The Wealth Race
Much has been said lately about the disparity between the haves and the have-nots. Particularly, as President Obama is saddled by historically bad polling results, his administration and mainstream media companions are seeking out every opportunity to blame our woes on income disparity and to stoke the flames of class warfare.
"Not only are the rich getting richer, but the rich are getting richer faster," they say. As it turns out, they are absolutely correct.
Several years ago I was working on a film that starred a very high-profile A-list actor. One weekend, this actor, his stand-in, and the director spent a weekend in Las Vegas. On the following Monday morning, the director came back with tales of grandeur. "I couldn't believe how much money was changing hands," he said. This was from the mouth of a successful director. By the end of their Saturday night of gambling, the actor had won over $150,000. His stand-in lost $1,800 -- a very significant amount, considering his income. The director, who was simply along for the ride, neither enjoyed gain or suffered loss.
In a single night, this actor earned about four times as much as the average American earns in a year. Our country has no shortage of people who would write this off as an example of gross unfairness.
Unfairness, however, depends on perspective. As it happens, this actor was being paid $20 million for a movie with a 60-day shooting schedule. For the sake of argument, let's call it $10 million in take-home pay after taxes, agent's fees, etc. That works out to about $166,500 per day. Suffice to say he was doing well for himself, and this says nothing of the residual income he earns for his side investments and the video sales and rentals of his past box office hits -- which, trust me, are plenty -- bringing him a net worth somewhere in the range of $150 million.
It doesn't take a rocket scientist to understand that someone with a net worth in the hundreds of millions can gamble more money per hand than someone with a net worth in the thousands. In this context, his $150,000 win isn't particularly impressive or shocking, especially considering that his table had a minimum buy-in of -- surprise -- $150,000. His level of risk is what allowed him a proportional return.
Similarly, every American with an investment portfolio is engaging in activity that carries risk. Each of these gambles has a different measure of it, as well as a different measure of potential reward. Is it such a revelation that those with the greatest risk are also the ones with the most to gain? After all, someone with a spare $10 million has investment opportunities that would never be offered to someone with a spare $1,000, just as someone with a spare $1,000 has opportunities unavailable to someone with a spare $10. Determining the wealth grown by these people isn't how much they already have, but how they use what they do have.
Thomas J. Stanley's insightful book The Millionaire Next Door tells us that the majority of wealthy people live quite frugally, and about 80% of them are first-generation rich, receiving little to none of their wealth by inheritance. They tend to spend less on clothes, food, and homes, opting instead to save and invest. When it comes to cars, few of them have ever leased, and most drive a car at least two years old. This picture of wealth -- the accurate one -- isn't politically advantageous. It's hard to talk about the greedy rich guy when he drives a 2004 pickup truck and gets his clothes from ROSS.
Instead, the conventional picture of wealth as a morally questionable man in an Italian suit, driving a Ferrari onto his yacht before enjoying a cruise on the Mediterranean while smoking fine cigars lit with $100 bills -- and don't forget about the corporate jet. This is the picture of wealth from the perspective of the left, and it is very politically advantageous. If anyone deserves to be resented and hated for his excesses, it's certainly this oppressive character, no matter how fictitious he may be.
Not surprisingly, those who see wealth in terms of fairness almost never see the risk required to get there. They see only the material success. In their defense, this isn't entirely their fault. We tend to see only the winners in this game. We rarely hear about those who bet the farm and lost it all.
"Millionaires and billionaires" -- or, as the Obama administration defines them, those who make $250,000 a year -- are almost all engaged in this type of risk. In fact, it is near impossible to earn "millions and billions" on income alone. Investment is almost essential for the kind of wealth that puts someone in the vilified top 1%. The average surgeon in America earns $219,000 per year. Even if an amazing surgeon could command $500,000 a year, he couldn't save a billion dollars unless he didn't spend a penny, had nothing taken out in taxes, and started his surgical career around the time Christ was born.
Those currently enjoying a camping vacation around our public buildings think that they should get a piece of the returns on successful investments, even though they took no personal risk themselves. Notice that their sense of entitlement applies only to the risks that end successfully -- they have no interest in sharing in the losses when risks end horribly. As an economic philosophy, this is incredibly convenient.
Lost on these protesters is the reality that most of today's "millionaires and billionaires" started with a degree of wealth very close to that of the average American. Also lost is the understanding that they too have opportunities to take risks with the money they have, but it's easier to blame the rich or blame a bad economy on a refusal to take risks. Investing would also mean giving hard-earned money to a corporation, which is clearly an unacceptable proposition.
In the 25th chapter of the book of Matthew, Jesus tells a parable of three servants entrusted by their master with various amounts of talents, or wealth. To one, the master gave five, to another he gave two, and to the last man, he gave one. An unequal state of affairs, to be sure, but Jesus didn't go on to talk about the passing of the Equal Talents Redistribution Act. Instead, the story ends with the champions being those who simply did something with what they had. The man who gets the harshest rebuke is the one who didn't even try.
Here, the Bible supports the laws of economics. Wealth begets wealth. So the next time one of the left says to you that "the rich are getting richer faster," embrace your inner aikido master and say,
"Of course they are."
Chris Corrado is a 2nd assistant director in film and television in Los Angeles, California.