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The Feral Rich. Wealth untamed.
If you know how rich you are, you are not rich. But me, I am not aware of the extent of my wealth. That’s how rich we are. Imelda Marcos .
For most of the world, time is running out for the hourglass economy. The poor are getting poorer; the squeeze on the middle class is more crushing than ever. But for one group of people life just gets better, no matter where they live. Known as HNWIs and UHNWIs – High Net Worth Individuals and Ultra High Net Worth Individuals – this global élite’s fortunes just keep escalating.
With the war on poverty raging – under the rubric of austerity – untamed affluence is rising for the seriously moneyed. They’re getting richer and more savage. We’re seeing a surge in a ruthless plutocracy; resulting in a seemingly inexorable increase of the ‘trickle upwards.’ While most people are having less and less, more and more wildly-wealthy fat cats are flowing into the top of the hourglass.
Now here’s the puzzle: The world economy is in crisis. Household income was down by more than 5% in 2012. That’s the global average; in some countries it’s much worse. The progress on reducing world hunger has stalled, leaving one in seven people without enough to eat.
The Origin of Opulence
To find the beginning of today’s feral incarnation of wealth we have to go back to the 1980s.
Free market policies were embraced by conservative governments on both sides of the Atlantic which cut through regulation, privatised state utilities and opened up new business opportunities.
While most wages grew at a sluggish pace, top executive pay started to race ahead.
How did members of this new plutocracy manage to peel themselves off from the rest of humanity, to feed off the crisis?
New laws eroded union power, while globalisation enabled transnational corporations to outsource production to the country that offered the cheapest, usually non-unionised labour.
Profit margins grew, benefiting shareholders and business owners. This was accompanied by fierce cuts in tax paid by both corporations and high earners.
But the most important factor was the decision to deregulate financial markets, taken initially in New York and London. Pay scales in the finance sector went through the roof, bonus culture went wild, and greed was good. As we now know, it was a house of cards.
Richer man, poorer man
The political response to the 2008 financial crisis – first to bail out banks, then to cut public spending – has produced the crowning irony of our times: those who made the mess have come out virtually unscathed while the rest of us are being punished.
Even government efforts to stimulate growth have lined the pockets of the already prosperous by pushing up share prices and other assets. In Britain, the richest households were $561,000 better off as a result of the Bank of England’s quantitative easing programme; the average increase for the poorest households was $1,900.
Greenbacks can create black despair
Does great wealth bring fulfilment? An ambitious study by Boston College suggests not. For the first time, researchers prompted the very rich—people with fortunes in excess of $25 million—to speak candidly about their lives. The result is a surprising litany of anxieties: their sense of isolation, their worries about work and love, and most of all, their fears for their children.
The truly wealthy know that appetites for material indulgence are rarely sated. No yacht is so fabulous, nor is any wine so expensive, that it can create inner peace or guarantee one’s children won’t grow up riddled with issues. When the rich man takes his last sip of Château d’Yquem 1959, he tips back the wineglass to find at its bottom an unforeseen melancholy. Like Leontes in The Winter’s Tale, he notes in horror, “I have drunk, and seen the spider.” It is as terrifying a realisation in Saint-Tropez as it is anywhere else.
Poor little rich girl
“OMG i was saying how i couldn’t afford the gas to fly daddy’s jet to the riviera this summer, and this barista like totally rolled her eyes at me”–Twitter user @babesmcphee
Why it’s important?
On a commercial level it’s greed on speed as the Feral Rich’s demands for obscene luxury pumps up sales for goods and services catering for the seriously wallet-endowed. The rest of us can but gawk and gasp at how flagrantly they splash their cash:
• Customized 18-carat solid gold mobile phone from Aesir Copenhagen, designed by Yves Beher – $60,000
• Night in the Royal Penthouse of the Hotel President Wilson, Geneva – $85,000
• Meal for two at New York’s Masa restaurant – $1,500 (base price $450 per person without drink, tips)
• Crocodile-skin umbrella – $55,000
• Small private jet hire – $9,000 per hour
• Mediterranean holiday at Royal Villa, Grand Resort, Lagonisi, Greece – $48,000 a night
• Green, orange, and black Renova coloured toilet paper – $20
• Penthouse on the New York’s Upper East Side – starting price $60 million
• Trophy hunting in Namibia – $16,000 (one giraffe, mounting and shipping extra)
• Crystal ErgoRapido vacuum cleaner (with 3,730 Swarovski crystals) – $18,993
• Louis Vuitton skateboard – $8,250
• Little Gold 24-carat gold vibrator (silent and waterproof) – $325
• Diamond encrusted Bluetooth headset – $50,000
• Tub of Harrods Posh Instant noodles – $43
• Luxury Frisbee – $305
• Virgin Galactic space trip (per person) – $283,000
• Rolex Daytona Leopard Dial and Strap Diamond and Sapphire Bezel – $71,350.00
Philanthropy: Cleansing the souls of the filthy rich
Not all super-wealthy individuals are venal, greedy, selfish and oblivious. Some may use their wealth to try to do good in the world. Even the monopolistic Microsoft boss Bill Gates seems genuinely concerned to improve public health in Africa. Currency speculator George Soros candidly blasts the system that has enriched him and he promotes democratic values though his Open Society Foundations. But while such individual actions may fill pockets, they won’t change the big picture. And yet the rich still give a smaller share of their income to charity than those earning average incomes, and much less than those on the lowest.
What’s the butterfly effect?
London is rapidly pricing out locals. Homeless people can be seen laying out their cardboard in the doorways of Mayfair’s elegant Regency houses.
There is a housing crisis partly due to shortage and recession – a million builders are jobless. But there’s another reason. The city’s real estate has become the number one haven for rich international investors, who are buying almost 60 per cent of properties valued at $3.2 million or more. These buildings are often left empty for months on end but harsh new laws have made squatting a prisonable offence. Local councils are breaking up communities and shifting their poorer residents to other cities, which may be hundreds of miles of away.
What’s happening in London is symptomatic of the distortions created by runaway wealth and overheated property values.
Thousands of miles away in Peru there’s another casualty of feral capitalism. Gold is a prize commodity in times of trouble – and mining is bringing fat returns for corporations, investors and purchasers. Peasants have been shot as they protested against gold and other precious-metal mining projects that are poisoning their water and polluting their land.
The mobilisation around corporate greed and aggressive tax avoidance in various parts of the world is revealing a long list of culprits – Apple, General Electric, Vodafone, Starbucks, Google, Amazon, PepsiCo, Goldman Sachs, Facebook – and generating widespread feelings of anger and revulsion.
The mood has changed. In Greece, a country where tax avoidance was previously the social norm, the journalist who was put on trial for revealing the names of 2,000 high level tax dodgers is viewed as a hero by the people.
The pioneers and global hot spots
New York City’s Upper East Side is now home to a lot of people, many aged under 40, who are making $20 or $30 million a year from their hedge funds, reports business journalist Chrystia Freeland in her startling book Plutocrats: the rise of the new global super rich.
India’s ultra-rich increased in number by 30% in 2012. Sri Ram Khanna of the Delhi School of Economics observes: “The better-offs continue to prosper in a slowdown and are largely immune to it… the lower your income, the more you are at risk. It is a global phenomenon.”
Russia, China, and Middle East: A London domestic service agency, Bespoke Bureau, placed 430 British-trained butlers last year, catering in particular to demand from the aforementioned countries.
Mexico: Carlos Slim Helu, the richest man in the world (net worth: $72 billion) made his fortune in telecom but didn’t stop there. Slim also owns mining and real estate companies and a stake in the New York Times. This year he added soccer to the mix, buying into Mexico’s Leon and Pachuca clubs and Spain’s Real Oviedo.
Spain: With a net worth of $37.5 billion, Amancio Ortega, founder of Zara, stepped down as chairman of his global fashion firm, Inditex, in July 2011. The company hasn’t missed a beat. Shares were up one-fourth in the past year, helping boost his fortune by $6.5 billion and pushing him into the global top 5 ranks for the first time.
At the end of 2012, Bloomberg News unmasked more than 30 hidden billionaires, amongst which were: Elaine Tettemer Marshall controls 15% of Koch Industries Inc., the second-largest closely-held company in the U.S. With fortunes of about $12 billion, she remains billions shy of Gina Rinehart, the richest woman in the Asia-Pacific region, who’s squabbling with her children over the family’s $19.1 billion minerals empire.
Bloomberg News also revealed Zong Qinghouas mainland China’s richest man, who had a net worth of $20.1 billion on Oct. 5 2012. The once poor soda seller today commands the Hangzhou Wahaha Group Co. beverage empire. With soft drinks producing hard cash, wealth creation is booming in China and beyond.
By: Raleen Bagg
Advertising industry refugee. Freelance writer, full time participant in all that is intriguing, expressive, fascinating, stimulating, startling and surprising. From time to time, reading, painting, photography and restaurants seduce me away from the keyboard.
Image credit: The World Wide Web