On Andrew Schiff’s “Middle Class Lifestyle” in New York City

Felix Salmon has been bending over backwards listening to and reporting on Andrew Schiff’s claim that he’s suffering making ends meet on $350,000 a year and only wants to give his kids a “middle class lifestyle” in New York City.

For those who missed the salient points of Schiff’s Howard Beale moment, he’s unhappy because he is making less money than last year and is feeling pinched financially. He is paying for a child in private school ($32,000 a year), a summer rental, saves, and complains that he can’t afford to trade up from his 1200 square foot duplex in Cobble Hill and worries he will feel even more strained when his 7 year old starts to attend private school.

Schiff’s argument to Felix as to why his critics have it all wrong is that the cost of what would have been a “middle class lifestyle” in 1987 has risen much faster than incomes. Felix tried running down some indicators and didn’t reach any firm conclusions, save pointing out that the competition among the rich (which means the proliferating hedgies and private equity barons) has driven up “positional goods” in New York like real estate much faster than wages. (Note to Felix: if you really are going to try to do this more rigorously, you need to factor in the changes in tax rates too).

I’m not about to reach any hard and fast answers either, but that’s in large measure because Schiff’s “middle class” claim is bollocks. I’ve lived in Manhattan since 1981, save two years in Sydney (2002 to 2004). On the one hand, it is absolutely undeniable that the cost of real estate, both rentals and purchases, has gone up so much that it has driven a ton of people into less desirable neighborhoods. You used to have a lot of artists and writers living in Manhattan, along with teachers, small firm lawyers, ad agency professionals, and so on. The more favorably priced areas, such as Manhattan on the West Side just below Columbia, Chelsea, Little India, Harlem, the West 50s, keep gentrifying, and true middle class people either live in smaller space or face longer commutes. I dated artists when I first came to Manhattan, when they lived in artist in residence or illegal loft space in Soho. If you saw one other person on a block there on a Sunday morning, that was a lot. The city has become a lot tidier looking and much less diverse.

On the other hand, what Salmon and Schiff miss is that someone “middle class” in the 1980s would have been very unlikely to raise kids in the five boroughs (Schiff and Salmon really mean upper middle class). The city was not considered safe for children. When I first came to Manhattan, pretty much everyone I knew who did not live in a doorman building had had an apartment break-in. I had my wallet stolen on two occasions in 1987. The subways were gross and no woman would dare ride them wearing real or real-looking jewelry (gold chain snatchings were a regular occurrence). I was a member of the 1% then (although not in terms of Manhattan incomes, trust me, there was a huge amount of headroom between me and them) and I lived in a 1100 square foot apartment on 69th Street between Park and Madison, which is a nice block (yes this was a glam apartment, a wreck I had renovated, long shaggy story as to why I no longer have it). I’d be the first out of the building in the morning. The townhouse kept the inner door locked and the outer door unlocked. I’d always have to step over a homeless man sleeping between the two doors.

So in the 1980s and even into the early 1990s, only the comfortably affluent (those who lived in large apartments in doorman buildings or could afford an entire townhouse, which in those days were cheaper than the bigger apartments in good addresses) expected to stay in the city if they had kids. Everyone else moved to the ‘burbs either as soon as the arrival of a child made their living arrangements unduly cramped or no later than when the young ‘un was going to go to elementary school. And that family would have gone to a nice suburb, ideally one where the children could have gone to public school till at least 6th or 8th grade, and gotten a home with a decent sized yard and would not have spent on a summer rental, but on a nice summer vacation and maybe a winter or spring break getaway.

So Felix’s trying to price out what it would have cost in the late 1980s for a Schiff equivalent to live in the better parts of Brooklyn or the nice but less than prime parts of Manhattan is the wrong comparable. It isn’t what people like Schiff did back then. It didn’t become common to raise kids in the city until into the 1990s. I’ve seen it in my own building (I’ve been here 20 years) and with couples in my peer group (the ones that stayed in the city had two high earners, often one member of the pair in private equity or M&A, the other a partner in a law firm, or else a male super high earner, and they’d have only one or two kids). There was all of one child in the building when I arrived and she was the only one until the early 2000s. Now we seem to have between 6 and 8 (there is also more turnover in the building than there once was).

So the pressure on real estate prices wasn’t simply due to rising Wall Street incomes, although that has been the biggest driver. It has also come from more couples in all professions being more likely to stay in the city once they have kids. You can see it in what has happened to townhouses. Many that had been divided into apartments have been reassembled into single family homes. Similarly, my building, like many other in the city, has been putting one bedrooms together and making them into larger apartments. And on top of that, both with the city being safer and the dollar falling over time, more foreigners have been buying apartments too.

The other part is what it takes to be “middle class” has changed. As Elizabeth Warren pointed out in the Two Income Trap, good quality public education has become more scarce, leading to escalating real estate prices in districts seen as having good schools (note that yours truly only went intermittently to schools that would have been considered pretty good, since I lived mainly in hick towns, but even so did well academically in college. I doubt someone who now went to the schools I had attended would have a shot at going to an Ivy unless they had an obvious sign of achievement, like winning a major math competition). But on top of that, people eat out more (partly due to more working spouses, but it is also a broader cultural shift), spend more on household help, entertainment, even Starbucks. There are a lot of routine spending items now that weren’t routine back then.

So the people who take Schiff on are correct. He has assumed he would have upward mobility in a society where that is no longer generally the case, even for those in finance. And his adjustment to new normal is a lot less painful than that being experienced by most people in their 40s. So instead of grousing, he ought to consider himself lucky.

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          1. wb

            quite quiet…

            until someone comes along and chops yer feets off to steal yer shoes…


    1. maynardGkeynes

      My pappy used to say to me that all of a man’s trouble started in his aching feet. One day, we saw a man who had only one foot, and he said, “now there’s a man whose troubles are half over.”

      1. chris m

        The only place I’ve ever been where people have no problems is a cemetary. – Norman Vincent Peale

    2. F. Beard

      “The world is so full of a number of things, I’m sure we should all be as happy as kings.” Robert Louis Stevenson

      But we’re not because of the usury for counterfeit money cartel induced rat race?

      “You shall not charge interest to your countrymen: interest on money, food, or anything that may be loaned at interest. You may charge interest to a foreigner, but to your countrymen you shall not charge interest, so that the LORD your God may bless you in all that you undertake in the land which you are about to enter to possess. Deuteronomy 23:19-20 New American Standard Bible (NASB) [bold added]

      1) Do the bankers consider us foreigners and should we reciprocate?

      2) Are we feeling blessed?

      1. Eric L. Prentis

        Interest? That is so 80s.

        Banks and corporations charge late FEES, much more profitable!

  1. Lafayette


    Ahh, the 1980s. I had just been hired into IBM up from NYC, in quite another country, called East Fishkill. Supposedly, I was told, it was a “job for life”. I once visited a major IBM plant in the western part of New York State where there was a row of lathes, preserved, not working – because that was “Millionaires’ Row”.

    Yes, each and every man working at those lathes in pre-WW2 times became a dollar millionaire when he cashed in his IBM stock upon retirement in the 1950s. Mind you, this was long before Manhattan had discovered the SubPrime Securitization GetRichQuick scheme – so Millionaires’ Row was a remarkable bit of local folklore.

    IBMers were a self-contented lot. After all, at the time, the computing world was called IBM And The Seven Dwarfs (the others being Univac, GE, Burroughs, RCA and I forget the rest). Children were abundant and typically underfoot most of the time. If there was a Desperate Housewife then in the Hudson Valley, she was keeping her sad tale to herself. Life was good.

    I moved away, having got bored with the overweening self-indulgence. Paris beckoned … and I never looked back.

    That version of nirvana didn’t last. IBM found inevitably its comeuppance and the career “lifetime jobs” were no longer career life-long. IBM downsized a great many people; some to retirement, most to unemployment.

    Sic transit gloria mundi.

    1. Up the Ante

      “I had just been hired into IBM up from NYC, in quite another country, called East Fishkill. Supposedly, .. it was a “job for life”. [I then chanced upon a book ‘IBM and the Holocaust’ by Edwin Black. I then realized I’d been working for one of the most grotesque corporations to have ever existed.] ”

      fixed it

          1. JIm Sterling

            Caesar aderat forte. Pompey adsum jam. Caesar sic in omnibus. Pompey sic intram.

  2. Carlito Quesare

    “The last guido in Brooklyn graduated High School in 1987.”

    Peter Schiff and Euro-Pac are based out of West Port CT, Peter has raised a family in the surrounding suburbs. Peter and Andrew were raised in the CT. suburbs. With Andrews salary and equity, he could afford a substantial house on a hill with a view of the LI Sound,… in CT.

    Andrew sounds like a whiny b***h,

    That being said, my college roommate grew up in Cobble Hill, his family’s brownstone has more than doubled in price in the last decade. As have rents, etc. Late 90’s through early 2000’s Cobble Hill was still a dump in areas with long walking distances to the sub stations… no longer.

  3. dearieme

    House prices rising because of pressure from the overpaid financial sector and from furriners; costs rising because state schooling is increasingly unpalatable – you could be describing life in much of London and many other places within commuting distance of it. Except, of course, the fall in crime making it more liveable – we don’t get that. Not remotely.

  4. jake chase

    Having lived several lives in Manhattan between 1968 and 1989, I can say without equivocation that only two things really mattered to one’s NYC life style: finding the right apartment at the right time and not having children. Anyone who managed both could get along quite nicely on 25-50k per year, and in the exceptional case while having no visible means of support whatsoever. One friend was able to rent half of his apartment (the lesser half) to a yuppie happy to pay 200% of his rent. He supplemented this income by walking dogs and moving cars from one side of the street to the other, and lived quite nicely for about ten years, although I never knew him to grab a check.

  5. Middle Seaman

    Schiff said that he is “unhappy because he is making less money than last year and is feeling pinched financially.” Schiff is clearly very fortunate and has no factual justification to “feeling pinched.” But he does.

    Since I went through a long period of time with Schiff-like income or higher (not anymore), I seem to understand what makes Schiff tick. $300K is a lot of money but it is not a life changing amount if you look at the rather more common $100k. Suddenly you don’t have to think twice when you spend $5000. But if you desire a larger apartment in Manhattan, it suddenly isn’t that much money. When you spend 10% of your income on kids’ education, you suddenly have only 90% of your income. (Actually Schiff’s kid probably absorbs about 15% due to the social environment.)

    To put it briefly, Schiff stopped way too early to live as member of the middle class, but doesn’t have the money to be rich. He feels pinched.

    1. Jim Sterling

      Another problem is that when you’re Director of Marketing at your brother’s investment firm (as Schiff is) or are getting your income from investments (as many rich people do), your income is from return on capital, or from bonuses. i.e. it is VERY VOLATILE. A more realistic man would mark his position to his income in the depth of a recession, and treat bull markets as gravy. He seems to have marked his position in society at the height of the boom, and treats bear markets as a personal tragedy.

      He’s right that what was once considered a middle-class (in the American meaning of “average to comfortable”) lifestyle is now a rich man’s game. A working-class American could raise a family in a two or three bedroom house in the 1970s in city locations that are now out of reach of all but the 1% (like those whose CEO brothers give them a director’s job in a brokerage). That’s because those houses were bid up by the rich so regular people can’t afford them any more. It’s all about the rent to wages ratio, asset prices have been rising and labor compensation hasn’t.

      Thing is, *we had noticed*. Some years ago now. Seems he only just cottoned on.

      1. mtnplover

        This is exacty right. Unless someone purchased a house before the 1990’s (or inherited one), housing prices can easily consume up to 30-45% of total income. And as incomes get higher, taxes can consume another 25-40% of total income, depending on the state and city of residence.

        One simple solution is significantly reducing the burden of taxes on working people by shifting from taxes on salary/wage income to taxing rents, capital gains and business gross receipts instead. A 10% tax on rents and a 75% captial gains tax on all real estate other than a personal residence will get a lot of air out of the market, including many speculators, making housing somewhat more affordable too.

        This solution is easy enough, but it counters the Fed’s goal of keeping interest rates extremely low to prop up asset values – especially real estate. Otherwise, many banks may disappear.

        When housing and taxes were a much lower percentage of a working person’s wage/salary income, the US was unstoppable as an economic dynamo. But after the rush of speculators found out how much money could be made from leveraged real estate – with little risk other than a small downpayment – then housing costs on the east and west coasts near the higher paying job centers got bid up to the highest levels. It’s pretty much the same situation in West LA, SF Bay Area, Wash DC, Boston, Manhattan, and some of the surrounding areas of greater NYC.

        High housing prices made the banks, real estate agents and speculators billions of earnings from 1990 to 2005, but the homeowners and renters – and their families – were the collateral damage.

  6. bmeisen

    Manhattan RE prices move inversely to the island’s cultural relevance. The island’s most relevant phase was say ’30-’80. As compensation for financial industry talent increased, i.e. their behavior became explicitly extractive, the area’s relevance to culture declined. I measure cultural relevance by the number of artists living on E 9 St between Ave A and B. “Artists” are individuals who paint, write, make music, dance, and exist aesthetically.

    1. ScottS

      This. I say let Hedgistan annex NYC and OC and blow land bubbles. Let’s create a new city based on honor and art and outlaw commerce. And when the Hedgistani want in to buy our art and our public spaces, we’ll laugh. How can you buy culture? How can you own the playful dialog between Duchamp and Warhol? It’s absurd.

      Maybe the Hedgistani are performance artists commenting on the senselessness of greed — without even realizing it themselves.

    2. Jonny

      Comically typical Manhattan-centric of you. New York City contains five boroughs, remember. Most (and many, many non-) New Yorkers know that much of the still-globally-very-vital aesthetic class has moved into other areas, notably Brooklyn, Queens and even the lower Bronx. Yes, they have been priced out of Manhattan, but NY’s artistic energy remains.

  7. Ned Ludd

    As Elizabeth Warren pointed out in the Two Income Trap, good quality public education has become more scarce, leading to escalating real estate prices in districts seen as having good schools…

    When I was a kid, I went to an excellent public school, even though I lived in a working class / lower middle class neighborhood. We lived in a new home that was about 1,200 square feet. It was built by a local builder, and the developer was also a local developer.

    Nowadays, all the undeveloped land has been gobbled up by large national companies. Where I live, the small, local land developer is extinct. The national builders build big homes (often of dubious quality) in the good school districts. They build small, low-quality townhomes in the mediocre-or-worse school districts. The quality of your child’s education depends on what kind of home you can afford to buy.

    Also, school districts increasingly rely on property taxes because of austerity at the state level. The better the school district, the higher the property taxes, adding another burden that pushes middle class parents into low-quality school districts.

    1. Ned Ludd

      The first pararaph of my comment is a quote from the post and should have been blockquote’d:

      “As Elizabeth Warren pointed out in the Two Income Trap, good quality public education has become more scarce, leading to escalating real estate prices in districts seen as having good schools…”

  8. smmbll

    I was born in the eighties in Manhattan and grew up on the Lower East Side, where there was a steady increase in the number of people who would self-describe as artists pumping out kids throughout the decade. But really, how come whenever people make statements about New York, they seem to take for granted that “the life of white people in certain zip codes” describes what it means for everyone to live in the city? There were plenty of kids around when I was growing up. They were mostly black, hispanic or Chinese, and a lot of them were middle class, especially if their parents had city jobs or businesses. I continue to be amazed at how little consideration is paid to the millions of people who make up the majority of New York and thus in fact the probable life of a New Yorker. With that total lack of perspective, guys like Schiff will continue to feel unashamed whining about what is essentially one of the most privileged positions a human being can be in.

    1. M

      I so agree with you smmmbil – it’s pretty infuriating that people who have lived in NY for so long don’t even see this. And for some reason it infuriates me that anyone thinks that a middle class lifestyle includes private school and a summer house! I would love to see a man-on-the-street interview of NYers

      Here’s my story, very typical of my generation: grew up in Manhattan in the 60s; our growing family moved to the suburbs in 68 in order to afford good schools; parents divorced in the 80s and moved back into the city, I graduated from college and moved back to the Lower East Side in the 80s.

      I now live in Brooklyn in a diverse neighborhood and most of my friends are artists, creative types, and we would all consider ourselves middle class – we all went to good colleges, many to Ivy League schools. I don’t have kids but everyone else does and none of them go to private school – oh wait my doctor friends send their kids to private school. The kids I know in public school are smart, creative and happy. No one has a summer home.

      I don’t know… as a NYer it’s obviously a subject close to home.

    2. Dan Friedman

      I regularly read Naked Capitalism; Yves and the rest of you (mostly) resonate with my politics. This post however, set me off. I grew up in NYC, starting in 1948. My education was in the NYC Public Schools and also in 2 NYC Public Colleges. My kids attending the Public Schools and also live in NYC.

      Andrew Schiff and his whining certainly don’t warrant the attention that they receive. Probably the most unimportant lot around.

    3. marcos

      Problem being that Manhattan is rapidly being transformed away from the mid 20th century melting pot of diversity into a cordoned off island of professional whites and Asians. As one born in Queens in the early 1960s, rent asunder by parents white flighting to the Rockland suburbs for the schools and then to the southwest as the Rockefeller drug laws and deteriorating northeastern economy took their tolls in the 1970s, and having sought refuge on the west coast once out of college, I divorced NYC last summer.

      The problem is that nobody from New York is a New Yorker anymore.

      Manhattan has been so thoroughly gentrified from the cultural ferment that made it interesting that I have declared myself solidly a west coasterner. Up through the 1980s and even into the early 2000s, Manhattan was an adult playground with no safety features that would jerk your neck like the first turn of the Cyclone at Coney Island. There were dangers around every corner and that was exhilarating and feed a cycle that made things more interesting, that pushed creative people to push the boundaries.

      Now Manhattan is little more than a series of big play dates made even safer and less unpredictable with the urban equivalent of guard rails and seat belts. American culture has suffered as a result from the cultural cleansing of both coastal crucibles, SF and NY, and this is largely because the queer youth of the flyover can no longer afford to seek refuge in the coastal crucibles. It was largely our presence that made American culture in the second half of the 20th century even remotely interesting and gave these now dead cities their spark.

      Damned be the real estate speculators, the maw end of the FIRE monster that has consumed American economics, politics and culture! These “new urbanists” are cut and run clear cutters whose steamrolling toolkit seeks “vibrant neighborhoods” which means more people than live here now but with higher disposable incomes. Established urban communities for them are problems that need to be solved and the solution is always more luxury condos.

      1. Dan Friedman


        Why be fatalistic about the “Problem being that Manhattan is rapidly being transformed away from the mid 20th century melting pot of diversity into a cordoned off island of professional whites and Asians.”?

        I live here. My children live here. My parents and grandparents before us. We live here FOR the diversity that Manhattan offers. I’m aware that there are few natural wonders the likes of great mountains and forests. What I’m after is great human resources, so here I stay.

        Things HAVE changed in the 63 years I’ve observed.OK

        And there IS a gay culture. And there IS a black culture. And there is an Asian culture. And there is…and the whole is even greater than the sum of its parts.

        1. marcos

          Dan, the problem is that the interesting cultures in our coastal crucibles have come up against barriers to entry in NYC and replaced with virtual, virtual as in fake, simulacra cultures via the interwebs.

          There is so much to still love about New York, it will always be a part of me. Manhattan has been lost, as we are losing San Francisco. There is no free or next to free culture anymore, everything costs, nothing can be had on the cheap.

          And this clearcutting, sterilization of urban crucibles has been accomplished with the blowtorch of cheap money and has been as effective at squelching resistance culture as if we were all consigned to Guantanamo, inflation generated low interest rates that scoured lower Manhattan and the east side of San Francisco clean of cultural and political threat in fifteen short years.

          It is as if West Hollywood were transplanted into Chelsea as far as the queer culture goes, the East Village is a gentrified remnant of its interstitial queer relevance during the 1990s which only happened because gentrification eradicated previously stable neighborhoods. There used to be a roughness to the Chelsea boys that has been dermabrasioned away in recent years.

          The lesbians likewise were eradicated from San Francisco’s Mission District in the 1990s, within five years of electing three lesbian supervisors. Blacks saw their numbers drop by 1/2 here in SF within five years after electing a black mayor, Willie Brown.

          The trap of identity politics has short circuited any sort of ongoing progressive economic power, even in SF where the political system had been pried open and is not welded shut like in NYC. Deals are cut with real estate interests to keep the advocacy groups funded and their will is worked on our communities.

          I cannot get a clear shot at power here because my so-called progressive and liberal allies stand between us collecting a check to represent us and sell us out. As above, the rise of the nonprofits representing discrete communities correlates directly with a deterioration of the position of those same communities.

          This is why the Occupy movement is so critical, that we need to both evict finance capital from political and dominance as well as cut off the nonprofit sellouts from their grant and public funded teats.

      2. different clue

        I am no expert to be sure, but I hear that there is an emerging “real art” scene in Detroit, Michigan. Young real artists moving there to practice their real art. Its supposed to be groovy, edgy, cool, hip, and all those good things. Plus it is still stumblewalking the edge of bankruptcy and it offers physical danger to those who want that excitement.

        So why not move to Detroit?

    4. Poci Ritard

      +1 for relevance, smmbll

      I spent the 80’s living in the Loisada. It was Dopetown, then. My friends and I used to call it a “national sacrifice area” as a jibe at James Watt. A little bit of the developing world right there in Manhattan, just a twenty minute walk of Wall Street.

      It’s a very strange, alienating thing to read this thread… My upstairs neighbor raised 4 children in a third floor 1 bedroom walkup. He didn’t speak much english and I had to help him up the stairs most Friday nights but they were a sweet family. His wife baked me cakes occaisionally as a polite way of saying thank you. Are these people relevant to this discussion WRT the cost of living in Manhattan, the difficulty of being middle class? Do they exist for Schiff? And you too, Yves. I love your blog but sometimes I’m reminded where you’re coming from.

      I feel like I’m from another planet. It can be hard for me to talk to “normal middle class white Americans,” not because they’re unintelligent or mean but because I have this other life experience that makes much of what they say seem cartoonish, a parody.

      It’s gotten worse as I get older. I used to be white, before 9-11, but that’s another story.

    5. Yves Smith Post author

      Did you not read the post? Please reread.

      I put “middle class” in quotes and said what Schiff and Salmon were talking about was an upper middle class lifestyle. That’s what I proceeded to discuss at greater length.

      1. Jack M.Hoff

        Yves, I think Pocci read the post alright. Maybe you didnt understand his comments? I may be wrong, but I’m thinking he is saying that people born with a silver spoon up their asses and those who manage to luck into wealth through the good old boys club always look at things different than people who never had the economic opportunities. I happen to agree with him.

        1. Yves Smith Post author

          I may have been lucky, but I most certainly did not have “a silver spoon up my ass.” I grew up in small, blue collar towns where a paper mill was the biggest employer and my father was a mill manager. There’s no wealth of any sort on either side of my family. Funny that you assume that someone who went to Harvard had to be rich. Not true. In the 1970s, when I went there, middle class parents could afford to send their kids there (and those kids were not on work study nor did they have loans. Yes, about 40% of the class was private school kids, and the rest of us were pretty intimidated by the fact that they did come in better educated than we were, not much by their money because the 1960s antimateralistic values were still pretty strong).

          I suggest you look at places like Escanaba, Michigan, Chillicothe, Ohio, and Keyser, West Virginia. Hint: they aren’t privileged, they are really hick, and you can smell the stink of sulphur from the mill a lot of the time. And I got started my career when being a woman was a major disadvantage.

          You really have ‘tude. And it’s not my problem if you get angry when someone discusses how the lives of high end professionals have changed over time. It is NOW a lot more difficult to get on that track than it was when I was young. Those jobs were a growth area ands saw rising incomes while average worker income stagnated. When I was young, if you did well at a good business school, you pretty much had your pick of that sort of job.

          I made it clear what this post was about. This is like picking up a copy of a lifestyle magazine and getting angry at the content. You are shooting the messenger.

          1. Chris Sturr

            I have to say I read it the same way as these commenters. E.g. this paragraph:

            “So in the 1980s and even into the early 1990s, only the comfortably affluent (those who lived in large apartments in doorman buildings or could afford an entire townhouse, which in those days were cheaper than the bigger apartments in good addresses) expected to stay in the city if they had kids. Everyone else moved to the ‘burbs either as soon as the arrival of a child made their living arrangements unduly cramped or no later than when the young ‘un was going to go to elementary school.”

            You say “everyone else,” implying–no, actually literally stating–that only the affluent raised children in Manhattan. Since I know you know that poor people did too, I knew what you meant. But I agree with these commenters that this way of phrasing things sounds (surprisingly, given that you wrote it) like the habit that the well off have of forgetting that everyone less well off than them exists. It reminds me of a dinner party I went to in Boston’s South End, where the hosts owned an entire townhouse (where most of them are split into condos now). They explained that they’d bought it cheap a long time ago, when “nobody” lived in the South End. (By “nobody,” they meant black and Latino families.)

  9. Harry

    Poor Mr. Schiff. People are conflating his bald statement of fact for a request for sympathy. But Schiff is right. The social contract he assumed was in place – that white well educated financiers should have access to very comfortable living conditions and a very high standard of living – is no longer in place.

    A new social contract hasnt yet been written. The negotiation is ongoing. I am not optimistic about its terms.

    1. chris m

      Whatever the new social contract turns out to be let’s hope it ISN’T the one Schiff assumed was in place.

  10. PQS

    “The rent is too damned high.”

    While I have lived all my life west of the Mississippi, save for brief forays as a child to Virginia and Florida, I can tell you that IMO, rental/ownership pricing for real estate is the main driver for the COL. When I got out of high school and started attending college, my first apartment was $275/month for a studio in the college neighborhood in Las Vegas. Not the best, but not scary, either. That was about a week’s pay at the time.

    Now apartments are about two weeks’ pay, if you’re lucky. I have a very long commute, and I seriously considered renting a place during the week, what with my sometimes ridiculous hours. But even the smallest place in the neighborhood where I work is at least $1K a month, plus utilities. My mortgage is $1600 a month, so that’s unworkable, even if I wanted to be away from the family and homestead.

    Couple that with this idea that many Americans have that they have to live like people do in magazines or on television, and most disposable income is going right out the door trying to keep up with the Vanderbilts.

    Saw a story this morning on HLN that the bourgeoisie are pawning their baubles due to lowered bonuses this year. Boo. Hoo.

    1. Wendy

      “The rent is too damn high.”
      THANK YOU.

      I live in Brooklyn, too – in Boerum Hill, just a couple blocks from Cobble Hill. Just like Schiff I rent a duplex in a brownstone. It’s in somewhat shabby condition, hasn’t been reno’ed in about 40 years, but with highly stylized details like molded plaster ceilings, still shows some hints of earlier (and maybe future) glory. My rent is $3300 and like Schiff, it’s two bedrooms. In the late ’90’s, entire brownstones (all 4 floors) were bought on this street and in this neighborhood for $250K – $400K. So, you could live in half and rent out half, and probably get your mortgage nearly covered by a tenant. Now, these same buildings are around $2 MILLION (maybe a little less) for the poor condition mine is in, to $3 MILLION and up if renovated (and depending on width). So, actually a LOT has changed in these little Brooklyn neighborhoods in just the past 10-15 years.

      The people who own my brownstone are a librarian and a poet. They bought in the early 70’s for an amount below $50K. The building still has the bars on the windows from that era. The family lived in the lower duplex that I now rent, and rented out the two upper floors (one of the kids currently lives in one of those apartments today). I think it’s fair to call them middle class.

      I am not sure comparing Manhattan is completely fair. I can see real changes in the very neighborhoods – “fringe” neighborhoods – Schiff is discussing (not that I feel any pity for him whatsoever). But I do think real estate has recently gotten way, way, way out of whack in this city. And I agree that a lot of it is driven/held afloat by wealthy foreign investors recently. That pushes locals and their dollars out of Manhattan and into Brooklyn and other nearby areas, resulting in higher prices in those outlying areas.

  11. SR6719

    Topic: Andy Warhol’s Manhattan

    (Warning: this is a little off topic, and becomes a rant on how Manhattan went from the center of the art world, to the place where art ended)

    The artists have all moved out. First to Williamsburg, from there they were taking the L train to Manhattan from Bedford Ave or Lorimer. Then as the hedge fund guys started buying up condos in Williamsburg, they moved out to Bushwick, or maybe Ridgewood, on the Queens-Brooklyn border, as Greenpoint became gentrified and second-generation Polish and Romanian families were priced out of Brooklyn.

    Now some of them are moving all the way up to Beacon in the Hudson Valley (in order to be near that Dia Art thing), or further north….

    One day (shortly before leaving New York), I was walking from the Strand through Union Square, on my way to the Barnes & Noble at East 17th St. And stopped in front of that 10 foot monument of Andy Warhol with a shopping bag in his hand. I’d passed it before, but never really paid attention:


    The artist goes shopping! That says it all.

    And some time after Warhol, MoMA became a “Center of Cultural Studies”, and Art was poisoned by social appropriation, that is, by the emphasis on its commercial value and its treatment as upscale entertainment, turning it into a species of social capital. Co-opted by the commonplace, it loses its uncommonness. It has also been undermined by the belief that all one has to do to be an artist, is have a “concept”.

    This is why so many people think of themselves as artists, for everyone, after all, has a favorite “concept”, especially about some person, place or thing.

    That’s where modern art lost its seriousness, becoming indistinguishable from non-art. That’s when the MoMA became the Museum of Mickey’s Art. The last time I visited, for instance, they thought it would be a good idea to display Picasso’s “Guitar” (1912-1913) in a wall-mounted plexiglas cover, making it perhaps the ugliest display of a masterpiece in 21st-century history. Even a toilet stall would have done more for “Guitar”.

    Or a wall of Cezanne landscapes as a display of framed reproductions ready to be charged to your Visa card and taken home. Rodchenko’s “Spatial Construction no. 12” could have been a colander. And poor Picasso trivialised once again, as his “Glass of Absinthe” (1914), one of the most original sculptures of the 20th century, was humiliated in a tableware display.

    And it all started with Andy Warhol. I blame him. After all, didn’t he once nonchalantly declare, although with his usual deceptive cleverness: “Business art is the step that comes after Art. I started as a commercial artist and I want to finish as a business artist. After I did the thing called “art” or whatever it’s called, I went into business art. I wanted to be an Art Businessman or a Business Artist….”

    I know, I know, for him it was all an act, he had this way of dramatizing everything. Some consider Warhol as the founder of modernity, in that he went the farthest in abolishing the subject of art, of the artist, by completely withdrawing from the creative act. He managed to move through the space of the avant-garde and reach the place it was striving to occupy: nowhere.

    While some of us relished the detour through art and aesthetics, Warhol skipped all those steps and completed the cycle in a single stroke.

    From the advent of banality, to the mechanized gestures and images, from simulation as drama to becoming the greatest simulator of them all, from the passage into the image to the absolute equivalence of all images, his principle: “I am a machine, I am nothing”, and since then, the entire art world from Williamsburg to Ridgewood to Bushwick is repeating the same mantra, only pretentiously…

    It got where I couldn’t take it anymore. The art world will never recover.

    But… but….. my complaints would mean nothing to Warhol, anymore than they would have meaning for some hipster in Bushwick who’s calling himself an artist because he had the “concept” of suspending four metal buckets over a table, or showing a glass of ordinary water on an equally plain shelf. So let me try a different way of criticizing, in the spirit of Warhol himself, and one that even the hipster-artist might relate to:

    In the following performance art video of Andy Warhol eating a hamburger, why does the founder of modern art leave the top of the bun off the burger if he is going to put ketchup on the side?

    I don’t trust him.


  12. Silver Spoon Throat

    What happens to someone when they discover their lifes’ work created more hurt than “wealth”. Run more propaganda for comfort equally troubled thieves?

  13. jake chase

    As to “where modern art lost its seriousness, becoming indistinguishable from non-art”, I think the only thing modern art ever had was its seriousness, and the only people who took it seriously were in the business of being pretentious and milking it. For my money, Tom Wolfe captured all this in The Printed Word.

    1. Fred Grandy

      Shell games are the FIRE sector. I’ll buy that for a dollar. Highly sophisticated do-nothings sell pretentiousness 24/7.
      Is fruit fake too?

    2. SR6719

      Not to make too much over this, but perhaps “seriousness” wasn’t the best choice of words.

      What these countless installations and performances are doing is compromising with past forms of art history. Raising banality or nullity to the level of values or even to perverse aesthetic pleasure. The mediocrity claims to transcend itself by moving art to a second, ironic level. But it’s just as empty and insignificant on the second level as it was on the first.

      Contemporary art loudly proclaims its insignificance: “I am null”, “I am null”, but it thinks it’s being ironic when it does this. The problem is that it truly is insignificant; it’s mediocrity squared.

      That’s where the duplicity of modern art lies: asserting insignificance and meaninglessness, when already null and void. Striving for emptiness when already empty. Claiming superficiality in superficial terms, etc. This is what I find so irritating.

      In a way, it’s worse than nothing, because it means nothing and yet it nonetheless exists.

      Just another case of insider trading, like I said before.

  14. sglover

    Good to see that Monty Python’s “Upper Class Twit of the Year” sketch is as timely as ever.

  15. Sam

    “…Everyone else moved to the ‘burbs either as soon as the arrival of a child made their living arrangements unduly cramped or no later than when the young ‘un was going to go to elementary school. And that family would have gone to a nice suburb, ideally one where the children could have gone to public school till at least 6th or 8th grade, and gotten a home with a decent sized yard…”

    That’s what smart people still do in San Francisco as well. Marin County just across the Golden Gate Bridge has some of the best schools in the state and is an easy ferry or bus ride to the city. Not much “diversity” though. That’s the whole point. It’s safe, it’s clean and it’s green.

    1. dirtbagger

      Sam is spot on here;

      We have another few years to endure in the burbs with the kids and then back to the city (West LA).

      People move out of the city to raise kids. That is why most of the social interaction is so excruciating mundane. If Dante was alive today and writing the “Inferno”, the 8th level of hell would be the suburbs.

    2. Dan Friedman

      “That’s what smart people still do in San Francisco as well. … Not much “diversity” though. That’s the whole point.”

      Huh! Isn’t something missing here for these ‘smart folk’. Is it that they don’t like these Diverse People?

        1. Daniel Friedman


          Your assessment is accurate. My question is why do they live in the USA (especially NYC)? The country is of course diverse, that’s what happenned after the indigiounous lost out to the foreigners. Now the foreighners don’t like to be around diverse people. And in NYC! If it’s not diversity you seek, why live in the most divers city in the world? The ‘melting pot’.

          1. Neo-Realist

            I believe the foreigners like the diversity of good dining choices in the city if not the diversity of its citizens.

      1. dirtbagger

        You seem to be completely clueless about the sad state of public schools in the inner city and adjacent urban areas.
        In those cases where a decent school district is not too far away, the housing costs in those neighborhoods tend to be extremely expensive. The only reasonable alternative that remains for parents is private schooling.

        Diversity may be fine in theory, but when your schools are flooded with students that barely functional in English and come from countries that tend to have a cultural indifference toward education, scholastic standards are abysmal.

        Your implication that parents flee the city to protect their kids from diversity is as likely false as it is true. Most parents want to offer kids the best environment and education they can afford. If that means relocating to the outer suburbs for a percieved safer neighborhood with better schools, then that is often what they will do.

        1. Dan Friedman

          “You seem to be completely clueless about the sad state of public schools in the inner city and adjacent urban areas.”

          No. I attended the NYC Public School as did my parents as did my children. I taught in the NYC Public Schools, as did my wife, as does my child. So much for me being ‘completely clueless’.

          But since you appear ready to wrangle,let’s examine YOUR words:

          “Diversity may be fine in theory, but when your schools are flooded with students that barely functional in English and come from countries that tend to have a cultural indifference toward education, scholastic standards are abysmal.”

          My experience differs. Both my child and my wife became bilingual, after schooling with NYC’s Hispanic students. My wife’s career subsequently relied on her bilingual skills, as does my daughter’s (those careers are not shoddy, as my daughter’s income in a large British law fim is handsome).

          “Your implication that parents flee the city to protect their kids from diversity is as likely false as it is true.”

          P L E A S E! My NYC Public School education led to the Ivy League. My daughter’s Public School education led to the Ivy league.

          more love.

        2. moneybagger

          Yeah, really. You’re lucky to be near NYC so you can get all that for free. If you’re smart enough and rich enough to get into a top-drawer private school or college, What are you buying? Kids from all over. Lots of perplexing languages and mores and cultures. You come out knowing your way around the whole world. You don’t end up as a helpless bitter provincial goober like poor dirtbag.

      1. Ted

        Actually it is not that expensive if you put the cost of private schools into the calculus.

        You can buy an $800,000 box in San Francisco in an ugly neighborhood with horrible weather and abysmal and dangerous public schools or you can buy an $800,000 house with real yards and great weather and most importantly fabulous public schools in Marin.

        Subtract the cost of private schools from living in Marin and it becomes a bargain compared to San Francisco. Commute times may be slightly longer. We have friends who lived in SF near the Daly City line. Now that’s an ugly place! Needed 40 minutes to commute to the financial district where the jobs are. Spent 45,000 a year for private schools.
        They sold their house and for the same price got a place in San Rafael with wonderful primary schools, the best
        weather and an great shopping street nearby. Commute time is ten minutes longer. The San Rafael high school is OK, still better than all but one high school in SF that they wouldn’t have gotten into probably. South of San Rafael, there are several towns like Corte Madera, Larkspur and Mill Valley with the best schools and property that is more expensive but is still on par with the city.

        If you are young, have no kids, like hanging out in edgy neighborhoods where you might get jumped, then San Francisco is definitely for you.

  16. craazyman

    what’s wrong with Ronkonkoma?

    the hardest thing to lose is your sense of identity.

    I think there’s a Zen phrase for that but I can’t remember what it is.

  17. Andrew Schiff

    This is Andrew Schiff, and yes I have been reading some of the comments. Does it matter at all that I was manipulated into appearing to be something that I am not?

    I never complained to the reporter about my salary or comfort relative to the rest of the country. I was careful to say that I was lucky to make what I do and that I recognized the huge advantages I have over most middle class people. But that didn’t serve the story. (The whole traffic jam discussion had absolutely nothing to do with the larger conversation and is a good illustration of the bias).

    I was merely answering the question posed to me when he called: how will the decline in the Wall Street bonus pool affect lifestyles of the wealthy in New York. I thought my circumstances could illustrate just how expensive it is to raise a family in the City while trying to maintain the amenities that the successful Wall Street types have traditionally expected.

    I wasn’t complaining, I was explaining. Now I’m a punchline.

    1. Anonymous Jones

      Well, one thing is certain in my mind…that it is unfortunate that so much ink gets spilled (or pixels get illuminated) over people who don’t always get everything they expected.

      If we only discussed the ‘Nickled and Dimed’ part of our society as much, investigated how hard it is for a median-income family of four living in a “cheap” part of the country to consistently put healthy food on the table, spend adequate time with our children, or provide the most basic health care, we might not seem so contemptible.

      I’m sure you have been portrayed in a misleading light. At the same time, the pie is relatively fixed. The people who consume an extraordinary amount of resources crowd out the ability of those on the edge of starvation and disease from having the resources to survive (and they tend to fall off the edge). No man is an island. But certain of us are more of a proximate cause of the suffering that occurs all around.

      1. bob goodwin


        Thanks for posting, and am sorry you got sucker punched by the media. If it isn’t obvious to you now, there is virtually no sympathy for the successful, especially when they have setbacks. I know this all too painfully when I got wiped out when I sold my company before the dot com bust and the buying company did an LBO with CD&R. I got a large tax liability while my assets went to zero. New wife, new baby. No sympathy, and a sense of profound isolation.

        I have since found my way back into success. The only way you can talk about wealth in America is like Donald trump (I am fabulous because I am rich, I am fabulous because I used the bankrupcy court). For the rest of us, we learn to keep our challenges private.

        I actually appreciate your willingness to stick your neck out, and hope you do well going forward.

    2. Andrew not the Saint

      And having in mind how much difficulty the 99.x% are having nowadays it would have been mildly wise to just keep your mouth shut and avoid such conversations. Perhaps you’ll learn next time.

      Now let the ridicule continue…

    3. Jim Sterling

      Hello, thanks for coming by. I wrote a comment above before I saw this, and would just like to repeat that it’s a good idea to keep some savings by when your income is bonuses or investments, because it’s not such a steady means of support. It’s more like a faucet someone’s playing with.

      Your remarks about the changes in American society over time aren’t so wrong, it’s just that you end up sounding like the guy in the room who just got the punchline.

    4. ScottS


      Are you familiar with the concept of a lightning rod? You may not be the cause of static electricity, but you’re part of the system. That is, you’re part of the problem, whether you see the victims of your work or not. As “marketing director” for Euro Pacific Capital, you’re someone who takes from society and gives nothing (constructive) in return.

      To suggest your life is anything less than awesome when people are starving in the streets is shockingly tone-deaf.

    5. Lambert Strether

      Andrew, thanks for stopping by. I don’t think you’ll find much argument here on the mischievous nature of our famously free press. That said, one of the “amenities” for those in your profession has been a level of deference that, given the events since 2008, is more than open to question. And that’s a very good thing.

    6. proximity1

      “I was merely answering the question posed to me when he called: how will the decline in the Wall Street bonus pool affect lifestyles of the wealthy in New York. I thought my circumstances could illustrate just how expensive it is to raise a family in the City while trying to maintain the amenities that the successful Wall Street types have traditionally expected.”

      Right. Without your profile, many of us should have had no idea how expensive are those “amenities that the successful Wall Street types have traditionally expected.”

      And, then, to add insult to “injury,” Felix, the cunning reporter, “manipulated” you–that is, rather, manipulated the content of the interview.

      By the way, did you ever notice that your country–the one in which your creature comforts put you in the ranks of the very privileged–is a scandalously corrupt disgrace? Or that those creature comforts you enjoy depend on the deliberate care and maintainance of that scandalously corrupt system? Or that those who most benefit from the corruption know what their privileges depend on and use every advantage at their disposal to defend and protect a corrupt system that so disproportionately serves them and their loved ones? Did you know these things?

      And, knowing them, you helped yourself to the spoils anyway? And now you’re sore because the reporter “manipulated” you? You’ve been manipulated?

      Oh, the humanity!!!!!

      What’s next? Domestic caviar?!? Please don’t say that. I don’t think I could take it.

    7. chris m

      Let us grant your good intentions for the moment. Nevertheless, in the midst of the worst recession in 80 years and a lot of very real suffering at no fault of their own by millions of decent hardworking people you failed to see the very obvious likelihood that many people would see your statements as self-indulgent, ungrateful whining. rather undermines the assumption that our Wall Street masters deserve their vast wealth by virtue of their superior intelligence.

  18. alex

    Schiff must be an undercover supporter for OWS, because the best thing for the OWS cause would be for Schiff’s whining about $350k to be heard by everyone in the country.

  19. Masonboro

    I recall the fictional bond trader Sherman McCoy in “Bonfire of the Vanities” explaining why one couldn’t live in NY on only $1MM/year and that was 1987 prices. Tom Wolfe actually made a convincing case, so $350K in today’s money must be near poverty levels.


  20. Stuart Gittleman

    NYC home costs did skyrocket in part from pressure by the very wealthy, including foreign investors, and from the financialization of real estate, but purchase prices came down thanks to the efforts of the financial sector. Too bad Mr Schiff didn’t take advantage of the bubble to sell high, then buy it back low. Lesson: don’t drink your own Kool-aid.
    But why do Schiff’s kids need to attend private school? When Lloyd Blankfein lived in East New York, soon to become one of Brooklyn’s worst neighborhoods, he attended public schools, and look where that got him.

    1. Con

      His dad was a f* mailman.
      He really did work hard
      to become a thief.

      However, if his last name were O’Brien and his dad had
      been a mailman and he had worked just as hard, I don’t
      think he would have been of Goldman.

  21. Hugh

    F*ck Schiff. We have 50 million in this country without healthcare insurance. 40 million on food stamps. 30 million disemployed. 20 million real unemployed. 10 million foreclosed upon. And he, a member in good standing of our predatory elites, is whining about living on $350,000. This raises the age old question is he stupid or greedy, –with the answer being as always, both.

  22. Jeff Morley

    “It didn’t become common to raise kids in the city until into the 1990s.”

    Hmm I grew up in New York city in the 1960s and 1970s and I could swear I saw lots of kids, lots of them. Middle class kids. I lived in the Avenue C coops and there were plenty of us. I went to the Stuyvesant Town basketball courts. They were aswarm with kids.

    I think what the author is saying is that in his cohort of upper-middle class white professionals with healthy status consciousness who weren’t born in New York City didn’t settle down there until the 1990s. That’s a slightly different proposition.

    1. Dan Friedman

      unhealthy social consciousness

      indifferent proposition

      (I was a kid here in the 50s & 60s. My children, in the 80s & 90s…no one played alone.)

    2. Yves Smith Post author

      I managed to live in a lot of different neighborhoods in the 1980s:

      1. Chelsesa

      2. West Village

      3. Murray Hill

      4. Upper West Side

      5. Upper East Side.

      You pretty much never saw kids. The news generally was that cities were unsafe (this was a big media meme at the time). This was just after the fiscal crisis (1970s). The first subway I took to work in 1980 (summer job) had a dead man in the car.

      1. Dan Friedman


        My children were kids in the 80s. I saw lots of people their age (ergo, kids). Their school was filled with kids. I’m missing something here.

        Also,a dead man in your subway car will never hurt you, so you’re safe. As a factual statement, I’ve been safe all these years. That’s The Bronx and Manhattan I’m talking about. So who ever believed the media news?

      2. Poci Ritard

        I was born and raised in NYC, Yves. For God’s sake, you do understand that those were all seriously yuppified neighborhoods at that time, right?

        I think we’re about the same age. We probably passed each other in the street. Thin, short hair, a painted black leather jacket? If you were headed to Wall Street and the cab took Bowery south I might have been one of the unconcious bodies in front of CBGB’s.

        1. Yves Smith Post author

          Did you READ THE POST????

          I said that Schiff and Salmon were discussing a “middle class lifestyle” which is actually upper middle class. I then proceeded to discuss that at greater length.

          Your beef is a straw man.

          And Chelsea was not gentrified when I lived there, nor was Little India (I managed to omit that from my list). and you would not want to raise kids if you had a choice in the way West Village (not safe, needles and used condoms all over the sidewalk on Bank Street at Hudson). I couldn’t afford to live in the Gold Coast (University Place to 14th Street between 5th and 7th Aves) but even there you saw hardly any kids in the 1980s.

          1. Dan Friedman

            Again Yves,

            I was a parent of 2 in 1981 NYC. There WERE KIDS IN NYC. Can I ask: are you counting kids of all races? I ask because it used to be cheap to raise kids here. Once Manhattan got overpriced, THEN I began to see lots of single people, especially people living alone.

            One of us is correct. One love

          2. Poci Ritard

            Yes exactly, Dan. The kids disappeared when everything got real expensive the yuppies (that’s what we called them) moved in). Remember “DINKS?” Stands for “Double Income No Kids.”

            As for needles and condoms: I can show you those, now, on streets in most rural small towns in America, and if you know where to look, a lot of affluent suburbs as well. What you experienced, what most young “UPPER middle class” (I find this distinction hilarious, revealing much the people that cling to it) white people freaked out about when they came to NYC in the ’80s was being forced to live in close proximity to people of a class you were previously unfamiliar with.

            Homeless people sleep on the street. Junkies shoot up get sick and die. They have and will for a long, long time. Lower Manhattan is a small place, so in the ’80s before Guliani managed to segregate these populations completely, you had to step over the bodies. THAT’S what was so dangerous about the city in those days. Your illusions were devastated every time you walked out the door.

            This whole thing is ridiculous. You know where the children were? In the South Bronx. In the projects. In the neighborhoods “upper middle class people” were terrified to go to. Think about that. The city was teeming with children that you could not see and even now seem not to believe existed. Perhaps because so many of them were poor, or brown?

          3. Poci Ritard

            P.S. My bedroom window was on the 2nd floor across from a public school playground. I got woken up every morning by the kids playing. For 10 years.

          4. Dan Friedman

            Grew up in the South Bronx, across the street from the Bronx River Projects. Learned how to get along. An observation: the first group that DIDN’T WANT TO GET ALONG were the Yuppies. Shame

          5. Yves Smith Post author


            Oh, I see, You are a mass of economic/race resentment and I managed to trigger it.

            You are a bigot and you project it on to other people. If I had had a problem with the homeless man in my doorway, don’t you think I would have called the cops to get rid of him? He was on private property, I’d be completely within my rights. I was quite aware of the poverty, and I felt bad about it and perplexed about it. But people with kids, and I guarantee that includes you, would rather not raise them in an environment with casual drug users nearby.

            And you talk about “upper middle class” as if that is some sort of status niche I care about. Felix in his post talked about the top 5% as opposed to the 1%. I’m being descriptive of the New York of the 1980s and now and even presented some income stats below, and you make something out of it. It’s YOUR issue, buddy.

            And why would I have reason to go to Harlem or the South Bronx? I didn’t go to Staten Island, either and have yet to go to the Hamptons. This isn’t a matter of “avoiding” them. I had no reason to go, the same way I have no reason to go to, say, Providence. I lived in the neighborhods I lived in because they were easy commutes to work, had good services (dry cleaners, grocery and drug stores, restaurants) and I could afford to live there. You imply that big firm professionals didn’t live in the South Bronx because they were bigots, as opposed to it was a LONGER commute than living in Manhattan and the services were also not as good.

  23. Admiral

    You can see where the French Revolution came from. It was not the peasants but the bourgeoisie. Not the 99% vs. the 1%, but the Top 5% vs. the Top 1%.

      1. Dr Winkle

        Some of the answer may be in George W S Trow’s two essays published in the New Yorker – November 1980 “In the Context of No Context” and March 31 1997, “Collapsing Dominant” – both essays discuss transitions and “one’s place” — Raymond Chandler’s Philip Marlowe also used to comment on “the way things are”.

    1. tvesque

      “You can see where the French Revolution came from. It was not the peasants but the bourgeoisie. Not the 99% vs. the 1%, but the Top 5% vs. the Top 1%.”

      Definitely apt for the in the run-up to the American War for Independence.

  24. Javagold

    as Marketing Director, i would think if one of your underlings gave this same interview, they would already be on the unemployment line

  25. monte_cristo

    This site is read internationally.
    Yet there are no international comments.. give or take..

    Do any of you realise just how preposterous your conversation sounds read from ‘outside’?

    If that is Schiff’s comment above then he’s now a little, and probably just that .. a little, wiser.

    Why this thread has interest in the moment is because it is ‘detail’ in the struggle against the ‘financial elite’s’ argument that they are especially gifted and thus deserve a pay reward that is far in excess of that which at a glance appears to lack any relation with reality (that is save power).

    One way of looking at the issue is simply seeing the the ‘elite’ here are jamming themselves harder and harder into protective/exclusive/privileged enclaves and thus they are themselves pushing the price up.

    An interesting footnote but hardly news. Mr Schiff is just another member of the suffering middle classes?

    1. Yves Smith Post author

      I’ve said this earlier but it seems to bear repeating: the post clearly put “middle class lifestyle” in quotes because it’s a ridiculous claim. Private schools? Summer home? Please. This is upper middle class. And I set out to debunk that the upper middle class is living as much worse as Schiff claims it is.

      1. chris m

        Median per capita income in NYC is $30k, median household income is $50k. Yet you describe $350,000 (nearly 12 times median per capita) as “upper middle class”. How many times greater than the median would equal “wealthy”, 100 times, 1000 times?
        You appear to suffer from an only slightly less deluded and offensive sense of detachment and entitlement than Mr. Schiff.

        1. Yves Smith Post author

          Have you looked at the skew of incomes in New York City? There are areas in the five borough with serious poverty.

          You miss that the skew of incomes is far greater than anywhere in the US, so looking at medians misses the distribution. From a September issue of the New York Times:

          Manhattan continued to have the biggest income gap of any county in the country, with the top fifth of earners (with an average income of $371,754) making nearly 38 times as much as the bottom fifth ($9,845).

          The article also pointed out that New York’s poverty rate is higher than that of the rest of the US and the official measures probably understate it:

          Advocates for the poor said the size of the problem might have been understated. “Increasing poverty is simply a confirmation of what we see every day in ever-longer lines at food pantries and soup kitchens,” said Joel Berg, executive director of the New York City Coalition Against Hunger. “It is also latest proof our city and state policies are failing in fundamental ways.”


          Schiff’s income is not as exclusive as you would like to believe. It may offend you, but that’s how the facts break. I do know people who are wealthy: major art collectors, live in the most exclusive buildings, etc. I’ve had four Forbes 400 members as clients and one of my good buddies from McKinsey is easily worth $200 million, which he made in real estate. And he came from a middle class family. There is a level and concentration of wealth in Manhattan you don’t begin to see anywhere else in the US.

          Again you and others are shooting the messenger. And telling you how the other half lives is not tantamount to having a sense of entitlement. Just because I’ve observed it at close range and can tell you what it looks like does not mean I am a part of it. You have a lot of nerve accusing me of a sense of entitlement. Looks like class resentment looking for an target, whether it is an appropriate one or not.

          There is a lot of wealth in this town that has been unfairly gained, and this blog is has been one of the loudest and most consistent in calling out corruption and predatory behavior in the financial services industry. But it’s a step from that to say all wealthy people are contemptible, which seems to be the subtext of your message, that there is something wrong with pointing out that $350,000 a year isn’t rich in New York City (notice this is different than what Schiff was complaining about: that it is hard to live comfortably with kids on that income, which is clearly bollocks).

          1. monte_cristo

            I’ve just noticed that your posting attracted an ftalphaville first position “further reading” reference

            I’m British but not living in the UK..

            Your answer to my posting answered, in detail together with your response to a subsequent post by another my doubts…
            … I did actually miss your use of quotes around ‘middle class income’… I don’t normally see myself as so insensitive to the author’s intention.. and particularly in your case…. which is no doubt why I actually posted… pardon me, but I missed your intention.. with sincere respect. I suppose the point I’m trying to make rather longwindedly is that from “outside” I couldn’t read your irony…

            todo arriba es solo matiz.. si lo enntiende pues bueno, si no .. olvidelo… un abraxo … best wishes

    2. Fíréan

      Bwaa bwaa, the la dee daa !

      Furnishing you with an “international” comment, to accommodate the noted lack there of.

      I’m lucky if i can get the same income as of ten years ago, if i can get an income, and though i don’t have any kids if I did they’d all be children, and the better off for it.

  26. Glen

    Mr. Schiff isn’t rich, but compared to over 99% of America he’s doing extremely well. He’s part of an “industry” that busted the world’s economy and only exists in it’s current form because of a massive bailout by the American taxpayer even as most of America is allowed to go down the tubes.

    Given all that and what he said – I’ll have to agree with his own assessment – he’s part of the punchline to what is a very ugly joke to most Americans.

  27. ThinkItThrough

    You can be entry-level rich on 350k a year in Manhattan, but you can’t do money-sucking things like have children who are sent to private school, summer homes, etc. Try living in a one-bedroom apartment in a walkup; take public transportation/bike/cab when necessary (rather than owning a car); don’t have servants; don’t take expensive vacations. 350k a year goes a long, long way without absurd expenses, even in Manhattan. I was born in Brooklyn and lived there until I was 20. I’ve lived in Manhattan the rest of the time (I’m now 33) and haven’t yet made more than 100k a year (usually 50-75k.) If I was making what he was making, I’d be living completely worry-free economically.

    What a seriously skewed perspective.

  28. Lloyd C. Bankster

    Why’s everyone picking on Andrew?

    The poor guy, even if his $350,000 was tax-free, even if he saved every penny of it, he’d still need 10 years to accumulate a lousy $3.5 million.

    To give you some idea of how pathetic this is, last week I used a small portion of my bailout money to buy my wife’s pooch a $3.2 million 52-carat dog collar, adorned with 1,600 hand-set diamonds, and featuring a stunning 7-carat, brilliant-shaped centerpiece.

    Give the guy a break!

    Sounds like he didn’t get any bailout money, he’s nowhere near the 1 percent, he’ll never get into Sebonack Country Club, and I doubt he can even afford lunch at Le Bernadin’s.

  29. American Slave

    I dont so much blame small fish like Andrew Schiff, if he made 100k it would make no difference but what our country needs is one of these http://en.wikipedia.org/wiki/Temasek_Holdings so maybe the people who make under 100k wouldnt have to pay taxes and unemployment could be funded better.

    We need to advance to the 21st century

  30. different clue

    I used to visit New York sometimes for a few days at a time on very rare occasion. A couple of those times I wondered where I might affordably live on the farthest out fringes of the city for a year and just see what there was to see in that year. Some of the frowzy little houses in Jamaica Bay (name remembered right?) looked perhaps affordable in theory. Of course that was decades ago.

    I betcha Greater New Yorkistan still offers some of the best urban-setting birdwatching of any major city anywhere around there for those who are into birdwatching.

  31. Manhattanborn

    Private school for multiple children and a family-sized apartment in Manhattan or close-in Brooklyn is well out of reach of the middle class and, as Schiff complains, even the lower reaches of the 1%.

    But it was not always so.

    In the years when Yves claims — quite incorrectly — that “no one” was raising children in NYC, I grew up in Manhattan in a large family.

    My parents had actual middle class incomes — middle quintile, not top 5%. That was quite enough to rent an apartment with separate bedrooms for the children in a neighborhood that, then and now, is more expensive than where Schiff lives, and a summer house, too. In fact, when they decided the public schools weren’t sufficiently interested in critical thought, it let them move us from mediocre public schools to excellent private schools.

    But that was in the days when America had a middle class economy. My parents never spent more than 10% of their income on housing; they assumed that medical insurance and retirement would come from their employers and so never saved a cent; they sent us to school and university on scholarships and work study and perfectly reasonable loans; and the financiers stayed comfortably distant in doormen buildings in far-away neighborhoods.

    Schiff is right about this much: The middle class has been screwed, and he, despite making so much more than the median American, is paying part of the price.

    Between the shift of state budgets from higher education to prisons, the vast increase in inequality and the reduction of taxes on the rich, the destruction of the private sector union and the expropriation of defined-benefit pensions for the benefit of private profit, the medical cost crisis and the developed world’s most primitive health care finance system, and the housing bubble, Schiff’s borderline 1% income isn’t enough for what used to be the birthright of three-quarters of the country.

  32. Maggie Mahar


    I was a single mother in ’86, and moved my 5 year old and 7 year old into Manhattan. We had a decidedly “middle-class” income (well below $100,000).

    We settled on the West Side a few blocks from Lincoln Center. At the time it still was consdidered a “dangerous neighborhood” for kids, but it was clear that the West Side was moving up. And it had a great public school.

    The reason that more parents stayed in the city in the early 90s is not so much because the city was safer, but because real estate values fell sharply, beginning in about ’88–and they couldn’t sell their apartments. They were “under water.”

    So much of the “fear-mongering” about how dangerous the city was for kids stopped. (In the 80s, neither I nor my kids had any trouble in this neighborhood. Nor did we have any trouble later. The kids grew up “street smart.”

    Once parents realized that they couldn’t sell their apts. and move to the surburbs, realized that two girls could share a bedroom. Or that the dining room could become a second bedroom And that the City isn’t so dangerous, after all.

    Some also realized that there are, in fact, many good public schools in NYC.

    Schiff’s problem is that he doesn’t know how to set priorities– based on his own values –not what his neighbors or friends think is impt. He’s living his life reflected in the eyes of others. An expensive way to live.

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