Wednesday, January 14, 2009

Minnesotans and wealth 

This article argues Minnesotans do not flaunt their wealth. (Just their WELLSTONE!!!!!!! bumper stickers.) According to the article on which it draws:
"There's certainly less mass luxury on parade in the Midwest than either coast," said George John, who as chair of the Carlson School of Management's marketing department tracks buying trends. Even the virtuous rich are probably spending just as much as ever but "we just don't see it. Public consumption is only public to the extent we can see it, like the cars people drive, partly because American society is so segmented."
One thing they do is hide it in the garage. I watched some of Sunday night's episode of 24 in someone's garage. It had a heater, a 27" flatscreen TV. And it was only two car stalls. Many homes have three stalls, meaning the garage has a bigger footprint than the car itself. What goes in the third stall? The boat (pronounced "bo-o-o-o-oat" here.) The snowmobile. The ATV. As Joe Soucheray would call it, your wealth is tied to your cylinder index. (I'm a very wimpy 17.) Most people aspire here to higher C.I.s as much as they would jewels or fur.

Surveys show that about a third of Americans think they will someday be rich (with rich being probably in the area of $200k of income.) I haven't found a survey like this just for Minnesota -- I wish we had one -- but I suspect the share of Minnesotans who think they will be rich someday is higher. Better education helps, as does a relatively dynamic economy here. And so there's a tension in Minnesotan public policy; we probably have Scandinavian attitudes towards income inequality, but because we think the shoe will be on the other foot soon, we have an inclination not to go too far in terms of using taxes in the state for redistribution. Bryan Caplan notes (in discussion of Obama and redistribution) "It's not like, 'Look, we're raising your taxes to (more evenly) distribute [income]. We're doing it because we need to raise money.'"

But that doesn't explain really this reluctance to display wealth. Mrs. S (unlike me, a native of Minnesota) has always bought into the idea that the rich don't show it. When I observe on TV someone in a Brooks Brothers suit and say hey, he's rich, she will argue it may just be a middle class person putting on airs. I know at fundraisers I wear suits, and many locals do not. I know I've sat with people in flannel shirts over coffee, and after they leave a mutual friend informs me how well off that person was. Is it the luxury of not having to care for what you wear? Is it embarrassment over one's wealth? Or is it that the income distribution in Minnesota is more fluid, more dynamic, such that wealth comes to people who are not particularly of a certain class? If it's the latter, that cylinder index might be an interesting way to look at the distribution of wealth in Minnesota.

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