(2025-11-30) Green Part2 The Door Has Opened

Michael Green: Part 2: The Door Has Opened. The wealth you’re counting on—the retirement accounts, the home equity, the “nest egg” that’s supposed to make this all worthwhile—is just as fake as the poverty line. But the humans behind that wealth are real. And they are amazing. — Part 1. (Re [[(2025-11-23) Green Poverty Line Is A Lie]])

I took heat for using “AI”. Let’s head that off at the pass — of course, I use Large Language Models (LLMs). In case you’re wondering, I also use electric lights, Excel, and Bloomberg.

As I made clear in the original article, the point was not the accuracy of the actual $140K claim. The POINT was the “Valley of Death”:

we’re going to try to do FOUR things with this piece.

• First, I’m going to address a few of the legitimate issues raised with my initial piece
• Second, we’re going to return to a theme from my piece, “Are You an American?” examining the “Mockery Machine”
• Third, I’m going to venture into a discussion of wealth and examine the belief that “wealth transfer” will save us.
• FINALLY, I’m going to tease at solutions. The actual proposals will wait until next week.

Part 2: The Broken Balance Sheet

1) A Note on the Numbers: The Bark, The Tree, and The Forest

the pushback from institutions, like the American Enterprise Institute, was instantaneous and coordinated.

To understand this reaction, we must establish three distinct layers of the argument: Layer, Concept, and Meaning. Using “forest for the trees” analogy — the bark, the tree, and the forest.

The Bark: The Specific Number ($140,000)

This number, sourced from the MIT Living Wage analysis for Essex County, NJ, is the trigger. As noted, I used Essex County, NJ, because it is the county for Caldwell, NJ, the subject of my prior article, Are You An American? (2025-11-16-GreenAreYouAnAmerican)

If we use the most statistically average city in the United States, typically cited as Lynchburg, VA, the level is $94,215 as of December 2024. Roughly 3x the official poverty line.

The Tree: The Precarity Threshold

The fundamental truth is that the cost of participation in modern life has become near impossible for a single earner with children, forcing a two-income precarity model on most households.

In both Lynchburg, VA and Essex County (Caldwell), NJ, only 27% of occupations generate enough on average for single earner households with two children; in Lynchburg, 64% of occupations (and a higher fraction when we consider combining high and lower income careers) provide adequate income in dual earner households with two children. With that additional worker, comes the additional expenses discussed — a second car, childcare, etc.

The Forest: The Valley of Death

This is the policy failure that was actually at the heart of Part 1: We have created benefit cliffs and income phase-outs that systematically capture the working poor (lower class), ensuring that climbing the ladder only leads to loss of essential benefits and permanent financial fragility.

The question we are increasingly asking is, “Why aren’t we having more families and procreating?” The answer, largely, is that we are asking families to make an investment in children that becomes a future common good and penalizing them for doing so.

The Cost of Thriving Index (COTI) from Oren Cass confirms this income statement failure by comparing the raw, inflationary pressure of essential goods against the income of the median full-time male worker expressed in “weeks of work” required:

Year Weeks of Median Male Earnings Required for COTI Basket

• 1985 30.1 weeks
• 2000 41.8 weeks
• 2010 50.2 weeks
• 2024 62.7 weeks

Note: AEI has also attacked Oren’s work with analyses that suggest the median actual expenditure is closer to 50-52 weeks of median income, but this relies on using CPI to deflate costs, which inaccurately conflates the aggregate cost basket with the “cost of participation” as I detail below.

2) The Mockery Machine — Calling Out the New Balph Eubanks

What I witnessed this week was not debate. I would gladly have made myself available for discussion. It was narrative discipline. First, they tried to ignore it:

Then reluctantly, they lumbered into battle. AEI’s champion, the “Black Knight” of Monty Python’s Holy Grail, performing his required professional function.

It was the déjà vu of a scene from Atlas Shrugged I had never fully appreciated until now: the role of Balph Eubank, the subsidized intellectual whose job is not to think, but to reassure the powerful that everything is fine.

This is the policy-intellectual echo chamber of the Mockery Machine. Eubank provides the moral justification to inaction in Atlas Shrugged — people are “too comfortable” and must bear “privations.” Winship provides the modern, data-backed policy verdict for the same — that income is secondary to “behavior.” The conclusion is identical: The Problem is not the system’s mathematics, but your moral character.

Winship’s central thesis, which anchors his entire body of work as the AEI’s Director of Social Mobility, is that American poverty and economic insecurity are vastly overstated, and that, once we “adjust X, Y, and Z” (namely, non-cash benefits and headline inflation measures), things have, in fact, never been better. His attack essay, How Not to Redefine Poverty, exemplifies the Mockery Machine perfectly.

The Mockery Machine was invoked to erase the contrast between your grandparents’ one-income middle-class stability and your two-income precarity.

The CPI is not designed to measure the cost of middle-class participation; it measures price changes in a shifting basket of goods, not the cost of entry into stability. The CPI index that is used to update the poverty line systematically understates the cost of middle-class existence because it is heavily weighted toward tradeable manufactured goods (like TVs and apparel) whose prices have collapsed due to the diffusion curve of technology. These goods enter the market as luxuries whose prices must fall for broad adoption, thereby lowering the CPI denominator even though the poor do not benefit until much later.

Luxuries like air conditioning, which were not common in 1960, became common by 2002. But poor people who didn't have air conditioning in 1960 didn’t benefit from the decline in price. Instead, the BLS adjusted “rents” CPI lower to reflect that more units had air conditioning (and extra bathrooms, larger size, etc). While I agree that these quality improvements benefited the rental EXPERIENCE, they did not actually lower the COST for consumers.

A flat-screen TV that cost $5,000 in 2000 costs $300 today, and CPI calculations include this decline. But no lower-income family was buying $5,000 flat screens in 2000.

As others have noted, it’s great that the 1963 basket is so much higher quality than the 2025 basket that it’s “worth” much more, but it’s illegal to buy the 1963 basket. Seriously, try buying a car that uses leaded gasoline and bias-ply tires without power steering and anti-lock brakes

No amount of cheap electronics can afford a family a house in a good public school district. The non-tradeable, gatekeeping costs of stable participation—housing in a functioning school district, healthcare, and childcare—have inflated at rates far above CPI

Scott DOES have an important point. To Scott and his acolytes, we offer this bridge: We agree that work should be the primary engine of mobility and that stable families are the bedrock of a functioning society. We do not seek a future of permanent dependence on the state. However, Winship’s work relies on a fundamental assumption: that the math of the sequence still works.

3) The Wealth Lie

Your primary house isn’t an asset. Your degree isn’t an education. And the “Great Wealth Transfer” is a hospice bill.

“Don’t worry that you can’t pay the bills with your salary,” they said. “Look how rich your house is making you!”

This is the second, and perhaps more dangerous, lie.
They are confusing (conflating) Inflation with Wealth.

if the home you live in goes from $200,000 to $1,000,000, you are not wealthy, because the replacement home also costs $1M. You are trapped. You cannot sell the house and take the profit, because you still need a place to sleep, and the house across the street also costs $1,000,000.

we are going to discover that what we call “Middle Class Wealth” is actually just a capitalized liability.

The Housing Trap: Mark-to-Market Misery

The only way to unlock that wealth is to:

• Die.
• Downsize (move to a cheaper region, sacrificing income/opportunity/quality of life).
• Borrow against it (HELOC or reverse mortgage), which turns your equity back into debt.

All three represent either a loss of utility or a conversion back into debt.

When housing prices triple relative to wages, we haven’t made homeowners rich; we have made non-owners poor. We pulled up the ladder and called it “Net Worth.”

The “Great Wealth Transfer” Lie (You Won’t Inherit the House)

They tell us that Baby Boomers hold $78 trillion in assets, and soon that money will flow down to Millennials and Gen Z, fixing their balance sheets.

In 1955, elder care was “non-market” labor. Grandma lived in the spare bedroom. The cost was space and food.

In 2025, elder care is a financialized product.
Assisted Living: $5,500 – $8,000 per month.

That $800,000 house your parents own—the “nest egg” you are counting on as you count out cyanide pills — isn’t paying out. If your parents require memory care or skilled nursing for five years (not uncommon), that costs roughly $600,000 to $700,000 ($657,915 is the national median). (is it common? ALF residency is relatively small%, isn't it?)

The truly affluent, those with complex estate planning and multi-million dollar portfolios, are skilled at this game; they shift wealth into perpetual trusts or transfer assets outside the five-year Medicaid look-back window. But we are speaking of the American middle class.

The Great Wealth Transfer isn’t a transfer from Boomers to Millennials. It is a transfer from Boomers to Private Equity-owned Healthcare REITs.

The 401(k) Mirage: Exit Liquidity for the Rich

Then there is the stock market. “The S&P 500 is up 25%! Americans are prospering!”

The Federal Reserve’s data on “Corporate Equities” shows that the Top 10% hold roughly 87% of business equity. The Bottom 50% own roughly 1% of corporate equity.

The middle class doesn’t own “The Market” in the way the wealthy do. They don’t own controlling interests or private shares. They own Target Date Funds. They own a 401(k)—a vehicle designed to replace the defined-benefit pension.

*The financial industry is working aggressively to get Private Equity into 401(k) plans.
By stuffing Private Equity into 401(k)s, they are solving their liquidity problem with your retirement money. You are serving as the direct exit liquidity for the ruling class.

That isn’t a retirement plan. It’s a Ponzi scheme running out of new entrants.

The Real Asset: The Rise of “Caste”

what is the actual asset that differentiates the winners from the losers in 2025?

It isn’t money. It’s Access.

In the old economy (The Ladder), you could get rich by building a better mousetrap. In the new economy (The Castle), you get rich by getting permission to enter the gate.

College is no longer about education. It is about sorting.

The Elite Degree: Signals “Prince.” You get access to High Finance, Big Tech, Big Law—the sectors where the currency is equity, not wages.

The “Asset” is the credential.

the cost of acquiring that asset has hyper-inflated faster than housing or healthcare. And it’s not just the sticker price — it’s the club sports, tutoring, test prep, afterschool activities, parentally-sponsored charitable activities to pad the resume, the global travel to build perspective, the brand clothing to signal affiliation, the therapist to address smartphone and social media-induced mental health issues

We are witnessing a phase transition in American society: The shift from Class to Caste.
Class is defined by income. It is fluid.
Caste is defined by credentials and access. It is sticky.

The American Dream wasn’t about “Net Worth.” It was about Mobility.
By inflating asset prices, we didn’t create wealth; we destroyed mobility.

The Conclusion: Unwinding the Trade

rigged games can be fixed

We have audited the books. Now it’s time to restructure the company. To steal from another billionaire turned philosopher, “It’s time to build.” We are a nation of builders.