Robert Frank - Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich  

RICHISTAN

Contents

1 / BUTLER BOOT CAMP
Housetraining the New Rich

2 / THE THIRD WAVE
The Era of the Instapreneur

3 / MAKING IT
Ed Bazinet, King of the Ceramic Village

4 / LIVING IT
Tim Blixseth

5 / LOSING IT
Pete Musser

6 / BARBARIANS IN THE BALLROOM
New Money vs. Old

7 / SIZE REALLY DOES MATTER
My Boat Is Bigger Than Your Boat

8 / PERFORMANCE PHILANTHROPY
Giving for Results

9 / MOVE OVER, CHRISTIAN COALITION
The New Political Kingmakers

10 / WORRIED WEALTH
The Trouble with Money

11 / ARISTOKIDS
We'll Always Have Paris

To Rebecca

RICHISTAN

Introduction

THE BIRTH OF
A NATION

This book began with the discovery of a single, remarkable statistic.

In 2003, while writing a routine article about Wall Street bonuses, I stumbled onto a chart from the Federal Reserve Board. It showed that the number of millionaire households had more than doubled since 1995 to more than eight million.

Granted, a million dollars doesn't mean what it used to. But no matter how far up I looked on the wealth ladderto households worth $10 million, $20 million, $50 millionall the populations were doubling.

Even more surprising was the fact that the United States was minting millionaires long after the tech bust, recession and terrorist attacks of 2001. The wealth boom, as the numbers showed, went far beyond the 20-something dotcommers in Silicon Valley and Wall Streeters in New York. It stretched across the country, to all age groups and to almost every industry. Never before had so many Americans become so rich, so quickly. The United States is now the world leader in producing millionaireseven if it lags behind China and India in other types of manufacturing. For the first time in history, we now have more millionaires than Europe.

After seeing the Fed numbers, 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? Why, in an age of millionaire reality TV shows and wealth voyeurism, did we seem to know so little about what this group was really like?

To answer these questions, my editors agreed to a bold experiment. In 2003, I became the first reporter at The Wall Street Journal to focus full-time on the life and times of the New Rich. I immersed myself in their world, hanging around yacht marinas, slipping into charity balls, loitering in Ferrari dealerships and scoping out the Sotheby's and Christie's auctions. I studied up on trust law, high-end investing and the latest trends in charitable giving. I grilled the top luxury realtors, jet brokers, party planners and resort managers. Mostly, I bothered rich people. I asked them endless questions and tried to get them to talk openly about their money and their lives. Surprisingly, many did. The resulting articles I wrote about this new culture of wealth proved surprisingly popular with readers.

This book began with that reporting. But its central premiseof a parallel country of the richtook shape later, with a chance conversation at a yacht club. In 2004, I was walking along the docks of Ft. Lauderdale's Bahia Mar Marina during an annual yacht convention when I met up with a boat owner from Texas. As we stared out over the hundreds of megayachts lined up along the docksmost 150 feet or more, flying Caribbean flags emblazoned with fruithe turned to me and said, You look at all these boats and you'd think everyone's making loads of money. It's like it's a different country.

The words stuck with me. Today's rich had formed their own virtual country. They were, in fact, wealthier than most nations. By 2004, the richest 1 percent of Americans were earning about $1.35 trillion a yeargreater than the total national incomes of France, Italy or Canada.

And with their huge numbers, they had built a selfcontained world unto themselves, complete with their own health-care system (concierge doctors), travel network (Net Jets, destination clubs), separate economy (double-digit income gains and double-digit inflation), and language (Who's your household manager?). They didn't just hire gardening crews; they hired personal arborists. The rich weren't just getting richer; they were becoming financial foreigners, creating their own country within a country, their own society within a society, and their economy within an economy.

They were creating Richistan.

As a former foreign correspondent, I set out to explore this new country. I spent 12 months traveling around and interviewing the most interesting Richistanis I could findall worth $10 million or more. They are people you've never heard of, since so many of today's wealthy prefer to keep to themselves. And they have little in common with Donald Trump, Bill Gates, Warren Buffet and the other well-known Forbes 400 superstars we read so much about.

Along the way, I discovered a new culture of wealth that's vastly different from Old Money. I found Richistanis who have made vast fortunes from things we barely knew existedlike miniature ceramic villages. And I learned that the very way that people get rich is changing, driven by vast pools of money sloshing around the world.

I met a song-writing, jet-setting timber baron named Tim Blixseth who typifies the new breed of workaholic wealthy who can't stop building empires even after becoming billionaires. And I met a risk-loving entrepreneur named Pete Musser who lost his entire billion-dollar fortune in the stock market and is now plotting his comeback.

I attended a black-tie ball in Palm Beach, where a brash pool-toy magnate tried to climb to the top of blue-blood Society, only to come crashing down (literally) on Donald Trump's ballroom floor. I sat in on a meeting of a wealth peer group, a new kind of group therapy for millionaires who need help with their money troubles. And I spent a day at Rich Kids Camp, where the new silver spoon set learn how to manage all the money they're about to inherit.

I jumped aboard some of today's biggest yachts, to see how Richistanis are reinventing the notion of conspicuous consumption. I also looked at how that spending is trickling down to the rest of America, for better and worse. I met a Jewish Irishman in Texas who's giving away half his fortune to help fight poverty in Ethiopia and embodies a new brand of philanthropy. And I explored Richistan's politics through a group called the Gang of Fourfour wealthy Coloradans who helped fund a Democratic takeover of the state legislature and have helped to usher in a new kind of progressive, rich man's politics.

Of course, Americans are conflicted about all this wealth. On the one hand, Richistanis represent all that's great about the American economy and the ability of just about anyone anywhere to become wealthy. Yet Richistan also symbolizes the huge gap that's opened up between the rich and everyone else. Even as the rich have grown more numerous, they have also become more financially and culturally removed from the rest of America. Richistan's success highlights Middle America's loss.

The purpose of my journey isn't to take sides in this debate. I haven't set out to condemn the rich, or to turn them into heroes. The best foreign correspondents seek to bring readers inside a country, to explore its people and places and explain them to the rest of the world. I have the same goal with Richistan.

The economist John Kenneth Galbraith once wrote that Of all the classes, the wealthy are the most noticed and the least studied. That has never been more true than today. To understand inequality, we need to first understand Richistan and the people who live there.