Rich: The Rise and Fall of American Wealth Culture [NOOK Book]

Read an Excerpt

INTRODUCTION

‘‘WITHIN THE LAST TEN YEARS NO END OF PEOPLE HAVE

become rich,’’ a Los Angeles Times reporter once wrote,

telling readers that ‘‘a man with a million dollars cannot, in these

days, be counted as really rich.’’ This reporter wasn’t writing a few

years ago, alarmed at how hedge fund managers were pulling further

and further away from the mere rich, or even in the late 1980s

as investment bankers made unprecedented gobs of money. No,

this reporter was writing shortly before the market crash in 1929,

another time in which it seemed that a million dollars just wasn’t

what it used to be.1

Rich reveals many such stories, which tell us a lot about how

the cultural dynamics surrounding the wealthy elite have both

changed dramatically and remained remarkably the same over the

past century or so. The first full examination of the American rich

since 1920, this book traces the cultural trajectory of the wealthy

elite and completes a surprisingly overlooked and important chap-

ter of the nation’s history. As well, Rich puts today’s obsession with

all things monetary into much needed perspective and context,

exposing the backstory that has shaped today’s fascination with the

rich. Who were the Gateses, Bransons, and Trumps of the past?

How did the rich show off their status? What did they splurge on,

and how did they scrimp when times got tough? Who were the

VIPs of yesterday and, some are sure to wonder, the Paris Hiltons?

We’re reminded, for example, that bling is hardly a new phenomenon

and that today’s McMansions are shacks compared to some

estates of the past. The book may surprise some readers with the

news that recent lifestyles of the rich and famous—building worldclass

art collections, collecting vintage cars, throwing $1 million

parties, heading off to remote locales to escape the hoi polloi—

have their roots in similar passions of the wealthy decades ago.

Today’s inclination for the super-rich to give away hundreds of millions

of dollars to ensure their legacy also echoes the past, the current

batch of gazillionaires merely following a long tradition of

attempts by the wealthy to achieve a kind of immortality.

Importantly, rather than try to establish its own definition of

‘‘rich’’ or ‘‘wealthy’’ as a certain level of net worth, income, or percentage

of the population owning or earning an arbitrary dollar

level, Rich relies on how its sources used these terms. Not only has

what constitutes being ‘‘rich’’ and ‘‘wealthy’’ constantly shifted

over the last century, but a single definition of either of these terms

would have to address inflation and a host of other economic factors,

much too complicated an exercise for the reader (and, even

more so, for a cultural historian).

If there is any single grand narrative of the rich, it is that American

wealth culture—the beliefs and behavior of the upper class—

became increasingly democratized over the past century. In this

country there are now more people with more money than any

other civilization in history, suggesting that the story of wealth culture

is perhaps the biggest story of our time and place. (Recent

media attention about the ‘‘rich versus the super-rich ’’ is entirely

a result of the hedge fund phenomenon of the last few years. By

virtually any measure—asset and income level, house and car ownership,

pairs of Jimmy Choos in one’s closet—America and Americans

have undoubtedly gotten richer since 1920.) Over the last

decade, despite the economic downturn, we’ve reached a new plateau

in individual and collective prosperity, making the examination

of the American rich that much more significant. If theWest’s

greatest achievement over the last two centuries was to create a

mass middle class, as Dinesh D’Souza argued in a 1999 article

called ‘‘The Billionaire Next Door,’’ the United States was, at the

end of the millennium, about to outdo even that milestone. The

emergence of what Russ Alan Prince and Lewis Schiff called in

their 2008 book The Middle-Class Millionaire will thus be the

major focus of this book.2

Although they’ve splintered into a million little pieces—

actually about 10 million; according to Transaction Network Services

(TNS) there were 9.9 million millionaire households in June

2007—and although the economy has headed south, the wealthy

elite have never been more influential than now.3 ‘‘Being rich has

never exactly been a downer but today it is all the more sweet,’’

wrote Harvard economics professor N. Gregory Mankiw for the New

York Times in 2008, after reviewing data that showed that the

super-haves were pulling further away from the pack of haves.4 Recent

TV shows like ABC’s Dirty Sexy Money, CBS’s Cane, and

HBO’s 12 Miles of Bad Road reveal our current celebration of and

fascination with the super-rich (and recall the 1980s televisual

troika of Dallas, Dynasty, and Falcon Crest). Despite a shaky-at-best

economy, some of today’s plutocrats are still spending $1,000

a month on their hair and $36,000 a year on skin maintenance;

others travel in style in submarines and Hermes-outfitted helicopters.

Hiring baby nurses who’ve worked for celebrities has become

a status symbol within some circles, and house detailing—where a

dozen maids wielding extra large Q-tips go over every inch of a

10,000-square-foot home—is all the rage among a certain segment

of the upper crust. A wide range of other service providers—art

conservators, family CFOs, nutritionists, and medical concierges,

to name just a few—are also popular among the very rich, sure

signs that the American wealthy elite is alive and well.5

The global wealthy elite, especially the uppermost end, is also

very much alive and well in 2008, despite the economic ‘‘meltdown.’’

The international ultra-rich, who David Rothkopf calls the

‘‘superclass,’’ are largely resilient to downturns such as the current

one, maintaining or even escalating their spending on luxury goods

and services. Record prices were set at a Christie’s art auction in

May 2008, for example, with Europeans, Russians, and a few

Americans springing for Monets and Rodins like they were blue

light specials. (Between 2007 and 2008, the number of billionaires

grew by 20 percent to 1,125, with more now in Moscow—74—than

New York—71—quite tellingly.) Luxury brands like Prada and

Hermes are doing gangbuster business, and top-shelf real estate in

New York is as strong as ever. ‘‘Bespoke’’ lifestyles have also taken

off, as the ultra-rich forgo off-the-shelf luxury in exchange for customized,

one-of-a-kind jewelry, vehicles, clothing, handbags, and

even doghouses. Last but not least, today’s super-yachts—

especially Larry Ellison’s Rising Sun, Paul Allen’s Octopus, and

Roman Abramovich’s in-the-works Eclipse—are making Aristotle

Onassis’s Christina look like a rowboat, another sign that, for at

least a privileged few, it’s not the economy, stupid.6

In fact, one of the most interesting stories in Rich is the natural

ebb and flow of the upper class and their enormous fortunes. The

death of Big Money has been a running theme over the past century,

with social critics of the 1930s, 1970s, late 1980s, and even

today predicting the end of prosperity and the demise of the American

rich. What such critics have failed to understand is that even

if the super-rich lose a fair chunk of their investments in a financial

‘‘tsunami,’’ to use Alan Greenspan’s term, many or most of them

will remain wealthy by any measure. (Even when a third of a $25-

million nest egg evaporates, for example, a ridiculous amount of

money remains, in a historical or comparative sense.) Critics also

tend to forget that what Americans do best is make (and spend)

money, making a recession or even a depression more of a tempo-

rary setback or inevitable correction than a fatal blow. In fact, there

has always been a bigger and faster way to make money waiting

around the corner, as this book vividly shows, suggesting that the

best days for the American rich lie ahead.

Tracking the virtual demise of Old Money as we knew (and

mythologized) it is equally as important as mapping the consistent

rise of a mass-affluent class. How are today’s rich different from the

rest of us, we should ask, besides having (a lot) more money? Much

has changed, of course, since Fitzgerald famously observed in 1925

that the rich were different (and since Hemingway apocryphally

replied that yes, they had more money). Most notably, the democratization

of wealth in America has diluted most of the social signifiers

or markers of elitism—sense of privilege and entitlement,

discreetness, understatedness, noblesse oblige, snobbery—that

once were assigned to the rich. Less than 10 percent of today’s rich

inherited their fortunes, according to a recentMendelsohn Affluent

Survey; the deterioration of Old Money is a running theme over

the last century. The American rich are now primarily ‘‘instapreneurs,’’

as Robert Frank called them in his book Richistan; these

folks bear a striking resemblance to the ‘‘blue-collar billionaires’’

described by Peter Bernstein and Annalyn Swan in All the Money

in the World. Because today’s rich look and act a lot like us, as

Steven Winn wrote in 2008, the wealthy elite are no longer ‘‘remote,

unattainable, or mysterious;’’ this supports the idea that

their social downfall has come along with the demographic rise of

the first mass-affluent class.7 The unequivocal victory of New

Money over Old has thus come at a significant cost—specifically

the loss of an identifiable wealth culture. There are, of course, lots

of rich Americans but very few ‘‘wealthy’’ ones, in the traditional

sense of the word. Being rich just means having a lot of money,

after all, while being wealthy means subscribing to a certain style

of behavior and code of ethics that goes back centuries. Without

Old and New Money, we are left with only Money, a more democratic

but less interesting state of affairs.

This book shows, however, that Old Money was in fact an en-

dangered species in Fitzgerald’s prime, when our Aristocracy Lite

imported from Europe had already begun to wear thin around the

sleeves. As the nation ping-ponged between economic expansion

and progressive reform over the next eighty-some years, a series of

events and movements would largely dissolve the privileged few.

Pick your culprit—modernity and youth culture in the 1920s, financial

crisis in the 1930s, the rise of the middle and upper-middle

classes in the postwar years, the countercultural, multicultural, and

feminist movements of the 1960s and 1970s, and the emergence of

a different kind of New Money in the 1980s, 1990s, and 2000s—but

American wealth culture as we once knew it would no longer exist.