“Billionaires should not exist,” Sen. Bernie Sanders said last month. And, at the Democratic presidential debate last week, he said that the wealth disparity in America is “a moral and economic outrage.”
“Senator Sanders is right,” said Tom Steyer, a businessman from California who happened to be the only billionaire onstage that night (as far as we know).
“No one on this stage wants to protect billionaires — not even the billionaire wants to protect billionaires,” noted Sen. Amy Klobuchar.
It’s an idea that’s going around. Mark Zuckerberg, the Facebook founder who is worth close to $70 billion, is apparently open to it. “I don’t know that I have an exact threshold on what amount of money someone should have,” he said in livestreamed question-and-answer session with company employees in early October. “But on some level, no one deserves to have that much money.”
Yet here we are, chugging into the 10th year of an extremely top-heavy economic boom in which the 1 percenters, by all statistical measures, have won, creating the greatest wealth disparity since the Jazz Age. This era, in length and gains, dwarfs the “greed is good” 1980s, that era of yellow ties, nigiri rolls and designer espresso machines that has come to symbolize gilded excess in popular imagination.
And yet the only thing we know in this casino-like economy — a casino that may, in fact, soon be shuttered — is that for those at the top, too much is never enough.
Many normal, non-billionaire people wonder: Why is that?
Studies over the years have indicated that the rich, unlike the leisured gentry of old, tend to work longer hours and spend less time socializing. Tim Cook, the chief executive of Apple, whose worth has been estimated in the hundreds of millions, has said that he wakes up at 3:45 a.m. to mount his daily assault on his corporate rivals. Elon Musk, the man behind Tesla and SpaceX, is worth some $23 billion but nevertheless considers it a victory that he dialed back his “bonkers” 120-hour workweeks to a more “manageable” 80 or 90.
And they continue to diversify. Lady Gaga makes a reported $1 million per show in her residency at the Park MGM in Las Vegas, and has evolved from pop music to conquer film — but still also recently unveiled a cosmetics venture with Amazon.
Almost everything rich people touch makes money, but this current financial inferno has meant little for the bottom 50% of earners in the United States, who have 32% less wealth than they did in 2003.
The 1% have, as of last decade, 85% of their net worth tied up in investments like stocks, bonds and private equity, where value has exploded. According to Redfin, the average sale price of properties in the top 5% are up 43% nationally over the past decade, and up even more in Los Angeles and San Francisco.
Fine vintage watches, which have become a must-have for the young male money class, are exploding in value, with prices on certain five-figure models of Rolexes doubling in just a few years.
Gold, once derided as a relic, is up 40% in the past few years.
No one has a retirement number these days
“What’s your number?” asked anyone caught up in the dot-com boom of the 1990s.
Could you retire to Napa with $5 million? $20 million?
Some hit their number and some went bust, but Silicon Valley is more than ever a showcase for the unfettered capitalism of 2019.
Yet no one seems to talk about their number anymore, said Antonio García Martínez, who sold a startup to Twitter and served as a Facebook product manager before publishing his memoir, “Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley,” in 2016.
Yesterday’s big score is just seed capital for tomorrow’s bigger one.
“There’s never some omega point,” García Martínez, 43, said. “People who get to that point don’t stop once they get there.”
“People say, ‘Why don’t you develop a hobby, or do philanthropy?’ ” García Martínez said. “But for many, they simply can’t stop doing it. They derive transcendent meaning from capitalism. Without their money, what else would they have?”
At a time of low taxes, friendly interest rates and torrents of venture capital available to would-be moguls, it’s a historical moment in the quest for more among the entrepreneurial class.
Tim Ferriss, the life-hacking author and podcast star who was an angel investor in Silicon Valley for nearly a decade, wrote in an email that many of these people have been “navigating work and life in sixth gear for decades.”
Without constant work, we must face the nature of existence
“Once they have no financial need to work — are ‘post-economic,’ as some say in San Francisco — they have trouble shifting into lower gears,” Ferriss wrote. “They’re like drag racers who now have to learn to navigate the turns and intersections of neighborhoods at 30 mph.”
“Without ambitious projects to fill space,” he added, “there is often a void that makes some of the bigger questions hard to avoid. The things you neglected are no longer drowned out by noise; they are the signal. It’s like facing the Ghost of Christmas Past.”
In a sense, it has been going on in this country for 2 1/2 centuries. “We are a nation founded on the overthrow of kings and the idle rich, so the hustle is deeply baked into mainstream notions of what it means to be American,” said Margaret O’Mara, a history professor at the University of Washington who is a New York Times opinion contributor.
And today’s competitive personality types are unable to slow down, in part because they fear slipping from their lofty perches, said Maria Bartiromo, the Fox Business anchor.
“Driven people are just driven,” she said. “They want to stay fresh and relevant, and to do that, it requires consistent practice. If you want to win, you need to be all in.” And winning can be collecting the most cash — pressing the excitement pedal over and over again, like so many exhausted rats in a cage.
Rich people know too many rich people
With the number of Americans making $1 million or more spiking by 40% between 2010 and 2016, according to the Internal Revenue Service, you may think that the rich are finally feeling flush enough to ease up, kick back, chill out.
They are not.
One recent Harvard survey of 4,000 millionaires found that people worth $8 million or more were scarcely happier than those worth $1 million.
In a widely cited 2006 study, rich people reported that they spend more time doing things they were required to do.
Why do they want to do this to themselves?
The fact that there are more rich people who are, in fact, richer than ever may be part of the reason.
Sociologists have long talked about “relative income hypothesis.” We tend to measure material satisfaction by those around us — not in absolute terms.
“For most people, enough is enough,” said Robert Frank, the wealth editor for CNBC and the author of the 2007 book “Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich,” who has interviewed many plutocrats. “But there is another group of people, no matter what they have, they have to keep going. I call them ‘scorekeepers.’ They’re truly driven by competitive zeal.”
Take Larry Ellison, the billionaire co-founder of Oracle. Ellison always felt competitive with Bill Gates and Paul Allen of Microsoft, Frank said. “So when Paul Allen built his 400-foot boat, Larry Ellison waited until it was done and built a 450-foot boat. Larry Ellison would never be happy until he was No. 1.”
Among the very rich, it does not matter that all imaginable material needs have been met, said Edward Wolff, a professor of economics at New York University who studies wealth and disparity.
“Among the rarefied group of the extreme rich, social status depends on net worth,” Wolff wrote in an email. “Their enhanced wealth allows them to make substantial charitable contributions to institutions like museums and concert halls, that may lead to having a building or the like named after them. Think of the Koch brothers and the New York City Ballet. This is only possible if they can stay ahead of the pack and out-contribute their peers.”
Social sampling leads the rich toward a blinkered view that society as a whole is more well-off than it is, feeding their unending need — particularly as wealth becomes geographically dense. Nearly 20% of the world’s ultra-high-net-worth individuals — with assets of $30 million or more — live in just 10 cities around the globe, by one tally. Six of those cities are in the United States.
Money is like alcohol but for money
Living inside bubbles, the rich need greater excess just to feel the same high, said Steven Berglas, a psychologist, executive coach and author.
“If you’re an alcoholic,” he said, “you’re going to take one drink, two drinks, five drinks, six drinks to feel the buzz. Well, when you get a million dollars, you need 10 million dollars to feel like a king. Money is an addictive substance.”
Feeding the addiction becomes even more challenging in a top-heavy economy where the price tags of the status symbols keep adding zeros.
For the superrich looking to buy their way in to professional sports, it’s no longer enough to have courtside seats or a luxury box. You need a team. They’re pricey.
The Golden State Warriors, for example, sold in 2010 for an NBA record $450 million to an ownership group headed by Joe Lacob, a Silicon Valley venture capitalist. The team is now valued at $3.5 billion.
Even that is not enough. Now you have to build the biggest, flashiest arena. The Warriors owners recently put the finishing touches on a gleaming new waterfront arena in San Francisco called the Chase Center. It was financed largely by themselves for $1.4 billion.
Not to be left behind, Steve Ballmer, the former Microsoft chief and owner of the rival Los Angeles Clippers, is seeking to build a $1 billion pleasure dome of his own in Inglewood, California.
Clustered courtside together at the sporting palaces, the celebrities, naturally, begin to envy the fortunes of the moguls near them.
Even at the pinnacle of success, entertainers like Mark Wahlberg and Lady Gaga find themselves “suddenly in the same world with billionaires and financiers who own private jets and have their own boats,” Frank said. “There’s only so much you can make in entertainment, so they look around and decide that they need to get to the next level that they’re encountering socially at the Met Ball and at charity functions.”
The opportunity appears endless. But what if it’s not?
The rich suspect the roller coaster is about to crash
As a hedge fund veteran, precious metals adviser and financial author, James Rickards is a rich guy who talks to a lot of other rich guys. They don’t always like what he has to say.
He believes that the current debt-fueled recovery may be a prelude for an economic collapse to dwarf the Great Recession. Until recently, he said, such theories were met with polite lack of interest by many wealthy people. Lately, something has changed.
“Literally, in a matter of weeks, certainly a couple of months, the phone calls have had a different tone to them,” Rickards said. “What I’m hearing is, ‘I’ve got the money. How do I hang on to it?’ ‘Are gold futures going to hold up or should I have bullion?’ ‘If I have bullion, should I put it in a bag in a private vault?’ ”
“It’s a level of concern that I’ve never heard from the superrich,” he said. “The tone of voice is, ‘I need an answer now!’”
It is not just the rockiness of the stock market. The fears of the wealthy seem to be of a more existential nature.
It is as if the very people who have profited most from these good times cannot believe that times are good — or that they will stay good, in the event of, say, a Bernie Sanders presidency.
Paul Singer, who oversees the behemoth Elliot Management fund, is reportedly tapping investors for billions as a war chest for a possible market implosion.
Among the tech zillionaire classes, a place to bug out in the event of an economic collapse, environmental disaster or violent uprising became the thing to have.
After he left Facebook, García Martínez himself bought 5 wooded acres on an island in the Pacific Northwest equipped with generators and solar panels, as The New Yorker reported in 2017.
When any part of the denial of rich people gets punctured, the boom reveals itself to be a very weird boom. The profits themselves are confusing. Even some who have ridden the wave to outsize fortunes see something amiss.
Marc Benioff, a chief executive of Salesforce.com, recently declared that “capitalism as we know it is dead.” Corporate earnings are often tepid, yet stocks in those same companies are soaring, thanks in part to stock buybacks that fatten executive compensation but do little to help the business.
Some even notice the rest of us out here. Ray Dalio, the hedge fund billionaire, recently wrote an essay on LinkedIn that capitalism “is not working well for the majority of Americans because it’s producing self-reinforcing spirals up for the haves and down for the have-nots.”
And for those who amass fortunes, the money is the only measure of success they have, said Jordan Belfort, the real-life inspiration for “The Wolf of Wall Street.”
As opposed to people who build businesses that make actual products, “a lot of Wall Street traders didn’t create anything — all they did was trade on the value and ingenuity of what other people created, so at the end of the day, what can they point to that’s tangible?” Belfort said. (He disavowed his former excess after a prison stint and became a motivational speaker.)
“All they have is money,” he said. “So they go out and buy a house and a fancy car, and that feels good for a short while, then they buy a second house and a fancier car. Because all they have is what they earn. They’re defined by it.”
The newly rich from normal backgrounds are the most anxious of all, said Jennifer Streaks, a personal finance commentator and CNBC contributor.
“Imagine growing up middle class or even poor and then amassing millions,” Streaks said. “This sounds like the American dream, but suddenly you have a $5 million apartment, a $200,000 car and a family that has these expectations.”
A panic ensues when those people believe “that they are one bad investment away from being broke.”
And the rich become anxious and isolated
It’s not like Jeff Bezos, the $110 billion man, is going to have to auction off his $65 million Gulfstream jet if he makes a bad bet on Amazon delivery drones (or goes through a $36 billion divorce).
Even so, the isolation that often accompanies extreme wealth can provide an emotional impulse to keep on earning, long after material comforts have been met, said T. Byram Karasu, an emeritus professor of psychiatry at the Albert Einstein College of Medicine in the Bronx who said he has worked with numerous high earners in his private practice.
Apex entrepreneurs and financiers, after all, are often “adrenaline-fueled, transgressive people,” Karasu said. “They tend to have laser-focused digital brains, are always in transactional mode, and the bigger they get, the lonelier they are, because they do not belong.”
Berglas, a onetime member of the Harvard Medical School faculty in psychology, said: “If you can’t relate to people, you presume that the failure to have rewarding relationships is because of jealousy — your house is three-X your neighbors’, and they look at your brand-new Corvette and drool. It’s a compensatory mechanism — ‘I might not have a ton of friends, but I can do anything I want and I’m the most powerful SOB there is.’”
Limitless opportunity, extreme isolation. They already own the present. What else is left to buy but tomorrow, and the tomorrow after that? Suddenly, the fetish of the superrich for space tourism starts to make sense.