Tokyo’s Many Millionaires: An Egalitarian Elite
Ok ‘egalitarian’ is stretching it a bit. And adding the word ‘elite’ makes it a bit of an oxymoron. But we’ve got your attention! Nevertheless there are some quirky nuances about Tokyo’s upper echelons to consider that ultimately impact all facets of consumer behavior across Japan (and in some respects globally). Their spending habits aren’t necessarily that of an exclusive subset of ultra-elite, far-removed from the rest of society. Instead the way they move their dough around is much more interlinked with society as a whole.
Consider the following: Tokyo is home to more millionaires than any other city on earth according to the Economist. But it’s not necessarily the playground of the truly rich. London has the highest number and concentration of ‘super rich’ individuals (those considered to be worth 30 million USD and above) despite having a far smaller population. That’s before Brexit anyway! For the ultra rich, New York still comes out on top for the highest number of billionaires with a total of around 80. And there are several cities in Asia, Europe and the US with more ultra rich than Tokyo by a long shot. Despite being the largest metropolis in the world by population and a rather prosperous one at that, Tokyo only comes in at around 17 on the billionaires list.
But it’s that large number of millionaires that really bring us to that ‘egalitarian’ analogy. Japan has long been thought to be less stratified than other economies; being more comparable to Scandinavia. That’s changed quite a bit since the Bubble no doubt and many lament the growing income gap, especially among youths. But there’s something in the way that millionaires spend their cash here that really does help to keep overall consumer spending afloat. No they’re not jet setting, buying the 50,000 acre ranch, the Rolls-Royce or even hoarding a Patek-Philippe Nautilus in their dresser drawer. They’re not the nouveau riche, the tech entrepreneurs or the bankers. They are on the older side and sure they’ve been accused by economists as being a bit too frugal for the nation’s good. But they are indeed spending and that will only increase. With Japan’s estate tax being 40-50%+ for those with 1 million USD more in assets, they are starting to spend it in two major ways:
Firstly, they’re spending on themselves. While they are not engaging in brash displays of conspicuous consumption, they like to be pampered and tend to go about it with a unique sense of Japanese subtlety. That is, except for that gold-trimmed Lambo hidden in the basement car park! Seriously, you will definitely find them out at the finest restaurants, getting spa treatments at the most upscale resorts, traveling often and buying loads of branded souvenirs for loved ones, as well as looking for an ever-widening array of creature comforts from the tech world to make retirement that little bit easier. Japan is basically spearheading the domestic robot movement and Tokyo’s millionaires will be the patrons first in line to experience this whole new world of contraptions.
Secondly, and more importantly, they’re spending on their children and family members. Again, the estate tax generally means they won’t want to “take it all with them” so economists are banking on the fact that they will start buying important family staples for their children such as homes, cars, major appliances and so on. This has a knock-on effect of putting more money into the backbone of the economy, as opposed to simply spending on luxury items and decadence.
You never know who a millionaire can be in this city and that’s kind of a fun prospect to think about. It could be a pleasant ‘obaachan’ who happens to own several high-rise apartment buildings in her neighborhood. Sometimes it’s just an ‘Average Tanaka’ in a construction outfit driving a work van who happened to make a small fortune with a string of successful machine shops. A diligent Japanese worker and example to his employees, he keeps a low profile and spends his wealth on his children. And then there’s the loudmouth in the pinstripe suit at the bar throwing cash around. He may simply be dressing up and playing hot-shot banker for the night trying to impress a client on the company dime, all the while clawing his way up through middle management! He’s only dreaming of those millions! At any rate, rich is rich but we hope you at least see where the egalitarian analogy comes from and there’s no mistaking the impact this small army of millionaires has on the economy.