This ambivalence goes back centuries. Aristocrats were guillotined during the French Revolution, and new taxes were based on how wealthy people appeared — measured in part by the number of doors and windows in their homes. The well-off learned to be discreet.
.. But there are still rules against showing it off. Parisiennes rarely walk around wearing the giant diamonds that are de rigueur in certain New York neighborhoods. “It’s more in a private dinner that you see the wealth,” a French friend explained.
.. And they’re revolted when money seems to trump all. Last summer, locals made a stink when the Saudi king and his entourage were allowed to cordon off a public beach on the Riviera. “The point we wish to make is that not everything can be bought,” a politician leading the protest explained.
.. The typical “French dream” (or at least the one people admit to) isn’t of great wealth, it’s of great security, including a steady income and pension. When you apply for a mortgage here, banks don’t care what stocks you own, because stocks can go down; they want to see a monthly salary and a permanent work contract.
.. Brexit also offers a cautionary tale about what happens when the superrich dominate a city, pricing out practically everyone else. In London recently, I visited friends at the peak of middle-class careers who are living crammed with their children in a one-bedroom rental.
The Price of Glee in China
This is Easterlin’s Paradox, the observation that a country in general does not get happier as it becomes richer. This is very controversial, with statisticians analyzing and reanalyzing data and crunching it a bunch of different ways. In the latest volley in this eternal war, Easterlin’s side came out with data from 37 countries over 30 years, including many countries that underwent spectacular growth during that time, and confirmed their original conclusion
.. Here we see a lot of cultural variation in this apparent happiness-income relationship. For example, Latin American countries are consistently poor but happy; Eastern European countries are usually richer but sadder than African countries, et cetera. Looking at the original graph above, you’d expect Chinese growth to make them much happier; looking at this graph, you notice that China’s three rich neighbors – Japan, Taiwan, and South Korea – are all about as happy as China. South Korea, despite making five times more money, is less happy than China is. If China’s income quintuples, why would you expect it to look like France or Ireland rather than South Korea?
.. A UN report theorizes that although richer countries tend to be happier, this is more likely due to factors other than income, like freedom, social trust, and stable families.
.. Let’s assume for a second that all this is true. National income does not matter for national happiness, and if China’s growth continues to skyrocket then in twenty years it will be as rich as Japan but not an iota happier than it is today. What do wedo with this kind of knowledge?
.. Or let me ask a more specific question. Suppose that some free trade pact will increase US unemployment by 1%, but also accelerate the development of some undeveloped foreign country like India into hyper-speed. In twenty years, India’s GDP per capita will go from $1,500/year to $10,000/year. The only cost will be a million or so extra unemployed Americans, plus all that coal that the newly vibrant India is burning probably won’t be very good for the fight against global warming.
How to Cover the One Percent: Web Reporting
When donors approach a nonprofit, “they’re more likely to say not ‘How can I help you?’ but ‘Here’s my agenda,’” Nicholas Lemann, the former dean of the Columbia School of Journalism, told me. Mainstream news organizations haven’t caught on to this new activism, he said, adding that most of them are into covering “the ‘giving pledge,’” by which the rich commit to giving away at least half their wealth in their lifetime. David Callahan, the founder and editor of Inside Philanthropy, a website that tracks this world, says that “philanthropy is having as much influence as campaign contributions, but campaign contributions get all the attention. The imbalance is stunning to me.”
.. As John Cassidy observed in The New Yorker, “The more money billionaires give to their charitable foundations, which in most cases remain under their personal control, the more influence they will accumulate.”.. As a number of the above examples suggest, much of today’s philanthropy is aimed at “intellectual capture”—at winning the public over to a particular ideology or viewpoint. In addition to foundations, the ultrarich are working through advocacy groups, research institutes, paid spokesmen, and—perhaps most significant of all—think tanks. These once-staid organizations have become pivotal battlegrounds in the war of ideas, and moneyed interests are increasingly trying to shape their research.. Naked Capitalism, an influential financial blog, recently ran a long post about how private equity companies “are far more obviously connected to an undue concentration of wealth at the expense of workers and communities” than are CDOs (collaterized debt obligations) and the other finance instruments that once drew such attention... as Susanne Craig reported in the Times in 2012, the company has exerted “enormous influence as a behind-the-scenes adviser to troubled governments” in places like Greece and Ireland. When seeking to analyze the health of a bank, the US Treasury Department often turns to BlackRock, leading a senior bank executive to call it (in an article in Vanity Fair) “the Blackwater of finance, almost a shadow government.”.. They described how in the spring of 2012 Google—facing possible legal action by theFTC over the dominance of its search engine—played a behind-the-scenes part in organizing a conference at George Mason University, to which it is a large contributor. It made sure that the program was heavily weighted with speakers sympathetic to Google and, according to the Post, it arranged for many FTC economists and lawyers to hear them. In the end, the commission decided against taking legal action. Just why could be a good subject for inquiry. Today, Google is working hard to protect its right to collect consumer data and to that end has sought the support of conservative groups like the Heritage Foundation. The type of string-pulling described by the Post goes on routinely and deserves more routine coverage... As a 2014 Oxfam briefing paper explained, most of Slim’s wealth derives from his having gained near- monopolistic control of Mexico’s telecommunications sector when it was privatized twenty years ago... Earlier this year, Slim more than doubled the number of shares he owns in The New York Times Company (to nearly 17 percent), making him its largest individual shareholder (though the Sulzbergers retain control). It’s interesting to note that Slim rarely appears in the paper’s news pages. On the surface, this seems a glaring conflict of interest.
Inside the Secretive World of Tax-Avoidance Experts
.. when Oxfam estimates that just 1 percent of the world’s population will own more than 50 percent of the world’s wealth by 2016, it’s important to realize that such a state of affairs doesn’t just happen by itself, or even through the actions of individual wealthy people. For the most part, the wealthy are busy enjoying their wealth or making more of it; keeping those personal fortunes out of the hands of governments (along with creditors, litigants, divorced spouses, and disgruntled heirs) is the job of wealth managers.
.. In designing my own research strategy, I was particularly inspired by the work of John van Maanen—now a professor at MIT’s Sloan School of Management—who famously did his doctoral research on a California police department in the early 1970s, not long after the Watts riots. In this period of heightened anti-police sentiment, van Maanen found himself shut out: He received over 20 rejections to his requests to study police departments as an outsider looking in. But rather than giving up and picking another subject for his research, van Maanen did something extraordinary: He enrolled in the police academy and underwent the full training process to become a police officer, including going out on armed patrols. Only then did he build enough trust and cooperation with fellow officers to conduct his research.
.. The credential I earned after two years was also my entry ticket to professional society meetings for wealth managers—more places where I could observe and recruit interview participants. Only by having the TEP credential in hand, or by showing I was enrolled in courses to obtain the credential, was I allowed to attend those meetings.
.. Like van Maanen, I disclosed my real name, institutional affiliation, and research aims throughout the research process; I did not, that is, go “undercover.” Whether I was attending classes or professional society meetings, I always wore a name tag that included my place of work, so it was clear that I was a scholar linked to a research institution.
.. Finally, people in a technically complex profession—especially one that carries some degree of social stigma—don’t have many opportunities to vent about their work lives with anyone: Their family and friends are unlikely to understand the nature of the work
.. There was also something bigger, and even more disturbing: a domain of libertarian fantasy made real, in which professional intervention made it possible for the world’s wealthiest people to be free not only of tax obligations but of any laws they found inconvenient.
Looking at a costly divorce? No problem—just hire a wealth manager to put your assets in an offshore trust. Then the assets are no longer in your name, and can’t be attached in a judgment.
.. Vulnerable to lawsuits? Have a wealth manager put your fortune into a Cook Islands asset-protection trust, as the Rothschilds and the less well-known wealthy families of the world have done. In effect, such trusts make these fortunes essentially immune from the application of inconvenient national laws. No litigant on earth has been able to break a Cook Islands trust, including the U.S. government, which has repeatedly been unable to collect on multi-million-dollar judgments against fraudsters convicted in federal court.
.. So at the airport, I discovered I didn’t have my passport and told the CEO I had to go home to get it. He said, “Don’t worry about it.” I said, “But we’re leaving Europe; I need my passport.” And he said, “Really, you don’t need it; you don’t need to go home.” So I figured okay, if the CEO tells me twice not to go get my passport, I won’t press the issue, and if I get detained and stuck at the airport, so be it. So we get on the plane in Zurich, and no one checked our documents. And then when we arrived at the client’s location, and there was just a limo waiting to take us directly to him. Nobody asked for our passports, even when we returned to Switzerland on the client’s jet. The CEO was right. These people, our wealthiest clients, are above the law…It’s potentially very dangerous.
.. The story was reminiscent of Joan Didion’s observation that “The secret point of money and power is neither the things that money can buy nor power for power’s sake…but absolute personal freedom, mobility, privacy.”
.. What these professionals most emphatically did not look like is people with control over millions in global capital flows. And yet that is exactly what they were. Call it the “banality of professional power”—the cultivation of a useful obscurity, which allows the very wealthy to exist in a realm of freedom verging on lawlessness.
.. It may be more productive to turn the spotlight away from the rich themselves, and instead focus on the professionals who—in their quiet, discreet, and extremely effective way—make it possible for the wealthiest people in the world to gain all the benefits of society, while flouting its laws. Rather than asking whether the distribution of economic resources is fair, perhaps the more compelling question lies upstream, in the way that distribution is created in the first place: by a kind of shell game played with international law. Most people have little tolerance for such shenanigans on the street corner. What about on a global scale?