šAmericans have lost their mind.
You are the most privileged people in the history of mankind. Stop whining and live up to it.
TLDR Summary
Americans are seriously arguing that $120,000 after tax per year is not enough for a family of four to participate in society. An income that puts you comfortably into the top decile of humanity. Itās an absurd belief. And yet it seems that itās a belief shared by millions of people.
The popularity of this idea shows the pervasiveness of victim culture. People are too afraid to actually live their lives which is why they are looking for external excuses. They will love every messenger who validates them and takes the responsibility for their own happiness off their shoulders.
If you live your live doing what everyone else does, without any passion, vision and inspiration, you will live a miserable life. That is true today. That was true in the past. And that will be true forever. Wealth building is your individual responsibility. You canāt outsource it to someone else. And certainly not to politicians.
The Manifesto of Michael Green
Michael Green is a fund manager with a large online following. He published a piece a few days ago that went viral.
In his article, Green calculates what he calls the Survival Line. The income level that separates those who can participate in society from those who canāt. According to Green, this Survival Line is $120,000 after taxes for a family of four. He uses this as evidence that the middle class is struggling and eroding in the US.
He also contrasts it to the so called Federal Poverty Level (FPL) which is published by the US Department of Health and Human Services to determine eligibility for federal welfare services like Medicaid for example.
The FPL currently just stands at $32,000 for a family of four. Green takes issue with the fact that the FPL is just an inflation-extrapolated figure based on three times the cost of a 1963 minimum food diet. He argues inflation in other goods and services has greatly exceeded food inflation in the last 60 years which is why the multiple on minimum food spending should not be three, but sixteen. Meaning that a family needs sixteen times what they spend on food to sustain themselves given all other expenses they have. In particular, he refers to excessive cost increases in education, housing, healthcare and childcare.
Approximately 100% of the responses to this article are of affirming nature. They claim that this is a revolutionary revelation. One that uncovers how bad things are for the US middle class. Itās an indictment for the political class.
I find the key takeaways from this article nonsensical and I believe it points to another set of problems the US is facing. Therefore, I feel compelled to add some thoughts below.
$120,000 after-tax is a ton of money.
$120,000 after-tax household income. Itās hard to place it into a global income distribution with precision, but very likely a family with two parents and two children will be in the top decile globally with this income.
Green seriously wants to tell us that being a top 10% earner globally is not enough to participate in America? 9 out of 10 humans on this planet would happily switch place with an American allegedly living on the edge of survival. How plausible is that? GMAFB.
From a pure US perspective, itās also non-sensical to argue that this is some sort of āparticipation ticketā as Green framed it in his article. To make $120,000 after taxes, you likely have to make more than $150,000 before taxes. That puts you easily into the top 25% of US households. Do you really want to argue that 75% of Americans are sitting at home, unable to participate in society?
The interesting part is that Green isnāt making up his numbers. He refers in his article to āconservativeā spending estimates based on credible sources. Actual observed spending data. But it seems to be that his conclusions based on that data lead to a wrong direction.
Needs and wants
Sure, a family of four can easily spend $120,000 and more every year. It doesnāt take expensive hobbies to burn through $10,000 a month. In fact, you need to demonstrate some creativity to sail smoothly.
But how much of that is really forced spending, i.e. near impossible to avoid? And how much of it is deliberate spending based on the lifestyle people are accustomed to?
I have been to the US many times. The extraordinary wealth level in that country is evident in many places. Cars the size of trucks where even my six foot frame is barely enough to look over the hood. Two of them in every driveway. 3,000 sqft homes with walk-in closets, kitchen islands with marble countertops and a bathroom for every bedroom. Everything is bigger than elsewhere. And it is getting even bigger. All while the median household income is about 35% lower than Greenās Survival Line.
There are certainly financial pain points. Not everything is sunshine and roses. A college education in the US is ludicrously expensive. But financial pain points need to be addressed through creativity and foresight. If you solve every problem by throwing cash at it, you will run out of it quickly.
Why do you believe that a college degree should be a god given ticket to prosperity? Just because it was so 60 years ago? Prosperity isnāt downstream from solving the problems of the past. Itās about solving the problems of the present. Answers today differ from those yesterday and tomorrowās answers will be different again. If you look into your options after high school and the RoI on a college degree isnāt compelling, do something else. āWhat?ā you may ask. Well, figuring out how to get wealthy is an INDIVIDUAL responsibility. Demanding a template from others wonāt cut it.
With respect to housing, buying a home is undeniably multiple times more expensive today than it was 60 years ago when benchmarked to incomes. But part of the truth is also that homes are much bigger. So, a good amount of the price increase is by choice, not by force. People simply put more of their disposable income into housing because it matters to them. Most young American families today would not accept the starter home their grandparents accepted 60 years ago. And they also wouldnāt accept the accommodation choices of many young Germans or Italians. I know many Europeans raising children in apartments. Every American with kids I know has at least a townhome.
The entire debate is also heavily impacted by a generational conflict. When people complain about inequality in the US, they love to point fingers at the Boomer generation who is allegedly stealing from younger generations by owning the majority of all assets. That argument makes no sense to me. Millennials and Zoomers struggling today will eventually receive the greatest wealth transfer ever through inheritance. US assets in the 2020s are the richest valued assets ever. Receiving the lion share of that is a HUGE privilege. Many other people on this planet would gladly trade their lives for that. Completely inappropriate to whine about a lack of financial resources when your parents are sitting on millions of Dollars in their stock portfolio.
Whether a boomer parent keeps all his money until the day he dies and starves his offspring financially in the process or whether he helps them with family formation, itās an individual choice. There are people with foresight and there are shortsighted people. Blame your parents if you have to. But itās hardly a systemic issue.
A tribute to the United States
Over the last 15 years, the US economy has outperformed the rest of the world by an incredible margin. Itās the result of its energy production boom, the global dominance of its technology industry and its attractiveness for the most skilled labor in the world.
However, Americaās greatest innovation is arguably its (re)invention of democracy which happened 250 years ago and which still is paying dividends. Itās easy to ridicule the aspects of the US political system that are not working well. But overall itās the greatest political system ever created.
I am German and I envy the US political system. Your Executive, Legislative and Judicial branches operate truly independent from each other. The individual power of your members of Congress is rooted in their electoral districts which limits the power of political parties which I consider cancerous. You have a strong two party political culture which enables public debates and majority formation on the most controversial topics. You have media outlets on both sides of the aisle.
In Germany, members of parliament rely on the blessing of the leaders of their political parties. They canāt openly debate in parliament. They canāt vote based on their opinion because they are fighting for their spot on the party list in the next election. The Legislative branch is subordinate to the Executive branch. The media is in the hands of the political class. All of this makes the political process dysfunctional. Way more dysfunctional than what you believe the US counterpart to be.
The technological, economic and political strengths of the US has given the country enormous gravity. Capital from all over the world is pouring into the country and the US economy converts it into profits like no other economy in the world can do it.
And Americans benefit greatly from that as the foreign capital creates jobs domestically and raises incomes. On a GDP/capita basis, the US has greatly outperformed the rest of the G7 countries over the last ten years.
The top 0.1% has benefited from that disproportionately without doubt. But lower percentiles have benefited as well. The wealth share of the bottom 90% was 30% in 2019. Today itās 33%. The disproportionate gain of the top 0.1% happened primarily at the expense of the rest of the top 10%. And these numbers assume static wealth classes. In reality, the socioeconomic order in the US is very fluid. You can move up wealth quantiles very quickly.
Victim Culture
One reason that made Greenās article viral is in my opinion that it pandered to our victim culture zeitgeist. People will love you the moment you tell them that the odds are stacked against them and they have no chance to succeed.
And why? Because people are too afraid to actually live their lives which is why they are looking for external excuses.
āI canāt have kids. I canāt get a partner. I canāt follow my dreams. Because life is too expensive. Life is too tough. Because the elites are robbing me of the things that I deserve.ā
Itās a softness that I see everywhere and that disgusts me. To be frank, thatās also what I see in the Bitcoin community. People want a quick way out because they are too soft to do it the hard way. Your parents did it the hard way. Your grandparents did and everyone before them, too. Just because the problems of the past are resolved by now doesnāt mean they werenāt tough at the time people faced them.
Look at this, a perfect encapsulation of current sentiment:
No, it was not easy to buy a home in 1991. It was in the middle of a recession. People had no idea how much their properties would appreciate in subsequent years and decades. And mortgage rates were about 9-10%.
I hate to break it to you. But there has never been a time in the world where you had more opportunities for growth than in the America of 2025.
No, not even the America of 1965. Were they able to buy a home on fewer years of income than you? Sure. But when they did, their mortgage rates tripled to 18% over the next 15 years. I doubt that was a ton of fun.
And did they have the internet to learn skills and market themselves? No. The internet has dropped the cost of obtaining information to near zero. If people donāt use that, itās their personal choice.
Did people 60 years ago have 100% freedom of choice in what profession they wanted to choose? No. Options were much more limited and many jobs were much more repetitive and physically harder than today.
Did they have democratic financial market access? No, there was no IBKR or Robinhood.
Were they free to live in almost any imaginable family/partner structure without discrimination? No. Social norms were much more rigid.
Did anyone tell them that buying and holding a passive and diversified stock portfolio offers great long-term returns? No. The research of Markowitz and co. hit the mainstream not until the late 1980s. Stocks were deemed only suitable for sophisticated active investors. Most people saved in Treasuries and underperformed. Not because they were stupid, but because understanding the truth was prohibitively expensive. Expensive in terms of the time and effort needed to understand it. Buffett became who he is because he was one the few who understood it and who lived long enough to compound.
Every member of every species in the world fights for the right to procreate. We on the other hand believe the society owes this right to us. We believe politicians owe us a free lunch.
But civilization doesnāt stop evolution. The fittest will always be the ones who survive. Itās not enough to have the keys for a successful life sixty years ago. You need to adapt to today. The game gets tougher because everyone learns from history just like you.
Hate the Boomers all you want. They wouldnāt have whined about 18% mortgage rates in 1980 like you are whining about tuition fees today.
What does this collective sentiment signal going forward?
Shortly before eras end, there are anecdotes that feel odd from a common sense perspective. They are objectively true when they shouldnāt be.
For example, various US newspapers ran stories in 1989 that the land under the Imperial Palace in Tokyo was worth more than all the real estate in California. It was more of a hypothetical illustration than an actual land value assessment. But the math was theoretically sound.
It didnāt make much common sense though. California is about 350,000 times larger than the Imperial Palace. It was home to about three times as many people as the entire Greater Tokyo with an economy about the same size as Greater Tokyo. Itās obvious in hindsight that this data point suggested an outrageous overvaluation of Japanese real estate at that time. And indeed, Japanese real estate prices started falling the next year and didnāt stop doing so for two decades.
The fact that Americans are today seriously debating that 120,000 after-tax is a ticket to poverty appears equally preposterous. It might be a signal that Americans are dramatically overearning right now in a global context. They clearly have lost touch. Perhaps itās a distortion that has to be digested in a way that will unfold similarly to what happened to Japanese real estate 30 years ago.
Sincerely,
Rene
As an American and a small business owner, I totally agree with your perspective on victim mindset. Itās pervasive and, quite honestly, annoying. Itās intellectual complacency gone amok. It comes from a confluence of factors, but mainly an educational system that doesnāt teach personal responsibility. In fact, it teaches the opposite. If you get a bad grade, then itās the teacherās fault. Parents affirm their childās struggles by blaming the teacher and not holding their child accountable. You can see how this translates into victimhood once they become adults.
Excellent article. Thank you!