100K is alot of money but for someone who has a largw family its not what I would call wealthy by any means but those fortunate enough to make 250K should (without being forced) make contributions to society for having looked mercifully on them.Lets face despite alll the vanity that comes with success anyone rational and wise knows that alot of factors that contributed to that success fell into place not entirely through effort or diligence but chance. What family you were born into was not your choice ,neither your personality nor the neighborhoods kids or siblings who affected you in the way they did wether it inspired a possitive response to negative remarks or a drive to succeed through moral support . The fact that that person who would have affected your life negatively was not there when you were at an allltime low (possibly introducing you to drugs at time when you were most vulnerable) etc....etc....etc....I hope there is enough humility in ppl to realise what COULDVE went wrong and didn't. And feel fortunate if this doesnt insoire a desire to help others in the country you reside in that afforded you such freedomsand liberties then you are unpatriotic.As for those large business CEO's who would take their business overseas to avoid taxes that would help the poor which make up about 80% of the populous.You are traitors and deserve to be hung or at the least excommunicated.
How the Mighty Have Fallen
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It's the same story with consumption. In late 2008, spending declined at about a 4 percent annual rate, and, in the first quarter of this year, rose slightly. But Danziger's surveys show steeper cutbacks at the top. From 2007 to 2008, consumers with incomes from $150,000 to $249,000 reduced spending by about 8 percent, while those above $250,000 cut almost 15 percent. Similarly, charitable giving decreased to $308 billion in 2008, a drop of 5.7 percent after adjustment for inflation, says the Giving USA Foundation, a nonprofit group. Donations may fall further this year. The stock market is a strong predictor of giving. A 100-point rise in the S&P 500 stock index increases charitable contributions by $1.7 billion, says the Center on Philanthropy at Indiana University.
Not all charities have suffered. "Our funding is up 42 percent over last year," says Ross Fraser of Feeding America, an umbrella group that channels cash and groceries to 206 food banks around the country. "Charities such as ours do well when times are hard. If you have to choose between giving to the ballet and feeding a hungry child, who's going to win?" But that compounds the pressure on other nonprofits: colleges, hospitals, and environmental groups.
It's probably true that being rich is more a state of mind than an explicit level of income or wealth. It's feeling of having enough money so that money is no longer a worry. For many, that sense of security is gone. Michael Silverstein of the Boston Consulting Group reckons there are about 100,000 households with a net worth—counting their homes, stocks, bonds, and businesses—of at least $20 million. Even at these rarefied levels, he thinks, many are rattled. "They've seen up to a 30 to 40 percent drop in their net worth from peak to trough. Some have friends at blue-chip companies like General Electric, AIG, or Citigroup who have lost fortunes invested in company stock," he says.
What's unclear is whether the trauma will permanently change behavior. Silverstein is skeptical. "The nice thing about Americans is that they have short-term memories," he says. "We'll get out of this—and then the rich will realize they're rich again and start to spend." But Danziger, the marketing researcher, thinks the shopping culture has taken heavy hits. Americans have "been on an extended buying spree for the past 20 years. They've got stuff—and they don't need a lot of it," she says. There's a growing realization "that material wealth doesn't make people happy." Striving to replenish their savings, Americans—even the rich—will skimp on spending.
One way or another, it's doubtful that trickle-down economics will soon regain the power of recent decades, when exploding stock and real-estate values and rising salaries were compounded by George W. Bush's favorable tax changes. But cheering at its eclipse may be premature and misguided. The contradiction is that many of the large gains at the top that are routinely deplored also provide the economic fuel for desired spending at the bottom. If the rich—however defined—remain stuck in neutral, the overall economy may not do much better.
With Baobao Zhang in Washington
© 2009
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