In defense of luxury, even in a downturn
The wealthy are indulging too little - not too much
Jack Smith is a senior correspondent for Robb Report
In a recent NPR appearance, Robert Frank, a Wall Street Journal writer and the author of Richistan, discussed how the rich are coping with the economic downturn. He said the economy was affecting, among other things, their reading habits.
Luxury-oriented magazines such as Robb Report were fine during a boom, Frank said, but those days are over. "Now I think Robb Report, rather than being in a clear plastic wrapper, should be in a brown paper bag," he quipped. "This is not the time to be spending and showing your wealth."
This sentiment struck me as both myopic and fundamentally un-American. Robb Report abounds with articles on luxuries of all sorts - private jets, 200-m.p.h. supercars, and intricate wristwatches that cost as much as a thoroughbred - as well as on such weighty issues as the rise of the oligarch class in Russia, the future of post-embargo Cuba, and wildlife conservation in Africa. But even if the magazine did nothing but spur the sales of personal helicopters, palatial mansions, polo ponies, and other big-ticket items, it would be performing a valuable public service.
The fact is that the current problem is not that the rich are spending too much, but that they are spending too little. Frank himself grudgingly conceded this point: "If the wealthy aren't spending, they're not creating jobs, and that spending doesn't filter down to the rest of the economy."
So apparently it's OK if the rich spend their money, as long as they spend it the way NPR wants them to - in other words, no Lamborghini Gallardos, Pilatus jets, Petrus '61 bottles, or Nautor's Swan yachts.
Equally verboten, I'm guessing, would be the penthouse suite at the Four Seasons New York. With waterfalls on its walls, gold-encrusted furniture, and balconies surveying Manhattan from a perch 52 stories high, it is the most sumptuous and expensive digs in the country. The suite goes for $35,000 a night.
But as Four Seasons marketing manager Brian Honan explained, the suite's maintenance keeps 12 to 15 staffers employed. Moreover, it has spurred the other luxury hotels in New York to respond with super-lux suites of their own, all of which keep more butlers, chambermaids, room-service waiters, bellmen, and concierges working.
To a large extent, a society's attitudes toward luxury define its destiny. As the billionaire Greek shipping heir and columnist Taki Theodoracopulos once told me, "Europeans are driven by envy. If a European sees somebody driving along in a Ferrari, he will say, 'Look at that guy in that car. Someday I will take it from him.' If an American sees somebody driving along in a Ferrari, he will say, 'Look at that guy in that car. Someday I will make a fortune and buy one just like it.' "
Unlike wealth, luxury comes with a catch. Wealth is impersonal and quantifiable. Luxury, on the other hand, implies a value judgment; it's revealing and therefore a risk. What will people think?
This was an important question in Salem, Mass., in the early 1700s. To engage in costly entertainments, personal finery, and overly splendid homes was to risk the censure of the community. Not a good idea in the days of Cotton Mather's witch hunts.
But a totally different philosophy drove another early American, Ben Franklin. Franklin was a revolutionary, a philosopher, and a scientist, but he was also an aficionado of fine wine, music, and art. His aphorisms, urging his countrymen to strive and be frugal, were meant to help them acquire not only the necessities of life, but also the luxuries, if they could afford them. "I have not thought of a remedy for luxury," he once confided to Benjamin Vaughan, an intimate and scientific collaborator.
We cannot be certain that Franklin would have been a Robb Report reader. But had the magazine existed in his time, it definitely would have carried stories about such creations of his as the glass armonica, bifocals, and the Franklin stove. And no one would have dared tell Franklin to carry the news of such wondrous luxuries in a brown paper bag.