The new global elite and the rest of us

My friend Marie Sidoti e-mailed me a link to an article in the Atlantic Monthly which drew a disturbing group picture of the new global elite of wealth.  They are not an elite of hereditary wealth, Chrystia Freeland wrote; most of them rose from the middle class through their enterprise and intelligence.  They are not content do sit back and enjoy lives of luxury; they use philanthropy as a means to reshape the world as they think it should be.

They meet at places like the World Economic Forum in Davos, Switzerland, where they hear presentations by people such as Desmond Tutu or Bill Clinton as medieval kings once heard theological disputes of medieval philosophers.

They have wealth beyond the dreams of most people.

[Novelist Holly Peterson] described a conversation with a couple at a Manhattan dinner party: “They started saying, ‘If you’re going to buy all this stuff, life starts getting really expensive. If you’re going to do the NetJet thing’”—this is a service offering “fractional aircraft ownership” for those who do not wish to buy outright—“‘and if you’re going to have four houses, and you’re going to run the four houses, it’s like you start spending some money.’”

The clincher, Peterson says, came from the wife: “She turns to me and she goes, ‘You know, the thing about 20’”—by this, she meant $20 million a year—“‘is 20 is only 10 after taxes.’ And everyone at the table is nodding.”

They have more in common with each other than with ordinary people in their own countries.  In other worlds, they are class conscious.

As Glenn Hutchins, co-founder of the private-equity firm Silver Lake, puts it, “A person in Africa who runs a big African bank and went to Harvard might have more in common with me than he does with his neighbors, and I could well share more overlapping concerns and experiences with him than with my neighbors.” The circles we move in, Hutchins explains, are defined by “interests” and “activities” rather than “geography”: “Beijing has a lot in common with New York, London, or Mumbai. You see the same people, you eat in the same restaurants, you stay in the same hotels. But most important, we are engaged as global citizens in crosscutting commercial, political, and social matters of common concern. We are much less place-based than we used to be.”

They have little sympathy for the American middle class.

The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.

I heard a similar sentiment from the Taiwanese-born, 30-something CFO of a U.S. Internet company. A gentle, unpretentious man who went from public school to Harvard, he’s nonetheless not terribly sympathetic to the complaints of the American middle class. “We demand a higher paycheck than the rest of the world,” he told me. “So if you’re going to demand 10 times the paycheck, 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.”

They have a strong sense of entitlement.

A little more than a decade ago … I spoke to Mikhail Khodorkovsky, at that moment the richest man in Russia. “If a man is not an oligarch, something is not right with him,” Khodorkovsky told me. “Everyone had the same starting conditions, everyone could have done it.” … …

Though typically more guarded in their choice of words, many American plutocrats suggest, as Khodorkovsky did, that the trials faced by the working and middle classes are generally their own fault. When I asked one of Wall Street’s most successful investment-bank CEOs if he felt guilty for his firm’s role in creating the financial crisis, he told me with evident sincerity that he did not. The real culprit, he explained, was his feckless cousin, who owned three cars and a home he could not afford.

In fact, they see themselves as victims.

You might expect that American elites—and particularly those in the financial sector—would be feeling pretty good, and more than a little grateful, right now. Thanks to a $700 billion TARP bailout and hundreds of billions of dollars lent nearly free of charge by the Federal Reserve (a policy [George] Soros himself told me was a “hidden gift” to the banks), Wall Street has surged back to pre-crisis levels of compensation even as Main Street continues to struggle. Yet many of America’s financial giants consider themselves under siege from the Obama administration—in some cases almost literally. Last summer, for example, Blackstone’s Schwarzman caused an uproar when he said an Obama proposal to raise taxes on private-equity-firm compensation—by treating “carried interest” as ordinary income—was “like when Hitler invaded Poland in 1939.”

Click on The Rise of the New Global Elite to read the whole article.

Click on The World’s Billionaires 2011 for the annual Forbes report on the world’s richest people.  “Why do we spend so much time counting other people’s money?” asks Forbes.  “Because these moguls have the power to reshape our world.

I don’t blame powerful people individually – Bill Gates, George Soros, the Koch brothers – for using their power to further their goals.  I’m often pleased when they use their influence on behalf of something I happen to favor.  The problem is the imbalance in power between the global elite and the rest of us.

I think the workers of the world should unite.

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