How America Made Itself a Poor Country

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Americans queue for dole

By Umair Haque

Let me share something with you that you should know. Americans are stupid when it comes to money. Really, really, painfully stupid. I know they think they’re not. But you can’t have it both ways. Americans can’t be smart about money, and America also be a poor country now. It’s either/or, really, and no, there’s no grad-school, binary-busting way out of that dilemma.

I’m going to teach you how stupid Americans really are about money. Maybe I’ll even make your jaw drop a little, who knows. Either way, by the end of this essay, you’re going to have learned a few things you didn’t know, and you’re going to hate me more than you already do. Sigh. I live this every day — when some poor bastard like me comes along and tries to teach or give Americans something that might actually benefit them, something they need desperately, like money, they end up hating that guy, because in the American mind, nobody can ever really do anything nice for anyone else, and being the most violent a-hole wins. Don’t worry, you’re going to prove all that in about ten minutes.

Hence, the entire world sighing with me, in unison. Americans, man. What can you do? Why are they such imbeciles? At least when it comes to money, I’m about to explain it all to you.

I recently wrote about how America was a poor country now. I used the example of my wife, who has degrees from plenty of the world’s top medical institutions…and earns just $50K despite managing a research team at America’s most famous hospital.

I knew what was going to happen next. One of the themes in the responses was denial. No way! Umair’s got to be lying! His wife can’t earn that little! Maybe he doesn’t even have a wife! Oh my God, he’s Umair Bannon!! It’s a Big Lie!! Jesus wept. Americans, I often think to myself, like most of the rest of the globe does, really are the world’s most hopeless people.

What does this particular episode of human stupidity teach us? That Americans are really, really stupid when it comes to money. Unbelievably stupid, in fact. They appear to have no real idea how poor a country America is, even though most of them are busy living it. Number one stressor in American life? Money.

There’s a reason for that.

When we’re in Europe, more or less, everyone knows how much everyone else earns. It’s not an exact science, no. But take our little block as an example. Ben the copper? We all know how much he makes. My wife the doctor? That’s a known quantity, too. The professor of neuroscience who lives upstairs? Same thing. The lecturer in engineering across the street? Yup.
That is because all this is public data, based on public employment. And where there’s private employment — the case of, I don’t know, the famous chef who lives around the corner, or the dude who works at Facebook that nobody wants to talk to and everybody studiously avoids, you can make a pretty good guess.

In other words, you know. And with knowing comes a certain…well, I’ll get to that. First, let me describe how America’s different, and weird, and toxic.
In America, you don’t know. You never really know how much anyone else earns. Why not? Because the entire economy is one giant capitalist scam. Salary data is zealously guarded. So much so that it’s the subject of “NDAs,” which is another thing that really doesn’t exist so much in the rest of the world. You’re not allowed to share it, often. And even when it’s legally permitted, it’s not a social norm.

The rest of the world is the polar opposite. You know, but you never discuss it, because, well, it’s gauche to talk about money.

Who does this particular set of social arrangement advantage? Well, capitalism. When the average American goes for a job interview, they’re usually completely in the dark. If they do know a little bit about salaries and wages, they often have to pay for that information. But of course since the economy is more or less run by a monopoly or two in every sector — Amazon here, Walmart there, Labcorp there, my wife’s hospital which calls itself a non-profit but pays its administrators millions over there — on this side of the table, it’s eminently obvious who gets paid how much and for what.

The economist in me, the social scientists, would call all this “opacity.” Americans don’t know how much their neighbours make, but even that’s an inadequate description. Americans don’t know how much their colleagues doing the very same jobs make. They don’t know how much their friends make. They are more or less totally, absolutely in the dark — even though they’ll deny it, for reasons I’m about to point out.

The person that’s lived all the world in me, though, has another word for all this. Stupidity. One of the most common questions I get when I’m not in America is the same people all over the world have been asking for centuries now: what makes Americans so painfully stupid? There are many answers to that question, but one of the big ones is: they’re kept in the dark. And they’re too inept and clueless to even get that much.

I’m being unkind, but only a little. There are now movements afoot in various states to publish salary data, and make it more transparent. That’s a good thing. But the problem is bigger than just “data,” which is another particularly American form of folly. As I’ve pointed out above, it’s about social norms. In Europe, you don’t talk about money, because you know. In America, all you do is talk about money, because you don’t.

In case you think I’m kidding, let me give you another slice of life. I hang out at a cafe down the street (what do you expect from a writer and musician?) in both Europe and America. There are plenty of first dates happening. But the interactions are totally, completely different. In Europe, the people on the dates never, ever talk about money and careers. In America, that’s all they talk about. The dates in America go like this. A bro rolls in, and tries to impress some poor lady with chitchat about his “job” and “title” and “role” and possessions. In Europe, that shtick would send the ladies running for the nearest foxhole, bar, or club, in peals of agonised laughter. I don’t know if the ladies in America are impressed with it — they just have to put up with it. But you see the difference. Money, money, money.

Americans are totally obsessed with money. It’s not healthy, obviously. But the reason they’re obsessed with money is because they are in a situation of — here’s the economist in me again — asymmetrical information. They don’t have any real information about anything when it comes to money. They don’t know how much the guy in the next cubicle makes. The boss makes. Their friends make. Nothing, nada, zilch. They never have enough, and they don’t know how to get more, don’t even know what figures as more, so, of course, they’re obsessed by money, which is this weird mysterious thing that appears to come and go with no real rhyme or reason.

Americans are in the dark — but meanwhile, on the other side of the table, there’s what economists call “complete information.” How do you think hedge funds “make money”? Their schtick is pretty simple, they hire corporate insiders to give them the dirt. Before the earnings reports come out. Hey, presto, it’s not insider trading, at least legally. Meanwhile, the average schlub is desperately trying to make a buck on the stock market by reading Yahoo finance or some such drivel. Multiply that a trillion for corporations, who know everything about you, more or less, when it comes to money.

That’s asymmetrical information. I’ve given you another example of it already — the infamous salary negotiation, where the average American is completely clueless, more or less, about what to ask for, what they can get, what anyone else really makes, because that’s the social norm, which is enforced by the power of capital to make people sign NDAs and whatnot if need be.

It should come as no surprise then, that Americans are stupid in this way, when it comes to money. They get fleeced, from the very beginning, and they don’t even know where “the beginning” really is. The average American is so clueless that they think they get fleeced when they get a massive “medical bill” — but that’s barely the beginning of it.

The average American income is around $30K. That’s it. Just $30K. What can you do with $30K? Not a whole lot, except be poor. You are living, basically, in poverty at $30K. That’s not even enough to afford rent, a car, and household bills, in most of the country. Luxuries? Investments? Forget it. The average American can’t afford the necessities. See the circle in the chart above? That’s where GDP per capita and incomes — AKA what people earn — diverge. It’s when America began to become a poor country in earnest.
That’s what I mean when I say America’s a poor country now. Its average income is not enough to not live in poverty.

The average American gets fleeced the moment they apply for a job, without the info of how much anyone else really earns. That means they earn way, way less than they should. When you begin with way, way less than you should have, and don’t even understand that much, then, my friend, you’ve really been made a fool of. Americans think they get fleeced when they spend, but the dismal truth is they get fleeced at the point of origin — what they earn.

How much less do Americans really settle for, from the very beginning? This is the part where every white Duder named Tucker or Tanner or Fletcher or Cooper tells me I’m exaggerating, so let me be a Real Economist again.
America’s labour share of income — that’s how much the average working schlub takes home — is about just 50% of GDP. Tanner Tucker Cooper Fletcher is about to shout at me that that’s fair. He’s wrong. In Europe, the labour share of income average between 70 to 80%. That is, Europeans, for the work they do, enjoy a share of the economy that’s 50% greater than Americans do (aka the difference between 50% and 75%.) Let me say that again. Europeans take home a share of the national income that’s 50% greater than Americans do. Fifty percent.

What would you do with a fifty percent higher income? That’s what Americans should be asking, instead of desperately searching for side hustles or day trades or what have you — and why they don’t earn it.

Europeans don’t get fleeced from the very beginning. Because they know. They know what everyone else earns, more or less. Because it’s not a secret. A secret that’s zealously guarded, and made out to be some kind of sacrosanct social norm, like it is in America. They’re not in a situation of opacity and asymmetrical information, the economist in me would say. They’re not stupid, the person in me says.

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These differing social norms around money have real consequences, in other words. We’re not just talking about abstractions. We’re talking about massive, massive difference in how much people earn as a share of the economy. In Europe, that figure is dramatically higher. In America, by contrast, the figure is incredibly low, precisely because Americans don’t even have the information they need to know how much to demand in the first place.

And when some poor bastard like me comes along, and tries to point all this out? Well, then we get Americaned on. We must be lying! It’s our fault! We’re just trying to get you. No, dumbos. It’s that you’re painfully ignorant. We’re trying to help you because, well, that’s what being a decent nice human being is.

But Americans have this bizarre combination of arrogance and stupidity. They don’t know how ignorant they are, and they can’t believe that they could be that ignorant. That combination is fatal. It’s all on display in how Americans deal with money,

Still don’t believe me? Hate me yet? Cool. Let me offer you another of facts.

Go ahead and guess the average American income. I wrote about it last time. You have three guesses, go for it.

My bet is that you were off by tens of thousands. You probably began at $75K, and settled at maybe around $50K, which is what my wife makes, for the privilege of helping a “non-profit” hospital make billions, and pay it’s “administrators” millions for doing nothing much of real value. You are way, way off.

The average American income is around $30K. That’s it. Just $30K. What can you do with $30K? Not a whole lot, except be poor. You are living, basically, in poverty at $30K. That’s not even enough to afford rent, a car, and household bills, in most of the country. Luxuries? Investments? Forget it. The average American can’t afford the necessities. See the circle in the chart above? That’s where GDP per capita and incomes — AKA what people earn — diverge. It’s when America began to become a poor country in earnest.
That’s what I mean when I say America’s a poor country now. Its average income is not enough to not live in poverty.

Now, when I point this fact out, the very same process that I described above happens. Americans — particularly guys named Fletcher and Tanner and Cooper, meaning white dudes with a certain amount of privilege — can’t believe it. Literally can’t. So, minds broken, they start shouting at me and calling me a liar and a fear-monger and not a real American and the whole nine yards. Meanwhile, all you literally have to do is type “America median income” into Google to be presented with this fact in giant letters.

In other words, there’s a huge, huge cognitive dissonance that takes place when I — or anyone, really — tries to educate Americans about their very own real economic facts. Americans are in denial that the average income in America is so low. They can’t believe it because they obvious conclusion is: “But nobody can live on that!” Exactly. And yet they don’t know the facts — it takes viral Twitter threads to shock people into this knowledge — because Americans are stupid when it comes to money. They literally have no idea of the most basic facts of their own economy, and they’ll attack you like gun-toting Trumpists at a school board meeting should you be the one presenting them, so duck and run for cover.

What’s really happening here? An even more advanced form of stupidity is taking place than mere ignorance. Americans don’t have any real information about how much anyone makes. Like we’ve discussed, it’s a situation of informational opacity and asymmetry, that’s become a social norm. So American assume. They assume that so and so must be making such and such. Hey — they have a nice car! They wear decent clothes! When actually, the average American is in debt they’ll never be able to repay.

But assumptions — and secrets — make fools of us all. And in this case, Americans assume that their neighbours and colleagues must be richer than they really are. Remember, in reality, America’s median income is startlingly low — but everybody’s busy keeping the secret of how much money they make and pretending that it’s not. Hence, the cognitive dissonance — the dumbstruck disbelief — that takes place when you teach Americans that in stark economic terms, they’ve become a poor country.

Think about it. A median income of just $30K is so abysmally low that it tells us a whole lot of American making the assumption that their neighbours and friends are rich are living in relative poverty themselves. See how absurd this is all getting? Hence, the anger that comes pouring out when you begin to discuss money with Americans in realistic terms.

So what happens to a society like this? A society of people falling into poverty — but assuming that everyone else must be doing pretty well — because nobody much is admitting the truth? It develops feelings of resentment. Envy. Jealousy. Spite, Hostility. Rage. Distrust and enmity prevail. Selfishness develops. Greed comes to be seen as good, necessary, righteous. If you’re getting poorer, but you assume that everyone else is doing pretty well, and you’re always hiding it, you must feel pretty humiliated. What political path does humiliation as a widespread social experience lead to? Fascism, of course.

All that is why American get so, so angry about money. Not just because they never have enough. But because they’re busy hiding the truth from each other, and pretending that it isn’t so bad. But it is bad. Really, really bad. Like I said, Europeans on average take home a full 50% more of their economies than Americans do. Ever wonder why they don’t feel so much money stress?

By the way, what are Americans most stressed about? Yup. You guessed it. Money. See how bizarre this situation is? Americans will admit to random pollsters that they’re struggling, that money has become a terrifying thing that keeps them up at night, because nobody much has enough. But at the same time, they’re the ones enforcing the social norm of secrecy which helps keep them poor in the first place.

Because there’s one adage in economics that’s always been true. Information is power. Europeans are wealthier precisely because they don’t keep money much of a secret. It’s nothing to be ashamed of to be poor — though if you have too much money, it is. That informational advantage means that they know what to ask for. It means they don’t even have to ask, in many, even most cases, because salaries are standardised across sectors, even in ones like hospitality or medicine. It’s not a secret, money. That balances the scales of information, and with that comes power. The power to demand their fair share.

But Americans are ignorant when it comes to money. They happily enforce the very information asymmetries which keep them poor. They keep money a secret for the very systems and institutions making them poor. They’re too proud to admit that they’re getting poorer — meanwhile, because everyone’s keeping that very secret, everyone thinks they must be the only ones getting poorer, while everyone else is doing OK, and so caught in this barbed wire of backwardness, society descends into enmity, envy, spite, and rage, and can’t figure out how poverty became the new normal.

It’s a vicious circle of stupidity.

Like I said, the entire world asks me this question: what the bejesus makes Americans so stupid? The answer is complex in one way — but simple, in another. They keep secrets. They want to get one over on everyone else. They don’t really believe in equality and fairness. They’re obsessed with power and advantage and selfishness. They don’t understand that a society, it only ever grows poorer that way. The only people who benefit are the most cunning and ruthless of all, which sure as sh*t isn’t the average schlub.

Americans are completely out of touch with how poor a country America really is. Even though they’re living it. That’s because they’re too busy keeping their poverty a secret, instead of sharing the pain and the terror of never having enough of it. And yes, it’s terrifying not to have enough money. I have news for you: that’s where about 80% of America is, and no, that’s not my opinion, it’s a fact, 80% of Americans live paycheck to paycheck, which is another term for poverty, more or less. No wonder Americans are obsessed with money, consumed by it, to the point that the world thinks they’re just greedy. You would be too, if you never had enough to make ends meet — and yet had to deny it for the sake of obsolete and pointless social graces, the very ones which made you poor. That paradox would drive you nuts in the end, just like it’s obviously done to plenty of Americans.

America’s poverty? It’s self-inflicted. Americans are stupid when it comes to money. Almost hopelessly stupid. And they have little to no idea how stupid they really are, because they’re the ones keeping themselves wilfully ignorant. Will that ever change?

Don’t ask me. What would I know? According to most Americans, I’ve been wrong about everything from fascism rising to their society collapsing. They’re the smart ones, I’m the dummy. I guess that’s why they’re rich. Not pretending to be rich, while mostly, they’re getting poor, playing a dunce’s game of musical chairs with not-enough-money to live on. Oh, wait.

*Umair Haque, is the Director of the London-based Havas Media Lab and heads Bubblegeneration, a strategy lab that helps discover strategic innovation.

He first published the article in Medium

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