Editor’s Letter, November 2011: Sarah Fulford on the New Gilded Age
It’s been a good decade for the ultra-wealthy. The global financial meltdown of 2008, which wiped out the retirement savings of so many Canadians, has not resulted in major long-term suffering for the super-rich. In fact, the extremely rarefied world of private jets, luxury vacation homes and trust funds is flourishing. For several years, I’ve been reading about the growth of the upper reaches of the upper class and the way wealth in North America is collecting more and more in the top one per cent.
My favourite article in a sea of articles covering this topic was a piece in The Atlantic by the Canadian-born journalist Chrystia Freeland called “The Rise of the New Global Elite,” in which she depicts an international set of mega-millionaires who enjoy lavish lifestyles and the privilege of influencing public policy at chic idea-exchanging conferences in Davos and Aspen.
Yet none of the reports I’d read really sank in until last spring, when the penthouse condominium atop the yet-to-be-finished Four Seasons tower here in Toronto was sold to a mystery foreign buyer for a staggering $28 million. It was the highest price ever paid for a condo unit in Canada. It appears the new global super-elite have landed.
Owning property, penthouses or otherwise, is increasingly becoming a privilege of the wealthy in Toronto. According to a report prepared by the Toronto Community Foundation, housing has moved from “seriously unaffordable” to “severely unaffordable”—which sounds like a bit from a comedy routine, but probably isn’t so funny if you make an average income and want to buy a place in the city where you work. Some residents are opting for unconventional solutions. In this, our annual money issue, we zero in on one community that has figured out where to find a decent-size home in the GTA for less than $150,000 (“Going Mobile,” page 64).
The divide between the rich and the poor is growing so rapidly that even Tory leaders talk about it now. Tim Hudak on the campaign trail: “Middle-class families like the one I grew up in were never rich, but led economically comfortable, secure lives. But in the last 10 years, we have seen a hollowing-out of the middle class.” The Ontario election was a competition to establish which leader could best appeal to the financial anxieties of the economically stretched working citizen. Average incomes in Canada have grown a mere nine per cent in an entire generation, except among the super-elite; for the top one per cent, the average income has doubled. As you can read in the article about Peter Munk’s newly developed port in Montenegro (“Destination Munkistan,” page 54), the big problem among the ultra-wealthy is finding a place that isn’t too crowded to dock their yachts.
A report called “The Rise of Canada’s Richest 1%,” prepared last year by the economist Armine Yalnizyan for the Canadian Centre for Policy Alternatives, shows that incomes haven’t been this concentrated in the top one per cent since the years before the Great Depression. Yalnizyan also notes that the richest Canadians are increasingly reliant on incomes from their jobs. I found that part particularly interesting. For the first half of the 20th century, the richest one per cent relied heavily on returns from investments or rents from real estate. Today the richest Canadians generate most of their wealth from the work they do (in other words, they work for their money instead of the other way around). That shift is illustrated vividly in our cover story (“The Loaded List,” page 46), a salary survey of some of the city’s best-paid people.
(Image: Nigel Dickson )