Income inequality: Our global oligarchs | The Economist via @yagbebi

Our global oligarchs

Jan 5th 2011, 20:39 by M.S.

TEN years ago Chrystia Freeland wrote  a very good book based on her experiences as the Financial Times' Russia correspondent in the 1990s. The funniest part comes when she's interviewing Mikhail Khodorkovsky, then at the top of his game as CEO of Yukos, over dinner. She asks him, as I recall, whether he feels any guilt for stripping the country's national assets for his own private gain during the infamous loans-for-shares affair, and he freaks out and calls her a "mediocre intellect". It's funny because it's not true! Chrystia Freeland is extremely smart. Meanwhile, this month Mikhail Khodorkovsky was sentenced to his second consecutive trumped-up seven-year jail term. (I believe Vladimir Putin has issued an ukaz that Mr Khodorkovsky will serve this term in a palace made entirely of ice.) And Ms Freeland has a new piece in this month's Atlantic that argues that, much like the Russian oligarchs of the 1990s, today's wealthy elites in America, Britain, Europe, the Far East and so forth don't give a damn about the countries where they were born, or where they technically reside in the intervals between private-jet excursions:

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.

...[T]he global “nation” in which they increasingly live and work is doing fine—indeed, it’s thriving. As a consequence of this disconnect, when business titans talk about the economy and their role in it, the notes they strike are often discordant: for example, Goldman Sachs CEO Lloyd Blankfein waving away public outrage in 2009 by saying he was “doing God’s work”; or the insistence by several top bankers after the immediate threat of the financial crisis receded that their institutions could have survived without TARP funding and that they had accepted it only because they had been strong-armed by Treasury Secretary Henry Paulson...For the super-elite, a sense of meritocratic achievement can inspire high self-regard, and that self-regard—especially when compounded by their isolation among like-minded peers—can lead to obliviousness and indifference to the suffering of others.

Unsurprisingly, Russian oligarchs have been among the most fearless in expressing this attitude. A little more than a decade ago, for instance, I spoke to Mikhail Khodorkovsky, at that moment the richest man in Russia. “If a man is not an oligarch, something is not right with him,” Khodorkovsky told me. “Everyone had the same starting conditions, everyone could have done it.”...

Though typically more guarded in their choice of words, many American plutocrats suggest, as Khodorkovsky did, that the trials faced by the working and middle classes are generally their own fault. When I asked one of Wall Street’s most successful investment-bank CEOs if he felt guilty for his firm’s role in creating the financial crisis, he told me with evident sincerity that he did not. The real culprit, he explained, was his feckless cousin, who owned three cars and a home he could not afford.

I agree with that Wall Street investment banker: the global financial crisis was clearly caused by his cousin. Somebody should find that guy! He owes the rest of us a lot of money.

Ms Freeland expresses the hope towards the end of her article that the global super-rich will at some point realise that in the long run, by refusing to pay the taxes that are needed to maintain the infrastructure of the countries they operate in or to educate the workers they expect to staff their businesses, they are courting a disastrous political reaction: protectionism, confiscatory taxes, or something worse and more violent. I'm not entirely sure the super-rich need fear such a reaction. Back in mid-2009, Barack Obama told the assembled plutocrats of Wall Street that they ought to be more grateful to him; he was "the only thing standing between you and the pitchforks." The plutocrats smiled, and departed by helicopter. To the extent any pitchforks have been seen, they were applied to the Democrats' behinds last November. Perhaps, rather than attempting to stand between Wall Street and any hypothetical pitchforks, Mr Obama should have gotten out of the way.

The other day I was on a Singapore Airlines flight in which every video feature on the inflight entertainment system was preceded by an advertisement for condominiums in a luxury beachfront apartment/shopping development with three canted, burnished-steel towers supporting a huge steel lintel with an artificial park on top, trees, lake, and all, 200+ metres up. It looked like the spoiler of some gigantic Formula 1 racecar. As the ad played, a chyron across the bottom of the screen repeated something along the following lines: "Republic of Singapore, zero capital gains tax, zero wealth tax, zero inheritance tax..." ad nauseum. I sort of think this is the world the super-wealthy are operating in, one in which every threat made by some puny government can be flicked away by the threat of moving to Singapore or some other principality slavishly devoted to wealth. Though given that I was watching this ad in economy class, it's probably just some pathetic low-rent imitation of the real thing, which is in fact beyond the imagination of mere wage-earners like me. There's a Victor Pelevin short story along these lines, in which a Russian neuro-physicist discovers that the possession of a certain quantity of dollars propels people's consciousnesses into an alternative dimension; to all outward appearances such oligarchs seem to still function in our reality, but in fact they are experiencing a universe invisible and completely alien to us mortals. State security authorities promptly hook up a couple of money-nauts to a psychic imaging machine developed by the KGB and transfer billions of dollars to their accounts. It turns out that the universe, as they experience it, looks like a long corridor, lit with a faintly greenish light, with something unidentifiable just around the corner. It's a strangely haunting, off-kilter story. As Ms Freeland says, the Russians always seem to be sharper at expressing these kinds of things.

(Free exchange has more on this topic. Painting credit: Valery Ivanovich Jacobi, 1878. Empress Anne of Russia forces Prince Galitsyn to spend his wedding night in a palace of ice.)

via economist.com

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