It’s Hard Up Here for the Rich

This review originally appeared in Daily Report.

Americans are enamored with the wealthy.

We take national pride in the rags-to-riches story, the mom-and-pop store that makes it big. We say things like “only in America” and call the United States a “land of opportunity.” We value the better mousetrap and laud its inventor with gobs of money.

But those are more the marks of success than of wealth. What really fascinates us is the money. We drive by McMansions and wonder what the owners do for a living, how much money they make, and how they spend it.

Since 2003, The Wall Street Journal has devoted a full-time reporter to chronicle the comings and goings of America’s New Rich – the dot-com billionaires, hedge-fund managers, CEOs, etc., that are redefining America’s upper-upper class.

Journal reporter Robert Frank got the idea in 2003 when he discovered a report from the Federal Reserve Bank that said the number of millionaire households in the United States had more than doubled since 1995.

“After seeing the Fed numbers,” Frank says, “I started to wonder about all these rich people. Who were they? How did they get rich? How was money changing their lives? Most importantly, how were they changing life for the rest of us?”

The answers have come in the form of the Wealth Report column and blog that Frank writes for the Journal and his new book, Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich (Crown Business, 2007).

Frank’s premise – that America’s rich have formed an insular, separate country unto themselves – came from his reporting at a 2004 yacht convention in Ft. Lauderdale. A yacht owner from Texas told him: “You look at all these boats and you’d think everyone’s making loads of money. It’s like a different country.”

Even in Richistan, there is a class structure – “upper-class warfare between the haves and have-mores” – that Frank divides into Lower ($1 million to $10 million net worth), Middle ($10 million to $100 million) and Upper Richistan ($100 million to $1 billion). Billionaireville, the have-mosts, has grown from 13 American families in 1985 to more than 1,000 today.

And no one is content. When asked how much money they would need to feel secure, millionaires routinely give an answer that is twice their personal wealth, whether that is $5 million or $50 million. Middle and Upper Richistanis call Lower Richistanis “affluent” as a pejorative.

Even billionaires get insecure. Timber baron Tim Blixseth – worth $1.2 billion and ranked No. 322 on the Forbes 400 – had a multi-billionaire buddy over to his estate to play a round at his private golf course. Afterward, the multi-billionaire made a $400 million offer for the entire estate. Blixseth politely declined. “Now that guy,” Blixseth said, “he was rich.”

The book’s chapters are narrative anecdotes that describe particular facets of life in Richistan, from a college for butlers (now “household managers”) to a clash of new money vs. old money in a Palm Beach ballroom to innovative approaches to philanthropy to multi-millionaire support groups.

Richistan’s cast includes predictably self-congratulating boors – including one who gave Frank a spreadsheet of his charitable giving and “permission” to write about it – but also fascinating characters who illustrate the complexity and variety of life in Richistan.

Blixseth is one of the more interesting. He made a fortune in timberland speculation in the 1980s, lost it all by getting over-leveraged, started over, and by 1990 was again worth millions. He now has 500,000 acres of real estate holdings, luxury destination clubs, a record label, and a strict no-debt philosophy. For his wife’s 50th birthday party, Blixseth put on a lavish Wizard of Oz production – Munchins and all – and Paul Anka sang a special version of “My Way.”

Ed Bazinet, who founded the company that makes Snow Village ceramic cottages, mocked his devotees by stamping “Get a Life” – he had a special stamp made – on effusive letters from collectors. Retired since 1997, Bazinet built a $30 million Manhattan penthouse that became a constant frustration to him: he sued the contractor, cannot understand the lighting and security systems, and obsesses over a scratch in the glass stairwell. He recently put the penthouse back on the market.

There are undoubtedly boring billionaires who live in modest homes and watch soap operas all day, but a chapter about stealth Richistanis would have cut against Frank’s definition of New Rich as not just rich but flamboyantly rich. Still, the modestly wealthy are out there, and the contrast could have been compelling.

Frank gives little attention to the question he said was most important – how the rich are changing life for everyone else – but in his summary chapter he talks of the growing divide between the rich and poor that presidential candidate John Edwards has called “Two Americas.” Franks seems to agree, noting that median household income in America fell for the fifth straight year in 2005 and that the rich have, essentially, education and healthcare systems that are far superior to those available to the poor.

(Cornell economics professor Robert Frank – same name, different guy – covers this ground more thoroughly in Falling Behind: How Rising Inequality Harms the Middle Class (University of California Press, 2007), which recently became available on Kindle.)

Richistan has factoids galore: North Carolina has more millionaires than India. Lower Richistanis skew Republican, but Middle and Upper Richistanis skew Democratic. The inflation rate for the super-rich is triple the national inflation rate because of soaring demand for luxury goods. A pair Iranian immigrant brothers started Hot Pockets (frozen pizza snacks) in the 1990s and sold the company to Nestle in 2002 for $2.6 billion.

Frank covers the New Rich like a foreign correspondent or Atlanta Braves beat reporter, providing a close-up perspective of a topic with wide interest and narrow access. Whether the topic merits the attention (or this kind of attention) is open for debate, but Frank certainly makes wealth feel important, as American an institution as baseball, SUVs and apple pie.


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