There was a time when being rich was something to brag about. The idea was that if you worked hard and saved wisely, eventually you’d be successful and live out the American dream — who wouldn’t brag about that? But times have changed. As the country struggled through recession, wealth stopped being something you told people about. The 1% may be richer than ever, but they’d rather no one knew about it.
A poll from American Express Publishing and Harrison Group has determined that those at the top of the financial ladder would rather keep their success quiet. 28 percent of those polled admitted they were worried about "being scorned for being in the top part of the economy" — a dramatic increase from statistics taken a few months earlier, when only 24 percent of subjects agreed with that statement.
38 percent of subjects agreed that they "feel guilty purchasing luxury goods and services," a number that has nearly doubled in a year's time. And while 33 percent of those asked still “like it when others recognize me as wealthy,” that number is on a distinct decline. 53 percent of those polled were proud of their fortune as recently as 2010.
You might be rolling your eyes at these numbers (Feeling bad about being rich? What a great problem to have!), but these sort of sentiments can have serious repercussions on the economy. The guilt of being fabulously rich makes the wealthy reluctant to engage in one of the most time-honored traditions of the financially gifted — shopping. Reports show that during the recession and subsequent financial fallout, the 1 percenters on average made more money. But instead of spreading the wealth around through retail, the rich have been saving, while the rest of us are losing.
Reports show that the rich save on average 37 percent of every dollar, a frankly astonishing amount of money. This is three times more than what they were saving in 2007, before the recession became a factor. And while it’s always great to put away money for the future, the wealthy’s habit of putting away vast sums of money is just adding stress to an already strained economy.
“It’s a real problem,” the Center for American Progress’ Michael Lindon told The Huffington Post, “to the extent that more and more income is going to people at the top and more of that income is not going to places that are productive.” Factor in this sobering statistic: the incomes of the top 1 percent have increased by 275 percent; for the same period of time, those at the bottom of the remaining 99 percent only saw their incomes increase by 20 percent.
This sort of economic inequality could have dire consequences to our slowly recovering economy. Not only does it lend itself to economic instability (which we certainly don’t need right now), it can actually worsen economic mobility and make it harder for those at the bottom to improve their financial situation. Basically, the rich hoarding their wealth is a bad idea.
So what’s the solution? Some have suggested taxing the rich, but others argue that such a move will only make the wealthy move their funds elsewhere to avoid paying. It seems that the easiest answer would be for the rich to start spending again. Investing and donating to charity are guilt-free options for the wealthy that would help the economy, giving a boost to lower-income earners. But part of the problem is that the wealthy are viewing themselves as the victims in this scenario, hated and maligned by the American public. Maybe the rich need to reevaluate why people are angry with them. It’s not their wealth that’s making people bitter — it’s what they’re doing with it (or not doing with it) that really counts.
[Pic via Flickr - Swiss James]