Friday 28 November 2014

Business: Middle class has most to lose as rich chase billions

Daniel Akst

Published 08/11/2012 | 05:00

An Egyptian telecom magnate, discussing how much of a fortune is enough, figures on $1bn: "That's my number for the minimum," he says.

You can meet him in 'Plutocrats,' Chrystia Freeland's exploration of the super-rich.

Moving from Davos to Martha's Vineyard as she stalks her subjects in their luxurious lairs, Freeland observes the subtly malign effects great wealth can have.

"Being self-made is central to the self-image of today's global plutocrats," she writes of these financiers and Internet tycoons. "It is how they justify their luxuries, status and influence."

Freeland finds a general disregard for the sufferings of the middle class and an obsession with not paying more taxes (even though marginal tax rates are historically low).

In the US, where finance has played a disproportionate role in producing mega-wealth, Freeland's subjects tend to blame government or the middle-class for the country's economic woes, not the recklessness of bankers.

"It is this not-our-fault mentality that accounts for the plutocrats' profound sense of victimisation in the Obama era," Freeland writes.

To people whose every whim is instantly satisfied, the slightest inconvenience can provoke outrage.

In one case, she reports cadging a ride with a financier. As they struggled to find his car and driver at Heathrow Airport, he "fumed about the wait, berating himself for breaking with his usual practice" of having his assistant, who was in California, be on call at all hours of the day and night to ensure his comfort.

The super-rich don't just live in a bubble, evidently; they're encased in a distortion field.

Freeland is acutely conscious of the way inequality and plutocracy have risen in tandem, even as growth in the developing world has helped shrink inequality between nations.

Of course, the rise of a vast new Asian middle class is small comfort to the ailing US middle class, whose income looks increasingly paltry next to the vast sums being made by the new fraternity of wealth.

Citigroup has coined the term "plutonomy" to describe what Freeland calls this "new virtual nation of mammon," and even created an 'Hourglass Index' which tracks stocks catering to the high and low ends of an economy, squeezing the middle class.

Anecdotes

Freeland is an insightful and indefatigable reporter, but she doesn't present a strong central argument about how, or whether, to counteract the trends she describes.

While often informative, the book is poorly organised, with thematic chapters that are hard to tell apart and countless anecdotes that go on too long.

Freeland concludes by reminding us of Venice, which 700 years ago made itself a wealthy imperial power through commerce. The city fell into decline when its own plutocrats tried to cement their advantages, thereby stifling the openness that accounted for the society's dynamism.

Today, of course, Venice is sinking. Freeland's book will make people wonder if we are, too.

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