The Wealthy Are Not Like You and Me--Our Terminally Stratified Society

History suggests such a stratified society cannot endure as a democracy.

When we say “The Wealthy Are Not Like You and Me,” most people will assume we’re talking about ultra-high-net-worth individuals (UHNWIs) with $30 million or more in assets or even the hyper-rich worth hundreds of millions or billionaires.

I’m not discussing the tiny class of UHNWIs here, I’m discussing the 8 million households of the top 5% and the 13 million households of the top 10% who own 70% of all assets and almost 90% of income-producing assets such as stocks, bonds, rental properties, etc. Not the uber-wealthy or hyper-wealthy, just the wealthy who own a million or two in assets not counting their primary residence.

A recent survey reports that there are 13.6 million households that have a net worth of $1 million or more (about 10% of the 132 million US households), and about 8 million US households have a net worth of $2 million or more (about 6% of households), not including the value of their primary residence. .

This top 10% collect about 50% of all income and account for about 40% of all consumption.

The topic here is the increasingly impermeable barrier between the top 5% and the bottom 95%, a matter not just of financial inequality but of sociological separation discussed by Christopher Lasch in his 1996 book The Revolt of the Elites and the Betrayal of Democracy.

I want to stipulate that I am not slamming the class of people I’m describing here. Rather, I am observing them as an anthropologist observes tribes, classes and cultures.

I recently met up with some old friends from our college days. At the time, they were students living in a cookie-cutter high-rise apartment with the usual hand-me-down furniture and concrete-block / pine boards book-shelving.

Now they live in a multi-million dollar house in an exclusive neighborhood, surrounded by $5 million McMansions recently built on small lots after the original homes were demolished. They too demolished the house inherited from parents and built a new luxe home.

What struck me as a journalist / analyst was how wealthy there are, and how all their friends are wealthy. They don’t interact with the bottom 95% of “normal” people except as their housecleaning maids, repair or delivery person, etc., as interchangeable, commoditized laborers who are effectively peasants / peons in our highly stratified neofeudal economy. They don’t actually know any “normal” people as friends or even colleagues; their friends are all wealthy people like themselves.

We might say this impermeable class divide is natural, but this overlooks three key factors.

One is that the barrier between the wealthy and the not-wealthy was once more permeable. As Lasch observed, America’s elites have separated themselves from the rest of society in exclusive enclaves and in a mobile lifestyle detached from place.

Other commentators have written about the same sociological trend of elites living in bubbles populated by other elites: in elite universities, in exclusive social groups, in exclusive neighborhoods no normal household can possibly afford, etc.

Lasch’s point was this economic / lifestyle stratification is toxic to democracy, a reality that is playing out in all sorts of ways.

Another factor is all the wealthy people I know became wealthy as a direct result of financial help from their parents. Every wealthy person I know (with a very few exceptions)–and by that I mean people who live in homes worth $750,000 or more in value and who own other substantial financial assets that generate capital gains and income–attended university funded by their parents, and whose first home purchase was enabled by help from their parents or in-laws.

I’ve also observed that this class of privileged people often tout their “bootstrapping” while neglecting to list the full measure of financial support they received from their family. Everyone wants to claim “I did it all myself” but this rings hollow once the facts of the matter come out.

This class also inherited substantial wealth when their parents passed away, or from trusts established by the parents to transfer their wealth prior to their death.

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