On the subject of revolution: Mr. Soros fled a comfortable childhood in his native Budapest after the arrival of the Nazis, a formative disruption that the hedge fund billionaire associates with his ability to intuit instability in markets others view as robust. Mr. Hoffman sensed that the changes being wrought in Silicon Valley in the early 1990s were an opportunity too great to ignore. Mr. Vekselberg collected privatization vouchers in the early days of the new Russia, while a less-prescient business partner cashed in his chips for a mere $100,000. Aditya Mittal, son of Lakshmi, spent years buying up Eastern European steel mills without much competition.
On rent-seeking: Mr. Slim made his fortune by winning a contract for the Mexican telecom concession that was so favorable it preserved a near-monopoly for close to 30 years. The American and British bankers who rose to wealth and power on the revolution in securitization are inextricably tied to a decades-long movement in banking deregulation.
Just because a plutocrat has made his way by disruption, Ms. Freeland is careful to point out, doesn’t preclude him from eating at government’s hand. Mr. Soros, to name but one example, is the beneficiary of the U.S. tax code, which privileges investment income by levying it at a 15 percent. Nor is a rent-seeker a purely self-interested being. Mexican telephone service improved throughout Mr. Slim’s ascension. Mortgage bonds made home ownership affordable for many more Americans (if ultimately too affordable for too many). Even the do-gooding tech evangelists come in for second-guessing. It’s nice to think that disrupting an old industry will create opportunities (read: jobs) in the new new thing that replaces it, but that much has yet to be proven.
Midway through Plutocrats, many readers will light upon an unpleasant notion: That, to invoke F. Scott Fitzgerald’s famous formulation on a far greater scale, we are not like the doers at the helm of the new world order. Ms. Freeland describes her own archetype in thinking about billionaires-by-disruption: public-school-educated students who go on to attend elite universities, thus equipped with the brains and the outsider status that come in handy if you’re looking to change the world. (It helps explain Ms. Freeland’s comfort with these people to know that she was born in Alberta, Canada, and matriculated to Harvard.) Mikhail Khodorkovsky, the richest man in Russia until he bucked the government too hard and wound up imprisoned for tax evasion, draws a sharper distinction: “If a man is not an oligarch, something is not right with him.”
It’s also worth noting that amid a presidential campaign heavy on the rhetoric of the 99 and 47 percents, either candidate fits into the smart outsider formulation. Mitt Romney may be the son of a wealthy man, but he’s an outsider by religion and geography, and recognized a pregnant moment—the rise of the private equity industry—to make his fortune. President Barack Obama, with his two Ivy League degrees and millions in book royalties, fits in with Ms. Freeland’s superstars. “Like the rest of the rising intellectual class to which he belongs, the president is an empiricist,” she writes.
Along with the realization that we are not like them comes another idea, which is that Ms. Freeland is going rather easy on the new masters of the universe. Indeed, when it comes time for her to make a prescription for right behavior, she draws it from the remote location of 14th century Venice. That city ascended to wealth and global dominance because access to fortune remained open. Specifically, she says, because investors in trade expeditions shared profits generously with the merchants they backed, a system which allowed new entrants into the class of the elite. When the city’s rulers locked in their status by placing formal limits on social mobility, Venice calcified and crumbled. Along those lines, Ms. Freeland closes on a piece of advice parroted from former Goldman Sachs senior partner Gus Levy, who described his philosophy as one of “long-term greed.”
That Ms. Freeland’s final words emit from an institution that is above all others symbolic of the global elite may be dispiriting to the 99 percent, but that is probably beside the point. An abiding lesson from Occupy Wall Street is that it’s far from easy to affect change by popular movement alone. In a world in which the very rich drive the biggest changes, there’s really only one thing for a superstar student of disparity to do: Speak to the rich—er, affluent—in a language they understand.
pclark@observer.com
