The Filthy Stinking Rich Are Creating Their Own Economy

What's there to say about an economy where $190,000 cars sell like hot cakes and half-price Mercedes can't find a buyer? Or where $5,000 earrings can't sell, but $58,000 gold bracelets won't stay in stock?

The ultra-rich have practically bought themselves out of the normal economy, Bloomberg reports, while the rest of the top 10% (those making between $150,000 and $250,000) exhibits the same anxiety and trepidation as the rest of the country.

But why shouldn't the rich have their own economy? For many reasons -- economics of superstars, global capital markets, financial innovation, and so on -- the wealth of the top 0.X% increasingly has nothing to do with the wealth of everybody else.* In April, Scott Winship presented this awesome chart explaining the incredible wealth of the world's billionaires by plotting them along Dubai's Burj Khalifa. The upshot is that the world's 0.01% are so much richer than the 1% that, in the big picture, Mitt Romney joins the rest of the 99.9% in the lobby.

The Atlantic's Matt O'Brien graphed this phenomenon a few months ago when he calculated how the 0.1% were breaking away, not only from GDP-per-capita, but also from the 1%.

Conservatives argue that income inequality doesn't pose a direct threat to the fortunes of the typical family. That might be true. But pictures like this make you wonder why, if we're going to have marginal tax rates, it makes sense to stop under $400,000. The real explosion of wealth takes off in the millions and billions of dollars. The ultra-rich can afford their own exosphere of luxury stores. They can't afford even tropospherical taxes? I've got nothing against super-duper wealthy people effectively creating their own shadow economy. They're earned it, rather literally. But it's weird to witness this breakaway wealth and determine that the way to fix public finances is to ask these people to pay less.

*This isn't even a new phenomenon. From Don Peck's cover story last year comes this finding in a 2005 Citi paper:

In a plutonomy, Kapur and his co-authors wrote, "economic growth is powered by and largely consumed by the wealthy few." America had been in this state twice before, they noted--during the Gilded Age and the Roaring Twenties. In each case, the concentration of wealth was the result of rapid technological change, global integration, laissez-faire government policy, and "creative financial innovation."