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Don't Hate Them Because They're Rich


This is no isolated incident. Several years ago, hedge-fund billionaire Bruce Kovner bought the International Center of Photography, a mansion on 94th Street and Fifth Avenue, and is now using it as a residence. A proud constituent of Museum Mile, which used to hold fantastic exhibits, has been turned into a somnolent outpost of Billionaires’ Mile. The Town Club, a homey place on East 86th Street that made its facilities available to neighbors for parties, Brises, and other events, was likewise sold to a Wall Street honcho who plans to use it as a house. The Lycée Français has sold off its impressive collection of Upper East Side buildings for residential use.

As space is monopolized by part-time residents, it sucks the life out of these neighborhoods—and further raises the barriers to the sorts of amenities that make Manhattan a distinctive, interesting place: museums and parks, schools, clubs, hotels, office buildings. If the trend continues, ever larger swaths of Manhattan will come to resemble a limestone and brownstone Buckhead, comatose bedroom communities that have no more civic bustle than the suburbs many city dwellers came here to avoid.

The omnipresence of the superrich also has psychic costs. For many New Yorkers, being around people for whom no price is ever an object inspires envy and sometimes rage. Not being rich here means, at some level, being excluded from playing in all the great games the city stages. And whatever professional triumphs lower-compensated and less-endowed people achieve—a Pulitzer Prize, a MacArthur “genius award,” tenure at Columbia, a partnership in an architecture firm—many distinguished professionals will simply never be able to carve out the Manhattan life to which they think their status entitles them. A writer who clears $500,000 a year is a star; on the trading floor at Morgan Stanley, that sum makes you a disposable nobody. Such disequilibrium can make even committed professionals question the value of their life choices. “It certainly resonates with me,” says Dr. Kathryn Faughey, an Upper East Side psychologist. “As a therapist, you can be treating somebody who just had a bonus of $750,000, and then they hand you a check for the fee and there’s quite a discrepancy.”

The magnetism of the very wealthy does limit options for the merely affluent. There are fewer apartments and schools to choose from, fewer lawyers seeking to write wills, and fewer brokers eager to manage money. Everybody knows a bodega’s margins are narrower than Whole Foods’; that’s why they’re all closing. Given the wealth here, it makes sense for businesses to zero in on the high end. One of the newest banks to open, the aforementioned New York Private Bank and Trust, wants to do the basics: accept deposits, lend, provide advice, and act as a trustee. It will also offer concierge services, like if you need to be medevaced out of Chile. “There are some very solid things that any private bank can do for somebody with $5 million to $10 million that are mutually beneficial,” says president Bill Fuhs. But New York Private Bank is primarily seeking depositors with assets of more than $50 million.

And that’s another troubling consequence of having so many very wealthy people around: It has the effect of defining affluence up. Think it’s hard to find a two-bedroom apartment in Manhattan for less than $1 million? Try getting meaningful financial advice for the $50,000 you’ve saved up. From a private bankers’ perspective, $5 million is the bare minimum it will take to make your phone call worth returning.

Manhattan is a sort of tableau vivant in which the plutocrats occasionally cross paths with the bohemians. We grow to be blasé about them, the way people in Los Angeles are inured to encountering movie stars at Starbucks. Look, that’s David Rockefeller strolling unrecognized through Rockefeller Center!

For literally centuries, New Yorkers have complained about the effects of extreme wealth on the city. Many would, of course, prefer an egalitarian paradise where the working man has a window on Central Park, too. But such utopian notions obscure what is, in fact, a very successful aspect of New York. The historical record clearly shows that when the very rich lose interest in living in a city, the dominoes tumble. Look at Philadelphia or Cleveland.

Part of what sustained New York through the crisis of the seventies was that Fifth Avenue never stopped being Fifth Avenue—apartment prices surely dipped and Central Park did get a bit woolly, but no landlords ever started torching those buildings and running away, as they did in the Bronx. The fancy sections of New York endured to an extent that many solid middle-class neighborhoods did not. “The majority of cities in America would die to have this problem,” says Edward Glaeser of Harvard. “If a city is doing well, then people are willing to pay a lot to be there.” Some are also willing to pay a lot to rule over the city, like our mayor and State Attorney General Eliot Spitzer.

The phenomenon whereby people with six-figure incomes think they can’t make it in Manhattan is simply an extension of what middle- and working-class New Yorkers have been subjected to for decades. If you want to improve your quality of life, you’ve got to move out. That may feel like a hardship, but the net effect is that the urban values that are disappearing from Manhattan are being exported and reinforced in Brooklyn and leafy towns in New Jersey, Westchester, and Fairfield County, Connecticut.

So love them or hate them—we’d better learn to live with the rich. They’re not going away. If 9/11 couldn’t scare them off, one has to wonder what will. The very rich may be carving out more space for themselves. But in this highly uncertain economy, that’s something of a blessing, not an unmitigated curse. The ultimate definition of a city’s health is the ability to attract people, companies, and industries that can choose to be anywhere in the world. “You can argue about the dangers of having an economy at the beck and call of the very rich,” says economist Ken Goldstein. “But it basically comes down to this: It’s better than the alternative.”

The Really Rich List
The most stunningly expensive T-shirt, hot dog, and more.


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