Sunday, July 19, 2020

Millionaires circa 2020

The snapshot of the "typical" millionaire has changed drastically since Stanley and Danko wrote their groundbreaking book "The Millionaire Next Door"

Stanley and Danko contended that the typical millionaire did not look like Thurston Howell, III from Gilligan's Island. Howell was "old money".

Stanley's findings were that the millionaires of the 1990s were almost invisible, they were small business owners.

A typical 1990s millionaire lived a frugal lifestyle. He lived in the same, modest house he had bought 25 years ago. It was the second house he had ever purchased. He was a plumber and employed 6-to-12 people, or was an auctioneer or owned an insurance business. Nearly all of his assets were tied up in his business.

He was very conservative.

The typical millionaire of 2020 is an upper-mid level executive. He is in the top 5% of nation for income grossing $200,000 a year or more. A significant portion of his assets are tied up in his house. In some parts of the country skyrocketing properties meant that all somebody had to do to become a millionaire was to purchase a house ten years ago and not treat it like an ATM as values went up.

The millionaire of today s very cocooned, very protected from the hurly-burly of everyday life. His "business" is not on Main Street. It does not have expensive plate-glass windows. He is an anonymous minion on the 7th floor of HQ and his personal reputation has little influence on the economic performance of the corporation he works for.

The millionaire of 2020 is more likely to be a liberal than a conservative.

Do you suppose the disconnect between the millionaires' actions and his assets might have something to do with that?

Let's push the chess pieces a little farther out on the board
These upper-mid level executives are the Field Officers of Corporate America.

They take orders from the Generals and execute the Generals' direction by creating action items for large blocks of underlings. The Field Officers delegate those actions to Company Officers to execute.

Tied to the orders the Field Officer passes to the Company Officers are authorities to access the resources needed to execute the orders.

You do the same thing when you hand your kid $50 and the keys and tell him to take the truck down to the gas station to fill the gas tank. But instead of a single, 17 year-old kid we are talking hundreds or thousands of employees.

Motivational patterns
The primary motivations for a typical Field Officer are a sense of duty, patriotism and loyalty.

The primary motivators for the upper-mid executive are wealth and power.

When things go poorly for the Field Officer's organization he is unlikely to bolt even when working 20 hour days.

When things go south in a Silicon Valley enterprise the executive ranks puke like a bulemic 22-year-old after a wedding reception.

What will the Colonels-and-Captains of Corporate America do when their $400,000 in home equity flips upside-down?

What will they do when the value of their stock options evaporate and their portfolio of $900,000 drops to $175K?

The Generals will stay in place. Their egos demand it. The Company Grade officers don't have that investment in ego.

What what will happen to all of the people who are vital links in the operations/logistics/planning activities when one of their prime motivators (wealth) takes a torpedo below the water-line?

What happens when those anonymous minions discover that there is a linkage between their actions (supporting Marxist organizations) and their assets?

"We pretend to work and they pretend to pay us"My guess is that we already have the answer. They will continue to go through the motions of executing their responsibilities but they will be slower and far less effective.

Never underestimate the power of Denial.


  1. Denial is NOT just a river in Egypt... sorry, couldn't resist... snerk

  2. What will they do? Become serfs if they're lucky. Die faster if they aren't.

  3. For over a decade, I have been saying that what this country needs to straighten it and the spoiled generations out is either a World War or a severe depression. Much of the frivolous in our society is going away, perhaps for good. Now we are getting the depression. I pray that we don't get the war.

    1. Trying to keep the stockmarket inflated is like trying to nail warm jello to the wall, at this point.

      Not even sure why Trump is trying.

      My opinion is that we have a great reset hanging over us.

      Stocks tanking and less credit worthy bonds puking will destroy public and private pension plans.

      Prices will drop when landlords dump properties due to rising taxes, rents in arrears and spiking insurance rates.

      Commercial rents will collapse since working from home has proven viable for most "knowledge workers".

      Urban tax revenues and pension obligations will be the vortex that sucks prices into the black hole.

      There will be a scramble to refigure costs to comprehend the new, lower "fixed" cost components. Legacy firms that drag their feet refiguring costs will be massacred by new entries who scoop up competing assets at pennies-on-the-dollar.

      Like Obama-care, there is no turning the hands of the clock back to where we were before.

      Do what you can to stay healthy, cultivate good friends, take care of family, keep costs low.

    2. And "Stay away from crowds." as 'Ol Remus said.

  4. I used to work with the Field Officers in the insurance and banking industries on a daily basis. Most have M.A.s in business and accounting along with JDs. They were educated to have a Paul Krugman formatted process of analysis. Most of them are not capable of seeing the linkage in specific situations that do not fit the textbook profiles. I totally agree with you that we have a great reset hanging over us. Actually that is probably an understatement.--ken

  5. I was wondering...are your descriptions of 2020 millionaires more typical in Cali, or do they apply to 2020 millionaires across the country (generally) ? BTW, I will be finishing my book Calexit in the next few minutes. Seven pages to go. Two thumbs up !

    1. Since most millionaires live in urban areas and are affiliated with "growth" industries, the typical millionaire lives in California, western Or or Washington state, NY, Connecticut, Maryland, northern Virginia, urban Tx and Florida.

      Real estate is a key component of their asset mix and there are fewer millionaires in markets with stagnant real estate values.


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