Richistan Commissioned for a book review and never published. Richistan: A Journey through the 21st Century Wealth Boom and the Lives of the New Rich. Robert Frank 277pp Not long ago, Louis Uchitelle published an article in The New York Times about the rise of the American mega-tycoon. His subjects were men like the banker and former Citigroup chair Sanford I. Weill and cable mogul Leo J. Hindery Jr., men whose immense wealth and power represent a throwback to the days of robber barons and the unregulated markets that nurtured them. That era, the pre-WWI Gilded Age, has returned, Mr. Uchitelle wrote, on a wave of deregulation and tax-cutting from Presidents Clinton and Bush; and along with it, apparently, has come the era of the outsized corporate ego. “I think there are people, including myself at certain times in my career,” said Mr. Hindery, by way of justifying his gigantic salary, “who because of their uniqueness warrant whatever the market will bear.” He compared himself to the “uniquely talented” Derek Jeter, saying that one could not find “another ballplayer with that same set of skills.” Accompanying these quotes was an eight-inch portrait of the televised-sports tycoon, gazing off into the distance like a member of U2, backgrounded by a hideously ugly painting of a stock car. Mr. Weill, in his comments, seemed to feel no less deserving of his wealth; he scoffed at the idea that the society he drew it from deserved any kind of credit. “We didn't rely on somebody else to build what we built,” he was quoted as saying, underneath a picture of himself spotlit on the stage of Carnegie Hall, “and we shouldn't rely on somebody else to provide all the services our society needs.” In the carefully sculpted moral logic of these modern-day titans of industry, financial good fortune is entirely the result of personal excellence—they are worth more money simply because they are better than others. Adjusting tax policy to favor the less fortunate, they believe, would not only be unfair—it would be catastrophic. Hedge fund chairman Kenneth C. Griffin was firm: “The income distribution has to stand.” With a more progressive tax, Griffin said, “you end up in problematic circumstances...if the tax became too high, as a matter of principle I would not be working this hard.” Reading Uchitelle's article, I felt as though I had, reaching for the Times, inadvertently picked up a copy of the parody newspaper The Onion. These people had to be kidding, right? What planet were they from? As it happens, the super-rich are from another world, which Wall Street Journal reporter Robert Frank has documented in his new book, Richistan. “Today's rich,” he writes, “had formed their own virtual country...a self-contained world unto themselves...their own society within a society, and their economy within an economy.” Frank draws upon his experience as a foreign correspondent to explore this new world, attending charity balls and cocktail parties; sitting in on wealth support group sessions; observing the students at a butler training college; and riding around on some yachts. The result is, of course, shocking and appalling—but ultimately, and surprisingly, offers some hope that the Neo-Gilded-Age bigwigs like Mr. Weill might not be ascendant after all. * As it happens, I thought I already understood rich people. I was, and am, a devotee of Paul Fussell's nasty, uproariously funny 1983 book Class, which explored America's social order in exhaustive detail. In the world Fussell described, the rich (and the working class) were more or less comfortable with themselves and their place in society; it was the middle class who felt the deepest social anxiety, the greatest fear of losing status. It was the middle class alone who seemed to wish they were richer, more elegant, better spoken, classier: The place to look for the snob is in the middle class. Worried a lot about their own taste and about whether it's working for or against them, members of the middle class try to arrest their natural tendency to sink downward by associating themselves, if ever so tenuously, with the imagined possessors of money, power, and taste. The rich, meanwhile, were more relaxed, comfortable in their own tanned skin, confident in their place in society, and certain that the future held more of the same. To be sure, there are a few of these old-money families remaining, living in the same places they always have, attending the same parties and endowing the same foundations. One of them, Franklin Osgood Butler II, gives Frank a tour of his “ramshackle mansion,” a former jewel of the Palm Beach society the 78-year-old Butler once stood at the apex of. A “cheerful, expertly mannered man” who contends that “welfare is a waste of money,” Butler is nevertheless tired and sad, and his once-glorious estate lies in disarray. While the half of his property that he recently let go in order to raise cash stands bright and clean under the energetic hands of its new owners, Butler's remaining property has grown shabby: The living room drapes are piled on the floor, the ceiling is covered with water stains, and there's a big hole in the wall where the bay window used to be. Most of the damage is from a recent hurricane. But as I walk through the house it's hard to tell what's being repaired, what's under construction and what's falling down from neglect. Butler complains about visits from celebrities (a public-fornication incident involving Puffy draws particular ire), changes in the local style of dress (jeans at the club?!!?), and perhaps most importantly, the social standing of his neighbors, especially the carpet salesman and his family whom he sold half his estate to. “They didn't play bridge,” Butler moans, “they didn't know the same people.” Indeed, Mr. Butler is right. The new rich—the people who inhabit Richistan—are different, and not just in their manners and style of dress. Richistanis, Frank tells us, are anxious. They're terrified of losing their money, and terrified that other people are making more. Their afraid of spreading themselves too thin, of running out of ambitions, of falling out with their spouses. Indeed, they sound an awful lot like Fussell's middle class. That's because, in fact, they are. The new rich, by and large, are not the recipients of inherited wealth, but beneficiaries of the internet boom's largess, and of an era of increased consumption, cheap foreign labor, and profligate lending. They're the middle class, turned into multimillionaires, sometimes literally overnight. And so they have carried their fears with them into affluence. Prominent among these fears is their children's future. Why? “Two words,” writes Frank: “Paris Hilton.” The spectacle of the hotel heiress—her profligate spending, moral turpitude, and dumb little face—has sent a bolt of terror into the hearts of the new rich, and so, in order to help their children learn to be responsible and respectable, they have done what any good parent would: spend $15,000 sending them to a weekend course on how to be rich. Frank pays a visit to the California wealth-training workshop Financial Life Skills Retreat, where affluent teens learn “how to control their spending, how to work with others and how to interview for a job.” Here, we are made privy to a role-playing exercise between a student and Dr. Lee Hausner, the psychologist leading the workshop. The student, 23-year-old Ryan Achterberg, plays the part of a bachelor about to get married; Hausner plays the equally wealthy object of his affection. The subject? A pre-nup. “In my family,” Hausner's imaginary fiancée explains, “we like to call it a marital agreement...This is not about our relationship. What should happen if I died and you wanted to remarry? You can understand my family would want to protect their assets.” Ah, love! But love is the least of the Richistanis' worries, when it comes to their children. You can't fault these people for a lack of energy—to remain rich requires a great deal of time and effort. And so their children end up being raised “by a revolving door of nannies and house staff”, and, according to a recent Columbia University study that Frank cites, are as prone as inner-city kids to substance abuse and rule-breaking behavior such as stealing. In addition, one in five rich kids is clinically depressed, and the rate of alcohol and drug abuse among private-school students is actually higher than that of inner-city kids. Psychologist Suniya Luthar, the author of the Columbia study, attributes the numbers to a variety of factors, including isolation from parents and the constant pressure to succeed. Frank fails, however, to make a more general point here, and that is that the children of the very rich and very poor share one important emotion in common: hopelessness. Both groups of kids lack self-determination; neither group believes themselves to have any kind of future. While the children of the poor lack opportunity due to their poverty and social standing, children of the rich are the victims of their parents' expectations; their lack of opportunity comes from a lack of the skills necessary to recognize it. The children of the poor are accustomed to society's indifference to their problems, and so believe they have no responsibility to society; similarly, rich kids' isolation from society prevents them from developing any respect for it. While no sane person would choose to be destitute over super-rich, the groups share a profound alienation from a society which has either ignored them, or which they have ignored. Fussell, in Class, was ahead of the curve on this one, noting the “curious similarity, if not actual brotherhood” between the classes he refers to as “top-out-of-sight” and “bottom-out-of-sight”: Just as the tops are hidden away on their islands or behind the peek-a-boo walls of their distant estates, the bottoms are equally invisible, when not put away in institutions or claustrated in monasteries, lamaseries, or communes. Well then! you might think. The rich may be odious, but at least we needn't be bothered by them, correct? Cloistered in their compounds as completely as any homeless madman in his trash-strewn alley, Richistanis are out of sight and out of mind, are they not? They are not. The Richistanis' middle-class origins, combined with their overnight new-economy success, have created the dangerous illusion that the rest of us can, and should, be like them. The culture of wealth has become the guiding light of mass culture. “With so much wealth parading around,” Frank writes, “the middle class and even upper middle class suddenly feel poor by comparison and are spending beyond their means to try to keep pace.” He goes on to cite Luxury Fever, a book by the economist Robert H. Frank (the disconcertingly similar name is a coincidence), which documents the middle class's futile struggle to afford a small tributary of the flood of luxury goods designed for the rich. Frank quotes Frank: The real significance of offerings like the $5,000 Viking-Frontgate Professional Grill, for most of us, is that their presence makes buying a $1,000 unit seem almost frugal...both the things we feel we need and the things available for us to buy depend largely—beyond some point, almost entirely—on the things that others choose to buy. It isn't just that we normal folk wish to keep up with the Joneses, or even the Gateses; it's that the entire market for consumer goods is now run at an artificially high level, in order to accompany what Frank (our Frank, not Robert H.) calls “a trickle down in aspirations.” Indeed, it is difficult to find any product that, in its design, marketing, and presentation, has not been tainted by the sheen of luxury. My own recent search for a simple, well-made coffee maker ended in dismay, when I realized that it was impossible to find a quality machine that had not been encrusted with nonessential “deluxe” features. My own reasonable expectations had been crushed by a market designed to accommodate other people's overly ambitious ones, and I face the consequences every morning as I go to pour my coffee. I do take comfort, however, in the fact that I actually budgeted the money for my overdesigned coffee maker before I bought it. The average American is spending far more money than she earns (according to the web site CreditCards.com, total American household consumer debt averaged a stunning $11,840 in 2005) in an economy unhealthily fueled (currently 72% of GDP, according to a recent Commerce Department report) by personal consumption. Frank explains that Richistanis are driving Americans increasingly into debt, “both through their own borrowing, and through the borrowing of everyday consumers trying to mimic their spending.” In other words, the rich are, with their profligacy, both propping up the economy and simultaneously threatening to push it into collapse. * Having read this far, then, a reader could be forgiven for thinking that the new rich are worthless at best, and at worst a drain on our national resources. I certainly was ready to take to the streets with torch and pitchfork. But then Frank does a funny thing—he suggests that the new rich might actually be doing some good. His case in point is a man named Philip Berber, an online trading pioneer whose technological innovations have made possible the golden age of getting to overhear long-haul truckers exchanging stock tips at Denny's. Berber may have helped to democratize greed, but lately he has taken his middleman-eliminating acumen and transferred it to a new arena: that of philanthropy. Berber, Frank writes, is a man obsessed with efficiency, and in his view, traditional philanthropic institutions are wasteful. “If anyone knew,” he says, “that some of these charities only spend 19 cents of every dollar on the people they claim to be helping, they would be shocked.” When people become rich, Berber believes, “they're being tested.” The rich are custodians and guardians of “our brothers and sisters outside of our countries.” The affluent in America fail that test, he says—and what's more, they're a bunch of snobs, to boot. They practice what he calls “social-ego philanthropy...they want to be visible and they want their name on everything.” Frank elaborates this position: When they give to charity, they're usually doing it to climb the social ladder, win friends, or advance their business interests. Black-tie balls are pure display, he says, and have nothing to do with solving the world's problems. Instead, Berber has developed an efficient, community-based form of giving, and brought it to bear upon his area of interest, Ethiopia. He travels to poor villages and asks them what they want—usually water wells and schools. Then he hires local people to do the work, and sets up committees charged with repairing and replacing infrastructure as it wears out. He holds these local groups responsible for spending his money wisely, in order to encourage competition and discourage corruption. Meanwhile, his own staff stands at around a dozen people, stationed at small, unostentatious offices around the world. There's very little paperwork, no sales department, no marketers, no fund-raisers—because he's got all the funds. With this system, Frank explains, most of every dollar ends up in the hands of the people who needs it; in traditional charities, half the money goes to “bureaucracies and bloated overhead.” Those are fighting words, of course, and conventional NGO's have sometimes reacted with dismay to Berber's efforts, decrying his inexperience and arrogance. Frank quotes Adam Hicks, a spokesman for CARE: “You have to understand the world context in which Ethiopia exists, to understand deeply the food issues and exporting world...You can't just go into Ethiopia and say, 'I know everything there is to know'.” But Berber, Frank tells us, is not alone—competitive altruism, as he calls it, is on the rise. Richistanis are not content to give their money away, and their power along with it; instead, they are keeping a hand in how their money is spent, and demanding results. Larry Ellison of Oracle; Mario Marino, a software magnate; eBay's Pierre Omidyar; and of course Bill and Melinda Gates—they are all participants in this new form of giving, and they are getting things done. Time will tell whether they're the right things. * “You can see them on airplanes,” Paul Fussell wrote back in 1983, “being forwarded from one corporate training program to another. Their shirts are implausibly white, their suits are excessively dark...and their hair is cut in the style of the 1950's. Their talk is of the bottom line, and for no they are likely to say no way...their eyes tend to be too much in motion, flicking back and forth rather than up and down. They will enter life as corporate trainees and, after forty-five faithful years, leave it as corporate personnel, wondering whether this is all. The middle class now have their answer: that wasn't all. What lay ahead for them was money, yachtloads of it, and the knotty question of what on earth to do with it. They're still uptight, still ambitious, still worried, worried, worried—but no longer about making their way to the top. They are there, and many of them are going to stay there. Will their worry prove transferable to more important things than wristwatches, butlers, and boats? Things like poverty and climate change? Frank, in the end, seems optimistic. He concludes this absorbing, frustrating book with a quotation from Andrew Carnegie, the grandfather of the modern neo-philanthropist movement: “We shall have an ideal state, in which the surplus wealth of the few can be made a much more potent force for the elevation of our race.” (250) Shall we, now? Personally, I have my doubts. Carnegie, after all, failed to pull it off. But perhaps, if the preeminent socioeconomic phenomenon of the twentieth century was the creation of the middle class, the twenty-first will see this class discover its purpose: to prosper, and to share that prosperity with the world. To this hypothesis there is only one reasonable response, which Frank offers as his final line, and which I enthusiastically echo: “We can only hope.” c2008 by J. Robert Lennon.