To balance out my reading, my wife purchased a copy of Richistan for me as a Christmas present. She had heard about the book on NPR and thought it sounded entertaining. And although she didn't mention this specifically, the reality is that someone has to make money before they can give it away. It therefore behooves an aspiring philanthropist to learn about people who make a lot of money.
Wall Street Journal reporter Robert Frank wrote the book because he was amazed at the rate of growth among millionaire households even during turbulent times. He wanted to learn how so many people get rich, how money has changed their lives, and how the newly rich are changing the lives of others. Below are brief answers to those questions:
First, how do millionaires get rich? Lower Richistanis, or people with net worths between $1 million and $10 million, tend to be well-educated professionals, such as corporate executives, physicians, lawyers, or Wall Street types. Middle Richistanis, who have net worths greater than $10 million but less than $100 million, tend to be entrepreneurs and business owners. And Upper Richistan (>$100 million but < $1 billion) is made up largely of people who started businesses and sold them for a large profit.
Next, how have riches changed the lives of the newly rich? Although they prefer to think of themselves as middle class, the newly rich have increasingly busy and complex lives stemming from overconsumption. For example, owning multiple oversized homes leads to the need for numerous household staff, which leads to the need for a household manager, etc. And competition to have the largest yacht has led to disappointment among some owners that when they stand on the decks of their large vessels, they feel "too far from the water." Less than half of Richistanis believe that their wealth makes them happier.
And most importantly, how are the newly rich changing the lives of others? To answer this question, the author provides a profile of Philip Berber, an entrepreneur who made his fortune by selling his online stock brokerage to brokerage firm Charles Schwab. Berber used his money and expertise to form A Glimmer of Hope, a non-profit that focuses on bringing Ethiopians out of extreme poverty. According to the non-profit's web site, Berber funds 100% of the expense, so 100% of outside donations go to fund programs related to water and sanitation, education, health care, irrigation, microcredit, veterinary clinics, and other humanitarian and economic development projects. Since 2001, over 2.2 million people have benefited from Glimmer's programs at an average cost of $8.90 per person. Berber's profile is a fascinating one, and I intend to learn more about his organization.
Richistan is a quick read and an entertaining account of the newly rich, with portraits ranging from flattering to decidedly unflattering. I'm glad I learned about A Glimmer of Hope as a result of reading the book. If you're not convinced you need to spend a few hours reading entire book, instead you may wish to spend some time on A Glimmer of Hope's web site. Heck, with the money you saved by not purchasing the book, you could even donate $25 to help end extreme poverty. That would benefit three people.