The Awl

Rich People: Where Do They Live?

Alex Balk — Tue, 01 Nov 2011 10:50:44 +0000

"A drill-down to the zip code level shows that the zip code with the largest number of very rich households is 10023 on the Upper West Side of Manhattan, with 7,621 such households. That zip code, plus one other on the Upper West Side, one on the Upper East Side of Manhattan, and the Washington suburb of Potomac, Maryland, each have about 0.2 percent of all the nation’s very high-income households. Rounding out the 20 zip codes with the most very high-income households are several in Manhattan (on the Upper East and Upper West Sides, Midtown East, and Greenwich Village), the New York suburb of Scarsdale, Chicago’s Lincoln Park, Cupertino in Silicon Valley, the Houston suburb of Sugar Land, part of Houston’s west side, the Chicago suburb of Barrington, Princeton, a suburban area north of San Diego, and the Washington suburb of Bethesda, Maryland."
—Here's where the rich people live. This will come in handy when the fires start.

Photo by Kiselev Andrey Valerevich, via Shutterstock

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"Mercedes Took the Express Elevator up to Sid’s Rarefied World"

Choire Sicha — Mon, 17 Oct 2011 13:00:43 +0000

The New York Post account of the Sid and Mercedes Bass divorce is PHENOMENAL. So well done! It's the greatest thing ever, ever, EVER. Don't miss the part where the young Mercedes Tavacoli Diba Kellogg Bass is described by rich person chronicler Charlotte Hays this way: "When she met the ambassador, she was heavier than she is now, and, of course, she’s no great beauty. But she was the ultimate geisha." AND: "And so nine weeks after Mercedes, then 41, lobbed that fateful piece of bread, she called her husband, Ambassador Francis Kellogg, from her five-star Parisian hotel suite. 'Goodbye, darling,' she said. 'I’m marrying Sid.'" OH YES. "On Dec. 10, 1988 — after Sid divorced his first wife, society queen Anne, settling with her for somewhere between $200 million and $500 million — the couple married in a $500,000 gala at New York’s Plaza hotel." WAIT, AND THIS, from her married life with Sid: "There were originally four houses on the Texas property; the couple combined two of them, and Mercedes had a third, which she deemed unsightly, picked up and sent across town to serve as a home for single mothers." Here, for your informed reference, is New York magazine's Oct 20, 1986 piece: "Sid Bass and Mercedes Kellogg Stun Society." Society! Stunned! The Dinner Roll Shot Heard Around the World (of the Upper East Side)! Still delicious!

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A History of the New York Times, Summer Camp and Rich People

Nate Hopper — Tue, 16 Aug 2011 17:00:57 +0000

Right now, many young summer campers are frolicking beneath the open sky, the wind on their faces perfumed by the rough fragrances of pine and their parents' jet exhaust; on the horizon, the mountains shrug, "whatevs." Their families will pay one-fifth of the median national household income so they can go "rough it." And The New York Times has been on it.

The modern tales are ghastly—and not just that now-infamous tale of chartered planes and rural runways. Because of the economy, some owners have to deal with lower enrollment this year; in July, the Times told the story of one camp that hit only 98 percent capacity this summer, which is up from 95 percent in 2009, but down from 100 percent in 2008. "With enrollment at the three camps nearly full,"—the owner has two others—"the business over all remains profitable… but he does say that profit margins are narrowing in the face of increased expenses for new buildings and new programs, along with the rising cost of food and gas for water-skiing boats." Ah, the pangs of expansion and water sports. And then there's the not-so-dirt-under-your-nails-y, like Fashion Camp NYC and the one where goers design videogames, build robots and write code—which could be awesome, could be horrible.

This coverage of ritzy camps appears to be—according to a review of the archives dating back to 1923—a new angle for the annual Times summer camp beat.

Sure, in 1950, they had a man opine about how television ruined the refined unrefined-ness of summer camp, saying, "too many camps are now glorified country clubs." (Glorified, indeed.) And yes, they sometimes chronicled the expanding upper-limit prices of a prelapsarian escape to the wilderness during the '60s and '70s, calling some options "plush."

But mostly the Times has—almost sadly, since it's so fun to riff on—covered summer camp tragedies and safety measures, or spent ink raising funding for needy camps (as the Times has zealously done since that fateful day in 1911, when publisher Adolph S. Ochs "went out for a walk after a big turkey dinner, and encountered a shabbily dressed man on the street") or the YMCA and the Boy's Scouts (Girl's Scouts less); it has provided guides for choosing between the many options (you know you're supposed to start looking in the winter, right?) and proper outfitting.

In 1988, they published a story about free summer camps for homeless children between ages six and ten; and, of course, camp crops up in the Neediest Cases mini-profiles, such as this one in '96; then, three years later, there's this on the closing of a camp for disabled children.

In '98 they wrote about New York City Schools Chancellor Rudy Crew's idea to send 10,000 public-school kids to sleepaway camps in the Catskills (an oft-tried proposal: for instance, in 1936, the Times wrote about how the mayor wanted to "give 110,000 vacations" to kids—take that, Rudy). The idea has been a recurring theme for decades of the paper's summer camp coverage and comprised most of the coverage of summer camps in the '20s; in 1924, a piece included, "Every means of getting children into the country who otherwise would be condemned to a summer on the city's pavements should be encouraged."

In other decades, "camp" had a different meaning for the Times too, like in the 1940's, when it was more closely synonymous with "military training." And David Brooks recently became one of many to wax nostalgic about the camp he fell in love with: "I've never been to a place where race and class mattered less."

At some point, things changed. Maybe the spiral always aimed downward, starting back when, in the paper's first long feature on summer camp (at least the earliest one yielded by our search), in 1924, the reporter wrote that, "While the European father continues his Summer custom of taking his wife and children to the seashore, the American father has broken this habit and adopted new ones. He is more apt to take his wife to Europe or on a fishing trip and send his children to camp."

Camps run by "philanthropic organizations and other societies... do not differ" in essentials "from the camp of the well-to-do child; the latter has only a few more frills," the Times wrote then. And: "Camps for the medium purse offer practically the same recreational attractions as the deluxe camp." To Europe! Not those who resided in the then-30-year-old tenement buildings of the East Village, after it was no longer Little Germany.

So the real turn in tone and focus is quite recent. Now our camp coverage, for whatever reason, has shifted from warning about over-crowded buses and trains to coverage of private jet ports. It seems to be a perverse sign of the—well, something or other.

Nate Hopper is a summer Awl reporter.

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In Which That 'T' Story About the Georgian Manor Is Addressed, At Last

Choire Sicha — Tue, 05 Apr 2011 16:00:59 +0000

"Their problem, which required a series of five architects to solve, was this: they had bought a 40-room Georgian manor house, and they wanted to occupy it as a family of six."

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Our Debt: Why Rich People Should Be Worried Too

Carl Hegelman — Tue, 15 Mar 2011 14:20:31 +0000

Back in the days before the great bull market began to charge in August of 1982, there was a soothsayer called Joe Granville. He was the Mad Money Jim Cramer of his day, a showman and exhibitionist whose performances included walking on water (across a swimming pool in Tucson, dressed in a tuxedo) and a piano-playing chimp. Despite that his demeanor wasn't what you would expect of a great financial brain, he attracted a large following of investors for his $250-a-year financial letter (about $615 in today's money), partly because, as People magazine explained, he had called four major stock-market turns in two years. His reputation grew to the point that when he issued a "sell everything" fax to his premium subscribers in January 1981 the market dropped 2½% on its busiest trading day to that point in history.

For every big financial turn, there's at least one hero who saw it coming. It's not surprising, when you think about it. Given the number of promoters airing their opinions, it would be surprising if someone, somewhere, hadn't called it, maybe even three or four times in a row. It's like the monkeys with the typewriters. The surprising thing isn't the occasional masterpiece. It's when the same lucky monkey who wrote Taming Of The Shrew then proceeds to peck out Two Gentlemen of Verona and Love's Labour's Lost. And, sure enough, Joe Granville's reputation didn't survive the Great Bull. Apparently, he's still in business, but I read somewhere that over the past 25 years his recommendations have lost an average of 20% a year. No word on his piano-playing chimp.

There are various heroes for the financial crunch of 2008-10; such as Robert Shiller of Yale, who called both the dotcom and the housing crashes, and Meredith Whitney, the banking analyst formerly at Oppenheimer who first exclaimed, in October 2007, that Citigroup was wearing no clothes (and who, by the way, is now predicting a meltdown in the municipal bond market). Perennial doomsayer Nouriel Roubini of NYU is also often cited, although he was already something of a stopped clock by 2008, more focused on the trade deficit with China than on the exponential rise of house prices.

Lately, the economic duo of Kenneth Rogoff and Carmen Reinhart have become talk-worthy because of a series of studies of past financial crises focusing on the dire consequences of having too much debt. Their most recent paper on "The Aftermath of Financial Crises" caused a stir because it's telling us that running up bigger deficits will only prolong the problem, a prescription that goes against the current policy of deficit-financing backed by both political parties—whatever they may say to the contrary—in the recent tax-cut-extension act. Probably nobody disagrees with Rogoff and Reinhart that our debt is a problem, but how big a problem is it and why is it a problem?

Well, if you add up $14.5 trillion in mortgage debt, $14 trillion of national debt (Treasury bills and bonds), $2.5 trillion in consumer debt (credit cards, student loans, car loans, etc.) and $3 trillion in state and municipal debt, you get to around $34 trillion. Given that we have about 140 million people working right now, that works out to about $240,000 for every working stiff in the country.

The median household (about 2.5 people) in the US has an income of around $52,000 a year, and that's including things like unemployment and Social Security benefits.

To pay back $240,000 at five percent over thirty years would cost this hapless worker about $1,300 a month or $15,500 a year. Obviously, that doesn't leave much for spending on stuff. Which in turn means companies don't make as much stuff and don't need to hire as many people, which means fewer paychecks, which means... the debt makes it much more difficult to pull out of the slump.

According to Rogoff and Reinhart, unemployment rises by seven percentage points after your average financial crisis—we're at about five so far—and the employment down-cycle lasts more than four years. House prices go down 35% over six years and stock markets go down 55% over three and a half years. Per capita real GDP goes down 9% over almost two years (ours went down about 4% and has just recovered to the level it reached in the fourth quarter of 2007). These are all average numbers for post-WWII crises. During the Depression, the United State's GDP per capita went down a lot more—almost 30%—and bottomed out after four years. And because tax revenues go down when nobody has a job, government debt goes up—by an average of 86%. Which, of course, makes it that much harder for the economy to climb out of the swamp. Since March 2008, the government's debt has so far increased about 49%—and it's still climbing quite rapidly.

But one of the most interesting questions—and one that doesn't seem to get much emphasis in the media— is, to whom exactly do we owe all this debt? We talk about "the debt" almost as if it were a kind of mythic Black Hole into which indentured humanity will have to pitch income forevermore, yet the debt must be owed to somebody. So who? Who are the blighters seated at the other end? Aliens?

To listen to the pols you'd think, indeed, we owe it all to the Chinese, who will therefore shortly become our lords and masters. Actually, that's not really true; it's just a convenient diversion. John Boehner, for example, recently attacked the debt-mongering (while ignoring that it's mostly due to Bush tax cuts and Bush wars) by declaring that it was "immoral to rob our children’s future and make them beholden to China." Truth is, this makes about as much sense as him pronouncing his name "Baner." In Treasuries, for instance, our total debt to China is about $1.1 trillion. It's not nothing, and there's likely other debt than Treasuries, but in the whole $34 trillion scheme of things it's clearly not the main problem.

The fact is, we owe most of this $34 trillion to our real lords and masters, viz., rich people. That is, John Boehner's campaign-funders; hence the China diversion. It stands to reason, really. The debt built up because for decades our working stiff has been spending more than he makes. He was only able to do that because rich people were willing to lend him the money, which they did because (a) they have, literally, more money than they can spend; and (b) they needed to keep the economy humming along and so preserve the value of their investments. There's a little bit more to it than that, which has partly to do with the magical ability of banks (N.B., owned by rich guys) to create money, but the essence is there: only people who don't spend all their income, by definition, can lend money, so who the hell else would we be owing all that money to?

Now you can see why our economic system is prone to periodic crises. If rich guys take too much of the national income, year after year, the economy can't sustain itself and eventually collapses. That's maybe one reason why the countries with the highest income inequalities are often the poorest. In terms of the "Gini coefficient," a measure of income inequality, the US ranks in the worst 30% in the world, right between Jamaica and Cameroon, and with greater inequality than such countries as Tunisia, Egypt and Libya.

In other words, income inequality is, in the long run, a recipe for economic disaster. And economic disaster isn't good for anyone—not even rich guys. It might, for example, do the wealthy well to remember that, between 1928 and 1933, the number of millionaires in the US went from around 30,000 to around 5,000 (see Kevin Phillips, Wealth & Democracy). You can only suck so much blood before the victim dies, and then what are you going to do for food?

Clearly, what we need for our long-term economic health is a system that allocates income more equally. Theoretically, it would be possible to do this without taxation, by giving wage slaves a bigger share of the pie. But that would mean lowering executive pay and/or corporate profits, measures that probably won't be accepted voluntarily. So we're left with taxation. The fact is, it's in the best interest of all Americans, including the high rollers, to raise the tax rate on the upper-income tiers. Taxing the rich isn't just morally fair, it's good for the economy. The more grounded and rational rich guys, like Warren Buffett and, recently, Bill Gross of Pimco, recognize this; but the current in Washington is clearly with the delusional fringe that thinks lowering taxes on the rich promotes growth. After all, worked pretty well so far; right, George?

The fact is, the economy will come back into balance at some point, either through defaults (which will result in rich guy creditors being no longer so rich), inflation (likewise) or a long and grinding repayment of the debt (rich guy stockholders no longer so rich). One way or the other, the rich-guy creditor-stockholder is going to take his drubbing. With little prospect of getting the rich-guy tax rate up near term, it looks like we're going to have to do it the hard way. Forsooth!

Carl Hegelman (a pen name) is a corporate bond analyst and a connoisseur of leisure.

Image courtesy of the Gallery of Space Time Travel, via Wikimedia Commons.

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How Much Money Rich People Need To Feel Rich

Alex Balk — Mon, 14 Mar 2011 12:30:35 +0000

"According to a Fidelity Investments survey of more than 1,000 millionaires (households with at least $1 million in investible assets, excluding retirement accounts and real estate), 42% of respondents say they don’t feel wealthy.... Those who don’t feel wealthy were asked how much money they would need to feel wealthy. Their answer: $7.5 million."

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Dining Out in New York City

Dave Bry — Thu, 23 Dec 2010 11:00:46 +0000

The other night, I ate at JoJo, on 64th Street. It's a Jean-Georges Vongerichten restaurant, but one of those on the less fancy, more affordable side of his 14-restaurant empire. It's small and quiet, too, and so it was that much more noticeable when, about halfway through our meal, a man in a powder-blue fleece pullover walked into the dining room talking loudly into the earphone attachment thing of his cell-phone and—without ending his conversation—told the hostess who'd led him to his table, right next to ours, to bring him "the most expensive bottle of wine" she had. She looked embarrassed and opened the menu and showed him what that would be. "No, no, no," he said, "You know what you do? You tell Stephen"—Steven?—"to find something three times that much and order that, and I'll come buy it." The hostess giggled nervously. The guy said, "All right, bring me two bottles then. I hope you're thirsty. Because I'm not going to drink them all by myself. Bring two glasses, one of them's for you."

I exchanged glances with my wife with which we agreed that neither of us would be paying attention to anything the other said for the rest of the evening. We've been married for a long time. The scene unfolding a foot-and-a-half to my right was obviously going to be much more interesting.

The guy ended his phone conversation, loudly announcing, "All right, I love you," twice before hanging up. The two bottles of wine arrived, and two glasses. The hostess opened a bottle and poured only one glass but stayed standing at his table with an uncomfortable smile fixed on her face. The guy took a sip and looked up at her unctuously and asked, "So what's going on?"

Not much, she told him. Her shift has actually ended an hour ago. The restaurant was busy, though, and the staff needed more hands, so she'd stayed on to help.

"I haven't seen you in a while. What've you been up to?"

Not much, she told him again. Busy with work. Then, in what seemed like a defensive measure, "I've been hanging out with a new boy."

The guy was not happy to hear to hear this. His tone changed and his face reddened. Apparently, there had been a previous conversation, on the phone, during which, to hear the guy complain about it, the hostess had misrepresented herself. "So for that whole time, while we were talking for twenty minutes, you let me think you were the general manager." (Did he mean Trisha?)

It got very tense. The hostess's fixed smile looked even more uncomfortable. The guy had an ugly sneer. "And you said yes when I invited you down to Panama. When I was going to fly you down on the private jet."

It was confusing. (And a little difficult to hear. My wife and I would sporadically say something, in a half-hearted attempt to disguise our eavesdropping. But not really. One time when I said, "The decor is nice in here," my wife said, "Shhh!") But from what we could understand, the guy had thought the hostess, who'd he'd had a twenty minute conversation, was another person who worked at the restaurant, a general manager. Apparently, yes, there was also someone named Stephen; at least, the guy knew Stephen well, and threatened to have the hostess fired. "No, no, it's fine," he said, upon her apologizing for her part in the confusion. "When I talk to Stephen, when he asks me how my meal was, I'll just tell him you pretended to be someone you weren't. And you tricked me into thinking you'd accepted my invitation to come to Panama with me on my private jet." That was one thing that we could be very sure about: He had definitely invited this woman, who he didn't even know well enough to know who he was talking to, to fly down to Panama on his private jet. He repeated that part a lot.

Another woman came over to his table. This new woman, who was tall and red-headed, smiled at the guy the same way the first woman had—familiarly, it seemed that he was a regular customer, but also sort of forcedly. He was blatantly unpleasant, and no one in his presence for more than a couple minutes would be smiling without effort.

“You know ____?" the man asked this other woman, about the first woman, and she smiled and said yes. “I got nothing nice to say about her,” he said.

The second woman did her best to agree with him, replacing her frozen smile with an expression of concerned sympathy on her face, while also offering diplomatic defense of her colleague. She noted that everybody had been working hard.

She also stood with him for most of the next hour. As the man ordered his dinner and drank not very much of his wine and ate alone (finishing only half of each of two entrees), there was never not a member of the restaurant’s staff standing at his table. She would step aside when a waitperson brought food, and when the guy was finished with something, he’d beckon a busboy by saying, “Hey, boss, take this.” He was chummy and glib and trashed the first woman to each of the staff, telling the story of how she “lied” to him again and again. He also talked a lot about the big business his company was doing with the government of one of the Carolinas, and offered people investment tips. For example: if you’re thinking of buying real estate, find a place with a low tax base. You know it’s going to go up in the future and you’ll make lots of money or something.

At one point, he swirled the wine in his glass and looked up at this second woman and said, “So what’s going on? Tell me something.”

Not much, she said. She was tired, she’d been working hard, that kind of thing.

“No, no, no,” he said, wiping his mouth with his napkin. “See, that’s the wrong attitude. You got all this going for you—you’re tall, you got red hair. But that’s the wrong attitude. No one wants to hear that you’re tired!"

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Rich People Don't Get Your Human Emotions

Alex Balk — Mon, 13 Dec 2010 14:30:01 +0000

“We found that people from a lower-class background—in terms of occupation, status, education and income level—performed better in terms of emotional intelligence, the ability to read the emotions that others are feeling.... You turn to people, it’s an adaptive strategy. You develop this sort of heightened independence with other individuals as a way to deal with not having enough individual resources.”
—Michael Kraus explains the findings of his recent study, which shows that rich people don't understand how you're feeling, because they don't have to. They're rich!

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Jeff Greene: How Much Rock Did His Yacht Enjoy?

Choire Sicha — Fri, 13 Aug 2010 09:55:21 +0000

Jeff Greene, the credit default-swapping millionaire Senate candidate for Florida whose best man was Mike Tyson and who is running on the platform that he is an "outsider," which may not be totally crazy, is today dealing with the big banner headline: "Jeff Greene's yacht holds the secrets: Sexcapades or Sabbath?" Green's talking point: "There's a million people not working in Florida. Why are we talking about the yacht all the time? I care too much about my country to spend all my time talking about a yacht and Mike Tyson." I appreciate the sentiment! Sort of. Except the sentiment is sort of "please stop talking about my 145-foot party yacht and my $24 million house in Palm Beach, there are people who have no jobs."

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Manhattan's Millionaires-on-Paper (May Be Mostly In Brooklyn!)

Choire Sicha — Wed, 04 Aug 2010 10:30:21 +0000

In looking at the recent wild estimate that there are 667,200 "millionaires" in New York City-supposedly up nearly 20% from 2008-it's important to pull back and look at what makes someone a millionaire on paper. The number one marker in New York City of this semi-mythical, marvelous status is home ownership.

We'll do this in some very nice round numbers!

There's 1.2 million houses in New York City, of the city's 3.3 million housing units. (So: twice as many apartments as houses, basically.)

So, already, you know: someone owns 3.3 million housing units! Clearly lots of these are owned in big batches-landlords like Pinnacle, for a random example, own 21,000 housing units in different buildings.

Still, despite the big landlords, home ownership rate among all New York City residents is almost exactly 1 in 3.

(It skews hard by borough, obviously: in Staten Island, it's more than 2 in 3; in Queens, it's about 1 in 2; in Manhattan, it's 1 in 4.)

Home owners are, unsurprisingly, way more likely to be wealthy. The median income of renters is around $36,000. (By the way, of all renters, nearly 1 in 3 pay more than half their income in rent.) The median income of a home owner is twice that of a renter.

In Manhattan, there's about 750,000 households, where about 1.5 million people live. (There are something like 80,000 single-family dwellings-you know, "houses." All told, about 150,000 of Manhattan's housing units are owner-occupied. You can pretty much guarantee that anyone who owns a single-family dwelling in Manhattan is a millionaire.)

1.2 million of Manhattanites are over 18-and only about half of the people who are older than 25 have a college degree.

So we can discount from our "rich list" those without college degrees, pretty much, because, duh-which means that, eerily, the number of people who are allegedly millionaires-on-paper in New York City is almost exactly equal to the number of adults who reside in Manhattan who have a college degree.

So, wait, some of you are saying: I'm over 25 and have a college degree and I live in Manhattan and I'm not a millionaire!

That's because you're a disgrace. If you're over 25, college-educated, a native English speaker, you reside in Manhattan and are not a millionaire? Technically you are a huge failure.

But don't worry too much. The real reason you're not a millionaire is because there's apparently a really large number of millionaires-on-paper in Brooklyn Heights, Cobble Hill, Carroll Gardens and Park Slope, obviously.

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