Are you in the protected class? If you’re reading this newsletter, you probably are. At least for now. I do have some readers who are struggling. I read their comments online and sometimes get email from them. For the most part, though, people read me because they have money to invest and want to keep up with economic news. The unprotected have other priorities.

I think we have subcategories within the protected class, though. I know some of the top 0.1%, and their lives are not like mine. They have multiple mansions, bodyguards, private jets, chauffeurs, and people to take care of everything. Call them the Super-protected.

As for me, I’m just plain protected. I live in a nice apartment with a doorman downstairs. I have assistance to help me with a lot of the “busywork.” I don’t miss any meals unless I’m trying to lose weight. I drive my own well-used vehicle. I don’t rate a private jet, but I can at least fly first class, usually, as my frequent flyer status with American Airlines allows me to be upgraded a large percentage of the time.

Another step down are what we might call the “semi-protected.” These are people with secure jobs, college degrees, some money in the bank, and a modicum of leisure time. They have the luxury of wondering where Junior will go to college instead of whether they can even pay for it.

Middle Class Shame
Those three categories encompass maybe (being generous) 30% of the population. The rest are the unprotected. What is life like for them? It’s a surprisingly hard question. You can’t truly know unless you’ve lived it, but I found one very interesting account in The Atlantic magazine. The May 2016 cover story is “The Secret Shame of the Middle Class.”


The writer, Neal Gabler, starts by noting a Federal Reserve survey that found 47% of Americans wouldn’t be able to cover an unexpected $400 expense without borrowing or selling something. (That percentage is strikingly, even eerily, similar to the one in the 2012 Mitt Romney quote about the percentage of Americans who are dependent on government but pay no income tax.)

Read that again. Yes, nearly half the country can’t come up with $400 cash in an emergency. That’s stunning. The slightest mishap – a toothache, a minor car problem, a hot-summer electric bill – will send them into debt or force them to sell something.

Gabler says he knows how it feels because he is one of those people:

I know what it is like to have to juggle creditors to make it through a week. I know what it is like to have to swallow my pride and constantly dun people to pay me so that I can pay others. I know what it is like to have liens slapped on me and to have my bank account levied by creditors. I know what it is like to be down to my last $5 – literally – while I wait for a paycheck to arrive, and I know what it is like to subsist for days on a diet of eggs.
I know what it is like to dread going to the mailbox, because there will always be new bills to pay but seldom a check with which to pay them. I know what it is like to have to tell my daughter that I didn’t know if I would be able to pay for her wedding; it all depended on whether something good happened. And I know what it is like to have to borrow money from my adult daughters because my wife and I ran out of heating oil.

That’s life on the edge in USA 2016. The data tells us that millions of people live like this or even worse.

I should point out that many of the protected were once unprotected. I certainly spent the first 35 years of my life in the unprotected class. I know what it’s like to wake up at 2 AM with your stomach in a knot as you try to figure out how you’re going to make your little two-person payroll, pay the electric bill before they turn you off, get enough gas in the car to make it to your first sales call – and wonder how you’re going to get one of your clients to pay you early so you can do all these things.

I lived in older mobile homes – not exactly considered even middle-class – (and in fact had my first two daughters while living in them) and was an enthusiastic supporter of the Reagan revolution because I wanted change. (Just for the record, I should note that I voted Democratic in the two presidential elections before that.)

When you have to borrow money at 18% and your taxes seem god-awful high compared to your income, your views on inflation and government participation change. For many years, as a young businessman, I kept a bank account in North Dakota to write checks on because it took between 7 and 10 days for them to clear. The polite term for that is cash management, but back in the day we called it kiting checks. Today, if I wanted to start a business, I could find a lot of people with a great deal of interest in investing. Back then I couldn’t even get a loan on my own signature.

I understand having an old car that requires a lot of maintenance to get you where you need to go. I grew up knowing how to maintain and repair cars, swing a hammer, and do everything else needed to keep my life moving forward. I actually never thought of that approach to life as unusual; it was just normal. But I really didn’t like where I saw our country and economy going.

So I can understand the frustration of people who don’t feel that they are participating in the prosperity and growth of the country. I at least felt like I had a chance. As we’re going to see as we go along in the letter, more and more people are feeling that circumstances – and the people who create those circumstance – are arrayed against them.

You might respond that even impoverished Americans live better than many others around the world. Maybe so. In some countries the poor and downtrodden simply accept their lot and remain happy. Here, we get angry. Why?