The super rich

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The super-rich - rise and rule of a new global money elite is the title of the German-language edition (translation: Andreas Simon dos Santos) of Chrystia Freelands, published in 2013 by Westend Verlag, of Chrystia Freelands, published in 2012 by the Allen Lane publisher, Plutocrats . The Rise of the New Global Super-Rich and the Fall of Everyone Else .

The key messages of Freeland's book are briefly summarized that the world economy and capitalism have fundamentally changed in the last 30 years, with the emergence of a new, strongly global class : the super-rich. Ten percent of US citizens currently have half of their total national income. In 2011, 84,700 ultra-rich people were counted worldwide.

The wealth of a part of this predominantly male elite is based on their own work and on the fact that situations of upheaval were used for their own benefit. Others have inherited their vast fortunes.

Since the 1970s, politics have contributed to the emergence of a new class of the super-rich. Conversely, this class now controls politics in some crucial areas. The "legal corruption ", that is, changes in the legal rules of the game by corporations and banks, affects economic development.

In Freeland's view, today's elites have little need to stand up for a more inclusive system: A new middle class in the emerging countries replaces the demand of their own impoverished ones. Oligarchs hardly have to fear a lack of innovation , because thanks to globalization , technologies can be imported more easily than ever.

content

introduction

On the one hand, social inequality was a taboo subject for a long time , (p. 9), on the other hand, growing inequality at the turn of the 21st century has become a worldwide phenomenon. (P. 12) This concentration of wealth has nothing to do with class struggle , but only with arithmetic (P. 13) For the first time since the Great Depression of the 1930s , it makes more sense for the middle class to focus on redistribution than on economic growth . (P. 13) For in the USA, for example, the richest percent of the population is the sole beneficiary of growth. Therefore Freeland intends to look at this top of the pyramid: "Who is part of it, where does her money come from, how does she think and what relationship does she have with the rest of us" (p. 14)

The story and why it matters

Freeland takes a clear stand for capitalism because it has been shown to work (p. 37)

As early as 1873 , Mark Twain and Charles Dudley Warner described a first "gilded age" (in The Gilded Age ): With the ostentatious wealth of the " robber barons " and their "all-pervasive lust for speculation", the gap between rich and poor was the "problem of our time", As Andrew Carnegie remarked in 1905. (p. 22 ff.) But this changed as a result of the emergence of the Soviet competitive model : through state regulation and an increase in income tax , as a result of the Glass-Steagall Acts separating commercial and investment banks and Franklin D. Roosevelt's New Deal policy of creating a social network and the existence of strong unions fighting for wage increases eventually reduced social inequality. (Pp. 29 ff.) The pendulum has been swinging back since the 1970s: the victory of neoliberalism , politics Ronald Reagans and Margaret Thatchers , the Washington Consensus , the collapse of the Soviet empire and with it the g lobal victory of capitalism, became the basis of a new growth of inequality and a second golden age (p. 33 ff.)

The culture of the super rich

But in contrast to 1916 , when the richest percent of US citizens only got a fifth of their income from paid work, this number has tripled to 60%. (Pp. 60 f.) Even below the top 0.01 percent was in 2005 Salaries as a source of income are far more important than capital and lease income . ( P. 62) To have made the ascent yourself is an essential part of the self-image of today's global plutocrats, who see themselves not as born aristocrats , but as meritocrats of the economy (p 63) In an economy in which the winners clear almost everything and the people at the top are paid far higher than everyone else, education at top universities is crucial. (P. 66) This is how a super elite emerged from people who have one Have worked most of their conscious lives to belong (p. 70) Above all, the plutocrats and their popular praise chorus would like to believe that they are not selfish (p. 74)

The Global Wealth Report 2011 of the Credit Suisse Research Institute wrote: “The basis of the wealth pyramid is formed by people from all over the world at various stages of their life cycle. In contrast, the focus is on the HNIWs (high net worth individuals, defined as people who have a million to 50 million dollars) and UHNWIs (ultra high net worth individuals, defined as' people who have an investable income of at least 50 million dollars own ') very strongly on certain regions and countries and share a far more similar lifestyle. ”(p. 77 f.) The UHNWIs, ie the super-rich themselves, describe it similarly; the circles, .., are defined by “interests”, not by geography: “You see the same people, eat in the same restaurants, stay in the same hotels.” (p. 78) The plutocrats develop into a transglobal community of who have in common the same over with their countrymen at home. (p. 76) "as a force is growing up with people whose collective experience connects them more with each other than with their local area and their local governments." said Eric Schmidt of Author. (P. 79) And the economic interests of this elite drive them to think globally, while the scope of action of the governments remains limited to their national territory. (P. 86) This is a world in which the specialty of the diploma is more counts as the nationality. The globalization of the super elite begins in school. The nation of plutocrats has its alma mater: the US elite universities of the Ivy League and Stanford in California and Oxbridge in Great Britain. (P. 80)

This elite meets at global conferences and is united in their enthusiasm for technological innovations and ideas. The international conference course includes:

The status symbols of the plutocrats include not only jets, yachts and racing stables, but lately above all philanthropic, scientific or political foundations because, in addition to their moral rewards and tax advantages, they also serve their social acceptance , and can even make them immortal (p 89) Philanthro- capitalism also wants to "improve" the functioning of the state. (P. 95) Super-rich politicians become important members of the global government elite because they can finance their campaigns and the establishment of civil law networks with their own money. (P. 96) Plutocrats try to influence the ruling ideology of a country, indeed the world, by funding think tanks that develop a political agenda that seamlessly aligns with their personal business interests or those of the plutocracy as a whole (p. 97).

The super-rich of 0.1 percent have left the “only” rich, who make up the next 0.9 percent at the top of the income pyramid, far behind and form the oligarchy . This gap between the one percent and the 0.1 percent could have serious political consequences (p. 100 ff.)

Superstars

Milovan Djilas ( Die neue Klasse. Munich 1957), György Konrád and Iván Szelényi ( Intelligence on the way to class power. Frankfurt a. M. 1978) and Peter F. Drucker ( The Age of Social Transformation , The Atlantic Monthly, November 1994 , Vol. 274, No. 5;) heralded the emergence of a new ruling class of technocrats , which is little talked about in the scientific debate in the early 21st century. (Pp. 109 ff.) The Massachusetts economist David Autor Institute of Technology stated that the advancement of high professional qualifications through technological change brought the technocrats immense income and brought them to power. (P. 112) And Alan B. Krueger stated in a speech at the Center for American Progress on January 12, 2012 found that in a survey of economists the majority saw technological change as the main driving force behind income polarization (p. 112)

The “superstar effect” in economics is described as the fact that under the created economic tournament conditions everything goes to the winners. (113) The number-driven empiricists - technocrats, stock market traders and internet entrepreneurs - “not only rule Wall Street, Silicon Valley, Bangalore and Beijing. They also have the say in Washington. ”(114) Since the superelite pulls away everyone else with their wealth, the demand for luxury services also grows disproportionately and this leads to plutonomy . Not only the top providers of business services such as lawyers benefit from this, but also those who provide luxury, a crowd of superstar artists who, thanks to modern technology in show business, reach an audience of millions, and top professionals (in addition to lawyers and managers, athletes, authors of bestsellers , Designers, chefs, etc.) who, in the happiest case, become super-rich themselves. (116–138; 146–157) Professor Roger Martin at the University of Toronto expects talent to win in the battle against capital because the organization is very much relies more on the knowledge worker than the other way around. Peter F. Drucker wrote The Foundation for Tomorrow in 1963 . The new realities in business and politics. prophesies the change to the " knowledge society " and the rise of the "knowledge worker". (140 ff.)

The biggest winners, however, according to Freeland, are the bankers after they discovered “that they can own the capital and with it the company.” Most top earners are Wall Street - financial investors who have moved from accountants and specialist clerks “to the ruling tribe of Plutocracy ”. She attributes this to three new forms of financing:

in which "clever people with luck could make a fortune almost in the twinkling of an eye." (142–146)

After all, the princes of industry , the CEOs - the stars among managers - are among the top earners. They have to be exemplary talents, not tied to a company, not even an industry, business economists with skills in management or company management, because the “increase in executive board salaries coincided with the increase in the number of company heads hired from outside the company were. ”(154–163) However, the principle of reward according to performance has its downside. Whoever is responsible for the company also pays their own salary, and this creates the agency problem of skimming or creaming. Company executives are always rewarded for their luck, but rarely punished for their bad luck or failure. (163–168)

In connection with these technocratic intellectuals, Freeland repeatedly speaks of a new class and also of class power . (141; 161)

Grab revolutions by hand

Significant paradigm shifts , whether in politics and society or in business and markets, are difficult for us to predict. Such revolutionary upheavals are moments in which wealth can be created quickly and thus one of the driving forces behind the formation of the superelite. (170 f.) The late 1980s and 1990s were a time of privatization , deregulation and the dismantling of trade barriers worldwide . New technologies such as computers and the Internet, mobile and wireless communication and, since 2012, “ Big Data ” also harbored risks but also opportunities. (172) The winners such “upheavals bring unexpected profits; the losers plunge them into disaster. ”(174) To use them and to grab such“ revolutions by the head, that has a lot to do with luck. You not only have to be in the right place at the right time, but also… stumble upon an emerging opportunity. ”(178) Of course, talent and a willingness to take risks are also fundamental requirements for this. (182) For the conversion of the revolutionary upheavals into wealth "the rule that there are no fixed rules applies." (204) It is not the building of states but their personal profit that is the guiding star of the economic tycoons . (206)

The biggest winners are not institutions, but individual entrepreneurs who are smart and lucky. (185) Lt. Global Wealth Report 2011 , 46 percent of the world's super-rich are company founders . (195) B. in Russia had built up a fortune through state loans and thus made the right connections, was able to "grab the really fat fillets" when in 1995 the huge Russian mineral resources were squandered in the loan-for-shares program by he bought up the shares in the privatization from people who couldn't do anything with them - and thus become oligarchs . (179; 209)

The super reindeer: billions at the expense of the general public

When pensions are mentioned here, it is not about social pensions , but about pensions (economy) , in particular political pensions in the sense of the pension economy .

Freeland counts the consequences of neoliberal “reforms to loosen state access to the economy”, from privatizations during the transition of former state-planned economies to a market economy, to the deregulation of the financial sector, as one of the “most hair-raising examples of the capture of political rents at the expense of the general public” . (219 f.)

She describes the transfer of formerly Soviet state property to private property as “probably the largest transfer of wealth in human history” . One of the consequences is that Moscow had more billionaires in 2012 than New York or London. (222)

However, western states also sold infrastructure and service companies "that were once considered natural monopolies ... that were previously believed to be best run by the state".

The financial elites of London and New York enjoyed an astonishing bipartisan consensus with the political elites in Great Britain and the United States, as well as around the world, on the need for financial deregulation. (241-247) The deregulation competition between Western states favored the rise of the superelite, especially of the top tenth of a percent and the financial sector, which bears a bond-economy trait through their political influence. But this development was also a major cause of the financial crisis of 2008 and led to the provision of a billion dollar rescue network for the banks by politicians. (249)

The Mexican Carlos Slim verbally supported the reform efforts of his friend Carlos Salinas de Gortari , President of Mexico from 1988 to 1994, including the privatization of the state monopoly telephone company Telmex . Slim then acquired it, thereby fulfilling the “dream of every rentier who wants to generate income at the expense of the general public through political influence” and was the richest man in the world by 2012. (225 f.)

In times of upheaval, corruption can take on a new dimension. The super-rich have access to politicians and get more favorable conditions, yes they can even participate in the formulation of the policy because they are asked as important people, this also applies to emerging countries such as India and China. (228–241)

“Legal corruption” is the term used to describe the plutocrats' endeavors to use lobbying and campaign donations to change the rules of the economy through reforms, regulation or deregulation in terms of their meaning and benefit. This gives the beneficiaries not only more wealth, but also more political power. Like the pension economy in general, legal corruption is becoming more and more global. (255–259)

The super rich and us

In this chapter (260-310) Freeland sets out how the super-rich see themselves - and the rest of humanity. The motto is the mockery of Robert Harris about their “self-pity” and their “paranoia”, but also an astonished observation by Adam Smith about the indifference “with which people view the misery of those who stand below them and, on the other hand, that Regret and outrage .. they feel about the misfortunes and suffering of those who are superior to them. "

In short, the super-elite sees itself as a meritocracy and considers the rest of the people to be lazy or incompetent. The plutocrats have a high opinion of each other and are convinced that they themselves know and are best able to do everything, including politics. For everyone else, however, they feel a lack of sympathy that can turn into contempt. (269) It is always the others to blame; In truth, the super-rich are victims who can only save themselves from unjust taxation through foundations. (273 ff.)

A team of psychologists from Berkeley University suspects after several experiments that "greater resources and greater independence from others lead to people placing their self-interest above the well-being of others and perceiving greed as positive and beneficial, which in turn leads to increased unethical behavior". (271)

The plutocrats see themselves as "those who employ millions of taxpayers and keep the wheels of trade and progress going - including those of the state," as billionaire Leon Cooperman put it in an open letter to President Obama. (277) The investment fund manager Foster Friess , who campaigned for Rick Santorum , told Freeland in an interview on February 9, 2012 that it would be better for the common good to abolish taxes and leave the rich to decide how to spend their money through charitable donations want. He is also convinced that we all depend on the top percent and should respect it accordingly. (278 f.) The hedge fund manager Ken Griffin says that the super-rich are not sufficiently heard in American politics and that political engagement is a heavy burden that they have a duty to bear: "I spend far too much of my time thinking about politics because the government interferes far too much in the financial markets." And he accuses it of using class struggle as a political tool. 279)

Dennis Gartman cheers in one of his daily investment letters: “God bless income disparity and everyone who made it. ... What we despise is a state that imposes rules that prohibit or make it difficult to earn even more money; to employ even more people; to donate even larger sums to charitable causes. "(280) The plutocrats feel hurt in their self-love if someone wants to see villains in them instead of heroes, because they are - as Lloyd C. Blankfein joked -" God's work ". (230 )

According to James Duggan, head of a Chicago law firm specializing in tax and real estate law, wealth is fleeing the country partly for reasons of conscience to set an example of its dissatisfaction with the situation in the United States. (281) This mentality corresponds well to Ayn's Rand's novel " Atlas Throws the World ". (281) Since the Earth-like planet Kepler-22b is still beyond the reach of manned terrestrial space travel, Patri Friedman and Wayne Gramlich founded the Seasteading Institute with the on April 15, 2008 in Sunnyvale, California Aim to establish autonomous mobile communities on floating platforms in international waters. The project is financially supported by Peter Thiel , among others . (282)

Everyone has to admit that states have the right to levy taxes; the argument is only about who pays how much. The rise of the new super-elite coincided with the growing belief that whatever is good for businesses is good for the economy as a whole, and that entrepreneurs know best what works. “This glorification carried over to the Lords of the Universe on Wall Street.” (288) They got what they wanted from the Fed because “those responsible in the state organs internalize the goals, interests and perception of reality of the private companies that they operate through osmosis regulate and monitor in the public interest, ”is sure the economist Willem Buiter. He speaks of the "cognitive hijacking of the state" by the bankers and has no doubt that the Fed under Alan Greenspan "treated the stability, well-being and profitability of the financial sector as an end in itself." (289) In this and in the "fatalism" of Wall Street, which refrains from learning and improving, Mark Carney sees the causes of the financial crisis. (291)

The rescue of the US banks in 2008 and 2009 was “the largest state intervention in an economy as a percentage of gross domestic product since Lenin's nationalization.” Therefore, Carney urgently demands reforms: “With about four trillion dollars in economic output and almost 28 million jobs, those in the following one Were lost in the recession, the reason for reform was clear and remains so to this day. "(294)

So it is not simply a question of a strong or lean state. "The question is rather ... whether the government has the will, the authority and the understanding to defend the interests of the general public even against the protests of the economy." (293 f.) Luigi Zingales describes this as a choice between a market-friendly one and a business-friendly policy. After all, superelites are often the result of a strong market economy, but they often become opponents after they have established themselves. Lobbyism likes to influence the rules in favor of existing companies instead of advocating the same rules for everyone and free and open competition. (294 f.)

In January 1977 , Henry Ford II resigned from the chairmanship of the Ford Foundation , which was created in 1939 because of the tax benefits and the continued control of the Ford family over the Ford Motor Company . In his farewell letter from the largest philanthropic foundation in the United States, he said “it is very likely that it is worth preserving the system that makes the foundation possible,” and expressed the growing fear of many entrepreneurs about the “battle for ideas lose ". (295 f.)

This is what Irving Kristol picked up in his March 21, 1977 article On Corporate Philanthropy in The Wall Street Journal . He made it a fact that most foundations and universities in the United States "exuded a climate of opinion in which anti-business tendency has become an entirely natural tendency." He therefore set the task of protecting capitalism and capitalists and keeping them healthy by shaping the climate according to public opinion , which “is created by our scientists, our teachers, our intellectuals, our publicists, in short: by the New Class Kristol suggested that business supports those dissidents within the New Class who “really believe in maintaining a strong private sector.” Over the next three decades, he and other conservative intellectuals and their funding business leaders built a network of Conservative think tanks, foundations, elite journals and the mass media. (pp. 297 f.) Finally, as a result of this philanthro-capitalism, Chrystia Freeland stated "the intellectual dominance of the mindset that Kristol had described as dissenting opinion in the 1970s in America. (300) The politicians are sometimes referred to as a branch of the New K lasse, and they are even more dependent than others on the super-elite, especially on their donations. But a growing number of them belong to the super-elite themselves and they no longer need to be bribed or hijacked, because they share their interests anyway. (302 ff.)

Luigi Zingales not only agrees with Buiter's theory of the cognitive hijacking of the state, but finds it natural that the government attracts the most intelligent minds in the financial sector, and also that they “have a tendency to believe that the interests of their industry and the interests of the country are identical ”and to obtain information exclusively from their milieu of origin. (p. 306 f.) The behavioral economist Dan Ariely is also convinced that people naturally see reality as it corresponds to their interests, and not from it Perspective of strangers, but that of their friends. That is why social inequality creates "instead of a single society a multitude of societies", he told Freeland in an interview. (P. 308)

Enough

In the final chapter, Freeland presents Venice as an example of how a state can put an end to not only social mobility but also its entire development by closing it down (Italian: serrata ) . (P. 310 ff.) Daron Acemoğlu and James A. Robinson represented the view that the success or failure of states depends on whether their institutions are exclusive or inclusive (p. 312)

Inclusive states grant all citizens co-determination rights and access to economic opportunities, which can lead to a self-reinforcing dynamic. However, when the elite at the top becomes too rich and powerful, they are given the opportunity to follow their inclination to change the rules of the game unilaterally in their favor and thus destroy social mobility. This would create a system that consolidates the supremacy of the elite so effectively that it stifles economic growth and makes the system politically untenable - as Karl Marx prophesied for capitalism. (P. 312 ff.) It is true that elites do not deliberately sabotage the system from which they benefit, but even clever plutocrats can let their self-interest lead them to undermine the foundations of their society. (P. 319)

reception

The book was still a New York Times bestseller in 2012 and Chrystia Freeland received the Canadian Lionel Gelber Prize for Plutocrats in 2013 for the best non-fiction book of the year as well as the National Business Book Award for the most outstanding Canadian book on business affairs.

Individual evidence

  1. ↑ October 19, 2011, p. 16 f.
  2. ↑ https://infocus.credit-suisse.com.data/_product_documents/_shop/3525/2011_global_wealth_report.pdf  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.@1@ 2Template: Dead Link / infocus.credit-suisse.com.data  
  3. ↑ http://www.theatlantic.com/past/docs/issues/95dec/chilearn/drucker.htm
  4. ↑ David Author: The Polarization of Job Opportunities in the US Labor Market. Implications for Employment and Earnings. Center for American Progress and The Hamilton Project, April 2010 ( http://economics.mit.edu/files55549  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice. )@1@ 2Template: Toter Link / economics.mit.edu  
  5. ↑ Alan B. Krueger: The Rise and Consequences of Inequality in the United States. ( Archive link ( Memento of the original from June 27, 2013 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this note. ) @1@ 2Template: Webachiv / IABot / www.whitehouse.gov
  6. ↑ http://www.faz.net./aktuell/sport/mehr-sport/motivation-der-superstar-effekt-in-der-oekonomie-1547519
  7. ^ So Adolf Augustus Berle , Gardiner Coit Means , The Modern Corporation and Private Property , New York 1932
  8. ↑ Archive link ( Memento of the original dated November 3, 2011 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.  @1@ 2Template: Webachiv / IABot / www.ml.com
  9. ↑ Robert Harris, Angst , Munich 2011, p. 197.
  10. ↑ Adam Smith, Theory of ethical feelings , Hamburg 2004, p. 74.
  11. ↑ http: //www.thestreet.comtsc/common/images/pdf/Omega  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice. Advisor1.pdf@1@ 2Template: Dead Link / www.thestreet.comtsc  
  12. ↑ Lt. Interview with Melissa Harris ( http://articles.chicagotribune.com/2012-03-11/business/ct-biz-0311-confidential-griffin-web-version-20120311_1_american-crossroads-politics-republicans-and-democrats )
  13. ↑ Eric Jackson: Dennis Gartman Celebrates Income Inequality. Retrieved June 29, 2020 .
  14. ↑ Archived copy ( memento of the original dated January 11, 2012 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. @1@ 2Template: Webachiv / IABot / www.kansascityfed.org
  15. ↑ Mark Carney, The Economic Consequences of the Reforms , lecture at the 7th Bundesbank Lecture 2010, Berlin, September 14, 2010 ( http://www.bis.org/review/r100917c.pdf )
  16. ↑ Mark Carney, Some Current Issues in Financial Reform , Address to the Institute of International Finance, Washington DC, September 25, 2011 ( http://www.bis.org/review/r110927a.pdf )
  17. ↑ Luigi Zingales, Capitalism After the Crisis , National Affairs 1, Fall 2009 ( http://www.nationalaffairs.com/publications/detail/Capitalism-after-the-crisis )
  18. ↑ http://hudson.org/files/documents/BradleyCenter/Kristol_On_Coporate_Philanthropy.pdf  ( page no longer available , search in web archives )  Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.@1@ 2Template: Dead Link / hudson.org  
  19. ↑ Chrystia Freeland, Working Wealthy Predominate the New Global Elite , The New York Times, January 25, 2011 ( https://dealbook.nytimes.com/2011/01/25/working-wealthy-predominate-the-new-global- elite / )
  20. ↑ Daron Acemoglu, James A. Robinson, Why Nations Fail. The origins of power, wealth and poverty. Frankfurt a. M. 2013. pp. 196-201.
  21. ^ Karl Marx, Friedrich Engels Werke , Berlin 1979, Vol. 36.
  22. ↑ Plutocrats author Chrystia Freeland wins $ 15,000 book prize for international affairs . ( theglobeandmail.com [accessed June 29, 2020]).