Wealth, Inequality, and Power

Who controls the wealth in modern society? And how much power does it give them?

According to the Forbes report released in March 2013, there are currently 1,426 U.S. dollar billionaires worldwide from 66 countries, boasting a combined net worth of $5.4 trillion, which is more than the combined GDP of 152 countries. The United States has the largest number of billionaires of any country, with 442 as of 2013, while China and Russia are home to 122 and 110 billionaires respectively. Among U.S. billionaires, the average age is 66 years.


Do these thousand or so super-rich control the world? Pretty clearly not. What’s striking about the list of the world’s richest men is how unremarkable their businesses are. Gates and Ellison are software; essentially, copyright law gives their companies a small cut of the hundreds of millions of copies of their software in use. The Waltons get their wealth from retail—again, a tiny cut of the billions spent by ordinary people at Wal-Mart. The Koch brothers from oil: that sounds more promising as the basis of some kind of real leverage over society, but their business is primarily oil refining—they’re another set of middlemen getting a tiny piece of the money flowing through the economy. Other middlemen pulling in riches the same way are Carlos Slim (Mexican telecoms) and Sheldon Adelson (Casinos).

Of the top ten, that leaves Warren Buffett as the only contender for a true plutocratic power. Michael Bloomberg is also swimming around in the top twenty.

The other one I left out is Amancio Ortega. It was Steve Sailer’s piece on him that triggered this examination, because he is the best example of the phenomenon I am discussing.

Ortega’s wealth is the Zara fashion chain—a bizarre thing to make someone the third richest person in the world. Sailer asks, “how great of a businessman do you have to be to get insanely rich in moderately priced women’s clothes?” And clearly, Zara isn’t even dominant in moderately priced women’s clothes. You can picture a dominant plutocracy based on control of the world’s energy, or weaponry, or a vital component of fertilizer or technology manufacturing. But Ortega is #3 because of a chain of 6,000 fairly ordinary clothes shops. What is going on?

One point is that the world’s richest individuals clearly aren’t the best way to look at the role of wealth in society. What has made these individuals super-rich is not the absolute position of their businesses, but the rapid growth of those businesses, which results in the rare situation of a significant proportion of a huge business being owned by only a few.

I don’t think that necessarily makes them unrepresentative, however. There is something else going on.

In the modern economy, relatively little of the nominal wealth is in solid capital: land, gold, machinery or even in specific pieces of “intellectual property”. The billionaires on the list have that wealth because money flows through the economy rapidly, from hand to hand to hand, and they are in positions that allow them to take a tiny piece of that flow as it goes past them.

The wealth is real, because the share of those flows really are, individually, exchangable for any other form of wealth. Zara really does produce profits of a couple of billion a year, and if you want to own that flow of profit, it really will cost you tens of billions to buy it from Senor Ortega. But, in aggregate, the sum of that wealth does not exist at all. That is because all the fountains of profit that give value to businesses like Zara or Wal-Mart are drawing from the same flow of money. If a few of those drawing water from the fountains stop pouring it back in: stop spending the profits on more moderately-priced dresses, smartphone contracts and kitchen gadgets, then the transient wealth can be converted to solid wealth. But if too many try to do that, the flow itself slows down and all the fountains run dry.

This is a familiar point, of course: it is the basis of Keynsian macroeconomics. However, it is equally significant in terms of power. The owners of wealth, whether individuals or corporations, can to a certain degree throw some weight around at the micro level, but the aggregate of all that power simply isn’t real. If one exercises it, the others can’t, because it’s really all the same power, being counted multiple times.


The Eich Controversy

The resignation of Brendan Eich as CEO of the Mozilla Corporation is a very exciting development—possibly the most significant political event of the last few years.

It will not do to get upset by it. The mainstream right can get upset, because it demonstrates their irrelevance, but Improprietary Influence is not a mainstream right-wing blog. It is a neoreactionary blog. Sure, what we are looking at is McCarthyism, but as the excellent neoreactionary site Theden will tell you, McCarthy was right. Bringing McCarthyism back into American politics is an extremely positive step.

Take a deep breath, calm your mind, and try to work out what it is that has you so upset. The democratic process requires that issues be debated openly, and that individuals feel able to participate in a life of civic engagement without fear of retribution. That would be a big deal perhaps, for people who don’t want to abolish the democratic process and destroy it as a political ideal for a thousand years. A majority opinion has been demonised, and forcefully driven out of the culture by a highly-motivated minority. That would be shocking, for people who think the opinion of the majority is worth paying attention to, and that culture should be allowed to drift in any direction without elite guidance.

For people who don’t respect the democratic process or the opinion of the majority, this drama provides an invaluable precedent and an encouraging demonstration. “Equal Marriage” is, by comparison, an irrelevance. The progressives are not, by this stage, trying to kill off traditional marriage. Traditional marriage has been dead for decades—what the progressives are doing today is pissing on its grave: distasteful, but not doing any real damage.

The job now is not to whine about the Mozilla Corporation, it is to go to town. The old, silly, idea, that Joe Shmo should respect and tolerate people in his community who are actively involved in trying to harm Joe’s interests through the political process, out of some kind of democratic fair play, is dead, and good riddance to it. If that firm downtown is donating to a party that wants to raise your taxes, then boycott it, picket it, shout abuse at its workers as they get out of their cars. Family across the road puts up a poster for a politician who wants to favour members of his race over yours in the university system? Write to all your friends, telling them what a bad person he is. Put up posters of your own, suggesting he find somewhere else to live. Ask if he’s really the sort of person who ought to have a job when better people don’t.

If ordinary decent people were to follow these same tactics used by the left against Eich, then the domination of society by a bunch of puritan-progressive extremists would be ended.

Did anyone believe that last line? Probably not: I was joking. Of course, “ordinary decent people” cannot possibly win that battle; they will get their arses kicked. They should do it anyway. It’s the next important step.

The progressives cannot be beaten until the people are ready to acquiesce under a non-democratic government. That cannot happen today—democracy is still believed in, and any non-democratic state at all would face Maidan-style street warfare, of a kind that a new government, without tradition and cultural roots, would not be able to overcome.

Democracy will be discredited eventually, when its effectiveness drops below the minimum necessary level—when it ceases to govern at all. That might well be too late to salvage very much of our civilisation. The way to discredit it sooner is to open up the lies and contradictions at its heart. Proving that a leftist establishment actually rules, and that a mere majority has no tools with which to overcome it, is the way to do that.