An average American family would have to work thousands of years to amass a billion-dollar fortune. America’s super rich, the new data on our richest 400 make clear, can lose a billion and barely notice.
By Sam Pizzigati
Tsunamis, we learned this past week, amount to equal-opportunity destroyers. Against a surging 20-foot wave, an opulent beachfront manse offers no more security than a cottage. But a recession, even a Great Recession, doesn’t work that way.
In a recession, as Forbes documents in its just-published latest report on America’s 400 richest, most super rich do see a dip in that financial abstraction known as “net worth.” But, otherwise, life goes on, as comfortably as ever. The rich emerge unscratched out of whatever wreckage a recession may bring.
By contrast, as economist John Irons reminded us last week in a powerful new report on America’s lean-pocket majority, recessionary tsunamis can leave average working families permanently scarred.
Let’s put some faces on that contrast. Start with Steve Wynn, the gaming industry “king of Las Vegas.” Wynn, along with 314 other billionaires on the list of America’s 400 richest that Forbes released this past Wednesday, has certainly lost “net worth” over the past 12 months.
In fact, Wynn has lost quite a bit of net worth since the financial industry meltdown one year ago. His fortune totaled $3.4 billion then and adds up to just $2.3 billion now, a $900 million fade. That’s a tidy sum. A typical American family, according to new Census Bureau figures, would have to work nearly 18,000 years to make $900 million.
But Wynn, despite that rather sizeable loss, hasn’t had to crimp his style over the last 12 months. He “rang in the New Year” skimming the Caribbean on a 183-foot megayacht he bought last summer. He went on to spend lovely winter days dodging gossip columnists on the Riviera and in the Alps.
Wynn has, to be sure, done some crimping over the last year, namely on wages and benefits for workers in his corporate empire. He slashed paychecks at Wynn Resorts by 10 percent last winter and, among other cutbacks, suspended matches to employee 401(k)s.
Overall, the total wealth of Steve Wynn and his fellow Forbes 400 ultra rich dropped $300 billion, or 19 percent, between September 2008 and September 2009, the fifth time the top 400’s net worth has registered an annual slide since Forbes started keeping count in 1982.
After all four previous slides, the top 400 quickly regained the lost ground and resumed their march to ever greater concentrations of personal wealth. In 1982, the top 400 together held only $91.8 billion. The Forbes 400 combined net worth today stands at $1.27 trillion.
Since 1982, the wealth of the top 400 has soared an amazing 12 times faster than inflation.
Some of America’s super rich are still soaring, even amid our current economic unpleasantness. The Great Recession has been, for them, an opportunity to scoop up some can’t-miss business opportunities.
Dallas banker Andrew Beal, for instance, has tripled his personal fortune, to $4.5 billion, since last September’s meltdown. He gobbled up “loans and assets on the cheap last fall.”
Other billionaires, patiently waiting for their personal net worth bounce-back, are gobbling up great luxury deals. Natural Russian sable furs, Forbes notes, are selling at 30 percent off their price last fall. Custom-made black calf wing-tip men’s shoes from London, $5,075 a year ago, can now be had for a mere $4,686.
The wealthy of the Forbes 400, in short, are making do quite nicely.
“Somehow,” quipped Wall Street Journal wealth analyst Robert Frank last week, “I think they will be fine.”
Most of America’s chattering class believes average Americans will be just fine, too, just as soon as the recession ends and jobless Americans go back to work.
Don’t bet on that, says the Economic Policy Institute’s John Irons. EPI last week published his sobering new report, Economic Scarring: The long-term impacts of the recession.
Pundits and politicos, Irons notes, often portray recessions “as short-term events.” But in real economic life, his new study shows, “high unemployment, falling incomes, and reduced economic activity can have lasting consequences.”
The Irons study summaries the vast economic research that details these varied consequences: the college students who have to drop out when a parent gets laid off, the workers whose wages never regain pre-layoff levels, the young children who do poorly in school because a fall into poverty has left them undernourished and bouncing from one community to another.
For average families, sums up Irons, recessions can wreak havoc “for years to come.” But some observers see havoc up and down our economic ladder.
“The 400 richest Americans, just like the rest of us, have lost a lot of money in the past 12 months,” as Duncan Greenberg, the Forbes 400 list co-editor, pronounced last week.
“Just like the rest of us”? Not quite.
Sam Pizzigati edits Too Much, the online weekly on excess and inequality.