Perhaps there is a “moral hazard” in merely being rich. The economic history of the United States for the last several decades seems to suggest that conclusion. During this period the U.S. has become the most unequal society among Western industrialized nations, largely due to disproportionate tax breaks for the wealthy, and the middle class has steadily been eroded by job loss to lower-wage nations.
The latest factoid suggesting the moral weakness of the rich is reported by David Streitfeld in his New York Times article of July 8th:
LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.
The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.
Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.
Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.
“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Read full article here.
I’m sure, though, that we can still count on plenty of pontifical lectures from the affluent class about “personal responsibility” and the sanctity of mortgage contracts.