Don Weston used to feel special cruising the world in his 100-foot yacht. Yet on a recent morning at the International Boat Show here, the retired Cincinnati businessman stood on his upper deck, overshadowed by giants.
Next door was the Corrie Lynn, a 130-foot cruiser with a king-sized Jacuzzi, five cabins, retractable plasma TV screens and twin jet skis. Down the dock was the 197-foot Alfa Four, with an indoor gym, swimming pool and helicopter pad. The talk of the show was billionaire Paul Allen's new pleasure boat, Octopus, which extends over 400 feet and has a basketball court, music studio and personal submarine. That's about to be topped by a yacht under construction in Dubai for a Saudi client. It's expected to exceed 500 feet, the size of a small cruise ship.
"I used to think I had a good-sized boat," sighs Mr. Weston. "Now it's like a dinghy compared to these others. How big are they going to get?"
The yacht business reflects a new arms race breaking out among the wealthy. With the population of millionaires soaring to more than two million in the U.S., the rich are finding it harder to set themselves apart. Many are turning to supersized luxury consumer products to rise above the pack. Today's super-wealthy, and the companies that serve them, are creating a whole new category of high-end products that are priced beyond the reach of mere millionaires.
Megayachts have grown in size from a typical length of 80 feet to 110 feet in the mid-1990s to well over 150 feet today. The market for luxury yachts has more than tripled since 1997, with some boats costing well over $100 million. Dozens of boats longer than 200 feet are now under construction.
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The luxury boom stems from a huge increase in personal fortunes. The wealth held by millionaires world-wide rose to $28.8 trillion as of the end of 2003, according to a separate Capgemini-Merrill study, up 11% from $26 trillion in 2001. That's more than the annual gross domestic products of the U.S., Japan, Germany, France and the United Kingdom combined. Those at the very top appear to be doing especially well recently. The wealth controlled by individuals in North America with more than $30 million in financial assets -- such as stocks and bonds, but not including real estate -- jumped 45% to $3.04 trillion in 2003 from $2.1 trillion in 2002, according to Capgemini-Merrill.
A generally rising stock market over the past decade, soaring executive compensation, higher real-estate values and lower taxes on the wealthy are all cited as explanations for the rising wealth. Also, more and more entrepreneurs who started family businesses after World War II are cashing out because of industry consolidation, creating what private bankers like to call "major liquidity events." Today's instant multimillionaires tend to be younger than the rich of the past, and more likely to splurge on lifestyle goods to differentiate themselves from hoi polloi affluent people.
Edward N. Wolff, a professor of economics at New York University who studies wealth, likens modern-day big spenders to nobles at the court of France's Louis XIV, who reigned from 1643 to 1715. To ensure the nobles' loyalty, Louis continually raised the "entry price" of being in his court, requiring them to wear increasingly expensive clothes and keep larger and larger homes. The nobles' need for greater wealth made them even more dependent on the king's good graces, and left them less money to spend on arms.
It is obscene for a class of people owning 400-foot yachts with helicopter pads to talk of the "hedonism" of same-sex couples that want to marry.
Here's your real "ownership society." These are the people George W Bush calls his "base," and it was for them he created the biggest deficit in American history by cutting their taxes, growing the government, invading Iraq, and masquerading that he shares the so-called moral values of those with less than eight figures in liquid assets.
