Plutocrats: Meet the 0.01%

In Plutocrats, Chrystia Freeland charts the rise of a new nation—the Republic of the Insanely Wealthy.

 
the-super-rich
(Photo illustration: AP; iStock; Ronit Novak; Getty)

Last winter, as the final Occupy protesters were taking down their tents and packing up their sleeping bags, a particular genre of article began appearing on North American newsstands with word from the other side of the barricades. The pieces captured the view from the 1%, and the view, it turned out, wasn’t all rosy.

In Toronto Life, writer Jonathan Kay ignored the workaday dictionary definition of “middle” to argue that being in the top percent of Canadian income earners can “seem positively middle-class” once you factor in the artisanal cheeses, granite kitchen counters and “wardrobe refreshes” that can eat into a paycheck. Speaking to a Bloomberg reporter, wealthy Wall Streeters likewise explained how smaller bonuses had left them selling their motorcycles, searching for discounted salmon, and generally feeling financially and emotionally bereft. “The New York that I wanted to have is still just beyond my reach,” said one man earning $350,000 a year. “People who don’t have money don’t understand the stress,” said a partner at an accounting firm.

In tough economic times, the laments of the wealthy seemed remarkably tone deaf. Gawker captured the absurdity of the argument with typical snark: “Sure, it’s an objectively large sum of money.…But it is far smaller after I spend it.”

Still, for those who don’t share the worries of the ultra-rich—that is, rounding up slightly, everyone—the pieces offered a fascinating window into the minds of the 1%. The very rich, as F. Scott Fitzgerald once wrote and ten thousand pundits have since repeated, are not like you and me. As Chrystia Freeland writes in her new book Plutocrats, what’s worth noting is that today’s rich aren’t even like the rich of the past. If the wealthy of Fitzgerald’s day were on a different level than the average person, the super-rich of the 21st century exist in an entirely different galaxy. Freeland’s book is built on the premise that, in a world where a tiny number of people control an increasingly large portion of the wealth, understanding these individuals—how they got there and what they think—is the key to understanding the changing world economy.

Freeland is a Canadian-born writer who has spent the past decade hobnobbing with the world’s super-wealthy at Davos and Aspen as a business reporter with the Financial Times and Reuters. She is hardly a raving socialist, but the numbers in Plutocrats are as stark as any you might have seen on an Occupy placard. In 1980, the average American CEO made 42 times the salary of an average worker. Today that has exploded to 380 times. Emmanuel Saez and Thomas Piketty, two French economists who have most thoroughly charted the course of income distribution in America over the past century, found that during the American economic recovery of 2009–10, an astounding 93% of profits went to the top 1%. Within that group, it was the people at the very top, the 0.01%, who took home 37% of the gains.

It’s not just in America, says Freeland. In Finland, Sweden, Germany, Israel and New Zealand, the gap between the rich and the poor has grown at least as quickly as in the United States. In the developing world, plutocrats in places like China, India, Brazil and Russia are enjoying an outsized portion of their countries’ growing economies.

The result, Freeland argues, is the creation of a globetrotting pack of super-elites who have more in common with one another than with the average person in their home countries. “Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves,” she writes.

The other characteristic that distinguishes today’s ultra-rich from those of Fitzgerald’s era is that, unlike the heirs and heiresses of the past, most of today’s super-wealthy are what Freeland calls the “working rich.” They include the Zuckerbergs of this world—bright middle-class kids who went to elite universities and made fortunes in Silicon Valley. They’re people like billionaire Leon Cooperman, the son of a plumber, who founded his own hedge fund, or Mitt Romney, who proudly told a group of millionaires during a fundraiser that “everything that Ann and I have, we earned the old-fashioned way, and that’s by hard work.”

The value of this work, of course, is up for debate, and Freeland makes an effort to differentiate between plutocrats who are creating wealth and those who are simply using their wiles and political power to get a bigger slice of the pie. But regardless—because today’s super-rich see themselves as self-made, they often have a less-than-charitable view of those who haven’t risen to their heights.

In those “view from the 1%” articles, it was impossible not to note how oblivious the interviewees were to the reality of their privileged positions. It’s a mindset that Freeland observed in her travels through the upper-crust. “If a man is not an oligarch, something is not right with him,” one Russian businessman told her. Stephen Schwarzman, the billionaire head of private-equity giant Blackstone, famously compared Obama’s plan to raise taxes on private-equity-firm compensation to “like when Hitler invaded Poland in 1939.” And in November 2011, one former trader used his daily investment note to defend his brethren: “Do we feel bad for the growing gap between the rich and the poor in the U.S.? Of course not; we celebrate it, for we were poor once and we are reasonably wealthy now. We did it on our own, by the sheer dint of will, tenacity, street smarts and the like.”

So while media tales of one percenters searching for discount fish might be amusingly outrageous, after dozens of anecdotes in Plutocrats, the sense of entitlement from a group of individuals so rich and powerful assumes a slightly more unnerving tone. The concern is that once a plutocrat has built his or her own fortune, the next logical step is to defend it—from the taxman, naturally, but also from any pesky competitors assailing from below. As Freeland writes, once you’ve climbed to the top, it only makes sense to pull the ladder up behind you.

Nicholas Hune-Brown is a Toronto-based writer and budding plutocrat

Comments are closed.