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So, how large is the global plutocratic class?

by Jerome a Paris Sat Jan 2nd, 2010 at 01:46:04 PM EST

The Financial Times' US editor Chrystia Freeland has an article today which can be interpreted in quite different ways. As its title suggests (Global super-rich no longer look so benign), and as various paragraphs which underline the amazing growth of inequality in recent years, the article can be seen as a belated acknowledgement that the emergence of ultra-dominant class of super rich (the so-called "global plutocracy") is a problem rather than something to celebrate (as it has been for a long while).

But Migeru has noted that this article was also a vicious attempt at trying to rewrite history, by creating a definition of that plutocratic class ("the hyper-educated, internationally minded meritocrats") which was rather convenient to deflect blame. If it is the highly educated, hard-working elite which has gotten very rich, at least it's a mostly fair order of things (work hard, get rich) that brought about the current situation; it also encompasses a lot more people than a few thousand gazillionaires - many readers here will likely find "highly educated" to describe them, and even more will see "hard-working" as even more appropriate: hey presto, suddenly income inequality is your fault, too!


So, go read the article, and tell us what you think is most significant...

This:

median wages have stagnated as machines and developing world workers have pushed down the value of low-skilled labour in the west. This dynamic has been most pronounced in the US: between 1997 and 2001, the top 10 per cent of US earners received 49 per cent of the growth in aggregate real wages and salaries, while the top 1 per cent received an astonishing 24 per cent. Meanwhile, the bottom 50 per cent received under 13 per cent, just over half of what went to the top 1 per cent.
We live in an age of unprecedented openness – of ideas, of people, of trade. But for the middle class, these opportunities have been largely theoretical: in America, social mobility has actually declined.
The less wondrous inventions [of the plutocracy] – particularly the explosion of subprime credit – masked the rise of income inequality for many of those on the losing end of the global shift.
The genius of that elite [the old Wasp ascendancy] was its ability to bring the American dream within reach of nearly everyone. If it hopes to emulate the longevity of America’s Wasps, and, more importantly, the political system they created, today’s global plutocracy must figure out how to do the same.

Or this:

Thomas Friedman was right: as these political, economic and social barricades came down, the world really did become flatter. Older, established institutions – ranging from the music business to traditional media and Detroit carmakers – found themselves outmanoeuvred and out-priced by entrepreneurs in Silicon Valley, Mumbai and Shanghai.
We live in an age of unprecedented opportunity for the smartest, most persistent, and most cunning among us – and, incredibly, today’s rags-to-riches stories are emerging not just from Harvard dorm rooms, but also from the software centres of Bangalore and the oil fields of Siberia.
the (...) forces that have allowed the super-talented to claim a reward that is richer and can be earned more swiftly than ever before
Both globalisation and technology have had a punishing impact on those without the intellect, luck, or chutzpah to profit from them
The wondrous inventions of the plutocracy – iPhones, Google, Amazon – improved everyone’s life.

So? What's most significant?

  • That inequality is acknowledged as a serious political problem, or the claim that such inequality was caused by a fair competition of talents and work?
  • The acknowledgement that growth, as it is defined, is benefitting almost exclusively a very small group, or the claim that this group got there through "hard work"?
  • That middle classes are left out, or the claim that the plutocracy is a new meritocracy bringing down old barriers and conservatisms?
  • that the plutocracy had something to do with it, through dubious inventions like subprime debt, or that it is beautifully international and multi-ethnic?
  • that even the right-wing has noticed, or that it's nothing so wrong that a little bit of elitist tinkering can solve?

Display:
by Jerome a Paris (etg@eurotrib.com) on Sat Jan 2nd, 2010 at 02:28:43 PM EST

Washington Post and Fiscal Times

On the last day of 2009 the Washington Post published an article as its own new story that was in fact written by the Peter G. Peterson Foundation funded "Fiscal Times." This marks the unfortunate demise of the Washington Post as a serious newspaper.

As background, Peter Peterson is a Wall Street billionaire, who has spent much of the last quarter century funding efforts to gut Social Security and Medicare. He wrote numerous books with scary titles like "Gray Dawn" that warned of a demographic disaster when the baby boomers retired. He would then use his vast fortune to ensure that these books were widely publicized. He also founded the Concord Coalition and more recently the Peter G. Peterson Foundation, both of which routinely call for cutting Social Security and Medicare in the context of reducing the deficit.

As his latest ploy, his foundation has created a newspaper called the "Fiscal Times." Given Peterson's longstanding agenda, this is like the American Rifle Association putting out the "Firearms Gazette" or the Tobacco Industry publishing "Smoking Today." Naturally advocacy organizations will use whatever tools they consider appropriate to advance their agenda. But a real newspaper would never publish the output of an advocacy organization as its own new story.

(...)

It is unfortunate if current economics may no longer support a serious newspaper, however it would have been best for the both the paper and the country if the Post could have died with its reputation intact.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Jan 2nd, 2010 at 02:50:06 PM EST
Why does techno come to my mind?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jan 2nd, 2010 at 08:17:51 PM EST
[ Parent ]
FT = Feudal Times, trying to set the clock back at least 1500 years regardless of the consequences.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Sat Jan 2nd, 2010 at 02:51:29 PM EST
might be an excellent name for an alternative publication...

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Sat Jan 2nd, 2010 at 03:13:47 PM EST
[ Parent ]
She's hedging. That's good. Means she isn't sure where the Zeitgeist is moving, and whether her fellow Villagers can control it.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Jan 2nd, 2010 at 03:00:25 PM EST
I don't think she's hedging. She's just rehashing Ayn Rand.

Her argument otherwise reminds me of The Bell Curve : social problems concern trolling the better to introduce the notion that the group at the top got there by survival of the fittest.

Except that Herrnstein and Murray posited that those at the top would stay there thanks to their superior genetic assets, while Freeland suggests they need to figure out a way of holding on to power. Which, since she closes on it, seems to be an outcome she'd be sympathetic to.

by afew (afew(a in a circle)eurotrib_dot_com) on Sat Jan 2nd, 2010 at 03:45:38 PM EST
[ Parent ]
European Tribune - Comments - So, how large is the global plutocratic class?
this group got there through "hard work"

This pisses me off no end. Lots of people work hard - nurses and first responders are just two of the sectors that come to mind. But when was the last time you saw a firefighter knocking down a seven-figure salary?

The amount of work has nothing to do with it.

Huh? Oh, sorry.

</rant>

The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman

by dvx (dvx.clt ät gmail dotcom) on Sat Jan 2nd, 2010 at 03:13:52 PM EST
that's the bit that Mig flagged to me as well and which most riled him up. I hadn't read the article in detail then, and I agree with both of you.

It sounds innocuous, but it is vicious.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Jan 2nd, 2010 at 04:00:22 PM EST
[ Parent ]
The less truth to the assertion, the greater the need for continual assertion.  The Big Lie.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jan 2nd, 2010 at 08:03:58 PM EST
[ Parent ]
It's that magical process that the FT, WSJ and others are so very good at--
You simply redefine "hard work" as whatever the plutocrat does. With one wave of the wand you change "plunder" to "admirable labor". The rest follows.  

Capitalism searches out the darkest corners of human potential, and mainlines them.
by geezer in Paris (risico at wanadoo(flypoop)fr) on Mon Jan 4th, 2010 at 02:22:31 AM EST
[ Parent ]
was in Moscow when Taibbi and Ames created the exile there, and she was one of their regular targets.

Since they were together at a talkshow a few weeks ago, it's hard to find old references to them, but this one's a gem (and not just for poemless).

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sat Jan 2nd, 2010 at 03:26:30 PM EST
The transformation of the standard "bleeding-heart" liberal of the seventies and eighties into the "think-positive" winners of the nineties (who had "their man" in the White House) was one of the key early causes of America's current disaster of political homogenization. By parting with the "winners" over this issue so dear to the heart of the old liberals-the fate of their fallen standard-bearer, the Soviet Union-Cohen has successfully restored some reason and idealism to the oldskool bearded-lefty way of looking at things. Cohen was the perfect candidate for this task, of course, being the prototypical bearded oldskool lefty. He is said to live in a shadowy book- and Knick-poster-lined lair somewhere on the upper West side, and reportedly has some kind of Luddite aversion to e-mail and even computers. "Failed Crusade", in fact, was supposedly written on a typewriter, one clack at a time. John Lloyd and Chrystia Freeland probably write on two iMacs (one blue and one pink, of course) at a time. Not exactly an improvement.

Hahahaha(gasp)
Hahahaha
Thanks, Jerome, Matt. Made my day.

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Mon Jan 4th, 2010 at 02:46:11 AM EST
[ Parent ]
What's most significant is that the U.S. editor of the Financial Times makes the following points, as you've outlined them:

  • That inequality is acknowledged as a serious political problem

  • The acknowledgement that growth, as it is defined, is benefitting almost exclusively a very small group

  • That middle classes are left out

  • that the plutocracy had something to do with it, through dubious inventions like subprime debt

  • that even the right-wing has noticed

plus:

Globalisation and its enabling technologies have had a winner-takes-all effect

And the title is: Global super-rich no longer look so benign

These acknowledgements are a significant and positive development, and I think it would be constructive to welcome and encourage it.

La Chine dorme. Laisse la dormir. Quand la Chine s'éveillera, le monde tremblera.

by marco on Sat Jan 2nd, 2010 at 03:47:26 PM EST
.
President's statement: Kleptocracy. Bush searched too far, he didn't require to cross the border.

"But I will not let myself be reduced to silence."

by Oui on Sat Jan 2nd, 2010 at 04:38:41 PM EST
[ Parent ]
Technically, you're right: on first reading, it is somehow sorta kinda significant that this super-rich class is officially recognized and acknowledged as a growing problem, and this even in other places than the usual quarters. That can be seen as good news, all right.

Is this yet the occasion to spread out welcome banners?

Personally, I would hold the champagne. Two things really bother me:

  • The plutocracy in question is framed as "meritocracy" who got there by "hard work"; while this is a blatant effort to paint them in a sympathetic light, there's plenty of evidence that this a rosy vision of the pasr decades events, to put it mildly.

  • Far from highlighting this situation as part of the problem that would beg for correction, the author is instead arguing for some noblesse oblige kind of patch to the existing system that must be kept intact.

This is not a novel situation in history: if you'll pardon a somehow clumsy historical comparison, this is similar to the French aristocracy in the pre-Revolution 18th century.

While the vast majority of the aristocracy cared only about increasing their wealth and privileges, a small enlighted group of arisrocrats pleaded for more concern and care for the well being of the populace, with concepts of government by the elite for the good of the people. Without questioning the social structure fundamentals, of course. A sort of compassionate conservatism of the time if you want. And that's exactly the soup the FT is serving us today, so excuse me if I'll pass.

The author is right: aristocracies/plutocracies that do not care of the branch they're sitting on end up badly.   As of today, there's no sign that our 21st century uber-class is giving any thought.

Ultimately, the small group of enlighted French aristocrats were unable to reign in the excesses of their peers and prevent the 1789 Revolution.

by Bernard on Sat Jan 2nd, 2010 at 06:04:25 PM EST
[ Parent ]
... some noblesse oblige ...

is "Power corrupts and Absolute Power corrupts Absolutely"

And what will stop them?  That's the question I keep asking.  Criminals keep up their activities until they're arrested or killed.  With the governments corrupted who will "arrest" these people?

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sat Jan 2nd, 2010 at 08:34:52 PM EST
[ Parent ]
THE Twank:
And what will stop them?

Apparently, nothing short of the collapse of the unsustainable system they have molded. And again, images of the pre-Revolution French aristocracy come to mind.
by Bernard on Sun Jan 3rd, 2010 at 09:37:46 AM EST
[ Parent ]
But the pre-revolutionary French had neither wars nor bread and circuses with which to distract the people. The west currently has all three.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Sun Jan 3rd, 2010 at 10:26:25 AM EST
[ Parent ]
I believe the Kingdom of France had some war action going on just before the revolution. They appear to have assisted terrorists - who often had spurious ideas about what god wanted them to do - on another continent. This was part of some grand strategy to tie up their ancient enemy. However, the cost of war caused a financial crises, that was very hard to solve as the already privileged answered with calls for more privileges.

Bread they also had until climate patterns shifted ever so slightly, then that became an issue.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun Jan 3rd, 2010 at 07:27:13 PM EST
[ Parent ]
.
Interesting, graphs included ...

Polarized America: The Dance of Ideology and Unequal Riches

(MIT Press) - Political polarization, income inequality, and immigration have all increased dramatically in the United States over the past three decades. The increases have followed an equally dramatic decline in these three social indicators over the first seven decades of the twentieth century. The pattern in the social indicators has been matched by a pattern in public policies with regard to taxation of high incomes and estates and with regard to minimum wage policy. We seek to identify the forces that have led to this observation of a social turn about in American society, with a primary focus on political polarization.

Our primary evidence of political polarization comes from analysis of the voting patterns of members of the U.S. House of Representatives and Senate. Based on estimates of legislator ideal points (Poole and Rosenthal 1997 and McCarty, Poole, and Rosenthal 1997), we find that the average positions of Democratic and Republican legislators have diverged markedly since the mid-1970s. This increased polarization took place following a fifty-year blurring of partisan divisions. This turning point occurs almost exactly the same time that income inequality begins to grow after a long decline and the full effects of immigration policy liberalization are beginning to be felt.  

"But I will not let myself be reduced to silence."

by Oui on Sat Jan 2nd, 2010 at 04:42:13 PM EST
"Based on estimates of legislator ideal points (Poole and Rosenthal 1997 and McCarty, Poole, and Rosenthal 1997), we find that the average positions of Democratic and Republican legislators have diverged markedly since the mid-1970s."

Despite the fact that, over that period, Democrats greatly moved to the right.


Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Sat Jan 2nd, 2010 at 05:08:29 PM EST
[ Parent ]
As I wrote in the Salon, the plutocrats who rerquested, inspired, even drafted the relaxed regulations allowing the bubbles of the past two decades; and the plutocrats owning most of the capital moved by the young analyst and broker hotshots, are not hyper-educated, internationally minded meritocrats.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Jan 2nd, 2010 at 04:57:52 PM EST
IOW, the admission that there is a problem is coupled by a strange parallel  recitation of the myth of self-made-men and the deflection of blame o the same.

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Sat Jan 2nd, 2010 at 04:59:38 PM EST
[ Parent ]
Strange indeed.  I suspect it is due to the cognitive dissonance of adopting a hyper-ideological worldview to reality.

La Chine dorme. Laisse la dormir. Quand la Chine s'éveillera, le monde tremblera.
by marco on Sat Jan 2nd, 2010 at 05:22:41 PM EST
[ Parent ]
That second sentence should have been:

Strange indeed.  I suspect it is due to her cognitive dissonance in adapting a hyper-ideological worldview to reality.

La Chine dorme. Laisse la dormir. Quand la Chine s'éveillera, le monde tremblera.

by marco on Sun Jan 3rd, 2010 at 12:14:52 AM EST
[ Parent ]
I wonder if a useful distinction can be made between those who pursue wealth and power in a narrow spectrum and those who target general political and economic power. An example of the former might be an executive of a computer company or oil company, whose expertise and world-view is focused on the problems and situation in such a company, and whose interest in politics is limited to things like labor outsourcing and corporate taxes that affect his industry. An example of the latter might be someone like Hillary Clinton or Gordon Brown who works for broad power over all political areas and grasps for huge personal wealth as a fundamental accompaniment.
by asdf on Sat Jan 2nd, 2010 at 06:43:19 PM EST
When you have transnats whose propaganda budgets alone exceed the gross tax revenue of several Central African republics, I am not sure that distinction has much meaning.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jan 3rd, 2010 at 05:24:46 AM EST
[ Parent ]
European Tribune - So, how large is the global plutocratic class?
The wondrous inventions of the plutocracy - iPhones, Google, Amazon - improved everyone's life.

A better cell-phone, a better search index and a mail-order business succeeding online? Three companies that all piggy-back on government sponsored research and development (cell-phones and the Internet) and has succeeded in capturing a lot of wealth? That is the "wondrous inventions" of the plutocracy?

What utter nonsense the Feudal Times (hey, it is catching on) prints today, but then they always do, don't they?

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sat Jan 2nd, 2010 at 07:57:24 PM EST
... the Feudal Times (hey, it is catching on) ...

I want royalties.  Blow me some kisses at least.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sat Jan 2nd, 2010 at 08:37:52 PM EST
[ Parent ]
I have re-read the article, and seen the light. This is a new era.

Both globalisation and technology have had a punishing impact on those without the intellect, luck, or chutzpah to profit from them

The idea to reuse the term was all mine, so all further re-use should of course give tithes to me, not you. Original use should give tithes to you of course, that is only fair.

This is my wondrous invention - the re-use of the term Feudal Times. It might appear unfair, but in the end I am sure everyone will agree that it will improve everyone's life.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Sun Jan 3rd, 2010 at 02:28:56 AM EST
[ Parent ]
This is a new era.

Yes, the era of blatant thievery.  Grab what you can and run like crazy.  You have a fine future at FT; file your resume soon if you haven't already.

They tried to assimilate me. They failed.

by THE Twank (yatta blah blah @ blah.com) on Sun Jan 3rd, 2010 at 04:58:24 AM EST
[ Parent ]
Okay, you got me.  I admit to my crimes.  As a highly-educated, hard-working individual, I too am contributing to income in-equality.  My failure to earn a seven figure salary is making my brethren look bad!  If I just got off my ass and started being more innovative and productive, I'd be earning seven figures in no time, so all this income disparity stuff is really my fault.

Gosh, it feels good to get that off my chest.  

by Zwackus on Sat Jan 2nd, 2010 at 08:15:57 PM EST
You BASTARD!!!  I suspected this all along!

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Sat Jan 2nd, 2010 at 08:38:51 PM EST
[ Parent ]
So are we ever going to address the question in the title? How large is the global plutocracy and by what measure do we ascribe membership?  Know thine enemy.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jan 2nd, 2010 at 08:44:42 PM EST
Media is so full of this s**t, that one can tell the story without reading it. How could it be otherwise in a neoclassical mind? All money is earned, so all rich are meritocrats. End of story. At least they here try to pretend that the rich "plutocracy" has produced something instead of being just real estate moguls. The plutocracy of engineers? Right.
by kjr63 on Sun Jan 3rd, 2010 at 04:28:42 AM EST
I'm waiting for the plutocracy of maintenance technicians to emerge.  
by Zwackus on Sun Jan 3rd, 2010 at 04:41:41 AM EST
[ Parent ]
The genius of that elite [the old Wasp ascendancy] was its ability to bring the American dream within reach of nearly everyone. If it hopes to emulate the longevity of America's Wasps, and, more importantly, the political system they created, today's global plutocracy must figure out how to do the same.

The genius of the old Wasp ascendancy was to allow those one rung below them to be heavily taxed while encouraging them to create a significant wage reward base to swell the middle classes. Even the working classes were moved into a semblence of carefree affluence through generous health and pension entitlements. Henry Ford always said he had to pay his workers the wages that would allow them to afford his cars and this was a lesson that america and Europe, deliberately or not, recreated across their industrial base.

Unfortunately somebody somewhere forgot that you have to give quite a bit to get a lot more. And those at the top got tired of giving quite so much while finding an ever increasing number of ways to make sure that their largesse was spent in the some modern version of the company shop.

Thus 20th century re-distribution, the engine of true prosperity, was overturned and denigrated as 21st century wealth capture came to resemble 19th century and earlier robber baron feudalism. Wheras the early 20th century recognised the problems of monopolies as being against the public interest, now we have legislaters who encourage companies to become huge and parasitical.

today's plutocracy don't have to find a new idea, they just have to go back to the old ones.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Sun Jan 3rd, 2010 at 05:40:00 AM EST
Excellent summary, Helen. Wider view, and all.

One can also make a powerful case for the even wider view that the dawning reality of climate change, resource capture as a political (military) survival tactic and the decay of sources of public information and therefore the democratic structures that depend on them create a dynamic that completely redirects the human story, which will need to be re-framed.
Perhaps structures and groups that attained ascendancy as a result of their skill at manipulating the pieces on the board of the "Consumer Society" game will be as unable to alter their ideas as the author of this piece is.

On the other hand, perhaps the more predatory segment of human society will adapt, and end up driving A greener post-industrial bus too.

My feeling is that the skillset of today's plutocrat is utterly inappropriate for the new world.

One thing is sure. The dead hand of Adam Smith is about to be replaced with the much-maligned, but equally dead hand of Malthus.

This is getting ---interesting.

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Mon Jan 4th, 2010 at 03:32:11 AM EST
[ Parent ]
For me, the difference between meritocracy and plutocracy is the difference between earned and unearned income.

I do not regard the multiplication of wealth by shrewd use of financial capital - ie exclusive property rights and leverage - as being 'productive', but rather the reverse.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sun Jan 3rd, 2010 at 07:39:06 AM EST


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