Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays.
Sometimes you just get a feeling something is wrong. You can’t put your finger on it, but you know, you just know, something is not right. Maybe you see something and wonder if you’re seeing it right. Then someone else mentions the same thing, confirming what you suspected. Then you read about in a news report or a blog post. And gradually it becomes “common knowledge.”
I’m talking about the growing gulf between the haves and the have-nots. Economists call it the inequality of income distribution; sociologists call it the precursor to social upheaval. We just call it unfair. The smart ones among us just try to learn what we can in order to get on the right side of the growing gulf.
Is It Real?
If there’s something we’ve all learned, it’s that you can’t go by what the media tell you. Just last year, everyone was on the ledge over the “fiscal cliff,” ready to jump. Now, however, you’re surprised someone even remembers “fiscal cliff.” Next came the scare over sequestration. That, too, came and went. Then it was the shutdown and debt ceiling. Media hype, we learn, doesn’t always translate into real change in our daily lives.
So what about this income inequality thing, then? Unlike the “crisis du jour” events above, this one is, if anything, under-hyped — because it is very real. Some smart people, just about a hundred years ago, figured out a way to measure it. It has a name, the GINI ratio or coefficient.
What’s more telling is this is something our illustrious Federal Reserve has been tracking for quite a while now:
A higher number means more inequality. The graph confirms what most of us feel to be true from casual observation: the years after World War II saw a rising in general prosperity as the GINI ratio gradually fell.
However, it started rising around 1968 and hasn’t stopped. There was a temporary dip as the housing boom created the illusion of prosperity for the middle class; but as the recession ended, it is clearly evident that it has been favoring the haves, as the GINI ratio breaks new records every year.
What Do You Do?
The natural, yea easy, thing to do is sit back with a cold one before dinner and figure out whom to blame. Democrats blame the Republicans, who in turn love to blame everything on the incumbent administration. That makes us feel good, doesn’t it? We know the solution — if only the dumb bozos in Washington had us on their speed dial, we’d solve all these prickly problems in a heartbeat.
However, this has been going on for 40 years, through all permutations of who controls each house of Congress and the White House, so there’s no single group, party, or administration to blame.
Here is the reality: No matter how hard we try to assign the blame, none of that helps you improve your position. Instead of figuring out who is to blame, wouldn’t it pay you much better to figure out how to be on the right side of this divide, if there is one and it is widening?
So what should you do?
Get A Degree
This article has a graph which clearly shows that having a degree, while not guaranteeing success, improves your odds dramatically. I know it’s a hot topic, guaranteed to heat up the air temperature, but it is possible to get a degree affordably. (It’s a topic for a post all its own, but if you look past the hype about the burgeoning student debt, you’ll see way more than half of that comes from the publicly owned online universities who have entire departments aggressively hard-selling students to get into their programs with student loans.)
Bottom line: it may not be easy, cheap or convenient; but if you want to be on the right side of that gulf, here’s one of the undisputed keys to get there.
Save and Invest
There’s no question that tax policy has favored the haves. In particular, it favors investing. Nothing puts you on the right side of the widening gulf as having investments, whether they be in bonds, stocks or real estate. For ordinary people to get there, saving and earning extra income are petty much the only realistic ways. Is that convenient? No, it isn’t. But it has come to “pick your poison” — either you’re a have-not, or you pay the price to not be one. Either way, there’s something to be unhappy about, but only the latter option has a positive side to it.
Say what? Well, that was my first reaction, at least. But this article on CNBC last weekend got my attention. Christine Schwartz, professor at the Univesity of Wisconsin says, “There’s the economic reality that people … often feel like they need two earners in the family to meet a given standard of living.”
A further reading of the article reveals that this conclusion may be more due to higher education, but it’s still an interesting read and food for thought.
What Do You Think?
How are you improving your odds of being on the right side of the widening inequality gap in America? Do you think you need to be on the right side of that gap? Is there anything else we all should be doing to get on the right side of the gap?
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (693)
- Dish Network Customer Service SUCKS (537)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (330)
- How Much Should You Pay a Babysitter? (292)
- Ethanol Blended Gas = Lower Mileage? (273)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (237)
- Will Mac OS X Lion Kill Quicken 2007? (191)