What It Takes (and what it means)
to be Wealthy Today

Richard Todd

[Richard Tood is a contributing editor of Worth. This article appeared in November 1996]

A look at the top 1 Percent.

I really may take money too seriously. A billionaire told me as much not long ago when he said that he thought we lived in a "classless society." His explanation was that all his friends had a lot less money than he did and yet drove the same cars, went to the same places, and so on. They were all comfortably well off -- professors, artists, doctors -- and what, really, did his extra money buy him? The conversation took sort of a droll turn when the billionaire's lawyer, a friend of mine, gently reminded him of his airplane, and I asked what kind it was. "It's a 727." Still, I had a glimpse of the world through his eyes, and it was a world in which money, after a point, seemed to have only a marginal utility. I myself dwell on money. I think a lot about what it does to people and how very much of it we seem to have in our country these days. I wonder about all these rich people.

Who are they?

The remington, a condominium building, is the newest addition to the Bay Colony community in Naples, Florida, on the Gulf of Mexico. A brochure renders the approach to the place better than I could: "A gracious perimeter wall encloses the entire development; a meticulously manicured entry replete with stately palm trees and luxuriant floral plantings leads to a sentry gate." The Remington itself rises 21 stories from the edge of the water, across from some responsibly preserved "wetlands," a mangrove swamp. In its lobby the building offers another line of defense against something, a security guard behind a reception desk, and it also offers marble floors, heavy silk draperies, and a mlange of English and French reproduction antique furniture. It's a slightly disconcerting structure to find on a beach.

On the 16th floor an unfinished condominium awaits sale, a vast slab of cement 250 feet above the flat blue gulf. Its floor plan is in place: master bedroom overlooking the water, the requisite master-bath complex with its twin sinks and Jacuzzi, a suite of plumbing large enough to accommodate a water-polo team. (One wonders about these bathrooms. Properties like this sell chiefly to buyers of an age when the mirror becomes an inconstant friend at best, yet everyone seems to want an Olympic-sized bathroom.) Two guest bedrooms, a large kitchen and "dining area," a long living room, and a private utilities and delivery hall complete the ensemble. It is hard to imagine the life meant to be lived here, so high above the water, in this urban building sprouting from a mangrove swamp. I ask the price and am told, "This is one-point-six." If I'm interested I should hurry because the building is almost sold out. Everything in Bay Colony sells quickly. The real-estate agent explains, "We have very good product."

One-point-six seems like a lot of money to me, especially for a second home, and I have the idea that an expenditure like this ought to involve sketch pads and site selection and architects. Not to be heavy about it, but it will likely enough be the house you die in -- at least if you die between Thanksgiving and Easter; no one dies here after April, because no one lives here then. But I'm wrong; buying is not a big deal. Plenty of people just take a weekend in Florida to have a look, they've heard of the Bay Colony and know it's "good product," and they call back from Dayton on Tuesday and say, "We'll take it."

Who are these people?

Everyone seems to know, at least anecdotally, as in: "He's a lawyer, and she's a doctor"..."He made a lot of money in cell phones"..."He's a businessman, and she's old money from Cleveland." Around Naples the stereotype is that everyone is from the Midwest. But what is really behind the question "Who are they?" is a simple acknowledgment of wonder: There are so many of "them." So many rich people.

Yes and no. If a couple is buying a vacation-retirement condominium for $1.6 million, you can be reasonably sure of one thing: They are one-percenters. That is, they belong to the group you hear more and more about these days: the top 1 percent of the population, the 2.6 million people (about a million households) who now control some 36 percent of the nation's personal wealth, 16 percent of the total personal income, and over a third of the dividend and interest income.

It is a briefly amusing dinner-table game, as I've discovered in recent weeks, to ask people to guess how much money you'd need to be in the top 1 percent. "Let's see, how low would you have to go," mused a successful venture capitalist, revealing his certainty about his own rank. "I'd say about $25 million." Answers vary wildly, but not many guess low, and the median answer, in my unscientific study, is about $20 million.

The correct answer is considerably less -- between $2.5 and $3 million in net worth. As for income, according to the Internal Revenue Service, the top 1 percent of returns last year were those that listed adjusted gross incomes in excess of $200,000. (These are what you might call entry levels. The mean net worth of the 1 percent stands at about $7.6 million and the mean income at about $675,000.)

People reveal their surprise at these facts variously, but often enough they react with a pleased little downturned smile. "Oh. Well. Then I guess we qualify!" If you are surprised because it seems that not only you but many of the people you know qualify, then you, all unwittingly, are living the one-percenter's life.


The top 1 percent of the richest nation in the history of the world ought to weigh in as a coherent elite of overweening wealth and power, and so it may--but it doesn't appear to feel that way to its members. The WorthRoper Starch survey of the 1 percent found that 57 percent of respondents didn't consider themselves "rich" (and only a quarter thought themselves "upper class"), even though they have a median annual income of $330,000.

The United States has long prided itself on being a middle-class society, an admirable myth in many ways. Also a self-serving one, if you are trying to disguise your wealth. But there's a sense in which some one-percenters who resist the idea that they're rich are scarcely being disingenuous. It is quite possible to be earning around $200,000 a year and think of yourself as "in the middle." James Atlas, the literary critic and journalist, recently described in The New Yorker the plight of parents like him who are coping with the demands their children's New York private day schools put on them. "No wonder those of us caught in the middle--somewhere between the privileged and the working classes -- care so much about which nursery school our kids attend." I don't know the Atlas-household income, but on the internal evidence of the piece (two kids in Manhattan private schools, each with a "huge tuition," for starters) what he is "in the middle" of could not be called American society. But you know what he means! Urban life is especially good at making the nominally rich feel somewhere in the middle, though a good suburb can do the job, too. "Once you buy a Mercedes station wagon," says a fellow who knows the meaning of debt, "you seem to set a chain of events in place." (The Mercedes drives a child to day camp, and a parent at day camp invites you sailing, and sailing introduces you to the yacht club and all these things you can surely afford if you can afford the Mercedes.) "Soon you are balancing on a high wire, with a long way to fall."

Part of the problem is the overhanging presence of those "privileged classes" who never need to stretch for anything. Highly publicized fortunes have their effect on the spirit. I mean not only the Buffett-Gates syndrome ($15 billion each and counting). There is also the incessant news of lesser lights. The new CEO salaries are posted this year: the median is $1.9 million. Lou Gerstner checks in at $10.5 million...Jack Welch at $33 million. ..John Reed of Citicorp at $46 million...Michael Eisner at $8.7 million, which may seem low for Michael, until you realize he has more than $180 million in stock options. The sports pages contain parallel tales, of Tiger's $60 million, of Rick Pitino's 70. And then there are stories about people who until that moment were utterly unknown and will quickly be again, except for one's dim awareness that they are out there somewhere in the night, skinny-dipping in money: "Three at Morgan Stanley received $10 million last year..." It has become a familiar story, but familiarity hasn't made it less significant -- on the contrary, we have read so much about multimillion-dollar "compensation" that we think the people who receive these sums must now be beyond counting. (They aren't. According to the IRS, some 70,000 households filed tax returns reporting incomes in excess of $1 million in 1995. They represent about one 15th of the 1 percent.) A rich man I know with a wry sense of humor had this to say about wealth: "All I know is that it seems to take another digit these days. There are lots of people around here" (we were talking in Florida) "who retired a few years ago with two or three million, thinking they were set. Now they feel poor. Of course, it costs $50,000 to join the golf club now."

When those on the bottom edge of privilege look upward, they have a long way to gaze. The distance from the bottom of the 1 percent to the top is, after all, far, far greater than the distance from the bottom of the 1 percent to the bottom of society. If you were to build a ladder of a hundred rungs, with each rung proportionally representing a percentile of wealth--well, the point is, you couldn't, because even if the bottom 99 rungs were fused into one, the ladder would stretch into the sky la Jack and the Beanstalk.

I observe my lawyer friend as he talks to his client the billionaire. The lawyer is a perfectly anonymous one-percenter, someone who, it's true, owns three houses (but two of them modest vacation places), two upmarket cars, whose children have been expensively educated--but not an ostentatiously rich man. The client has about $2 billion. I reflect on seeing them together: One has a thousand times more money than the other. Someone who has a thousand times less money than the lawyer would be worth about $2,000.

The Roper Starch survey reports an intriguing finding: that a surprising portion (about a third) of the 1 percent thinks the distribution of wealth in the country is "unfair." The result seems to suggest a blossoming of egalitarianism at the top, until one is informed that most of those holding this view are at the bottom of the 1 percent. Some of them (the "guilty rich, " as the survey calls them) are looking downward in sympathy, but others are looking up in resentment. And not a few are doubtless looking both ways at once, with that collision of feeling well described by a woman of liberal sentiments: "I don't deserve what I have, and I need so much more."

I asked a young bond salesman recently what he thought would constitute not riches but security for himself. "Well, I think if I had $10 million to put into tax-free municipals, with about a 6 percent yield, I could be sure I'd have enough to withstand inflation and so on." That is, an annual tax-free income of $600,000 and you can start to breathe easy, but not before.

When you travel in the world of the 1 percent, just as when you are immersed in a city, it becomes increasingly hard to remember that the rest of the world exists. It happens to the one-percenter, too. We live in a Pentium-chip society, a world of a billion social circuits, and you can, with the insulation of money, zip around the country and remain in the same comfortable place, a place of Four Seasons suites, helicopters, $500 dinner tabs. The rest of the world tends to fall away, through no fault of your own. It happens to everybody--your immediate surroundings loom larger and larger until everything else becomes just a dimly perceived backdrop.

Here are some remarks I have heard in recent weeks, all made by people I like, all of them musing about things that didn't seem to them very extraordinary.

A Palm Beach hostess on the cost of living in that town: "It's outrageous. I sent the butler down for a case of wine the other day, and it cost $3,500--the same wine I'd paid $2,100 for a year ago."

A Boston businessman and his wife, talking about the small family foundation they had just established. Husband: "It's just a few million dollars." Wife: "You know, we talk about millions the way we used to talk about hundreds of thousands. It sort of bothers me."

A CEO's widow: "I've never had a worse case of withdrawal than I did when I had to give up that airplane."

A member of the "working rich": "I can retire if I can figure out how to live on $200,000 a year."

Meanwhile, however dimly visible, the rest of the world is out there.


As a measure of the distance the 1 percent enjoys from society as a whole, consider some basic facts. The median household income is about $31,000, and median household net worth (including real estate and personal property) is about $51,000. About 60 percent of all American households have liquid assets of less than $10,000. These are the sorts of numbers one passes over in the newspaper, but it is worth considering them for a moment. For the 1 percent, $31,000 is an income so low that it is hard to imagine. (Asked in the Roper survey what they could "get by" on, the respondents said, on average, $80,000, but one wonders.) For many people, and not just one-percenters, $31,000 is a price tag, not a salary. It buys a low-end Land Rover, a year at Brown, a wedding, a dozen or so Prada dresses.

It has become a commonplace that the distribution of both wealth and income has become more lopsided in recent years, and the growing gap between rich and poor has become an almost ritualistic cause of concern. That wealth has accreted at the very top is beyond dispute, though interesting skirmishes are fought over the numbers.

Perhaps the most convincing account of the gilding of the 1 percent has been written by Edward N. Wolff, an economist at New York University, in his book Top Heavy and in subsequent research. Wolff notes a simple set of statistics that serves as a benchmark: Mean wealth in the country (now more than $212, 000 per household) has risen steadily, but the median has dropped (to about $51,000). In other words, more money is going to fewer people. But these numbers don't reveal how the wealth is distributed. The details are quite impressive. Between 1983 and 1992 (the last year for which fully analyzed figures are available from the Federal Reserve Board's consumer-finances survey), virtually all gains in wealth went to the top 20 percent. (The next two-fifths stayed about even, and the bottom two-fifths actually got poorer in constant dollars.) Of those gains, almost two-thirds went to the 1 percent. The bottom 20 percent of the population has a negative net worth, and the bottom 60 percent accounts for about 7 percent of total net worth. Financial wealth (liquid assets) has grown even more for the 1 percent during recent years. By 1992, the 1 percent owned 46 percent of all household financial wealth in the country. (The top 20 percent controls an astonishing 92 percent of all financial wealth, leaving 8 percent of that particular pie for 80 percent of the people.)

What to make of these facts? For many, they spell the loss of something vital in our national life, the steady upward progress of the middle class. As he left his post in January as secretary of labor, Robert Reich put this argument eloquently: "In the America of my youth we were growing together.... The remarkable thing about the first three decades after World War II is that prosperity was widely shared. Most people in the top fifth of the income ladder saw their incomes double, and so did most people in the bottom. ...[Today] all the rungs on the economic ladder are now farther apart than they were a generation ago and the space between them continues to widen."

It is the implication of Reich's remark that it doesn't really matter how much richer the rich get if everybody else is getting a little richer, too. We have staked a lot on the idea of opportunity, and it is remarkable how upward movement can sustain not only an individual but a society. Such was the magic--one is tempted to say the mass delusion--of the postwar years.

I have just had the curious experience of re-reading one of the most influential American books of the era, whose title embodied our self-concept, John Kenneth Galbraith's The Affluent Society. According to Galbraith, by 1958 the age-old problem of production had been solved in America: Almost everyone had enough of everything, or soon would, and our social mission was to turn to higher things--creating good schools, clean streets, improved housing. As late as 1966, it was possible for Time magazine to predict that "by 2000 machines will be producing so much that everyone in the U.S. will, in effect, be independently wealthy." Galbraithism was a classic case of mistaking the trend for the fact: Because wages for the poor and middle class were rising, they would continue to do so. Indeed, we might as well assume that we had arrived where we were headed. We were an affluent society. (There were startlingly few dissenting voices to this view. Even Michael Harrington's landmark book, The Other America, discovered poverty as a nasty exception to the general rule. No one paid much attention to the 1 percent either. In those days they were anomalous or vestigial figures--East Coast snobs or Texas millionaires--in a middle-class society. But it is interesting to note that in 1958, the year The Affluent Society appeared, the 1 percent controlled about 34 percent of personal net worth, just a bit less than it does today.) By 1973, median family income (in inflation-adjusted dollars) had ceased its long sustained climb and began to stagnate. It is also true that by this time there had been a dramatic shift in the percentage of wealth controlled by the 1 percent: from 34 percent to just 20 percent. But the cause of this was not primarily increases in income at the lower end of the scale. There was another, far more important economic condition at work--"stagflation." The stock market was languishing, but many prices, notably housing prices, were rising, as they had for decades. Few remember those days with nostalgia, but it's possible that the middle class should think again. Many a retirement nest egg was secured by the long upward march of real-estate values. It turns out that over the decades a major factor in determining the relative wealth of the top and the middle of society is the ratio of stock prices to housing prices. The apparent leveling in the early 1970s had a lot to do with the inflated real-estate market combined with the depressed stock market, and much of the rise in inequality in recent years is accounted for by the reversal of those conditions. But the early 1970s were truly an exception in terms of the relative equality of the classes. It is important not to forget that for more than 150 years, ever since the full-fledged industrialization of the country, through boom and bust, under Republicans, Democrats, or Whigs, the 1 percent accounted for 25 percent or more of the nation's personal wealth. We notice the 1 percent now as it seems to leave everyone else behind, and it is tempting to think we are living in another Gilded Age, when the 1 percent controlled nearly half of the household wealth. We are about ten percentage points short of this record, and on our current trajectory we would arrive there shortly after the turn of the century. Now, as then, people are famous essentially for being rich, and huge fortunes seem made out of thin air: The emblematic fortunes, Buffett-Gates, just like Carnegie, Rockefeller, and Morgan before them, derive from technology or financial wizardry. And now as then, money tends to trump all else.

Although individual fortunes may have been more spectacular in the Gilded Age, as a group the rich have gotten richer. They have also, of course, gotten more numerous. The Mass Elite I awake one morning in the Delano Hotel, in Miami Beach, and all around me see nothing but white: It is the style of the hotel. White floors and walls and furniture. The strange, austere bathroom, with no place to put anything, is all in white, too. I am thinking, in a kind of abstract way, about suicide. I don't mean that I really want to kill myself, just that the first image in my mind is of hurtling to the beach 14 stories below. It is only several hours later, when I tell a Miami friend where I'm staying, that I understand why. The Delano is high fashion, a creation of the brilliant designer-entrepreneur Ian Schrager. The rooms cost about $300 a night, and the white-jacketed doormen love to tell you which stars have just checked out. My friend is not impressed. "It's kind of like an asylum, isn't it?" she says. And that's it; that's why I was thinking about suicide: It just seemed the appropriate thing to do. So many rich people, and the Delano is a cozy home for some of them, for guys in sandals and black T-shirts, their gray hair drawn into ponytails, women with proudly ungovernable frizzes, wearing black dresses from some Moroccan marketplace. Record producers, agents, hippies who got rich selling carrot juice. Whatever. One-percenters all. So many rich people, and those who understand how to sell things to them realize it's not enough to target the affluent anymore.

It is now a matter of niche-marketing to the rich. Ian Schrager understands perfectly. With the Delano, he has created an anti-hotel for people who disdain conventional luxury. It could not exist without the existence of the Ritz. (The ultimate Schrager experience will be called the Bellevue, and you will sleep in beautifully lacquered metal beds on wards, and muscular men will hose you down in shower rooms.) My problem with the Delano is, as they say, my problem: I am out of my niche. In Naples, my warm real-estate agent had tucked a breast into my arm and confided, "You're Naples people," and God help me, she may have been right. The tent of the 1 percent is a big tent, and there is room for all sorts inside. One percent is a small part of anything, but absolute numbers count, and 2.6 million people take up a lot of space, especially when many of them can afford to maintain two or three houses.

If you have not yet gotten your solicitation for the new magazine Golf Course Living, that may be because you are known to be a yachtsman or you spend too much time on international fly-fishing trips. The two and a half million richest Americans make up a diverse enough group so that, to one another, they do not look much alike--indeed, they give a fair amount of emotional energy to the distinctions among themselves.

Not long ago, Martha's Vineyard and Nantucket were two bucolic little islands that in summer attracted a laid-back assortment of the Eastern rich. Today they are fiercely desirable ground, but different: Nantucket heavily corporate, the Vineyard more literary and liberal. In the eyes of anyone who has read Marx, these distinctions are ludicrous. In summer, the average net worth on either island is well into 1 percent range, yet residents of each have disdainful views of the other island. Each thinks the other is full of elitists.

In a lighthearted book a few years ago, called Class, Paul Fussell set out to delineate the social structure of the country, and--taking issue with the usual three-tier system--he proposed nine levels, from "bottom out-of-sight" to "top out-of-sight." Writing today, Fussell would, I expect, want to complicate things considerably. The old markers--school, parentage, accent, manners, taste--still count, but they are confounded by the new amounts of money involved. The waning of a cozy, homogeneous upper-class life only fuels people's acquisitive desires. A billionaire lights up the room in a way that the fairest-haired Groton old boy no longer can. At the end of the Palm Beach winter season, I met an old-money clubman who lamented that "many of the nicest people can no longer pay the dues." We are witnessing, according to David Frum, a conservative thinker at the Manhattan Institute, "history's first mass upper class....Nothing like this immense crowd of wealthy people," he says, "has been seen in the history of the planet."

Frum's larger point is that this "mass upper class" is a triumph of American capitalism and that those who mock the new rich fail to see that they are viewing an economic miracle. Perhaps in the end wealth is in the eyes of the beholder, but in the eyes of those who are earning and spending this new money, what appears to be happening is a constant upward redefinition of the middle class. Large numbers of people living in apparent luxury no longer seem so rarefied, and their presence stimulates restlessness and desire among a middle class that used to think of its own life as the norm. This is perhaps the real meaning of "the mass elite."

If the 1 percent cut a fairly wide swath, the top 10 percent are themselves disproportionately visible--and we are now talking about a truly substantial number of people, some 26 million of them. Many of the things the rich do at will--fly to Europe--the prosperous do less frequently. But the impression to the onlooker--the true middle class, which can't afford the trip--is of an awful lot of people who can fly to Europe. Thus is ambition, upward-longing, stimulated. Seen from high atop Marketing Mountain, this is a truly glorious system, breeding constant, self-replenishing appetite.

From the top of Philosophy Mountain the view is less happy--a land of continual discontent. A rough narrative of the progress of American life, one that we all carry around in our heads, tells of the insistent democratizing of the society. In many ways it is true. Think of the class barriers that have fallen--barriers of accent, of dress, of all sorts of permissible behavior among people of different social stations. Society has grown less formal, less self-evidently hierarchical in the time that anyone now adult has been alive. Nobody is immune from being first-named by a stranger on the telephone, and the guy sitting next to you in business class may be wearing a T-shirt--you may be wearing a T-shirt. Our richest man and our president are two guys who would just as soon have you call them "Bill." In these and countless other ways our society has become more egalitarian. Yet a strange thing has happened to relations between the economic classes. As everyone aggressively asserts his equality, we lose the ability to talk about our inequality, that is, to identify our class interests.

In the Gilded Age, benighted as it may have been, populist sentiment flourished. William Jennings Bryan wasn't going to be intimidated from giving his Cross of Gold speech by a rival's accusing him of fomenting class warfare. But that charge awaits any politician today who even speaks of raising taxes on the wealthy. As late as the 1940s it was possible to talk without irony of "soaking the rich"; today we are all, in effect, trickle-down economists. In 1954, the highest marginal tax rate was 91 percent, for incomes over $200, 000. Writing a few years later in that decade, Galbraith noted that a significant reduction in this rate was simply not politically supportable. Shortly after that John Kennedy began the long process of disassembling the progressive income tax that continues, with lurches back and forth, to this day.

One can argue about the effectiveness of the high tax rates of mid-century, one can even accept that they served only to spawn loophole navigators, and yet one can still feel an odd wistfulness for this system--not for what it accomplished but for what it expressed in terms of society's sense of the seemliness of high incomes. With the depression still in mind, the tax code seemed to say that there was a social limit to inequalities of reward. And even if a dozen ways, like the notorious oil-depletion allowance, were found to circumvent the law, the law nonetheless surely had a restraining effect on what was paid. In 1954, a board could plausibly say to its president that compensation in excess of a million dollars was rather pointless, since the government was just going to take 91 percent. It seems reasonable to think that with similar rates in place we would now see fewer $8 million point guards and $12 million CEOs. But maybe this argument is purely circular.

Current law reflects popular ideas. Little enthusiasm appears to exist for higher taxes for the very rich. Edward Wolff, the NYU economist, has advanced the notion of a wealth tax, modeled on similar taxes in some European countries, such as Switzerland. The tax would assess a small percentage, starting at 0.05 percent for household wealth between $100,000 and $200,000, graduating to a maximum of 0. 3 percent for wealth above $1,000,000. At these painless levels (about two-thirds of American households would pay nothing; a family with a net worth of $500,000 would pay $1,000) it would raise $40 billion annually. Such a tax presents all sorts of practical problems (chiefly having to do with assessing wealth), but the real hurdles are political. Wolff says he found a supporter for his plan in Congress--Bernie Sanders, the former "socialist mayor" of Burlington, Vermont. It is hard to imagine that Trent Lott will get on board.

Why is there so little sense of resentment toward the imbalance of our society? Is it possible that we, or some significant part of us, may want a world of outlandish compensation at the top? Do we, in an important part of our heart, think the rich deserve their money? The New Snobbery Dining alone one evening at the folksily elegant Alexis Hotel in Seattle, I find myself becoming aware of a conversation at the table next to me. The tone reaches me before the words, and a glance at the participants reveals the essential dramatic situation. The players: a middle-aged couple and two boys, or young men. One is clearly their son, the other a friend of his. The friend is getting special, respectful attention from the parents. They are oddly deferential to him. It would seem odd even if the boy were not wearing a baseball cap during his $300 dinner. The son, discomfited, is cracking jokes. If you are old enough, you have probably acted each part in this play at one time or another. I turn to the Pacific Coast creation on my plate: quail with a mango sauce--good restaurant. Words float over to my table. The young guest speaks of his new apartment, his new car, his travel, and finally of the company that provides all this: Microsoft. It is a little later, when the son has briefly left the table, that the parents ask the question they have clearly been dying to ask from the start: Do you get your stock options right away? A perverse genius is built into our culture. At the small price of making ourselves a little bit insane, we maintain social order and make our economic engine work very well. The genius part is self-blame.

In a land of opportunity--and who, looking around at the bizarre successes that sprout up everywhere, can deny that it is a land of opportunity?--if you are not rich it's your own fault. If there is a consensus in our country about what constitutes fairness it would go under the currently fashionable name "meritocracy." This is the condition that supposedly results when the barriers to success that have marred our system--prejudice against race, religion, gender, reliance on old-boy networks--are removed. It is the triumph of innate worth, talent and intelligence, and, of course, their earnest little brother, hard work. In our sunnier moments, we congratulate ourselves on having gotten closer to this ideal state of things. Meritocracy is the ideology of the technological West Coast, of Silicon Valley and the new Northwest. It is increasingly the ideology of all major corporations, as business becomes ever more "knowledge based," "information driven." It is the ideology of our colleges and universities, which ironically have only made the credential they offer that much more a dividing line between haves and have-nots.

Never before have smart and rich been so nearly synonymous in the public imagination. (In Douglas Coupland's entertaining novel Microserfs, we learn that "in the Silicon Valley the IQ baseline (as at Microsoft) starts at 130, and bell-curves quickly, plateauing near 155, and only then does it decrease.") It is a belief in the power of meritocracy that allows a middle-aged couple to devalue the wisdom of a lifetime and defer to a kid in a baseball cap with a high IQ and stock options. And it's this ethic that helps the very rich to feel deserving.

The history of the word "meritocracy" deserves mention. Most words begin life simply and take on whatever ironic connotations they may acquire with use. With "meritocracy" it's just the opposite. The British sociologist Michael Young coined the term in 1958 in a spirit of mordant satire. First Americans, then the British, adopted it as a virtue. Young's book, The Rise of the Meritocracy, 18702033, depicts a dystopian world of the future in which society is in fact sorted out according to intelligence, level of schooling, and training. At length a rebellion occurs--but the bright and obtuse narrator goes to his death not able to understand why. What the rebels want, according to their "manifesto," is a world in which, "were we to evaluate people, not only according to their intelligence and their education, their occupation and their power, but according to their kindliness and their courage, their imagination and sensitivity, their sympathy and generosity, there could be no classes." The book is forgotten; the word lives on, stripped of its irony.

It seems that we move closer and closer to a market-economy world, in which people are judged--in which we judge ourselves--on a single axis. The simplest way to describe the axis is, of course, money--the pursuit of which never seems to cease, not even at the top. Ted Turner's famous diatribe about billionaires afraid to slip down a notch on the Forbes 400 list plainly drew blood. Lawrence Ellison, head of Oracle, is notoriously rivalrous with Bill Gates. Asked what it is Ellison feels, exactly, toward Gates, a friend of Ellison's in the industry replies, "Well, I don't know that there's a word for it. I mean, how many times in history has somebody with $7 billion been unhappy because he doesn't have 18 billion?" Something has changed about the way we think of money. It is hard to define, but to try to get at it, imagine a woman on a yawl at anchor in Pulpit Harbor, in Maine, on an August morning. Call her Phoebe. She is having her morning coffee on deck, her legs stretched out on the cockpit cushions. Her beauty, which is considerable, suggests another era--her thin lips, her prominent nose--but she's just barely 40. She grew up on the Massachusetts coast, the 14th generation of her father's family to do so. He's a (now retired) classics professor, and the guardian of an old China-trade fortune, which did very well on his watch. Phoebe has had a Boston education, a Boston life: Winsor School, Harvard, Harvard Law, married at Trinity Church. Her biography qualifies her as one of that class many people claim does not exist: an American aristocrat. There is one other fact about her: She left her law firm after just two years to work with (and bankroll) a little company founded by three guys from MIT. They now produce a cloying, but extremely successful, computer game for children. She has turned her $5 million trust fund into nearly $100 million, and the end is not yet.

How you think about this life suggests something about your attitudes toward money and class. Once, many people would have disapproved of Phoebe's turn to commerce: The point of having money was to free yourself for other things, a life of art, service, pleasure, perhaps work in a profession. Why should this elegant woman contribute to the national glut of junk? But this Jamesian view of life, which implies an upper class, even an unapologetic leisure class, has few current advocates. I think that for most of us now, Phoebe's new fortune enhances her, makes her more interesting, even redeems her. She "did it on her own." The entrepreneurial virtues dominate our culture, and it is hard to resist them, hard even to see sometimes how completely they have permeated life. Indeed, even those most cosseted of people, CEOs, perhaps the most secure people in the history of the world, like to style themselves as "risk takers" and justify their pay accordingly.

It is fashionable now among entrepreneurs to take the position that they will leave little or nothing to their children. This always seems kind of virtuous and bracing, until you realize they're really saying that they can imagine no higher calling for the next generation than doing it all over: making it again.

The American Dream

I was sitting at a Washington, D.C., dinner party in the middle of a conversation (a conversation I had initiated) about the rich. As is customary, everyone around the table was pretending that he or she wasn't rich. A nice woman to my left was lamenting the excesses of somebody and then of somebody else, and I was matching her, and we were just generally on the side of fairness. A fellow to her left, an entrepreneur, intervened with a burst of what I took to be candor. "Let's face it," he said. "In this country the destructive behavior is done by the bottom 5 percent. The productive behavior comes from the top 5 percent. Everybody in the middle just eats the food." Stark and ghastly a vision as this may be, it had the virtue of explicitness, of saying something that one often senses at the top ranks of our country but seldom hears: a true abhorrence of the people in the middle. The entrepreneur went on to say that in the end he couldn't take inequality very seriously because of the great saving grace of our society: mobility. The ability of the "productive" to rise to the top. It is an argument, living where and as we do, that has to be taken seriously.

The Wall Street Journal recently proclaimed the american dream lives above a piece about a longitudinal study of economic class over some 15 years. Between 1975 and 1991, the story said, almost 30 percent of those in the bottom fifth had risen to the top fifth. About half of the billionaires on the 1996 Forbes 400 list are there by virtue of money they have made, not inherited, and virtually all the very largest fortunes are "first generation. " (To be sure, many on the list came from comfortable upper-middle-class upbringings.) This sort of data, and the rags-to-riches anecdotes we encounter almost daily, are seductive. It is important to remember that figures on income inequality are not static, that when you speak of the poor you are speaking about some people, anyway, who one day will be rich.

Net worth typically rises over the course of a lifetime, but the median household net worth of those for whom the mobility game is over--people at retirement age--is just $92,000. But debates like these--the American dream is dead; no, the American dream lives--leave something out. Why does one wince a bit at the very phrase--only because it has become such a clich? I did not fully know what I found so unsatisfying about this argument until I encountered a passage by the late Christopher Lasch, in his book The Revolt of the Elites and the Betrayal of Democracy, reminding me that, once, the American dream had meant something nobler, the belief that in a democratic society equality refers to more than opportunity. Lasch refers to the most important choice a democratic society has to make: "Whether to raise the general level of competence, energy, and devotion--'virtue,' as it was called in an older political tradition--or merely to promote a broader recruitment of elites.

Our society has clearly chosen the second course... generating social conditions in which ordinary people are not expected to know anything at all." In many ways we live in a thrilling society. On a day in spring, I have lunch at a club in San Jose, California, with a man who embodies American opportunity--a Korean-born software entrepreneur just months from taking his fledgling company public. He speaks of the hopeful engineers who came to the valley willing to work for stock options. It is another heartening story of wealth being created by intelligence, initiative, energy. Later, driving to San Francisco, I stop on a ridgetop and look out over Silicon Valley, the bright green hills torn by new construction--a sensuality in that sullied landscape, like a mussed silk blouse--and though the agents of change are technology and money, they seem here as irresistible as nature itself. But the fragile idea that there is an equality based on worth that transcends net worth, the original American dream--what place does it have here? How much success, how many billionaires, how large and prosperous a "mass elite" can it survive? When it disappears entirely, we will all suffer equal loss--the 1 percent no less than the rest of us.