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The problem I have when discussing "wealth" is that it's almost always done in comparison to others at this time. For example, I'm "rich" or "poor" compared to

The problem I have when discussing "wealth" is that it's almost always done in comparison to others at this time. For example, I'm "rich" or "poor" compared to the richest and poorest people around me today. If we compared it with other people internationally, or even historically, we're filthy rich at almost any level of the ladder.

themodelplumber 8y ago
That's a good point. I also don't like that these discussions of wealth are always accompanied by a discussion of income and then they end. Especially in an article where debt is featured so prominently. Significantly raising one's income and seeing it as the sole dividing factor between oneself and others becomes part of a false system of hope for many. A saving habit _and_ reasonable living on one's income, no matter the level, will _often_ quickly result in the kind of savings that will pay for those big restaurant meals, if needed, or those vacations, if needed. My friends who are good savers tend to take vacations to really nice places without needing to spend a lot when they get there. So they have more money for the next vacation, etc. There are people who are unfairly saddled with debt, to whom this doesn't really apply as readily, but it'd be nice if messages like "wow, sad, income levels make life so hard" could be accompanied by "but here's what many of you who are reading this can do at any level to feel on top of things." We are short-changing our children by not bundling that more realistic discussion with discussions of income.
- ansgri 8y ago
  That's an interesting comment. It made me think about having two different kinds of wealth: wealth enabling things and wealth freeing from problems. If you can do fancy things with careful planning, that's one thing. Doing fancy things without burdening yourself with complicated cost-benefit analysis is the other, and it's probably the latter that gives more freedom and the one the article talks about.
- kaitai 8y ago
  Reading "The Millionaire Next Door," as much a of a cliche or a classic as it is right now, really opened my eyes to some of this nuance for me. The book points out that many high earners are still living paycheck to paycheck, and some lower earners do quite well by saving aggressively. So who is rich, the software engineer who earns $120k/year in a LCoL area and takes expensive vacations and buys photography equipment and has a nice house & great car and has little saved, or the senior school teacher who makes $80k and saves a ton, but doesn't take the expensive vacations, drives a 20-year-old Civic, and enjoys gardening? What's the definition of rich? What's the definition of value? What do you want in life? The other aspect is (as you and parent posters note) the comparison with others. If you live in an expensive area where everyone drives a nice car, pays for a gardener, and sends the kid to a high-tuition school, you'll stand out if you drive a 2008 Civic, have an adequate but not nice yard, and send the kid to the public kindergarten. "Comparison is the thief of joy," said someone. I personally was much happier with my un-professionally-landscaped yard and small house and used car in my middle-class neighborhood when I realized that those were reasons we have a higher net worth than most of our peers, not signs that we don't.
lev99 8y ago
Wealth is a relative thing, not an absolute. The distribution of wealth is one of the most interesting aspects of it, which is why that is commonly discussed.
- pdonis 8y ago
  > Wealth is a relative thing, not an absolute. This is not true. Wealth is choices: how many different things can you choose to do? The average person today has a multitude of choices that were not available to the richest person in the world a century ago, and for that reason is wealthier than the richest person in the world a century ago.
  - ryandrake 8y ago
    Relative wealth is very important because it distorts the market. Even if you are well-off compared to a larger population, if many others around you are even better off, it’s going to suck for you. See Bay Area housing prices for a concrete real world example.
    - pdonis 8y ago
      > Relative wealth is very important because it distorts the market. No, that's not correct. What distorts the market are artificial constraints on the market. You mention Bay area housing prices, but you fail to point out that those prices are skyrocketing because of enforced scarcity: the supply of housing in the Bay area is not being allowed to grow in response to growing demand, but instead is held fixed by local laws and regulations. That is what is distorting the market. Relative wealth does give an advantage in this kind of situation, but that doesn't mean fixing the wealth disparity will fix the market. It won't; it will just mean that the scare Bay area housing gets rationed by some other method than who has the most money. It will still have to be rationed because demand far outstrips supply; and no matter how it is rationed, many people will be left out and will complain that the system is unfair. The only long term fixes for that are to either expand the supply of housing (by letting it respond normally to market forces), or for a lot of people to stop feeding the monster and abandon the Bay area for someplace that offers them better opportunities--which again is a normal response to market forces. And what empowers people to make those choices is absolute wealth, not relative wealth.
cryoshon 8y ago
doesn't matter an iota. does absolute wealth buy you influence? no, not even for a moment. if you have a million dollars, you have "a lot" of money. great. but what about your ability to turn your mass of money into societal influence? you can't buy congress if someone out there has a billion dollars. your chump change doesn't move the needle even if you are "rich" because they have so much more money that the sums they can offer are much greater. as the level of wealth rises, the costs of bribing politicians rises too. absolute wealth doesn't help you gain influence. it's all about relative wealth. if you are more wealthy, you have relatively more say in the way society goes, at least in the way that things are configured currently.
- pdonis 8y ago
  > it's all about relative wealth. if you are more wealthy, you have relatively more say in the way society goes, at least in the way that things are configured currently. This is a problem with the way things are configured currently. It doesn't mean absolute wealth doesn't matter.
mikeash 8y ago
In some ways we are, but in other ways we aren’t rich at all. In our ability to procure food and entertainment and travel, even a very poor person is pretty rich compared to the historical average. But if you consider our ability to have leisure time, walk away from an employer, or get other people to do stuff for us, the moderately wealthy of the distant past were still much richer than today’s middle class, let alone today’s poor.
- AnimalMuppet 8y ago
  What you say is true, but what fraction of the population was "moderately wealthy" in the distant past? What fraction of the population could walk away in the past, and what fraction can walk away today?
  - mikeash 8y ago
    All good things to keep in mind, but the comparison here was with the wealthy of past eras. I often see the statement taken to extremes, saying that a poor person in a first world country today is better off than an ancient king. And in many ways, it’s absolutely true! But in other ways it’s not. My main point is that wealth is as much about power as it is about possessions, and when it comes to power, your relative wealth is all that matters.

themodelplumber 8y ago

That's a good point. I also don't like that these discussions of wealth are always accompanied by a discussion of income and then they end. Especially in an article where debt is featured so prominently. Significantly raising one's income and seeing it as the sole dividing factor between oneself and others becomes part of a false system of hope for many. A saving habit _and_ reasonable living on one's income, no matter the level, will _often_ quickly result in the kind of savings that will pay for those big restaurant meals, if needed, or those vacations, if needed. My friends who are good savers tend to take vacations to really nice places without needing to spend a lot when they get there. So they have more money for the next vacation, etc. There are people who are unfairly saddled with debt, to whom this doesn't really apply as readily, but it'd be nice if messages like "wow, sad, income levels make life so hard" could be accompanied by "but here's what many of you who are reading this can do at any level to feel on top of things." We are short-changing our children by not bundling that more realistic discussion with discussions of income.

ansgri 8y ago
That's an interesting comment. It made me think about having two different kinds of wealth: wealth enabling things and wealth freeing from problems. If you can do fancy things with careful planning, that's one thing. Doing fancy things without burdening yourself with complicated cost-benefit analysis is the other, and it's probably the latter that gives more freedom and the one the article talks about.
kaitai 8y ago
Reading "The Millionaire Next Door," as much a of a cliche or a classic as it is right now, really opened my eyes to some of this nuance for me. The book points out that many high earners are still living paycheck to paycheck, and some lower earners do quite well by saving aggressively. So who is rich, the software engineer who earns $120k/year in a LCoL area and takes expensive vacations and buys photography equipment and has a nice house & great car and has little saved, or the senior school teacher who makes $80k and saves a ton, but doesn't take the expensive vacations, drives a 20-year-old Civic, and enjoys gardening? What's the definition of rich? What's the definition of value? What do you want in life? The other aspect is (as you and parent posters note) the comparison with others. If you live in an expensive area where everyone drives a nice car, pays for a gardener, and sends the kid to a high-tuition school, you'll stand out if you drive a 2008 Civic, have an adequate but not nice yard, and send the kid to the public kindergarten. "Comparison is the thief of joy," said someone. I personally was much happier with my un-professionally-landscaped yard and small house and used car in my middle-class neighborhood when I realized that those were reasons we have a higher net worth than most of our peers, not signs that we don't.

lev99 8y ago

Wealth is a relative thing, not an absolute. The distribution of wealth is one of the most interesting aspects of it, which is why that is commonly discussed.

pdonis 8y ago
> Wealth is a relative thing, not an absolute. This is not true. Wealth is choices: how many different things can you choose to do? The average person today has a multitude of choices that were not available to the richest person in the world a century ago, and for that reason is wealthier than the richest person in the world a century ago.
- ryandrake 8y ago
  Relative wealth is very important because it distorts the market. Even if you are well-off compared to a larger population, if many others around you are even better off, it’s going to suck for you. See Bay Area housing prices for a concrete real world example.
  - pdonis 8y ago
    > Relative wealth is very important because it distorts the market. No, that's not correct. What distorts the market are artificial constraints on the market. You mention Bay area housing prices, but you fail to point out that those prices are skyrocketing because of enforced scarcity: the supply of housing in the Bay area is not being allowed to grow in response to growing demand, but instead is held fixed by local laws and regulations. That is what is distorting the market. Relative wealth does give an advantage in this kind of situation, but that doesn't mean fixing the wealth disparity will fix the market. It won't; it will just mean that the scare Bay area housing gets rationed by some other method than who has the most money. It will still have to be rationed because demand far outstrips supply; and no matter how it is rationed, many people will be left out and will complain that the system is unfair. The only long term fixes for that are to either expand the supply of housing (by letting it respond normally to market forces), or for a lot of people to stop feeding the monster and abandon the Bay area for someplace that offers them better opportunities--which again is a normal response to market forces. And what empowers people to make those choices is absolute wealth, not relative wealth.

cryoshon 8y ago

doesn't matter an iota. does absolute wealth buy you influence? no, not even for a moment. if you have a million dollars, you have "a lot" of money. great. but what about your ability to turn your mass of money into societal influence? you can't buy congress if someone out there has a billion dollars. your chump change doesn't move the needle even if you are "rich" because they have so much more money that the sums they can offer are much greater. as the level of wealth rises, the costs of bribing politicians rises too. absolute wealth doesn't help you gain influence. it's all about relative wealth. if you are more wealthy, you have relatively more say in the way society goes, at least in the way that things are configured currently.

pdonis 8y ago
> it's all about relative wealth. if you are more wealthy, you have relatively more say in the way society goes, at least in the way that things are configured currently. This is a problem with the way things are configured currently. It doesn't mean absolute wealth doesn't matter.

mikeash 8y ago

In some ways we are, but in other ways we aren’t rich at all. In our ability to procure food and entertainment and travel, even a very poor person is pretty rich compared to the historical average. But if you consider our ability to have leisure time, walk away from an employer, or get other people to do stuff for us, the moderately wealthy of the distant past were still much richer than today’s middle class, let alone today’s poor.

AnimalMuppet 8y ago
What you say is true, but what fraction of the population was "moderately wealthy" in the distant past? What fraction of the population could walk away in the past, and what fraction can walk away today?
- mikeash 8y ago
  All good things to keep in mind, but the comparison here was with the wealthy of past eras. I often see the statement taken to extremes, saying that a poor person in a first world country today is better off than an ancient king. And in many ways, it’s absolutely true! But in other ways it’s not. My main point is that wealth is as much about power as it is about possessions, and when it comes to power, your relative wealth is all that matters.