L.A.’s rich give clues as to what direction the new economy may be heading. In the basic idea of free market capitalism those who are not rich still benefit substantially from them, yet that seems to be only true when the rich are getting richer. After all, in bad times the rich have been known to be complete money hoards. And there is evidence of this yet with many of L.A.’s rich buying gold bars, “J.P. Morgan’s Walsh mentioned clients who were buying bars of gold and having them stored under the Thames River in London.” (Lacter, February 2012, p.81). This can’t be any good for those who don’t own fortunes. This type of paranoia is not part of the American entrepreneurial spirit. Yet, the article is also keen to point out; those making more than $200K contribute nearly two-thirds of California sales tax. What this means is there is diverging evidence of the super rich being our benefactors. Although it could be argued that a good majority of those contributing the most to the state’s sales tax are still hard-working business owners. The real question is how can anyone prosper when de facto responsibility for prosperity is placed to those who are the least practical and the most paranoid in hard times?
To further the opposing argument, very pricy real estate hasn’t been selling at all lately in L.A. and Orange County. According to a recent article in the O.C. register demand for cheaper homes has been great while the multi-million dollar homes are not being sold.
“Homes listed for under a million bucks have a market time of 2.82 months vs. 10.26 months for homes listed for more than $1 million. So, basically, it is 3.6 times harder to sell a million-dollar-plus residence!”
Well, that certainly won’t help our trickle-down theory. One countervailing point that would help sustain the overall theory and give credence to the claim that the super rich are in fact our benefactors is their willingness to buy luxury cars. Last year was a spectacular year for car sales, and nothing helps an economy more than luxury car sales. According to Lacter, Porsche sales in Los Angeles are up 21% from last year and 55% overall since 2009. To think that this sort of scenario could happen when real estate turns the corner isn’t far-fetched. Yet, it begs the question, are the super rich movers and shakers or just followers with a vested interest? Lacter would argue they are movers and shakers, according to the article, the number of millionaires had doubled in 18 years. No longer are the days of oil and stock tycoons, those who belong to the 1% are also fresh risk-takers with an interest in serving their communities of which they operate. At this rate of wealth creation Lacter would argue that the overall economy is best served with plenty of rich people.