Luxury has progressed: the rise of the global elite

I want to comment on this month’s Atlantic Monthly piece by Chrystia Freeland, “The Rise of the New Global Elite,” but before I get to that, I thought it might make for nice companion viewing to link to the new Audi ad.

Luxury isn’t “out” as it was in the late ‘60s, or “in” as it was in the ‘80s, it has just progressed to something more innovative and less stuffy.  The old aristocracy has given way to the new meritocracy.

Onto the Freeland piece…

The first ten or so pages are illustrative and full of rich anecdotes, but really nothing new.  The “global elite” are different from the old aristocratic elite in several ways: 1) they are interested in the creation of wealth as well as the consumption of wealth (as opposed to the exclusively consumption-focused aristocrats); 2) they have no ties to place or nation; 3) most were not born rich; 4) they prefer to set up their own Big Ideas philanthropies, rather than donate to existing charities; and 5) they have a higher self-regard… after all, it was their “hustle and intelligence” that earned them a spot at the top.

Before the crash of ’08, they were celebrated as heroes ushering in a new – and at the time, presumably more egalitarian – economic era.  But in the process, they created a completely insular world community that led them to be entirely disconnected from the rest of their countrymen and more connected to their own international counterparts.  After the crash, they could not relate to the pain the collapse caused everyday citizens; pain that the old aristocrats would’ve been more aware of since they at least shared a country with the other 99%.  To the global elite, the pain was a stumble; a minor, temporary glitch that could be kept in perspective when one considered all the good the new economy had achieved.  Their response was at best insensitive and at worst downright callous and it led to a small backlash.  Subsequently, there was a very minor bubbling up of “populist” reform suggestions (such as Obama’s proposal to raise taxes on private equity firm compensation – this is hardly Huey Long territory being debated).  But no matter how minor, it led to a “going Galt” moment (Freeland’s analogy, not mine) among many of the new breed, setting up a showdown between a sort of moderate neo-liberalism and an unchecked new capitalism.

That summarizes the first 12 pages of Freeland’s piece, a nice bit of journalism leading up to what could’ve been an appropriate Call to Action at the end.  Then there’s the last page.  Freeland, it turns out, believes that in “today’s hypercompetitive global environment, we need a creative, dynamic super-elite more than ever.”  The only needed change is that that elite should show a bit more humility.  Rather than blaming the caddy for the collapse or suggesting that middle-class Americans settle for significantly lower wages (both are mentioned in the piece), the global elite should quietly accept moderate checks on their power in order to stave off any greater backlash.  After all, occasionally giving ground to those moderate neoliberals is nothing compared to letting the frustration build until they are forced to hold off a full-scale attack from (God forbid,) the Protectionists.  We are warned that, while protectionism “didn’t bark” in 2010, it looms as a warning in the distance to be both feared and avoided.

There is nothing inherently wrong, the reader is left to understand, with being completely free of any concept of home, or loyalty to any particular place or people.  Rationally speaking, who can argue with one U.S.-based hedge fund CEO that “if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade.”  When there’s no such thing as country, I suppose it’s all the same.  The fact that those same four people in China and India who were just hypothetically lifted into the middle class could just as easily fall out of it as new markets open will almost certainly be rationalized similarly; with their fall opening the door for 8 people in [fill in countries here] to join the middle class, and on and on and on….  Innovation is the name of the game, and as long as the world economy grows, exactly who benefits is beside the point.  They are, in the words of Goldman Sachs CEO Lloyd Blankfein, “doing God’s work.”

The fact is though that Freeland’s concerns about the likelihood of a backlash are, sadly, overstated.  My own guess is that the super-rich and placeless can pick fight after fight against the softest demands on them without sparking a particularly large backlash.  Sometimes they’ll win battles and sometimes they’ll lose, but even their losses won’t be too painful, and won’t ultimately change the way they do business.  The appointments of Bill Daley and Gene Sperling (author of the “The Pro-Growth Progressive”) demonstrate pretty clearly that Obama’s interpretation of the 2010 election cycle was more in keeping with the Going Galt angle of the backlash, and not of the Unholy Washington-Wall Street Alliance variety, both of which could have justifiably been named the source of voter outrage.

There will always be some, like myself, who believe that on the whole the emergence of the Global Elite is a net negative – certainly for my country, which is important enough, but I would also suggest for the world – and who believe that Freeland’s bogeyman of protectionism might not be such a bad idea.  But when the worst national recession since the Great Depression somehow leads to a neo-Randian movement, I have to think that the global elite can rest peacefully.