The Inevitable Rise Of Wealthy Global Elites

Although I usually talk about the wealthy Few and the increasingly poor Many in an American context, such inequality is part and parcel of what has become a capitalist global civilization. Aaron Task interviewed Canadian writer Chrystia Freeland, author of Plutocrats: The Rise of the New Global Super-rich and the Fall of Everyone Else, in the Daily Ticker story The Rise of the Super-rich Is a Global Phenomenon (video below).

As the title suggests, "the increase in income inequality" in the U.S. is not just a domestic development but "is happening in all Western industrialized countries," Freeland tells the Daily Ticker in the accompanying interview.

"And crucially you're seeing the same phenomenon in the big emerging market economies."

Freeland says globalization is at the root of income inequality around the world. Both capital and labor are global therefore businesses leaders must maintain a global perspective, says Freeland.

"Inevitably that means the super-elite see themselves as citizens of Planet Earth" rather than as a citizen of their home country, which means they are less concerned with the health of the middle class in the U.S. or any other country they call home.

In the U.S. the gap between the very rich and everyone else "is wider than at any time since the gilded age," says Freeland...

As for the plutocrats, Freeland says if they confuse their own self-interest with the common good, they threaten the very system that created them.

You might also look at Freeland's story The Self-Destruction of the 1%, which appeared in the New York Times Sunday Review on October 13, 2012. In the video Freeland describes the situation as "winner take all" on a global scale, and agrees with Task's observation that we appear to have Social Darwinism writ large.

We should not be surprised to see this enormous wealth gap. When has unfettered Capitalism, given free rein over markets and labor, ever led to a different outcome? The promise is always the same, and might be summarized as a rising tide lifts all boats, a phrase first used by Jack Kennedy in a speech in 1960. The free flow of capital which gives us this "winner take all" situation justifies itself in the great prosperity many ordinary people (labor) will allegedly achieve, although these people don't have access to capital and markets. So we see right away that the world is smoothly divided up into the Those Who Make The Magic Happen (the global capitalists) and Those Who Benefit From the Magic (global labor).

A rising tide lifts all boats—if you have a boat, or temporary access to one. And that's the way it has always been. Deng Xiaoping, who has the led the liberalization of markets in China, bought into this philosophy—

Let some people get rich first.

What is different now is that for the first time in history, the "rising tide" is occuring outside the normal boundaries created by nation-states. As the Daily Ticker notes, these global bloodsuckers capitalists view themselves as citizens of Planet Earth, not as citizens of some particular nation. They are not citizens of Brazil, France, China, India, Russia or the United States, although they may have a base of operations in one of these places. As such, the new global super-rich are operating totally outside the laws of any particular nation.

If one country does not give them what they want, they can play off that nation against others to achieve their goals. Factories are moved, jobs created elsewhere. If these global capitalists don't like living in some place, they can move to another. Social Darwinism, indeed.

In so far as the "developed" (OECD) nations are hopelessly indebted, and their economies have stalled and will be stagnant in the foreseeable future, capital has flowed to the so-called BRICS (Brazil, Russia, India, China) and other "developing" countries. Consequently, these "emerging markets" are experiencing the same wealth and income inequality we have in the developed world for the same reasons.

There is much more we could say about this subject, so I shall return to this subject in the future. One more important point needs to be made about the rise of global super-rich and the fall of everyone else—don't expect this situation to change, either here in the United States or anywhere else on Planet Earth. There are no global institutions with the power to control it, and if there were, those institutions would be "captured" by the super-rich.

 

Comments

[Shorebreak]

The Federal Reserve Bank, and the other central banks of industrialized countries, have been willing participants in this greatest transfer of wealth in history through their quantitative easing shenanigans.

[Oliver]

Dave - regarding your comment: There are no global institutions with the power to control it, the reality is that these institutions have already been captured and are already working to further enrich the super-rich elite.

Witness, for example, the IMF collaborating with German financiers (a.k.a. European Central Bank) to recolonize Greece, with large parts of the rest of the European Union now in their greedy sights (starting with Portugal, Spain and Italy). The German elite is now achieving by sophisticated financial skulduggery what their imbecilic predecessors failed to do by military force in WWI and WWII, i.e. rape other "weaker" countries for their resources.

The World Bank has for decades operated like an arm of US imperialism, which these days means on behalf of the US-based supranational elite puppet-masters who currently pull Obama's strings and don't give a flying fuck which zombie is elected by "the people" in November.

In the UK, it's as clear as day to anyone who gets their nose out of the sewer-level media that the government is run on behalf of the City of London - which is a shorthand term for the supranational elite who stalk the London-based markets in pursuit of short-term margin calls raking in billions every day for their personal aggrandizement. Here, too, it doesn't matter which political party is in "power", they are all lackeys and apologists for the elite.

This winner-takes-all Darwinism is a runaway train - utterly short-termist - with a 100% probability of the whole global "system" going the way of city-state Venice (as Freeland details in her NY Times piece).

It is interesting to me that from a bird's eye view, the enormously destructive financial theft going on mirrors the catastrophic environmental pillage you have cataloged in DOTE, a perfect storm that is bound to hasten our demise as residents of Earth.

[BrianM]

If you think about history, other than western industrial societies over the last 150 years, when has any society been arranged in anything other than two main classes?

Even small tribal societies tend to have elites in the form of chiefs, holy men, etc. True, in a few of these societies, the elites did not inequitably collect wealth, and in a few there may have been some semblance of group decision making and authority. However, these are probably not the most common situations, and it's difficult to come up with an example outside of these small, isolated societies. Most of the time, the elites (in virtually all political/economic formulations) commanded the lion's share of power and wealth, with everybody else struggling at a survival level, or just above (or not).

Only with the abundance brought on by fossil fuels did a third, central tier join this story. The American middle class (and its counterparts in most industrialized societies) exist almost exclusively due to the surplus energy from fossil fuels and the surplus money from debt. Absent the growth of either of these things, it's hard to see how the middle class could exist.

And that is the story. The age of expanding cheap debt and the age of expanding cheap fossil fuels are both coming to a close. In the US, the fossil fuel squeeze process started some 40 years ago, although the effects were somewhat masked by a) the last few large finds, and b) the blowing of massive credit bubbles. However, those things have run their course. Without the once-in-a-planet's-lifetime fossil fuel bonanza middle class lifestyles will largely become untenable, and the middle class will most likely slowly, and painfully, return from whence it came.... the working (if they are lucky) poor. Once again, the historical order for human societies will exist, the elites and the rest.

Hasn't it really always been so?

[Don Levit]

The power of the global elites has been mirrored in our own stock market, which has doubled since 2009. I am not a stock market guru by any stretch, but I personally cannot see the logic behind this extraordinary rise, other than institutions are parking their excess dollars in the stock market. In general, doesn't more money have to flow in than flows out, for the market to grow?
It seems we have gotten a lot of information that the "retail" investor has pulled out more dollars than they have pulled in.
Or, do you guys think there is some type of manipulation going on behind the scenes?
My personal opinion is that Bernanke's low interest rate policy is specifically designed so entities will put their money in the stock market, with no logical alternatives, including bonds.
Don Levit

[Oliver]

BrianM - agree but the difference is that the horse has bolted regarding the middle class. It's one thing to have always lived as a serf, but to be a prosperous free man then drastically reduced to poverty by elitist thieves will inevitably result in a leveling of scores, one way or another. The educated disenfranchised newly impoverished will not go quietly back to their ancestors' chains.

Don Levit - it's all manipulation pure and simple, in the biggest game of hot potato ever. The level of sophistication among the stock trading gangsters is such that unwary small (retail) investors are tricked into continually buying high and selling low - latest example: the Facebook Heist. Large investors used to put dollars behind long-term profit-making ventures. Now all they care about is a short-term gain on a sliver of a margin that they themselves create through insider trading and mass media massaging.

General point - when will enough ever be enough? I guess the answer is never for psychopaths.

[Don Levit]

Oliver:
Thanks for taking the time to comment.
If this is true, and buy and hold is obsolete, I just do not see how the stock market can perform as it traditionally has.
The last 3 years, it seems that the monetary elites are saying "Screw you" to the little guys, and the stock market seems to be a good indicator and vindicator of that philosophy.
Don Levit

[JohnWDB]

Interesting article in the NY times review, though his Marxist tone comes bleeding through and leads to some revisionist history. Heck, he even quotes Marx. Namely, it wasn't "industrialization" that wrecked American egalitarianism, it was an unregulated financial industry, which allowed the wealthy to run ponzi schemes to extract wealth from the middle class. That led to the collapse and the Great Depression in 1929. The deregulation of stocks, derivatives, and mortgages in the 1990's led to not one but two similar bubble market collapses, the second partially mitigating the first. I think partisan politics blinds people on both sides to what is actually creating the wealth gap: global labor arbitrage and unmitigated large-scale financial fraud

[Oliver]

JohnWDB - you make good points. However, I'm disappointed that you appear to maintain the received negative view of Marx, perhaps confusing his theoretical analysis with the dictators who antedated him and twisted Marxism to suit their own bestial Homo nonsapiens agendas.

Careful reading of Marx validates his basic premise regarding the destructiveness of unbridled capitalism. We are now witnessing the death throes of the unregulated "free" market. Totalitarianism isn't the answer, but we've yet to see any country following true Marxism - the Soviet Union, China, North Korea, etc certainly weren't/aren't Marxist states.

I suspect we never will get to know if genuine Marxist governance is possible. Our species en masse is far too welded to me-first, me-only biological behavior. And that's the greatest pity of our existence.

[Oliver]

Whoops! Of course I meant postdated him.

[JohnWDB]

Thanks, Oliver, but I'm not sure I misunderstand Marx. I don't believe that capitalism is dangerous. I believe human beings are dangerous. The danger in any system is that those in power are more prone to corruption than the rest (who are fairly prone themselves). There have been times of flourishing over the course of human history, and those times have generally been in capitalist economies. The worst we can say about capitalism is that a few dastardly people tend to screw it up for everyone else. You'd say the same thing about Marxist governance, and in fact you did. It's utopian promise is never realized because it depends on people not being people (i.e., not being corrupt). The difference is that capitalism has worked for a century at a time here and there. It works because it harnesses the essence of what it is to be human--to be selfish. And most likely, it will continue to work until the cycle of exponential growth and collapse has run its course, and the planet has been stripped bare.

[Oliver]

John - Interesting thesis and I respect your viewpoint, but personally I find it hard to separate capitalism from human beings. I believe capitalism is probably the only system that "works" for our species for the very reason that we are are biologically self-serving and barely cooperative, except where we can get one over someone else by paying lip service to cooperation.

What you call "times of flourishing" have in reality generally been for the benefit of the few, with the majority of the human race continually living in one or other form of serfdom. That a "few dastardly people screw it up for everyone else" is to my mind a necessary outcome of such capitalism, not some accidental occurrence. Such is the situation today. The ultimate expression of unfettered capitalism - short-term self-aggrandizement by a mere handful of power-laden actors - is being enacted in dealing rooms and banking boardrooms worldwide as we speak. And it clearly contains its own seeds of destruction, just as Marx postulated, through the voracious rape of planetary resources without any thought for the conservation of energy.

Using your analysis, what I'm basically contending is that because human beings are dangerous, so is capitalism. They are interchangeable factors. Furthermore, all economies are and have been capitalist economies, despite the propaganda about communism. Name me one country where there has ever been equal access to resources and common sharing of power, no power elite owning the bulk of the wealth and no imperial urge to dominate neighbors who possess tempting resources.

Finally, I'm not promulgating Marxism, because it is a utopian impossibility given our species' predilections - so beautifully detailed by Dave these past years. However, I still admire Marx's thinking - as I do several other philosophers - and I am astounded that anyone in 2012 still "buys" the McCarthyite interpretation designed to bamboozle Cold War era citizens into accepting massive, fraudulent defense budgets. [Today, the deliberately never-ending "War on Terror" has replaced Communism as the Orwellian bête noire.]

[JohnWDB]

Oliver, we are saying slightly different things, but to me we seem to agree more than disagree, particularly on the human condition. In response to your challenge to name a country with equal access, I cannot. I wouldn't argue that there has ever been a purely communist country, because there hasn't been, and that, to me, seems like the point. Communism is as impossible as a legal "honor system" in lieu of police. People will be people, and they will suck. Americans commonly say "communism doesn't work because people have no incentives!". I don't think that's quite right. It's more correct to say that communism doesn't work because the only incentives people care about are grossly selfish. Innovation happens because people want to be made great themselves, not because they want to make life better for everyone. But in the process of winning a Nobel Prize, getting a building named after you, or making a billion dollars, you might eradicate some disease or create a hundred thousand medium income jobs. Those things are good.

As such, the claim that capitalism "contains the seeds of its own destruction" assumes that the problem is in the system itself and not in human beings. I would say the very engine that drives a capitalist economy is the same one that destroys it. That engine is selfishness. To lament selfishness is to lament the human condition--I do so frequently. Laws and economic systems, at their best, only hope to allow it free reign in a controlled environment.

I do realize you are not a proponent of Communism, but it wouldn't bother me if you were. I'm not one of those McCarthyites. Communism as a system is not evil. Neither is capitalism. Evil people use either one to further their own selfish agendas. Alas, this is the human condition. My issue with Marxist philosophy (and I may be repeating myself) is not that it is itself, evil, but that it suggest that systems make people evil. And so far as I can tell, you and I agree that it's not the systems that are evil but the people themselves.

[Oliver]

John, yes - we accord with each other almost entirely. It is only a small matter of how we each view the "system". You consider it a concept in itself, subject to the external corrupting influence of us humans, while I see it as an actual embodiment of human nature, which as you say is selfishness plus a dash of reward for the few.

Regarding communism, I see this as the label used (usually pejoratively) to identify the regimes of China and the Soviet Union, which were never Marxist from day one. That's why I made my earlier comment about McCarthyism - I simply wish that Marxism and Chinese/Soviet communism weren't thought of as one and the same. They are not, just as original Christian teachings are not the same as the rantings of the "God fearing" KKK.

Thanks for the interesting debate. I rarely find anyone these days among my acquaintances interested enough to discuss such matters (most run a mile!). Explaining why I haunt DOTE and one or two other islands of sapience in this planetary jail.

All the best, Oliver