The middle-class ripoff

The big “middle class” rip-off: How a short sale taught me rich people’s ethics –

There’s some good insight in this article. There’s also a little bit of baby-with-bathwater. The author gives a passing, obligatory nod to  “still promoting innovation and competition”, but seems to think that the idea of a limited liability business is a bad one. Here’s a clue: there is no way I’d be in business for myself, “innovating” new formats of programmer education if incorporation wasn’t possible. The ability to protect your family from total destitution if your business idea goes belly-up is fundamental to innovation and competition, because otherwise nobody would dare to start a new business.

I agree 100% with the author’s zeroing-in on “get rich quick” schemes. The dream of “sudden wealth someday” hobbles people from attaining a sustainable lifestyle almost as much as the attitude of “everyone else lives on credit and loans so it must be OK”.

But ultimately the author’s prescription, a vague hand-wave about introspection as a society, is disappointing. Yes, as a matter of policy we need to stop despising the poor, and stop letting the wealthy play by a different set of rules. But I think part of that is empowering the poor and the middle class to play by the same set of rules the rich do. And a good start is to encourage people to start their own businesses. There’s nothing wrong with building wealth while insulating your family from disaster, which is what an incorporated business lets you do. There’s nothing wrong with risking the bank’s money instead of your own, which is what business loans are all about. Hell that’s why we have banks.

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  1. The very first step in encouraging non-rich people to start their own businesses is to provide health care for everyone, not tied to employers. This benefits not only the entrepreneurs but their potential employees, since providing health insurance for employees is a major cost for a small business. As it stands, our family needs to have a corporate employee (me) to bring in the health insurance or we can’t make ends meet. The Affordable Care Act brought down costs significantly, but for us that just means the cost of health insurance is now under $1,000 a month – still way out of reach if I were to stay home as long as Nick is working for startups or doing independent consulting.

    1. I won’t argue with that. Even if you can manage to start a business with no capital risk, the risk of losing health insurance is still a huge barrier to entry.

      In your particular case I do wonder if Nick is valuing himself highly enough in the market. I’ve been buying health insurance for more than $1000/mo for years. But then, your expenses are probably different than ours.

      Avdi Grimm

  2. I agree with everything you said. I read the article and what bugged me was the almost implicit sense of “the way to succeed is to be a douche just like the Rich!” <–which is not how I see it. Let's make the rules fair–for all–but then let people figure it out.

    1. Yeah. I feel like some of the doucheyness he’s describing isn’t really that douchey – IF it’s evenly distributed. Short selling and soaking a bank for the difference when the market crashes? That’s what banks are *for*: buying risk, and absorbing a percentage of failures associated with that risk.

      Avdi Grimm

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