More rich people in America -- a bad thing?

Earlier today, Peter Cohan wrote about the growing number of very wealthy Americans. He wondered if this is a good thing, and quickly concluded that it is.

It's hard to argue against people finding wealth and happiness in whatever way they see fit. But the details of his analysis raise a few questions. He refers to a recent New York Times piece that tells the story of a medical doctor who left medicine for Wall Street. The doctor is now fabulously wealthy, rather than merely well off. His net worth is in the $20 million range. This, Peter Cohan argues, is proof that the American Dream works. People are free to pursue any amount of education they want, and then are free to move through the labor market in any way they see fit. If a hedge fund pays more than a medical practice, then go with the money. This is simply how a properly functioning meritocratic system works, and as a result everybody is better off.

But something doesn't seem quite right here. In this interpretation, the American dream consists of highly educated people -- typically from privileged backgrounds (the doctor in the story is a Harvard grad) -- making millions working with investment capital. The fact that the country now has one less well trained doctor doesn't seem to matter. The fact that only a small percentage of the population has access to the top educational institutions is not a concern. And, most importantly, the economic condition of the majority of the population is not part of the calculus.

Using these simple points of reference, I think you can argue just as convincingly that the fabulous and growing wealth of highly educated people who work in the capital markets is in fact a loss for the country itself. As the American economy becomes more strongly oriented to making money from money, many citizens are left behind. This includes the people who 'merely' make things and provide basic human services, from auto workers to doctors. Many of these people face declining incomes and decreasing economic security. More rich people is great -- but only if you're one of them. For everyone else, it's a different story.