Freedland: author of "Plutocrats"...a credible canary in a global 'coal-mine'

As this plutocratic elite starts living more and more in its own world, able to create its own services, its connection to the rest of society and willingness to fund what the rest of society needs decreases. I feel that very much living in the United States and I see a really big contrast with Canada. I went to public schools; the longer I live outside a national health care system, the more I see its great benefits. But if you’re living in a place – and more and more the plutocracy is – where your kids go to private school, where you have private health care that is super Mercedes excellent, maybe where you’re even flying on private jets, your willingness to invest in all of that social infrastructure that everyone needs decreases. Not because you’re a bad person, just because you don’t have the same connection to it.

The other thing is that this group is really global. These guys live truly international lives. Their investment decisions are truly international. And that makes it really difficult for the nation state to regulate and to tax them. (Chrystia Freedland, in conversation with the editorial board of the Toronto Star, April 17, 2013, interview excerpted below)
We all know that political power is umbilically attached to money, no matter which language is spoken, or which church, synagogue or mosque is attended, or even if none is attended. The shrinking capacity of the nation state to regulate the plutocrats is emblematic of the shrinking capacity of the national politicians to rein in the power of the plutocrats. In fact, for the most part, politicians, by definition want to cozy-up to these plutocrats...so the political incest is, in effect, mutually arranged.
The political class will not be very interested in campaign finance reform so long as the plutocrats cherry-pick candidates for office that are willing to serve as the "Charlie McCarthy" for their Edger Bergen, and enough of them can find their "sugar-daddy" to get re-elected. Nevertheless, campaign finance reform is a place to start cutting the cords that bind the plutocrats to the political class.
Another approach that merits consideration is the need for international bodies, such as the IMF, and the World Bank, and the new BRIC Bank among the emerging nations to research and propose international monetary frameworks that would bring these "outlaws" (to national tax laws) back into the fold where they participate in funding the services needed by the people they literally don't care about.
So, strengthening, not weakening, the United Nations, would be another place for nations to look to bring about changes that would support and encourage the development of international norms, for example of nation state funding of global warming preventive measures, provision of clean air and water, extending access to quality health care and education to those not now able to benefit from such "human rights", as well as labour laws that would apply across the globe, so that worker protections are not sacrificed as these plutocrats gain power and momentum.
Increased funding of the International Labour Organization would also seem to flow into a concerted international action plan to balance the power of the mighty with the needs and rights of the powerless.
Increased education exchanges, of the kind the Rotary clubs of the world have been conducting for decades, but on a much larger scale, supported by national budgets and international co-operative monitoring, would open the eyes of many future leaders to the inequality faced by the global community, and bring the "gated-community" mentality out of the "closet" of their gated-ness.
Similarly, research projects conducted by graduate students from various universities around the world, together, using the digital platforms now available, would enhance the dissemination of their results into the farthest corners of the planet, for all to read, study and build upon.
Call all of this "pie-in-the-sky-idealism" if you like; nevertheless, there will need to be a series of responses to this growing chasm between the extremely wealthy and the rest of us, if we are to survive...their short-term goals are utterally incompatible with the long-term survival of the eco-system that sustains even the most indigent, whose existence is little more than a statistic for these plutocrats.


‘It’s impossible not to be worried’: a Q&A with Chrystia Freeland about income inequality


Chrystia Freeland, the winner of this year’s Lionel Gelber Prize, met with the Star’s editorial board to discuss her award-winning book, Plutocrats.

From Toronto Star, Ap;ril 17, 2013
Earlier this week, Chrystia Freeland took home the $15,000 Lionel Gelber Prize for the best English-language book on foreign affairs. Before picking up her award, Freeland, who is the managing director of Thomson Reuters, met with the Star’s editorial board to discuss her book, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else , and how to manage rising income inequality in a changing world.

Here is a partial transcript of the conversation:
How are the so-called plutocrats you cover in your book – today’s super-rich – different from the extremely wealthy of the past?
The biggest difference is the gap has grown so much greater. The core reason for writing the book was to say to people that things are different now, that this is not your same old income distribution. There’s been a huge surge in inequality and it’s pretty recent. It’s over the past 30 years that you’ve seen this gap really grow into a chasm. It hasn’t been this big since the Gilded Age – and some economists think it’s bigger today than it ever has been.
Let’s pause and reflect on what a huge statement that is. Whether or not you agree with those economists, crucially, it’s bigger than it was at any time during the period that mass democracy really swung into gear in the world – that post-war era. And that happened to be an era – and I don’t think it’s a coincidence – that was a time when income inequality was actually decreasing. So I think it’s really important to pause, take note and start thinking about the implications of the fact that over the past 30 years, we’ve been living through the opposite trend – this surge – and, by the way, even post-financial crisis that trend is continuing.
What’s the significance of the increasing concentration of wealth among the 0.1 per cent for the rest of us?
That’s the big question. I think it’s impossible not to be worried. And the biggest thing about the consequences that I worry about is that when you have this growing gap in economic power, it’s really hard to imagine it won’t translate into a gap in political power. And you don’t just have to use your imagination to think about that; I think we’re seeing it already. And that becomes really worrying.
It’s not worrying because the rich are bad. (And this is something the left sometimes has a hard time dealing with.) This age of plutocracy also happens to be an age of increasing meritocracy. More than in previous times, these really are guys who built it themselves, who are meritocrats, who are running businesses they created. But even if you’re that kind of person, the desire to start tilting the rules of the game in your own favour is a natural human desire and a very natural business desire. And I think that is a danger for society as a whole.
As this plutocratic elite starts living more and more in its own world, able to create its own services, its connection to the rest of society and willingness to fund what the rest of society needs decreases. I feel that very much living in the United States and I see a really big contrast with Canada. I went to public schools; the longer I live outside a national health care system, the more I see its great benefits. But if you’re living in a place – and more and more the plutocracy is – where your kids go to private school, where you have private health care that is super Mercedes excellent, maybe where you’re even flying on private jets, your willingness to invest in all of that social infrastructure that everyone needs decreases. Not because you’re a bad person, just because you don’t have the same connection to it.
The other thing is that this group is really global. These guys live truly international lives. Their investment decisions are truly international. And that makes it really difficult for the nation state to regulate and to tax them.
To what extent is this wealth-concentration trend reversible?
I thought the financial crisis was going to end the trend. In October 2008, I thought I wasn’t going to be able to write this book; I thought I was going to write a book called Survivors about what emerged post-financial crisis. But by January or February 2009 it started to become clear that this big trend was not going to change.
For me, one of the most striking data points comes from Emmanuel Saez, who I think is the leading economist on the statistics of income distribution. He does a data set that he updates every year, on income distribution. The 2009-2011 numbers showed that more than 100 per cent of the recovery in income over that period went to the top 1 per cent. You might ask, How can more than 100 per cent go to the 1 per cent? And it’s because the 99 per cent’s income shrunk over that period. It’s just shocking to me. This is after the financial crisis that was supposed to say to us that things are going wrong. And Obama is the president – he’s a pretty progressive guy. And yet, on his watch, we’re seeing more than 100 per cent of the income gain go to the top 1 per cent. That says strikingly that the underlying forces are very strong.
But, yes, of course it’s reversible. There have been bleaker moments in human history. There was serfdom; there was slavery; there used not to be democracy. Things have been worse and collective human action has improved things. But I think, both at a level of mass mobilization and at a level of ideas, we aren’t collectively sufficiently aware that there’s a big problem that requires new, big, bold ideas. It’s not going to be enough to go back and reheat FDR. It’s new times and it takes new thinking. Big social change takes decades of people thinking about it and fighting about it and decades of grassroots mobilization. I think there’s a broad feeling of discontent, but we’re only at the beginning of that process of thinking and agitating.
Critics of this trend – progressives, the left, whatever you want to call them – seem to be completely at a loss about how to react to all this other than that they lament it. Why do you think the left is so bereft of ideas about how to deal with this phenomenon?
I do agree with that starting point. I think one piece has been that left-leaning people haven’t thought enough about business and how business works and how the economy works. There’s been much more of a focus on expansion of individual rights – which I don’t think is bad; I’m a feminist – and as a result maybe less thinking about corporate governments.
Also, these are new issues. As the facts change, as the world changes, you have to change the set of policies you think are right. It takes a long time – decades – to adjust these ideas.
What could be some elements of an effective response to these issues? And can it be a national response or does it have to be an international one?
I don’t have even a partially perfect response. But there are a few directions in which we should be thinking. One is, absolutely, this is the opposite of a moment in which we can retreat into the nation state. Anyone who thinks that is missing this really powerful change in the world. Business is global; governance needs to be global too. The issue of tax havens is a great example of that, so is banking regulation. So you do need to start working on global institutions – and I think we’re in political retreat from them. Multilateralism is hard. But this is a moment to reengage with it.
Another thing: I asked George Soros about this – my next book is a biography of him. I asked George if he was worried about the technology revolution and how it’s going to change income distribution. And his response was really interesting. He shrugged his shoulders and said, “That’s an easy problem. It’s not complicated at all.” I said, “What do you mean, George? It’s really hard!” But he said the technology revolution is not a problem at all. It will mean extreme concentrations of income but that’s not technocratically hard to solve. All you need is a state that has the power to do a lot more redistribution and everything will be fine. For him, maybe the politics was complicated, but the answer wasn’t.
The third thing is that we in the big middle class are moving toward a world where the kind of structure of work that we’re used to, where you get a good job, working for a good solid company, that pays you the benefits and the good pension, that’s not going to be there for more and more people. And more and more of us will be working in what Tina Brown calls the “gig economy.” More and more of us are going to have to cobble together bits and pieces to make a living. And I think public policy needs to start making that easier. Canada actually has a head start. Having a national health care system is a huge step in that direction. But we should be thinking about more and more ways to let people do that. Because standard jobs are increasingly not going to be there.