One of the biggest myths that has had a negative effect on American politics is that the US is a society with a lot of economic and social mobility and that simply by dint of hard work and other worthy qualities one can achieve success and become wealthy. It should not be surprising, then, that a full one-third of Americans think that they will be rich some day. More than half in the age group 18-29 think so, with the percentage declining with age as people begin to realize that time is running out on achieving that dream
A recent Gallup Poll, conducted Jan. 20-22, finds that 31% of Americans expect to get rich at some time in their lives, and another 2% volunteer that they already are rich. The public’s definition of rich means an annual income of about $120,000 or financial assets of about $1 million (each figure is the median estimate). These figures, as well as the percentage who expect to get rich, all vary considerably by gender, age, and income.
Unencumbered by much experience and filled with hope for the future, young people are the age group most optimistic about their future wealth. Just over half of Americans under the age of 30 say they are very or somewhat likely to be rich at some point in their lives, compared with just 8% of Americans 65 and older. Add 2% in the oldest age group who volunteer that they are already rich, and that makes 10% who either expect to be or are rich, just one-fifth the number of young people. The intermediate age groups show declining rates — 37% of the 30-49 age group either are or expect to be rich, down to 26% in the 50-64 group.
This poll was conducted in 2003 and it would be interesting to see if the numbers have changed significantly following the recent financial crisis.
This expectation of future wealth enables people to look down on the poor and say that they have only themselves to blame them for their situation. Though the people thinking this way might also be poor, or at least not rich, they see this as a temporary state along the road to wealth. Hence they support policies that favor the wealthy because they foresee themselves as future beneficiaries of such policies.
Like most myths, they have some basis. Some people are poor due to squandering away their opportunities. Some others do overcome great personal obstacles to achieve success and these people are glorified and their stories are endlessly written about and made into books and films so that they seem far more common than they are. So people can always point to specific examples to support the myth.
But as Steve Roth writes, one of the best predictors of how wealthy you will be is how wealthy is the family you are born into. Donald Trump is a good example of that, though such people often delude others (and even themselves) into thinking that they made it largely on their own.
Less than 5% actually make it. And many of those do it the old-fashioned way: they inherit it. About 60% of U.S. household wealth is inherited. Between a quarter and a third of Forbes 400 billionaires got rich that way. It may not be the most common way to get there, but it’s widespread, and it’s surely the easiest way.
Roth points to important new data accumulated by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman (PSZ) that looks at Distributional National Accounts (DINAs) that “reveal the distribution of national income to different income classes, wealth classes, age groups, and genders (and potentially different races, etc. etc.).” Here is one such chart that shows the increasing inequality over time.
Roth links to other charts provided by PSZ that slice the wealth and income by different means and it is an invaluable resource for understanding the depth of inequality in the US, especially for economics wonks. Those charts show that the share of the bottom 50% has collapsed since 1979. That year is significant since it is when the deregulation boom began, with the last days of the Carter administration and accelerating through the Reagan and Clinton years. This led to the freeing of the industrial and financial sector from many of the constraints and led to, among other things, the real-estate bubble and collapse of 2008.
It is curious that people who have the belief that success in life is in their future often seem to equate success with wealth instead of all the other measures (peace of mind, creative achievements, happiness, loving family and friends) that could be used.