Abhorrent Anniversary Gifts

Chances are you forgot to buy a present again this year, after all, anniversaries are hard to remember. What with the aftermath of that whole another former Disney girl goes off the rails thing, the release of another copy of a phone that'll make your life better and the anticipation of another brown people massacre, you could be forgiven for forgetting given the buzz surrounding Miley's strange twerking, Apple's chain jerking and Obama's postponed berserking. As if that weren't enough, there's always America's monthly mass shooting, the release of a video game glorifying said killing while looting or some kind of sporting event featuring flag saluting or home team rooting. Yes, it seems the official narrative of the Great Recession™ has sanctified September 15th, 2008 as the day the GFC (Global Financial Crisis™) began with the failure of Lehman Brothers. On cue, the distraction industry inundated those still paying attention with a slew of stories to perpetuate this myth, ranging in theme from the horror of the meltdown to how it couldn't have been predicted to hagiographies of those who saved us from even greater disaster and how the world of finance has changed since, thus ensuring it couldn't happen again. Nearly all miss the point and couldn't be more wrong as all we had to do was open up the newly released Fortune 400 list of richest Americans to see the cause, how nothing's changed and that the worst is yet to come.

Though many will be cheered and applaud the newest Fortune list, the inequality in wealth that it illustrates was not only the disease at the root of the crisis but a sure sign that like a malignant cancer it is metastasizing. Hooray! Bill Gates is still the richest man in America and passed Carlos Slim to reclaim the #1 slot in the world. Mark Zucherberg's wealth jumped almost $10 billion to get him back into the top 20 so you can rest easy, all those hours you've spent on Facebook weren't wasted. Warren Buffet, the Oracle of Omaha, had the biggest dollar gain while some schmoe named David Duffield, co-CEO of some outfit called Workday had the biggest percentage rise. All told, the wealth of the richest 400 in America climbed from $1.7 trillion to $2.02 trillion in a single year making them worth more than such economies as Canada, Mexico and Russia. Hooray that is until you realize where this mind-boggling wealth is coming from and for that all you had to do was notice what stock prices did this September 18th when the Fed announced it was going to continue its $85 billion monthly bond buying program, AKA quantitative easing 3, AKA printing money to buy assets from banks at book value instead of  market value, AKA providing a massive tax payer subsidy to the stock market.

Fortunately for the attention span challenged, the past couple of weeks have also seen a couple of other reports highlighting the financial situation of the rest of the country. The US census bureau's report on income and poverty was full of sobering stats, but the most telling were regarding poverty and median income leaving people angry, disgusted and frustrated. Now, I'll grant you the fact that these statistics are subject to manipulation and often don't compare well over time, but the raw numbers are shocking in themselves. The poverty rate remained above 15%, some 46.5 million people; meanwhile children are the poorest group, 21.8% (the highest in the industrial world) or 16.1 million children under 18, and the younger, the poorer as 25.1% of kids under 5, the years of greatest brain development, were poor. Meanwhile, the median household income was unchanged from the previous year, not so bad in itself until you notice this means the household that falls in the exact middle of the income range, with half the families in the country earning more and half less, earns less than they did in 1989, a quarter century of stagnation.

These details are important when one wants to discuss inequality as many free market believers will close their ears upon hearing the word as visions of Marxist hordes coming to take away their money flash before their eyes. Ironically, the previous two paragraphs illustrate Marx's theories to a tee as the former shows how well capital is doing while the latter paints a grim picture of labour's situation. As America's 2nd richest man, the aforementioned Oracle, said "[t]here's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." It's not my purpose today to get into the nitty-gritty of this war, you can check out how it was waged here, here, here, here, here or here, but to look at the conscious choice we made five years ago to continue the slaughter along with how and why things will continue to get worse if nothing is done to stem the tide.

Back to our anniversary. It's five years ago and we've been told the financial world is on the verge of collapse with the implication that there will be mass panic as bank machines refuse to spit out cash, credit lines seize up and pension plans crumble. Not only were bankers and brokers about to start jumping off window ledges, supermarkets soon to run out of food and grandma sure to freeze to death, but horror of horrors, we wouldn't be able to get the new iPhone 2.0! If anybody was to blame besides bankers it was Bush; Dubya had messed up the country and it was time for a change, brand America was due for an overhaul. Lo and behold, there was an election coming, contested between an old white guy who wanted to bomb Iran and a young, black, hip, handsome, debonair, peace loving constitutional law professor. Many (myself included) were blind to the fact that Obama was just another marketing stunt that changed the packaging but not the substance. At the same time he was surrounding himself with an economic team sure to carry on past policies favouring Wall Street and the rich, men such as Emanuel, Geithner, Bernanke and Summers, he had an all-star marketing team including a Facebook founder, a social secretary and David Axelrod who ensured the public wouldn't notice that Goldman Sachs was his campaign's biggest private contributor. Every tool in the marketing arsenal was used to create and sustain the Obama brand from the perfectly calibrated logo to viral marketing, product placement, infomercials and brand alliances.

Yes we can hope and change was nothing but cover for the great con job of the past five years. Sure, My administration," the president added, "is the only thing between you [bankers] and the pitchforks." Yes, the new president would be the greatest reformer since Franklin Roosevelt, the press sold it and the public bought it. Obama the socialist was coming to take away not only the wealth of the rich but everyone's, a fear so strong it spawned the Tea Party. The ultimate irony though is that despite all the noise, vile and bile directed against him by the rich, Obama left their great money making machine pretty much intact as he told the bankers behind closed doors "[y]ou guys have an acute public relations problem that’s turning into a political problem. And I want to help…I’m not here to go after you. I’m protecting you…. I’m going to shield you from congressional and public anger." Help and shield he did, enabling the greatest transfer of wealth, from the bottom up, in history.
Obama played the populist card when he had to with the help of the star-struck press. Stories of the president hauling in the heads of the 13 largest financial institutions to explain their actions and justify their sky-high salaries and bonuses were peppered with quotes to justify our faith: "

While millions were losing their homes and jobs, trillions were pledged to prop up the rich, the banks and corporations. TARP's $700 billion was quickly followed by trillions in loans and guarantees to the likes of McDonald's, Harley Davidson and UBS, $1.75 trillion in bond purchases in 2009 for QE1, $600 billion more the following year in QE2, another $400 billion of mortgage purchases in 2011 during 'Operation Twist' and of course the now-always-taper-threatened-in-order-to-allow-insiders-to-profit QE3, the monthly $85 billion in purchases. This back door bailout also includes six years of artificially low, near zero interest rates and the implicit guarantee that the government will step in and save them if necessary. Meanwhile, while the government plays back door man to the rich, we play the cuckold, getting screwed over, footing the bills and getting left out in the cold, some literally, thanks to the never-ending debt ceiling budget battles this profligacy along with Dubya's wars and 30 years of tax cuts for the rich have led to. The enormous shift in power away from labour has allowed capital to further squeeze jobs and wages from the lower and the middle classes. As late as 1980, economists believed labour's share of national income was pretty much fixed, but since that time it has slowly dwindled (not just in America). More money is flowing to corporate profits (and thus shareholders, ie. capital) than ever before while an ever larger slice of the smaller pie left to labour is being served to those at the top of the income scale. The result is obviously growing inequality.

Which brings us to another recently released study of note, Emmanual Saez's 2012 US inequality report, Striking it Richer: The Evolution of Top Incomes in the United States. Sadly, it brings no surprises, only confirmation of the suspicions of those paying attention; inequality is getting worse, itself no surprise as inequality feeds on itself in a vicious circle. After a brief drop immediately following the GFC, thanks in large part to policies that could have no other result, the top 1% of income earners have captured 95% of the income gains in the first three years of the so-called recovery, leaving America's income distribution more unequal than any time since records have been kept. The proportion of income going to the richest decile broke through the 50% mark for the first time ever while that going to that top 1% increased from 19.65% to 22.46% in just one year. In case you're wondering, the share going to the top 0.01% jumped from 4.32% to 5.47%, the largest percentage increase since 1927-1928. However, this inequality is dwarfed by that of wealth, perfectly encapsulated by this video. But wait, so what, right? Some people win, some lose, that's the way capitalism works.

Right. But wrong. Huh? Well, the thing is, capitalism and thus society works better when inequality isn't so severe as can be seen in many ways. The first and most obvious is to look at the history of income distribution, the chart above that practically forms, in the words of Robert Reich, a suspension bridge. Before a new standard was set last year, inequality had peaked in 1928 and then again in 2007. It's no coincidence the Great Depression followed the former in 1929 and the GFC followed the latter in 2008 as the majority of the population simply don't have enough purchasing power necessary to maintain a consumer economy. Worse, epidemiologists Richard Wilkinson and Kate Pinkett convincingly demonstrated the link between inequality and a wide range of social ills such as teenage births, homicides, obesity, lower educational achievement, drug use, mental illness and infant mortality rates in their book The Spirit Level. Not only do they show the link, they dispell the "correlation is not causation" complaint by showing the same effects between countries as well as within countries finding the same correlation among the 50 US states.

Perhaps most ironically of all, as America moves its way up the inequality charts, the most American story of all, the rags to riches, Horatio Alger, land of opportunity parable, slowly dies. As "The Great Gatsby Curve" illustrates, the more unequal the economy, as measured by the GINI index, the more closely children's income is tied to that of their parents. The US already has one of the lowest earning elasticities (how much a father's income affects their offspring's) in the developed world, and as it becomes more unequal this affect will only worsen. Social mobility has become a thing of the past in much of America, the chances of someone born into the lowest economic quintile in Atlanta has a 4% chance of reaching the top 20%. One study suggested that the loss of life from income inequality in the US in 1990 was the equivalent of the combined loss of life due to lung cancer, diabetes, motor vehicle accidents, HIV infection, suicide and homicide.

The reason for the negative economic and social effects of inequality is bundled up with why the phenomenon seems to feed on itself, getting worse and worse. Inequality increases economic insecurity for those at the bottom while transforming wealth into political power for those at the top. The proletariat, er, the 99%, er, well, the majority of us are forced to fight for fewer jobs, which pay less and offer less security, thus upping the stress. The official unemployment rate may be down but the labour-force participation rate is also down, at a 35 year low, as new jobs haven't kept up with population growth. The jobs created are paying less on average, with less hours than those lost in the GFC. Those who kept their job have most likely had their hours and benefits cut and are probably earning the same or less as five years ago but are happy now just to have a job. If you don't have a job you are shamed as being lazy, someone gaming the system, a taker (or skiver for you Brits) coasting on the beneficence of the rich. These makers (yeah, there's a British version too, strivers), ensure the only legislation that passes protects their power and/or expands GDP, like blowing brown people up, creating a crazy health care system centered on insurance or passing new free trade deals such the upcoming TPP which will lower wages for 90% of workers.

There were of course a couple other significant anniversaries that have passed in the past couple weeks that illustrate the corrosiveness of inequality on empathy and imagination: 9/11, both the 12th and the 40th and Occupy Wall Street's 2nd. Whether created or not, the only answer to the fear that was produced by the terrorist strikes in America a dozen years ago could ever be blowing stuff up as not only does it enrich those buying the election but also because those at the top are no longer able to understand the Other. Mirror neurons, which allow us to get into the heads of others, seem to reflect better for the powerless but much worse for the powerful. In simpler terms, the rich and powerful have less empathy helping explain the results of a study last year showing the rich are more likely to lie, cheat and even take candy from children. Amassing great wealth breeds an arrogance made even more harmful given the with us or against us atmosphere of the GFC and war on terror. Worse, those in power thanks to their wealth know they won't need to sacrifice anything as only poor people's children fight and die in wars. Thus the public ignores both the epidemic of returning GI suicides and the near doubling of suicide rates in the past 10 years for the general public aged between 50 and 59; used up by war and used up by the GFC.

The CIA helping Pinochet take out Allende in Chile in 1973 turned another possible socialist success story (I know there haven't been any yet) into a laboratory for the Chicago Boys to study free market economics. Ever wonder where economists got their field research to test and try to prove their wacky theories? Chile was the real ground zero. Allende's mistake was trying to give the wealth of the nation back to the people when everyone knows mulinational corporations are the only actors rational enough to control it properly. Er, wait, that's right, thanks to folks like Gary Becker, people are rational actors constantly making rational economic choices in a world of equal knowledge and power as we make our way through a world filled with attempts to alter our decision making process, ie. advertising. How is that supposed to work again? Wouldn't it be great if we all really did have equal information and power to make this fiction possible? Oops, that sounds like socialism, sorry guys. By the way, why didn't many people notice that John Kerry met with Henry Kissinger, a man intimitately involved with the events of September 11th, 1973, on September 11th this year to discuss Syria?

In What Money Can't Buy, Michael Sandel puts forward the argument that without realizing, debating or noticing it we have drifted from having a market economy to being a market society. What was once a tool for organizing productive activity has become a way of life allowing market values to usurp moral values. Particularly in America, but more and more around the world thanks to austerity, market values have penetrated every part of our world, from education to politics, health to war. Students are paid to get good grades, admissions to elite universities are auctioned and the whole idea of education has been transformed from gaining knowledge into job training. The arts, philosophy and non-financially lucrative scientific fields are shunned in favor of finance, public relations and programming. With student loan debt of almost $30,000, the average graduate can't afford to believe in anything that won't get them a well paid job. Seems like slavery to me but instead economic freedom is being able to bet on people dying by buying people's life insurance; the gamble lies in the higher payoff the sooner the insured die.

Obscene wealth and growing inequality have separated us from each other creating an ever growing empathy deficit. It's not only gated communities, private beaches and exclusive restaurants anymore as barriers are being thrown up all around us. Sports have traditionally been about competion but also about bringing people together, be they teams, cities or nations, societies large and small. As recently as 1980, we'd go to a ball game at a stadium named for a public figure where one would rub shoulders with Joe Six pack and Richie Rich as tickets prices ranged from a couple of bucks for bleacher seats to a few dollars for the best seats in the house and root for our home town heroes. Today we go to InsertCorporation™ Stadium, segregate ourselves according to wealth to the bleachers, box seats or luxury boxes, to cheer for a team threatening to change cities if their owners aren't granted more public concessions, made up of free agents who change teams for raises of tens of millions. While there, we're as likely to be discussing transfer fees and salary cap restructuring as we are ERAs or wins and losses. An institution that was a source of civic pride and social glue has been transformed removing a bond that held us together, in the words of Sandel -

In fact, for most of the twentieth century, ballparks were places where corporate executives sat side by side with blue-collar workers, where everyone waited in the same lines to buy hot dogs or beer, and where rich and poor alike got wet if it rained. In the last few deades, however, this has changed. The advent of the skybox suites high above the field of play has separated the affluent and the priviliged from the common folk in the stands below.

As for Occupy, another potential source of human contact and feeling of community, well thanks to the wilting of the collective imagination, how you view it solely depends on where you get your news. They might have just been a gang of smelly hedonists looking for a good time as evidenced by their lack of a coherent message or the nudge that awoke a glimmer of public consciousness to the problems of inequality. The reason for the ferocity of both the media propaganda machine and the coordinated nationwide military style attacks on the movement was the importance of convincing people, particularly those who would be activists, that there's no hope to change anything, thereby creating a self-fulfilling prophecy. Rather than entering the humanities to expand their minds, today's youth, the imagination of tomorrow, are streaming into the indoctrination machine. In 2006, just before the GFC, 25% of graduating seniors at Harvard, 24% at Yale and a mind blowing 46% at Princeton were starting their careers in financial services. The creation and maintenance of a reality where everything is only about profit and there's nothing else to believe in.

No wonder wealth reduces compassion. The self interest needed to survive in a system of such extreme inequality not only drives financially measurable crimes from petty theft to hiding $32 trillion in tax havens forming a fraction of the tax evasion industry or pseudo-financially-measurable-for-bank crimes such as laundering terrorist money and world wide interest rate manipulation, it rips at the fabric holding societies together. Gun nuts are right, it's not just guns that kill people, it's a system that glorifies greed driving people over the edge. American exceptionalism in terms of inequality is becoming as dangerous to itself as their military version is to the world yet strangely much of the world seems to want to emulate their uniqueness. Chilean economist Manfred Max Neef has claimed that "[t]his economy can go on no longer…because it has become absolutely criminal…this economic model is killing more people in the world than all the armies put together" and has proposed an economic crimes tribunal to mete out justice. He's also part of the King of Bhutan's General Assembly working to develop a new economic paradigm based on well-being, happiness, ecological stability, adequate distribution of wealth and intelligent use of natural resources. Basically, the opposite of what we do now so it must be worth a shot. 

Chances are, however, nothing much will come of it as most people are trapped in a never ending cycle, forced to work to simply survive and are voiceless in a world where power only listens to money. We were given the opportunity five years ago to change the world for the better but were instead fed a pipedream of hope and change. It seems a type of madness to try sustain a broken system, our current suicidal economic model of infinite growth, in a manner that seems designed to fail, but that's just what's happening. Budgets need to be cut when it's spending that goes to the needy, yet the US government continues to subsidize the rich to the tune of over $1 trillion per year. Capital is winning the struggle with labour, whose spending drives the economy. Left with so little, labour can simply survive, not thrive. In 1947, labour's share of US nonfarm business income was 65%, in 2000, 63%; in 2013 it's 57%. This shifts about $750 billion annually from the workers to the rentiers. The age of austerity offers little hope for today's youths, burdensome tuition indebtedness, worklessness, homelessness and powerlessness, virtually guaranteeing mass shootings will become a daily occurrence, in fact America's almost there already. If only this infection was contained to the US it may not be so bad but in a study of 22 other advanced countries it was found labour's share of income fell from 73% in 1980 to 65% in 2011, a trend occurring in poorer countries as well.

Perhaps the decades of shared prosperity in America from WWII until the late 70's that created a thriving middle class was simply a historical fluke due to unique circumstances, after all, most of human history has featured but two classes, the aristocracy and the peasants. We've forgotten the battle that took place in order to create the institutions that enabled this historical anomaly known as the middle class and are passively allowing the system to be dismantled as we stare blankly into our propaganda screens, be they TV, tablet or telephone. The tension is all around us; politically, partisanship rules the day as the likes of Citizens United has made the voice of the few louder than the many; economically, finance rules the day as the rentiers extract rents from the rabble; socially, we've become zombified by those aforementioned screens, disillusioned by a dollarocracy masquerading as democracy and indebted by an economic system that forces you to borrow to eat, sleep, learn or even get sick. The World Economic Forum (you know, those rich guys who meet in Davos every year) listed severe economic disparity at the top of their Global Risks 2013 report. President Obama was forced to admit that "[t]he folks in the middle and at the bottom haven't seen wage or income growth, not just over the last three, four years, but over the last 15 years," only to have it suggested later in the same interview that "[m]aybe a president just can't stop this accelerating inequality?".

This is exactly what the elite want us to believe, that no one can do anything about inequality, that it is a natural occurrence that 'incentivizes' effort. What if we could show them that even their lives would be better in a more equitable society? Woah! Wait, if you could do that what would the cognitive dissonance of working against their own self interest do to their brains? The same thing that should happen to the rest of us when we realize the neoliberal fairy tale of supply side, trickle down economics is just that, a fable, and scream the emperor has no clothes. Bankers shouldn't earn more than teachers and nurses, four members of one family shouldn't have more wealth than the combined wealth of just under the 50 million poorest American families and resources need to be allocated to those who are forced to start behind others. Intuitively, absolute poverty causes negative health and social outcomes, but unfortunately it is slightly less so regarding inequality leading to the 'so what' attitude of so many. Yet, 'status anxiety' or insecurity seems real enough in a society that places people in a hierarchy which increases competition for status and causes stress, leading to poor health and other negative outcomes such as the falling life expectancy of poor white women in the southeast of America, surprise, where inequality is highest. Too bad we seem to have lost our empathy, otherwise we might try to do something about it. Well, at least tell your friends to go see this movie -

Towards a New Normal

The release of Forbes' annual list of billionaires last week seemed little more than a tired attempt to hawk a few magazines. It tried to create a bit of buzz by ranking a Mexican, Carlos Slim, at the top of the list at $53.5 trillion. Hoped to get America's panties in a bunch trumpeting the fact that Asia was home to more new billionaires than the US and Europe. Endeavoured to convince us the world's economy is turning around heralding the dramatic rise in wealth of the billionaire club, up 500 billion to $3.5 trillion. Guess it's lucky for Forbes that most people really hadn't been paying attention as a quick google search reveals more than a few reactions, from apocalyptic to benign,  fawning to condemning. Somehow they missed Fortune magazine's announcement that Slim was the richest man in the world nearly three years ago, that the West has already sold its future to the East and that the current brand of capitalism is working on the last course of its meal as it devours itself.

In case you missed it, Bill Gates isn't the richest man in the world anymore, nor is Warren Buffet. Gates had topped the list since 1994 then lost the title in 2008 to Buffett only to regain it last year. Neither did too badly last year, both seeing their fortunes grow by over $10 billion. Problem was, the Mexican's grew by $17.5 billion. Carlos Slim Helú's wealth grew from a paltry $35 billion to $53.5 billion in just a year. While the propagandists will peddle the Horatio Alger myth of a self made man whose business savvy has brought him to the pinnacle of power, Slim owes his over the top success to an inheritance head start and insider influence.

Still drinking the Kool-Aid that teaches us that motivation, innovation and education sets one on the pathway to success? Funny enough, Fortune featured at article alongside their rich list which asked "Are You Born to be a Billionaire?" which stresses optimism and risk taking, when in fact one of the best ways to get on Forbes' list is to be like Steve Forbes himself and be born onto it much like the Walton clan of Wal-Mart fame occupying the 12th, 15th, 16th and 18th positions on the list. Sure, you'll find a useful proportion of productive entrepreneurs who have enlarged the economic pie but looking at the rest of the list, one gets a feeling that the invisible hand isn't as important as the silver spoon in determining one's financial fortune.

Still, Slim wasn't granted the advantage of the Waltons, so how did the son of a Lebanese immigrant amass such a fortune in Mexico? Easy. You control the communication industry of not only your country, but an entire region. "Slimlandia" truly blossomed thanks to privatization of the Mexican telecommunications industry in the early 90's, which brought about a monopoly instead of diversity. His purchase of Telmex, facilitated by contributions to then president Carlos Salinas, was the springboard which has led to a Mexican economy that "is highly inefficient, and it is losing its competitive standing vis-à-vis other countries because of people like Slim." Almost every time a phone rings or text message is sent, Carlos pockets pesos from the 92% of subscribers in land-line telephony, while his mobile operator, Telcel, has almost 80% of users in Mexico. Oh, in the past five years his mobile telephone company America Movil has purchased most of the remaining mobile operators across Latin America, becoming the largest mobile service provider in the region. The reward for the people? Some of the highest phone hook up rates in the developing world. America Movil now has 201 million customers from Brazil to the United States. Slim also owns five insurance companies, a Mexican retail chain, a mining company, the Inbursa bank, the Cigatam tobacco factory, the Volaris airline company and the Progidy Internet provider. Oh yeah, chunks of Saks and Sears, plus he lent $250 million to the NY Times at 14% interest plus warrants convertible into 16% of the paper. All together, Slim’s companies have a value of half of the Mexican stock market, 7% of Mexican GDP, while much of the rest of the country gets by on a little over $4 a day per head (54-57 pesos).

Sure, your probably saying to yourself, "Yeah, sounds like Mexico, poor and corrupt, nothing like that happens in the developed world, after all they've got a drug lord on the rich list." Yet one could easily argue that Gates billions are largely thanks to the monopoly position he attained in his industry, but I won't. Or maybe bring up the culture of war that his seen a transfer of wealth measuring in the trillions to defense contractors’ whose growing use of offshore subsidiaries from 2003 to 2008 resulted in the loss of tax revenue and unemployment benefits for workers. How about you take a noble idea, say, granting health care coverage to your people, then twist it into an evil package that will deliver guaranteed profits to the insurance industry? I suppose I could point out that the entire financial industry was given trillions of dollars to keep them afloat in order to hand over billions in compensation to the guys who drove the world economy into the ground, but that would be too easy. How did capitalism become so corrupt?

Unlike the last depression when the gilded fortunes of most plutocrats dropped precipitously, along with the banks the rich have been well taken care of by the system. The government printing presses have been working overtime to maintain the illusion of stability in order to artificially propel stock and resource prices. This has clearly benefited Warren Buffett who has gorged himself on the buffet of buying opportunities that the crisis presented resulting in a $10 billion increase in his wealth. Sure, the "Oracle of Omaha" does his bit allocating wealth through Berkshire Hathaway while taking home a reasonable salary, but what has he produced? One can ask the same of these other 33 hedge fund managers on the list. How did they improve the world?

And who else's wealth is your tax payer money, along with your children's and children's children's children, going to support? Only 16% of the new members of the elite thousand were from the States while Asia added 104 moguls giving them just 14 fewer total than Europe, 234 to 248. The 4th and 5th richest people in the world are now from India, Mukesh Ambani and Lakshimi Mittal moved up from 8th and 7th respectively. Soaring resource prices helped the biggest gainer on the list, as Brazil's Eike Batista saw his wealth increase by $19.5 billion(!) thanks to his mining interests, moving him up to 7th at $27 billion. Russia rounded out the BRIC countries fine performance. As oil and gas prices bounced back, so did oligarch fortunes. Of the 164 returning members to the list, 28 were Russian, giving them a tally of 62 billionaires. Taiwan tripled its number of billionaires to 18 and Turkey more than doubled its own to 28. For the first time China, with 64 billionaires, has the most outside the US whose residents now command 38% of the collective net worth of the world's richest, down from 44% a year ago.

It wasn't until I read the BBC version of the story that my ears pricked up. You see, apparently the latest Forbes list is good news for everyone: "In a sign that the global economy could be improving, the average net worth of the world's billionaires is now $3.5bn, up $500m from last year." You hear that everyone? Yep, it's a good sign for the global economy that the super rich became super richer last year. It was just a year ago that the Beeb was lamenting "Rich list hit by economic crisis". Yesiree Bob, 2009 was a much better year for the world than 2008, a year that saw 332 names wiped off the rich list leaving a measly 793 billionaires who saw their wealth plummet by 23%. Things are much better now as the billionaire list is back in quadruple digits with 1,011 members.

The pursuit of wealth has clearly become an end in itself, with the wealth rankings taking on the importance of an Olympic medal table (yeah Canada, New Zealand or more likely India). Much of the rest of the list is being celebrated and debated over national lines with many cheering their country's inclusion (Finland and Pakistan got their first members) while others lament their nation's totals on the list. National pride seems to be at stake as we're fed the meme that having more billionaires means a better country and world.

Though they've convinced the apologists that this may be true, they couldn't be more wrong. We're seeing the fruits of the system planted by Nixon in which the treadmill of debt allows a nation to sell future generations into indenture in order to buy stuff made by the future slave owners, the price being held low thanks to the artificial peg maintained by the purchase of debt in the first place. Does that make sense (I mean the sentence and the system)? To my way of thinking, a world where hyper-wealth is celebrated has two basic flaws: a system that creates winners also breeds losers to scale, resulting in massive inequality and even more fundamentally, more stuff means more unhappiness.

As it stands, the US and much of the world suffers from more inequality than any time in over 100 years. We're taught to believe in this evil Gilded Age that existed before capitalism kicked in and distributed wealth away from the kings, queens and Rothchilds. Yet today these fat cats do more than throw off the standard deviation of wealth distribution. When a ruling class becomes entrenched it follows that mobility between classes inevitably declines - a lethal ailment for economies. Sadly, the tea partiers will believe it's the government control of the economy that destroys innovation but in reality it's the gilded class and true enough, the government is enabling their control. Funny how those Nordic 'socialist' countries feature much more intergenerational movement than the US (Italy and the UK are even more stagnant).

Whether you invent something or inherit your cash, there is no doubt money is an innovation driver, but 10 digit wealth takes a lot of cream off the top. Could this loss of incentive to move up have led to the decline in median wages in the US between 1998 and 2008? Yet it's facilitated by a tax system that has seen a fall of the highest marginal tax rate from 91% in the 1950's to 28% today (well, the IRS says that the top 400 richest tax filers actually paid a rate of just 16% in 2007 thanks to loopholes, a lower rate than your average Joe). In 1970 the compensation ratio of the top 100 CEOs compared to the average worker was 45 to one. By 2008 it was 1,071 to one. You think they got that much smarter? If given the choice of giving our money to these guys, the banks, the military industrial complex or health care it seems like you would choose door number four, no?  We're sold the fairytale image of the first man from the developing world to become the world's richest along with slumdog billionaires, but they're just replaceable cogs in the machine. It's the machines they operate that control the world's markets, employing armies of lobbyists to influence government, and a network of spies (yes, real spies, CIA, MI5, ex-KGB) in order to maintain their stranglehold on global wealth.

Finally, here's the kicker. More money and more stuff don't make you happier. Building upon the ideas of Thorstein Veblen, who in 1899 coined the term "conspicuous consumption" in his book The Theory of the Leisure Class (google books here), two professors of economics, Curtis Eaton and Mukesh Eswaran, believe they have shown through economic formulas that more things make us less happy. Veblen's work is considered to have been the first critique of consumerism where he argued that our modern division of labour began in tribal times when the "higher-status" group monopolized war and hunting while farming and cooking were considered inferior work. Veblen's ideas were discarded by neoclassical economists as he cast people as irrational creatures who chase after social status without regard to their own happiness, an idea that should be gaining more traction in light of the financial crisis. In the Middletown studies, for example, researchers learned that lower-class families were willing to go without basic necessities such as food or new clothes to maintain a certain level of conspicuous consumption, in particular, car ownership. The concept of conspicuous consumption has been carried forward to this day, and is often used to criticize advertising and to explain why poorer classes have been unable to advance economically. His views on the uselessness of "businessmen" have been adopted in modified form by none other than third-ranked Warren Buffett, who has harshly criticized the growth of practices such as day trading or arbitrage, which makes money solely through abstract means.

Well, according to Eaton and Eswaran it seems our drive to own more stuff is really a sort of zero-sum game, where the owners may feel happier but the rest of us are left feeling worse off. They state that once society reaches a reasonable standard of living and consumption shifts towards the purchase of status symbols with no intrinsic value, average wealth may rise causing people to be richer but unfortunately not happier. Worse yet, as people yearn for more status symbols they have less time or inclination for helping others. This, the authors argue, damages "community and trust", which are vital to an economy because they ensure the smooth running of society. They conclude: "Conspicuous consumption can have an impact not only on people's well-being but also on the growth prospects of the economy." Huh, sounds a little bit like what's ailing the west these days as we mortgage our futures in order to buy more stuff today, thus sacrificing our growth prospects.

Well, seems I've managed to ramble on quite a bit again. As usual though, these arguments will fall upon deaf ears of the true believers as the cognitive dissonance created between reality and their beliefs cause them to fall back on tired, disproven arguments. They'll blame my Karl Marx beard for my socialist rantings or accuse me of tall poppy syndrome while ignoring the words of their idol, Adam Smith who warned:

Of the corruption of our moral sentiments, which is occasioned by this disposition to admire the rich and the great, and to despise or neglect persons of poor and mean condition

There is little question that our current form of capitalism is failing us, while those in positions of power are doing all they can to protect and propagate their wealth. There's a frightening increase in momentum about it as the rich become richer and the poor poorer. In the meantime, panem et circenses will be fed to the masses while ensuring the next generation will be dumber than the last as places like Texas reinvent the history books and Kansas City closes half of its schools. Knowledge is after all nearly as powerful as the dollar.