In my post Lifestyles of the rich and oblivious I wrote about the complaints of people like Andrew Schiff who felt that he could not live as he wanted to in New York City on $350,000 per year. To no one’s surprise (except perhaps to people who move in the same circles) he received a huge negative backlash. He has gone on a kind of media tour to try and repair the damage and explain in more detail his difficulties.
Some have been sympathetic to his claim that New York is so expensive that he needs a level of income that few can even dream of but Felix Salmon, finance writer for Reuters, is having none of it. Salmon dissects their claims one by one. He points out that:
If you’re a financial professional, New York is arguably the cheapest of the world’s financial centers. And most major non-financial cities are more expensive than New York, too.
According to Mercer’s annual cost of living survey, New York lies somewhere between Brisbane and Brasilia, and is significantly cheaper than the likes of Milan, Tel Aviv, Melbourne, Seoul, and, of course, London. And it doesn’t even come close to Sydney, Rio, Hong Kong, Singapore, Geneva, Moscow, or Tokyo. Complaining about the cost of living in New York is the ultimate in parochialism: New York might be expensive by US standards, but it’s definitely cheap by global-city standards.
Salmon also has little patience with the most frequent complaint, that private school for their children costs so much that it leaves little left over.
If you’re a connoisseur of rich people’s whines you’ll be intimately familiar with the idea that they don’t have much money left after paying for expensive things in general and private school in particular. But sending your kids to private school is the epitome of upper-class snobbishness and elitism, and nobody who does it should ever be allowed to kvetch about their straitened circumstances. After all, they’ve already paid, with their taxes, to send their kids to public school. But their local public school isn’t good enough for little Muffy — in large part because all the rich parents in the neighborhood send their kids to private school instead, and therefore the local public schools aren’t getting the benefits of a significant cohort of affluent, educated, and engaged parents.
What’s more, if you send your kid to public school and augment her education with anything near $32,000 worth per year of books and travel and experiences and even private tutoring, she’ll end up extremely well educated. After all, when you look at studies which adjust for socio-economic status, there’s very little evidence at all that private schools provide a better education than public schools. Indeed, the evidence shows the opposite: that middle-class kids who grow up with two well-educated parents and lots of books around the house will generally do very well in school no matter where they go. Which means that the only real reason to send Muffy to private school is to ensure that she only hangs out with rich kids.
The point about education is interesting. Salmon is right about the importance of certain practices when it comes to education. When parents have had good educations or otherwise attained high levels of literacy, and children grow up in a home environment where there are books, newspapers, and magazines lying around that are read, are taken to the library and to cultural events, engage in serious conversations and so forth, such things have considerable positive effect on children’s attitudes towards learning. (I explore some of these issues in my book The Achievement Gap in US Education: Canaries in the Mine (2005).) Part of the reason why poor children underachieve in schools is that their parents often struggle with multiple jobs and have little time left over to do those kinds of things. The simple fact that when I get home, I can put up my feet and read newspapers and books gives my children an educational advantage.
We live in an inner ring suburb of Cleveland. It has a good public school system that is diverse ethnically (about equal numbers of black and white students with a smattering of other groups) and is also mixed socio-economically, though tilted towards the high end, ranging from families on welfare to high-powered corporate types. Despite this, some of the affluent people of all ethnicities in our suburb do forego the public schools and send their children to private or parochial schools, some of which are very expensive. By scrimping and saving we too may have been able to cobble together enough to send our children to private schools but the thought of doing so never even crossed our minds. Our children went to the public schools and did just fine and the money we did not spend on private schools enabled us to pay for their college educations. Furthermore, I think that growing up with a diverse group of students in school made them as adults far more comfortable in dealing with diversity in their workplaces and social lives.
The whining of rich people like Schiff essentially boils down to saying that once they have spent tons of money on things that most people cannot conceive of doing (sending their children to private schools, having second or even third homes, joining country clubs, going on expensive and extended vacations) they have, by their standards, very little money left over for ‘living expenses’, by which they mean money to go out regularly to eat in fancy restaurants or frequent Broadway shows.
What is most surprising is that they are surprised that the rest of us are not sympathetic to their plight.
Andrew Schiff was in an interview on NPR last week. The interview was focused on his comments that you have mentioned. He seemed like a normal guy who was just venting his frustration/ anxiety regarding a pending change and this is an act that he now regrets. Clearly he should have vented to his peers, his congress-person, his boss, etc… and not the media. I think that in all fairness to him this follow up interview should be part of any judgement passed about the quality of a human being that he really is.
Is this the story James?
http://www.npr.org/2012/03/02/147830367/defending-pain-on-wall-street
About a year and a half ago my spouse had a friend, who was a co-worker, and her husband over to our home for a get together. Each of them alone make more than our combined incomes, the husband more than twice that. At some point they started off on their own pity party about how tough they have it with their big expenses, primarily private school for their three kids. Oh how unfair it was, in their opinion, that the cost of private school was so high. Oh how onerous it was that they still had to pay taxes for public school even though they didn’t use it.
Playing the role of polite host isn’t really in my nature. I do try but it is a fault of mine that I really only have two modes of communication, one where I state facts and give my opinion without regard for how it will be perceived and the other where I mostly stay quiet to avoid unnecessary conflict. I seldom ever try to be confrontational but have been made aware many times that being to the point the way I do often comes across that way. Well, at some point I had enough. I made it clear in no uncertain terms that their whining wasn’t gaining any sympathy with me. That if they, and all the well-to-do like them, used just one third of that money to invest in public schools and sent their children there that not only would the kids likely receive a better education and grow into more well rounded people but that all the other kids that didn’t have the privilege of going to private school would as well. That their tens of thousands of dollars a year could help hundreds of children in their community get a better education and that instead of bitching about the roughly three thousand they “lost” in property taxes they should see it really was the absolute least they could do.
I was prepared to back up my points. I wanted them to protest so that I could say more about how they only wanted to send their kids to private school to have them hang out with other wealthy people (hell they said a benefit for their kids was “future networking opportunities”). I wanted to say more about how good public schools actually are but how much better they could be with more engaged parents, which they were. I wanted to point out that they are teaching their kids an implicit us/them attitude that will follow them through life, that they are somehow better people for having money. I wanted to say more about how privileged they were to consider this a legitimate problem in their life, even though it was one of their choosing. I wanted to talk with them about all this and more…
Instead they changed the topic. I quickly made an attempt to bring it back but no go. There was never any talk about politics or social issues the rest of the night, which was likely for the best. My SO is still pretty good friends with the lady, they hang out from time to time, usually with other friends, although the husband is never around when they do. They haven’t accepted an invite to our home since either. At first I thought I may have missed an opportunity to have a real conversation with someone who may not have ever considered any other viewpoint on an issue like this, but most likely I was instead saved a bloody forehead from beating it against that particular brick wall.
In other words, he has trouble making $350,000 per annum last when he’s in charge of spending it.
Well, bully for him.
http://www.cracked.com/blog/6-things-rich-people-need-to-stop-saying/
My two modes of communication in social situations exactly match yours. I think that when we remain silent, they think we agree. There is no point in beating your head against a wall but making them aware that their view is not universally shared is surely a good thing.
So to clarify, he says his problem is that these rich people start to live to their means based on expected bonus sizes. Can’t say that makes me more sympathetic.
If you can’t manage to live off $350,000 a year and treat your bonus as just that--a bonus--than your financial management skills are pathetic, and you just need to sort that out for yourself. Expecting consistent bonuses, rather than a sum based upon the job performance and that of the business, is absurd.
I’ve been itching for the private education expense issue to start making the rounds on FaceBook.
Having read a little about the Finnish system -- where the goal is equality of educational opportunity -- I’m more and more against private schools.
I can’t wait to suggest to my wealthy friends that they ‘get some skin in the game’ when it comes to public education.
By coincidence, just today I received a book that I ordered called Finnish Lessons: What can the world learn from educational change in Finland? by Pasi Sahlberg and am looking forward to reading it.
I will post about it when I am done.
Have a little sympathy, folks. Sure, he makes a lot of money--but think how little is left after he spends it.
*plays tiny violin*
I wasn’t going to comment on this before, but another item I heard of today spurred me to.
People are rightfully up in arms about how one wealthy jerk is moaning about his “suffering”, how he is so hard done to because he can’t afford a fourth Mercedes. But you can bet your boots that media spin will go full throttle, now that a lottery winner is reported to be collecting food stamps.
http://www.nj.com/news/index.ssf/2012/03/1_million_lottery_winner_conti.html
This is ONE woman collecting food stamps, not the millions of others who are still poor, but she will be the focus of the “discussion”, falsely portrayed as representing all poor people. The full court press will start as a means of diverting attention from the THOUSANDS of wealthy people who aren’t paying their fair share of taxes.
Once again, the attack will be on a single “welfare queen” instead of rampant corporate welfare. The media are whores who report what they are told and how they are told by their owners -- those on corporate welfare.
Our children went to the public schools and did just fine and the money we did not spend on private schools enabled us to pay for their college educations. Furthermore, I think that growing up with a diverse group of students in school made them as adults far more comfortable in dealing with diversity in their workplaces and social lives.
I completely agree -- we did the same, in New Zealand, and were one of the few families paying for college (university here), most other students having loans which take years to pay off. We found that most children going to private schools were either not too bright or were difficult, and the parents hoped that the private school would give them the unfair advantage or do the disciplining that wasn’t done at home.
I don’t know Andrew Schiff and I have very little to judge him on. From the little that I know I would be willing to bet that he is like most people and has fallen into a lifestyle that roughly matches most of his peer’s lifestyles so he assumes this is what he should be doing. Since he is not as enlightened as many of the readers here he doesn’t know that he is not suppose to lament the loss of his bonus although I think that he has at least figured out that he shouldn’t talk to the media about his concerns. He thinks that he is a good parent that is doing what is best for his children by sending them to private school. He hasn’t figured out that by sending his kids to private school he is apparently destroying civilization. I just don’t see any malice on his part. He hasn’t stated that he hates athiests, or gays, or scientists, or evolutionists, or poor people, etc… Now, he could be the biggest A**hole in the world but I cannot reach that conclusion on what I know of him so far. Clearly the system that he works in is broken and changes are long over due. I refuse to despise somebody just because they have a job that pays them more than my job pays me.
To the points made about not depending on a bonus to maintain a lifestyle is probably good advice. I must say though that for many professions the “bonus” isn’t something that comes out of the blue, but rather is something that the worker can and does plan on. If the company an auto sales-person works for has a bonus program, for example, the way to earn that bonus is likely to be spelled out clearly so that the sales-person can set personal goals to achieve a certain bonus. After time the sales-person, wisely or not, might just depend on some of that bonus income. I worked full time on the night shift at a factory for 6 years while earning my undergraduate degree. It was a successful company that would give an annual year end bonus to the employees (about 600 people) every year in the paycheck that fell right after Thanksgiving. The bonus was calculated on a base of the employees salary and adjusted for their annual performance review scores. Every person I knew in that factory budgeted that money into their budget. So while unwise, I don’t believe depending on your bonus is a practice used by just greedy financial professionals.
But that’s a faulty comparisson. Not only are the sums of money no doubt completely out of proportion--someone making as much money as he can live a lavish lifestyle without ever factoring a necessity for bonuses--but if you work on Wall Street, you work in a very defective, failing economic sector that has been responsible for a great deal of economic trouble.
Why you would expect to get a bonus when your line of business seems responsible for crashing a national--or global--economy, is beyond me.
I think, however, the most interesting thing out of all this is the notion that even those of the richest amongst us seem rather incapable of managing their finances. Yet the pundits and extremists keep raving that the poor have to take responsibility for not planning ahead in the current economic situation. How’s someone on a $40,000 salary expected to show that kind of foresight and ability when someone with ten times that who works in finance can’t seem to manage it?