The Rise of the New Global Elite - Magazine - The Atlantic

A nice summary of everything that's wrong with the global economy - income inequality, plutocrats, hubris, etc. You see, the rich really do think they're smarter than you. Why else would they be so stinking rich, and you so stinking mediocre:

Though typically more guarded in their choice of words, many American plutocrats suggest, as Khodorkovsky did, that the trials faced by the working and middle classes are generally their own fault. When I asked one of Wall Street’s most successful investment-bank CEOs if he felt guilty for his firm’s role in creating the financial crisis, he told me with evident sincerity that he did not. The real culprit, he explained, was his feckless cousin, who owned three cars and a home he could not afford. One of America’s top hedge-fund managers made a near-identical case to me—though this time the offenders were his in-laws and their subprime mortgage. And a private-equity baron who divides his time between New York and Palm Beach pinned blame for the collapse on a favorite golf caddy in Arizona, who had bought three condos as investment properties at the height of the bubble.

and..

You might say that the American plutocracy is experiencing its John Galt moment. Libertarians (and run-of-the-mill high-school nerds) will recall that Galt is the plutocratic hero of Ayn Rand’s 1957 novel, Atlas Shrugged. Tired of being dragged down by the parasitic, envious, and less talented lower classes, Galt and his fellow capitalists revolted, retreating to “Galt’s Gulch,” a refuge in the Rocky Mountains. There, they passed their days in secluded natural splendor, while the rest of the world, bereft of their genius and hard work, collapsed. (G. K. Chesterton suggested a similar idea, though more gently, in his novel The Man Who Was Thursday: “The poor man really has a stake in the country. The rich man hasn’t; he can go away to New Guinea in a yacht.”)

This plutocratic fantasy is, of course, just that: no matter how smart and innovative and industrious the super-elite may be, they can’t exist without the wider community. Even setting aside the financial bailouts recently supplied by the governments of the world, the rich need the rest of us as workers, clients, and consumers. Yet, as a metaphor, Galt’s Gulch has an ominous ring at a time when the business elite view themselves increasingly as a global community, distinguished by their unique talents and above such parochial concerns as national identity, or devoting “their” taxes to paying down “our” budget deficit. They may not be isolating themselves geographically, as Rand fantasized. But they appear to be isolating themselves ideologically, which in the end may be of greater consequence.

Yglesias » Production, Consumption, and Prosperity

A slightly muddled response to the resurgence of supply-side, producer-oriented economic blather.

If the wealthy were the source of all economic growth, we could produce our way to prosperity simply by making iPhones by the billions, have the Dallas Cowboys build eight more stadiums in Texas for eight new teams, have James Cameron film Avatars 2 through 9 simultaneously and have them in theaters by next summer.

But who would buy all those iPhones? Who would go to all of those football games? Who would watch all of those movies, buy all of those BlueRays? Precisely. The fact is no one would ever do that because there's no market for that much stuff, no audience, no customers. Which proves the point: demand for goods and services - not supply - is what drives the economy. When wealth is increasingly moved into the hands of fewer and fewer wealthy people, you destroy demand and push the economy into a golden-goose-killing death-spiral.

Businesses succeed when they build things that people want, and businesses prosper when they reinvest for the future rather than waiting for some bigger fish to buy them up and offer them the equivalent of lottery winnings.

What's needed are incentives to put more money in the hands of people who actually need things and fewer incentives for those at the high end of the income spectrum to take the money and run.

Lance Mannion: All the mad men and all the mad women are about to go Galt

An analysis of Mad Men by way of Ayn Rand. Pretty great when you can read stuff like this:

Work, as far as they’re concerned, is not its own reward. They don’t take pride in a job well done because they can never be sure that they will continue to hold that job no matter how well they do it. Someone who can do it better will always come along to impress the bosses and where will that leave them? People who just work don’t have worth no matter how well or hard they work. People who just work are just useful to the people who produce.

Now, The Hobo Code is not an endorsement of their Randian world view. In fact the episode and the entire series is a refutation of the idea that the world of work and business is a world of solitary and independent heroes carrying the parasites along on their broad shoulders.

Built Out Of Nothing

Slate deconstructs Ayn Rand's popularity. It's not unfettered genius her fans admire, it's money:

Rand expresses, with a certain pithy crudeness, an instinct that courses through us all sometimes: I'm the only one who matters! I'm not going to care about any of you any more! She then absolutizes it in an amphetamine Benzedrine-charged reductio ad absurdum by insisting it is the only feeling worth entertaining, ever.

Control Galt Delete

I actually overheard someone at work today saying that they'd spent the weekend reading Atlas Shrugged. So, this was timely:

In essence, Rand advocated an inverted Marxism. In the Marxist analysis, workers produce all value, and capitalists merely leech off their labor. Rand posited the opposite. In Atlas Shrugged, her hero, John Galt, leads a capitalist strike, in which the brilliant business leaders who drive all progress decide that they will no longer tolerate the parasitic workers exploiting their talent, and so they withdraw from society to create their own capitalistic paradise free of the ungrateful, incompetent masses. Galt articulates Rand’s philosophy:

The man at the top of the intellectual pyramid contributes the most to all those below him, but gets nothing except his material payment, receiving no intellectual bonus from others to add to the value of his time. The man at the bottom who, left to himself, would starve in his hopeless ineptitude, contributes nothing to those above him, but receives the bonus of all of their brains. Such is the nature of the "competition" between the strong and the weak of the intellect. Such is the pattern of "exploitation" for which you have damned the strong.

The delusion is the notion that anything of value could be created by the single man of genius alone in his fortress of solitude, or that genius goes unrecognized because of the philistine masses. The simpler truth is that value is created through interaction, the building of relationships, and the collaboration of diverse talents.