Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland
Authors: Chrystia Freeland
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biggest shifts of wealth and income disparity ever in history. It irritates me when I hear and read endless distorted stories of how only a few benefit and increase their wealth from the fruits of globalization, to the detriment of the marginalized masses. Globalization may widen inequality within certain national borders, but on a global basis it has been a huge force for good, narrowing inequality among people on an unprecedented scale. Tens of millions of people from the BRICs and beyond are being taken out of poverty by the growth of their economies. While it is easy to focus on the fact that China has created so many billionaires, it should not be forgotten that in the past fifteen or so years, 300 million or more Chinese have been lifted out of poverty. . . . We at Goldman Sachs estimate that 2 billion people are going to be brought into the global middle class between now and 2030 as the BRIC and N-11 economies develop. . . . Rather than be worried by such developments, we should be both encouraged and hopeful. Vast swaths of mankind are having their chance to enjoy some of the fruits of wealth creation. This is the big story.
Mr. O’Neill’s empathy for the prospering people of China and India isn’t the only reason to be optimistic about the twin gilded ages. Another is that the experience of the past two centuries has taught us that, with time, the creative destruction of capitalism inevitably brings an overall improvement in everyone’s standard of living.
That was what John Baranowski, the general manager of accounting and operations at Greyhound Lines, the bus company based in Dallas, Texas, argued in reply to an essay by W. Brian Arthur, a professor at the Santa Fe Institute, about the computer revolution and the rise of a second economy in which most of the work is done by machines talking to other machines, with little intervention by humans. “Wealth will be created but also spent in some form we cannot imagine,” Mr. Baranowski wrote. “Past productivity eliminated millions of jobs and created millions more—and while it is highly disruptive, there is no precedent for a long-term negative impact on total jobs and no reason to expect that the future (and the second economy’s impact) will be different.”
Professor Arthur’s counterpoint was to hope that Mr. Baranowski is right, but to caution that we have no proof that today’s technology revolution really will eventually make all of us richer.
“I only hope you are right that the new prosperity will create new jobs,” Professor Arthur wrote. “The idea that this always happens is called Say’s law in economics, and it’s now held by economists to be a tenet of faith, not true in reality. Since the second economy began, in the early and mid-1990s, we’ve had wave after wave of downsizing and layoffs, and now we have ongoing structural joblessness. I hope jobs will be created, and maybe they will. More likely, the system, as so many times before in history, will have to readjust radically. It needs to find new ways to distribute the new wealth.”
H APPY P EASANTS AND M ISERABLE M ILLIONAIRES
Both the Western critics and the Western fans of globalization tend to agree about one thing: the emerging markets, particularly their rising middle classes, are among the big winners. As far as GDP goes, that is certainly true. But, just as the West’s first gilded age was not perfectly benign for everyone living through it, the developing world’s age of creative destruction is bumpy.
For one thing, international studies of the correlation between income and happiness have recently uncovered a counterintuitive connection. Until a few years ago, the reigning theory about money and happiness was the Easterlin paradox, the 1974 finding by Richard Easterlin that, beyond a relatively low threshold, more money didn’t make you happier. But as better international data became available, economists discovered that the Easterlin paradox
Mr. O’Neill’s empathy for the prospering people of China and India isn’t the only reason to be optimistic about the twin gilded ages. Another is that the experience of the past two centuries has taught us that, with time, the creative destruction of capitalism inevitably brings an overall improvement in everyone’s standard of living.
That was what John Baranowski, the general manager of accounting and operations at Greyhound Lines, the bus company based in Dallas, Texas, argued in reply to an essay by W. Brian Arthur, a professor at the Santa Fe Institute, about the computer revolution and the rise of a second economy in which most of the work is done by machines talking to other machines, with little intervention by humans. “Wealth will be created but also spent in some form we cannot imagine,” Mr. Baranowski wrote. “Past productivity eliminated millions of jobs and created millions more—and while it is highly disruptive, there is no precedent for a long-term negative impact on total jobs and no reason to expect that the future (and the second economy’s impact) will be different.”
Professor Arthur’s counterpoint was to hope that Mr. Baranowski is right, but to caution that we have no proof that today’s technology revolution really will eventually make all of us richer.
“I only hope you are right that the new prosperity will create new jobs,” Professor Arthur wrote. “The idea that this always happens is called Say’s law in economics, and it’s now held by economists to be a tenet of faith, not true in reality. Since the second economy began, in the early and mid-1990s, we’ve had wave after wave of downsizing and layoffs, and now we have ongoing structural joblessness. I hope jobs will be created, and maybe they will. More likely, the system, as so many times before in history, will have to readjust radically. It needs to find new ways to distribute the new wealth.”
H APPY P EASANTS AND M ISERABLE M ILLIONAIRES
Both the Western critics and the Western fans of globalization tend to agree about one thing: the emerging markets, particularly their rising middle classes, are among the big winners. As far as GDP goes, that is certainly true. But, just as the West’s first gilded age was not perfectly benign for everyone living through it, the developing world’s age of creative destruction is bumpy.
For one thing, international studies of the correlation between income and happiness have recently uncovered a counterintuitive connection. Until a few years ago, the reigning theory about money and happiness was the Easterlin paradox, the 1974 finding by Richard Easterlin that, beyond a relatively low threshold, more money didn’t make you happier. But as better international data became available, economists discovered that the Easterlin paradox
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