The global elite and the surveillance state

Ian Welsh on his web log made observations that I find hard to accept, but impossible to disprove.

Liberalism, classic and modern, believes that a properly functioning “freer” society is a more powerful society, all other things being equal.  This was, explicitly, Adam Smith’s argument.  Build a strong peacetime economy, and in wartime you will crush despotic nations into the dirt.

If you want despotism, as elites, if you want to treat everyone badly, so you personally become more powerful and rich, then, you’ve got two problems: an internal one (revolt) and an external one: war and being out-competed by other nations’ elites, who will come and take away your power, one way or the other (this isn’t always violently, though it can be.)

The solution is a transnational elite, in broad agreement on the issues, who do not believe in nationalism, and who play by the same rules and ideology.  If you’re all the same, if nations are just flags, if you feel more kinship for your fellow oligarchs, well then, you’re safe.  There’s still competition, to be sure, but as a class, you’re secure.

That leaves the internal problem, of revolt. The worse you treat people, the more you’re scared of them.  The more you clamp down.  This is really, really expensive and it breaks down over generations, causing internal rot, till you can’t get the system to do anything, no matter how many levers you push.

What is being run right now is a vast experiment to see if modern technology has fixed these problems with surveillance and oppressive states.   Is it cheap enough to go full Stasi, and with that level of surveillance can you keep control over the economy, keep the levers working, make people do what you want, and not all slack off and resist passively, by only going through the motions?

The oligarchs are betting that the technology has made that change.  With the end of serious war between primary nations (enforced by nukes, among other things), with the creation of a transnational ruling class, and with the ability to scale surveillance, it may be possible to take and keep control indefinitely, and bypass the well understood problems of oligarchy and police and surveillance states.

via Ian Welsh.

My gut reaction to this post is that it is paranoid, even though it fits all the facts.  But it certainly is true that there is a tiny and increasingly powerful global elite which feels increasingly connected with each other and decreasingly connected with the rest of us.  It is true that the rise of this global elite coincides with the rise of the secret and lawless power by governments.  It is true that, in the name of national security, there has been a crackdown on dissent of all kinds.   It is true that increasingly militarized local police forces act as if they expect some kind of revolutionary uprising.

What I find hard to accept is that all of this is intentional.  The reason I find it hard to believe is that I judge others by myself.   I have done bad things in my life, but, at the time I did them, I had to be able to justify them in my mind.   In my mind, I imagine the ruling class thinks the same way.   I imagine they honestly think that they are the creators of wealth and jobs, and that all the rest of us are parasites on them.   I imagine that members of the secret national security establishment honestly think they are making the nation more secure.

But maybe not.  Maybe they are aware of what they are doing and don’t care.   Maybe I should think about sociological and psychological studies that indicate that the holders of wealth and power on average have a sense of entitlement that makes them feel exempt from the rules that apply to everyone else.  Maybe I should think about the classic definition of the paranoid—one who lacks the normal person’s ability to diminish awareness of reality.

In the end, it doesn’t matter.   What goes on in the minds of the elite is unknowable and irrelevant.   All I can judge is the probable consequences of their actions, which I think Ian Welsh judges correctly.

Inside the minds of the global financial elite

During the first year of the U.S. economic recovery, 93 percent of the gains from growth went to the top 1 percent of income earners, and 37 percent went to the top 1/100th of 1 percent.

Bill Moyers did a good show a few nights ago about the mentality of this elite of wealth—how they regard themselves as Ayn Rand characters who are carrying the rest of the world on their shoulders, their limitless sense of entitlement to their special privileges, and their isolation from ordinary people and their conerns.

Moyers interviewed Chrystria Freeland, editor of Thomson Reuters Digital and author of a new book, Plutocrats: The Rise of the New Global Superrich and the Fall of Everyone Else, and Matt Taibbi, who reports on high finance and politics for Rolling Stone.

As Freeland and Taibbi noted, the wealthy elite do not think of themselves as plutocrats.  They sincerely think that they are absolutely entitled to their wealth and privileges.  As a group, they are smart and hard working, and have risen largely through their own efforts.  As a result, they think they owe nothing to anyone else.  They think that they created the world’s wealth by themselves solely through their own efforts, and that they are carrying the rest of the population, especially the American middle class, are parasites.

Both Freeland and Taibbi got their start in journalism reporting on Russia in the 1990s.  They saw the rise of an oligarchy of wealth, which got control of resources based on their connections in government, and who lived lives of luxury behind guarded walls, cut off from the struggling majority of the population.  Now they see the same thing happening on a global basis.

Income inequality is rising everywhere, not just in the United States, but in France, Canada and other countries.  The elite of each country feel they have little in common with ordinary people in their own countries, but much with the rest of the global elite.

Freeland talked about “cognitive capture”—how politicians and intellectuals have come to accept that the plutocracy deserve their privileges, and how even poor people in the United States (not necessarily in other countries) believe they deserve to be poor.

On the other hand, Taibbi and Freeland said, there is class conflict within the upper 1 percent of income earners.   Millionaires resent the way government gives preferential treatment to billionaires.  Silicon Valley entrepreneurs resent Wall Street bankers.

My response to all this:

• The fact that someone is highly intelligent and works very hard does not mean that person deserves to be rich.  I know smart, hard-working people who are barely making it.  You deserve to be richly rewarded if you make a contribution to society of great value.  Some members of the global elite do make a positive contribution.  Others do not.   Some are no better than thieves.
• Many members of the global elite have determined that a prosperous middle class and a well-paid working class are not needed.  They can get along very well without  us.   But that is not the issue.  The issue is whether working people and middle-class people need the global elite.
• The global elite think of themselves as “job creators.”  Another way of putting it is that they are gatekeepers who determine access to gainful employment.  There is a lot of work that needs to be done—in the United States, repair of aging water and sewerage systems, for example—that does not necessarily enrich the elite.   They shouldn’t have a veto over whether it is done.
• It is a misnomer to label the plutocracy as “libertarian.”  They are libertarians or statists depending on what is to their interest at the time.  What is constant is their sense of entitlement.
• I think the complaints of the millionaires against the billionaires, and the Silicon Valley elite against the Wall Street elite, probably have some merit.  There are many bankers who have operated on sound banking principles, and been overshadowed by bankers who’ve grown by gambling recklessly and then being bailed out by the government from their losses.

Click on The Rise of the New Global Elite for an article by Chrystia Freeland in The Atlantic.

Click on Plutocracy Rising Transcript for a written transcript of the show.

Click on Chrystia Freeland | Analysis & Opinion | Reuters for her blog.

Click on Matt Taibbi | Taibblog | Rolling Stone for his blog.

Click on Moyers & Company for Bill Moyers’ home page.

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.”