By Morf Morford
Tacoma Daily Index
Maybe money is just like everything else; the more you have, the more you get and the less you have the more the obligations seem to pile up to take what little you have from you.
If you were among those who thought that economic progress and opportunity were inequitably distributed, the past year or so has confirmed that with a vengeance.
There’s nothing recent or American about the cultural, economic or opportunity inequity we see so vividly on our streets, for example.
In history we have always had nobles living in luxury while peasants and serfs labored in seemingly endless generational poverty, often under oppression.
A reigning philosophy for many centuries was that we should accept, if not be thankful for, the position we were born into.
This was literally an article of faith among many.
America, in many ways, sought to be an exception to that near universal belief.
In America, or at least the America I grew up in, anyone could be a success.
Rags to riches was our homegrown model of how an economy would work.
Pursuing one’s vision, claiming one’s destiny was the highest calling in the American economy.
Each person’s determination, vision and character were the tickets to success.
We wanted to believe that anyone could make it big in America.
And they would do it on their own merits.
College admission scandals and political nepotism hits us hard because they so fully went against our core shared beliefs.
We imagined that “a few bad apples” took advantage of the system.
Until we saw this disparity on our city streets – or even on our front steps.
A drive through almost any city, and in far too many streets, proves that the disparity could not be more vivid.
Tents and tarps and homeless people clustered in the shadows of luxury condominiums and apartments fully equipped or under construction could not tell more graphically the story of our current economy.
And in the worst days of the pandemic, those of us who could afford it had food or any other basics (or not so basics) delivered to our doors by those “essential” workers who, by some indiscernible mystery were celebrated as “essential” while working for near minimum wages.
But, as always, there was a far larger story going on in the background.
The economic/opportunity “conveyor belt” kicked into over-drive during the pandemic-induced recession.
The number of homeless people exploded as did the number of billionaires.
And among people most of us would know, more of us became (at least on paper) millionaires.
If you, or anyone you know, happened to be a homeowner before 2020, your wealth, at least in terms of assets, grew dramatically – by the month.
My home, on paper at least, for a year or so was growing in value by about $10,000 a month.
Even my car, a used Toyota a little over ten years old, was suddenly worth more than I paid for it when it was new.
But if you were a renter, or in need of a car, you found yourself a victim, not a beneficiary of such a turn of events.
I know people who, for whatever reason, were long term renters and found themselves facing eviction (on short notice) not for any reason of their own, but because, in the red-hot housing market, the owner decided to sell their home – at a previously unimaginable price.
Who could blame the property owner?
A house in my neighborhood just went on the market. It is a nice home, not dramatically different or nicer than most others, on a fairly busy street; asking price $829,000.
And they’ll probably get it. Or, as is usual in this market, and in that neighborhood, a bidding war will ensue.
Once again, a massive amount of money (close to a million dollars) will go in one direction while this family I know faces either eviction or a most unwelcome submersion in a very hostile and unforgiving housing market.
This is not just my experience.
A Credit Suisse report found that the pandemic season was a boon for the rich with an estimated 5.2 million people becoming dollar millionaires in 2020 while the number of those worth at least $50 million increased by almost a quarter. (A dollar millionaire has $1 million+ in US dollars. Thus, a Brit with 720,000 pounds would be a dollar millionaire).
Much of this wealth was created by central banks that flooded financial markets with cheap money, inflating asset prices.
Stock prices, pension accounts, and of course, real estate prices sky-rocketed.
The economic tide was rising irreversibly.
On the other end, disaster, eviction and bankruptcy seem just as inevitable.
After 2020 an estimated 2.9 billion people — equivalent to 55 per cent of all adults world wide — meanwhile had less than $10,000 in net assets.
There was a recurring news story a few months ago that about half of all Americans could not deal with a $400 dollar unexpected expense.
I don’t know about you, but I have unexpected expenses, often for far more than $400, on an almost regular basis.
The study estimated there were 56.1 million dollar millionaires globally at the end of 2020, up by 5.2 million from a year earlier. About a third of the new millionaires came from the US.
Millionaires remained relatively rare in India, Indonesia and Russia; about one in a thousand adults. While in China, the rate of millionaires is about one in 200.
This compares with about 8 per cent of the population in the US and 15 per cent in Switzerland.
Credit Suisse’s methodology included housing wealth as well as investable assets.
In short, if you own a house in Tacoma, or almost anywhere really, you are almost automatically at, or at minimum, close to, millionaire status.
And if you are not a property owner, you are on the “conveyor belt” going the wrong way.
You can see more on the Credit Suisse study here: https://businessnewsanalysis.com/2021/06/22/more-than-5m-people-become-millionaires-despite-pandemic/.