Self-Pitying Wealthy Poor: The Fancy-School Factor - James Fallows

Self-Pitying Wealthy Poor: The Fancy-School Factor - James Fallows - National - The Atlantic.

I thought a couple of the observations in this column quite useful, both from Fallows and from others he chooses to quote.   It comes off the brouhaha that started a few weeks ago when a University of Chicago Law School professor put in his blog a whine about how even with his and his (MD) wife's joint income of $400,000 or so, he had little disposable income.  The response to his blog post was strong enough that he has removed the post, but it remains, at least for a while, available via google's cache. (Fallows and Brad DeLong both link to it.)

I particularly liked this one:

(1) >>If no one else says this, or no one says it more succinctly, could you please incorporate into the discussion the implicit idea that extends across pretty much all of the posts? It basically goes like this: "once professional success is achieved, life isn't supposed to be hard or uncertain anymore". It's there in the original post and it's there in the backdoor-trickle-down economics of the east-coast lawyer. Somewhere along the last 50 years our "meritocracy" started to incorporate the idea that once you achieved a certain amount in life, you wouldn't have to try anymore.

This idea is, from my point of view (as a 30-something professional who anticipates that retirement will become an antiquated concept by the time I reach such an age) grandfather to the current state of affairs in which high school and college students expect grades to symbolize the extent of their effort rather than the quality of their work. As Clint Eastwood said snarled in "Unforgiven": "deserve's got nothing to do with it". How about we agree on this: if you need to ask yourself if you are rich (or better yet mount some kind of argument about how you aren't rich), then you probably are in fact rich.<<

and this -- emphasis mine:

(2) >>I wonder if part of the issue stems from the fact that there seems to be an implicit promise that attending one of these top schools will inevitably make you rich.  I went to Stanford, and from the very beginning we were reminded of all the luminaries who also hold Stanford degrees (or at least attended classes).  Larry Page came and gave a speech during freshman orientation, and Phil Knight and Jerry Yang both donated buildings while I was there.  Part of the selling point of these universities is the idea that all of these great, successful, rich people went to this school, and it impacted them so profoundly that they have donated millions of dollars for its improvement.  Even if you are making $250,000 or $500,000, it really doesn't seem like all that much when compared to what the people who are getting their names on the buildings make.  Presumably working at a university makes this even more evident.

And in the end, you still have the same degree as these people who are actually rich.  Who's to say you won't someday get there yourself?  Why would you want to punish your future self with higher taxes?<<

and this, which speaks to payroll taxes for ordinary people vs an increase in the top bracket for the highly-compensated (though it doesn't quite note that since the UChi professor's wife is also well-paid, they are paying a bit more in payroll taxes):

(3) >>I wanted to weigh in on your latest, the two defenders who cited the costs of private education.  I'd just like to note that these $250,000 + level professionals are getting a substantial break on their social security taxes. Every dollar of my sub-$100,000 salary is taxed at 6.2% paid by me, over and above state and federal income taxes, and 6.2% paid by my employer. In contrast, the majority of these poor, pitiable professionals' salaries are exempt from the tax. The ceiling this year is $106,800, so the rest of their salary is free and clear of this 6.2% coming out of their paycheck. To boot, the proposal is to raise their taxes on the amount exceeding $250,000, so taxwise, they have it easy, compared to the rest of us.

4% of the amount exceeding 2 times $106,800 is a lot less than 6.2% of the first $106,800 or $213,600, until one reaches rather high levels.

Those who have spent much time browsing this blog will know that I'm not enthusiastic about taxes on wages.  They're a poor, blunt instrument for collecting what we ought to be collecting before we start taxing wages.  But to the extent that we do utilize taxes on wages, those taxes ought to be highly progressive, and ought not to be levied on the first dollars of wages.

I have a sense that a large percentage of Americans have high hopes -- and even high expectations -- of eventually, somehow, becoming very wealthy, and are willing to accept special privileges for high-income people, and/or wealthy people, because they'd like such rules to apply to them in the (in reality highly unlikely) chance that they might be so awesomely lucky.  

Those accepted at our highly selective colleges have confirmation of their specialness, and are thus likely, as the second comment above, to think it in their likely best interests to protect privilege for the wealthy.

And no wonder those who profess economics or political science at such colleges and universities are unlikely to include favorably in their courses the ideas of heterodox economists or philosophers who seek merely to create a level playing field.  THAT is not what their students seek!  They seek to get a good bead on the angle of the slant, and how best to exploit it.  And of course, so do their parents, and the agencies that lend those students the funds to attend.

You might appreciate "The Corruption of Economics"  to understand this further.   But recognize that most instruct-ors and profess-ors of economics don't even know what they're omitting from their teaching.  How could they?  It was in their texts and maybe even their reading lists, but their attention was directed in other directions.  How many generations of such teaching does it take to extinguish an idea from the vast majority of universities?  If it doesn't support the interests of the major donors, and something has to be omitted, what would you omit?