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Interview Part II: A Member of the 1% on Mitt Romney and the Death of the American Dream

Please click above to listen to full interview.

I continue the conversation with Jim, a member of the 1% who made his career in advertising to the high-end consumer, and who has studied the stratification of America professionally.  We spoke about the problem Mitt Romney will have portraying himself as a “Job Creator,” the disappearance of the American Middle Class, and the implications of that disappearance for the publishing business.

Click here if you would like to listen to Part I of this interview.

Jim: My name is Jim, and I’m a former publisher of a major, national, luxury magazine.

Mike: Thank you for joining Bankers Anonymous this morning.

On Mitt Romney as a “Job Creator”

Mike: I liked what you said in an earlier conversation about the trouble that the nominee Mitt Romney is going to have in arguing that he is a job creator, and I just thought you summarized in a funny way basically what the Democratic argument is going to be against him as a Bain Capital guy, which has gotten some press – after you said it of course.  Do you mind telling me your thoughts on that – the problem of Mitt Romney as a job creator.

Jim: Sure.  I mean, when you’re an executive of any company – certainly I can speak for myself, in the publishing industry – whenever you have a good year, you aren’t looking to ‘create more jobs.’  You’re getting pressure from your investors, or your boss, or your corporation, or your partnership, to actually squeeze more profit out of whatever you’re doing.  And usually the fastest way to do that is to keep your head count down.  So this idea that given the chance to invest and spend you’re going to add a ton of people to your payroll is absurd.  In fact, you’re going to find ways to outsource all of that, to NOT hire that person.  So you don’t have to pay them health insurance, to have it done in Indonesia, or overseas, and to find ways to use technology to save costs.

So this idea of executives dying to create jobs is absolutely absurd, in fact there’s a tremendous amount of pressure from the top to, when you hit a certain profit level, to see if you can hit that same number, with less people.

Mike: Mitt Romney is the ultimate, he will become the symbol this Fall of the ultimate 1%er.  The difference between how he knows how things really work – which is like you just described: Investors need to cut jobs not add jobs – and what he needs to say to get elected…The gap is so wide that as you and I, [who] have been inside that world of the 1%ers…it’s extraordinary to hear what he knows must go on, and that he has done, and what he has to say in order to be elected.  It’s really an amazing gap.

Jim: Yeah, and I wonder sometimes this whole idea of repeating a mantra over and over and over again. He’ll give a speech in Iowa to a predominantly middle class group, and the language he uses over and over again I think you begin to believe your own press releases, and your own dialogue.


On the Disappearance of The Middle Class and the American Dream

Mike: One of the thoughts that has occurred to me in the Occupy Wall Street Movement and to some extent the Tea Party – mirroring them on the other side – is that as a country we have this idea of “everybody has a chance to make it” and we’re somewhat of an egalitarian society, and we don’t talk about severe income and wealth stratification as if it exists.  Everybody’s middle-class.  We have this illusion that everyone is middle-class.

And yet what’s changed is in fact these two movements are basically saying “No, there’s a group of elites who are permanent.  And we can’t access them, and they don’t care about us.”

And yet you were talking to elites about this idea long before it became part of the public dialogue.

Jim: I mean, what people don’t know is we have the most stratified income and wealth inequality of any democratic, industrialized country.

In the history of America the whole zeitgeist is “The land of opportunity, for everybody.”  The Horatio Alger myth: “If you work hard you can pull yourself up by the bootstraps and you become part of this top 10%.  I happen to not believe that that is as easy to do as it was before, for a lot of different factors which I can go into, or not go into.

Mike: the myth has gotten more mythical and less real over time.

Jim: very mythical.

Mike: it’s a very helpful myth.  It is a very good story that we tell ourselves.  But the question is: Is there a reality behind the myth?  And that’s unclear.

Jim: You know, you look at what the wealthy have done to drive up the cost of education at the University level.  I mean how many people can afford $35,000 per year minimally to go to these colleges, and end up in that top 1 to 10% unless your parents are already in that top 1 to 10%?  And remember, the number of jobs involving physical labor or simple mechanics and engineering just don’t exist.  That’s what drove the middle class in America.  And as corporations and executives try to cut costs, and thus to pay themselves more money, because most executives are paid on profits, they lay off the people, replace the people with technology, and then outsource everything else they can to another country.

So what do you do when you don’t create those big middle-class jobs that we used to have an America?  We have to educate the workers, and once again the system is rigged.  That unless you have enough money to educate your children, you’re at a serious disadvantage.  So, I think because of globalization and technology [I would say to] the people who continue to say “hey with a little hard work you too can do it,” that was true in almost every part of American history, but because of globalization it just simply is not a reality today.


On The Disappearance of the Middle Class As Seen in the Magazine Business

Mike: Yeah.  I want to ask you about the magazine business.  I think what you’re saying is that advertisers are saying, “No, we do care about at least the top 10%” – or at least people with access to credit – which is middle, and upper-middle [class] aspirational buyers.  But they rejected your idea of the stratification, not so much on this illusion of American equality but more just because they actually just believed [Middle-Class consumers] had money to spend, which was only based on credit.

Jim: Yes they believed they had money to spend.  And, yes they did have money to spend, but it wasn’t real money.  It was borrowed money.  And eventually, eventually the banks and credit card companies are no longer willing to lend it to them.  So they had no wealth creation, they had no income gains when adjusted for inflation, and once they didn’t have credit they felt their lifestyle change dramatically. And then they started to look at how unfair the system really was, and how bad the disparity has gotten.

Mike: You were appealing to luxury advertisers.  And your competition to some extent was trying to appeal to the middle-class, mass affluent, people with some disposable income.  Do you have any sense what happened to them?  Was that just an error they made, when we went into recession?   Are those magazines dead?  Hurting? Will come back? Do you know where they stand versus the magazines like yours that appealed only to the truly wealthy.  What’s the relative performance – do you know?

Jim: Yes, there’s definitely some evidence that the magazines that strayed from their original luxury mission – pure luxury with a pure editorial product that appealed to that top 1 to 10% – during the boom times when the aspirational consumer seemed to be spending as much on luxury as the affluent consumer a lot of these magazines chased that aspirational consumer.  Made their articles more accessible, dumbed down the editorial a little bit, and for a short period of time were very successful doing it.  They saw their circulations go up.  They saw their ad pages go up.  And unfortunately when it became clear that that aspirational consumer wasn’t going to be able to buy the products that were featured editorially, and featured by the advertisers in the magazines, a few of them actually went out of business.

You look at a magazine like Gourmet which had been exclusively for the high-end consumer, they became much more accessible: shortened the recipes, talked about value, talked about fast food, TV dinners.  I mean everything that would have been anathema 10, 15, 20 years ago.  And they’re actually out of business.  Another example would be House and Garden magazine which catered to the aspirational consumer – kind of just under the Architectural Digest super-affluent consumer – and they too went out of business because they got lost in the middle.

I think it’s very tough for any brand to target that middle-end consumer – whether it’s J.C.Penney or whomever else because it simply doesn’t exist.  You have two classes: the high-end and the low-end.

Mike: And that doesn’t seem to be changing anytime soon.  If you were to look what is the future of magazines or anybody appealing to the middle-class or the very cost-conscious consumer, it must be very tough times.

Jim: You know the magazines that cater to the Walmart consumer, or the CVS or the Target consumer, whether it’s Cosmopolitan magazine, Good Housekeeping, or Glamour , those magazines are doing very very well.  A lot of the editorial is the “Look for Less” or “How to Get that High-End Look For Less Money,” how to get that high end skin cream for less money.  “What are the products available at the lower end stores that still look like $1 Million Bucks.”  Those magazines are thriving, and at the very top-end magazines like Departures, and Robb Report and Architectural Digest are doing very well also.


Want to hear more from Jim?

Part I of the Interview with Jim is here.

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9 Replies to “Interview Part II: A Member of the 1% on Mitt Romney and the Death of the American Dream”

  1. This is a great and thought-provoking piece, although I wonder if its pronouncement of the death of the American Dream is a bit hasty. I think that the pressures Jim refers to play out differently on large versus small and medium sized businesses. If we look at April’s job figures in the US, we can see evidence of this squeeze on hiring among large firms (with over 500 employees) where very little hiring took place. The picture looks quite different for small and medium sized firms, which were responsible for most of the month’s private sector job increases. The SMEs shouldn’t be overlooked. In aggregate, they employ almost as many Americans as large firms. Jim is certainly right though, that the vision that Romney peddles certainly doesn’t reflect the world of Bain Capital or the world that the 1% inhabit.

  2. Lori, Thanks for your comment. I hope the American Dream is not dead. It’s always been a bit of a myth, but its an extremely important, powerful, inspirational myth that’s been quite helpful in shaping reality, paradoxically enough. If nobody believes in the myth anymore, then reality will turn out a lot worse.
    Leaders like Obama and Romney need to peddle myths, since that’s part of leadership. Romney’s version is unusually ironic given his own reality.

  3. A great article banker. I do not think the American Dream is dead. Only delayed.

    He points out the one thing alot of people in the middle class do not or did not get. We all cannot keep up with the jones on a beer budget. Most Americans fell into the trap because of envy for what others had or what was protrayed as success. Now most are underwater or living paychck to paycheck.

    I submit you do not need to be 1% to be sucessful and it is a state of mind to be honest. I am debt free and lived modestly and own everything. I save and pay cash for items with the exception of a vehicle. I put my children through college and they were debt free when they left.

    Quite frankly Romney or or that matter Obama will not be job creators. Unless we count public employment.

    What does scare me sir is globalization and the loss of our jobs as is clearly stated in this interview. Private business can only compete globally now with labor and opening the doors with so-called free trade allowed large corporations to ship most manufacturing jobs overseas.

    A question I would have asked this 1% is what could we do to bring some of these jobs back to the USA from a 1%er’s perspective.

    Thanks for a great article and perspective.

    1. Thanks for your thoughtful reading and question, GCT.
      I agree ‘success’ cannot be effectively measured, or best measured, by one’s income or assets. And I agree with you envy, and a misunderstanding of success, play an unhelpful role in popular media.
      I’ll pass on your question to my interviewee about what if anything can be done and see what he says.

    2. GCT:

      The 1%er responded to me in answer to your question:

      “Basically the only good strategy is for government to invest in education – specifically math and science and engineering. Need to be able to invent, build and manufacture things that are extremely advanced – way ahead of other countries – we will never be able to compete on labor and efficiency – our standard of living is too high. We can only aspire to invent and build incredibly advanced things first that rest of the world will pay a premium for. Kind of like our advanced weapons technology – ironically.
      Sent via BlackBerry from T-Mobile”

  4. Thanks for the reply Banker.

    I agree and had a funny discussion last year with my neice that was headed to college. She is majoring in Spanish. We sat in the local TGIF and I started discussing what she wanted to do withher degree much to the dismay of her parents. I informed her she need to minor in math or science. I explained to her it is alot cheaper to hire a mexican that speak English to be a go between with spanish speaking people then hire her and she would be very disappointed with her decision. Her parents got a tad upset wit me to say the least.

    We met last month and she told me she is now minoring in advanced mathmatics. She got it and her parents still do not.

  5. Don’t know why it took me so long to see this TED Talk, about the whole “Job Creator” myth that Jim talked about in this podcast.
    Actually, I do know why it took me so long: Because TED quashed the video for being ‘too controversial.’
    Which is sick, and absurd.

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Public Speaking


I founded Bankers Anonymous because, as a recovering banker, I believe that the gap between the financial world as I know it and the public discourse about finance is more than just a problem for a family trying to balance their checkbook, or politicians trying to score points over next year’s budget – it is a weakness of our civil society. For reals. It’s also really fun for me.

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