Book Review: "Plutocrats" Examines Rise of the Super Rich

Search form

Book Review: "Plutocrats" Examines Rise of the Super Rich

Book Review: "Plutocrats" Examines Rise of the Super Rich
Fri, 11/16/2012 - by Jan Rosen
This article originally appeared on USA Today

The birth of the Occupy Wall Street protest movement last September helped return America's rising inequality to a dominant place in the public eye. Though most rhetoric has focused on the growing rift between the 1% and everyone else, here comes a book to warn that the most shocking story may be the rise of those even higher up the socioeconomic ladder.

According to writer Chrystia Freeland, the gap between the super rich and everyone else is wider today than it's been since the Gilded Age, the late 19th-century period when dishonest financial titans amassed eye-popping wealth from the country's industrialization, and income taxes did not yet exist.

In the 21st century, who are the super-wealthy and how did they amass their fortunes? In "Plutocrats: The Rise of the New Global Super Rich and the Fall of Everyone Else," Freeland gets financially intimate with a new breed of global billionaires and details the economic and political forces that have helped them rise above the rest of us.

Unlike the rich of yesteryear, today's titans are mostly self-made, and in an era of globalization, increasingly impervious to national borders. As Freeland writes, "they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home."

Freeland, a veteran financial reporter and digital editor at Thomson Reuters, draws on two decades of covering the global business elite to reveal a portrait of the ultra-rich that few other journalists have had the access to capture.

In Freeland's view, it is not individual plutocrats, per se, who should be held accountable for rising inequality. For the most part, they have been in the right place at the right time to capitalize on larger economic forces and public policy decisions that have enabled the very rich to "tilt the rules of the game in their favor."

She is far from a champion of the global plutocracy. But her interviews with several of its most visible members -- from Eric Schmidt, former CEO of Internet giant Google, to jailed Russian oligarch Mikhail Khodorkovsky – put human faces on the individuals, mostly men, who have risen to the height of global affluence.

In the United States, technology advances and globalization, which helped perpetuate economic stagnation among the middle class, are an important part of the story. Yet, a shift in public policy has been just as crucial in eroding what Freeland calls the "Treaty of Detroit:" the post-World War II era of high taxes, strong unions, and high minimum wages that for a while shrank the gap between the 1% and everyone else.

Since the late 1970s, Freeland explains, tax cuts and other forms of economic liberalization have reversed the tide in favor of the wealthy. This is particularly true in finance, where the creation and marketing of increasingly complex financial instruments -- spurred by deregulation -- allowed America's biggest banks, and their executives, to reap larger and larger windfalls.

"Much of the story of the rise of the 1%, and especially of the 0.1%," Freeland writes, "is the story of the rise of finance."

As Plutocrats explains, the extreme wealth of America's top financiers is a cautionary tale of so-called "rent seeking," an economic term describing enrichment through reallocation rather than the creation of wealth. This phenomenon is by no means unique to the U.S.

Take a look at China's National People's Congress. As the country evolves into an urbanized industrial superpower, China is becoming rife with rent-seeking billionaire legislators who are growing rich through ties to the state apparatus. In China, however, the enrichment of elites has coincided with a dramatic rise in the average citizen's living standards, which has not been the case in 21st-century America.

Freeland argues that this is the most worrisome aspect of the rise of the plutocrats: that America, long a land of economic opportunity, will increasingly veer toward oligarchy, with avenues for advancement shut off by elites who are determined to maintain their hold on power and "tempted to pull up the ladder they climbed to the top."

This shift away from a democratic, politically inclusive society, Freeland warns, would not be unprecedented among a major global power. A similar fate, she explains, befell 14th-century Venice, once the richest city in Europe. After prospering through policies that promoted social mobility, Venice fell into decay once the reigning elite used their wealth to shut out other would-be competitors – an era known as La Serrata, or the closure.

Unlike some critics on the left, Freeland does not vilify her super-rich protagonists – a nonpartisan approach that helps make Plutocrats harder to ignore. But her warning that the U.S. may someday face a Serrata of its own is a message – however uncomfortable – that Americans may want to heed, particularly at a time when the nation's economic future is so uncertain.

Article Tabs

Comcast spent $18.8 million on lobbying last year – among the top for U.S. corporations – and operates a giant revolving door with Washington, making it an already too-powerful communications giant.

Faceless hedge funds and nameless investors are replacing landlords in many low-income and foreclosed-on neighborhoods — often with disastrous consequences.

One lesson of the Heartbleed bug is that the U.S. needs to stop running Internet security like a Wikipedia volunteer project.

Corruption rules in India – and as the world’s largest democracy goes to the polls this month, the Common Man’s Party has emerged as a new hope promising a corruption-free future.

Depriving the homeless of their last shelter is Silicon Valley at its worst – especially when rich cities aren't doing anything to end homelessness.

Revolts are shaking the world, bursting in the most unexpected places, but they rarely take power. Is the big explosion still coming?

Posted 4 days 20 hours ago

Anyone who has ever gone "skipping," or "dumpster diving," knows that shops regularly throw out masses of perfectly edible food.

Posted 6 days 17 hours ago

The Vermont Senate passed a bill to require labeling on all GMO foods sold in the state – signaling a wave of nationwide victories against the Gene Giants may be underway.

Posted 4 days 19 hours ago

Life in tent encampments, vehicles, motels, and storage units - REAL CHANGE focuses on four men who sell Real Change News, a street newspaper in Seattle. Follow ROBERT, GEORGE, DANIEL, and BUDDY as they navigate the less visible side of homelessness in America. Despite their struggles, they persevere. Each sells newspapers to get by.

Posted 5 days 20 hours ago

From climate change to Crimea, the natural gas industry is supreme at exploiting crisis for private gain.

Posted 4 days 20 hours ago

Wal-Mart, one of the country's largest corporations, is selling Occupy Wall Street posters online. The company has itself been the target of demonstrations advocating for higher wages. On sale are large, panoramic posters of protesters camped out at Zuccotti Park in New York City, where the movement started in 2011.

Germany, China, Japan and India have thriving public banking systems. In America, we are so used to big banks that many of us don't even recognize we can create the same alternative.

The Careerists

The greatest crimes of human history are made possible by the most colorless human beings. They are the careerists. The bureaucrats. The cynics. They enforce the laws and the regulations. And they do not ask questions.

200,000 Greeks March on Parliament to Condemn Austerity

A general strike brought the country to a halt on Wednesday as hundreds of thousands of anti-austerity protesters took to the streets in the first mass confrontation with Athens's three-month-old coalition government.

Cyprus is hardly the only safe harbor for the tax-averse. Switzerland, Luxembourg, Malta and the Caymans are reminding those shaken by events in Cyprus that they remain open for business.

Sign Up