What does it take to reach the pinnacle of the economic hourglass? Choosing the right parents, homeland, and birth year helps. So does having the right talents and interests. Oh, and get help from The Powers That Be. (More)
Plutocrats, Part II: The Top of the Hourglass
This week Morning Feature considers Chrystia Freeland’s Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. Yesterday we considered the changing shape of the U.S. economy, and how we fit in the global economy. Today we see how plutocrats have risen, in the U.S. and around the world, to become more citizens of a super-rich global village than of their homelands. Tomorrow we’ll conclude with whether such high levels of income inequality are sustainable in democratic societies.
Chrystia Freeland is a veteran financial reporter and is now Reuters‘ global editor-at-large. Born in Alberta, Canada and educated at Harvard and Oxford, she began her career as a correspondent covering the Ukraine for the Financial Times, the Washington Post, and the Globe and Mail. She was later the deputy editor of the Globe and Mail, and the U.S. managing editor of the Financial Times. She has been honored as a Young Global Leader by the World Economic Forum, and won the 2004 Business Journalist of the Year Award.
The ‘Working Rich’
It used to be easy to get rich. Just choose parents who were landed aristocracy and wait to inherit your land and title. It helped to be a firstborn son. Younger siblings could sometimes be a problem, but less often than movie-style histories suggest. Alas, those pesky commoners were a problem and, because of them, choosing the right parents and waiting to inherit your land and title is no longer a good way to get rich. Now you have to work, just like those pesky commoners. Well … not just like them….
Yet Freeland emphasizes that most of today’s plutocrats do work. They’re mostly CEOs and financiers, or superstar professionals – lawyers, architects, designers, personal chefs, etc. – whose clientele are CEOs and financiers. Some of the CEOs are in long-established industries like oil or mining, shipping or retail giants. Many are in newer industries like computer software or social networks. Many of the financiers work at banks, while others work for private equity or hedge firms. Almost all plutocrats are cozy with at least a few key political leaders, and many are or have been political leaders themselves.
But few of today’s plutocrats spend most of their time sipping cocktails around the pool at one of their many homes while toting up the compounding interest on their ever-accumulating wealth. They go to offices. They fly around the world attending conferences, meeting with other plutocrats, making deals. One took his daughter to climb Mount Kilimanjaro for her 18th birthday, and what struck her most about the two-week trip was that it was the longest period they’d had together in her entire childhood. If you squint really hard, you can almost see the exposed bones of their overworked fingers.
Getting to the Top
How do you become a plutocrat? Well, if you’re asking that question and you’re over age 35, you’ve almost certainly already missed whatever slender chance you had to join the super-rich. In fact, Freeland writes, if you’re not earning at least six-figures by age 30, you’ll probably never join the Plutocrats Club. Sorry.
So who does get in? Freeland cites several common factors:
- Alpha Geeks – These guys, and they’re almost all guys, went to elite universities and took a lot of math classes. Some were computer nerds. Some were statistics or economics prodigies. Many tried to start their first businesses while in college, and some succeeded. Others were recruited into Wall Street or Silicon Valley firms. While Bill Gates and Steve Jobs famously didn’t finish college, they made their splash way back in Ye Olde Dayes. To join the Plutocrats Club today, you pretty much do need a degree from a place like Harvard, Yale, Stanford, Wharton, Oxford, Cambridge, or Moscow Polytech. Many are what Freeland calls outside-insiders: born to upper middle class but not super-rich families, yet still attending the elite universities, mixing new ideas with new connections.
- Revolution Responders – Most of the world’s plutocrats struck it big on revolutions. In the U.S. and western Europe, many of today’s plutocrats surfed the wave of the information revolution, but others found waves like big box retail or modern finance. In eastern Europe, Asia, and elsewhere, the revolutions were often not mere metaphors, and those with nerve and connections and good luck got rich during the transition from state-run to market economies. Others caught rides as their countries’ economies lifted off through foreign investment and industry migration.
- Rent Seekers – Almost all plutocrats get help from governments, if only when government looks the other way while the plutocrats find new ways to feather their own nests. Many are more blatant about it. Carlos Slim bought Mexico’s public telephone company, with a contract that guaranteed an eight-year monopoly. One Indian plutocrat said the hardest part of getting rich was figuring out who to bribe to get the best contracts. Most of China’s plutocrats are or have parents in the top echelons of government, which is nice until the other top-level government officials decide to set an example. China executed eleven billionaires from 2003 to 2011 and several others ended up in prison, few for anything their accusers had not also done.
A Global Village
Having made it to the top of the hourglass, the world’s plutocrats increasingly live together in a traveling global village. Their primary homes may be in New York, London, Hong Kong, Dubai, Mumbai, or Moscow, but most know their way around Cannes or Aspen better than their home cities. From the English summer season of horse races and polo matches to the film festivals, the regattas, the charity galas, the TED conferences, the business roundtables, the World Economic Forum at Davos … well, you should be grateful you don’t get a paid vacation. All that travel is exhausting.
That all adds up to plutocrats spending most of their time with other plutocrats, and a plutocrat from Boston feels more kinship with another plutocrat from Beijing than with some random commoner on the Commons. Many plutocrats talk of being “global citizens,” and many mean that in an enlightened, almost-progressive, “let’s set aside nationalism and work together on our problems” sense.
The difference lies in how they define “we” and “our problems.” Their “we” is usually other plutocrats, and “our problems” are the problems plutocrats consider important. And as we’ll see tomorrow, many of them resent that the rest of “we” don’t appreciate how wonderful they are, and that the rest of “we” insist they should help us with … well … our problems.