The Conversation

Readers respond to our May 2016 cover story.

America’s Financial Impotence

In the May cover story, Neal Gabler confessed “My Secret Shame”: He’s among the nearly half of Americans who would have trouble finding $400 in an emergency.

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The author has no reason to feel shame, nor does anyone else who finds themselves in similar circumstances financially. The badge of shame should be worn by the ruling class, whose owners and managers profit greatly from their low-wage workers. Indeed, it takes a large number of working poor to keep one person wealthy. Let’s face it. People are either grossly overpaid and regarded as successful, or grossly underpaid and regarded as lazy or losers. And then there are the financiers who profit from the debt people carry their entire lives, paying out huge sums at usurious interest rates. The system is more rigged than ever, and the new gilded class seems impervious to the price society pays for its extreme wealth.

Kelly Aanrud
Amherst Junction, Wis.

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The Atlantic published this article without addressing the most glaring of Mr. Gabler’s inaccuracies—his declaration that “the erosion of wages is something over which none of us has any control.”

Let us consider that we live in a representative democracy that has, for decades, consistently voted to curtail the bargaining power of organized labor. It should come as no surprise that the real income of nearly everyone who works for a living has declined with labor’s waning strength. Similarly, Americans have rejected single-payer health care. We have refused to use public funds to make higher education affordable. We live with the results of our votes as well as the results of our personal choices.

Unfortunately, many of us are in very similar situations to Mr. Gabler’s—but let us admit that we are doing this to ourselves as a nation as much as we are doing it to ourselves as individuals.

Paul Grego
San Francisco, Calif.

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“Financial impotence is an equal-opportunity malady, striking across every demo-graphic divide,” writes Neal Gabler …

It might be true that this can happen to anyone, but for minorities, it’s far, far more likely. It’s also true that in the event of a downturn—personal or marketwide—they fall harder, faster. They have fewer resources for digging themselves out of a hole, and they are unlikely to know anyone who is much better off who could spot them the needed cash …

Blacks and Hispanics continue to struggle economically. In 2013, the median white household had wealth that totaled more than $140,000; Hispanics had only about $14,000. And black Americans had $11,000 …

At the start of 2016, the homeownership rate for white Americans was 72 percent. For Hispanics it was 45 percent. For blacks it was 42 percent. Even for those minorities who are able to buy homes, the benefits are more muted than they are for white Americans. Why? Blacks and Hispanics are more likely to live in low-income neighborhoods, which means that their homes don’t appreciate as much as they would if they were somewhere else. But when these families do move to mostly white neighborhoods, they nevertheless tend to suffer. In fact, research has shown that once more than 10 percent of a neighborhood becomes populated by black residents, property values begin to decline, largely in response to their presence.

A prime example of this inequality is the aftermath of the housing crisis. While whites were more likely to own homes, they were also more likely to own other assets. For black homeowners, however, houses accounted for a larger portion of their wealth. That means the recession gutted much of the black wealth there was.

Gillian B. White
Excerpt from a TheAtlantic.com article

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Everyone knows that the U.S. middle class is in serious trouble; however, this article does not do the problem justice, because it is mostly about this one author who lives in the Hamptons, has two children, sent them to private schools and to elite schools of higher learning, and paid for his youngest daughter’s wedding to the point of using up his retirement savings. He complains about how tight his spending money is, despite the fact that, for the most part, his parents paid for his children’s education, and also despite the fact that he is well educated and has a decent income, a good profession, and many awards to his name. He thinks he deserves better.

I would sympathize, except his family is not living the lifestyle of the American middle class. They are living the lifestyle of the rich, and that lifestyle costs a lot of money. Is it any wonder that they are strapped for cash? Compare them with the real middle class, laboring in jobs that are being outsourced abroad or offered to others who will do them for much less. Compare them with those people who cannot afford to send their children to elite schools, so they must aspire only to community colleges or, if they’re lucky, to state colleges, the budgets for which are being reduced more and more. Compare them with those families who are either living in very modest homes or unable to even buy a home in the first place.

This article gives the impression that the American middle class is strapped because people cannot live the lifestyle of the rich. Nobody is entitled to that—probably not even the rich. Please, Mr. Gabler, stop whining. You give the middle class a bad name.

Ana Martinez Marshall
Bellevue, Wash.

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The shame and silence surrounding money in our culture is intense; the need to keep up appearances almost as much so. In addition, the plight of the middle-age journalist is all too real … But Gabler’s particular circumstances demonstrate the blindness to class at the heart of this particular personal-finance genre, even if he protests that he’s aware of it. It’s one thing to be broke; it’s another to be broke while apparently writing from a home that could probably sell for six figures.

Helaine Olen
Excerpt from a Slate article

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Though my 2015 tax returns record my income as about $24,000, I do not find myself in Gabler’s predicament; I could easily come up with $400 for an emergency. I attribute this to my consumption habits and lifestyle choices. My needs are simple and my tolerance for a lack of luxury high, so my monthly and annual expenses are quite low—as is my carbon footprint (the less one consumes, the smaller the footprint).

As a Peace Corps volunteer in Nepal for two years, I lived a very simple lifestyle: I carried my water from the spring; I cooked my food over a wood fire on a clay stove that I’d built myself; I had no electricity or plumbing; and, of course, I walked everywhere.

I believe that we Americans could all live on less—much less. When I look around my town, I see new SUVs everywhere! I don’t know what they cost, because I drive a 20-year-old VW diesel that I own outright, but I imagine that both the payments to the bank and the comprehensive insurance coverage—as well as expensive repairs—would break my bank account.

My dad once told me that when he’s about to buy something, he says to himself: Do I want it? Yes. Do I need it? No. And then he leaves the store without it. If we all asked ourselves that question, more of us might be able to come up with $400.

Scott Durkee
Vashon Island, Wash.

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Americans’ love for consumption overwhelms any fear of financial insecurity and its attendant risks.

I was raised by parents who lived through the Depression, the First World War, and the Second World War. I developed a deep understanding that I had to work hard and save money for difficult times. I also developed an appreciation for the joy that one gets from those things in life that are not expensive but are deeply gratifying, such as a good book or a warm conversation with a good friend.

So here I am, 67 years old, married, with two boys who from the get-go knew they had to work and be financially self-sustaining (I always told them that they could come home to live with us at any time—as long as they had a job). They seem to be happy and well adjusted. And I don’t worry about finances, because I worked hard and saved money.

John Allen
Sharon, Conn.

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The primary reason people have so much trouble saving is that they can always find a reason to justify not doing so. The details of what they’re spending on may change, but the justifications have a curiously similar sound to them …

Frequently … that reason is (a) all I want is the bare-minimum decent life enjoyed by every other member of my social class and (b) children. The former justification is exacerbated by the fact that we are so furtive and shame-ridden about our finances, so people often don’t realize how often our neighbors’ “bare-minimum decent life” is hired on credit. The latter is exacerbated by the fact that it’s hard not to want to give the best to your kids …

People are locked in a status arms race that somehow often comes to focus on the happiness or safety of their kids.

I’m not deriding those folks, only pointing out the behavior. Because the only people who can stop the self-bankrupting arms race are the people participating in it. And the only way they can do so is to start deliberately sitting out the competition. Untold generations of human beings have lived to adulthood without the blessings of a brand-new minivan, a travel-soccer trophy, or a Harvard education. Modern children raised without them will probably also be fine.

Unfortunately, I’m not sure how much good it does to point this out. The truth is that your kids will care about how nice your car is, about whether they can be on travel hockey with their friends, about whether they can go to fancy schools like their friends. And if you were raised in a social class that regards any of these things as the basics of a decent life, you will feel horrible about denying them. It’s the mother of all collective-action problems: If all the parents agreed at once to stop this mad arms race, everyone could breathe easy and have a more secure life. But as long as some of the parents provide those things, everyone else’s kids will want them too … and their parents will long to deliver.

Megan McArdle
Excerpt from a Bloomberg View article

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It’s all too clear why parents will spend their last dollar (and their last borrowed dollar) on their kids’ education: In a society with dramatic income inequality and dramatic educational inequality, the cost of missing out on the best society has to offer (or, really, at the individual scale, the best any person can afford) is unfathomable. So parents spend at the brink of what they can afford. By contrast, nonparents are far more likely to actually build up savings …

Gabler writes, “We resolved to sacrifice our own comforts to give our daughters theirs.” Considering the stakes, this is not a mistake (despite what many commenters have insisted) but a rational response to the unequal distribution of America’s good schools and its prosperity more generally. And there’s reason to think this may yet pay off for Gabler. True, he has no savings. True, he lives very meagerly. But he has two very well-educated and successful daughters. They are, in a sense, his retirement plan: Most likely, they will be in a position to care for him and his wife in their later years. We should all be so lucky.

Rebecca J. Rosen
Excerpt from a TheAtlantic.com article

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The Big Question: What is history’s most influential feud?

(On TheAtlantic.com, reader’s answered June’s Big Question and voted on one another’s responses. Here are the top vote-getters.)

5. The feud between Imam Ali and the Prophet Muhammad’s other companions, which led to the current division between Shia and Sunni Muslims.

— Lama Hassoun Ayoub

4. The Neanderthals and the Homo sapiens some 40,000 years ago.

— Patrick Driscoll

3. Between spirit and matter, as in Plato.

— Donald Wigal

2. The conflict between Islam and Western civilization.

— Holmes Brannon

1. The one that began in 1945, after the death of FDR, between the United States and the Soviet Union, which continues today between the U.S. and Russia.

— Jeff Brown

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Correction

June’s “Cover to Cover” review of Olja Savičević’s Adios, Cowboy misidentified the book’s publisher. McSweeney’s published the book.

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