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Life Among the Plutocrats -- What Unimaginable Wealth Does to a Person

They control our politics, shape our societies, outsource our jobs.

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Freeland's interest in this super-elite is infectious. They really are smart people, superbly educated and culturally sophisticated. They attended the best universities in the world and did brilliantly in fields like mathematics and physics. They understand their own success; coming often from working-class or middle-class backgrounds, they embody the old Horatio Alger dream of rags to riches. Modestly, they think anyone could have done the same, with a lucky break or two and a lot of hard work.

This is where the plutocrats really part company from the rest of us -- including the bottom 0.9 of the top one per cent. Living in their own higher world, with its own economy, they have only a fading sense of what non-plutocrats are like. Mitt Romney's famous dismissal of the 47 per cent was actually an understatement. The plutocrats don't think much even of the mere multimillionaires scrambling about in hopes of breaking into the billionaires' circle.

Freeland is keenly aware of the impact of inequality, but she doesn't see the 99 per cent as the plutocrats' biggest enemies; it's the aspiring plutocrats who are beginning to see how the deck is stacked against them. It will be interesting to see if they decide to take serious steps against their superiors.

Those moderate Canadian plutocrats

Freeland gives sympathetic attention to former prime minister Paul Martin (himself a multimillionaire) and outgoing Bank of Canada head Mark Carney, who sympathize with the Occupy movement and support the bank regulation that most plutocrats still reject. But such attitudes are rare among the plutocracy.

In the meantime, the plutonomy is not just booming, but skewing the still-depressed economy the rest of us live in. Many of the plutocrats reflect soberly on Andrew Carnegie's comment that the man who dies rich dies disgraced. Many, including George Soros, Bill Gates, and Warren Buffett, are giving away their billions to various causes and charities.

Individually, those causes may be admirable (Soros has worked hard to promote democracy in eastern Europe). Collectively, those causes may be compromised and diverted from their original purposes by the sheer quantity of plutocratic money available. And of course many billionaires like the Koch brothers are pumping money into political causes that promise to keep their taxes low while suffocating government programs for the rest of us.

This is just one form of plutocratic "rent-seeking" -- getting one's businesses into a monopoly position, or lowering their operational costs, through favourable legislation. Every business, after all, wants to improve its own working conditions, just as every worker does.

But what is good for one's business is not always good for the country. Rent-seeking simply runs up the plutocrats' revenues while doing nothing for their customers. And it never occurs to such plutocrats that their success ultimately stems from the system created and maintained by the rest of society. As Barack Obama observed, "You didn't build that."

Freeland makes a useful contrast between plutocrats who are pro-market and those who are pro-business: In the market, companies compete, innovate, or die if they can't. This is the "creative destruction" that brings genuine improvements in living standards, and it's still at work. As one plutocrat told Freeland, the big companies used to eat the little ones. Now the swift eat the slow.

But in business, one tries to protect one's own company by eliminating the competition (and the innovation). Historically, innovators become consolidators and rent-seekers, creating a new privileged class of their children and hangers-on.

Plutocracy 2.0

That second generation, Plutocracy 2.0, is already with us, especially in the U.S. Freeland notes that until the 1970s, sizable numbers of Ivy League graduates went into science, the arts, and public service. Few went into finance, because it paid little better than most other fields. But as superstars came to dominate finance, and their incomes rose, more bright young graduates migrated to the field.

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