Question: How has people’s wealth changed?
TEXT OF INTERVIEW
TESS VIGELAND: And some final thoughts now from Robert Frank and Ted Klontz. The Bush tax cuts were enacted in 2001 and 2003, years before the onset of the Great Recession.
Since then just about everyone’s notions of wealth have been upended. But to what extent?
Ted Klontz starts us off.
TED KLONTZ: The more money you have, the more quickly you understand that it can go away in one afternoon on the stock market. And so that’s another huge insecurity that leaves the folks that I work with a lot of anxiety: “Look, it’s only in a computer that I got this, if something happens I could be penniless tomorrow.” And that thinking that they can get security if they have more, works. I know of a lady who just bought 350 pounds worth of gold and had it delivered to her house, and the people go, “What am I supposed to do with this?”
ROBERT FRANK: Wealth used to be about comfort and stability, first and foremost; that you didn’t have to worry about money. What’s changed about wealth creation and investing is that nothing is secure anymore. As we learned, most millionaires in America lost about 30 percent of their fortune during this great crisis and yes, some of them have made a portion of that back, but what the lesson was is that wealth is no longer about stability. And I think going forward we are going to have a much more anxious class of wealth and also maybe the rest of us saying, ‘well stability is something I can get from other things in life rather than just wealth.’
TESS VIGELAND: Yeah, but losing 30 percent off multi-millions, someone who lost 30 percent off a $100,000, is going to look at that and say, ‘oh gee too bad.’ I really wonder, when you look at the perception of folks who are below the $250,000 mark and they look at folks who do make that, who are complaining and saying I’m not rich, I’m actually middle-class. Talk to me about what that means for people who are making $40,000, $50,000, $60,000.
FRANK: Well, what’s happened in the economy the wealthy had become more removed from the rest of the world and the rest of the country, both financially, psychologically and culturally. So you had this huge disconnect between the world of the wealthy and the rest of America, where the world of the wealthy compared to the rest of the country is wealthy but they don’t feel it, they don’t feel they are living it or that they ever are going to get there, because again, their whole economics is different from the rest of the country’s.
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