Posts Tagged ‘Asia’

billionaires

The timing could not have been better, at least for me. It just so happens I’m teaching Thorsten Veblen’s Theory of the Leisure Class this week. It should become quickly obvious to students that, as I have argued before on this blog, we’re now in the midst of a Second Gilded Age.

This is confirmed in a new report by UBS/PwC, according to which, after a brief pause in 2015, the expansion in billionaire wealth around the world has resumed.

Thus, billionaire wealth rose 17 percent in 2016 (up from $5.1 trillion to $6 trillion), far more than the 5.8-percent nominal GDP growth figure and double the rate of the MSCI AC World Index.** There was also a 10-percent rise in the number of billionaires globally to 1,542. Despite a period of heightened geopolitical uncertainty, the world’s ultrawealthy are flourishing.

The United States still has the world’s largest concentration of billionaire wealth. It grew by 15 percent from $2.4 trillion to $2.8 trillion as billionaires prospered, far outstripping the MSCI AC World Index. Thirty-nine Americans entered the billion-dollar plus wealth band and 14 dropped off.

asian

Europe’s billionaire population was static in 2016. Twenty-four entered this wealth band, while 21 dropped off.*** There were 342 European billionaires at the end of 2016.

The biggest jump occurred in Asia. Three quarters of the newly minted billionaires are from the region’s two biggest economies—China and India. China had by far the highest number, adding a net 67 to total 318. India’s billionaire population climbed 16 to 100. Taken together, the wealth of Asian billionaires grew by almost a third (31 percent) in 2016, up from $1.5 trillion to $2 trillion.

So, what do the world’s billionaires do with their vast wealth? Most of it is used to capture even more income and wealth. Thus, the 1,542 billionaires in the UBS/PwC database own or partly own companies that directly employ at least 27.7 million people worldwide—roughly the same as the UK’s working population. And, via an array of financial instruments and “club deals,” they manage to siphon off a large part of the surplus created by the rest of the global working-class.****

sports

Apparently, the world’s billionaires are also becoming major patrons of sports, such as football (both global and American), hockey, baseball, and basketball. According to the report, more than 140 of the top sports clubs globally are owned by just 109 billionaires.*****

One European entrepreneur explains why he owns a sports club in the following way. “Sport is my life and my dearest hobby,” he says. “Further, the publicity you get from the broadcasting is global. The business works according to the theme ‘you win on Sunday and sell on Monday.’ People always identify themselves with winners. A er all, I not only sponsor, whatever I do in this eld must be sustainable and needs to make commercial sense.”

It should come as no surprise that Veblen held a quite different view:

Addiction to athletic sports, not only in the way of direct participation, but also in the way of sentiment and moral support, is, in a more or less pronounced degree, a characteristic of the leisure class; and it is a trait which that class shares with the lower-class delinquents, and with such atavistic elements throughout the body of the community as are endowed with a dominant predaceous trend.

Clearly, the Gilded Age today shares with its historical predecessor a “dominant predaceous trend” that enables the world’s billionaires to accumulate more and more wealth and leaves the rest of us behind.

 

*The title of this post is from the collection of short stories by Mark Twain and Charles Dudley Warner, published in 1873. Apparently, the name chosen by Twain and Warner was inspired by William Shakespeare’s The Life and Death of King John (Act 4, Scene 2):

Therefore, to be possess’d with double pomp,
To guard a title that was rich before,
To gild refined gold, to paint the lily,
To throw a perfume on the violet,
To smooth the ice, or add another hue
Unto the rainbow, or with taper-light
To seek the beauteous eye of heaven to garnish,
Is wasteful and ridiculous excess.

**The MSCI AC World Index is a market capitalization weighted index designed to provide a broad measure of equity-market performance throughout the world. It is maintained by Morgan Stanley Capital International, and is comprised of stocks from both developed and emerging markets.

***Germany, Europe’s largest economy, also has the most billionaires, at 117. The United Kingdom comes a distant second, at 55, followed by Italy (42), France (39) and Switzerland (35).

****One high-profile example of clubbing together occurred when Warren Buffett’s Berkshire Hathaway group backed the ill-fated Kraft Heinz $143-billion bid for Unilever in February 2017. Buffett has a record of helping the 3G private equity vehicle behind the bid to finance its deals. 3G is controlled by Jorge Paolo Lemann, Brazil’s richest man, and his partners. Buffett has added his financial firepower to 3G’s acquisitions of doughnut chain Tim Hortons as well as Kraft Heinz.

*****The Glazer family, worth an estimated $4.7 billion in 2015, controls 83 percent of my own favorite sports team.

came

I know all about how corrupt a city can by. I live in Chicago, the “Capital of Corruption.”

And I hear all the time about all those other corrupt cities, most of them located in countries in Latin America, Africa, and Asia, which often fall low in the corruption perceptions indices like the one produced by Transparency International.

But for all the talk about transparency and the need to tackle corruption at the 2016 Anti-Corruption Summit in London, the host country itself may be the most corrupt in the world.

As Joel Benjamin [ht: ja] explains, the indices produced and disseminated by groups like Transparency International “only measure perceived corruption based upon the abuse of public office for private gain, i.e. the payment of bribes.” What they don’t account for is the fact that “While nepotism and subservience to finance capital is rife in Britain and its overseas dependencies, it is not illegal.”

At least Chicago’s corruption is transparent. Donate to the mayor’s campaign chest and you get a city contract or assistance with a development project. In the city of London (and other such financial centers in Britain, the United States, and Western Europe), corruption is based on money laundering and financial secrecy.

FSI-2015

And if we measure those forms of corruption, then (as with the Financial Secrecy Index developed by the Tax Justice Network) the tables (so to speak) are turned: Switzerland ends up at the top, the United States rises to number 3, and the United Kingdom rounds out the top 15.

If anything, the bribing of public officials in Chicago, Lagos, Bogotá, and Bangalore is quite transparent—and often involves the siphoning-off of some of the surplus from the initial appropriators to their friends in high places in order to keep doing business. The corruption in Geneva, London, and New York is something quite different and even more pernicious: it involves the laundering of the surplus captured from the entire world so that the economic and political elites who capture it get to keep it and accumulate even more wealth, for themselves and their friends in high places.

All of it legal—and fundamentally corrupt.

Changyong Rhee, chief economist at the Asian Development Bank, clearly recognizes the problem of growing inequality in Asia:

Over the past 20 years, the gap between Asia’s rich and poor has widened so that the richest 1 per cent of Asian households now account for 6 per cent to 8 per cent of expenditure. Income inequality has widened in China, India and Indonesia, the countries that have powered the region’s economic growth. Taking developing Asia as a unit, the Gini coefficient – a common measure of inequality – has increased from 39 per cent to 46 per cent. Had it only remained stable, another 240m people would have escaped poverty. . .

The abundance of labour has depressed wages. Capital has benefited disproportionately from Asia’s growth. Between the mid-1990s and the mid-2000s, labour income as a percentage of manufacturing output fell from 48 per cent to 42 per cent in China and from 37 per cent to 22 per cent in India.

But he doesn’t understand how the growing inequality might itself be a condition of the “miraculous” growth rates achieved in Asia in recent years.

What Rhee is really worried about is that government responses to inequality might upset the current economic model (much in the way that Raghuram Rajan has argued for the United States)

Widening inequality threatens the sustainability of Asian growth. A divided and unequal nation cannot prosper. Rising inequality can lead to instability and poor political choices, as governments facing populist demands opt to curry favour – for example, with inefficient subsidies on fuel or food – rather than promoting long-term sustainable growth.

Rhee really wants it both ways: he wants to safeguard “technological progress, globalisation and market-oriented reform – the main drivers of Asia’s rapid growth,” while suggesting that governments tackle inequality before it really gets out of hand.

The real miracle in Asia will not be continuing to achieve high levels of economic growth but, instead, transforming the current model of capitalist growth in order to actually solve the problem of inequality.

What poverty?

Posted: 3 May 2012 in Uncategorized
Tags: , ,

In preparation for the 45th Annual Meeting of the Board of Governors of the Asian Development Bank, the Philippine government decided to hide the country’s poverty by erecting a makeshift, temporary wall on a road from the airport to downtown Manila so that delegates wouldn’t see the sprawling slum along a garbage-strewn creek.

Presidential spokesman Ricky Carandang defended the wall’s installation, saying Thursday “any country will do a little fixing up before a guest comes.”

The theme of the conference is “Inclusive Growth Through Better Governance and Partnerships.”

source

This is another example of mainstream commentators’ obsession with the middle-class.

That’s bad enough. But then notice from the chart that, even on its own terms, the ranks of the poor have been growing—and will continue growing for at least another decade. Only then, based on the particular assumptions of the model, is the number of people with annual per capita expenditures below $3650 supposed to start to fall.

Now, I have no doubt that capitalist growth in China, India, Brazil, and elsewhere is creating what Homi Kharas wants to call a growing middle-class. But, first, they’re mostly members of the working-class. And, second, they’re growth has been and will continue to be predicated on a swelling of the ranks of those who live in poverty.

The chart could have been focused on how a truly global working-class is emerging. And how its share is shifting eastward. But  Kharas and many others prefer to reinforce the myth that the success of capitalism is all about the middle-class.

Who’s cashing in, and what are they cashing in on? And who’s cashing out?

The Massachusetts Institute of Technology is cashing in, via MITx—its new, interactive e-learning venture—by providing the courses online for free but charging “a ‘modest’ fee for certificates that indicate a learner has mastered the content.”

The alternative, of course, would be to support the public university system, and allow all students to get a real college education in residence.

Ian Ayres and Aaron S. Edlin believe we should cash in on the growth of income and wealth by the top 1 percent, by using the Brandeis Ratio—the ratio of the average income of the nation’s richest 1 percent to the median household income—as a trigger to create a new top-income tax bracket.

Or we could use Brandeis’s warning—that “We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both”—to find a way of creating democracy in both political and economic institutions.

Blake Gopnik sees the super-rich using their piles of cash to buy up contemporary art, thereby creating a modern-day equivalent of the potlatch of the Pacific Northwest (“where the goal was to ostentatiously give away, even destroy, as much of your wealth as possible—to show that you could”), which blurs the boundary between aesthetic and economic value.

Which doesn’t stop Gopnik from offering his suggestions of “five highly touted artists whose works are lousy investments.”

Multi-millionaires in Hong Kong and elsewhere are cashing in on their growing wealth to purchase not only Asian art but also “wine, gems, watches, postage stamps and other memorabilia–the rarer and more exclusive, the better.”

As Jack Amariglio suggested, we shouldn’t “be shocked if new theories and conceptions of what is beautiful and worth owning and displaying, once again, is radically revised such that what is now considered primarily ‘mundane’ and prosaic among the vast amount of Chinese artistic productions of the past becomes the newly discovered ‘treasures’ and ‘wonders’. . .of the global aesthetic consciousness.

The Freakonomics team of Steven D. Levitt and Stephen J. Dubner have certainly been cashing in, with their growing franchise consisting of a bestselling sequel, SuperFreakonomics, an occasional column in the New York Times Magazine, a popular blog, and a documentary film.

However, as Andrew Gelman and Kaiser Fung explain, Levitt and Dubner have made a number of avoidable mistakes, “from back-of-the-envelope analyses gone wrong to unexamined assumptions to an uncritical reliance on the work of Levitt’s friends and colleagues.”

And then, as Barbara Ehrenreich and John Ehrenreich explain, it’s not the “liberal elite” but the top 1 percent of the wealth distribution—the “bankers, hedge-fund managers, and CEOs targeted by the Occupy Wall Street movement—that has been cashing in, thereby creating the 99 percent.

As it happened, the idea of the “liberal elite” could not survive the depredations of the 1% in the late 2000s. For one thing, it was summarily eclipsed by the discovery of the actual Wall Street-based elite and their crimes. Compared to them, professionals and managers, no matter how annoying, were pikers. The doctor or school principal might be overbearing, the professor and the social worker might be condescending, but only the 1% took your house away.

Finally, there are all the Greek people who, in the midst of the current crises, appear to be cashing out—leading to the highest rate of suicide in Europe.

Painful austerity measures and a seemingly endless economic drama is exacting a deadly toll on the nation. Statistics released by the Greek ministry of health show a 40% rise in those taking their own lives between January and May this year compared to the same period in 2010.

Before the financial crisis first began to bite three years ago, Greece had the lowest suicide rate in Europe at 2.8 per 100,000 inhabitants. It now has almost double that number, the highest on the continent, despite the stigma in a nation where the Orthodox church refuses funeral rights for those who take their lives. Attempted suicides have also increased.

“It’s never just one thing, but almost always debts, joblessness, the fear of being fired are cited when people phone in to say they are contemplating ending their lives,” said Eleni Beikari, a psychiatrist at the non-governmental organisation, Klimaka, which runs a 24-hour suicide hotline.

Chalmers Johnson, his scholarship, and his role as a public intellectual will be sorely missed. He stood tall, first, as an analyst of state capitalism in Japan and China (e.g., in MITI and the Japanese Miracle and How Asia Got Rich: Japan and the Asian Miracle) and, second, as a persistent critic of U.S. militarism and imperialism, especially in terms of the threats they pose to democracy at home (in the so-called blowback trilogy: Blowback: The Costs and Consequences of American Empire, The Sorrows of Empire: The Last Days of the American Republic, and Nemesis: The Last Days of the American Republic).

Here are some obituaries: Los Angeles Times, the Nation, and the Washington Note.

This is from the last essay he published on Tomdispatch:

Thirty-five years from now, America’s official century of being top dog (1945-2045) will have come to an end; its time may, in fact, be running out right now. We are likely to begin to look ever more like a giant version of England at the end of its imperial run, as we come face-to-face with, if not necessarily to terms with, our aging infrastructure, declining international clout, and sagging economy. It may, for all we know, still be Hollywood’s century decades from now, and so we may still make waves on the cultural scene, just as Britain did in the 1960s with the Beatles and Twiggy. Tourists will undoubtedly still visit some of our natural wonders and perhaps a few of our less scruffy cities, partly because the dollar-exchange rate is likely to be in their favor.

If, however, we were to dismantle our empire of military bases and redirect our economy toward productive, instead of destructive, industries; if we maintained our volunteer armed forces primarily to defend our own shores (and perhaps to be used at the behest of the United Nations); if we began to invest in our infrastructure, education, health care, and savings, then we might have a chance to reinvent ourselves as a productive, normal nation. Unfortunately, I don’t see that happening. Peering into that foggy future, I simply can’t imagine the U.S. dismantling its empire voluntarily, which doesn’t mean that, like all sets of imperial garrisons, our bases won’t go someday.

Instead, I foresee the U.S. drifting along, much as the Obama administration seems to be drifting along in the war in Afghanistan. The common talk among economists today is that high unemployment may linger for another decade.  Add in low investment and depressed spending (except perhaps by the government) and I fear T.S. Eliot had it right when he wrote: “This is the way the world ends, not with a bang but a whimper.”