An ill-omened name for a house, Versailles. But it's the one Jacqueline and David Siegel chose for their 90,000-square-foot house. It would have been the largest private residence in the United States, except for that pesky credit crunch. Now the Siegels' half-finished house is for sale for 75 million dollars, 100 million dollars if the buyer wants it finished.
I know all this because of a Wall Street Journal article about the hard times of the super-rich. The article focuses on the greater volatility of the incomes of the super-rich in recent years, perhaps implying that the super-rich Have It Tough, Too, what with their incomes seesawing more than the measly incomes of the rest of us?
Not sure. The piece may have been published just for its click-value. Everyone and their dog will want to yell at someone like the Siegels.
Not all economic losses are of equal concern. A poor family losing everything has lost everything, and that is still a bigger proportional loss than gigantic losses from a mega-gigantic wealth. Complaining about the latter is uncouth, given what the housing markets crash has done to the the real and perceived wealth levels of most everyone else and given what unemployment has done to the incomes of many.
The article focuses on income volatility, though all the human-interest stories are about people losing large chunks of their wealth, not their incomes. Then there's this on wealth volatility:
During the 1990 and 2001 recessions, the richest 5% of Americans (measured by net worth) experienced the largest decline in their wealth, according to research from the Federal Reserve. As of 2009, the richest 20% of Americans showed the largest decline in mean wealth of any other group.Largest decline in mean wealth in what units? Dollars? That would be no surprise at all, given that this group begins the recessions with more wealth. By definition. If the largest decline is defined in percentage terms the same argument I'm giving below for income volatility serves for wealth volatility, too.
That argument is this: Even if the wealthy now experience more income fluctuation over business cycles than the non-wealthy, the average incomes of the former are much, much higher. Those higher average incomes cushion the impact of any recession-related income drops. A loss of 9% from a $500,000 annual income won't make it necessary to choose between heating or food whereas a loss of 3% from a $20,000 annual income very well might*.
If I really make a stretch, I can read the author's argument as one about social mobility:
Though often described as a permanent plutocracy, this elite actually moves through a revolving door of riches, with some of today's nouveau riche becoming tomorrow's fallen kings. Only 27% of America's 400 top earners have made the list more than one year since 1994, one study shows.And what are the income and wealth levels of those "fallen kings?" I have no idea, but I very much doubt that most of them are now among the working poor. A list of the 400 top earners tells us nothing about that. My guess is that most of those who fail to reappear in the list still remain rich.
*This example uses the extreme percentages from the article.