My previous post on the ghetto lottery and Freddie Gray got me to thinking about inequality in our society, and effective methods of eliminating it. Unlike what most people think about conservatives (e.g. that we’re all rich assholes in the pay of world capitalism), I think there is too much inequality in America. Hell, at my own company, the CEO makes over 200 times my own salary, and just announced yesterday that layoffs were in the works (thankfully, they shouldn’t affect my division). There are a variety of reasons for this inequality: globalization, offshoring to foreign countries, abuse of the H1-B system, and illegal immigration.
Often capitalism is blamed. After watching Milton Friedman’s excellent old television program, Free to Choose, I do not believe capitalism to be the problem – in fact more capitalism (and not less of it) would help to diminish the income and wealth gaps that are manifest in our country. Due to the colored tint of inequality, often white racism is blamed (in fact, in the Age of Obama, it appears to be the reason for Everything Bad in the World Today). It is a waste of time to try and refute this contention, as the people that believe it have already made their minds up despite available evidence and wouldn’t read a race-realist blog such as this one.
The Underclass and Personal Finances
The problem with inequality, is that the solutions are a catch-22.
- Set aside at least one-tenth of your earnings for savings and investment purposes.
- Do not rush into foolish investments with people who do not have knowledge of the particular field in which they wish to make money. Only deal with experienced, knowledgeable people that know how to turn a profit.
- Guard your treasure from loss. In our day and age, this means making sure you are adequately insured, and that you are only dealing in sound investments that will probably make money. As a rule of thumb, I would be very cautious of investments that promise beyond a 15% annual return.
- Own your own home. I dispute this one as an absolute rule, since it depends on the housing market, and renting avoids much of the hassle of the upkeep of a home. Water heater busted? It’s the landlord’s problem. Own your own home? Now it’s your problem. But if you can afford to do it, and your job situation is reasonably stable, then go for it.
- Ensure a future income – plan for your own retirement. No one else will do it for you.
- Increase your ability to earn by increasing the quality of your skills and your education level.
Following these rules… anyone will eventually become wealthy. And should the compounding stretch across generations, an entire family can be supported by the dividends and interest produced from the amassed capital. Even the underclass, with its meager earnings from fast food restaurants and other low-income jobs, can theoretically accumulate decent wealth simply by saving and investing. At $10 an hour, that comes to about $1600 a month. Assume an 18 year old kid starts working at McDonald’s for that wage. A $160/month contribution to a retirement account, accruing 7% interest, and 47 years of accumulation, will eventually amount to $652,167.36, assuming no pay raises. Such a large sum of money could fund a comfortable retirement, and then the principal could be passed on to the bearer’s own children in a trust, preventing them from having to start off at square-one like their parents did. Though I have not yet read this book, Family Fortunes by Will and Bill Bonner supposedly goes into greater detail on sustainable family wealth management.
Why then isn’t everyone wealthy?
This is a question, while seemingly child-like to ask, really bugs and puzzles me. Following the steps above, anyone will eventually become wealthy. The problem is that, the steps outlined above by George Clason all require diligence, hard work, persistence, planning, and…. intelligence. As I (and many others) have discussed here, intelligence is simply a quality that the underclass does not possess. The underclasses are composed of people that are utterly bereft of future time-orientation or the capacity for long-range planning among other poor ideas and decisions:
- They prefer the dole to honest labor.
- School is a useless chore to be shirked.
- Drugs are an acceptable form of escape.
- Birth control interferes with pleasure, so birth control has to go.
- Children are an obnoxious byproduct of fun sexual misadventures.
- Laws and rules are for suckers, so “Fuck the police.”
These are the attitudes of the low-IQ, impoverished underclass. People who possess such attitudes can never hope to become wealthy; they are slaves to their appetites, and stuck wandering blindly through the fog of an intellectual, spiritual, and economic night.
The Habits of the Underclass and Wealth Destruction
The combination of low IQ and “poverty attitude” leads the underclass to engage in activities that systematically destroy their potential to obtain income and accumulate wealth, flouting the rules listed above. While I can’t possibly list every poor choice that members of the underclass make, I can think of two off hand: for young males, its going to prison, and for females, its having children too early in life.
Prison is especially damaging to the investment potential of young males. Assume that same 18 year old kid does 5 years in prison, and then goes to work for McDonald’s: his accumulated wealth is now only $456,864.45, a nearly $200,000 difference. Those 5 years in prison cost him dearly.
The underclass female that gives birth at the age of 15 probably is so overwhelmed with the costs of child care, that she cannot possibly set aside even 10% of her income (assuming she has an income) for retirement purposes. Furthermore, the type of female that gives birth at age 15 is not the sort of person that plans for retirement anyways. This explains why the median wealth of underclass, single black women amounts to a mere $5 – not enough to buy an Extra Value Meal at McDonald’s.
Other Forms of Wealth Destruction: Low-Quality, Depreciating Assets
Another problem among the underclass, is their massive misspending on low-quality, rapidly-depreciating assets. Young underclass males will spend $200 each year on Air Jordans (which cost $16 to make using Chinese slave labor and advanced manufacturing technology), while ignoring the possibility of investing. Investing that same money after 40 years amounts to nearly $40,000. Jewelry is another misspending I see, especially among young black males. Every day at the mall in Tampa several years ago, who would I see fooling around with the Arabs at the jewelry kiosk? Young black males, who have virtually no earnings potentials but somehow can cough up hundreds of dollars for gold chains, gold teeth, and other silly stuff. Such jewelry is likely to simply get stolen or get the owner killed over, just like the Jordans.
Black females are hardly immune to criticism, as they are some of the biggest misspenders (and often control the money in black households). One of the biggest wealth drains among black Americans is black women’s obsessive spending on hair and nail care.
Such massive spending could fund the flotation of several major corporations, or outright buy several small countries. One can only dare to dream the heights to which black America could lift itself if that money was put on the capital markets instead of into… low-quality depreciating assets.
The Bottom Line
The bottom financial line, is that we are unlikely to see an end to poverty in our lifetime, or anyone’s lifetime. The underclass is composed of people, who by virtue of being on the far left-side of The Bell Curve, are incapable of accumulating any significant wealth. Such people are destined to be blind slaves to their immediate appetites and creditors for the entirety of their lives, when they are not confined to a prison cell or chain gang. While there is no cure, there are some ways we can contain the bleeding, such as shutting down the illegal immigration and H1B visa rackets. A President using his bully pulpit to engage African-Americans on how to better spend their money would be a large step in the right direction – something that Barack Obama failed to effectively do in his 8 years of presidency. However, old habits die hard, and even a “fireside chat” with the President is unlikely to have much long-term impact.