Transcript The Global Elite - Globalization: Social & Geographic Perspectives

The Rise of the
New Global Elite
Chyrstia Freeland, The Atlantic,
Jan/Feb 2011
Is growing income inequality a
“national crisis”?
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Even “market fundamentalists” like former
Fed Chairman Alan Greenspan think so
Between 2002 and 2007, 65% of all income
growth went to the top 1% of the population
Though world GDP has risen and world poverty
has declined significantly, income inequality
within nations has been growing
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Though China’s middle class has grown
exponentially and tens of thousands have
been lifted out of poverty, the superelite has
pulled away
Income inequality has also increased in
developing markets like India and Russia,
and across much of industrialized West, from
the laissez-faire US to social democratic
Canada and Scandinavia
There are fears we live in a
plutocracy, in which the rich have
outsize political influence
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plutocracy: rule by the wealthy, or power
provided by wealth
oligarchy: a society or social system ruled by
a few people
Rise of the plutocracy is
driven by two phenomena:
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the revolution in information technology
the liberalization of global trade
the international conference
circuit
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‘The real community life of the 21st century
plutocracy occurs on the international
conference circuit, e.g.,
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World Economic Forum in Davos, Switzerland
Bilderberg Group
TED (Technology, Entertainment, Design)
conference
Google’s Zeitgeist conferencec
philanthrocapitalism
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Philanthropy has long been seen as a path to social
acceptance and immortality for the superwealthy
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e.g., Andrew Carnegie transformed his image from a
“robber baron” to a “secular saint”
Today’s plutocrats tend to bestow their fortunes in
the way they made them: entrepreneurially
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Rather than merely donating to charities or institutional
endowments, they use wealth to test new ways to solve big
problems
“Rootless cosmopolitans”?
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The global super-elite don’t seem to have a
country of their own, no single national loyalty
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Mohamed ElErian, CEO of Pimco, the world’s
largest bond manager
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Son of an Egyptian father and French mother
Spent childhood between Egypt, France, US, UK, and
Switzerland
Educated at Cambridge and Ozford
Leads a US-based company that is owned by a
German financial conglomerate (Allianz SE)
America’s super-elite is adjusting
to the more global perspective
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In a recent internal debate in one of the
world’s largest hedge funds, based in the US,
a senior exec argued that the hollowing out of
the American middle class really didn’t
matter:
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“…if the transformation of the world economy lifts
4 people in China and India out of poverty and
into the middle class, and means one American
drops out of the middle class, that’s not such a
bad trade”
In a globalized economy, the American
middle class is no longer “protected” from
foreign competition
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Most elites aren’t too sympathetic: “So if you’re
going to demand 10 times the paycheck [of a
lower-cost worker abroad], 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.”
Speaking of value…
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In 2009 the top 25 hedge-fund managers were
paid more than $1 billion each – equaling they
pay of 658,000 entry-level teachers (at salary
of about $38,000/yr, including benefits)
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Those educators could have brought along over 13
million young people, assuming a class size of 20
Revolt of the elites
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There’s a growing disconnect between US business
elites and the US workforce
Elites see the world differently
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See their wealth as a consequence of merit and hard work
Feel victimized by criticism, while they see themselves
“doing God’s work,” as the CEO of Goldman Sachs put it
Generally blame indebted working and middle classes for
their economic troubles – and for the financial crisis
Bridging the divide
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“And ultimately, that is the dilemma: America
really does need many of its plutocrats. We
benefit of the goods they produce and the
jobs they create. And even if a growing
portion of those jobs are overseas, it is better
to be the home of these innovators—native
and immigrant alike—than not. In today’s
hypercompetitive global environment, we
need a creative, dynamic super-elite more
than ever.”