Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich
By Robert Frank
Crown, 277 pp., $24.95

On assignment in Fort Lauderdale several years ago, Wall Street Journal wealth reporter Robert Frank strolled through Bahia Mar Marina during an annual yacht convention—a “weeklong celebration of boats, beaches, and billionaires,” as he puts it. Frank saw row after row of 100-foot cruisers. One boat owner remarked that wealthy Americans now live in a virtual foreign country; such is the enormity of their riches. This inspired Frank to write a book exploring the new world of the ultra-wealthy, which he cleverly dubs “Richistan.”

It’s not the existence of these well-heeled, free-spending Americans that’s remarkable, Frank writes, but their sheer abundance. In 1995, there were 230,000 U.S. households worth at least $10 million and 50,000 households worth at least $25 million (in inflation-adjusted terms). In 2004, there were 530,000 and 110,000 such households, respectively. The accumulated wealth of America’s top one percent of earners—about $1.35 trillion—equals more than the total national incomes of Canada, France, and Italy. Perhaps most striking, roughly half of all American wealth has been created in the past ten years.

Where did all the money come from? Richistanis (as Frank calls them) began making their fortunes in the bull market of the 1980s, which turned out to be a mere prelude to the exuberant 1990s. The recent wealth explosion has been fueled by globalization, new technologies, rising corporate profits, and low interest rates. Many Richistanis cashed in on Wall Street; others are low-profile entrepreneurs who made their fortunes in such eclectic industries as pool toys, timber, miniature ceramic villages, and strawberries.

Unlike the old money WASP elite, Richistanis are products of the meritocracy. Many have dual personalities. Being parvenu, they grew up with middle-class values, but now enjoy lavish, upper-class lifestyles. Most prefer not to think of themselves as elites, but rather as ordinary folks who just happen to have a lot of money. “I don’t like rich people,” says timber baron Tim Blixseth (number 346 on the Forbes 400 list). “They can be arrogant.” Richistanis also go out of their way not to dress like old money. They opt for polo shirts, slacks, and open-collar dress shirts, shunning suits and monogrammed shirts. “Suits are for the people who work for me,” quips one Richistani from Palm Beach.

In 1995, there were 230,000 U.S. households worth at least $10 million. In 2004, there were 530,000 such households.

Though they have more money than they could spend in a lifetime, Richistanis are hardly part of the "idle rich" class. They tend to be restless and addicted to new projects. In particular, Richistanis are shaking up the world of charity by cutting out the middlemen. Take Blixseth: a prototypical “guerilla philanthropist.” When he read in his local paper about a paraplegic man whose home had been robbed, Blixseth showed up at his door with a truckload full of new furniture and appliances. (At first, Blixseth’s slovenly appearance made the poor chap worry that he was being robbed again.)

Then there’s Philip Berber, creator of the online day trading system CyBerCorp, whose charity applies investment theories to help fight poverty in Ethiopia. Berber has strict performance expectations for every grant he makes: when he donates to an Ethiopian NGO, he attaches a set of mandatory goals, and future funding is contingent on meeting those goals. So far, Berber’s charity has built 190 schools (serving 112,000 students); 1,657 water wells (which have brought clean drinking water to some 900,000); and 99 health clinics (serving 766,000). “I’m not giving to anybody,” he says. “There is no charity with me. I’m a social investor investing capital for social profits.”

Not surprisingly, Richistanis have also thrown themselves—and their fortunes—into politics. While single-digit millionaires trend Republican, those worth $10 million or more largely favor Democrats. With a bit of glee, Frank reports that the political liberalism of most Richistanis isn’t a product of guilt or embarrassment, but of a desire to “preserve the system of fairness and opportunities they had growing up.” This is an interesting assertion. But it is somewhat contradicted later in the book when Frank describes the proliferation of “wealth support groups” in which Richistanis “swap advice on everything from hedge funds and stocks to family and the personal effects of wealth.” This is “where the self-help culture meets the wealth boom.”

Charitable and progressive though they may be, Richistanis often indulge in obscene luxury. Their conspicuous consumption ranges from collecting hundreds of cars to installing alligator-skin toilet seats on their Learjets. Frank devotes several pages to their customized yachts, many of which are equipped with full-service spas, helipads, extra speedboats, theaters, basketball courts, and gyroscopes to offset any rocking caused by the water. One yacht owner Frank meets complains that the other boats in the marina make his 100-footer look like a dinghy.

In the concluding chapter of Richistan, the author switches his tone from dispassionate to philosophical. He laments widening income gaps and wonders “How much is too much?” But Frank mostly makes good on his promise to avoid demonizing or deifying his subjects (though even a devoted capitalist would be tempted to mock the ridiculously wealthy). It’s true that Richistanis have spent frivolously. It’s also true that they have donated eye-popping sums to charity. Therein lies the paradox of America’s wealth boom: it not only produces philanthropists like Philip Berber, but also alligator-skin toilet seats. In a way, the tradeoff seems uniquely American.

Rachel DiCarlo Currie is managing editor at the Hudson Institute.