Moneybags

There are few things more boring than a class analysis, some say. Karl Marx’s “fetishism of the commodity” or Adam Smith’s “invisible hand” can kill a dinner party. But celebrity, especially celebrity attached to wealth – real, gigantic wealth – is another matter altogether. And so, while Conrad Black’s trial in Chicago concentrated on the arcane legalities of non-compete agreements and whether his Lordship pocketed tens of millions of dollars that didn’t belong to him, what sparked a real frisson about this case were the accounts of orgiastic spending Black and his vampish wife, Barb­ara Amiel, indulged in at the pinnacle of their power.

When is enough enough, people ask, mad, envious, curious. Three opulent mansions and a Park Avenue condo, a private jet and Rolls-Royce Silver Wraith, and Amiel’s “environmental chamber” – her dozen crocodile-skin Hermès Birkin handbags, the Renaud Pellegrino evening bags (whose handles are encased in jewels), the vast collection of Manolo Blahnik shoes – are part of the answer. But there were also the ludicrously expensive holidays in Bora-Bora, the parties, and, of course, the staff – the maids, chefs, chauffeurs, footmen, housemen, guards, and seventeen butlers, one of whom earned $130,000 annually, plus board. (Good help is hard to come by, apparently, and once found must be compensated accordingly.) “Nobody has seventeen butlers,” snorts Peter C. Newman, Black’s former confidant and biograph­er (and Amiel’s former boss), who covered the tycoon’s trial. “Nobody had seventeen butlers even during the Gilded Age.”

Newman’s quip provides an interesting historical comparison. As the Blacks’ pharaonic appetite for luxury illustrates, we are in the midst of a new Gilded Age, a period where “extravagance knows no bounds,” as Amiel herself put it. The world’s richest man, Bill Gates, is worth $56 billion (US) and lives in a 66,000-square-foot lakeside compound near Seattle, valued at approximately $100 million. Paul Allen, the co-founder of Microsoft, owns a 413-foot yacht complete with a cinema, recording studio, two helicopters, and a ten-person submarine. To call it a boat is absurd, says Shinan Govani, the National Post’s gossip columnist, who attended a party on Allen’s ship at the Cannes film festival. “It’s a country unto itself.”

In a manner that has become familiar, Ira Rennert became one of Amer­ica’s highest paid executives in the 1990s by accumulating nearly $500 million in dividends and management fees from his companies, mostly metals and steel plants (one of which, AM General, builds the gas-guzzling Hummer and Humvee). His duplex apartment on Park Avenue is replete with antiques and Impressionist paintings. He owns a palatial spread in Israel, a Gulfstream V jet, and, the pièce de résistance, a 100,000-square-foot oceanfront mansion in the Hamptons – a twenty-nine bedroom mini-Versailles on sixty-four acres with beach and garden pavilions, basketball, squash, and tennis courts, and a theatre.

Not to be outdone by US billionaires, Prince Alwaleed bin Talal Alsaud of Saudi Arabia, the world’s thirteenth richest man, owns a 317-room, 400,000-square-foot palace in Riyadh. Costing $130 million to build, it has eight elevators and more than 500 television sets, and the grounds, in this desert kingdom, feature a soccer field.

Canada has twenty-three billionaires, with David Thomson, controlling $22 billion (US), leading the pack. And many of our hyper-rich also enjoy their toys. David Ho, the Vancouver-based ceo of the now-defunct Harmony Airways, reportedly owns a golf course, a thirty-eight-foot Miami Vice-style cigarette racing boat, a custom-made Fer­rari Testarossa, and a 13,000-square-foot mansion. He also owns two homes in Hawaii, one of which is valued at over $20 million. Heather Reisman and Gerald Schwartz of Indigo and Onex fame, own homes in Nantucket and Palm Beach, a yacht and a plane, and live in a huge Toronto spread. They safari with Hollywood royalty like Michael Douglas and Catherine Zeta-Jones.

In 2003, according to Forbes magazine, there were 476 billionaires in the world. Today, there are 946, with an average net worth of $3.6 billion and a combined wealth of $3.5 trillion. (The current US budget is $2.7 trillion.) Five percent of Americans control just over half of the country’s wealth, and collectively the richest 300,000 Americans earn almost as much income as the bottom 150 million. A study co-authored by McMaster University economics professor Michael Veall and Emmanuel Saez at UC Berkeley revealed that in Canada, the wealth controlled by our most affluent class has risen dramatic­ally over the past thirty years. Today, the top 1 percent account for 13.5 percent of all income, as compared with 7.5 percent in the late 1970s; other studies show that wages for the working majority have either flattened out or declined for more than two decades.

While most Canadians consider themselves part of a broad middle class, that designation has shifted significantly. In the post-World War II era and through the 1970s, an ever-increasing number of Canadian families – supported largely by the salary of a single wage-earner – improved their standards of living and socked money away. Today, incomes are growing much more slowly if at all, and Canadians are borrowing more and more. As in the US, much of Canada’s “middle class” is actually two or three paycheques away from going broke, and many are wonder­ing what separates them from the privileged few.

In the 1970s, American ceos made roughly thirty times what average work­ers hauled in; today, they make 300 times the average wage. The chairman of Wal-Mart, America’s largest corpor­ation, earns $23 million (US) annually; the company’s non-supervisory staff take home $18,000 (US). Thirty years ago, Jack Armstrong of Imperial Oil was Canada’s highest-paid ceo. He made just over $500,000 ($1.5 million in today’s dollars). In 2005, the 100 highest-paid Canadian ceos took home an average annual salary of $9 million. Whereas executive pay was once almost entirely made up of salaries and bonuses, the use of stock options as inducements took hold when corporations started wooing a small class of superstar ceos. As a result, in both Canada and the US, executive compensation has gone through the roof. Between 1998 and 2000, Michael Eisner, then at the helm of Walt Disney, cashed in over $680 million (US) in stock options. Last March, the co-ceos of Canada’s Power Corp., André and Paul Desmarais Jr., earned a combined $35 million by exercising some of their stock options. Says David Green, a professor of economics at the University of British Columbia, “The right wing managed to win the argument that what is good for the rich is good for all of us.”

But is it? In North America, the wealth divide has become a canyon, and critics believe that the concentration of so much money pooled in the hands of a tiny elite is corrupting our institutions and dissipating economic vitality. Both national governments are becoming less relevant in the face of emergent plutocracies not necessarily loyal to local economies – perhaps one reason North America’s manufacturing base is in such sad shape. Nor does either national government seem interested in solving the myriad economic, health, environmental, educational, and social problems that cash-strapped local governments cannot address. Princeton economist and New York Times columnist Paul Krugman has argued that the growing gap between rich and poor in countries like Canada and the US has a haunting parallel with countries across Latin America, where for decades dramatic wealth inequality so fractured societies that revolution from below was a constant threat. It still is. “This, ultimately, is the most pressing issue we face as a society today,” Krugman wrote.