The Rise of the New Global Elite

F. Scott Fitzgerald was right when he declared the rich different from you and me. But today’s super-rich are also different from yesterday’s: more hardworking and meritocratic, but less connected to the nations that granted them opportunity—and the countrymen they are leaving ever further behind.

By Chrystia Freeland

Image credit: Stephen Webster/Wonderful Machine

If you happened to be watching NBC on the first Sunday morning in August last summer, you would have seen something curious. There, on the set of Meet the Press, the host, David Gregory, was interviewing a guest who made a forceful case that the U.S. economy had become “very distorted.” In the wake of the recession, this guest explained, high-income individuals, large banks, and major corporations had experienced a “significant recovery”; the rest of the economy, by contrast—including small businesses and “a very significant amount of the labor force”—was stuck and still struggling. What we were seeing, he argued, was not a single economy at all, but rather “fundamentally two separate types of economy,” increasingly distinct and divergent.

This diagnosis, though alarming, was hardly unique: drawing attention to the divide between the wealthy and everyone else has long been standard fare on the left. (The idea of “two Americas” was a central theme of John Edwards’s 2004 and 2008 presidential runs.) What made the argument striking in this instance was that it was being offered by none other than the former five-term Federal Reserve Chairman Alan Greenspan: iconic libertarian, preeminent defender of the free market, and (at least until recently) the nation’s foremost devotee of Ayn Rand. When the high priest of capitalism himself is declaring the growth in economic inequality a national crisis, something has gone very, very wrong.

This widening gap between the rich and non-rich has been evident for years. In a 2005 report to investors, for instance, three analysts at Citigroup advised that “the World is dividing into two blocs—the Plutonomy and the rest”:

In a plutonomy there is no such animal as “the U.S. consumer” or “the UK consumer”, or indeed the “Russian consumer”. There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the “non-rich”, the multitudinous many, but only accounting for surprisingly small bites of the national pie.

Before the recession, it was relatively easy to ignore this concentration of wealth among an elite few. The wondrous inventions of the modern economy—Google, Amazon, the iPhone—broadly improved the lives of middle-class consumers, even as they made a tiny subset of entrepreneurs hugely wealthy. And the less-wondrous inventions—particularly the explosion of subprime credit—helped mask the rise of income inequality for many of those whose earnings were stagnant.

But the financial crisis and its long, dismal aftermath have changed all that. A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble.

Through my work as a business journalist, I’ve spent the better part of the past decade shadowing the new super-rich: attending the same exclusive conferences in Europe; conducting interviews over cappuccinos on Martha’s Vineyard or in Silicon Valley meeting rooms; observing high-powered dinner parties in Manhattan. Some of what I’ve learned is entirely predictable: the rich are, as F. Scott Fitzgerald famously noted, different from you and me.

What is more relevant to our times, though, is that the rich of today are also different from the rich of yesterday. Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves.

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6 Responses

  1. Am noticing some nasty similarities between legislative “inaction” and the days of regulatory forbearance (SL Crisis) and FSLIC…. I mean really, who wants to man up and say their agency sucks?

  2. Nice link on legislative in/action. Thanks for the bookmark.

    A quick read shows the sad fact that much if not most of the legislation is geared towards proper procedural rules i.e. serving notice of default correctly, or that foreclosure sales are properly noticed.

    Then comes NY State riding in on a white horse:

    A.B. 629
    S.B. 697
    Provides that only the owner and holder of a mortgage and note, or its agent, shall have standing to commence a mortgage foreclosure action; lack of standing shall be defense that may be raised at any time; requires the plaintiff in a foreclosure action to affirm that it is the holder and owner, or its designed agent, of the subject mortgage and note; the summons and complaint shall include a copy of the original mortgage and note, and all endorsements, assignments and transfers thereof, and any delegations of authority by the owner and holder of the mortgage and note.

    Now I ask you, how simple is that? Is that asking alot? Is there any reason on earth that this simple piece of legislation shouldn’t be implemented in all 50 states?

    Please write your legislators and discuss with them this simple line thought….all we are saying, is give justice a chance. Mirror NY!

  3. @stopGOVTwaste: Thanks for posting this. Unfortunately, many of these legislative attempts to curtail abuse have died or been “sent to committee”. The House Bill 1506 in Va. House of Delegates was posted on this site as was the article that Dan Pennell wrote describing the obscene committee hearing. He had given a presentation at the behest of the sponsor, Del. Bob Marshall, providing a power point presentation of the workings of MERS. At that hearing were the principals who were to decide on whether or not the Bill was submitted for a vote and…..wait for it…..multiple members of the Bankers Lobby. There! In the committee meeting. Their decision was to send a letter to the Governor’s task force. For consideration….in 2012.

  4. You see, I can understand the whole Republic thing when using it to minimize the cost of Government and other things like they protect minorities (supposedly), but once it inflates beyond what was constituted and creates class and other ‘privileged’ ‘immune’ etc. categories and ‘new’ government positions police, attorneys etc. that were never constituted it’s no longer a Republic and the bigger it gets the more Communist it becomes :O

    But What if we had or tried a true ‘Democracy’ (not that fake ‘representative’ one that doesn’t exist), I know James Madison said that they always tend to develope into the majority overpowering the minority.

    But at what point does that become the mandatory solution (from the current state we’re in) for the greater benefit and stability of the whole, when the current problem is being caused by the minority?

  5. stopgovtwaste-thanks for posting that information which provides all new state foreclosure legislation on a state-by-state basis. Notice the only entry for Pa.- “none”

  6. Foreclosures 2011 Legislation by State

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