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The Rise of the New Global Elite

The Rise of the New Global Elite. Chyrstia Freeland, The Atlantic , Jan/Feb 2011. Is growing income inequality a “national crisis”?. Even “market fundamentalists” like former Fed Chairman Alan Greenspan think so

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The Rise of the New Global Elite

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  1. The Rise of the New Global Elite Chyrstia Freeland, The Atlantic, Jan/Feb 2011

  2. Is growing income inequality a “national crisis”? • Even “market fundamentalists” like former Fed Chairman Alan Greenspan think so • Between 2002 and 2007, 65% of all income growth went to the top 1% of the population

  3. Though world GDP has risen and world poverty has declined significantly, income inequality within nations has been growing • Though China’s middle class has grown exponentially and tens of thousands have been lifted out of poverty, the superelite has pulled away • Income inequality has also increased in developing markets like India and Russia, and across much of industrialized West, from the laissez-faire US to social democratic Canada and Scandinavia

  4. There are fears we live in a plutocracy, in which the rich have outsize political influence • plutocracy: rule by the wealthy, or power provided by wealth • oligarchy: a society or social system ruled by a few people

  5. Rise of the plutocracy is driven by two phenomena: • the revolution in information technology • the liberalization of global trade

  6. the international conference circuit • ‘The real community life of the 21st century plutocracy occurs on the international conference circuit, e.g., • World Economic Forum in Davos, Switzerland • Bilderberg Group • TED (Technology, Entertainment, Design) conference • Google’s Zeitgeist conferencec

  7. philanthrocapitalism • Philanthropy has long been seen as a path to social acceptance and immortality for the superwealthy • e.g., Andrew Carnegie transformed his image from a “robber baron” to a “secular saint” • Today’s plutocrats tend to bestow their fortunes in the way they made them: entrepreneurially • Rather than merely donating to charities or institutional endowments, they use wealth to test new ways to solve big problems

  8. “Rootless cosmopolitans”? • The global super-elite don’t seem to have a country of their own, no single national loyalty • Mohamed ElErian, CEO of Pimco, the world’s largest bond manager • Son of an Egyptian father and French mother • Spent childhood between Egypt, France, US, UK, and Switzerland • Educated at Cambridge and Ozford • Leads a US-based company that is owned by a German financial conglomerate (Allianz SE)

  9. America’s super-elite is adjusting to the more global perspective • In a recent internal debate in one of the world’s largest hedge funds, based in the US, a senior exec argued that the hollowing out of the American middle class really didn’t matter: • “…if the transformation of the world economy lifts 4 people in China and India out of poverty and into the middle class, and means one American drops out of the middle class, that’s not such a bad trade”

  10. In a globalized economy, the American middle class is no longer “protected” from foreign competition • Most elites aren’t too sympathetic: “So if you’re going to demand 10 times the paycheck [of a lower-cost worker abroad], you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.”

  11. Speaking of value… • In 2009 the top 25 hedge-fund managers were paid more than $1 billion each – equaling they pay of 658,000 entry-level teachers (at salary of about $38,000/yr, including benefits) • Those educators could have brought along over 13 million young people, assuming a class size of 20

  12. Revolt of the elites • There’s a growing disconnect between US business elites and the US workforce • Elites see the world differently • See their wealth as a consequence of merit and hard work • Feel victimized by criticism, while they see themselves “doing God’s work,” as the CEO of Goldman Sachs put it • Generally blame indebted working and middle classes for their economic troubles – and for the financial crisis

  13. Bridging the divide • “And ultimately, that is the dilemma: America really does need many of its plutocrats. We benefit of the goods they produce and the jobs they create. And even if a growing portion of those jobs are overseas, it is better to be the home of these innovators—native and immigrant alike—than not. In today’s hypercompetitive global environment, we need a creative, dynamic super-elite more than ever.”

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