Market Power

Musings by an academic economist on the power of markets and the power over markets.

Friday, December 31, 2004

What Will $45 Million Buy?

This kick-axe house and its associated acreage and furnishings bought by pharmaceutical distributor Stewart Rahr described in this New York Times article (free registration required):

Of course, there is the usual aghast comment on conspicuous consumption:

"It's a sickness," said Mona Holzman, who oversees sales for Laffey Associates, a real estate firm on the North Shore of Long Island. She said she was shocked that a Hamptons home had fetched $45 million. "I guess people just don't know what to do with their money. I don't know what could be so spectacular about this house."

Why are we to think that Mr. Rahr isn't going to get at least $45 million worth of benefits from this house and the included furnishings? And who's to say how he's to spend his money? Would Ms. Holzman have been happier if Mr. Rahr had bought a doublewide with one flat tire and a broken window on a half-acre of property outside Eminence, Mo.?

The coolest thing about the whole transaction?

"I don't even have a mortgage on that property," Mr. Rahr said. "I'm able to write a check."

He paid cash! Hell, I'd have to use a credit card to afford the down payment! Damn. It must good to be the king!