The Millionaire Next Door

It turns out that the key to wealth is buying the right kind of watch, marrying the right kind of wife and being the right kind of white.

Where to find us: 

• Our Patreon
• Our merch!
• Peter's newsletter
• Peter's other podcast, 5-4
• Mike's other podcast, Maintenance Phase

Sources:

• Uneasy Street
• A Century of Wealth In America
• Family, Education, and Sources of Wealth among the Richest Americans, 1982–2012
• Wealth Elite Moralities
• The insane growth of America’s millionaire class
• The Extraordinary Rise In The Wealth Of Older American Households
• Planning & Progress Study 2025
• Striking Out on Their Own: The Self-Employed in Bankruptcy
• How Many Households Meet The Net Worth Guidelines Of The Millionaire Next Door?
• Paying Tribute to Thomas Stanley and His ‘Millionaire Next Door’
• Pity the Billionaires
• What Rich Women Want
• The deserving or undeserving rich?
• The Evolution of Top Incomes

Thanks to Mindseye for our theme song!

Transcript

Peter: The only other thing I'll say about this is that you meet the prosecutors and stuff like me, they introduce themselves, but they're all Italians from New Jersey. And I was just like, “This was any other ethnicity?” It's not every prosecutor was an Indian or something. Like, JD Vance would be talking about it.

Michael: [laughs] Do they have a Jersey Shore accent? How do you tell that, that they're Italians? How do you know?

Peter: Their names. It was like, “I'm Danny Goomba. I am Jenna Pasteroni.” [Michael laughs] 

Michael: This is such an insane way to run a justice system, honestly.

Peter: There's a moment when we're all standing outside the court room, 50 people, dead silence, except for this one girl who was having a full fucking chat with the woman next to her, who obviously was less into it. We were right next to the elevator, which was under construction, and she kept saying, “Are they doing construction or is that just a very loud elevator?” And when I tell you that, it was the most obvious construction noises. It was fucking jackhammers and men shouting. [Michael laughs] And she kept waffling every two minutes. She's like, “Maybe it is construction, maybe it is just a loud elevator.” And I think the other lady was a little too polite to be like, “Moron, what are you talking about?” [Michael laughs] Also, several of the elevators were blocked off with giant signs that said-- I was like, this woman is about to decide whether a murder one case.

[laughter] 

Michael: Someone's life is in this woman's hands.

Peter: There's a fucking murder defendant in there.

Michael: All right, we got to jump in.

Peter: All right.

Michael: Get us in. 

Peter: You have to start. You have to, right?

Michael: Peter.

Peter:  Michael.

Michael: What do you know about The Millionaire Next Door?

Peter: Finally, a book that lionizes the rich.

[If Books Could Kill theme]

Michael: So, the name of the book is The Millionaire Next Door: The Surprising Secrets of America's Wealthy. It's by Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D.

Peter: Two guys. 

Michael: Two guys and importantly, two academics.

Peter: Yeah.

Michael: So, this book comes out in 1996. It is apparently on the New York Times bestseller list for more than three years. It sells many millions of copies. It's extremely influential. It basically launched a whole genre of book, this ordinary millionaire book. Like, millionaires are all around us. You can be an ordinary millionaire. I didn't know this until I was reading up on it, but Rich Dad, Poor Dad is a rip-off of this book.

Peter: Oh.

Michael: Like, it's like a dumber version of this book. It comes out a year after this book. So, within a couple years we get The One Minute Millionaire, Top 10 Distinctions Between Millionaires and the Middle Class, Millionaire by 30, The Millionaire Maker, The Automatic Millionaire, The Thin Green Line, The Money Secrets of the Super Wealthy, Secrets of the Millionaire Mind, and Cracking the Millionaire Code. In 1999, there's one called Smart Women Finish Rich, which I imagine a guy named Rich carrying around bars and showing to women.

Peter: Can we circle back? Is there a way that we can just talk about The One Minute Millionaire? Because that is pretty quick [Michael laughs] and I feel like maybe worth a read.

Michael: That's the four-minute abs. You're like, this is even faster. This is three-minute abs. This is two-minute abs.

Peter: You can be a millionaire and have three minutes of abs remaining. 

Michael: [laughs] And then one of the authors of this book also wrote follow-ups called The Millionaire Woman Next Door and The Millionaire Mind.

Peter: The Millionaire Next Door. [laughs] And then he's like, “Obviously that was about men. [Michael laughs] Girls can be millionaires too.”

Michael: So, the authors interviews very explicitly say, “This isn't a get-rich-quick book. We're not giving advice. This is a descriptive, basically study of who has a million dollars in net worth.” And they also talk about how they've been doing. For 20 years, they've been doing focus groups where they dig more deeply into rich people's finances. What are they spending money on? How have they earned their money? We're getting a real portrait of people with high net worth in America.

Peter: This is 1996, you said, right? 

Michael: Yes.

Peter: So, millionaire had a little more meaning back then.

Michael: I did the math. A million dollars in 1996 is almost exactly $2 million. So, any of the figures that they give in the book, roughly double them.

Peter: Right.

Michael: So, this is a paragraph from the introduction to the updated version of the book. This is an introduction of the book 10 years after it was published.

Peter: "Prior to writing The Millionaire Next Door, I spent nearly an entire year reviewing my survey data and the transcripts of the interviews conducted between 1982 and 1996. This extensive research and analysis, I believe, is what makes The Millionaire Next Door a perennial bestseller. For the price of a book, the reader is essentially buying the equivalent of more than $1 million worth of invaluable research and interpretation."

Michael: So, you're already a frugal millionaire. [Peter laughs] You're already having good spending habits by buying this.

Peter: This is when people are like, “Would you rather have a million dollars or 10 minutes with Jay-Z?”

Michael: [laughs] This is the first sign that this book despite being written by academics, this is not that smart of a book.

Peter: This shows that like, if you have a PhD and then you write a bestselling book, you get dumber.

Michael: Yeah, absolutely.

Peter: Like, it's not just that dumbasses write these books. It makes you stupid.

Michael: So, the introduction of the book, they give the origin of it. They've been surveying people in rich neighborhoods and middle-class neighborhoods across the country for years. What they find out is basically this idea that when you think of a millionaire, you think of someone who lives in a big house, they're driving a fancy car. But what they've discovered in their research is basically there's this huge tranche of modest millionaires, people who drive a used car, they wear normal clothes, but they're sitting on $2 million in wealth. They're trying to draw this distinction between people who earn a million dollars a year versus people who have a million dollars in net worth. 

There's a lot of people who have a million dollars in net worth who are teachers and firefighters and kind of ordinary jobs. They talk about dull, normal jobs, but they're sitting on this massive nest egg. And then they talk about the kinds of wealthy people that they will be discussing in the book. So, here's the end of the introduction.

Peter: "It is seldom luck or inheritance or advanced degrees or even intelligence to amass fortunes. Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and most of all, self-discipline."

Michael: It's because people are self-disciplined. That's how they became millionaires. You're like, “Do I make the one book joke now or do I save it for later?” [laughs]

Peter: There's a myth that rich people don't spend money and that's why they're rich. Like a rich person is you with better spending habits. No, dude, have you ever seen this? There's a meme that's just a drawing of two guys and one is dripping out in all sorts of shit. And it's like, jacket $2,000, hat $150, shoes $300. And above him it's like, poor. There is a rich guy and he's just wearing a $25 shirt and $50 pants or whatever. And that's the lesson. It's like, “Poor people are poor because they spend all their money.”

Michael: And rich people are rich because they're dressed modestly and they live in a modest house and they drive a modest car. This is kind of the spoiler of the episode, Peter. But this book essentially invented that myth.

Peter: When I was in college, I knew a woman whose uncle was mega rich, CEO of a Fortune 50 company sort of guy. And also, super cheap. It was like, hanging on to a dollar.

Michael: Yeah.

Peter: Frequently when she told these stories, someone would be like, “Well, that's how he got rich. It is like, “No, he got rich because his salary is $10 million a year.”

Michael: So, the first part of the book is basically just a bunch of statistics on who are the millionaires in 1996, 3.5% of households in America are millionaires. At this time, 92% of millionaires are men. Half of them have wives who are housewives who are not working outside the home. Around one in five of them is retired. Of the people who are employed, two-thirds of them are self-employed. But then they immediately get to the number one factor that they think explains why people are millionaires. They do this throughout the book. They use specific names for people. So, in this section they talk about a guy named Johnny Lucas who's one of these humble millionaire types. But it's not clear if this is a real person or just a name that they've given this person. So, here is this.

Peter: "Why are so few people in America affluent? Even most households with six-figure annual incomes are not affluent. These people have a different orientation than does Johnny Lucas. They believe in spending tomorrow's cash today. They are debt-prone and are on earn and consume treadmills. To many of them, those who do not display abundant material possessions are not successful. To them, non-display-oriented people like Johnny Lucas are their inferiors."

Michael: They're going to look down on you for being frugal.

Peter: I'm already annoyed at the-- Also, what are these guys? What are their PhDs in?

Michael: They're both professors of marketing.

Peter: I knew it was fake.

Michael: [laughs] Thomas Stanley, before this book comes out, he's written a number of books called Selling to the Affluent, Networking with the Affluent. So, that's why he's doing all this anthropology on rich people.

Peter: This is like flattering rich people. It's like you're the people who aren't rich. They're not disciplined like you are.

Michael: Here's more of this.

Peter: "Johnny Lucas, the affluent business owner, is very punctual." This guy's fake. This is not real-- [crosstalk]

Michael: Oh, you can't really tell. But they're clearly presenting all these millionaires as very virtuous throughout.

Peter: "He is never late for meetings and arrives at work each weekday at 6:30 AM. How does he do this? It must be his wristwatch. Could it be that Johnny wears an expensive watch? Fully one half of the millionaires surveyed never in their lives spent more than $235 for a wristwatch. About one in ten never paid more than $47. Certainly, some millionaires purchase expensive watches, but they are in the minority. Even among millionaires, only 25% of those surveyed paid $1,125 or more." Are you just doing this to bait me?

Michael: I specifically chose this. I could have chosen any kind of excerpt. [Peter laughs] But he goes on about watches for a very long time. And I wanted you to read it.

Peter: Folks, let me tell you about watches. [Michael laughs] Okay, let me ruin this episode with an extremely long digression about watches.

Michael: It's an investment. It's really an investment when you think about it.

Peter: So, as we're hinting, I like watches. I have a ton of watches.

Michael: [laughs] There's no need for you to do this, Peter. You don't need to defend yourself. 

Peter: Well, I need to explain why I know so much about this, because I'm about to share information.

Michael: Okay.

Peter: I have a ton of watches. Most of them are cheap. Some of them are fancy. But the thing that you learn very quickly is that no one gives a shit.

Michael: Oh, yeah.

Peter: Other people don't know. And the percentage of the population who likes nice watches is super small. So, he's presenting this as, like, they must be so frugal. But in reality, 25% of these guys paying 1100 and change for a watch is actually pretty hefty, especially since that's like 2200 now. So, a full quarter of millionaires are buying fancy watches for themselves.

Michael: What's so weird is, this Peter is a third of the book. They have a whole chapter on buying cars. They have a whole chapter on buying clothes. It's very detailed how much they are spending on these consumer goods. And it's all kind of the same point. They say the typical American millionaire reported that he never spent more than $400 for a suit of clothing. So that's $800 in today's money.

Peter: Yeah. That's not cheap.

Michael: Yeah. They say half of them have never spent more than $140 for a pair of shoes, but half of them have spent more than $280 for a pair of shoes.

Peter: You're hitting these thresholds where it's like, “Yeah, to spend more than $300 on a pair of shoes, you need to really want nice shoes.” You need to like shoes, like fashion or whatever. Big chunk of these guys don't really care about shoes or watches or whatever, so they get a nice one and they move on.

Michael: It's also telling that they don't have a chapter about how many are sending their kids to private school.

Peter: Yeah, yeah.

Michael: Like major things that people actually do spend huge sums of money for.

Peter: When they're like 50% of these millionaires have never spent more than X on a watch or X on a car. It's like, “Okay, right?” It's not the same guy every time. You might be a car guy and so you spend your money on cars, you might be a watch guy, you spend your money on watches, you might be a shoe guy, you spend your money on shoes. They're not all frugal. They just have different priorities and care about different things.

Michael: So, this is also the section of the book where you see that they're just laying it on a little too thick. They're talking about how it's good to be frugal, which is true. I mean, like, fundamentally, at the heart of this book is good advice. If you don't have a ton of money, don't spend a ton of money. Fair enough. Whatever.

Peter: Or if you're like upper middle class-ish and you save your money, you can be a millionaire. That might have been something that someone in 1996 needed to hear. Totally.

Michael: And doing the math, compound interest. It's useful, right? Yeah, fair enough.

Peter: Exactly right. But if you're like, I don't know. Yeah, it's getting a little too-- He shows up promptly at 6:30. What are we talking about? Does that make him more money? What's going on?

Michael: The other thing that he starts doing is in the chapter about buying cars, he's contrasting doctors. So, there's Dr. North and Dr. South. One of them has the good car buying method and the other has the bad car buying method. So, Dr. North buys used cars. He's like a very frugal millionaire. He's the good kind. So, here's this.

Peter: By the way, Michael, you introduced these as like, “I'm not sure if these are real guys, Dr. North and Dr. South.”

Michael: I know, but again, he goes back and forth between obviously fake names and like maybe logistically real names. I don't know. So, in this section, he's basically talking about how buying a used car, being a frugal millionaire saves you time compared to buying a new car.

Peter: "Dr. North decided that his best choice would be a three-year-old Mercedes Benz. He telephoned a few dealers and advised them of his interest. He also examined several advertisements in the classified section of the paper. Finally, he decided on a low-mileage model offered by a local dealer. The North method took only a few hours. Contrast this with Dr. South's automobile purchasing crusade, a process that took him at least 60 hours."

Michael: As someone who only bought used cars, back when I had a car, it's a huge fucking hassle to buy a decently priced, not scammy used car.

Peter: I do agree that it's good to spend three hours as opposed to 60. [Michael laughs] I guess.

Michael: But also, people, if you're buying a new car, I feel like a lot of wealthy purchasing habits are like, they just don't want to think about it that much. They go to the dealership, the guy is like “80,000 bucks for a Jaguar.” He's like, “Yeah, fuck it, I'll get it.”

Peter: This is like the biggest benefit of having money. The idea of never having to think about this shit because you can just-- you're paying for the convenience of who cares, right?

Michael: Exactly.

Peter: But also, we're really slamming on these guys, right?

Michael: Yeah, I know, it's really bad. I know.

Peter: This is getting a little weird.

Michael: And also, it's like, “Why even do this?” It's like you could say, “Oh, it's a hassle to buy a used car, but it's worth the hassle, compounded interest, blah, blah, blah.” But instead, they're just lying to your face and being like, “Oh, you spend way less time on buying a car if you buy a used one.”

Peter: Not true.

Michael: They also say, "In most of the cases we've examined, prodigious accumulators of wealth love working while a large proportion of under-accumulators of wealth work because they need to support their conspicuous consumption habit." For a book by two academics, it's like, what are you talking about? [laughs] People oftentimes teachers love their work and they don't make a ton of money, but they do it because they love it. The idea that if you're wealthy you'll love your job. It's like, you don't need to do this.

Peter: It's like the virtuous millionaire and the slovenly middle-class idiot. [Michael laughs] Like it's, what the fuck is this?

Michael: It's really like they're creating this binary, but they're just doing it way too much.

Peter: The idea that self-discipline leads to money and money is replicated through self-discipline, I just don't think that's right.

Michael: And that this is the only meaningful factor. I mean, that's basically what they're setting up here.

Peter: The mistakes that you can make financially if you have a high income, if you make $500,000 a year and you burn straight up, just like no reason to have bought that 60 grand a year, you're still so far ahead of someone making 150.

Michael: This is also the weird obsession with things like wristwatches, where if you're very wealthy, the difference between a thousand-dollar watch and a 5,000-dollar watch is not going to make a meaningful difference to your net worth. It's weird that they focus on almost exclusively these consumer items.

Peter: It's so weird to talk about wealth. Income is like the second thing.

Michael: Right, right, right.

Peter: You know what I mean?

Michael: This is the other extremely, like just laying it on too thick thing. They have an extended anecdote about one of their qualitative interviews with millionaires.

Peter: "The first time we interviewed a group of people worth at least $10 million, decamillionaires, the session turned out differently than we had planned. To make sure our decamillionaire respondents felt comfortable during the interview, we rented a posh penthouse on Manhattan's fashionable East Side. We also hired two gourmet food designers. They put together a menu of four Pâté and three kinds of caviar. To accompany this, the designers suggested a case of high-quality 1970 Bordeaux, plus a case of wonderful 1973 Cabernet Sauvignon. Armed with what we thought would be the ideal menu, we enthusiastically awaited the arrival of our decamillionaire respondents. The first to arrive was someone we nicknamed Mr. Budd. Mr. Budd owned several valuable pieces of commercial real estate in the New York metropolitan area. You would have never figured from his outward appearance that he was worth well over $10 million. 

Nevertheless, we wanted to make Mr. Budd feel that we fully understood the food and drink expectations of America's decamillionaires. So, after we introduced ourselves, one of us asked, “Mr. Budd, may I pour you a glass of 1970 Bordeaux?” Mr. Budd looked at us with a puzzled expression on his face and then said, “I drink Scotch and two kinds of beer, free and Budweiser.” We hid our shock as the true meaning of our decamillionaire's message dawned upon us. During the subsequent two-hour interview, the nine decamillionaire respondents shifted constantly in their chairs. Occasionally, they glanced at the buffet, but not one touched the Pâté or drank our vintage wines. We knew they were hungry, but all they ate were the gourmet crackers.”

Michael: That's something about decamillionaires. They hate Pâté and wine.

Peter: This is like when Kevin in Home Alone 2 gets the limo and the pizza. [Michael laughs] Like, what would a baby think that the rich people do? We got three kinds of caviar. They imagined a world where they supplied one type of caviar. And the decamillionaires were like, “What the fuck is this?”

Michael: Right. [laughs]

Peter: I don't eat this type of caviar.

Michael: I love that they're treating them like zoo animals too. They're like, we have to make them comfortable. We have to do a penthouse. And like, it's like the special kind of foods they eat.

Peter: Also, I like that the guy's like, “I drink two kinds of beer, free and Budweiser.” Okay. The Pâté's free. Eat that, bitch.

Michael: This whole thing seems really fake and also just unnecessary to the thesis of the book. The fact that rich people drive humble cars, live in humble houses. It's not like they're actively hostile to the trappings of wealth.

Peter: If someone put me up and was like, here are three types of caviar, I wouldn't be like, “I'm more of a chicken wings guy.”

Michael: Yeah, you'd probably just eat something. It's just like, why lay it on this thick in your book? It doesn't need to be here.

Peter: Right, right. It's like, bizarre.

Michael: So, this all speaks to the weird between the lines ideology of this book, that the only thing that matters to net worth is frugality. Is your spending habits on these things like food and clothes, etc. Throughout the book, they keep downplaying the influence of income. So, in a chapter on budgeting, they say one of the mistakes people make is people allow their income to define their budgets. They also say it's easier in America to earn a lot than it is to accumulate wealth. They sure take it for granted that like, “Yeah, you're earning like hundreds of thousands of dollars in 1996.”

Peter: Right, right.

Michael: But what really matters is how much you're spending. And so, this is an excerpt from a New York Times article about this book that came out a couple years later. Because this book really does show up everywhere. It shows up in articles. There's a David Brooks column about it from a couple years afterwards. It shows up in academic articles. It's taken relatively seriously.

Peter: "So many more of us could become millionaires, as was amply demonstrated by Thomas Stanley and William Danko in their fascinating book, The Millionaire Next Door. They found that inheritances or even extended educations aren't necessary. The main requirement, given time and a decent income, is thrift."

Michael: I love "Given a decent income." [laughs] 

Peter: Yeah, right.

Michael: Well, that's the hard part is the given a decent income.

Peter: Rather than saying some intelligent spending habits can make a well-off person kind of rich, which is, I think probably true. They're going the other way and saying like, “Rich people are rich because of their frugality, because of their spending habits.”

Michael: And they also, again, they're laying it on too thick. They say later in the book, "We've interviewed many people worth two or three million dollars who have total realized annual household incomes of less than $80,000." So, they're also creating a spread where you can have massive net worth at remarkably low income. 

Peter: I'm sorry, but how?

Michael: They're basically saying like, “It's virtuous to save 15% of your income and that's like the one thing that matters. But of course, if you make $500,000 a year and you only save 5% of your income, you're going to be a millionaire much faster than a teacher who saves 20% of her income. Like that just is the case.”

Peter: This is such a simple thing to understand, but let's say you make 150. Maybe you save 30 grand a year. If you double the income, you're not doubling the savings, you're like quadrupling the savings. I don't know if this is to flatter rich people or if it's to trick the middle class somehow. Maybe it's like aspirational, right? Like you don't need a better job, you just need to like focus up.

Michael: It's your fault, basically. Yeah. Anyone can do this. Other people making $50,000 a year, they have 3 million bucks in the bank. You don't. We're not doing that.

Peter: I'm sorry, but the people making 80 grand a year that have $3 million cannot exist.

Michael: So, I did actually do the math on this because there's all these retirement calculators online. So first of all, he says $80,000 in realized income. So that's post taxes and that's 1996 dollars. So, we're talking about $160,000 in 2025 post-tax, which first of all is just a lot of money that puts you firmly in the top 10% of income earners in the United States. But even if you have this high salary, starting at age 30, you manage to put away 15% of your income, which is what they recommend in this book, every single year of your life, you will have $3 million in net worth when you are 78 years old.

Peter: Right.

Michael: That's the way you get to $3 million. So, this is actually kind of a demonstration of how hard it is to get to $3 million in net worth.

Peter: Look, maybe you, yeah, whatever, if you fucking buy IBM in 1971.

Michael: Exactly, yeah.

Peter: Like, whatever. I don't know. There's a way, but I just don't believe it.

Michael: It's also very funny that throughout the book they almost never talk about income other than to downplay it. But they do mention at one point, one single point in the book, they say in the survey that they did of people with high net worth, the household median taxable income is $131,000 a year. So, 260K in 2025 money.

Peter: It's like a lot. 

Michael: That's a shitload of money. And they just never talk about it again. [laughs] I really don't think wristwatches are that important if you're making that much money.

Peter: Yeah. I think if you're making a quarter million now and you're sitting there like, how do I ensure that I have $3 million dollars when I retire or whatever, then this is probably part of the calculus. But if you're sitting there right now making 90 grand, this is not the way you're going to become a millionaire. It's just not.

Michael: So, there's these sketchy qualitative stories about these focus groups they're doing. There's also the issue of like, where are these statistics coming from right?

Peter: Yeah.

Michael: Because the entire book is based on this survey of millionaires. And it's actually not a given that this is a population that's easy to study. Because by definition, this is only 3.5% of households. So, if you send out a general survey to the entire population, you're going to have so few millionaires that you can't really say anything meaningful about them. So, you have to find this population but they're difficult to find.

Peter: Well, not if you lure them to your east side penthouse with caviar and three time Pâté.

Michael: [laughs] But so finally, in Appendix 1, they describe how they are finding millionaires.

Peter: Before you get into this, I'm going to say what I would do. I would go to the cheapest stores [Michael laughs] because that's where the millionaires’ shop.

Michael: The used car dealerships, where the real beaters are getting sold. Yes.

Peter: [laughs] Go to the shittiest clothing store you can find and just talk to anyone there. Go to the dollar store. Every person in there is a millionaire.

Michael: So, basically, they start with neighborhoods, which is like, yeah, you look at sort of where are houses worth a lot? You find rich people there. But they specifically say that they're not looking at wealthy neighborhoods. They say that they're stratifying them across what they call the estimated net worth scale. They're looking for neighborhoods where people have a high estimated net worth, not necessarily a high income. And so, in his follow-up book, one of the authors, Thomas Stanley, describes this in more detail. He's talking about working with a researcher, actually let me send this to you. So, his researcher's name is John.

Peter: "John found that some neighborhoods have high concentrations of people who have substantial investment income and thus would have the millionaire mindset. From his national database of 227,000 neighborhoods, John selected 2,487. His mathematical model predicted that these would contain high concentrations of people who were actually wealthy, as opposed to those who had big homes with big mortgages but low net worth."

Michael: So, they're not looking at rich neighborhoods. They're basically selecting neighborhoods that will have frugal millionaires, that will have people with relatively low incomes but high net worth.

Peter: You're not looking at the wealthiest neighborhoods where the actual wealthiest people in America live.

Michael: You're looking for this upper middle tranche that maybe has a million dollars in net worth but not super high incomes. But that's also the conclusion of your entire book. So, the way that they're selecting neighborhoods is pretty sketchy. They also the way that they're doing the actual study is they're doing it by mail.

Peter: Hello, I am here to interview men of means.

Michael: Do you want to hear what they did Peter?

Peter: Mash some caviar into the envelope. [Michael laughs]

Michael: They actually did a version of this. So, they say, "We selected 3,000 heads of household. Each received an eight-page questionnaire, a form letter asking for his participation and guaranteeing the anonymity and confidentiality of the data we collected, and a dollar bill as a token of our appreciation."

Peter: Oh my God.

Michael: [laughs] So, they send out an eight-page questionnaire, which is just wild. They say in the book that their response rate was 45%.

Peter: That can't be right.

Michael: I was like, “What the fuck?” But then I posted this on Bluesky to social science researchers. I was like, “Does this sound remotely plausible to you?” And people said response rates have cratered across the board since the 1990s. This was at least plausible. It wasn't like laughably false.

Peter: I also feel again, this might control out some of the higher income folks.

Michael: Exactly.

Peter: The people who are willing to talk about this shit might be your “Humble millionaires” who are more frugal or whatever. But yeah, if you're just a super high-income person and someone's like, “Tell me about your money,” you're probably like, “No.”

Michael: So, they're selecting neighborhoods with frugal millionaires. They're only getting a half and half response rate, which I think would select for frugal millionaires. And then the questions on this actual questionnaire, they don't print the entire questionnaire in the book. And there's no peer-reviewed studies based on this data, which is fucking wild for two academics which also just makes me very skeptical of this entire project. But at a couple points they say what the questions are. So, when they're talking about the predictors of millionaires, they have a list of questions. So, one of them is, were your parents very frugal? Are you frugal? Is your spouse more frugal than you? Asking are you frugal is fucking wild? [laughs]

Peter: It's not great data.

Michael: Like everyone's going to say yes. No one thinks that they spend too much money. Frugal is a virtuous thing. It's like, “Are you generous? Are you kind?” Everyone's going to say yes to that. It's not meaningful at all.

Peter: Yeah, I feel like you need to see the data on their spending.

Michael: Which they're not getting. It's all self-reported. Like, how much have you spent on a suit? Like all of that is just asking people.

Peter: Yeah. And again, I think that data just sucks because people spend their money in different places. It's really hard to tell if someone is generally frugal from that sort of data.

Michael: So, basically the rest of the book is them describing the characteristics of millionaires. So, we found all these millionaires, they're in our sample. What distinguishes these people from the rest of the population? This sounds like I'm being mean to the book, but this is actually true. The first chapter on what makes millionaires different is their ethnicity. And you'd assume like, okay, with wealth data, you'd be like, okay, black, Asian, Hispanic. You can find these statistics anywhere. They don't include black people or Hispanics or Asians in this book at all.

Peter: Yeah, no, let's get down. Let's get down to business, folks which are the best types of whites?

Michael: So there is literally-- this is the list, Peter. These are the ethnicities. English, German, Irish, Scottish, Russian, Italian, French, Dutch, Native American and Hungarian.

Peter: All I am interested in here is what are Italians doing? [Michael laughs] Doing French as a subset here is fucking crazy. [crosstalk] Doing Hungarian as a subset here is fucking crazy.

Michael: Well, Peter, do you want to know which kind of whites are the most likely to be millionaires according to this data, this extremely non-representative data? 

Peter: I'm going to knock some out of contention right away. [Michael laughs] It's not the Hungarians. It's not the Irish. It's not the French. It's not the Russians. I think, are we down to Germans, English and Dutch?

Michael: Yeah.

Peter: Those are my top three contenders.

Michael: Who's number one?

Peter: I'm going to say that the Dutch are number one.

Michael: Trash. Dutch are number fifth. 

Peter: Fuck, fuck.

Michael: You got it way wrong, Peter.

Peter: I forgot about the Pennsylvania Dutch.

Michael: Keep in mind this is a fake survey, which is not really-- [crosstalk]

Peter: Obviously it's a fake survey. I do think that what I just said was probably more accurate than their survey. My vibes about the subspecies of whites are pretty scientific, I have to say. [Michael laughs] Was it the French?

Michael: It is the Russians.

Peter: That makes a lot of sense to me in the sense that I do feel like a lot of rich ass Russians came here in the 80s and 90s.

Michael: Oh, that is not what they say. That is not what they say. 

Peter: No.

Michael: They say that Russians are ethnically inclined to start businesses.

Peter: Hell yeah.

Michael: They have a quote from a guy who grows up in the Russian community who says, "Russians, they are the best horse traders."

Peter: And like, obviously it's not the French. They're lazing about.

Michael: They do also mention that Germans are trash. Germans make up 19% of the population, but only 17% of millionaires.

Peter: Obviously a pretty big hit to Hitler's theory.

Michael: I think it's mostly sampling though, because all the large ethnic groups all do bad, and small ethnic groups all do well. I think it's just like, “How big is their sample?” Again, I think this is just fake ass data because the English do bad too. And there's a shitload of English people in America.

Peter: English have been here for too long. They're too assimilated.

Michael: Dude that's what they say. They literally have a whole section about the longer you're in America, the more you acclimate to the American consumptive lifestyle. But immigrants don't do that.

Peter: Yeah, immigrants are more likely to start businesses and shit, but [laughs] that's not some fucking genetic predisposition. It's like if you're first generation, you're more likely to start a business.

Michael: The weirdest thing too is that they have-- even though Scottish people are number two.

Peter: What?

Michael: In millionaires.

Peter: What?

Michael: But do you know why, Peter? Do you know why?

Peter: I would love to know.

Michael: Their theory is it's because Scottish people are cheapskates.

Peter: That rocks, dude.

Michael: They're like Scottish people are known for their frugality, which is a stereotype about Scottish people. But it's also not true. They're basically just repeating like, “Oh, because they like never spend money. That's why they're all wealthy in the United States.”

Peter: I love that. [Michael laughs] The only other time we've talked about Scots on this show was JD Vance's book talking about how the Scots Irish are degenerate losers who like can't do anything.

Michael: But they're also cheapskates.

Peter: JD Vance should just hold on and wait for that Scottish DNA to kick in [Michael laughs] and perhaps then Appalachia will lift itself out of poverty.

Michael: So, that's the first characteristic of millionaires. They are the correct ethnicities. The other thing about millionaires is that they tend to buy specific stocks. They say that millionaires hold onto stocks. They're not like day traders. So that's pretty good advice.

Peter: Also, who was a day trader back in the 90s?

Michael: How would you even do it? You're calling a broker or whatever.

Peter: Just like you fuck like a degenerate gambler calling a broker and there's like a twenty-dollar transaction fee on every single thing-- [crosstalk]

Michael: Sweating and loosening your tie.

Peter: You're just losing $500 a day on transaction fees.

Michael: So, he says 79% have at least one account with a brokerage company. But they make their own investment decisions. This is something they say a lot in this book. The term like mutual fund and index fund, target-date fund. None of these appear in the book. And they're basically saying like you should be spending an inordinate amount of time investing in specific things. So here is a little vignette of some of the millionaires we've met.

Peter: "Mr. Willis, a highly productive sales professional, had a Walmart as a client for more than 10 years. All during this time, Walmart was exploding in growth and value. How many shares of Walmart did Mr. Willis ever purchase? Zero. Yes, zero. Even though he had considerable first-hand knowledge of his client's success and an annual six-figure income. But he did purchase a foreign luxury car every two years during this time." What a fucking scumbag.

Michael: He could have been doing insider trading, but instead he found a vehicle.

Peter: [laughs] "A high-income marketing manager, Mr. Peterson, was employed in the high-tech field, but he never invested a dollar in Microsoft or any other growth company. Never, in spite of having considerable knowledge about many of the firms in the technology industry. The owner of a printing business enjoyed having one of the leading beverage companies in America as a customer. The customer bought millions of dollars’ worth of printing from him annually. But how much has the printer invested in his customer's equity offerings? Zero."

Michael: That's basically the advice is like if you're somebody who does professional services, you should invest in the companies that you work with.

Peter: What if the companies who are your clients are not good investments?

Michael: What if it's bad? It's such weird advice.

Peter: Also just having a little bit of vision into a company does not give you advanced stock knowledge.

Michael: No, it's such-- this is egregiously bad advice. I've read other reviews of this book that mention the idea of having somebody else do this for you was not as widespread in 1996. So, you can give them a little bit of credit on it.

Peter: ETFs didn't exist, right? There are mutual funds, but there aren't really. You didn't have as many options. That's why it was very popular at this time to just buy a handful of blue-chip companies.

Michael: Right, right.

Peter: But yeah, this is just stupid advice.

Michael: Yeah.

Peter: And also, my guess is that some of what they're looking at is that the richest people will be people who put a ton of money into one company that did well. 

Michael: Yeah, yeah.

Peter: That's just survivorship bias, right? 

Michael: Like you happen to have invested a ton in Microsoft and you got super rich. But there's also people who invested a ton in Kodak.

Peter: I remember seeing someone say like, “The best investors are not investors who diversified. The best investors, if you look at the numbers, the Warren Buffetts of the world are people who made huge bets on a single company. And it's like, right? The people who are the most successful will be people who took extreme risks and then hit. But that doesn't mean that's a good strategy. That's just survivorship bias.

Michael: So, as well as doing your own investments, they also have two entire chapters about how you must make budgets. You have to spend a ton of time budgeting every single piece of spending that you do. Everything you spend on, `like, leisure, food, activities.

Peter: Where is the tax fraud chapter? Is that-- are we getting to the tax fraud chapter?

Michael: This is another thing where, like, I give them a bit of a pass because this is pre-apps. Yeah, yeah. Nowadays, your bank just kind of tells you how much you're spending on various things. It's very easy to track your spending. Like, the concept of balancing your checkbook doesn't really exist anymore because you can check your app like, what am I spending? But at the time, it was pretty easy to lose track of things like, what should I spend eating out last month? I think again, this is fairly good advice.

Peter: Yeah, yeah.

Michael: But because this book so closely links virtue and money, they have this thing where you have to be spending a ton of time on it. So, they say the average person in their survey spends 8.4 hours a month planning their investments and knowing what their budget is.

Peter: That's a crazy amount of time.

Michael: It's so much time. It's like, that's like two hours a week.

Peter: In my mind, every hour I spend budgeting is an hour I'm not podcasting. [Michael laughs] And that's bad business.

Michael: They also have a weird section about how you shouldn't give money to your kids. There's this paragraph.

Peter: "What happens when weakened children become adults? They typically lack initiative. More often than not, they are economic underachievers, but have a high propensity to spend that's why they need economic subsidies to maintain the standard of living they enjoyed in their parents' home. We will say it again. The more dollars adult children receive, the fewer dollars they accumulate, while those who are given fewer dollars accumulate more. This is a statistically proven relationship. Yet many parents still think that their wealth can automatically transform their children into economically productive adults. They are wrong. Discipline and initiative can't be purchased like automobiles or clothing off the rack."

Michael: They have a section in this chapter called "The Unemployed Adult Child."

Peter: Yes, and no offense to all of our listeners who fall into this category, but they're right about this.

Michael: [laughs] Again, it's good advice. Don't spoil your kids. Don't like-- [crosstalk]

Peter: Yeah, whatever, right? Look, everyone knows someone who's like on the extreme end of the spectrum where it's like their parents are just constantly funneling them so much money that they don't ever really get a sense of what money is.

Michael: Right. But also, this is not really based on the data that they've collected. This is just a thing they want to complain about.

Peter: I would be shocked if there's real data about this because I'll say this. I know a few people who went from this sort of lifestyle to just making mid six figures in finance because their dad was in finance.

Michael: The other tell that this is not based on their data is that they also have an entire chapter about how millionaires marry the right kind of housewife.

Peter: So true.

Michael: So, here is a little section of this.

Peter: Chapter five, “How to keep your girl in check.”

Michael: This is literally, Peter, in this chapter. [laughs] 

Peter: All right. "How did the wife of a millionaire respond when her husband gave her $8 million worth of stock in the company, he recently took public? According to her husband of 31 years, she said, “I appreciate this. I really do.” Then she smiled, never changing her position at the kitchen table where she continued to cut out 25- and 50-cent-off food coupons from the week's supply of newspapers. Nothing is so important as to interrupt her Saturday morning chores."

Michael: That's a wife you want?

Peter: I think, three things I want to talk about here. One is like, “Yeah, if you take a company public, the reason you're rich is probably not frugality.” I think it's that you did an IPO.

Michael: Yeah.

Peter: Second of all, if I did keep separate money with my wife and then I gave her $8 million and then she was like, “Thanks, I appreciate this,” and then went back to what she was doing. The way the life would drain out of me, Michael.

Michael: It's like, you should marry a woman who hates you. [Peter laughs] He's like, “Okay, it just goes back to what she's doing.” [laughs]

Peter: I understand. They're trying to be like, “Look, she still does the coupons” which is like, “Yeah, how much she's saving.”

Michael: But that's the thing they want you to perform frugality. And like, it should be a hassle. It's part of the thing with the budgeting too. Like, you shouldn't have financial advisors that do this for you. You're only the good kind of millionaire if you're spending time doing it right, even if it's totally useless and pointless. You should be clipping coupons because you're performing frugality.

Peter: This could be a manosphere TikTok video.

Michael: Totally, totally.

Peter: People are rich because they're cheap.

Michael: They didn't throw it away on their weak children and their profligate wives.

Peter: Also do not date a whore.

[laughter] 

Michael: So, we then get into the two kinds of housewives. There are type A housewives. They say type A's tend to marry high-income producing, successful men. They tend to take leadership roles in caring for their elderly, sometimes disabled parents. The gifts and inheritance they tend to receive are in part compensation for these efforts. We then have type B housewives. They say type B housewives, in contrast, are viewed as adult children who need economic outpatient care and even emotional support. They tend to be dependent on others and are unlikely to be leaders in any capacity.” And that goes on for many paragraphs. [laughs]

Peter: Yeah, no doubt. No doubt.

Michael: [laughs] Like the bad kind of housewife.

Peter: And unfortunately, this is all of our female listeners.

[laughter]

Michael: That's. All of our listeners are lesbians. So, we want a type A and a type B. Those are the power couples you want [crosstalk] very important.

Peter: Ooh, yeah. You need one leader housewife- [crosstalk] 

Michael: One freeloader. [laughs]

Peter: -who takes care of her parents and one scumbag lesbian lady. [Michael laughs] One leap.

Michael: So, the whole time I'm reading this, I'm like, why is this in your book? This is not based on any of the survey data. They have it as, like, “What kind of housewife do you have?” This is just like, they want to complain.

Peter: There's just a chapter called “The Bitch Spectrum.” [Michael laughs] It's so funny that you get to see, again stretching out what should be a relatively short book into a relatively long book. They're like, “Okay, well, first, we'll break down the whites by ethnic group and rank them. Second, let's divide wives into wives we like and wives we don't like.”

Michael: They also have an extended section about-- They do admit that the gender wage gap is real. They say, "The objective data make it quite clear. In America, the odds are against women earning high incomes," which is true. But then they're like, “But discrimination can't explain it all.” We think it's because daughters get more help from their parents. And when you're a woman growing up, you see your mother not working, and then you're like, “Well, I don't have to work either.” And then you basically freeload.

Peter: Okay.

Michael: It is like that's why we have the gender wage gap. [laughs]

Peter: I feel like a lot of men never recover from watching women get their drinks paid for a period of time in their early 20s.

Michael: Yeah, yeah. You're like, this explains everything. [laughs]

Peter: This all fades away by the time you're 40, none of this exists anymore or like in much smaller degrees.

Michael: But if women could invest the cost of those drinks, they'd all be millionaires now.

Peter: That's so cool.

Michael: Given compound interest.

Peter:  If you're smart and you're a woman in your early 20s, someone buys you a drink, you sell it, and then you invest it in stocks.

Michael: Do you have a share of a target date fund with you instead of a mojito? That's what I'd prefer. But the most important characteristic of millionaires, and this is a thuddingly repetitive book that returns to this like 3,000 times throughout the text, is that millionaires are self-made.

Peter: Yes.

Michael: They go out of their way to establish this salt of the earth character of millionaires. And a lot of that is because they did hard work to get where they are. So, here's this.

Peter: "Who becomes wealthy? Usually, the wealthy individual is a businessman who has lived in the same town for all of his adult life. This person owns a small factory, a chain of stores or a service company. He is married once and remains married. He lives next door to people with a fraction of his wealth. He's a compulsive saver and investor. And he has made his money on his own. 80% of America's millionaires are first-generation rich."

Michael: They're all business owners. They all took on great risk to themselves. They have the right wife. They've only been married one time. They have like a type A wife.

Peter: The kind of lady who barely looks at you when you give her $16 million in today's money.

Michael: A good Russian lady.

Peter: Most of you might think that it's okay to marry a German. No.

Michael: They also go out of their way to say millionaires did not inherit their wealth. So, they have statistic after statistic about how inheritance just isn't an important thing for today's millionaires. So, here's this.

Peter: "Have you always thought that most millionaires are born with silver spoons in their mouth? If so, consider the following facts that our research uncovered about American millionaires only 19% receive any income or wealth of any kind from a trust fund or an estate. Fewer than 20% inherited 10% or more of their wealth. More than half never received as much as $1 inheritance. 91% never received as much as $1 of the ownership of a family business."

Michael: So, they really laid it on thick.

Peter: I feel like occasionally you'll find some people on the left are obsessed with the idea that it's all a full dice roll.

Michael: Yeah.

Peter: That's not something I'm super invested in. But I will say that like 20% inheriting their money or not being first-generation rich feels like a decent chunk. Like this is not nobody.

Michael: This is also a unique situation in that if you look generationally, somebody who's a millionaire in 1996 and they're in their late 50s, their parents would have grown up in the great depression.

Peter: Right. Interesting. Yeah.

Michael: The fact that they're more rich than their parents, it's kind of everybody's more rich than their parents. America just had a huge explosion in living standards and wealth and income over the course of the last hundred years.

Peter: Literally everyone our age has a story about their parents buying a house.

Michael: Yeah.

Peter: And now they're rich somehow.

Michael: They do mention in this section, again, kind of offhand, that the children of millionaires have a one in five chance of becoming millionaires and the general population has a 1 in 35 chance of becoming a millionaire.

Peter: That's the relevant fact. It's not necessarily did all rich people just get it from their parents or whatever. It's how much of a leg up is it?

Michael: And so, this gets into a lot of the research that I did. What this book is doing is actually expressing an ideology of the new class of wealthy people in America that has now become the dominant ideology of wealthy people. The first thing we have to talk about is there really was a shift in the demographics and the makeup of the rich around this time. This is an excerpt from a super fascinating book called Uneasy Street by Rachel Sherman.

Peter: "The composition of US elites has changed significantly since Ostrander conducted her research nearly four decades ago. In that period, as in most of the 20th century, the upper class was exclusive and homogenous, dominated by old money families such as the Rockefellers and the Astors. Elite college and professional education were typically closed to all but white men. Wealthy women rarely worked for pay. Social status was largely inherited, and the old elite looked down on newcomers. In the past few decades, in contrast, elites in the United States have become more diverse in terms of race, ethnicity, religion, and class of origin. The post-war opening of higher education, especially in elite institutions to people besides elite WASP men, was a major catalyst for this shift. Importantly, not only the composition, but the outlook of elites in the United States has changed from a view that accepted inherited status as legitimate to one that stresses meritocratic achievement through hard work and cultural openness to a diverse world."

Michael: So, this is a real change the old money elite, of course those people still exist, but they don't dominate the elite the way that they once did.

Peter: The Great Gatsby was entirely about how you can be super rich but still not be accepted. I really don't understand why we have to read that book. I was like, I actually remember thinking in high school, like just being confused about this cultural dynamic that it was describing.

Michael: Well, one of those interesting things I read for this was an article called "Family, Education and Sources of Wealth among the Richest Americans, 1982 to 2012," where they looked at the Forbes 100, every single member for this entire 30-year period and just looked at their sources of wealth. And you do see this huge shift from real estate empires to tech CEOs. And Piketty talks about the working rich, like people who are CEOs, executives.

Peter: I'm sorry, I'm sorry, we need to pause. Michael Hobbs read Capital in the Twenty-First Century a fucking thousand page.

Michael: I audio-booked it. I audio-booked it, so I missed the chance. [laughs] 

Peter: Oh my God. The fact that you were reading the slop and you're like, what does Capital in the Twenty-First Century say about this?

Michael: But one thing he does talk about is this concept of the working rich. Not to say that like, oh, these people work so hard and they're so good or whatever, but it's like these are people with jobs. You're not just sitting there quietly getting money. You are somebody with a job. And that's a huge part of your identity.

Peter: It's not like salt-burn money or something?

Michael: Right, exactly.

Peter: You are working and have income, and that's why you're rich.

Michael: And what you find in this article about the Forbes wealthiest is they say, "Those in the Forbes 400 today are less likely to have inherited their wealth or to have grown up wealthy. They are more likely to have started their businesses having grown up with some wealth. What we consider to be the equivalent of upper middle class. The Forbes 400 of today also are those who were able to access education while young and apply their skills to the most scalable industries, technology, finance and mass retail.”

Peter: Podcasting. 

Michael: “The percent who grew up wealthy fell from 60% to 30%, while the percent that grew up with some money in the family rose by a similar amount. The share that grew up poor remained constant at roughly 20%." So, getting from the poor to the rich is still really fucking hard and has only gotten harder. But getting from the upper to the super upper has gotten a lot easier. There's circulation between the sort of top 10% and the top 0.1%. And that is the circulation that I think feeds this idea that the rich are hardworking. Because if you are Mark Zuckerberg, you did work really hard. You worked really long hours. You launched Facebook. You had this idea, right?

Peter: Right.

Michael: But also, he was the son of a dentist in Westchester County.

Peter: Yeah, it's like the Bezos thing where he was given 300 grand by his parents or whatever. And it's like, “Yeah, he probably doesn't get ultra rich without the 300 grand.” That said, “You can give me 300 grand. I'm not creating Amazon.”

Michael: Yeah, yeah, totally. Yeah, yeah.

Peter: Yeah, there's a huge gray area when you're talking about who's self-made and who's not.

Michael: What's interesting about the way that they frame this in the book is they very narrowly focus on inheritance. But inheritance, your parents don't typically die until you're in your 40s or 50s, in which case, oftentimes, your kind of financial fortunes are relatively well established. The much more important form of wealth transfers from rich people to their kids is in getting them into elite colleges. Oftentimes, wealthy people are helping their kids with down payments for homes. Oftentimes they're helping them with startup capital for their businesses.

Peter: Hey, we couldn't have done this podcast if your mom didn't give us $10 million.

Michael: [laughs] But I didn't inherit it, I didn't inherit it. [Peter laughs] What's interesting about this shift is not just that it's a shift in “Meritocracy.” On some level, these people are self-made, but in other, I think, very meaningful ways, they aren't self-made. They're getting a ton of privilege. But it also created an ideology among the rich that, I did this myself, right?

Peter: Yeah.

Michael: In this book, Uneasy Street, it's essentially a series of qualitative interviews with mega rich people in New York where she sits down with them and talks to them about money, and she finds a couple of really interesting characteristics. So, the first thing is that rich people explicitly describe themselves as middle class. So here is this.

Peter: "Helen was a stay-at-home mother who had worked in banking and was married to a lawyer. With a household income of over $2 million and assets I estimate at well over 8 million, including two homes. She told me, 'I feel like we're somewhat in the middle in the sense that there are so many people with so much money. They have private planes, they have drivers, they have all these things.'"

Michael: And so, you see this sense of like, “Well, there's people who are richer than me, so I don't feel rich. Right.

Peter: Yeah.

Michael: What you find in other qualitative interviews is they oftentimes refer to their childhoods to say, like, well, I grew up in a normal home. I went to public schools. Oftentimes, they did.

Peter: It's almost a social identity more than it is a description of their wealth.

Michael: You also have survey data. There's a 2025 survey that asks millionaires whether or not they're self-made and 79% say they're self-made.

Peter: Okay.

Michael: So, people have this idea of themselves as pulling themselves up by the bootstraps.

Peter: I'm actually kind of impressed with the 21% who were like, “No, dude.”

[laughter] 

Michael: I didn't do shit. 

Peter: I'm a fucking loser. 

[laughter] 

I do not deserve this money at all.

Michael: There's also a survey that two-thirds of US millionaires don't consider themselves to be wealthy.

Peter: Yeah.

Michael: So, this is also how you have these constant articles that are, I think, rage bait at this point. They're like, “You can't even get by in New York on $500,000 a year.”

Peter: And that's true, folks. That's why I had to move out here to Jersey. [Michael laughs]

Michael: It's also very important to wealthy people to constantly emphasize how hard they work. That they're not one of the lazy rich. They're not just sitting there getting rent money.

Peter: Yeah, yeah.

Michael: Here is another excerpt from Uneasy Street.

Peter: "Near the end of the interview, I asked if he felt he deserved his lifestyle. I had started asking interviewees this question after I noticed they often seemed to feel conflicted about their advantages. Paul responded without hesitation. “Absolutely. Damn right I fucking deserve it. Where I am today, I've earned every dime on my own. No one's done it. My in-laws have helped, but I've done it.” 

Michael: I mean.

Peter:  Tell them, Paul, [Michael laughs] you know, the money's real when it's like, “Yeah, sure, my in-laws help,” like, not even like my parents. 

Michael: Sounds like he has a type A wife, one of those type A housewives.

Peter: Yeah. Was it helpful marrying into the Bezos family? Yes. [Michael laughs] He goes on. "My job, my career, my current employer, my previous employer. This is all me. No one's helped me. It's been me. So, I've earned every fucking dime. Absolutely." And then Rachel asks him, "And people who have less than you, do you think they deserve less?" He responded, "Some of them, absolutely. Occupy Wall Street, what have they done? They sat in a park doing nothing.

[laughter] 

Tell them, Paul.

Michael: You haven't done shit. 

Peter: Look, it's so important to be self-made in the sense that you marry a rich lady. It's underrated to count that as self-made.

Michael: But what's also so interesting to me about how consistent this is throughout the book is that people's advantages are immediately written off. I did have advantages, but I worked hard. This is the number one thing that people describe oftentimes like totally unprompted, like how hard they worked. And oftentimes this is true. You don't want to take it away from somebody. They did work really hard.

Peter: What we're actually just talking about is how much of it was luck, how much of it was outside of your control. Because it might be that it couldn't have happened without a ton of hard work. I think in many cases that is true. The actual question though was a ton of hard work on its own enough? And the answer to that is basically unequivocally, no in almost every single situation.

Michael: There's statistics on this. Yeah.

Peter: There are a ton of people who work very hard and don't have what you have. So, can you explain what that gap is? Or can you explain if you're Mark Zuckerberg or whoever, why you, if you think you deserve what you have, deserve 50,000 times someone who works very hard in a normal job? There's almost a moral question in there, especially if you're looking at income in terms of like, “Well, did we order society in such a way that this is a trade-off?” This guy gets 3 million a year and our welfare state's a little bit smaller than it might be.

Michael: Also speaking of morality, Peter, another article I read for this super fascinating is called "Wealth Elite Moralities: Wealthy Entrepreneurs’ Moral Boundaries" by Anu Kantola and Hanna Kuusela, two Finnish researchers who interviewed rich Finnish dudes. And what they found was that people have this mythos of hard work, but oftentimes they keep that mythos even after they're not really doing the hard work anymore. So, here's a fucking brutal series of paragraphs.

Peter: And this is the Finns. 

Michael: I know.

Peter: They're not even on the list. Overall, the entrepreneurs create symbolic and moral selves as hardworking, risk-taking, humble, ordinary blokes who do not show off their wealth. However, their actual lifestyles contradict this moral self, especially when describing their current lives. The interviewees share anecdotes of idleness and relaxation. One interviewee, for example, states that everyone should work an hour more each day to save the national economy. But when describing his own life, it is evident that he is not working at all. After selling his company to foreign investors, he, “Sunbathed for one or two years,” [laughs] And four or five years later he still is not working. At the interview conducted in June, he said he plans to return to work in October. “I don't really work. I was just thinking of putting an automatic reply in my email saying let's get back to the issue on October 1st.” I do some real estate business which is not really that hectic. And then there was investing, but I had people to do that, so I don't really work."

[laughter]

Michael: This is what The Millionaire Next Door should have been. Interviewing these people will be like, “You're actually not working that hard, dude.”

Peter: The only people I want to hear from are the 21% of millionaires who said they are not self-made. [Michael laughs] My guess is that those people are kind of cool.

Michael: But then what's also interesting about The Millionaire Next Door focusing so much on frugality is that when you read both Uneasy Street and these qualitative interviews with rich Finnish people, this thing of frugality comes up all the time. This is a huge part of the ideology and the self-conception of people as someone who isn't like those other millionaires. Rich people will mention out of nowhere all the time they're like, “I don't fly business class, I live in a modest home, I don't wear designer clothes, right?” In the Finnish interviews, they say “Another interviewee who kept his sunglasses on throughout the interview regards humility as one of his defining characteristics. I consider myself a normal bloke. A sense of humility comes from my upbringing and because of that, even if I was elite I don't know how to show off.” 

Peter: I would love to do this interview as a gag where I'm in a full fur coat and sunglasses. [Michael laughs] I would say my defining characteristic is how humble I am.

Michael: This is the mythology of the wealthy now. I think it's you see this in Mark Zuckerberg wearing hoodies. A lot of the aesthetics are not about bright gold and shit, right? Like, ostentatious displays of wealth. It's ostentatiously displaying how you're not the bad kind of rich person.

Peter: Zuckerberg's a good example because they all have this duality where they are sort of an everyman, but then a large part of their life is completely ridiculous and unattainable. Zuckerberg was maybe in a hoodie and some casual jeans, but then has a yacht.

Michael: Yeah, yeah, yeah. And also, three houses or whatever. But, in his self-conception, that stuff doesn't count. What counts is the hoodie. And you're seeing this at The Millionaire Next Door, where it's like, people are ignoring that. They send their kids to private school for $50,000 a year and they're like, “Oh, my car is three years old.”

Peter: Actually, a little Zuckerberg anecdote that ties into the watch stuff. Most normal people, if this becomes your hobby and you're like, “I want a luxury watch,” then maybe you save up and one day you buy a Rolex. One day you buy a Cartier. Mark Zuckerberg got into watches a couple years ago and then just immediately bought 10 of the rarest watches in the world. 

Michael: Oh, yeah. 

Peter: And there's actually something so weird and artificial about it where it's like, I'm going to start this hobby. And then like, he asks someone, like “Well, what are the rarest, most expensive watches? Because I'm worth so much money and I'm so famous that I can just get them all right now.

Michael: Yeah.

Peter: Every time you see him in a public appearance, he has a watch worth like $3 million on his wrist. And it's like there's something so fucking fraudulent about it, right? Where not only is he not this character that he plays, this regular dude that he plays, but he actually doesn't even really know what to do anymore.

Michael: What can you do with that amount of money? It's like an infinity symbol.

Peter: Money makes having a hobby like that almost irrelevant, right? Like, he gets into watches and just buys $50 million worth of the best watches in the world. And now what? Now what are you going to do?

Michael: It's also very similar to normal people when you're like, my New Year's resolution is to start running and then you go on Amazon you're like, I'm getting running pants, I'm getting running shoes. You go on this buying binge even though you haven't actually started the thing yet. It's the same thing that he's doing, except he's spending like $4 million instead of like $200.

Peter: There's something, there's something I can't quite articulate, but like their conception of themselves is so fucked they no longer even understand themselves.

Michael: But this is also-- this to me is so key to the political ideology. Because one thing Rachel Sherman mentions in her book is that rich people voted for Harris in the last election, right? So, this isn't necessarily a partisanly right-wing group, but these are all people who experience any idea of increasing taxes on the wealthy as a personal affront. Because they're like, “Well, I worked hard for this.” I'm not the bad kind of rich person. I'm not an Astor. I'm not a Carnegie. You can't really get any political consciousness out of these people because they don't understand themselves as rich people. They will never admit it.

Peter: Right.

Michael: And one thing she mentions in the book too, is this concept of luxury creep. We're decision by decision as somebody stays rich for many years. It's like, “They'll fly business once and they're like, “Oh, I fly business, it's just easier for my neck.” And then they'll fly private. Like over time they just go up the wealth ladder, right? It's like one decision, I'll buy a new car this time, but I'm not the person who buys new cars. And of course, the cars become like a Bugatti and then a Rolls Royce, blah, blah, blah. It's like over time they entrench themselves into these buying habits. But she also mentions that they actually get stronger in their mindset of themselves as middle class people partly because they're hanging out with more elites. 

So, they are in the middle of the income band of people that they're spending time with. But there's never a point at which these people start to identify as rich people. It's always a fluke. They're like, “I'm a middle-class person, I'm an interloper here.” But that makes it so hard to do any kind of political organizing or political punishment of these people because they experience it as such an attack if you try to reduce the amount of wealth that they have. Because they don't think they have that much wealth.

Peter: Because they don't view themselves as having done anything wrong. The idea that it would better or more moral to take some of their money from them never sits right in their brains.

Michael: It's an injustice. It's like, “Well, I worked for this money and you're taking it away from me. It's a theft.”

Peter: Right? You can't tell me that I've done something wrong to get this. All I did was work hard.

Michael: So, we then get back to the book. We have to talk about his chapters on taxation. Yeah, this is going to be a little script, Peter, about two IRS workers. So, he says, "Assume for a few moments that you are Mr. Bob Stern, a scholar who works for the IRS. One morning, your manager, Mr. John Young, calls you into his office." So, do you want to be the IRS guy or the manager, Peter?

Peter: I will be the manager. 

Michael: Okay.

Peter:  Bob. "I keep reading reports about the growth of the millionaire population. The number of wealthy people keeps rapidly increasing. But our income tax revenue for a lot of these people is not keeping pace. I wish Congress would wake up. What this country needs is a tax on wealth."

Michael: "I know what you mean. But sooner or later, we will get them. Remember, it's inevitable. Death and taxes."

Peter: "Not so fast, Bob. Look at this case study. Here's a woman, Lucy L." 

Michael: Big names. 

Peter: It's funny to not give the full name in casual conversation. "Here's a woman, Lucy L, who had $7 million just a year before she died. She lived on her pension money. Never in her life sold a share of stock out of her portfolio. Her wealth doubled in just the six years before her 70th and 76th birthdays. But what did we get out of it? In terms of income tax, nearly zip."

Michael: "But the reaper, he got her, right? Death and taxes."

Peter: "Wrong, Bob. She died last year. And do you know what her net worth was at the time the reaper finally showed up? Less than $200,000. No estate taxes. Some days I wish I were in another line of work. The enemy is winning."

Michael: "But where did her money go?"

Peter: "She gave it to her church, two colleges and a dozen or more charitable organizations. She also gave $10,000 to every one of her children, grandchildren and nieces and nephews. She's real country, loaded with relatives. Like a mountain of people."

Michael: No, like a lot of mountain people.

Peter: "Oh, my God. She's country loaded with relatives. Like a lot of mountain people."

Michael: She's the wrong kind of white. She's the wrong kind of white.

Peter: That's right.

Michael: "Well, she sounds like a pretty nice person to give so much money to a church, colleges and charities."

Peter: "Bob. Bob, shame on you. Every one of those churches is racist.” 

[laughter] 

“Bob, shame on you. She and her ilk are the enemy. America needs their wealth to keep our government operating. We need her money to pay off the federal debt. We need to fund all of our social programs."

Michael: "Perhaps she feels that her church, the colleges, and the charities also have needs."

Peter: "Bob, you are so naive. This woman is an amateur. What type of experience does she have with doling out her wealth? We are her government. We should decide where and how wealth is distributed. We are the pros. We have to start taxing wealth before all the millionaires transform themselves into non-millionaires."

Michael: So, this is insane in general, but it's also so insane to include in an allegedly academic book about features like survey data on the wealthy in America.

Peter: Fucking marketing PhDs are doing.

Michael: They're doing an extended bit.

Peter: I don't think you should legally be allowed to put PhD on the cover of your book if it's a marketing PhD.

Michael: [laughs] I love that they're just creating the IRS as these demons who are like, this bitch gave money away. We hate her for it.

Peter: And also, it's just like some fucking middle management asshole at the IRS is like.

Michael: But you see this weird radicalization, it's like you have to construct these efforts to tax rich people as somehow totally illegitimate and only appealing to the worst people. Like, "Mwahaha. She gives money to charity. She's evil."

Peter: Right, right, right.

Michael: Also in the book, they say, "We believe in the next 20 years, the affluent will have to use every option within the law to remain affluent. It's a segment of our economy that will be under siege by the liberal politician and his friends, the tax man."

Peter: Yeah, well, look, they got that right. The affluent, of course, under siege in our country. [Michael laughs]

Michael: Since 1996, baby it's been pretty tough for the affluent in America.

Peter: Fucking like Newt Gingrich got fucking his claws into their [crosstalk] shit marketing brains. And they were like, “My God, [Michael laughs] in the next 20 years, the entire country is going to change. Rich people won't be allowed to be rich anymore.”

Michael: The last thing I want to read is also another part of the ideology that shows up throughout the book about being a frugal millionaire, right? They're basically creating this identity for yourself as one of the good kinds of rich people, right? So, here is him talking about this millionaire that he made up, Johnny Lucas. He has a long thing about baseball players and celebrities, like all their spending habits are so glorified by the media. So, he's talking about whether you would ever have a TV show about someone like Johnny Lucas.

Peter: "Is a show about the typical American millionaire one the mass TV audience would enjoy? We doubt it. Let's take a look at why not. The camera zooms in on the typical millionaire household of Mr. Johnny Lucas. Like most millionaires, Johnny, 57, has been married to the same woman for most of his adult life. He holds an undergraduate degree from a local college. He's the owner of a small janitorial contracting firm that has thrived in the last few years. To his neighbors, Johnny and his family appear to be nondescript middle-class folks. But Johnny has a net worth of more than $2 million. How will the TV audience respond to the description of Johnny's wealth in the images of Johnny on the screen? First, viewers will likely be confused because Johnny does not look like the millionaire most people envision."

Michael: What, a house worth a million dollars? Why? I don't know. I don't understand.

Peter: "Second, they may be uncomfortable. Johnny's traditional family values and his lifestyle of hard work, discipline, sacrifice, thrift and sound investment habits might threaten the audience. What happens when you tell the average American adult that he needs to reduce his spending in order to build wealth for the future? He may perceive this as a threat to his way of life. It is likely that only Johnny and his cohorts would tune into such a program.” Why would Johnny watch a program about his own--?

Michael: [laughs] About a guy not buying stuff? He's like, “No, I don't want [crosstalk]”

Peter: He's just a guy at work. What are you talking about? [Michael laughs] Of course people aren't going to watch that. It's fucking boring as shit, dude.

Michael: But it's also, I think the other part of the ideology is this sense of victimhood. You're a millionaire, but no one wants to admit that the way you got there was with frugality. No one wants to congratulate you.

Peter: Americans feel threatened by you.

Michael: Yeah.

Peter: Not only are you a special boy, but just hearing about it would upset people.

Michael: And you can argue that sort of celebrity culture is a lot of spending stuff. But if you talk about standard financial advice, it's all about frugality. It's all about being prudent. Yeah.

Peter: The idea that a frugal rich guy is offensive to people. What are you talking about, what is that? Is that based on something?

Michael: There's later this whole section about how Johnny sometimes parks his janitorial truck in the driveway and then his neighbors try to kick him out of the neighborhood. Because they're like, “Oh, we hate your values.” At one point, they're like, they hate that he sends his kids to college.

Peter: If I found out that one of my neighbors was working class, that would be disgusting to me. [Michael laughs] I would say, “No, no.”

Michael: Start throwing your watches at him.

Peter: Unless you are doing some sort of rent-seeking on American capital, then I'm not interested in living near you.

Michael: If you heard a story, if you told the average American a story, be like, “Oh, this guy only makes $80,000 a year, but he has a net worth of $2 million because he lives a prudent lifestyle.” How many people are going to be like, “Fuck that guy.”

Peter: They think he's a hero.

Michael: Yeah. You're not under attack for this at all.

Peter: The fact that this man doesn't exist is pretty important because you are literally creating a mythical hero.

Michael: But this is what's so interesting is I think that this book between the lines is creating, giving rich people this story about themselves. A lot of people read this book and this book showed up in popular media all the time and it really created this story of like, you're not the bad rich person and they hate you for being thrifty.

Peter: Not just that, but where is the chapter that's like, yeah, look, some people are just high-income big spenders.

Michael: Yeah, exactly.

Peter: They seem to collapse all rich people into this category of guy with reasonable income, who's just very frugal, very smart, very responsible, by the way, doesn't cheat on his wife. 

Michael: Only been married once.

Peter: What are you talking about.

Michael: They hate you for only being married once.

Peter: Where does the scumbag rich guy that we all know fit into this framework.

Michael: I mean, they basically talk about this and they basically say they're not really rich. If you see somebody driving a Rolls Royce, he's not rich because he drives a Rolls Royce.

Peter: The guy with a fancy watch can't be rich because he's outside of the category that we have created.

Michael: But of course, wealth inequality, that guy might just earn $10 million a year and the fucking watch doesn't matter. 

Peter: It's so interesting that they just carve those people out of the equation. No, they're frauds.

Michael: With no real data on them because we didn't survey them basically.

Peter: My net worth I pin at $25 million but that's mostly brand equity. That's where I value. 

Michael: That's your IP.

Peter: That's my estimation, my personal calculation of the Peter brand. 

Michael: That's the only epilogue I will say about the aftermath of this book is that obviously it sold a billion copies, they made a ton of money. Thomas Stanley, one of the authors, went on to write a bunch of these other slop books. There's an article following up on the book 10 years later that notes one of the authors of this book, a couple years after it came out, bought a brand-new Mercedes in a book that says over and over again never buy a brand-new car and the other author bought a brand-new Corvette. 

Peter: So long suckers, [Michael laughs] literally leaving their readership in the dust just fucking cruising away in the new Vette. Let's go, boys.

Michael: It was a fucking fraud.

Peter: Well, but they’re self-made.

[laughter]

[music]

[Transcript provided by SpeechDocs Podcast Transcription]