Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else by Chrystia Freeland Page B
Authors: Chrystia Freeland
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should go back to work.’”
BYD’s response to India’s more aggressive unions, Ms. Li said, was to back away from its initial plan to make the country “kind of our backyard for manufacturing . . . So, we have five thousand to six thousand employees there. Initially we wanted to grow huge, like we can be over fifty thousand jobs over there.”
As in the West, moving production somewhere else is one response to bolshie unions. The other is technology. As Kiran Mazumdar-Shaw, India’s richest self-made woman entrepreneur, said to her employees: “If you join the union, I’m going to automate, and you’ll all be out of jobs.” And here’s the twist—she made this comment to a New Yorker journalist whose profile largely focused on Mazumdar-Shaw’s philanthropic commitment to improving the lives of India’s poorest people. The union didn’t listen, so Mazumdar-Shaw automated their jobs away.
T HE W INNERS: T HE D ATA
We do know one thing for certain—whether it is Indian entrepreneurs like Shaw, or Chinese executives like Li, or Western financiers like O’Neill, those at the top around the world are doing very well indeed in this era of the twin gilded ages. One of the most respected students of today’s surging income inequality is Emmanuel Saez, a lanky, curly-haired forty-one-year-old Frenchman who teaches economics at UC Berkeley and won one of his profession’s top prizes in 2009. Working with his colleague Thomas Piketty of the Paris School of Economics, Saez has documented the changing shape of income distribution in the United States over the past century.
From the mid-1920s to 1940, the share of income going to the top 10 percent was around 45 percent. During the Second World War it declined to around 33 percent and remained essentially flat until the late 1970s. Since then, it has been climbing dramatically. By 2006, the top 10 percent earned 50 percent of national income, even more than it did in 1928, at the height of the Roaring Twenties.
But the biggest shift in income isn’t between the top 10 percent and everyone else—it is within the top 10 percent, Saez and Piketty found. Almost all the gains are at the very apex of the distribution: during the economic expansion of 2002 to 2006, three-quarters of all income growth in the United States went to the top 1 percent of the population. The social gap isn’t just between the rich and the poor; it is between the super-rich and the merely wealthy (who may not feel quite so wealthy when they compare themselves with their super-successful peers).
Here’s how that translated into U.S. average family income in 2010, according to Saez: Families in the top 0.01 percent made $23,846,950; that dropped sharply to $2,802,020 for those in the top 0.1 to 0.01 percent. Those in the top 1 percent made $1,019,089; those in the top 10 percent made $246,934. Meanwhile, the bottom 90 percent made an average $29,840.
Even among the super-super-rich—the people on the annual Forbes rich list—the greatest gains have been at the tip of the pyramid. A recent academic study of the Forbes list of the four hundred richest Americans found that between 1983 and 2000 all of the wealthy prospered, but the very richest did best of all. In the course of those years, the top 25 percent of this group became 4.3 times wealthier, while the bottom 75 percent of them got “only” 2.1 times richer.
In 2011, in its annual report on the world’s rich, Credit Suisse, the international investment bank, noted that the number of super-rich—whom it delicately dubs “ultra high net worth individuals,” or UHNWIs, with assets above $50 million—surged: “Although comparable data on the past are sparse, it is almost certain that the number of UHNW individuals is considerably greater than a decade ago. The general growth in asset values accounts for some of the increase, along with the appreciation of other currencies against the U.S. dollar. However, it also appears
BYD’s response to India’s more aggressive unions, Ms. Li said, was to back away from its initial plan to make the country “kind of our backyard for manufacturing . . . So, we have five thousand to six thousand employees there. Initially we wanted to grow huge, like we can be over fifty thousand jobs over there.”
As in the West, moving production somewhere else is one response to bolshie unions. The other is technology. As Kiran Mazumdar-Shaw, India’s richest self-made woman entrepreneur, said to her employees: “If you join the union, I’m going to automate, and you’ll all be out of jobs.” And here’s the twist—she made this comment to a New Yorker journalist whose profile largely focused on Mazumdar-Shaw’s philanthropic commitment to improving the lives of India’s poorest people. The union didn’t listen, so Mazumdar-Shaw automated their jobs away.
T HE W INNERS: T HE D ATA
We do know one thing for certain—whether it is Indian entrepreneurs like Shaw, or Chinese executives like Li, or Western financiers like O’Neill, those at the top around the world are doing very well indeed in this era of the twin gilded ages. One of the most respected students of today’s surging income inequality is Emmanuel Saez, a lanky, curly-haired forty-one-year-old Frenchman who teaches economics at UC Berkeley and won one of his profession’s top prizes in 2009. Working with his colleague Thomas Piketty of the Paris School of Economics, Saez has documented the changing shape of income distribution in the United States over the past century.
From the mid-1920s to 1940, the share of income going to the top 10 percent was around 45 percent. During the Second World War it declined to around 33 percent and remained essentially flat until the late 1970s. Since then, it has been climbing dramatically. By 2006, the top 10 percent earned 50 percent of national income, even more than it did in 1928, at the height of the Roaring Twenties.
But the biggest shift in income isn’t between the top 10 percent and everyone else—it is within the top 10 percent, Saez and Piketty found. Almost all the gains are at the very apex of the distribution: during the economic expansion of 2002 to 2006, three-quarters of all income growth in the United States went to the top 1 percent of the population. The social gap isn’t just between the rich and the poor; it is between the super-rich and the merely wealthy (who may not feel quite so wealthy when they compare themselves with their super-successful peers).
Here’s how that translated into U.S. average family income in 2010, according to Saez: Families in the top 0.01 percent made $23,846,950; that dropped sharply to $2,802,020 for those in the top 0.1 to 0.01 percent. Those in the top 1 percent made $1,019,089; those in the top 10 percent made $246,934. Meanwhile, the bottom 90 percent made an average $29,840.
Even among the super-super-rich—the people on the annual Forbes rich list—the greatest gains have been at the tip of the pyramid. A recent academic study of the Forbes list of the four hundred richest Americans found that between 1983 and 2000 all of the wealthy prospered, but the very richest did best of all. In the course of those years, the top 25 percent of this group became 4.3 times wealthier, while the bottom 75 percent of them got “only” 2.1 times richer.
In 2011, in its annual report on the world’s rich, Credit Suisse, the international investment bank, noted that the number of super-rich—whom it delicately dubs “ultra high net worth individuals,” or UHNWIs, with assets above $50 million—surged: “Although comparable data on the past are sparse, it is almost certain that the number of UHNW individuals is considerably greater than a decade ago. The general growth in asset values accounts for some of the increase, along with the appreciation of other currencies against the U.S. dollar. However, it also appears
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