Burdens of wealth

Because of the day job, publishers sometimes send me books, most of which I have no interest in whatsoever; meanwhile, most of the new books I really am interested in, those never get sent to me. But in a rare exception, I got in the mail from Crown a book called Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich, which I did in fact find interesting. It’s by Robert Frank, the Wall Street Journal writer (not to be confused with Robert H. Frank, the economist who wrote Luxury Fever, among other books).

Given all the detail in the subtitle, I guess there’s not much reason to explain what the book is about. It was of interest to me because I’ve mused here about the Four or Five Americas, and maybe this is one of them. Frank divides his Richistan into three (lower-middle-upper) parts: the 7.5 million households with a net worth of between $1 million and $10 million; the 2 million households with a net worth between $10 million and $100 million; and those with a net worth higher than that, which number “in the thousands.” (There are around 100 million households in the U.S., I believe.)

The middle group is most interesting to me: $10 million is a lot of money, and 2 million is a lot of people. Enough people to form something like a common worldview, or a cultural consensus, among them.

Here’s a quick bit that I found interesting in terms of how Richistan relates to the other Americas: The spending/consumption of the broad group that Frank calls Richistanis is of course motivated in part by peer comparisons, but also by something else:

Richistanis are also spending to outrun the hordes of Richistani wannabes. The growng ranks of affluent consumers are increasingly trading up to buy goods once reserved for the rich. Luxury companies, to grow sales, are happy to sell cheaper version of their high-end products to serve this new crowd of aspiring shoppers. Marketers call it “mass luxury” and, oxymoron or not, it’s made life miserable for Richistani spenders.”

I’m used to thinking about the chasing-luxury game from the non-rich point of view: How people like say, me, will buy something like a wallet with a luxury brand name attached to it, blissfully unaware that it’s just some mundane object stamped with ersatz prestige by way of one of the licensing deals that fuel lux-company profits. Clearly it’s true that if enough people like me glom onto a lux brand, the lux crowd doesn’t want to be associated with it anymore. (An extreme version: Burberry’s chav problem.)

What I’ve given less thought to is that once Richi dumps whatever I’m buying, he has to find something else to buy, with a suitable prestige level attached to it. The example Frank offers that I like the most is the watch category. More on that tomorrow.