
The Rise of the New Global Elite - pointillistic
http://www.theatlantic.com/magazine/archive/2011/01/the-rise-of-the-new-global-elite/8343/
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edj
Single page: [http://www.theatlantic.com/magazine/print/2011/01/the-
rise-o...](http://www.theatlantic.com/magazine/print/2011/01/the-rise-of-the-
new-global-elite/8343/)

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patrickgzill
I question exactly how long-lived this new wealth is or will be.

Look at the Rothschilds - they have figured out a way to take the initial
1700s wealth and keep it (we can assume mostly) together in a relatively
cohesive lump for some 300 years.

A less "notorious" example would be the duPonts, easily trillionaires if you
were to add up the wealth accumulated amongst this wealthy family.

Against that, someone worth $100 million who gives 90% of it away when he/she
passes doesn't seem all that significant.

Not sniping, just expressing a contrary POV to consider...

~~~
cturner

       > keep it .. we can assume mostly.. in a relatively
       > cohesive lump for some 300 years.
    

I think I disagree but it might just be over choice of words. It's an
interesting topic that I want to develop and I'll charge on.

On the topic of intergenerational wealth, it's not enough to say that you can
keep a lump of wealth. During the 300 years you talk about, governments rose
and fell, and currencies and sovereign debt with them. In order to stay above
water, you have to float your position across multiple regimes and positions.
Or keep it in a lump of gold. That didn't do that - they worked money hard.

Rothschilds took on huge positions in the Napoleonic wars that could easily
have gone wrong. They then would have lost it all due to poor timing over the
end of the waterloo campaign but leveraged up by taking an audacious position
on sovereign bonds that paid off and made them even richer. My point is, they
gambled the house at several points.

Part of what's striking about the Rothschilds specifically is that they kept a
healthy mindset across several generations. This is a wildly interesting topic
that has crossover with another article hacker news today link today to the
atlantic, <http://news.ycombinator.com/item?id=2072200>

In that article you see lots of people who came from aspirational backgrounds.
But how do you keep that? How do you raise a wealthy family in a way that
passes on those values?

~~~
patrickgzill
I upvoted you because you have hit on the core question: how do you stay
hungry after that first x million, and how do you pass it on to the next
generation?

Some family members have achieved relative wealth and I see this with their
children who attend private schools ... I see nephews and nieces likely to
pursue professions, but do not see the same competitive drive being passed
along.

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drinian
This is a fine exposition on the state of the world today -- and the hope that
these hard-working global citizens will help create a more equitable world --
but it's worth remembering that there's nothing new under the sun.

After all, the British royal family is of German descent.

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jamesaguilar
> . . . but less connected to the nations that granted them opportunity—and
> the countrymen they are leaving ever further behind.

Because opportunity springs not from the ingenuity of man but the granting of
nations who "own" him.

~~~
simon_
I understand your sentiment, and don't really disagree, but keep in mind that
it's basically impossible to innovate or build wealth under unfavorable
institutions. So... some value probably "should" accrue to nations.

~~~
jamesaguilar
Yes, for sure. Some of the benefits should return to the nation that provided
the favorable conditions (and do, in the form of that person's taxes and also
in the form of opportunity-seekers from around the globe flocking to the
places where growth is possible). But I don't like the notion that people owe
their successes to their country any more than I believe they are indebted to
oxygen or gravity.

~~~
noahth
You may not like the idea but that doesn't necessarily have any bearing on its
truth. None of us does anything on our own - water, power, roads, schools, the
list goes on and on (not all directly attributable to the country itself, but
certainly national governments are high on the list of contributors to these
projects in almost all cases, and I haven't even mentioned things like tax
policy yet). I think the days of the nation-state are numbered but we can't
ignore what those entities did for human progress. Maybe not in the form of a
literal debt, but it's short-sighted and antisocial to pretend that the elites
didn't have a hundred million helping hands on their way up.

~~~
yummyfajitas
Perhaps, but the elites have already paid for all of those helping hands many
times over. The top 5% paid about 60% of the nation's taxes, for instance, and
they almost certainly have not used 60% of the public services.

<http://www.taxfoundation.org/news/show/250.html>

In spite of this, most of the services they paid for are _not_ the public
goods (e.g., roads, power, water, police) you describe. Of the top 5 biggest
expenditures in the US, only the 4'th is a public good.

<http://www.usgovernmentspending.com/year2008_US.html>

And this completely ignores all the consumer surplus they have created (i.e.,
the happiness you get from using a macbook rather than having $1000). The
elites have paid their debt. Let them leave if they want to.

The US should not become a prison state.

~~~
raleec
I think the point is that the elite benefit from the public services even if
we do not use them directly. E.g. if we work in an office building we benefit
from the services that allowed the worker vacuuming to be there, though we
didn't necessarily take the bus there ourselves. [edit] but this is not to say
that anyone should be restricted unduly.

~~~
yummyfajitas
First of all, if the worker is a taxpayer, the employer is already paying for
those services in the form of pre-tax wages. I pay for my own police
protection, and I raise my wage commensurately [1]. This is all included in
the cost of labor.

Secondly, most government spending does not provide those necessary services.
Roads, police and water are just not very expensive. Most government spending
is just transfers from the wealthy to the less wealthy - see my second link in
my previous post.

[1] Actually, my landlord pays for police protection, and has raised my rent
commensurately.

~~~
raleec
Most of the cleaning service people are not _really_ taxpayers[1], which is
why including them distorts the equation. They are benefiting w/out
contributing, and we do in fact, need them. Also reinforcing my point, How can
you claim that Defense is the only public good in the top 5? What percentage
of the population must benefit to qualify?

[1]From other IRS data, we can see that in 2008, around 52 million tax returns
were filed with either positive or negative AGI that used exemptions,
deductions and tax credits to completely wipe out their federal income tax
liability. Not only did they get back every dollar that the federal government
withheld from their paychecks during 2008, but some even received more back
from the IRS.

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danenania
Why is Greenspan so often referred to as libertarian or an ultra-capitalist?
Central banking is the polar opposite of both these things.

When Greenspan says something like "capitalism has failed", it isn't some sort
of grand ideological reversal, it's an unwitting joke.

~~~
borism
not that those references are true, but the guy was part of the friggin Ayn
Rand Collective.

<http://en.wikipedia.org/wiki/Libertarianism_and_Objectivism>

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stuaxo
If I wasn't skint I would right now buy the domain

fucktheglobalelite.com

Not sure what it would have apart from a link to the article and "seriously,
fuck those guys"

~~~
tomjen3
Why do you have a problem with them? They made money and now they hack word
poverty. What's wrong with that?

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anaphoric
Is wealth/poverty relative or absolute?

I think most people would be happier if they saw it in more absolute terms. I
have witnessed wealthy people made to feel like paupers when a yet more
wealthy person puts on a display that they can't afford. The phenomena is
actually quite comical.

Still it's fairly clear that wealth will always be a measuring stick that
people will use to display their relative worth. It's like plumage. A lot of
resources go into growing those fancy tail feathers. In itself I don't see
anything wrong with that. It's quite natural.

However it's important for societal cohesion that the absolute wealth of the
average does not fall and that they can maintain some semblance of dignity.

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sayemm
Good read on the world trending towards meritocracy, esp during these times as
a lot of older institutions are getting turned upside-down. It reminds me of
this old PG post, "After Credentials" -
<http://www.paulgraham.com/credentials.html>

"The course of people's lives in the US now seems to be determined less by
credentials and more by performance than it was 25 years ago."

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narrator
One thing that's disturbing these days is there is even a huge gap in wealth
between someone in the top 1% and the top 0.1%.

~~~
brc
Why? Why is that disturbing? This is a genuine question.

It doesn't disturb me one bit. As long as each generation is relatively
wealthier than the prior one, I don't care about the spread within that
generation.

My grandfather died of pneumonia at age 56 due to a lack of oxygen and
antibiotics at the hospital. They didn't have enough money to paint their
house and instead used old tractor sump oil. My parents, when married, didn't
have hot water or a toilet inside the house. They had never travelled more
than 200 miles from their place of birth.

My kids have access to better health, leisure, education, food and housing
than even I did, which is not that long ago.

This continual improvement in wealth amongst my own family is proof enough
that the very rich aren't impinging on what really matters, which is improving
living standards for the majority of people.

Paraphrasin PG in one of his essays - it doesn't disturb me that Mozart was 1
million times more musically talented than I am, or that Tiger Woods is 10
million times better at golf. Their ability and success doesn't impede on my
life at all - if anything - it improves it. It's not unfair (in any real
sense) that Federer can play tennis very well and I can't hit the ball to save
myself. So why is it unfair that someone has talent at making money and can
make a million times more money than I can? In a free society, (apart from a
very tiny minority who steal or lie their way to it) the only way they can get
(and stay) rich is by providing excess value to everyone else. That's true
whether you are kicking a ball, trading stocks or building software.

Nobody has ever successfully convinced me why wealth disparity in a free
society is a problem. If anything, I see it as a sign of a healthy society.

~~~
SkyMarshal
No time for a thorough answer, but a few clues as to why it's not always a
great thing.

First, some data:

<http://sociology.ucsc.edu/whorulesamerica/power/wealth.html>

[http://www.good.is/post/americans-are-horribly-
misinformed-a...](http://www.good.is/post/americans-are-horribly-misinformed-
about-who-has-money/)

In a nutshell: the top 20% of the populace controls 85% of the US's wealth.

1\. Increasing wealth concentration = increasing concentration of political
power => democracy undermined. US is excellent example - the populace can
vote, but only for candidates preselected by funders in the top 20%; populace
can advocate, but top 20% has much better access, influence (due to both
campaign funding and 'revolving door' jobs when leaving office), and in some
cases actually writes the legislation (bank bailout being a major example).

When that happens, you get capture of the government and regulators, financial
excess & crisis, and symptoms of banana republic:

[http://www.theatlantic.com/magazine/archive/2009/05/the-
quie...](http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-
coup/7364/)

2\. _'As long as each generation is relatively wealthier than the prior one, I
don't care about the spread within that generation.'_

That's held true for decades, but is not guaranteed to continue forever.
Problem of induction: no amount of confirming observations can prove a theory
true, while one single refuting observation can disprove it. Eg, even if all
strata of every generation has always been relatively wealthier than the
previous generation, that is no guarantee the same thing will continue
indefinitely in the future.

Highly concentrated wealth also skews some economic statistics, masking the
plight of the lower and middle class. The latter can even be in decline while
the top 20% are making out like bandits by outsourcing chunks of our wealth-
creating 'making things' industries to higher-profit-margin manufacturing
centers, and that wouldn't show up on some stats based on averages.

The workers get laid off while the CEOs, boards, 'pay consultants', and
shareholders pocket the increased profits. And when the top 20% controls 85%
of the wealth, guess who those shareholders are. Bottom 80% is increasingly
locked out of the wealth that can be generated from ownership, and forced to
subsist as wage slaves.

There are arguments that is what is beginning to happen now.

3\. _'This continual improvement in wealth amongst my own family is proof
enough that the very rich aren't impinging on what really matters, which is
improving living standards for the majority of people.'_

Your standard for 'proof' is pretty low. That's a single data point anecdote.
C'mon now.

4\. Extremely high wealth concentration has historically been associated with
revolutions and other unrest. The French Revolution comes to mind. I'll let
the amateur historians here argue over causality, but it's really not a road
we want to go down.

For anyone who believes in the adaptive, corrective power of free markets and
democratic government, increasingly extreme wealth concentration should be a
concern, since it can and does undermine exactly that.

PS - I'm not implying wealth redistribution is the solution, since that's just
a poor kluge that addresses the symptoms rather than the underlying problem/s.
But I do think the reasons for this accelerated wealth concentration need to
be clearly understood, and in some cases neutralized - unpunished financial
fraud that led to the crisis, CEO pay based on board & pay consultant
connections, free trade with countries that allow effective slave labor, among
others.

~~~
potatolicious
> _"Extremely high wealth concentration has historically been associated with
> revolutions and other unrest."_

The truest statement of all. American history books would glorify the American
Revolution as a battle against tyranny for freedom, but above anything it was
a battle against extreme economic exploitation.

Just like the French Revolution... just like the Russian Revolution... just
like the Chinese Civil War...

The rich are digging their own graves. No amount of economic power will hold
back a sea of desperate, furious peasants who have nothing left to lose and
every desire to see your head on a stick. I'm not looking forward to that
mess.

~~~
tomjen3
Oh please, get a fucking grip on reality for fuck sake. Those populations
starved for _years_ under insanely despotic regimes.

Today even poor people have too much to eat (look at obesity rates) and _leave
tvs behind when they loose their house cause it isn't worth taking with them_.
Your computer would have been worth fighting a war over 200 years ago.

To suggest that we are anything close to a "sea of desperate, furious peasants
who have nothing left to lose and desire to see your head on a stick" while
the peasents have access to better food, medical care, running water,
communications, transportation and entertainment that the Sun King ever
dreamed of shows how crazy that argument is.

~~~
mattobrien
Marie Antoinette would approve of that sentiment. Let them eat Big Macs?

~~~
tomjen3
They have access to Big Macs, they are one of the cheapest foods ever. Do you
think anybody would have cared about that cake remark (which she never said)
if they really had eaten cake instead?

------
pero
"Peter Lindert is an economist at the University of California at Davis and
one of the leaders of the “deep history” school of economics, a movement
devoted to thinking about the world economy over the long term—that is to say,
in the context of the entire sweep of human civilization."

North America: "Deep history" school of economics

Rest of the World: "Marxist"

Stuart Hall must be impressed...

~~~
gwern
Pattern match detected: 'Deep history' and 'Marxism' both discuss human
economies over millennia. Conclusion: Deep history == Marxism.

Pattern match detected: 'George W. Bush' and 'a duck' both have 2 legs.
Conclusion: George W. Bush == a duck.

~~~
wazoox
> _Conclusion: George W. Bush == a duck._

You're probably onto something here.

------
relic17
Sadly, yet another author who either did not bother to read and think about
Ayn Rand's work, or, worse, pretends to have NOT understood it.

~~~
forensic
explain

~~~
sp332
Rich people already have power. Trying to minimize their political power, in
favor of a more "democratic" system, is just denying the reality that the rich
are powerful. If the government antagonizes rich people, the rich will fight
back economically until they get what they want anyway (with lots of
collateral damage). On the other hand, if you give the rich political power to
begin with, you are merely acknowledging that they have power. Then they can
wield it more effectively, and (Ayn Rand hopes) society will be better off.

Edit: Also, income inequality is no big deal if the rich aren't stepping all
over the poor. As the article points out, the super-elite in Shanghai haven't
stopped the middle class in China from exploding, and average income is
growing strongly despite the financial crisis. The super-elite aren't hurting
anything.

~~~
forensic
That's a fair point but I don't think it is obvious from Atlas Shrugged.

You can read that book in many ways.

~~~
brc
You know I've wanted to read Atlas Shrugged for a long time but I can't find a
copy that isn't in microscopic brain-hurting print and crappy paper. Any
ideas?

~~~
joubert
You can also wait for the movie <http://www.imdb.com/title/tt0480239/>

~~~
tomjen3
When I clicked that link I though you were making a clever joke.

But they did actually film it - and it only took them 35 years to get it done.

