How the richest 1% live

Global wealth has risen considerably over the last 10 years but this wealth is spread unevenly. The richest 1% have more than 46% of all global assets and the richest 10% have more than 86% of wealth. Here’s a neat youtube video which graphically illustrates this inequality.

So what do the 1% spend all they money on? Lots of things I am sure, but evidence of their ostentatious expenditure is very visible here in the Côte d’Azur and yesterday we had a look at some of their toys. In Port Vauban, Antibes, there is the IYCA (International Yacht Club of Antibes) which is home to the mega-yachts of the super-wealthy. Here are some photos:

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How much does it cost to own a boat like this? Lots. You can search luxuryyachts.com to see how much they sell for. The most expensive that I can find comes in at £119,523,252. Don’t have that kind of money? Well, you can charter them out for your friends and family by the week.  For this 88m yacht which sleeps 12 guests, you’re looking at £855,470 per week. Add to that fuel expenses, food and drink and tips for the crew (usually 10% of the total bill). Your crew will consist of a Captain, first mate, engineer, chef, and numerous deckhands and stewardesses. A superyacht like this can easily have 20 or more permanent staff living on board.

There’s something almost obscene about this kind of money. The people in possession of it do not have any special intelligence or creativity over and above the rest of us. And nor do they work harder than the average person as Gina Rinehart might have us believe. A large proportion of the yachts I photographed on the IYCA are owned by wealthy Russians and I can’t help but wonder whether their wealth was acquired honestly.

35 responses to “How the richest 1% live”

  1. But Gina’s Dad did! Flew his own plane solo over parts of W.A. for years looking for iron ore and then took a punt on the Aussie govt lifting its export ban on uranium. He waited, and waited, for many years. There was nothing to stop the rest of the population doing what Lang Hancock did. I dont begrudge the family this fortune. There was no crime behind it.
    If I had that sort if money, I might go shopping at one of those boat shows. Perhaps your sister could help me choose something nice? “Amnesia” perhaps.

  2. This kind of money fits right in with my fantasy of winning the lottery, I play a whole 4 dollars a week. I would build a 100 percent green self sustained home on 25 acres in the middle of nowhere. Set up trust funds fro my grandkids pay off some of my friends mortgages then donate to some charities and start my own. I wouldn’t want or need all of that fancy crap that just waste resources.

    • That sounds like a really nice way to spend the winnings, Bob. I’m not sure what I would do if I had that kind of money. I don’t really feel that I want for anything at the moment so I don’t buy lottery tickets. I’m just thrilled to have a cool bike that I can ride everyday to be honest.

      • I think being content with what you have is what more people should feel. I know I feel that way with what I have, I just don’t need all of that other stuff. The lottery thing is just a fantasy nothing more 🙂

      • It’s partly because we’re not exactly living in poverty and we’ve also got more than enough money for food, rent and holidays. I know that many people struggle with day-to-day expenses.

  3. I recommend reading Joseph Stiglitz’s new book (The Price of Inequality). It’s very accessible. There’s another good one I’ve just finished, but I’ve forgotten the name. Climate change/global warming aside, I think inequality is one of the great problems that we should be aiming to solve. It’s no good telling people to pull up their socks and work harder to afford what they need if the jobs pay virtually nothing. Furthermore, you then get the irony of the government in the UK supporting those on low incomes while corporations do their best to encourage the government to reduce taxation so as to, supposedly, encourage growth.

    • The same thing happens in Australia. Unfortunately, governments seem to like slashing funding on worthwhile programs that help people move out of the poverty cycle. The long-term costs of allowing disadvantage to become entrenched should be hugely worrying. Thanks for the recommendation re Joseph Stiglitz’s book.

    • Thanks for the book recommendation. It sounds like just the sort of thing I’d like to read.

      Inequality is a huge problem, I agree. It seems to me that large corporations and the mega-wealthy have an undue influence on government. It used to be the church that had this power. Now it’s big business.

  4. It would be nice if the wealth was more evenly distributed. The worry is that the divide between rich and poor is becoming more pronounced. Something is amiss. It’s not in anyone’s interests that this is happening.

    I can’t help but share your suspicions, Rachel, about the source of funds used to buy some of these yachts. Drugs? Arms? mmmmm…..

    • Yes, drugs was my first thought. Are there any mega-wealthy, law-abiding Russians?

      I also agree that the growing divide is very concerning. Inequality is growing when really I think it should be decreasing.

  5. Aw, come on, guys, wouldn’t you enjoy being on one of those yachts just once in your lives cruising around the Mediterranean? And if you inherited a fortune, or anything for that matter, would you turn it down because you didn’t earn it yourself?
    I think people from those yachts hire tuk tuks, too.

    • I think I’d prefer a house boat on the River Ouse for a holiday. I wouldn’t like having all the staff around on those yachts. I’d hate that invasion of my privacy. I also hate the waste.

      • Personally, I love walking. That’s all I need.
        But what about inheriting wealth as Gina Rinehart did? Should that not be allowed?

      • That’s fine. My problem with Gina is that she inherits a fortune and then tells other people they’re poor because they’re not working hard enough. Didn’t she also acquire some of that wealth by taking the inheritance from other people? I’m thinking of her dad’s girlfriend and also her own children but I’m not really familiar with the story.

    • My comments are about the widening gap between rich and poor. Whether or not I would like to go on one of those yachts is irrelevant. Seeing you asked, my answer is that it would be interesting to look inside one of these yachts but I don’t care if I never get the chance. Just as well because I’m sure I’ll never get the chance.

      • I’m concerned about the widening gap also but it doesn’t make me want to attack the rich and make, often incorrect, assumptions about how they got there. To a poor person in Africa, Rachel’s lifestyle must seem like a tale from the rich and famous. We can all support charities by deed and money. So many citizens of Antibes owe their prosperity to that marina!

      • Who said I’m attacking wealthy people simply because they’re wealthy. I’m doing no such thing. I’m merely commenting on the widening and worrying gap between rich and poor. I don’t see why it’s a crime to speculate whether nefarious activities could account for some Russian billionaires’ wealth either. It’s not ‘incorrect’ to do this. Agree totally that we can all support charities by deed and money. I certainly hope some of the owners of the yachts in this blog take your advice!

  6. It is beiing ruthless that is the common factor and can overocome honest intelligent work where the playing field is skewed in their favour, by the governments who are influenced by their weath. Hence it is a runaway system.

    Likewise, it is that same ruthless lack of concern that uses the moeny for toys and trophies.

    Really it has always been like this. In some parts of history, worse. There is the other side which seeks to create balance. The ruthless carry the seeds of their own demise. They don’t know where to stop and generate rebellion. More that this, they do not have the abiding power of fellowship. Compared with our lifteime, the advance is slow and ebbs and flows but it is inexorable. 🙂

    • Hi Graham,

      Yes, I think there is an element of ruthlessness. Not all wealthy people are ruthless though. I do agree with Doug’s sentiments about Warren Buffet and Bill Gates and how much of their wealth is donated to charitable causes. I think that even Warren Buffet complains about how he pays less tax than his secretary. If only more wealthy people were like this!

    • And don’t underestimate her (Gina R’s) abilities, Rachel. Anyone who can inherit 6 billion dollars and turn it into 29 billion is no dope. I’ll bet she worked her butt off doing it! I agree with Doug, Moonbat’s article is full of psycho babble!

  7. Rachel,
    As to how many but not all Russian Oligarchs made their fortune ,see the Wikipedia entry under that title.The suggestion is that corrupt connections with bureaucrats on the break-up of the old Soviet Union saw state assets effectively stolen by some of these characters.
    Now as to “The people in possession of it do not have any special creativity or intelligence over and above the rest of us.”
    Really? George Monbiot’s article does not make even a pretence of making out this proposition .It is a lot of socialist nonsense including profundities from a psychologist.What did the Viennese wit say,”psychoanalysis is the disease that calls itself the cure”.He then links to an article by Mark Ruffalo on Occupy Wall Street..Monbiot then claims psychotics have stolen the wealth of the nation !
    Does Monbiot really think Warren Buffet and Bill Gates have no special intelligence or creativity ?
    By the way ,Buffet is as repulsed by flagrant displays of wealth as you and I are.He has lived in a modest home in Omaha,since 1957.
    To see the “better angels “of Billionaires ,read Forbes -The World’s Biggest Givers.Gates and Buffet are getting billionaires to give to philanthropic causes their fortunes either in life or by will.Some 69 have so far signed up.
    The quote at the beginning of The Godfather is a great one-liner but is not universally true-
    “Behind every great fortune lies a crime”.

    • Hi Doug,

      Yes, I think Bill Gates is probably very clever and this has no doubt contributed to his success. I read a Malcolm Gladwell book a few years ago called Outliers and in it he describes how successful people become successful. Certainly ambition and intelligence play a big role but he also makes the case for things like family, birthplace and birth date. He discusses Bill Gates at length. There’s a review in BusinessWeek here – http://www.businessweek.com/stories/2008-11-19/gladwells-outliers-timing-is-almost-everything – and it specifically mentions Bill Gates.

      I actually thought the George Monbiot article was very good. He discusses the work of numerous people (not just one psychologist as you say) in support of his claim including Daniel Kahneman (winner of Nobel economics prize), Belinda Board & Katarina Fritzon, Paul Babiak and Robert Hare, Branko Milanovic.

      But probably the most important point in his article and the one I wanted to make with my post is this one:

      Between 1947 and 1979, productivity in the US rose by 119%, while the income of the bottom fifth of the population rose by 122%. But from 1979 to 2009, productivity rose by 80%, while the income of the bottom fifth fell by 4%. In roughly the same period, the income of the top 1% rose by 270%.

      My concern is not that some people are wealthier than others but that the gap between the rich and the poor is so huge and growing.

  8. Wow, I can’t even imagine having that kind of wealth. Down at Poole Harbour you can see an array of ‘gin palaces’ as far as the eye can see. I wonder who owns all of them? Maybe the same people who own these here in your post.

  9. Just on 11 years ago, Paul Krugman wrote a cover essay for the New York Times Magazine that included this interesting statistic:

    “Over the past 30 years most people have seen only modest salary increases: the average annual salary in America, expressed in 1998 dollars (that is, adjusted for inflation), rose from $32,522 in 1970 to $35,864 in 1999. That’s about a 10 percent increase over 29 years — progress, but not much. Over the same period, however, according to Fortune magazine, the average real annual compensation of the top 100 C.E.O.’s went from $1.3 million — 39 times the pay of an average worker — to $37.5 million, more than 1,000 times the pay of ordinary workers.”

    Why is a CEO considered to be worth 25 times as much as he would have been 30 years before? This is really the crux of the issue.

    The full essay can be read at: http://www.nytimes.com/2002/10/20/magazine/for-richer.html?pagewanted=print&src=pm

    The Economist this week weighs in to the discussion of returns to capital vs returns to labour,, although it offers no ready answers, http://www.economist.com/news/finance-and-economics/21588900-all-around-world-labour-losing-out-capital-labour-pains

    • Paul Krugman’s article about the explosion in executive compensation is very good and I think I’ve seen it before. But what can be done about it? As Eve says, shareholders are powerless because the board of directors have the final say and they’re the ones who determine what the compensation will be. Krugman describes it as the “invisible handshake in the boardroom”.

  10. As a shareholder, I find most CEO’s salaries outrageous and not at all commensurate with their abilities. They usually perform well in a bull market but subject them to a financial crisis and they are just as hopeless as the rest of us. In fact, some of them turn out to be real dummies. They just looked good in suits and wore trendy glasses from what I could see. Was it this and luck that got them to the top of the corporate tree? Lest I defame anyone, they shall remain nameless. I can’t afford a lawsuit.
    What really galls me though is that shareholders seem to be powerless in trying to reduce the wildy exaggerated salaries and bonuses they pay themselves even when their companies are losing money and cutting dividends. I’ve often supported such motions only to discover them overturned later by the board of directors who have the final say. I do not know what can be done to change this.
    However, not all the mega-rich are such CEO’s, and if there weren’t any special intelligence or creativity involved as Rachel suggests and if it were so easy, we’d all be millionaires!

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