Reading this book and listening to this audiobook was depressing for me. The book is successful in digging into the income inequality of the world at present and historically and how the super rich/elite (top 0.1%) world-wide made their money and their view of the “poor.” I am disgusted by how the super rich become rich and yet envy of them, hoping I were one of them so that I could thumb my nose at those who would criticize me. Ironic, isn’t it?
The super rich are global, not just the Western developed world but also the Russian, Chinese and others. Overall it’s a well-researched long book – a lot more than I wanted to know. But if you want to know why the rich became so rich and why you’re always cash strapped, this book might have the answers for you, which you may not like.
A short summary:
1. History and why it matters: The first “Gilded Age” happened around 1897 due to the industrial revolution. Then the “Twin Gilded Ages”- enters the BRIC’s, not just Westerners or Americans. The history repeats and the wealth disparity gets amplified.
2. Culture of the Plutocrats: Nowadays, the super rich are “working rich,” 60%, derived from work vs. 20% before in 1916 – the rise of “alpha geeks.” They tend to start young since right off the college (e.g. Bill Gates, Carlos Slim), and heavily jet-lagged, unstable/insecure, egotistical, citizens of the world (not just U.S.) – capital and capitalists have gone global, geeky enthusiasm for innovation and ideas (TED conference gatherings), philanthropy as a pathway to social acceptance and even immortality (Philanthro-Capitalism). The battle between the top 0.1% and the 1% are fierce and of serious political consequence.
3. Superstars: “Superstar” effect – the tendency of both technological change and globalization to create winner-take-all tournaments for the super geeks/nerds. Never occurred to me that Obama falls in the same category as the pragmatist who care about facts and results. Charlie Chaplin benefits from the birth of film technology as a live performer to become a superstar. The interplay of Marshal Effects (in-person performances for a society growing more affluent) and Rosen Effects (technology driven scale) is creating a superstar effect. The Martin Effect – the growing power of talents among the superstars, thanks for the mobile capital (Personal Computer) rather than the steam engine of the past. “We all think we can be superstars, but in a winner-take-all economy, there isn’t room for all of us at the top.”
4. Responding to Revolution: The rise of the emerging markets (from authoritarian regimes to more democratic ones) and technology (computer and internet), and the broader global trend toward more open markets in money, goods and ideas form a faster-paced, more volatile world. Revolution is the new global status quo. Being at the right place at the right time helps.
5. Rent Seeking: In most of the developing countries like Russia, India and China, the ways to super wealth involve rent-seeking from the government through bribes. In the U.S., rent seeking happens on Wall Street and the bail-out money they receive from the government due to the de-regulation.
6. Plutocrats and the Rest of Us: “The middle class need to take a pay cut.” “My golf caddy caused the financial crisis.” Interesting perspective from the super rich how they perceive the rest of us.
7. Conclusion: The author use the example of Venice, Italy to project what might happen in the future. Venice started out as an open, inclusive society of commerce freely with rest of the world. Then the rich started putting barriers to protect their own interest. It’s hard to tell what’s rent seeking and value creation. Plutocrats have the inertia to keep doing what they do. It’s hard to avoid.