The start of the new year is a guilt-filled occasion: People spend less after the glut of the festive season and sign-on to gyms and diets to shed the weight gained.
The wealthy are also starting the year feeling guilty, but for very different reasons. After growing public resentment against the rich, many are starting to feel guilty for their excess. This ‘wealth guilt’ is not new, but it is stronger now than ever before.
A Short History of Wealth Guilt
The English taboo of not discussing money was punctured by the ‘greed is good’ mentality of the 1980s. It was an era when city brokers and Greek shipping magnates popularised ‘super’ yachts and technology became a status symbol.
Aristotle Onassis’s popularised the ‘super’ yacht with his Christina O. (Photo: Ron Galella/WireImage)Getty
Then came the turn of the Russians and Arabs. With wealth earned from privatization and oil, respectively, they bought yachts, mansions and jets, images of which permeated European culture with fanciable ideas of wealth. ‘Luxury’ became a commodity that everybody aspired to. Wealth was flaunted during a time when rising incomes meant everybody was living well.
The global recession of 2008 put an end to that. The crash in global markets hit the pockets of the wealthiest as well as the poorest. For a few years, being rich was not cool.
But the ten years since the recession has seen the wealthiest grow their wealth faster than everyone else. According to a report by Credit Suisse last year, the top 1 percent of global wealth holders held 42.6 percent of all household wealth in 2008. This rose up to 47.2 percent in mid-2018.
Last week the British charity Oxfam released figures showing that billionaires’ wealth increased 12 percent in 2018 while the poorest half of the world’s population saw theirs fall by 11 percent.
“Austerity in rich and poor countries alike following the global financial crisis of 2008 has overwhelmingly protected the interests of the rich while cutting back the public services and social protection upon which the poorest and most vulnerable people depend,” says Oxfam’s report.
The post-recession era was also one of social media. Many of the newly minted flaunted their wealth via Facebook and then Instagram (the latter with the ‘Rich Kids of Instagram’ trend).
Populism has now checked that ostentation. Left-wing political parties are growing more popular throughout Europe on an anti-austerity, anti-wealth ticket.
The Global Wealth Clash
Jeremy Corbyn, leader of the U.K.’s Labour Party, recently told his supporters, “The very richest in our society have had tax breaks, giveaways, and tax havens. I tell you what, they’re on borrowed time.”
This has caused serious concern among wealthy Brits. In a poll of high net worth individuals (HNWIs) last year, 42 percent of respondents said a change of government was their biggest financial concern.
British wealth manager Sanderson House, which conducted the survey of 200 wealthy residents, said, “fears over a change of government largely relate to the prospect of a radically changed tax landscape under a Corbyn-led Labour government.” This ‘new landscape’ would see taxes directed at the rich.
In France, the yellow vest (gilet jaune) protesters shut down France last year over fuel tax hikes. However, their real gripe was with president Emmanuel Macron, who they labeled, “president of the rich”. As protests thundered down the Champs-Élysées, luxury boutiques shuttered their windows and expensive cars removed elsewhere.
A ‘Gilet Jaune’ or ‘Yellow Vest’ protestor confronts a line French Riot Police at the Arc de Triomphe in Paris, France. (Kiran Ridley/Getty Images)Getty
Even the wealthy in non-democratic countries are considering their spending. In Saudi Arabia, the rich are leaving their private jets at home (or at the airport) in order to avoid unwanted attention. Reuters has found dozens of planes stranded at airports across the Kingdom. Quoting unnamed sources the news agency said, “Saudis who either face travel bans or are reluctant to fly the planes because they are wary of displays of wealth that might be seen as taunting the government over the anti-corruption campaign.”
Private jets belonging to Saudi Prince Alwaleed bin Talal sit on the tarmac at the private aviation terminal in Riyadh, Saudi Arabia. (Waseem Obaidi/Bloomberg)BLOOMBERG NEWS
It is a similar situation in China where an anti-corruption clampdown implemented seven years ago still checks lavish spending. Wealthy Chinese leave their shopping sprees to trips abroad either in Hong Kong or Europe.
Money Is No Longer Cool
A recent survey of Americans with assets ranging from $1 million to $20 million found almost a third (30 percent) identified one of the main negatives of being wealthy as ‘people judging their status’.
Another survey by Y Pulse, a market research firm, found that 81 percent of 13 to 34-year-olds agree that showing off expensive things on social media is ‘not cool’ anymore. The Rich Kids of Instagram have had their day.
Luxury brands now sell streetwear like this Gucci denim jacket in the streets of Paris before the Heron Preston show. (Claudio Lavenia/Getty Images)Getty
Rich Lives In The Shadows
While a few aged oligarchs and tarnished tycoons will stick to their super-yachts and cars, unable to drop their rich addictions, most wealthy Europeans will be living different lives in 2019.
Brand agency, The Future Laboratory calls this movement ‘uneasy affluence’. Writing in their Luxury & Hospitality Futures report, Elizabeth Currid-Halkett, author of 2017 book The Sum of Small Things, said, “It’s creating a cultural shift. There’s a disdain towards overt materialism and a shying away from showing off wealth. It’s not attractive to show your social position in that way.”
Luxury firms have already cottoned onto this. Gone are brands and bling. Streetwear and athleisure (athletic wear) are now their fastest selling products. If shiny things must be bought most luxury stores provide customers with the option to do so behind closed doors in personal shopping suites. Major auction houses provide private rooms from where serious collectors can bid through one-way glass.
Entertaining is now also done behind the closed doors of private clubs. A surge of membership clubs across European capitals allows wealthy attention seekers to show off only to their own.
Shoreditch House is one of many private members clubs that have opened in London in the past few years. (David M. Benett/Getty Images)Getty
While sales in luxury cars have been rising, those driving them are starting to feel self-conscious. “I parked my Rolls [Royce] in Soho the other day. And when I came back someone had keyed ‘rich twat’ on the paintwork”, moaned one Londoner who announced he was going to buy a “banger” to drive to less salubrious locations from now on.
As wealth guilt permeates the 1 percent of the world’s richest there will be fewer displays of ostentation. But there is an age-old solution for the guilt-ridden rich. Spend less money on the cars, yachts, and mansions that symbolize excess and more on solving the world’s problems.
Research shows that some of the wealthiest donate less than the average person. Now more than ever is the time to reverse that.