Prof. Henderson’s judgment continues to fail him, and he apparently went up against Brad Delong, something the really smart and really wise and really well-informed do with great caution. Who was it that rush in where angels fear to tread, again? Remember the Black Knight in Monty Python’s Holy Grail?
Brad attached a rocket engine to my Piper Cub post and sent it into orbit with substantial added fact and analytic payload.
UPDATE 20/IX: I had in mind to remove Prof. H’s name from this post in view of his recent post, because I have and had no wish to make him personally victimized or threatened, much less his family and especially his wife, who apparently gave him counsel he should have listened to (mine has certainly saved me from making a fool of myself many times). But I can’t edit the whole web or even, practically, the hundreds of comments.
What I can say is, leave him alone. If his post weren’t typical of a common way of thinking, so common as to rate discussion in Paul Krugman’s column today, I wouldn’t have flagged it or flogged him about it. This isn’t personal and shouldn’t be.
It’s a neat trick to make shit up about somebody, and when they don’t object to the specifics, just to their maltreatment, you hold them to the fiction. What high standards they have in the University of California system.
Somebody should tell DeLong that we’d be fine but for his stimulus plan. I do wonder what DeLong means by “wars” of choice. Did DeLong oppose the Afghanistan war? Let’s attribute that lunacy to him, and if he doesn’t object we can run with it forever. He deserves much worse.
Thomas - Incoherence with mashed non-sequitur mohitos are the house drink in lots of places, but not here.
Henderson reminds me somewhat of Michelle Obama, about whom Real Clear Politics reported two years ago “Campaigning for her husband in Zanesville before the Ohio primary, Michelle Obama described to a group of women how hard it had been for her and Barack to make ends meet: “We spend between the two kids, on extracurriculars outside the classroom, we’re spending about $10,000 a year on piano and dance and sports supplements. And summer programs…Do you know what summer camp costs?” The burden was especially heavy because she and Barack had to repay the student loans for college and law school at Princeton and Harvard: “The salaries don’t keep up with the cost of paying off the debt, so you’re in your 40s, still paying off your debt at a time when you have to save for your kids,” Michelle Obama said.”
I’ve read that some staggering percentage of the country thinks it’s middle class. I can kind of understand it: our family is fortunate, we are not financially worried, really. But there are some markers of wealth - the boat, the second house, the airplane. Send the kids to St Alban’s. Live in help. We have none of those, and we send our kids to public schools. We air condition our house, we drive a car we own to go shopping, our clothes aren’t patched, we have television, we have heat in the winter - but those markers are there for people who make a tenth what we do. So we think we are middle class, as did Michelle Obama, as does Henderson. As does Brad Delong, who has to think how to pay college tuition.
Now, Snopes says Willie Sutton never said he robbed banks because that’s where the money was. Some stories are true, and some just ought to be true. But people like me, and Henderson, and Delong, and Michelle O. before she passed through the curtain between ‘upper middle class’ and ‘rich’ are a lot of where the money is. And if you are going to tax income to pay for our huge national expenditures, that’s where you have to go. I still think we ought to be raising other taxes more, like the gas tax. Regrettably, our political class remembers too well what happened to John Anderson.
Plinthy, you apparently haven’t been paying attention. O’Hare and DeLong are both in the habit of making shit up about people. They’re both assholes.
Has Thomas @7:28 finally crossed the line that would earn him a permanent banning? I’d have mixed feelings about that. On the one hand, he and people like him are a cancer in any body politic. On the other hand, the impotent rage and pathological projection of wingnuts is often mildly amusing.
Memo to self by Todd Henderson: do not get the names of dangerous adversaries wrong.
This was my reply to Todd on his blog. I’m reproducing it here because I think the central point is important enough (and has not been mentioned in any of the many comments I’ve seen on this issue) that it should be widely disseminated.
Todd, here is a different way to look at this, and if you have any sense you will think about it long and hard.
Most of what you are spending money on, the real expenses, are POSITIONAL goods. Positional goods, by their very nature, cost as much as their is money around to pay for them. The government (fed, state and city) could stop taxing you tomorrow and what would happen? The price of your house would rise to eat up much of our extra cash —- irrelevant to you now, since you have made the purchase, but very relevant as a hypothetical in understanding the world. And likewise the cost of private school — the best such schools, because only the best for your kids — would rise to eat up the rest of the surplus, and presumably you have not paid the tuitions of all three kids for 12 years in advance.
It is truly amazing to see this over and over again — people who claim to be deep economic thinkers who appear completely unaware of the very concept of elastic prices, and how they apply ESPECIALLY to the largest costs in their lives. That’s the way the capitalist system works — these items are priced at whatever cash the richest n% that buy them HAVE to spend on them.
There are two issues here.
First you seem unaware of elementary game theory — you imagine that when one thing changes (the tax take of the government) everything else will stay exactly the same. You are willing to make this argument when it suits you (“if my taxes rise I will have no money to spend on the servants and they will lose their jobs”) but are blind to it under other circumstances.
Second you want to live the lifestyle of the top .5% on the income of the top 1%. This is a stupid stupid stupid way to look at the world. There will ALWAYS be people better off than you. When you make it to the top .1% there will Bill Gates with more money than you. When you reach Bill Gates’ level of wealth, guess what: some guy in Hollywood has a hotter wife than you; and some guy at Harvard is more respected intellectually than you; and some guy in the NFL has a better body than you.
The government cannot solve your insecurities about not having the social status you feel you deserve.
HOWEVER with a higher tax take, the government CAN provide you with freedom from fears of the most elementary sort — fears of what would happen if you lost it all, fears of rare but expensive medical problems, fears of not being able to feed and educate your kids. It can create a society where the levels of violent crime against you and the wealthy like you are low (compared to say South Africa or much of South America). And it can create a society where new science every day, science that would never be undertaken by individuals and companies, is working to help us with problems and limitations in our biology, along with giving us convenient marvels like iPhones that were undreamed of fifty years ago.
With or without the tax take, you are still in the top 1%, not the top .5%, and you will live a 1% life not a .5% life in a 1% house with kids attending a 1% school — that is the way positional goods work. But with a higher tax take, you can like that same level of status in a way that involves less fear for yourself, your family and everyone around you, in a society that is richer not just in the count of dollars, but in the store of knowledge available and being used to improve everyone’s lives.
Maynard, excellent comment
@M(r)s Tilton:
I suggest that Thomas not be banned for being a dickhead, which, surely, he is. But that he be invited to post at every opportunity, implored even, and after he launches into his “message,” people ask him questions. Thomas, what do you mean by “make shit up”? What do you mean by “‘war’ of choice”? Unless you give us examples, these are I suppose ad hominem. You just throw shit at prof delong because, well, you’re an aXXh•le, you repeat your comment to the brilliant Plithy, and then you sort of go away. (Cheers!) Carry on! Back up your otherwise lame and nasty statements! Show some st•nes!
eqbaloo, what do I mean by “make shit up”? Well, let me walk you through it. O’Hare couldn’t figure out how Henderson paid so much in taxes, apparently because O’Hare doesn’t know about social security and medicare taxes, and so he invented some numbers that he thought represented Henderson’s income. He then relied on a bug in the software at TPC to suggest that a tax increase would actually be a tax decrease. (TPC’s software doesn’t allow one to recognize that Congress would fix AMT this year, as they do every other year.) The simple fact that tax increases increase taxes seemingly escapes him. As does the common-sensical notion that Henderson might be more familiar with his own tax and financial position than some idiot half a continent away. That distance doesn’t keep O’Hare from an intimate familiarity with the real estate market in Hyde Park, Chicago, Illinois, or so O’Hare believes. After making up some numbers-a fiction in its entirety-O’Hare’s idiot friend barged in and invented some new “facts.” DeLong says that Henderson-a man he’s never met, and never heard of before this incident-was a supporter of the Bush administration’s policies down the line, and that those policies require the tax increases. Pure invention. Which causes O’Hare apparent delight. As I said, a couple of assholes. And clowns. That you don’t see anything wrong with this says plenty about you as well.
As for the rest: The asshole DeLong notes that we have two wars, and refers to them as “wars of choice.” The locution “war of choice” has often been used by those opposed to the Iraq war, but I haven’t seen it used in the context of Afghanistan. Does DeLong think that the war in Afghanistan was optional? In what sense? (If I wanted a job on the faculty at Cal I guess I’d skip the questions and go straight to the accusatory fiction.) And, no, I didn’t go away, but I do have a life.
There´s another aspect of Todd Henderson´s asymmetric myopia. DeLong´s hypothesis is plausible: that Henderson and other aggrieved bottom-of-the-top-1% rich are responding to the huge increase in the income and ostentation of the top 0.1%. But Henderson in particular is ignoring one important feature of the income of investment bankers, sports and film stars, dot-com entreprenneurs, hedge-fund managers, and Fortune-500 CEOs: volatility.
At the upper end of the income scale, higher incomes are more volatile. This is normal: it´s a winner-take-all world at the top, and your stay there is likely to be short. But Professor Henderson and his oncologist wife have about the most secure jobs imaginable. They have every expectation that in in 20 years, they will if they choose be able to do more or less the same personally and financially rewarding work they do now, provided only they stay competent and healthy. This adds to the puzzle of their Chinese savings ratio. The $10 million-a-year hedge fund manager has to salt it away while the going is good, the Hendersons on the face of it don´t.
I´ll leave it someone else to respond to or zap Thomas if they feel like it. I´m for ignoring the trolls.
James, I’m not trolling. I’ll leave it to you to decide what O’Hare is doing. I’m not sure why you think that the Hendersons are saving at the rate that O’Hare says they are. Sure, if you imagine they are earning what O’Hare invented, then you need to assume they are. But you don’t know, and neither does O’Hare. Liberals are amazingly confident in their ability to budget for other people, even when they have a very very small amount of information.
Thomas, the man owns a million dollar house and sends his kids to private school. (Someone in DeLong’s comments did a little snooping around and figured out how much he paid for his house, and it was about 950k — and he claims to have done a lot of renovating.) Even if he and his wife earn something much less than 450k (say 300k, which is the absolute lowest number I would believe), that he lives in an expensive house, has car payments apparently totally over 800 a month if you believe his numbers, and sends his kids to private school are things that are his own fault.
Something I’ve not seen discussed anywhere on any board, but Maynard Handley’s comment gets toward it: the lack of a social safety net is a main driver of the desire to accumulate seemingly excessive wealth as the only hedge against disaster.
The Hendersons are partly feeling squeezed because they rightly perceive that in this country, you must build your own safety net. What does it take to self-insure a middle-class family — perhaps $3, 4 million would do it? I suspect the Hendersons’ hugely high annual savings and the effort to build (what seems like excessive) home equity are partly, actually, a prudent effort to self-insure.
That’s a prudent effort, if you can manage it, in a society where public schools are underfunded and failing, pensions are underfunded, health insurance is iffy and inadequate. Yes, despite their rather ugly and pitiable ingratitude, the Hendersons have a very valid point. You have to have millions at your disposal to replace a missing social safety net with a personal safety net.
The Hendersons (and many at or below their income) might actually feel less financially at risk, and free to spend their money differently, if we all knew what each Swiss or Swede knows: that the public schools are near the best in the world; that no one will be old and destitute; that no disabled child or adult will go wanting for support services that give them a decent and dignified existence; that a medical disaster wouldn’t turn into a financial disaster for a whole family.
The Hendersons are trying to do risk management for themselves and their three children. Probably, they see that their childrens’ social secureness is also dependent on abundant wealth as a hedge against disasters and misfortunes; so their burden is even greater when saving for that is figured in.
The sad thing is, as smart as they are, they don’t see that self-insurance is vastly more expensive undertaking than social insurance.
Well, it’s too easy to post how to acquaint Prof. Henderson with the real world.
But almost irresistible! I think Brad is right, that Prof Henderson FEELS poor when he really is better off than most everyone, because he knows investment bankers with half his IQ who have a billion dollars. But really, he ought to look over at the physics department and the English department of his very own university, and they probably are all as smart as he is, and somehow I doubt they make $180K in salary.
But as they say, financial happiness all depends on who you know- if you mostly know poorer people, you feel rich. So I suggest Prof. Henderson start cultivating some poorer friends. Walk out of the law school and visit the librarians. Take a beer out to your gardener and sit with him and talk about baseball. Take a bus down to the Loop with the hoi polloi. I bet you he feels much richer, and without spending much at all!
I do wonder (I’m a U of C alum- lived 5 years in Hyde Park) where he found a million dollar house in Hyde Park. I bet he’s up in the mansion section (Kenwood).
What Betsy said. But what these virtuous and energetic privateers are doing, for all the “right” reasons, is top down class warfare — while they and their sympathizers initiate complaint about (bottom up) class warfare. The unselfconscious projection is mind boggling.
We want to be so sensitive to Prof. Xxxx Xxxxxxxxx, because he has suffered so as a result of…
As a result of Prof. Xxxxxxxxx sitting down at a computer and voluntarily writing a blog post chock full of his own opinions, which he then uploaded to the Internet so that people all over the entire world, numbering in excess of a billion, could freely access it. And it turned out that the opinions contained in Prof. Xxxxxxxxx’s freely-written blog post displeased a certain number of those billion-plus internet users. Some of them made harsh, critical replies which gave the Professor a sad. He’s still got the big luxurious house; he’s still got the retirement accounts; he’s still got the great-paying career; he’s still spending more than all my family lives on paying for his kids’s exclusive private schools, which enable them to move in a virtual antiseptic tunnel from infancy through college to a well-paying career without ever being soiled by contact with the likes of me and my family; he’s got all that still, but now, also, he has a sad, so bad he had to take his posts down! Aw poor guy!
Meanwhile, because of the economic slump - do you think Prof. Xxxxxxxxx even noticed the slump? - several of my friends at work have been laid off completely, and they have neither fat 401ks nor salaries five or ten times larger than the average to console them; in fact, right now they have no income except unemployment compensation. And I know a couple who lost their house to foreclosure last year, and had to move into a travel trailer. And a few weeks ago instead of getting in forty hours at work I was able to put down three hours on my weekly timecard. Guess what; my bills aren’t 7.5% of what they were a year ago; they’re still 100% as big. And we didn’t do this to ourselves by writing a stupid damn blog post.
W., whatever it would cost to be able to move through life without ever being soiled by contact with you, I’d be willing to pay it.
One thing that comes up in the posts on Henderson over and over again is the concept that he is middle class or upper middle class. No, he is not; he is rich. Anyone in the upper 5%, let alone the upper 1% or 2% is rich. The middle is the middle, not the top. Does that mean that people at his level can’t overspend? Of course not; the world is full of the rich who managed to spend themselves right out of the rich. Check out what happens to a lot of lottery winners. Now in fairness to Henderson he does save a lot and isn’t likely to fall into poverty. But maybe he could loosen up just a bit on the savings and go eat out occasionally. I know some good restaurants in Pilsen where he could eat economically. Or he could do what Chicagoans have done for generations: buy a three flat and let your tenants in the other 2 units pay your mortgage. I bet there are some for sale even in Hyde Park.
I am really tired of listening to everyone talk about Professor Henderson’s high tuition bills at the private school where he sends his children. Tuition at the University of Chicago Laboratory School is FREE for the children of faculty members. Not to mention that another benefit of being a faculty member is free tuition for your children at any college in the country they choose to attend. This is a benefit worth hundreds of thousands of dollars which Professor Henderson does not seem to have factored into his net wealth.
Oh man, oh wow, sorry I ever mentioned any people who are making less than five times the median family income to you, Thomas. I see I have given you a big sad too you by even referring to the existence of such low-lifes. The fact that, in the middle of the worst recession since the Great Depression, millions of working-class people are out of jobs and in financial binds a Hell of a lot worse than that contemptible U. Chicago professor can even imagine, is, well… it’s not relevant. Why should Thomas waste his beautiful mind on something like that?
Seriously. What in Hell was your problem with what I wrote? What was so offensive about it to you that you replied with your stupid one-line insult, garbage head? Hey, you know how you can avoid contact with the likes of me from now until eternity? Go eat rat poison.
I’m a professor at a public university, and my family makes about a third of what Prof. Henderson’s does. Much of that is because my wife is a stay-at-home mom who takes care of our growing child. I don’t compare myself with the Hendersons, I compare myself with the vast middle class below me who are barely making enough to make ends meet. I don’t have the conspicuous spending pattern that Prof. Henderson has - I send my kid to public school (I live in a nice part of our city with reasonably good public schools), I live in a large and comfortable house that cost me one-fourth of Prof. Henderson’s million-dollar home, and I drive two inexpensive compact cars. I don’t have student loans, since I went to an inexpensive but good state university, I don’t have a nanny (my wife is the nanny and I find other ways to reward her efforts), and I mow my own lawns. Hence, I save a lot of my income, and over time, have managed to pay off my mortgage, and now save some more! I figured out how to live within my means, and Prof. Henderson, with three times my income, hasn’t. I feel rich and Prof. Henderson doesn’t!
One thing I have done (which I suspect Prof. Henderson hasn’t) is travel extensively and see living standards in other parts of the world. I wouldn’t want to live in Japan or Korea, which has all of the first world ameneties, but extraordinarily high living costs (housing, food, etc.), higher taxes than the USA, and lower personal freedom. I wouldn’t live in South Africa or Latin America, where the rich can maintain opulent life-styles, but must also have private security guards to protect their homes and families, and still live in constant fear of crime. I wouldn’t live in Western Europe, where taxes are much higher (upto 50-60%) than the USA even after the Obama increases. I can’t live in Eastern Europe or Asia where there is no social safety net, wages are depressed, and life is more difficult. I think there’s a certain privilege in being able to live in the USA, in terms of the quality of life, low crimes, social harmony, social safety net, and all of that carries a certain premium in terms of slightly higher taxes. If Prof. Henderson thinks that he is getting a raw deal in the USA, try moving to another country and see how he likes it there!
Betsy, Paying on a large mortgage does not strike me as a prudent way to self insure. If the Hendersons were to lose one of their incomes (e.g. thru unexpected sickness which is a major reason to self insure) then they’d have a very hard time paying on the mortgage. A house is a pretty illiquid investment and a mortgage requires decades of stable income.
If self insurance is a major goal then it probably makese sense to rent a cheaper place and save large amounts of cash.
I am expecting an oncologist alone to make over $250k per year. But we would need to know a lot more about the educational debts of the Hendersons to make a decent appraisal of their financial situation.
how long after you sign your first contract paying $250k until you become rich? day of first paycheck? after first year? certainly there must be some lead in to pay back debts and accumulate savings, which may be where the professor is sitting now and claiming upper middle class. i don’t believe that he posted to say he wouldn’t eventually be rich, but just that he felt that declaring the line for super-rich to be at that income level did mean some families would be adversely affected in their expenditures, not that anyone making over that amount could just absorb it. what are his options if he doesn’t like it? he could either blog about it or keep silent. so he blogged about it and in a fairly ill considered post about his even more ill considered expenditures. but he does claim to have a negative net worth, and if that part is true, it is hard (for me)to consider him rich (yet). it is hard for me to judge whether the kids need private school in that area, so i will refrain from commentary but certainly there are worse ways to spend your money. i do not think wsj articles advising him to mow his own lawn are necessarily well considered either-it might be more lucrative for him to write a book or something than to mow the lawn, but again i think it is reasonable for him to spend money that way, given his income. if i lived in that area and had that kind of money, i would want my wife to have a reliable car. overall, the house is what is killing their finances imo. well, that and three kids that probably involved some maternity leave (?loss of income) while their fixed costs remained the same.
if everyone piling on is so smart, then maybe we can come to a concensus on how much income makes you rich. apparently that number is less than 250k.
doesn’t matter how much debt you are in, doesn’t matter how long you made the money, doesn’t matter how much is in the bank. if that number happened to be around 100k, there would be people here screaming they weren’t rich, even though they facts are that they make roughly twice the national average. they would justify their position by arguing are clipping coupons and doing the right things-small house, old cars, no vacations. but since we decided they were rich, they are mistaken. 
there is a difference between feeling rich and being rich. i would guess if you pulled him aside and asked him if he felt pretty affluent, the answer would have been yes. he has a lot of things affluent people have. however, he feels he works hard for the money and doesn’t have the savings that he thinks someone who feels rich should have. or the comfort perhaps, as others alluded to. lots of successful hard working people have difficulty feeling rich. their spending and savings patterns allowed them to get there because they didn’t feel rich enough to afford certain things. if you have a pension that has a present value of a couple million, you might be rich…even though you are clipping coupons. if the government had said they were going to increase taxes on pension payments 4%, because people with pensions were rich, there might be a lot of similar posts about people not feeling rich. a lot of retired folks scrimped and pinched and might be considered rich living in a small house and with old cars and eating beans. should we label them as rich, allowing us to feel better about taxing them because they have a lot of disposable income and they didn’t use it to stimulate the economy?
O’Hare congratulates himself and Delong on their imaginary evisceration of Henderson.
Thomas crushes them both in two short paragraphs.
Nicely done.
Someone posted that it is Henderson’s “fault” for sending his kids to private schools.
Huh?
Are we really at the point where the desire to provide a better education and better opportunities for your children nets a liberal scolding? No you’re right, he should have sacrificed his children’s future at the altar of our failed, union controlled, government monopolized educational system. How selfish and financially reckless of him to prioritize his childrens’ education and fail to plan for the day when his fickle, bloated and incompetent government decided his $100k tax payment wasn’t enough. Henderson’s money should be spent on that community pool O’Hare wants to build, not the education of his own children.
Mush brains.