily.

That said, those are all fundamental financial principles. If you abide by all 10, you will probably do very well no matter your status. If you were lucky enough to go to college and have a decent enough job with good insurance you will definitely do very well.

Posted by: joshua | Apr 2, 2007 11:10:03 AM

I would say that one additional engine of inequality is a culture that reinforces the mindset that you need to own expensive clothes, a nice car, and a big television. This is ingrained in us enough that an ad for "Buy Nothing Day" was rejected by TV channels on the grounds that it expressed "anti-American" sentiments.

Motley Fool and TheStreet do not make their money on the promise of living the high life. The "high life" is sold to readers by Maxim, Stuff, and Wired, as well as the real-estate-flipping infomercials on late-night tv.

Posted by: Constantine | Apr 2, 2007 11:18:31 AM

I would say that one additional engine of inequality is a culture that reinforces the mindset that you need to own expensive clothes, a nice car, and a big television.

But this is Rule #1 and Rule #2 on the list. Don't try to keep up with the Joneses buying crap you don't need and can't afford on credit.

This is ingrained in us enough that an ad for "Buy Nothing Day" was rejected by TV channels on the grounds that it expressed "anti-American" sentiments.

Presumably, they rejected it because it would be a slap in the face of all their other advertisers. You can't simultaneously sell ads to people saying "buy stuff" and to others saying "don't buy stuff" without harming the interests of one or the other.

Posted by: James Joyner | Apr 2, 2007 11:29:32 AM

James, that strikes me as a perverse incentive system for the public media and the economy in general. You're saying that the mass media, which is supported by advertising, is designed to encourage people to make poor economic decisions. If you're going to point-blank say that the economy can make it easy for people to become financially well off while the economy's performance itself depends on telling people to make decisions which will deter them from becoming well off, it's something that will make even the most ardent believer in "hard work and responsibility" start to believe that the game is "rigged."

Also, James, in your blog post on this topic, you conflate mere millionaires with the "fabulously wealthy" who own sports teams. The large majority of the former got to where they are because they had few serious strikes against them and lived a life of responsible living, for the most part. The wide majority of the latter pretty much got lucky enough to be born into the right families. The article in TheStreet isn't about "how to become a tycoon." It was about "how to grow a $1 million+ nestegg."

Posted by: Constantine | Apr 2, 2007 11:43:45 AM

(knows it's useless to respond to Fred; still thinks this is too hilarious to resist)

"In the interests of justice, we have decided that no one starves or goes without shelter. So also have we decided that these tools for success are to be made available to all. That is the limit of our responsibility. The rest is up to the individual."

Really? When did we decide that?? I need to tell the homeless guys down the street that in the interests of justice, they've been granted access to shelter. Because they don't seem to know that. Odd.

The non-starving thing would probably be welcome news, seeing as right now they think they have to panhandle and dumpster dive if they want to eat.

Posted by: emjaybee | Apr 2, 2007 11:45:54 AM

To whine that everyone is not a millionaire is ludicrous. There will always be differences in culture, intelligence, emotional makeup, etc. that will cause people to succeed or fail. What else can we do? Give everyone a guarantee?

The trouble with this Fred, is that in our society money equates to power both political and social. As has been pointed out, the vast majority of the wealthy in our country have wealth via inheritance with all the power that goes along with it. They have attained this essentially without effort and with no need to develope any of the skills, characteristics and abilities that market competition is said to promote. In short, we have placed the lion share of power in a narrow section of the population that, with each generation, is less and less competent to wield it.

The issue of equity is important, but it isn't the only reason for concern. The less ability people have to advance financially the greater their inability to affect public policy and governance in any meaningful way. This creates an oligarchical dynamic, destructive to any society based on Republican and Democratic principles.

What Ezra's post illuminates is how the active promotion of the notion of wealth accumulation as purely a matter of individual initiative and foresight obscures the actual economic/political realities.

Speaking of realities, I think you're exagerating a bit on the matter of food and shelter. I'm not aware of any guarantee of these two items in our law or jurisprudence. I don't know of any "right" to them being recognized by the US government. Which would suggest that you are really refering to philanthropy or limited policy palliatives (foodbanks, shelters, etc.). So to say that "we have decided that no one starves or goes without shelter" is a bit of a stretch. That is, if by "we" you mean the US as a national polity.

Posted by: WB Reeves | Apr 2, 2007 11:46:55 AM

I think this makes more out of the piece than is really there. The article is addressed to "you," the one reading it. The points made will apply to most people reading the article. It's about things you can actually do something about, not things you can't fix (like being born with a million dollars). The moral desert concern is overdone too. This article isn't trying to make a case that millionaires are morally superior. The virtues are all relative to the goal, which is just assumed here, justly, for the reader of that website. There's no defense of the goal.

Posted by: Sanpete | Apr 2, 2007 12:18:37 PM

We used to talk about the haves and the have-nots. Now it's the deserves and the deserves-nots.

There's a very good post from God of the Machine on this very subject:

http://www.godofthemachine.com/archives/00000576.html

The article speaks of exactly the kind of person who'd read something like TheStreet: Let's call him Chet.

"I will put it less politely: Chet makes a lot more money than you because Chet is worth a lot more money than you."

Now, those 10 steps don't guarantee a life of wealth, but folding one's arms about how all capital is in the hands of the inherited and implying that you no chance whatsoever because your own parents weren't rich isn't exactly honest, either. It wreaks of hopelessness - hopelessness that's solved through - hey! - your policy ideas.

But telling someone that they have an ability to improve themselves is empowering - on some level that's what sites like TheStreet.com are selling.

I don't mind welfare, and no one is against aid to the poor. And no, I'm not twirling my mustache thinking about the undeserving poor while I sort out my moneybags. I just think that treating "the rich" as some pre-Revolutionary leisure class justifying their tyranny with some modern form of the Royal Lie is false.


DU

Posted by: The Mechanical Eye | Apr 2, 2007 12:24:17 PM

Financial web sites, like all financial magazines and most other financial and investing printed matter are for the suckers, not the winners. The undeniable truth of the market is this, and it's simple, it's takes a lot of suckers to support a few "winners". The reasons why some of winners and most are losers are easy to find and fairly consistent throughout history. The rhetoric is mostly the same. Well, a litle less "bad blood versus good breeding" and little more of the "personal responsiblity" horseshit.

If nothing else, we humans are very constistent. We do things much the same way we did hundreds of years of ago. Only the nomenclature and the tools change.

Posted by: ice weasel | Apr 2, 2007 12:25:59 PM

I never lived in a truly "nice" neighborhood until I got married, and the thing that totally shocked me about our "nice" neighborhood was that hardly anyone in it had a job. Most of my neighbors, age range of about 35 to 65, lived off of family money, huge settlements from ex spouses, elaborate disability/insurance arrangements, and a scam or two. Some of these people seemed barely capable of working a regular job anyway, what with the rampant chronic fatigue syndrome that seemed to be sweeping the town like an epidemic.

Posted by: sprocket | Apr 2, 2007 12:32:58 PM

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