Reply to Uncle T.: Who's for the Little Guy?

Uncle T.,

OK, so you do know how the other half lives. Yet in your arguments you never speak to their risks and troubles, only to the risks and interests of owners, entrepreneurs, and managers. Why?

You say you want an "ownership society" for everybody, including the "little guy," but how is the little guy supposed to save and invest when his real wages have been going down for the past 30 years (although he's working more hours than his father did), prices are always going up, and as a result he (and his family) are living hand to mouth?

I consider myself and my family extremely fortunate to have a decent income and (knock on wood) no expensive health problems or emergencies. But even I find it very hard to save much money. I really can't imagine how a family with less income and more children could save anything, much less risk their meager savings in investments like stocks or real estate, which they don't understand or have the time or resources to investigate.

Example 1: My colleague has several hundred thousand $ in various investments, including stocks; and now that the markets are going up and down, he's on the phone or e-mail with his financial adviser every day; and he's reading financial news and doing research every day. But he has the time and luxury to do all that because he's single, has zero expenses, and can afford expensive financial advice.

Example 2: A lot of smart people, and many not-so-smart people like myself, lost a lot of money when the dot-com bubble burst. We can surmise that if every little guy had also invested in the market in the 90s, he would have followed the herd and bought tech stocks or mutual funds heavily tech-invested, and then lost 50-100% of his initial investment.

I've never heard your "ownership society" theories address the risks and economic realities related to imperfect and unequal information.

Then there's entrepreneurship, the riskiest investment of all. More than half of small business startups are doomed to failure. (To be sure, there's a big difference between venture capital-funded entrepreneurs, who play with other people's money, and small entrepreneurs, who risk their and their relatives' money). Anyway, the little guy probably won't even try to start up a business because he has no collateral to get a startup loan; and/or his credit history sucks because he lives hand to mouth and his credit cards are maxed out.

So, how the hell is the little guy supposed to get ahead in life with all this stacked against him? I'm not saying little guys don't beat the odds and achieve success, but if you look at statistics, you'll see that wages and average household income (adjusted for inflation) are falling for the little guy. Yet -- let's face it -- you think this system is basically OK. With a few minor tweaks, you basically support the status quo, and believe that success in life depends on one's personal responsibility and gumption. Basically, you say to the little guy: "It's all up to you, Little Guy! If you're not lazy, America is your oyster!"

Meanwhile, thanks to conservatives, he has a government that could afford to give his family health insurance, a real alternative to expensive cars, and a decent K-12 and college education, etc., yet that gov't chooses to spend its money on guns and wars. Meanwhile, he has a gov't that gives tax breaks to big companies that outsource little guys' jobs to Asia.

I know, I know: you'll always come back to Social Security taxes and "Ponzi schemes." But people like my mom and [name deleted] are now depending on SS for a large part of their retirement income. And they are not lazy or stupid; they tried to plan ahead. Millions of Republicans like my mom, and my rich boss who will soon retire, won't send their SS checks back to the gov't out of their conservative principles. So, even in that sense, the system is stacked against the little guy, because he's funding the supplemental income of millions of people who don't need it; meanwhile, his benefits when he's old will probably be less than that of seniors today.

But let's say, for argument's sake, the gov't did not take that 7-8% of FICA from the little guy's paycheck. What would he do with that extra $2,000 - $5,000 per year? Would he start up a small business and become wealthy? Probably not. Would he invest it wisely in the markets, year after year, and make his 10% over the long run? Maybe. Would he use his FICA money to buy decent health insurance, and a private school or college education for his kids? Uh-uh, no way, FICA doesn't even begin to cover those expenses.

Rather, you know and I know that, more than likely, he would spend that FICA money. He wouldn't save or invest it, he would consume. Because that's what little guys really do with their money. (This, after all, is the underlying assumption of the "stimulus plan," which Democrats and Republicans seem to agree on.)

Some people define insanity as repeating the same thing over and over and expecting a different result. The status quo in America for the little guy, which you defend, is insane, because politicians and guys with money tell the little guy, "Keep working, keep plugging away, and you'll come out ahead," even though experience shows this is not the result. Maybe it was true up until the 70s, but not anymore.

So please tell me, besides in your heart and your admirable charitable work, how you can be for the little guy, when you defend a system that doesn't support him?

J