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Old 12-02-2010, 06:51 AM   #1
Drysdale
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Default The dying leisure class

Oh, and the so-called "leisure class" is dying out.

http://blogs.wsj.com/wealth/2010/12/...-for-a-living/
The idea of the “leisure class” has been dying for decades. The wealth boom of the past 20 years has been fueled more by the working wealthy–entrepreneurs and executives–than by passive capitalists who earn a living off their investments and spend the rest of their days sailing or golfing.

Yet new research shows the change has been more rapid than we might expect. A study released Tuesday in Canada shows that the top 1% of earners now get more than two-thirds of their total income from salaries. That is up markedly since the 1950s and 1960s, when less than half (45%) of their total income came from paychecks.

“What’s driving the trends is how the work of those at the top is valued. It’s not capital gains, it’s not how many assets you’ve got, it’s really a question of earnings and how the work of the bosses, the celebrities, the artists, the athletes are rewarded now,” Armine Yalnizyan, senior economist Canadian Centre for Policy Alternatives, told the Vancouver Sun.

The U.S. has experienced a similar increase. According to income research from Emmanuel Saez, wages accounted for 56% of income for the top 1% of earners in 2008, up from 40% in 1960. Dividends, interest income and collected rent accounts for the rest. He also found that business ownership accounted for only a third of the occupations among the top 1%.

Says Mr. Saez: “The evidence suggests that top incomes earners today are not ‘rentiers’ deriving their incomes from past wealth but rather are ‘working rich,’ highly paid employees or new entrepreneurs who have not yet accumulated fortunes comparable to those accumulated during the Gilded Age.”

The fact that soaring salaries at the top have helped the rich, and driven up inequality, isn’t news. Attacks on Wall Street bonuses and CEO pay are now part of the daily media diet. Whether these salaries are actually justified or not is another debate.

But the marked increase of the salaried rich shows just how much the upper class has changed in recent decades. Thorstein Veblen, in his famous “Theory of the Leisure Class,” published at the turn of the century, wrote that “manual labour, industry, whatever has to do directly with the everyday work of getting a livelihood, is the exclusive occupation of the inferior class.”

Today, even the true leisure class–or what’s left of them–want to be seen as productive.

Why do you think salaries have replaced capital as the source of high incomes?
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Old 12-02-2010, 07:11 AM   #2
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I suspect there's some confusion inherent in the use of "top 1%" - I think everyone has been conditioned to think of the top 1% as incredibly wealthy - the "Thurston Howells"-style millionaire (a good icon for the "leisure class"). The problem, however, is that it's really only the "top 0.1%" or "top 0.01%" that really have that kind of traditional millionaire lifestyle. The money that a very, very small few have (like Warren Buffet & Bill Gates) tends to mess up a lot of the general statistical methods (the book "The Black Swan" goes into this a bit).

Back in the 90s, the book "The Millionaire Next Door" also went into this in quite a bit of detail, and while I've only read summaries of it, one take away is that much of that top 1% lives "middle class" lives. In fact, the way to spot the real millionaires is they're the ones buying rather boring cars (probably used), smaller older homes, and living less extravagent lives than their "poorer" neighbors. The only way to spot a "top 1%" is to go through their financial records - you won't spot it from the way they live.

But what you see is the media focusing in on that upper 0.01%, and then broadcasting this as 'the way the top 1%' live - in sort of a "Wanna Be a Rockstar" lifestyle of private jets, $1000 bottles of booze, etc. (and from what I've seen, folks with that kind of lifestyle seem to flame out very quickly - a lot of real rockstars/movie stars seem to wind up with huge tax/finance problems).
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Old 12-02-2010, 07:34 AM   #3
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If the leisure class is recruiting to fill their dwindling ranks I'd be happy to join, they just have to spot me a little starter dough. Call my people, we'll do lunch.
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Old 12-02-2010, 08:07 AM   #4
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Originally Posted by FafnerMorell View Post
- a lot of real rockstars/movie stars seem to wind up with huge tax/finance problems).
Leave Randy Quaid alone!!!!
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Old 12-02-2010, 08:10 AM   #5
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Originally Posted by FafnerMorell View Post
I suspect there's some confusion inherent in the use of "top 1%" - I think everyone has been conditioned to think of the top 1% as incredibly wealthy - the "Thurston Howells"-style millionaire (a good icon for the "leisure class"). The problem, however, is that it's really only the "top 0.1%" or "top 0.01%" that really have that kind of traditional millionaire lifestyle. The money that a very, very small few have (like Warren Buffet & Bill Gates) tends to mess up a lot of the general statistical methods (the book "The Black Swan" goes into this a bit).

Back in the 90s, the book "The Millionaire Next Door" also went into this in quite a bit of detail, and while I've only read summaries of it, one take away is that much of that top 1% lives "middle class" lives. In fact, the way to spot the real millionaires is they're the ones buying rather boring cars (probably used), smaller older homes, and living less extravagent lives than their "poorer" neighbors. The only way to spot a "top 1%" is to go through their financial records - you won't spot it from the way they live.

But what you see is the media focusing in on that upper 0.01%, and then broadcasting this as 'the way the top 1%' live - in sort of a "Wanna Be a Rockstar" lifestyle of private jets, $1000 bottles of booze, etc. (and from what I've seen, folks with that kind of lifestyle seem to flame out very quickly - a lot of real rockstars/movie stars seem to wind up with huge tax/finance problems).
Yes, I was thinking of "The Millionaire Next Door" as well. I have read this, and it contains studies that show that the overwhelming majority of American millionaires are self made.

Keep in mind that a "millionaire" is a valuation of net assets, and not necessarily cash on hand. When you consider the value of homes, retirement accounts, and even other assets, such as land, cattle, or other assets, it's not that hard to be a "millionaire" nowadays. Many people are millionaires and don't realize it, and certainly don't live lavish lifestyles.

Also, consider that being a millionaire at retirement nowadays is almost required for comfortable living, considering cost of living, medical bills and other expenses in your golden years. The secret to having a lot of money and assets is wise investing and saving... not spending lavishly. In this way, a lifestyle of conspicuous consumption is not generally an indication of large wealth. As Faf pointed out, it is generally an attitude of conservatism that is more indicative of larger holdings.

My personal favorite was the preferred suit of millionaires: A JC Penny suit.
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Old 12-02-2010, 08:39 AM   #6
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Originally Posted by Drysdale View Post
Leave Randy Quaid alone!!!!
The funny thing is, I was thinking of Nicholaus Cage as an example, but then realized it was Wesley Snipes that I had seen a story about his tax woes, but had for some reason filed it in my memory as Cage. All those guys seem to have the same problem with spending even more millions than they get paid. And while I like the Billy Joel/Elton John concerts, they probably could have a running theme of "We wasted our money and need some more, but we're getting too damn old for this shit".

Speaking of getting old, I don't know if I'm the only one, but as years go by, I just reuse the same memory bins for a lot of stuff, so anything with Lady Gaga gets filed under Madonna, and Tom Cruise/Travotola/any-Scientology-movie-star are all the same. I look at the tabloids in the supermarket lines and have a tough time keeping the newbies and old folgies straight.
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Old 12-02-2010, 09:13 AM   #7
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Originally Posted by FafnerMorell View Post
Speaking of getting old, I don't know if I'm the only one, but as years go by, I just reuse the same memory bins for a lot of stuff, so anything with Lady Gaga gets filed under Madonna, and Tom Cruise/Travotola/any-Scientology-movie-star are all the same. I look at the tabloids in the supermarket lines and have a tough time keeping the newbies and old folgies straight.
I know whatchya mean there, Wildane.
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Old 12-02-2010, 09:15 AM   #8
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Originally Posted by FafnerMorell View Post
Speaking of getting old, I don't know if I'm the only one, but as years go by, I just reuse the same memory bins for a lot of stuff, so anything with Lady Gaga gets filed under Madonna, and Tom Cruise/Travotola/any-Scientology-movie-star are all the same. I look at the tabloids in the supermarket lines and have a tough time keeping the newbies and old folgies straight.
I do the same thing!
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Old 12-02-2010, 10:49 AM   #9
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Originally Posted by Davek View Post
I know whatchya mean there, Wildane.
Now THAT was funny! Thanks, Davek!
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