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Class Actions
Judy Martel
03/01/2008
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Obviously the U.S. is not the only country bathing itself in an
opulent glow. Burke and others in the luxury industry note a global rise in
demand for high-end goods, notably in countries like Turkey and South Korea.
"Hermès built an enormous store in Seoul that is three times the size of the
Manhattan store," Burke says. China is rapidly moving up to rank in the top five
countries with the largest appetites for luxury goods and the greatest numbers
of high-net-worth households—behind only the United States, Japan, the United
Kingdom and Germany—according to a report published by the Boston Consulting
Group.
 | MAKERS OF affluence: Versace helicopter, Vacheron Constantin
watch, Triton 1000, Hermès bag, diamond-studded phone, Christian Louboutin
shoe. |
Should they choose to do so, the truly wealthy can still
clearly differentiate themselves through their purchases. Recent media reports
tell of a proposed 656-foot yacht, dubbed at this early stage the
Everest, that would have to dock in cruise-ship terminals because its massive
size wouldn’t allow it to squeeze into a typical marina.
The current economic climate may also clarify class lines that
have begun to blur. Ileana van der Linde, a principal in the wealth management
practice at Capgemini, says stock market volatility in 2007 affected the merely
wealthy and the middle class, who typically have more invested in the market. So
these groups might hold back a bit in 2008. However, the luxury market is not
tapped out by any means. Social ambition will remain a powerful driver of
consumer behavior.
Twitchell says we all still celebrate wealth, and will continue
to do so. "The perception of the superwealthy has not changed at all," he
explains. "We went from one type of royalty—defined by blood—to a new type,
which is defined by cash. This group has taken the place of royalty, because
they represent what we are yearning for."
Illustration by Lou Beach.
Judy Martel is a certified financial planner and the author of Dilemmas of Family Wealth:
Insights on Succession, Cohesion and Legacy.
As the market for
luxury goods continues to swell, megayachts and private islands ultimately will
not be enough to distinguish the superwealthy. While the acquisition of material
goods will never cease, author James Twitchell says the more recent leap in
distinctive consumption has been in philanthropy. "We are moving into a curious
world of competitive philanthropy, where you can make a mark. Carnegie and
Rockefeller had very much the same problem, which is, I can get all that stuff,
but can I get a university?"
In the last few years, numerous charities have promoted the
idea of naming rights, giving rise to plaques with benefactors’ names festooning
schools, libraries, museums, parks and more. "If you hold naming rights, you’ve
made a purchase every bit as real as a yacht or private island," Twitchell says.
There are those, however, who apparently don’t care to
participate in the naming game. Warren Buffett recently—and very effectively—put
an end to that particular narrative, Twitchell says, by donating most of his
wealth to the foundation set up by Bill and Melinda Gates. "It was a wonderful
extreme of storytelling," Twitchell explains. "By his saying, ‘You take it and
give it away,’ he effectively ended the story of consumption, like the king of
England abdicating the throne: ‘Here, you take it.’"
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