Aside from wages, it can be argued that all New Yorkers benefit as consumers from the presence of the extremely rich. Those of us willing to splurge on a single obsession—food, opera, clothes—can choose from the best the world has to offer. For foodies, a semi-annual meal at Peter Luger or Daniel may be a prized ritual, the best reason for not moving to Pittsburgh. But Peter Luger and Daniel—and other fabulous restaurants—can’t get by on these occasional customers alone. They depend on the very wealthy who dine there all the time. The same holds for many of the shops that make New York New York, like Barneys.
This is especially true for the feature that most defines New York’s superiority over other cities: the embarrassment of riches that is our cultural life. “Other cities have one museum. We have two operas, Carnegie Hall, and Lincoln Center,” says Mitchell Moss, an urban-policy professor at New York University. “Unlike Los Angeles, which is intrinsically a culturally deprived area, we’ve had a competitive cultural life.”
The full scope of cultural offerings explains how local wealth contributes to economic development. New York isn’t just a center of finance. It’s home to industries like architecture and design, art and publishing, media and advertising, the businesses that attract what urban theorist Richard Florida calls the “creative classes”—hip, imaginative go-getters whom many cities regard as crucial to future growth. But the creative classes are drawn to places like New York in large part owing to what it has to offer. Consider the architects playing softball in Central Park fields lovingly manicured by the Central Park Conservancy, or the novelists tapping away in the New York Public Library’s glorious reading room. In an era of permanently constrained budgets and gaping deficits, these pleasurable activities are subsidized by friendly local plutocrats. You may be barely able to afford to live here, thanks to the very rich, but thanks to them, you don’t have to stay holed up in your studio apartment.
The rich subsidize our public services, too—and graciously don’t use them much. Mayor Bloomberg may pride himself on riding the subway, but your average hedge-fund managing director is not a connoisseur of mass transit. Part of what it means to be wealthy in New York is to live off the grid, as it were. They have their own transportation systems, including Teterboro Airport, the local holding pen for Gulfstreams, which supports more than 5,000 jobs. NetJets, a company that enables the rich to share private jets, made 25,000 flights in and out of a dozen airports in the New York area last year.
When super-wealthy New Yorkers need certain services, they provide for themselves in ways that produce residual benefits. Former Citigroup boss Sanford Weill pledged $100 million to Cornell’s Medical School in 1998, in part because he wanted to ensure that he would have quality health care in his neighborhood. And what he doesn’t use is there for the rest of us. In this way, the super-wealthy have made New York a world-class center for medicine. Top talent is trained here at well-endowed teaching hospitals and then sticks around for the ample compensation that comes with tending to rich people. Obviously, such excellent care is not evenly distributed, but the concentration of medical expertise means there are specialists here for just about every ailment, no matter how exotic.
The rich subsidize public amenities like the subway—and graciously don’t use them much.
Sometimes, the rich invest in things they have no intention of using at all. Carl Icahn, the Queens-born corporate raider, won’t be sprinting regularly at the new stadium on Randalls Island that bears his name. Set to open on April 23, it’s a fitness palace befitting a Big Ten university. Underneath the stanchions of the hulking Triborough Bridge stands a $6 million, nine-lane Mondo track, so springy it makes you want to take off your jacket and take a few laps. The city kicked in half of the $42 million cost of the facility, which is being built by the Randalls Island Sports Foundation. “Several board members chipped in $150,000, $250,000, or $500,000,” says executive director Aimee Boden. “And then there was Carl’s $10 million topping-off gift.” Since construction started before there was money to build the roof, Icahn’s donation came just in time. For his efforts, the brow of the cantilevered green roof is capped with big letters: ICAHN STADIUM.
It’s quite a fine trophy—and it cost Icahn no more than a decent place on the beach in the Hamptons.
The rich also fund less-glamorous social services to which their names are not always affixed. In 2002, the New York metropolitan area was home to 6,340 of the nation’s 64,843 foundations, according to the Foundation Center. Together, they accounted for 15.5 percent of the nation’s total foundation assets and 17 percent of their giving. Top foundations like Ford, Mellon, Starr, Rockefeller, and Carnegie are all based here. The Leadership Academy, which oversees private training of principals for public schools, raised more than $38 million with the assistance of dozens of executives, few if any of whom have children in public school.
The nonprofit world has become a big business in its own right. The Museum of Modern Art raised $858 million—in the teeth of a recession—for its new building. The New York Times reported that 50 trustees—whose members include David Rockefeller, Ronald Lauder, and out-of-towners Thomas H. Lee and Los Angeles developer Eli Broad—kicked in more than $5 million each. About half the cash was spent on construction, which probably had the downstream effect of at least a couple new swimming pools on Staten Island.
Of course, New Yorkers don’t donate so much just because they can afford to. Giving bestows status. “There are so many wealthy people here that being rich isn’t a distinguishing characteristic; you have to be intelligent and socially useful,” says Mitchell Moss. Whether you approve of his mayoralty or not, Michael Bloomberg is admired not simply because he made several billion dollars in the course of two decades, but because he has given away hundreds of millions of dollars. Compared with him, even the most benevolent centamillionaires are rank underachievers.
Before we get too carried away in enumerating all the great gifts New Yorkers humbly receive from the very rich, let’s admit some limits. The ever-climbing cost of living hits us all. It’s not just the price of apartments; everything from sneakers to a jug of milk costs more here and prices are rising fast. The Consumer Price Index in New York City has been growing at a 30 percent greater clip than the national rate. For the vast majority of people, inflation cuts directly into their standard of living.
As for real estate, if this boom does turn into bubble, the really rich will be bummed, but they’ll disappear for a week to St. Barts and return good as new. People with mortgages they can barely swing—like those three-year, fixed-rate, interest-only “deals”—could be wiped out.
There’s a broader effect on the texture of the city, as well. In many areas, the most economically efficient—frequently the only economically justifiable—use is wildly upscale housing. That’s why the Plaza Hotel, which charged dearly for its cramped, old-fashioned rooms, is being converted into premium condos. The profit potential is too powerful to ignore. Should we care? Well, yes. No matter their exorbitant markup on a cup of tea or a martini, great spaces like the Palm Court and the Oak Bar feel like part of the public domain. Soon they will vanish.