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No, they don't. The upper class live off investments. I'm not even going to look but just guess that 60K EUR/year isn't even enough to buy a house near Frankfu

No, they don't. The upper class live off investments. I'm not even going to look but just guess that 60K EUR/year isn't even enough to buy a house near Frankfurt or another decent sized city. They might be in a high percentile. That only means that most people are very poor.

fuzz4lyfe 7y ago
60k euro puts you in the top 0.11%[0] globally in terms of income. "It would take the average labourer in Zimbabwe 71 years to earn the same amount." [0]http://www.globalrichlist.com/ http://www.globalrichlist.com/
- danharaj 7y ago
  GP already told you: living off ownership of capital.
  - benj111 7y ago
    That also includes pensioners, some of whom may not be that well off.
    - marvin 7y ago
      Treating pensions as capital is an interesting twist. Relatively accurate in one economical sense, but it's a bit of an edge case and not accurate in others. Pensions are usually a part of the "social contract", and usually pensioners have only a few years of expected healthy life left. So in most cases, a pension is more akin to having decent savings than having enough capital to live off investment income perpetually. Also, crucially, pensions rarely pass on money to inheritors, and almost never enough that the inheritors can live indefinitely from the income.
      - benj111 7y ago
        It depends on what country you live in, in the UK at least you have a small state pension and private pensions can be saved on top. These can optionally be used to buy an annuity. 'A few years' seems an understatement for what is reasonably expected to be 20+ years, I'm not sure what difference the healthy modifier brings. But yes, an annuity wouldn't generally allow you to pass on family wealth. That isn't the dividing line that was being discussed though.
    - abdullahkhalids 7y ago
      Redefine: their earning from capital investments alone are enough to put them in the top 10% of the population.
      - benj111 7y ago
        Top 10% of assets? This [1] suggests that $1,180,000 would put you in the top 10% in the US, which if you're living off (and in) it won't stretch that far. If top 10% of income earners, that's quite a movable feast. If I have $1,000,000 in shares earning 10% and taking all as income, am I rich, if I've got $10,000,000 in less risky investments, and after reinvesting to account for inflation, earning 1% the same amount of rich? One advantage of taking an income from assets is that you can choose how and when. I suspect the latter approach notionally invested in some prudent fashion would give a figure comparable to a wage, I misses out on some big differences though, no having to work, worry about getting sick, having the money there if you need is a major psychological boost, and if you want to buy a house, you can, plus you can pass on assets, which you can't do with a job. [1] https://dqydj.com/net-worth-percentile-calculator-united-states/ https://dqydj.com/net-worth-percentile-calculator-united-sta...
- alexgmcm 7y ago
  But the variance in the cost of living globally is also huge - so just comparing income doesn't really make sense.
  - fuzz4lyfe 7y ago
    It costs pretty much the same to live in a tin shack with no running water or electricity and eat rice and beans for every meal everywhere. This whole "cost of living" thing is a rationalization to make westerners feel better.
    - asutekku 7y ago
      I’m pretty sure a bag of rice is way more cheaper in the countries where it is produced versus the countries where it’s exported. In some countries it’s more expensive to be poor than in others.
      - fuzz4lyfe 7y ago
        $8.43 gets you 20 pounds of rice in the west, 42 cents a pound. How much cheaper could it be? Put it this way, India is a relatively wealthy nation and a large proportion of middle class Indians don't have flush toilets. How can you compare that to a middle class European with a straight face? It's not that the cost of living is lower it's that standards of living are. https://www.walmart.com/ip/Great-Value-Long-Grain-Enriched-Rice-20-lb https://www.walmart.com/ip/Great-Value-Long-Grain-Enriched-R...
    - Aaargh20318 7y ago
      > It costs pretty much the same to live in a tin shack with no running water or electricity and eat rice and beans for every meal everywhere. No it doesn't. First of all, the price of land can vary wildly. One square meter in the middle of Amsterdam will be a bit more than a square meter in Bumfuck, Alabama. IF you can buy land at all, in some places you can only lease it (you could own a home, but not the ground it sits on). Then there's all kinds of taxes you'd have to pay, just for owning that piece of land. A 19.5ft by 8ft parking spot in London was on the market a few years back for £350,000, and you won't even be allowed to build a shed on it, just park your car. An empty lot without even a tin shack can cost more than a mansion, depending on location.
- JumpCrisscross 7y ago
  > If that isn't upper class what is 0.01%? A statistical threshold. Europe has a landed aristocracy with political power, tax and social advantages and investments to last generations. The upper class lives off investment income. The middle class requires income to achieve its goals (if not survive). The practical effect of this distinction is people over whom employers have power versus those over whom employment, if it exists, is electively pursues.
- deleted 7y ago
  [deleted]
- Sharlin 7y ago
  "Class" is intrinsically culture-specific. I'm not sure whether "global upper class" is a meaningful concept.
- romanovcode 7y ago
  60k NET EUR is a lot of money tho
- asutekku 7y ago
  Yes, globally, but that’s a completely different story in Europe where this story is based in. The global upper class is not the same as upper class in germany or in italy or in finland.
- deleted 7y ago
  [deleted]
- esotericn 7y ago
  Yes, it's a high income globally. "Class" in the European sense is not an income based thing. It falls apart a bit at the extremes (what is Jeff Bezos?) but it'd be incorrect to categorise e.g. a CEO as being upper-class despite them being in the 99th percentile by income in their country. The term really describes nobility, inheritance, large land ownership. Existing in a different 'class'.
  - rexgallorum2 7y ago
    For the German bourgeoisie, it's education and cultivation. (Education and profession are probably more important class markers than actual income or wealth.) The genuine upper class may or may not care about either because their status is drawn from other things.
deleted 7y ago
[deleted]
dtech 7y ago
Note that it is €5.160 net income, so that's about €100-110K/year gross income in germany ($110-120K). Gross income in Europe is also after pension contributions and employer taxes.
Retric 7y ago
Investments are not limited to physical things. People making 100+K per year pretax are making money off of investments in education etc. PS: For more physical examples, a stripper can deduct cosmetic surgery from their taxes. http://backalleytaxes.com/is-cosmetic-surgery-tax-deductible/ http://backalleytaxes.com/is-cosmetic-surgery-tax-deductible...
- danharaj 7y ago
  That's obviously not the same thing and I'm pretty sure you understand that.
  - Retric 7y ago
    Some people in the US are investing 400+k in education. Spending that on buying and renting property can also create an income stream, but they both take work.
  - matz1 7y ago
    It is similar, education is an investment. One of the best investment you can make, in terms of return.
sabertoothed 7y ago
> No, they don't. Yes, they do. Because it is defined in relative terms -- as the top 10% by (net) income. EDIT: Why do I get downvoted for a non-emotional, purely factual comment that provides additional information?
- lazyjones 7y ago
  > defined in relative terms -- as the top 10% by (net) income. A ridiculously stupid definition only some economists can come up with. A family with a huge mansion and its own multi-billion trust (living expenses paid by the trust) is not upper class, a graduate who owns nothing but debt and has just landed a well-paid job is, according to this definition.
  - FabHK 7y ago
    Not quite. The study includes a rent imputation on owned property in income, and I saw no indication that Kapitalerträge (interest, dividends, capital gains) are excluded from the income. Furthermore, university in Germany is basically free and there is government support for poor students (BAföG) [1], so graduate debt is not that much of an issue. [1] https://en.wikipedia.org/wiki/Bundesausbildungsförderungsgesetz https://en.wikipedia.org/wiki/Bundesausbildungsförderungsges...
    - lazyjones 7y ago
      > I saw no indication that Kapitalerträge (interest, dividends, capital gains) are excluded from the income. A trust (Stiftung) owns itself. Its capital gains are not the beneficiaries' capital gains. It may also own the mansion in my example, so good luck taking imputed rents into account. > Furthermore, university in Germany is basically free and there is government support for poor students (BAföG) [1], so graduate debt is not that much of an issue. This doesn't change the point that someone who just started a well-paying job and owns nothing but debt is considered "upper class" by this so-called study.
      - FabHK 7y ago
fanzhang 7y ago
Is this a critique of the article's definition of upper class (which they define as top 10%tile, and you define as non-working class). Or are you saying even given their calculation, their result is wrong?
mattnewton 7y ago
The definition I have always used is credited here[0] as “Brooksmith’s Law of Class Distinction”, but I don’t know if this is where I heard it first. “Name on building: upper class. Name on desk: middle class. Name on shirt: working class” It’s not perfect, but the idea is that class as most people conceptualize it is determined by workplace and lifestyle affordances and isn’t a neat percentile cutoff but flexes and wanes in size. [0] https://www.just-one-liners.com/name-on-building-upper-class-name-on-desk-middle-class-name-on-shirt-working-class/ https://www.just-one-liners.com/name-on-building-upper-class...
- JumpCrisscross 7y ago
  > It’s not perfect But it captures the essence of the upper-middle split. The upper class earns income from assets. The middle and lower classes from employment. This isn’t an economic conversation, but a political one. The upper classes are economically sovereign. The middle and lower classes are beholden to their employers, at least during the savings stage of their careers. Put another way, a child born to an upper-middle class family gets a leg up in educational opportunities and connections. A child born to an upper-class family may never have to work at all. Their principal challenge is retaining familial relationships. Referring to the upper middle class as “upper class” papers over the exorbitant privilege the latter retains.
  - lmkg 7y ago
    There's an essay on social class breakdowns in the US, which used the term "Working Rich" to describe people like doctors, lawyers, engineers. I thought that was a much more useful term than "middle" vs "upper" vs "upper-middle." Many such people are in the top 10% (depending on educational debt), but the label succinctly describes their relationship with money beyond simply deciding an arbitrary dollar amount.
    - dogma1138 7y ago
      The Great British Class Survey has a very good definition of various classes imo: https://en.m.wikipedia.org/wiki/Great_British_Class_Survey https://en.m.wikipedia.org/wiki/Great_British_Class_Survey
draugadrotten 7y ago
Defining wealth in Germany, where even millionaires claim to be middle class ... Sociologist Wolfgang Lauterbach says: “All in all, the German upper classes are characterized by relatively old money.” https://www.handelsblatt.com/today/finance/who-is-rich-defining-wealth-in-germany-where-even-millionaires-claim-to-be-middle-class-/23710684.html?ticket=ST-7879695-sd5LjvyvwIAhZl1XiWXc-ap2 https://www.handelsblatt.com/today/finance/who-is-rich-defin...
- arethuza 7y ago
  That's the "traditional" class view here in the UK where pretty much everyone is middle class these days (real aristocratic members of the upper class being rather rare and hardly anyone claims to be working class) - even Eton educated David Cameron claimed to be middle class: https://www.bbc.co.uk/news/magazine-25744526 https://www.bbc.co.uk/news/magazine-25744526
deleted 7y ago
[deleted]
FabHK 7y ago
The study defines upper class as the top 10% of net income (after tax and mandatory insurances, after transfers such as pension and child benefits, and including a rent imputation for home owners). The study [1] does not explicitly mention capital income (capital gains, interest, dividends), but I have no reason to believe that they were excluded (insofar as they are also liable to taxation at 25%). [1] https://www.iwkoeln.de/fileadmin/user_upload/Studien/Kurzberichte/PDF/2019/IW-Kurzbericht_2019_Einkommensverteilung.pdf https://www.iwkoeln.de/fileadmin/user_upload/Studien/Kurzber...
- marvin 7y ago
  Depending on the tax system, a wealthy person may have a lot of leeway in choosing the amount of investment income they’ll realize for tax purposes. So someone with $10 million in stock market investments may choose to withdraw none, or only a small part of the returns generated, placing them in the low income category.
matteuan 7y ago
An example, near Frankfurt outside the centre the property price is around 5000€ per m^2. 100m^2 for a couple is considered quite confortable, costing around €400k. This means a 25 years mortgage at 1,5% interest rate (atm it could get even better) -> 1600€ monthly repayment, definitely affordable with 5160€. Anyway, I'm not sure property price is a very good metric for this. Renting in Germany is still relatively cheaper than buying.
- deleted 7y ago
  [deleted]

fuzz4lyfe 7y ago

60k euro puts you in the top 0.11%[0] globally in terms of income. "It would take the average labourer in Zimbabwe 71 years to earn the same amount." [0]http://www.globalrichlist.com/ http://www.globalrichlist.com/

danharaj 7y ago
GP already told you: living off ownership of capital.
- benj111 7y ago
  That also includes pensioners, some of whom may not be that well off.
  - marvin 7y ago
    Treating pensions as capital is an interesting twist. Relatively accurate in one economical sense, but it's a bit of an edge case and not accurate in others. Pensions are usually a part of the "social contract", and usually pensioners have only a few years of expected healthy life left. So in most cases, a pension is more akin to having decent savings than having enough capital to live off investment income perpetually. Also, crucially, pensions rarely pass on money to inheritors, and almost never enough that the inheritors can live indefinitely from the income.
    - benj111 7y ago
      It depends on what country you live in, in the UK at least you have a small state pension and private pensions can be saved on top. These can optionally be used to buy an annuity. 'A few years' seems an understatement for what is reasonably expected to be 20+ years, I'm not sure what difference the healthy modifier brings. But yes, an annuity wouldn't generally allow you to pass on family wealth. That isn't the dividing line that was being discussed though.
  - abdullahkhalids 7y ago
    Redefine: their earning from capital investments alone are enough to put them in the top 10% of the population.
    - benj111 7y ago
      Top 10% of assets? This [1] suggests that $1,180,000 would put you in the top 10% in the US, which if you're living off (and in) it won't stretch that far. If top 10% of income earners, that's quite a movable feast. If I have $1,000,000 in shares earning 10% and taking all as income, am I rich, if I've got $10,000,000 in less risky investments, and after reinvesting to account for inflation, earning 1% the same amount of rich? One advantage of taking an income from assets is that you can choose how and when. I suspect the latter approach notionally invested in some prudent fashion would give a figure comparable to a wage, I misses out on some big differences though, no having to work, worry about getting sick, having the money there if you need is a major psychological boost, and if you want to buy a house, you can, plus you can pass on assets, which you can't do with a job. [1] https://dqydj.com/net-worth-percentile-calculator-united-states/ https://dqydj.com/net-worth-percentile-calculator-united-sta...
alexgmcm 7y ago
But the variance in the cost of living globally is also huge - so just comparing income doesn't really make sense.
- fuzz4lyfe 7y ago
  It costs pretty much the same to live in a tin shack with no running water or electricity and eat rice and beans for every meal everywhere. This whole "cost of living" thing is a rationalization to make westerners feel better.
  - asutekku 7y ago
    I’m pretty sure a bag of rice is way more cheaper in the countries where it is produced versus the countries where it’s exported. In some countries it’s more expensive to be poor than in others.
    - fuzz4lyfe 7y ago
      $8.43 gets you 20 pounds of rice in the west, 42 cents a pound. How much cheaper could it be? Put it this way, India is a relatively wealthy nation and a large proportion of middle class Indians don't have flush toilets. How can you compare that to a middle class European with a straight face? It's not that the cost of living is lower it's that standards of living are. https://www.walmart.com/ip/Great-Value-Long-Grain-Enriched-Rice-20-lb https://www.walmart.com/ip/Great-Value-Long-Grain-Enriched-R...
  - Aaargh20318 7y ago
    > It costs pretty much the same to live in a tin shack with no running water or electricity and eat rice and beans for every meal everywhere. No it doesn't. First of all, the price of land can vary wildly. One square meter in the middle of Amsterdam will be a bit more than a square meter in Bumfuck, Alabama. IF you can buy land at all, in some places you can only lease it (you could own a home, but not the ground it sits on). Then there's all kinds of taxes you'd have to pay, just for owning that piece of land. A 19.5ft by 8ft parking spot in London was on the market a few years back for £350,000, and you won't even be allowed to build a shed on it, just park your car. An empty lot without even a tin shack can cost more than a mansion, depending on location.
JumpCrisscross 7y ago
> If that isn't upper class what is 0.01%? A statistical threshold. Europe has a landed aristocracy with political power, tax and social advantages and investments to last generations. The upper class lives off investment income. The middle class requires income to achieve its goals (if not survive). The practical effect of this distinction is people over whom employers have power versus those over whom employment, if it exists, is electively pursues.
deleted 7y ago
[deleted]
Sharlin 7y ago
"Class" is intrinsically culture-specific. I'm not sure whether "global upper class" is a meaningful concept.
romanovcode 7y ago
60k NET EUR is a lot of money tho
asutekku 7y ago
Yes, globally, but that’s a completely different story in Europe where this story is based in. The global upper class is not the same as upper class in germany or in italy or in finland.
deleted 7y ago
[deleted]
esotericn 7y ago
Yes, it's a high income globally. "Class" in the European sense is not an income based thing. It falls apart a bit at the extremes (what is Jeff Bezos?) but it'd be incorrect to categorise e.g. a CEO as being upper-class despite them being in the 99th percentile by income in their country. The term really describes nobility, inheritance, large land ownership. Existing in a different 'class'.
- rexgallorum2 7y ago
  For the German bourgeoisie, it's education and cultivation. (Education and profession are probably more important class markers than actual income or wealth.) The genuine upper class may or may not care about either because their status is drawn from other things.

deleted 7y ago

[deleted]

dtech 7y ago

Note that it is €5.160 net income, so that's about €100-110K/year gross income in germany ($110-120K). Gross income in Europe is also after pension contributions and employer taxes.

Retric 7y ago

Investments are not limited to physical things. People making 100+K per year pretax are making money off of investments in education etc. PS: For more physical examples, a stripper can deduct cosmetic surgery from their taxes. http://backalleytaxes.com/is-cosmetic-surgery-tax-deductible/ http://backalleytaxes.com/is-cosmetic-surgery-tax-deductible...

danharaj 7y ago
That's obviously not the same thing and I'm pretty sure you understand that.
- Retric 7y ago
  Some people in the US are investing 400+k in education. Spending that on buying and renting property can also create an income stream, but they both take work.
- matz1 7y ago
  It is similar, education is an investment. One of the best investment you can make, in terms of return.

sabertoothed 7y ago

> No, they don't. Yes, they do. Because it is defined in relative terms -- as the top 10% by (net) income. EDIT: Why do I get downvoted for a non-emotional, purely factual comment that provides additional information?

lazyjones 7y ago
> defined in relative terms -- as the top 10% by (net) income. A ridiculously stupid definition only some economists can come up with. A family with a huge mansion and its own multi-billion trust (living expenses paid by the trust) is not upper class, a graduate who owns nothing but debt and has just landed a well-paid job is, according to this definition.
- FabHK 7y ago
  Not quite. The study includes a rent imputation on owned property in income, and I saw no indication that Kapitalerträge (interest, dividends, capital gains) are excluded from the income. Furthermore, university in Germany is basically free and there is government support for poor students (BAföG) [1], so graduate debt is not that much of an issue. [1] https://en.wikipedia.org/wiki/Bundesausbildungsförderungsgesetz https://en.wikipedia.org/wiki/Bundesausbildungsförderungsges...
  - lazyjones 7y ago
    > I saw no indication that Kapitalerträge (interest, dividends, capital gains) are excluded from the income. A trust (Stiftung) owns itself. Its capital gains are not the beneficiaries' capital gains. It may also own the mansion in my example, so good luck taking imputed rents into account. > Furthermore, university in Germany is basically free and there is government support for poor students (BAföG) [1], so graduate debt is not that much of an issue. This doesn't change the point that someone who just started a well-paying job and owns nothing but debt is considered "upper class" by this so-called study.
    - FabHK 7y ago

fanzhang 7y ago

Is this a critique of the article's definition of upper class (which they define as top 10%tile, and you define as non-working class). Or are you saying even given their calculation, their result is wrong?

mattnewton 7y ago

The definition I have always used is credited here[0] as “Brooksmith’s Law of Class Distinction”, but I don’t know if this is where I heard it first. “Name on building: upper class. Name on desk: middle class. Name on shirt: working class” It’s not perfect, but the idea is that class as most people conceptualize it is determined by workplace and lifestyle affordances and isn’t a neat percentile cutoff but flexes and wanes in size. [0] https://www.just-one-liners.com/name-on-building-upper-class-name-on-desk-middle-class-name-on-shirt-working-class/ https://www.just-one-liners.com/name-on-building-upper-class...

JumpCrisscross 7y ago
> It’s not perfect But it captures the essence of the upper-middle split. The upper class earns income from assets. The middle and lower classes from employment. This isn’t an economic conversation, but a political one. The upper classes are economically sovereign. The middle and lower classes are beholden to their employers, at least during the savings stage of their careers. Put another way, a child born to an upper-middle class family gets a leg up in educational opportunities and connections. A child born to an upper-class family may never have to work at all. Their principal challenge is retaining familial relationships. Referring to the upper middle class as “upper class” papers over the exorbitant privilege the latter retains.
- lmkg 7y ago
  There's an essay on social class breakdowns in the US, which used the term "Working Rich" to describe people like doctors, lawyers, engineers. I thought that was a much more useful term than "middle" vs "upper" vs "upper-middle." Many such people are in the top 10% (depending on educational debt), but the label succinctly describes their relationship with money beyond simply deciding an arbitrary dollar amount.
  - dogma1138 7y ago
    The Great British Class Survey has a very good definition of various classes imo: https://en.m.wikipedia.org/wiki/Great_British_Class_Survey https://en.m.wikipedia.org/wiki/Great_British_Class_Survey

draugadrotten 7y ago

Defining wealth in Germany, where even millionaires claim to be middle class ... Sociologist Wolfgang Lauterbach says: “All in all, the German upper classes are characterized by relatively old money.” https://www.handelsblatt.com/today/finance/who-is-rich-defining-wealth-in-germany-where-even-millionaires-claim-to-be-middle-class-/23710684.html?ticket=ST-7879695-sd5LjvyvwIAhZl1XiWXc-ap2 https://www.handelsblatt.com/today/finance/who-is-rich-defin...

arethuza 7y ago
That's the "traditional" class view here in the UK where pretty much everyone is middle class these days (real aristocratic members of the upper class being rather rare and hardly anyone claims to be working class) - even Eton educated David Cameron claimed to be middle class: https://www.bbc.co.uk/news/magazine-25744526 https://www.bbc.co.uk/news/magazine-25744526

deleted 7y ago

[deleted]

FabHK 7y ago

The study defines upper class as the top 10% of net income (after tax and mandatory insurances, after transfers such as pension and child benefits, and including a rent imputation for home owners). The study [1] does not explicitly mention capital income (capital gains, interest, dividends), but I have no reason to believe that they were excluded (insofar as they are also liable to taxation at 25%). [1] https://www.iwkoeln.de/fileadmin/user_upload/Studien/Kurzberichte/PDF/2019/IW-Kurzbericht_2019_Einkommensverteilung.pdf https://www.iwkoeln.de/fileadmin/user_upload/Studien/Kurzber...

marvin 7y ago
Depending on the tax system, a wealthy person may have a lot of leeway in choosing the amount of investment income they’ll realize for tax purposes. So someone with $10 million in stock market investments may choose to withdraw none, or only a small part of the returns generated, placing them in the low income category.

matteuan 7y ago

An example, near Frankfurt outside the centre the property price is around 5000€ per m^2. 100m^2 for a couple is considered quite confortable, costing around €400k. This means a 25 years mortgage at 1,5% interest rate (atm it could get even better) -> 1600€ monthly repayment, definitely affordable with 5160€. Anyway, I'm not sure property price is a very good metric for this. Renting in Germany is still relatively cheaper than buying.

deleted 7y ago
[deleted]