Plutonomy

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Plutonomy means economic (economic) growth, held and controlled by the upper and richest class of the population.

term

The term comes from a team led by the equity analyst of the US bank Citigroup Ajay Kapur, who first used the term in 2005 in the thesis for the then strong growth of the US economy despite rising key interest rates, raw material prices and national debt . Based on plutocracy, it is a contraction of the Greek words for "wealth" and "economy". Citigroup analysts define plutonomies as economies "where economic growth is driven and largely consumed by a few rich people."

discussion

In a total of three reports on “Plutonomy”, Citigroup analysts explained their thesis to the bank's customers, according to which the income share of the super-rich in total income in the so-called plutonomies has become so large that developments in these economies can no longer be understood without them to shed light on the financial situation and consumer behavior of the super-rich. The concept of the average consumer has no meaning in these economies. Citigroup analysts predicted that the trend towards plutonomy would continue for a long time, partly because of well-meaning governments. However, they also pointed out dangers for the plutonomy model, including the fact that the economically insignificant majority of the population could use their weighting to push for political changes.

Ulrich Thielemann wrote in 2007 in the magazine Die Gazette , "that according to a study by Citibank, it" described the US economy as a social ›plutonomy‹ "because it is" geared towards the small group of the so-called ›super rich‹ , the richest one percent of Americans, who consumes 20 percent of the national product and who has received most of the considerable growth of recent years . "The middle class, which makes up the majority of the population, is made up of an ever smaller minority of the upper class of the population Economic growth - and with it politics - depends on the benevolence of this small “group of the super-rich”.

In the Plutonomy Reports, Kapur and team recommended that companies bet on the production of luxury goods, and investors to buy shares in luxury goods manufacturers. Those who have stuck to it have earned a great deal. The international share index for luxury goods manufacturers has risen 145 percent since mid-2006, despite the financial crisis. The general share index MSCI-World gained only 30 percent in the same period.

Trend towards concentration of wealth and plutonomy

Eight years after Kapur and his team worked out and published the Plutonomy thesis, the French economist Thomas Piketty became world famous with a book ( Capital in the 21st Century ) in which he documents and analyzes a strong long-term trend towards wealth concentration. Piketty's theses were disputed by some economists. In this discussion in 2014 the author of the Plutonomy thesis, which is closely related to Piketty's theses on asset concentration, Ajay Kapur, spoke up again for the first time. In the study he carried out for clients of his new employer, Bank of America, Merrill Lynch , one of the world's largest asset managers, Kapur and Team Piketty defended against his critics. “The forces that fuel the trend towards plutonomy are all gaining strength,” they write. According to the new study entitled “Piketty and Plutonomy: The Revenge of Inequality” (German: “Piketty and Plutonomy: The Revenge of Inequality”), the drivers of further wealth concentration are intact in the long term, including globalization and capitalism-friendly governments; Kapur and team see potential for setbacks in the short term. The US Federal Reserve is scaling back its security purchases. “The plutonomists' balance sheets and their behavior were an important transmission channel for this monetary policy,” he analyzes. He sees a second threat to the luxury industry in anti-corruption initiatives like those in China or India. The spirits manufacturer Remy Cointreau already felt this in the form of a slump in sales of its most profitable luxury brands.

Web links

literature

  • Kapur, Ajay, Niall Macleod, Narendra Singh: “Plutonomy: Buying Luxury, Explaining Global Imbalances”, Citigroup, Equity Strategy, Industry Note: October 16, 2005.
  • Kapur, Ajay, Niall Macleod, Narendra Singh: “Revisiting Plutonomy: The Rich Getting Richer”, Citigroup, Equity Strategy, Industry Note: March 5, 2006.
  • Kapur, Ajay et al .: “The Plutonomy Symposium - Rising Tides Lifting Yachts”, Citigroup, Equity Strategy, The Global Investigator, September 29, 2006.
  • Kapur, Ajay, Ritesh Samadhiya and Umesha de Silva: “Piketty and Plutonomy: The Revenge of Inequality”, Equity Strategy | Global Emerging Markets, Bank of America Merrill Lynch, May 30, 2014.

Individual evidence

  1. ↑ http://www.wallstreet-online.de/nachrichten/nachricht/2846646-plutonomie-reichen-haben-fuer-wachsen-sorgen.html
  2. ↑ Kapur, Ajay, Niall Macleod, Narendra Singh: Plutonomy: Buying Luxury, Explaining Global Imbalances. S. 1: We will posit that the world is dividing into two blocs - the plutonomies, where economic growth is powered by and largely consumed by the wealthy few - and the rest.
  3. ↑ Kapur, Ajay et al .: “The Plutonomy Symposium - Rising Tides Lifting Yachts”, page 8: “There are certain economies, driven by massive income and wealth inequality - plutonomies - where the rich are so rich that their behavior - be it negative savings, or just very low consumption of oil as a% of their income - overwhelms that of the 'average' consumer. "
  4. ↑ Kapur, Ajay, Niall Macleod, Narendra Singh: “Plutonomy: Buying Luxury, Explaining Global Imbalances”, page 9f lists two of six reasons: “capitalist-friendly governments and tax regimes”.
  5. ↑ Kapur, Ajay, Niall Macleod, Narendra Singh: “Revisiting Plutonomy: The Rich Getting Richer”, page 10: “Political enfranchisement remains as was - one person, one vote. At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. "
  6. ↑ http://www.gazette.de/Archiv2/Gazette14/Thielemann.html
  7. ↑ Handelsblatt No. 109 of June 10, 2014, page 34.
  8. ^ Ajay, Kapur, Ritesh Samadhiya and Umesha de Silva: “Piketty and Plutonomy: The Revenge of Inequality”, Equity Strategy | Global Emerging Markets, Bank of America Merrill Lynch, May 30, 2014