The ultra-wealthy drive the economy. At least, that is what we have been conditioned to think. A new book named “The High-Beta Rich” by Robert Frank challenges those notions, suggesting that superrich individuals also make economies volatile. Among other things, the author of the bestselling “Richistan” focuses on the problems of Aspen, where the arrival of big money and irresponsible spending has resulted in wide-ranging crises in the areas of jobs, housing and tax revenues.
Aspen is currently home to a growing population of superrich individuals. In other parts of the world, that may be good news. But in Aspen, this poses serious worries for not-so-rich locals. Luxury cars, luxury stores and luxury mansions are mushrooming throughout the region. A case in point is that an average home in Aspen, Colorado goes for $6 million currently.
The prosperous city also has the sharpest economic inequalities. While the top bracket have little reason to worry and spend only a few months here annually, lower income groups are getting the short end of the stick. A major debate has erupted over a real estate development in downtown Aspen. A developer incensed residents and political leaders by plans to tear down two historic buildings and build a lavish 31,000-square-foot building that would house, among other things, Aspen’s largest new penthouse, a home occupying 7,000 square feet. Protests from townsfolk has prompted an unexpected response from the developer, who is willing to spare the landmark buildings in return for an exemption of over $4 million in fees.
Mayor Mick Ireland has gone on to call the developer an “extortionist” for this “blackmail”-like proposal. He highlighted Frank’s “The High-Beta Rich” and said, “Aspen can ill afford to see its downtown economic engine converted into a speculative venue for the excesses of an increasingly volatile finance-driven economy.” Whether you agree with him or not, the mayor is aware of the dangers of an economy fuelled by superrich individuals. His aim is not to curb luxury spending, but to “dampen some of the excess”.