All Wealth Is Relative Wealth

Published in Investing on 5 April 2012

Putting money in perspective.

A version of this article initially appeared on our US site,

Grab your violins, Fools, and let me introduce you to Andrew Schiff. His is a sad story of the plight of the 1%.

Schiff, brother of investor Peter Schiff, is the director of marketing at broker-dealer Europe Pacific Capital, and earns $350,000 a year.

But in Schiff's world, it just doesn't cut it. "I feel stuck," he told Bloomberg earlier this year. "The New York that I wanted to have is still just beyond my reach." Earning over $1,000 per day doesn't cover private school tuition for his children, rent on his three-month summer vacation rental and the home of his dreams. "All I want is the stuff that I always thought, growing up, that successful parents had," Schiff said.

Alan Dlugash, a financial advisor to the wealthy, summed it up nicely in the Bloomberg article. "People who don't have money don't understand the stress."

No, they don't.

The Bloomberg article rightly set off a firestorm of criticism. Schiff's comments are appallingly out of touch. Arguing that the rest of the nation -- nearly one in six of whom are officially classified as living in poverty -- doesn't understand the financial stress of the 1% is exactly why there's outrage toward the 1%. This is especially true for those working on Wall Street. Americans don't resent success, a point underscored by the absence of outrage directed at productive billionaires like the late Steve Jobs or Mark Zuckerberg. They resent those who, as blogger Josh Brown put it, "found their success as a consequence of the damage their activities have done to our country". Wall Street, in other words.

But is there another way to think about this? While doing damage control for his remarks on Yahoo!'s Daily Ticker, Schiff complained that Bloomberg largely quoted him out of context, but stood by his point and made this comparison:

"There's always a point of relativity to make, and I think that gets lost. Yes, it's easy scoff at people like [Wall Street millionaires]. But just as Africans or people who are living off $10 a day can scoff at any American who are complaining about trying to get by on $20,000 a year, there's a comparison."

Poorly worded, but I have to say, part of me agrees here. I made a similar point in an article last year: even adjusted for purchasing power parity, any American earning over $34,000 a year is in the top 1% of wage earners in the world. As World Bank economist Branko Milanovic wrote in his book The Haves and the Have-Nots, "The poorest [5%] of Americans are better off than more than two-thirds of the world population." Furthermore, "only about three percent of the Indian population have incomes higher than the bottom (the very poorest) US percentile." That's not to belittle anyone's hardship. But it is powerful perspective.

The most common pushback I got from readers when citing the statistics was that comparing the well-being of an American to someone living in third-world poverty was apples to oranges. "I'll grant this article an ounce of credit," one reader wrote, "if we can all agree that comparing what was the finest country in the world to standards of 3rd world populations is somehow a smarter perspective. Sure, I earn more than my dog. I'm like, a bazillionaire in her mind. That's not clear thinking."

Fair enough. But people like Schiff use similar logic when comparing their well-being to other Americans. The Wall Street banker thinks it's just as apples-to-oranges to compare his income to a plumber in Detroit as the plumber in Detroit thinks it is to compare his income to a farmer in rural India. Both can look at those earning far less and say, "They have nothing in common with me". Both have a perception of what "adequate" means that seems reasonable to them, but is outlandish to someone else.

Schiff is out of touch and said some stupid things. But I think his later clarification has a gram of truth to it: all wealth, no matter how much, is relative wealth.

Do you agree?

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mull1 05 Apr 2012 , 10:28am

Absolutely agree. It reminds though of the 'live within your means' philosophy. Schiff does not seem to be able to. He could buy better or haggle on the private tuition and vacation rental, etc. His main problem is that he wants what he sees others as having, but is not prepared to spend the time to get that at a lower cost, or to forego something for a while so as to reach his goal. Unfortunately, I see a lot of people like that. Why do they want everything and they want it now? I suspect due to modern marketing.

We all earn differing amounts, but as long as we have shelter, clean water and food, then we have 'enough'. The issue comes when we want more than that.


Micklemaker 05 Apr 2012 , 10:42am

Schiff is out of touch, but most of us are until we're confronted (by choice or not) with someone who is earning far less than us. Schiff, of course, could live on less than $34,000 a year, if he had to, but being accustomed to earing vastly more, his lifestyle would be shot to pieces. Put another way, my idea of a "life-changing" amount would be either someone else's loose change or more money than they could imagine.

LastChip 05 Apr 2012 , 11:36am

The question I would ask, is why is Schiff earning $350k?

If he's that far out of touch with reality, he's not worth a fraction of that amount.

It really goes to show what morons there are in top paid jobs.

ANuvver 05 Apr 2012 , 7:16pm

Surely being "wealthy" simply means having enough choices to be free from worry? With the qualification that such freedom from worry comes with a burden of responsibility (at very least not to blow it).

Of course, what you worry about is a matter of personal choice. Sounds like Schiff chooses to worry about wealth, which is probably a rather unhealthy circular mindset.

So he doesn't live in the kind of NY he aspires to. If he feels spurned by the Hamptons set, that would reflect nastily on them or pathetically on him. I don't have any problem with aspiration, but his seemingly ingrained sense of entitlement leads me to suspect that he'd never be satisfied.

Sad really. With interesting psychological parallels to that "I'm just too beautiful for my own good" Brick woman.

wordofandy 06 Apr 2012 , 7:32am

“As my father always used to tell me, 'You see, son, there's always someone in the world worse off than you.' And I always used to think, 'So?”
― Bill Bryson, The Lost Continent: Travels in Small Town America

spinquark 06 Apr 2012 , 1:05pm

We might ask Schiff "What are you worth?" and no doubt he would reply something like "About £10M or 100 times more than a plumber in Detroit". He would show us his Rolex and his yacht in order to demonstrate his worth.

We might ask a Detroit plumber "What are you worth?" and he may reply something like "I am a father to 2 children and I help others by fixing and installing plumbing in their homes." He would show us his children and the heating system he installed in the local school.

Schiff is a very poor man.

Life is a search for happiness not wealth. My own interest in wealth is only as a vehicle for achieving independence and freedom from the control of Schiff and his like.

goodlifer 06 Apr 2012 , 4:36pm


"My own interest in wealth is only as a vehicle for achieving independence and freedom from the control of Schiff and his like."

That's my main interest too; and you're not really free without some control over how you live.
Which means you need a bit more than just enough for food, clothing and shelter..

Perhaps that's part of the reason why poor people in rich countries aren't as happy as some people think they should be when it's explained to them they're so much better off than poor people in poor countries.

supasap 09 Apr 2012 , 12:47pm

I think that the frustration of being lowest in USA is greater than being on benefits I. Uk or Scandinavia ..... The pressure to buy shit is so much higher over there

curedum 09 Apr 2012 , 2:56pm

It's not for nothing that the early Church described avarice - not success - as a "mortal sin", and in Buddhism greed is one of the "Three Fires" which prevent people gaining Enlightenment.

Too much money, too little insight.

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