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Wednesday, January 05, 2011

 
"Philanthrocapitalism" and the Lucky Duckies

by digby


If you read nothing else today, be sure to read Cynthia Freeland's piece in the Atlantic about the new super-rich. She discusses what may be the most important aspect of the plutonomy --- the fact that it's unmoored from national allegiance. This is an important insight and gets to what I think is really the big transformation of our time: the unraveling of the nation state. You see it in these international institutions like the IMF and in huge multi-national corporations, of course. But I hadn't realized until I read this just how much the super-rich had adopted a transnational identity.

I'm not entirely sure that it's a bad thing in the long run --- there's nothing that says the nation state is the only possible human organizing principle. It's actually fairly new in historical terms. Something different could feasibly end up being better. But at the moment the only people who are currently benefiting from this new arrangement are the very wealthy and powerful. And there is a very good chance that this will not go well for regular folks in the long run either.

In the meantime, here's what we are dealing with:
If you are looking for the date when America’s plutocracy had its coming-out party, you could do worse than choose June 21, 2007. On that day, the private-equity behemoth Blackstone priced the largest initial public offering in the United States since 2002, raising $4 billion and creating a publicly held company worth $31 billion at the time. Stephen Schwarzman, one of the firm’s two co-founders, came away with a personal stake worth almost $8 billion, along with $677 million in cash; the other, Peter Peterson, cashed a check for $1.88 billion and retired.

In the sort of coincidence that delights historians, conspiracy theorists, and book publishers, June 21 also happened to be the day Peterson threw a party—at Manhattan’s Four Seasons restaurant, of course—to launch The Manny, the debut novel of his daughter, Holly, who lightly satirizes the lives and loves of financiers and their wives on the Upper East Side. The best seller fits neatly into the genre of modern “mommy lit”—USA Today advised readers to take it to the beach—but the author told me that she was inspired to write it in part by her belief that “people have no clue about how much money there is in this town.”

Holly Peterson and I spoke several times about how the super-affluence of recent years has changed the meaning of wealth. “There’s so much money on the Upper East Side right now,” she said. “If you look at the original movie Wall Street, it was a phenomenon where there were men in their 30s and 40s making $2 and $3 million a year, and that was disgusting. But then you had the Internet age, and then globalization, and you had people in their 30s, through hedge funds and Goldman Sachs partner jobs, who were making $20, $30, $40 million a year. And there were a lot of them doing it. I think people making $5 million to $10 million definitely don’t think they are making enough money.”

As an example, she described a conversation with a couple at a Manhattan dinner party: “They started saying, ‘If you’re going to buy all this stuff, life starts getting really expensive. If you’re going to do the NetJet thing’”—this is a service offering “fractional aircraft ownership” for those who do not wish to buy outright—“‘and if you’re going to have four houses, and you’re going to run the four houses, it’s like you start spending some money.’”

The clincher, Peterson says, came from the wife: “She turns to me and she goes, ‘You know, the thing about 20’”—by this, she meant $20 million a year—“‘is 20 is only 10 after taxes.’ And everyone at the table is nodding.”

That's nice. One wonders whether Holly will be "satirizing" the lives of the millions of elderly Americans her father seeks to impoverish with his crusade to destroy social security. A crusade which Freeland inexplicably seems to think is a form of "philanthropy"!

Inspired and advised by the liberal Soros, Peter Peterson—himself a Republican and former member of Nixon’s Cabinet—has spent $1 billion of his Blackstone windfall on a foundation dedicated to bringing down America’s deficit and entitlement spending. Bill Gates, likewise, devotes most of his energy and intellect today to his foundation’s work on causes ranging from supporting charter schools to combating disease in Africa. ..
Just ... wow. Comparing what peterson is doing to what Soros and Gates are doing is just absurd.

That is a small mistake in a piece that's worth reading for the rich (no pun intended) details about this emerging plutocracy and their disdain for the parasites. She gives these people far more credit than they deserve --- after all, they may have helped build the modern economy, but they were so reckless they nearly destroyed it as well, so much so that the parasites had to step in and bail them out. But she knows them well and gives us a fascinating portrait of the new western aristocracy.

An aristocracy that's producing the same thing they always produce:


Peter Cary “PC” Peterson, 18 years old and a senior at Dwight, is sitting at Philippe on the Upper East Side, talking about the way the world works, based on his extensive experience. “Everything in New York City is about connections,” he explains, his eyes glinting and head lolling back. “It’s who you know and how much money you have. It’s really sad. And I am not saying I’m like that. But that’s what New York is: money and power.”


That's Pete Peterson's grandson PC -- Holly Peterson's nephew --- the one for whom old Pete the "philanthrocapitalist" is trying to save the country by destroying the safety net.



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