Strutting Down The Red Carpet Of Richistan

We have a number of countries in the Middle East and Asia that end their name with “stan,” such as Khazakhstan, Afghanistan, Pakistan, and Uzbekistan. Even portions of India are often called Hindustan. “Stan” is Persian for “place of,” as in “place of Afghans.”
The suffix has become so popular it is used to describe video games such as “Carjackistan” and the fictional country “Franistan” in the TV show “I Love Lucy.”

Now we have added two other “stans” to our list of countries, Richistan and Pooristan. Robert Frank of the Wall Street Journal has written “Richistan,” where the rich live in expensive enclaves, jetting from one gated, guarded section of Richistan to the other.

But because there is such an income gap among the rich in their own different, parallel country—where they don’t live like the rest of us—Richistan itself is divided into three provinces: Upper Richistan, Middle Richistan, and Lower Richistan.

In that Frank has not placed the world’s poor in any country, I thought I might as well create Pooristan for them—and divide it into three provinces: Dogpatch Pooristan, Stinking Pooristan, and Super Pooristan.

There are about 400 billionaires in the United States and about 600 more in the world. These billionaires have a combined wealth of $3.5 trillion.

Warren Buffett, the sage of Omaha, is currently the richest person in the world with a net worth of $62 billion. Bill Gates, Warren’s bridge partner, has fallen all the way to third at $58 billion after giving up the reins of Microsoft to become philanthropist to the world.

These two could live anywhere in Richistan they wanted to. But to show how the superrich march to different but very loud drums, I remember when Gates built a $100 million house on the shores of Puget Sound filled with technical marvels and precious artifacts from around the world—with a 30-car garage to hold a collection of the world’s most expensive cars.

Buffett chooses to live in the same story-and-a-half on a middle-class street in Omaha where he has lived most of his life. So these two with a combined net worth of $120 billion live completely different personal lives, Gates in Upper Richstan, Buffett in middle-class Omaha.

Some Of The Rich Are Suffering From Post-Traumatic Success Disorder

Shortly after Frank’s book came out, economists Peter Kuhn and Fernando Lozano published a study indicating that the rich are suffering more from the income gap than any other group.

It is fascinating to discover that half the number of men among the bottom fifth of the income ladder who used to work long hours are now working fewer hours, while the long weeks among the top fifth of earners have increased by 80 percent. For the first time since records were kept, inhabitants of Richistan are working more hours than lower-wage earners are.

Dalton Conley in his New York Times article “Rich Man’s Burden” explains it this way: “This is a stunning moment in economic history. At one time we worked hard so that some day we (or our children) wouldn’t have to. Today, the more we earn, the more we work, since the opportunity cost of not working is all the greater (and since the higher we go, the more relatively deprived we feel).”

Conley writes that our growing disparity in income makes New Yorkers in the $200,000 a year bracket actually feel poor. He says the anger over the income gap has moved from the poor to the rich who feel stress because of the everwidening gap between themselves and the superrich.
As Conley says, “The rungs of the economic ladder are getting spaced further and further apart.” An ordinary billionaire looks at Buffett’s net worth and feels deprivation. He would like to move from Lower Richistan to Upper Richistan but the gap fills him with apprehension. Personal jet airplanes, vacation homes, aristocratic mansions, yachts, personal submarines, art collections, the number of board of director seats, and $3 million birthday parties often can separate inhabitants of Middle Richistan from Upper Richistan.

A 16,500 Square-Foot Condo At $2,848 A Square Foot

I don’t know whether the widow of TV producer Aaron Spelling lives in Middle or Upper Richistan—but I do know that it is not in Lower Richistan among the riffraff. I don’t know what her net worth is, but her 56,500 sq. ft. French chateau-style Los Angeles home called “The Manor ” could fit in either community.

Mireya Navarro of the New York Times describes it in her article “Downsizing in Los Angeles: Mansion to Condo”: “It includes a wine-tasting room, a bowling alley, a silver room, a china room and a well-known wrapping room.” This adds additional meaning to the old proverb: “There’s no place like home.” A staff of 20 serves Mrs. Spelling.

Ms. Navarro did not reveal that Mrs. Spelling was selling her mansion but she did write that she is buying two top penthouse floors in a new building called The Century for $47 million. That comes out to $2,848 a sq. ft.

I bet it will appear in a new magazine called WSJ, started by the new owner of the Wall Street Journal, billionaire Rupert Murdoch. Evidently it will feature wealth and consumption in one issue and consumption and wealth in the next.
This magazine is strictly for the luxury market, featuring $15,000 handbags, million-dollar autos, $150 million estates, $20 million trips to space on Russian rockets, $300 million yachts, and other expensive playthings.

The big question is, will it even appear in Lower Richistan? The magazine was introduced at the Pierpont Morgan Library with a breakfast of smoked salmon, caviar, and raspberry parfait. That ambiance might be above even Lower Richistan standards.

In What Pooristan Do 18,000 North Dakota Kids Live?

How many poor actually live in Pooristan has never been determined. Forbes magazine says that at least one billion live at or below an allowance of $1 a day. Other estimates say that about 3 billion of the souls on earth live on less than $3 a day.

How many people fall below poverty lines around the world is really difficult to compute. We will have to figure out what wage-earners fit into another country called Middlestan.

But if 18 percent of the children in the U.S. are below our poverty lines, we can guess that many millions of kids are in or below Dogpatch Pooristan.

With the economy tanking because of foreclosures, layoffs, plant closings, and increased gas and fuel prices, Pooristan will add many citizens this year.

Fifty million U.S. children are returning to schools in 2008, many to school districts that have deep financial problems.
As an example, Louisville, Kentucky has an enrollment of 98,000 and the state has cut its funding by $43 million.
Higher fuel and food costs may create a bigger deficit. In an attempt to make up losses in state funding, Louisville has increased lunch prices, eliminated 17 buses, and increased property taxes, all while record numbers of homeless and free-lunch students are enrolled.

Detroit has laid off 700 teachers, Los Angeles has fired 500 administrators, and Miami-Dade County Schools has laid off hundreds of school pysychologists and maintenance workers.

Other cities have reported record numbers of needy children coming from unemployed and underemployed parents. Over half of the districts in Minnesota are trying to pass special levies so they can offer an adequate education.
Mobile, Alabama enrolled 850 homeless students in 2006-7. This year 2,500 showed up. Louisville had 7,600 homeless students last year.

If parents earn no more than $27,560 their children qualify for free meals. Almost 15 million U.S. students qualified in 2007. This number is bound to go up in 2008.

But Even The Rich Cry Poverty

East Hampton, New York would have to be considered one of the richest towns in Upper Richistan. Many of the superclass and the superrich live or vacation in their Hampton estates, flying in with their Lear jets from around the world. Many money-management teams from Wall Street ride their limos to “The Hamptons.”

It’s ironic that East Hampton is now $12 million in debt. The New York Post, the newspaper of the conservatives, screamed recently: “Lea$t Hampton Is Going Broke; Glam(orous) Town $12 M In The Hole.”

The East Hampton population is made up of billionaires and undocumented immigrants who mow the lawns, trim the hedges, park the cars, clean the swimming pools, serve food and drinks, and do all the work which makes being rich enjoyable, according to the Post.

The town recently bought $100,000 worth of beach rakes so the inhabitants of Super Pooristan can keep the Upper Richistan beaches clean. The town leaders are reluctant to raise taxes on their billionaire property owners. A state lawmaker recently pushed through a bill authorizing a $15 million credit line for the town. I think it’s funny that any Hampton billionaire would consider this chump change—but when a small portion is put on a tax bill…

These billionaires certainly know where to put their money. The Cayman Islands, the tax haven for Richistan residents, has 47,000 residents and over 95,000 registered businesses. Isn’t that amazing that the citizens of these little islands are so productive they each run, operate, and own two businesses? Now that is real entrepreneurship and supercapitalism.

The Ugland House, a five-story building, recently added 6,000 new businesses—without even adding a new floor.
This is why two/thirds of our corporations and businesses do not pay a dime of taxes.

This big cry to cut business taxes? That’s as phoney as the 18,000 businesses that “operate” out of one Cayman building.