The cities where the super-rich live

Richard Florida has the rankings of where the super-rich around the world live:

London is the world’s top location for the super-rich, with 4,364 people with $30 million or more in assets. Tokyo is second with 3,575, followed by Singapore (3,227), New York (3,008) and Hong Kong (2,690). The table below shows the top 20 cities with the most ultra-high-net-worth individuals.

Rank

City

Number of Super-Rich

Percentage of Total

Global Super-Rich

1

London

4,364

2.5%

2

Tokyo

3,575

2.1%

3

Singapore

3,227

1.9%

4

New York

3,008

1.7%

5

Hong Kong

2,690

1.6%

6

Frankfurt

1,909

1.1%

7

Paris

1,521

0.9%

8

Osaka

1,471

0.9%

9

Beijing

1,408

0.8%

10

Zurich

1,362

0.8%

11

Seoul

1,356

0.8%

12

Sao Paulo

1,344

0.8%

13

Taipei

1,317

0.8%

14

Toronto

1,216

0.7%

15

Geneva

1,198

0.7%

16

Istanbul

1,153

0.7%

17

Munich

1,138

0.7%

18

Mexico City

1,116

0.6%

19

Shanghai

1,095

0.6%

20

Los Angeles

969

0.6%

And if you control for population size, the list changes:

Rank

City

Super-Rich per

100k Population

1

Geneva

143.7

2

Zurich

70.8

3

Singapore

60.0

4

Frankfurt

42.9

5

Hong Kong

37.0

6

Auckland

35.7

7

Oslo

34.4

8

London

29.9

9

Munich

29.1

10

Hamburg

26.6

11

Rome

22.3

12

Dublin

21.0

13

Toronto

20.1

14

Edinburgh

20.0

15

Stockholm

18.9

16

Taipei

18.6

17

Sydney

15.9

18

Monaco

15.8

19

New York

15.0

20

Tel Aviv-Yafo

14.3

These lists have some overlap with the top global cities but there are some differences. For example, on the first list: Chicago and Los Angeles are typically in the top 10 for global cities but they don’t rate highly here. In other words, there are some different social forces at work as to where the rich live versus which cities are most influential. Some possible forces at work:

1. Perhaps the super-rich in a single country tend to all go to one place. In the United States, perhaps this is New York City which is heads and shoulders above anyone else. Super-rich people want to be where all the other super-rich people are.

2. Certain industries might be important here, particularly ones like global banks or the oil industry.

3. Certain cities have amenities that appeal to the super-rich. This could range from certain cultural opportunities or tax breaks or high-status (and expensive) properties.

The per capita list has even more differences. Auckland? Hamburg? Edinburgh? I’m guessing there are some interesting stories behind these conglomerations.

The gift of empathy

Megan McArdle of the Atlantic has a timely reminder of the dangers of schadenfreude:

I saw a fair amount of chortling this morning about this Bloomberg piece on wealthy financial-industry types who are having to cut back because of plummeting bonuses….[W]hen middle class people take out a mortgage that’s perfectly affordable on the income they’ve been enjoying for years, and then lose the house because they suddenly saw that income cut in half, we don’t feel a delicious sense of joy because they finally got what was coming to them.   We recognize that this it is really terrible to be forced out of a home where you’ve built loads of happy memories and dreams–and not incidentally, to possibly be forced to yank your kids out of the aforementioned schools.

Why are people supposed to shrug off the exact same thing because they’re rich?  It’s still really awful to lose your house.  I hardly think it’s whining to worry about this when your income drops and your fixed expenses don’t.
There are plenty of problems in this country and this world.  Rejoicing in the misery of others is just another problem that nobody needs.
The fact is that no matter how much you make, seeing your income fall below the expenses you’ve committed to is difficult.  Obviously, people whose expenses are closer to the minimum deserve more of our sympathy, and our help.  But I’m not sure that this means we’re supposed to be happy when it happens to someone richer than we are.  It’s not very attractive when conservatives rejoice to see union members thrown out of work.  I’m not sure this is much better.

How much income one needs to be considered rich

Americans tend to think of themselves as middle-class, even wealthy and poor Americans who objectively are in the upper or lower ranks of income. So this question occasionally arises: how much income does one have to be earn to be considered “rich”?

The current case in the news:

Todd Henderson feels like he’s barely making ends meet. He’s a law professor at the University of Chicago. His wife’s a doctor at the school’s hospital. Their combined income exceeds $250,000. They have a nice house, a nanny, kids in private school, a retirement account and a lawn guy…

“A quick look at our family budget, which I will happily share with the White House, will show him that, like many Americans, we are just getting by despite seeming to be rich. We aren’t,” Henderson wrote on the blog “Truth on the Market.”

While Henderson meant for his posting to encourage a debate about taxes, it turned into a public flogging, characterizing him as out of touch or arrogant. More broadly, it has provoked a discussion about what it means to be rich, particularly in an economy where many people are suffering.

Henderson’s no longer part of the conversation, though. The firestorm of online hostility compelled him to delete his essay and declare on Tuesday that he will no longer blog. He declined to comment Thursday. Even his wife is angry at him, he acknowledged in a follow-up blog post.

A few thoughts on this:

1. The Chicago Tribune article cites someone saying earning $250,000 a year is in the top 3 percent of American incomes.

2. At the same time, incomes can vary in their purchasing power in different areas. A $150,000 income living in Manhattan can lead to different things than living with that income in Atlanta.

3. Is this a microcosm of how Internet “discussion” works? It seems like a perfect storm of bad economic times plus widespread attention leads to a bad outcome for having made this argument.

4. Perhaps the real issue is whether people making $250,000 feel like they can live the lifestyle that is associated with such income levels. If they feel like they have to pinch pennies or a lot of the money is taken out in taxes, they might not “feel rich.” From those with lower incomes, this seems absurd: just think what could be done with that money. But having certain incomes leads to certain ideas about what that level of income looks like or how it is to be experienced.

UPDATE 9/24/10 3:36 PM: A piece from the Wall Street Journal fits in with my idea about the income and lifestyle not matching up. The overall idea seems to be that people who make this kind of money may not think they have to or don’t want to reign in their spending.

Conspicuous consumption during a recession

Trying to make sense of how recent events like the lavish wedding of Chelsea Clinton, the furor over Michelle Obama’s trip to Spain, and other similar events, can take place during this recession, Bella English of the Boston Globe turns to the concept of conspicuous consumption.

Sociologist Juliet Schor comments:

“It’s adding insult to injury at a time like this when so many Americans are suffering such extreme economic pain,’’ says Juliet Schor, a sociology professor at Boston College and author of “Plenitude: The New Economics of True Wealth.’’ “Those kinds of conspicuous displays of wealth undermine everyone else. They make us feel poorer and less satisfied with what we have.’’

Thorstein Veblen coined the term conspicuous consumption. According to Veblen, consumption is not just about buying necessities; it is about projecting an image and establishing status. The wealthy intentionally are wasteful in their consumption in order to show that they can afford to be wasteful.

Schor is expressing what the people toward the bottom of the economic ladder feel when the rich show off their riches. Should the rich cut down on their spending in times like these? Or perhaps they could draw less attention to themselves? My guess is that if one has the money, one is going to spend it whether it is a boom time or a down time. The only barrier to this may be a popular backlash – if the consumption actually leads to decreased status (rather than increased status), it may not be worth it.

Deciding who is really rich

As the American government considers changes to the tax brackets, James Surowiecki of the New Yorker says this involves an important question: how much money does one have to make to be rich?

While the administration has suggested being rich starts at $200,000 income per year, Surowiecki describes why it is not so simple:

Judging from surveys of how Americans describe themselves, most of the privileged don’t feel all that privileged. Why is that? One reason is the American mythology of middle-classness. Another is geography: in a place like Manhattan, where the average apartment sells for nine hundred thousand dollars, your money doesn’t go as far. And then there’s a larger truth about how wealth is getting concentrated in this country. As the economists Thomas Piketty and Emmanuel Saez have documented, people who earn a few hundred thousand dollars a year have done much worse than people at the very top of the ladder.

Indeed, wealth and income is often relative: if you made $150,000 a year but lived in a neighborhood and mainly associated with people who made around $1,000,000 a year, you might feel poor. The same concept is used to describe various levels of poverty: the relative poverty of the United States versus the absolute poverty experienced in Third World nations. Americans are notorious for feeling like they are middle-class, even if they clearly are not.

At the same time, I find it slightly difficult to believe that $200,000 doesn’t make one rich. Of course, one has choices about how to spend that money. Making $200,000 in Manhattan is not the same as the making that money in Nebraska. However, it should cover all of one’s expenses. Those making over $200,000 are still part of a small and elite group: according to the Census Bureau, in 2006 3.5% of American households made over $200,000 a year.

Surowiecki suggests the solution is to create separate tax brackets for the rich and “super-rich.” If the tax rates are changed, this seems reasonable to me – though it complicates the tax code.