The Millionaire Next Door: The Surprising Secrets of America’s Wealthy
by Thomas Stanley and William Danko
272 pages, Taylor Trade Publishing, $9
On the surface, this book attacks the problem of getting wealthy in modern society, but underneath that surface it is a more potent analysis of wealth and how it can replace a native population by creating an inherent burden to membership in a wealthy society.
The authors conducted extensive surveys and interviews with people having assets of one to ten million dollars, and broke a stereotype that is common to conspicuous consumption societies: while we’re all familiar with the image of the wealthy person wallowing in luxury goods, the mundane reality is that most people who amass wealth do so by living conservative lifestyles, converting their cash into investments, relentless frugality and smart financial planning. From this they derive principles of individual wealth management, and its effect on politics.
What is the number one income-consuming category among the affluent? Income tax. The affluent in the $200,000-and-more annual realized income category account for only about 1 percent of U.S. households but pay 25 percent of the tax on personal income…The government will likely place increased pressure on the affluent, possibly by creating innovative ways to tax wealth in addition to income…It is a segment of our economy that will be under siege by the liberal politician and his friend, the tax man. (216)
Seven traits of these “millionaires next door” are identified, and then explained in the context of conventional financial planning advice. These traits ultimately boil down to two, which is (a) spending money on things that create more money and (b) not spending unnecessary money. The authors write about how these millionaires haggle over used cars, buy ordinary homes in middle-class neighborhoods, eschew luxury and branded goods and clip coupons. The statistics back up this analysis. While there are some Paris Hiltons out there, the majority of people in this country did not inherit wealth, and got it by finding a career, applying themselves, and skipping over the great “keeping up with the Joneses” consumer dream.
This book is unsettling because it shows what a house of cards the average citizen is. They are one paycheck away from financial doom, own almost nothing, but spend money like they will never need it again. They save nothing for retirement. If the economy were to hiccup, as it did recently and lost 40% of its value, such people are doomed. The millionaires this book studies on the other hand are likely to survive without major loss.
However, the content of the book moves past these straightforward observations to discuss how the wealthy handle money given to their children. In doing so, it advances a startling hypothesis: wealth destroys the native population. Parents who have middle-class or higher incomes tend to spend it on their children, both to provide good lives for them and, as they’re accustomed to in other parts of consumer society, to exert control over them. The children in turn then face the world with a lifestyle they cannot afford, and a dependency that saps them of clarity about their actual financial status, which is why they do not become as wealthy as their parents. The book hints but does not state that the controlling parents enjoy this as it preserves their control.
In short, wealth creates a kind of dependency because it raises the bar of the lifestyle one must uphold and increases the scope of power one expects over the world. The authors talk about “Economic Outpatient Care,” or the tendency of affluent parents to give to their children and how it creates a dependency. They also point out that the control that this gives over the children creates a dependency in the parents. Demographically, this creates vassal generations of the native population, which makes them less competitive and gradually replaced by newcomers.
Just before the American Revolution, most of this nation’s wealth was held by landowners. More than half the land was owned by people who either were born in England or were born in America or English parents…And yet, what percentage of the English ancestry group in America is in the millionaire category? Would you expect the English group to rank first? In fact, it ranks fourth…most American millionaires today (about 80 percent) are first-generation rich. Typically, the fortunes built by these people will be completely dissipated by the second or third generation. The American economy is a fluid one. There are many people today who are on their way to becoming wealthy. And there are many others who are spending their way out of the affluent category. (18)
Wealth slowly dissipates in the maintenance of wealth and the expectation of control it instills in those who have it. A cynical observer might point out that this book doesn’t touch at all the gulf between the ability to create wealth, and to manage it in a way that rewards something other than the individual. In addition, the list of professions in the back of the book that indicates where people are getting wealth lists a good many honorable professions, and just as many that are entirely products of what some might call a decadent consumer culture and its appetite for non-necessary convenience and luxury services.
However, this book is a vital piece of reading for those who are attempting to understand class in modern liberal democracies. First, it shows us how the path away from poverty is one paved with good life decisions and not necessarily back-breaking work, but at least some facility with a trade or specialization. Second, it shows us how populations replace themselves with those they can import who have lower expense curves and lower expectations. This seems to be a pitfall of having any kind of open borders at all, and illustrates one of the destructive aspects of capitalism.
As a piece of writing, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy offers great information in an airy package. The writers take an authoritative and judgmental tone because they feel they must in order to make their points clear; they also write in a “Mr. Rogers” style of simple declarative sentences separated by conversational comments addressed to the reader. Their book, like most modern books, would be easily expressed in 120 pages for the content it has. They have opted to pad it with repetition and airy writing, where what they should consider (since they have a vast treasure trove of research) is to instead tell more of the personal stories behind these successful people. Those are often the most interesting human analyses.
Writing from the ivory tower created by fat residuals from a 30-year publishing history, these authors also seem out of touch. They value the “traditional” American ethic of hard work but in doing so, avoid noticing any other attributes of these people. Their advice would replace a nation of individuals with a nation of shopkeepers, and praises those who remain distant from the larger questions of community, but instead focus on the accumulation of personal wealth. While it may be beyond the scope of the book to explore those territories, it is apparently within the scope of the book to tacitly approve of them.
Like many books on the edge of self-help, this book is an oversimplification masquerading as a distillation. That being said, it also offers advice that mirrors what I have seen and read from those who have become successful financially in modern society. It is also a validation of the conservative lifestyle, from stay-at-home Moms to faithful marriages and family-oriented values. As a result, it has become an essential fixture in our cultural landscape, and offers a great pathfinding tool for sensible conservatives seeking to discover a method of succeeding in a society that would otherwise obliterate them.