Monday, September 08, 2008


I didn't know I had an obsession until I took a critical look at my recent entertainment choices, choices that at the time seemed positively random:

  • Deluxe by Dana Thomas
  • Richistan by Robert Frank
  • My Super Sweet Sixteen
  • Some MNBC show devoted to how the other half, or more accurately, the top 0.01% lives

This form of entertainment feels part voyeurism, part sheer envy, part research on how to infiltrate the world of the Superrich (answer: start a tech company, inflate its value, launch an IPO followed by a "liquidity event", and all within a year) and finally, part train-wreck-watching.

First, some jargon.

Richistan devides its population into 3 subsets: Lower Richistan ($1 million to 9 million in annual revenue), middle Richistan (10 to 99 million), and upper Richistan (100 million plus. In case you are wondering, John McCain is a member of Upper Richistan via his wealthy wife).

Do you know what the median household income in the United States is? It's $26,000 per household. If we assume the population of the US is 300 million, this means that 150 million Americans are living in households earning $26,000 or less.

Or less.

Politicians will usually talk about the "average" income – not median – because the average is a very top level figure that doesn't show you what's happening at the bottom, or how big the "bottom" is.

For example, if in Company X the CEO makes $1,000,000 a year, his VP $100,000, his secretary 25,000 and his two laborers $15,000 each, then the average income per employee of Company X is $231,000/year.

This is the figure usually quoted by politicians: $231,000 per year, per employee.

Makes those laborer's jobs sound great, right? I would LOVE to be working at a company where the average income was $231,000 a year!

The figure you won't hear about as often is the median. The median in this case is $25,000. Half the workers at this company earn less than $25,000, while half of them earn more.

Even though that figure gives us a slightly more realistic picture than the average, it still doesn't tell us that the CEO earns 10 times the salary of the next highest paid employee, and 67 times that of the lowest paid worker.

Of course, this is a totally fictional scenario.

In real life, the average CEO earns 821 times that of the lowest paid worker (2005 figures).

This was not so a mere two decades ago, but I digress. The point of this whole discussion is to provide an answer to the inevitable question that popped into my mind after reading these books and watching a couple of nauseating back-to-back My Super Sweet Sixteen episodes: WHO ARE THESE PEOPLE???

Richistan did a good job of answering this question, and also addressing the "how" of how these people came to be. Deluxe, however, though very entertaining especially to an avowed fashionista, devoted its 300+ pages to examining how the luxury industry (Vuitton, Gucci, Prada, Coach….) had sold out the Superrich by slapping their coveted logos on more pedestrian, affordable items like the $50 bottle of perfume, the $32 lipstick, or the $700 "It" bag. The final question Deluxe sought to answer was: where do the Superrich go now?

Where, indeed.

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