In his excellent essays about America’s 3-1/2 class society, (See http://www.oftwominds.com/blogoct12/three-classes10-12.html or http://www.oftwominds.com/blogmay13/debt-tax-serfdom5-13.html), Charles Hugh Smith uses the term Tax Donkeys to describe the roughly 20% of Americans who are just below the top 0.1% – people who earn most of their income by their labor, and are taxed at the highest rates by multiple levels of government.
Unlike the super-rich, these individuals cannot afford the armies of accountants, tax lawyers and lobbyists to rig the system in their favor. Smith hints at the possibility that one day the Tax Donkeys might rebel, but the more relevant question is why they have not done so already.
Let’s examine some possible causes
1. The situation is not yet personal for enough people
Opinion polls show a broad dissatisfaction with the country’s direction, and almost every major institution in our society carries less respect than it once did.
In my own conversations with friends and colleagues, complaints seem to have a harsher edge to them now than in years past – moving beyond normal daily gumbling.
But dissatisfaction is not sufficient to drive major transformations. It is well documented – at least with health/fitness and career moves – that people do not make fundamental life changes on this basis, nor on the basis of logic alone. Instead, the situation must become personal.
Over the past few years, I have run a dozen half marathons, and on race day, the local newspaper invariably highlights a first-time runner. The story is always the same: a year or two before, the new runner was sedentary and grossly overweight, despite years of pressure from family or friends to start exercising and eat better. But then something happened – a diagnosis of diabetes or a friend’s death from a heart attack – to spur the runner to action, to cause him or her to think, “I could be the next one to drop from the roster, and I’m going to do something about this, starting today.”
It wasn’t that these runners were unaware of the facts: they knew they were dangerously obese, and that their food choices were poor. But this wasn’t enough. They needed a personal catalyst to compel them to take that first step, to begin to endure the pain and sacrifice required to make life-altering improvements.
Po Bronson, in his book What Should I Do With My Life, documents this same phenomenon with career transformations. His book covers many people who were dissatisfied with their careers, but until something happened to make it personal, they remained in miserable situations – often for years.
2. Many of the Tax Donkeys’ careers consist of providing services to the 0.01%.
Many of the upper-income reaches of Tax Donkey-dom are lawyers, accountants, consultants, or other providers of professional services to the Top 0.01%.
A significant number of these people are employed by large national firms, whose web sites are filled with high-sounding blandishments about “values” and “integrity.” But behind the pretty pictures, these organizations operate on a very simple principle: those who rock the boat are tossed overboard.
In every financial disaster of our current Millennium (take your pick: Enron, Arthur Andersen, AIG, Washington Mutual, IndyMac, for starters) lonely voices in the wilderness argued against what their firms or their clients were doing. In each case, these warnings were ignored.
For a lucky few Cassandras – who were either high enough in the organization to have already socked away a secure retirement or lucky in their timing (Sherron Watkins at Enron, for example) – this resulted in no significant personal consequences. For everyone else, the example of Christine Casey at Mattel presents the usual outcome. “The High Risks and Low Rewards of Making Allegations About Your Employer.”
Today’s poor economy only exacerbates this problem. According to the American Bar Association, only half of 2011 and 2012 law school graduates found themselves working in jobs that required a JD. What choice will a big firm associate make when forced to choose between doing something borderline sleazy or joining his classmates behind the counter at Starbucks? Add $100,000 in nondischargeable student loan debt (and perhaps a wife and child) to the mix and the path forward becomes pretty clear.
3. Many aspire to become one of the 0.01% and see a period of Tax Donkey-dom as a necessary step toward achieving that goal.
Last year on an overnight flight, I found myself sitting next to a man who owned an investment firm. As the flight attendants took our plates and dimmed the lights, this man looked at his watch and chuckled that his analysts would be “getting ready to go home about now” (midnight, at his office’s local time).
“But they like it,” he added.
Nonsense. I have worked for managers who thought their teams did their best work at 3:00 a.m. while subsisting on a diet of vending machine donuts – and I did not enjoy it one bit; nor did the people who remained at the firm long after I had departed.
In fact, when such persons answered honestly, they almost always admitted that their primary career goal was to do something else.
So why did they stay? Why did they continue working miserable hours doing useless work for unpleasant bosses when their highest objective was to leave?
Because they wanted money – FU money to be precise – and felt like they needed to stay to learn the game. Any step off the perceived fast-track and their careers – along with their hopes of also owning (like their boss) one of the 100 most expensive houses in town – were finished.
We’ll address other important factors in future posts.