Tuesday, November 20, 2007

Luxury Fever, by Robert H. Frank

Another book by Robert Frank, author of Richistan, which I loved earlier this fall.
Older (well, 1999, but feels like in a different financial era altogether) but very interesting look at some common human ideas about relative income, and why it damages our society for individuals to indulge themselves at the expense of collective gains.
Economist Frank somehow makes some pretty intricate arguments seem fun and lively, and the book definitely gives you some great party-arguing hooks - Would you rather make $100k in a world were everyone else made $90k, or make $110k in a world where everyone else made $200k? Why?
Would you rather live in a 4,000 sq. ft. house with an hour drive to work, or in a 3,000 sq. ft. house with a 15 minute rapid transit commute? And so on.
Mixed in with these fun questions are a lot of staggaring (and honestly revolting) factoids about what the truly wealthy spend (some) of their money on- from Bill Gates' $115 million dollar house (the pool alone cost $6 million) to the disgusting whale foreskin barstools on Aristotle Onassis's yacht Christina.
More importantly, and interestingly, Frank's book from 1999 details what he forsaw as fallout from the ludicrous and selfish excesses of the bubble days- he specifially addresses redshirting, the ( almost entirely) socioeconomically determined decision some wealthy parents make to keep their child out of kindergarten for a year to make them more competitive against their classmates, a problem which many states now are attempting to address with legislation.
He also talks about how individual indulgences (such as driving alone to work) create a massive loss of value (when the air is polluted, etc) without sounding in the least bit preachy.
In another section, he talks about what at least he could see coming- the current disaster with consumer debt and bubbly mortgages, the crisis of school-teacher pay falling relative to other fields, food inspection, and decaying municipal water systems.
Most impressively to me, he talks at length about how deferred bridge and highway maintenance increases costs immensely, and how pressure to balance state and federal budgets lead to decision making that is flawed, at best, and criminally negligent, at worst. After what we saw this year with America's bridges, Frank looks a little like a wordy, number-crunching prophet.
A thoroughly enjoyable book.
Quality: 9 Popularity: 6 Overall: 15
(The popularity thing pains me, but this might not be everyone's favorite book, and the chapter on compound interest almost put me to sleep, until I tried to actually follow the math and woke up!)

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