The Richer Get Richer and the Poor...from Another Planet

When you get a chance, read the article "Big Names, Big Wallet, Big Cause" in the New York Times. Here's the link: www.nytimes.com/2007/05/04/business/04insider.html?_r=1&oref=slogin

"The only thing I like about rich people is their money."
Nancy Astor

Wealthy hedge funders, media moguls and private equity denizens placed outrageous bids for the special opportunities to play a round of golf with Tiger Woods ($650,000), have Mario Batali make dinner for 10, $1.2 million or sing a song with Aerosmith ($400,000). The proceeds go the Robin Hood fund that supports a variety of charities in the New York area. This year the Robin Hood soiree raised over $71 million! Not bad for an evening’s worth of excess.

Now don’t get me wrong. There is nothing I like more than to see the ridiculously wealthy give away their money, particularly to worthy causes. You can only buy so many mansions in the Hamptons, private jets, or seats of the Metropolitan Museum of Art Board of Directors. I guess it has been a good year on Wall Street, in private banking and for speculators who buy or sell derivatives or futures contracts. An evening of wealth redistribution is a good thing! I must give these folks credit. $71 million is a great deal of money for charities.

According to a Spectrem Group Study. “For the first time, the number of households with $5MM+ Net Worth, not Including Primary Residence (NIPR), exceeded 1 million. While all wealth segments increased in 2006, the wealthiest segments experienced the largest percentage increases.

The number of “lesser” millionaires and affluent Americans also increased, according to Spectrem. The group says there are now 9 million households in the U.S. worth $1 million or more, while the number of affluent households — those with $500,000 or more — grew to 15 million in 2006, up 9% from 2005.

In other words, the fastest population growth was at the top of the top. Over the past decade, the number of households worth $5 million or more has more than quadrupled. …It’s all further proof of the widening gap among the rich — with those at the top of the top doing better than those at the bottom of the top.” According the U.S. Census, the top 5% have increased their total wealth over 65% from 1970 to 2000 using constant dollars. In real terms, the top 5% own over 50% of total net wealth in the USA. Not surprisingly the bottom 10% of citizens own no net wealth at all!

Wealth inequality is growing faster than anytime in our nation’s history. The richer are getting richer and the poor remain very poor. Yes, it is nice see the newly rich open up their pocket books and give half a million so they can play golf with Tiger. For an increasing number of people this is just pocket money. I am sure the money will go to some worthy cause.

I guess I am more unsettled by the growing distance between the very wealthy and the rest of our society. When 1 out of every 4 children has no health insurance, 18% of children live in poverty and 1 in 10 families experience hunger on a regular basis, a dinner prepared by Mario for over $1 million seems a little extravagant.

Yes, hedge fund owners are giving but do they do it because they genuine comprehend the enormous social needs that are out there? Or do they do it because it has become a social norm among their very wealthy peers? I don’t begrudge those who work hard, take risks and accumulate a fortune. We do live in a market economy. I am concerned that their world view and increasingly circumscribed lifestyle of extravagance and opulence insulates them from the grim realities that define the lives of many of less fortunate in this country. Do we still live in the same country?

“When the rich think about the poor, they have poor ideas.”
Evita Peron