“The poor enjoy what the rich” Andrew Carnegie, “Wealth,” North American Review 148:391 (June 1889).
“I was once told” Branko Milanovic, The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality (Basic Books, 2011), p. 84.
“I didn’t attack them for their success” Bill Clinton, Back to Work: Why We Need Smart Government for a Strong Economy (Knopf, 2011), p. 93.
“often the word ‘rich’” Graeme Wood, “Secret Fears of the Super-Rich,” The Atlantic, April 2011.
“If one looks closely” Alexis de Tocqueville, Memoir on Pauperism: Does Public Charity Produce an Idle and Dependent Class of Society? 1835.
“Americans grew together” Claudia Goldin and Lawrence F. Katz, The Race Between Education and Technology (Belknap Press, 2008), p. 87.
Ariely showed people Michael I. Norton and Dan Ariely, “Building a Better America—One Wealth Quintile at a Time,” Perspectives on Psychological Science 6 (2011).
“for the first time since the Great Depression” For a more developed take on this, see Lawrence Summers, “The fierce urgency of fixing economic inequality,” Reuters, November 21, 2011.
Look more closely at the data Emmanuel Saez, “Striking It Richer: The Evolution of Top Incomes in the United States (Updated with 2009 and 2010 Estimates),” March 2, 2012. http://elsa.berkely.edu/~saez/saez-UStopincomes-2010.pdf
“This association of poverty with progress” Henry George, Progress and Poverty: An Inquiry in the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth; The Remedy (Cambridge University Press, reprint, 2009), p. 8.
USA Today advised its readers Deirdre Donahue, “Able, Entertaining The Manny Does Triple Duty,” USA Today, June 18, 2007.
“There’s so much money” Several CF interviews with Holly Peterson, 2009–2010.
In 2005, Bill Gates was worth Robert Reich, Supercapitalism: The Transformation of Business, Democracy, and Everyday Life (Knopf, 2007), p. 113.
A 2011 OECD report showed “Divided We Stand: Why Inequality Keeps Rising,” OECD report, December 2011.
“I’ve never understood in my life” CF interview with Naguib Sawiris, November 18, 2011.
“the World is dividing into two blocs” Ajay Kapur, Niall Macleod, and Narendra Singh, “Plutonomy: Buying Luxury, Explaining Global Imbalances,” Citigroup Global Markets Equity Strategy report, October 16, 2005.
“The U.S. stock markets and the U.S. economy” James Freeman, “The Bullish Case for the U.S. Economy,” Wall Street Journal, June 4, 2011.
“very distorted” Alan Greenspan, interview on NBC’s Meet the Press, August 1, 2010.
“consumer hourglass theory” Ellen Byron, “As Middle Class Shrinks, P&G Aims High and Low,” Wall Street Journal, September 12, 2011.
On February 10, 1897, seven hundred members Sven Beckert provides an excellent description of the Bradley Martin ball in The Monied Metropolis (Cambridge University Press, 2001) in his smart and highly readable account of New York City and the consolidation of the American bourgeoisie, pp. 1–2.
“British history is two thousand years old” Walter L. Arnstein, “Queen Victoria’s Diamond Jubilee,” American Scholar, September 22, 1997.
“It is here; we cannot evade it” All Andrew Carnegie quotations come from “Wealth,” North American Review 148:391 (June 1889).
“We have no paupers” Thomas Jefferson, letter to Dr. Thomas Cooper, September 10, 1814. http://www.yamaguchy.com/library/jefferson/cooper.html.
“nothing struck me more” Alexis de Tocqueville, Democracy in America (Penguin Classics, 2003), p. 11.
Data painstakingly assembled by economic historians Peter Lindert and Jeffrey Williamson. “American Incomes Before and After the Revolution” (NBER Working Paper No. 17211, July 2011).
“In America nearly every man” Mark Twain and Charles Dudley Warner, “Author’s Preface to the London Edition,” The Gilded Age: A Tale of Today (Chatto & Windus, 1897).
In 1980, the average U.S. CEO “CEO Pay and the 99%,” AFL-CIO Executive PayWatch report, April 19, 2012.
Milanovic, the World Bank economist Branko Milanovic, “Global Inequality: From Class to Location, from Proletarians to Migrants” (World Bank Development Research Group Policy Research Working Paper 5820, September 2011).
“Britain’s classic industrial revolution” Chrystia Freeland, “The Rise of the New Global Elite,” The Atlantic, January/February 2011.
“The rate of technological change” CF interview with Joel Mokyr, August 19, 2010.
“The Treaty of Detroit” to the “Washington Consensus” Frank Levy and Peter Temin, “Inequality and Institutions in 20th-Century America,” MIT Economics Department Working Paper No. 07-17, June 2007.
“The bottom line: we may not be able” Conversation with author at Yale conference on the budget and inequality, April 30, 2012.
“It is structurally much more extreme” Chrystia Freeland, “Some See Two New Gilded Ages, Raising Global Tensions,” International Herald Tribune, January 23, 2012.
“We are seeing much more rapid growth in developing countries” Ibid.
A survey of nearly ten thousand Michael E. Porter and Jan W. Rivkin, “Prosperity at Risk: Findings of Harvard Business School’s Survey on U.S. Competitiveness,” Harvard Business School, January 2012.
“When a company is stressed and has issues” CF interview with Michael Porter, January 17, 2012.
“Although the overall pie is getting bigger” CF interview with John Van Reenen, January 13, 2012.
“Conservatively, it explains one-quarter” David Autor, David Dorn, and Gordon Hanson,“The China Syndrome: Local Labor Market Effects of Import Competition in the United States,” MIT working paper, May 2012.
“lousy and lovely” jobs Maarten Goos and Alan Manning, “Lousy and Lovely Jobs: The Rising Polarization of Work in Britain,” Review of Economics and Statistics 89:1 (February 2007).
A recent investigation of the direct employment impact of the iPod Greg Linden, Jason Dedrick, and Kenneth L. Kraemer, “Innovation and Job Creation in a Global Economy: The Case of Apple’s iPod,” Journal of International Commerce and Economics 3:1 (May 2011).
Even though the devices are made in China Greg Linden, Jason Dedrick, and Kenneth L. Kraemer, “Who Captures Value in a Global Innovation System? The Case of Apple’s iPod,” Communications of the ACM 52:3 (2007).
Consider, for example, the argument Caterpillar See James R. Hagerty and Kate Linebaugh, “In U.S., a Cheaper Labor Pool,” Wall Street Journal, January 6, 2012.
“Under the law of competition” Carnegie, “The Gospel of Wealth.”
“The economic theory is very clear” CF interview with Joe Stiglitz, January 26, 2012.
“Well, first off, as a citizen of the world” CF interview with Steve Miller, January 26, 2012.
“These things have been going on for a couple of decades” Freeland, “Some See Two New Gilded Ages.”
“India’s gilded age is going to be a combination” CF interview with Ashutosh Varshney, November 13, 2011.
The two gilded ages can also get in each other’s waySee Mark Landler, “Chinese Savings Helped Inflate American Bubble,” New York Times, December 25, 2008.
“In the long run, we are in good shape” CF interview with John Van Reenen, January 13, 2012.
“This is an exciting story” Jim O’Neill, The Growth Map: Economic Opportunity in the BRICs and Beyond (Penguin, 2011), pp. 251–52.
“Wealth will be created but also spent” Reader feedback on “The Second Economy,” McKinsey Quarterly Facebook post, November 1, 2011. http://www.facebook.com/note.php?note_id=10150536805679908.
“I only hope you are right” Ibid.
Until a few years ago, the reigning theory Richard A. Easterlin, “Does Economic Growth Improve the Human Lot? Some Empirical Evidence,” in Nations and Households in Economic Growth: Essays in Honor of Moses Abramowitz, eds. Paul A. David and Melvin W. Reder (Academic Press, 1974).
“Surprisingly, at any given level of income” Angus Deaton, “Income, Health, and Well-Being Around the World: Evidence from the Gallup World Poll,” Journal of Economic Perspectives 22:2 (Spring 2008).
Two separate studies of China See John Knight and Ramani Gunatilaka, “Great Expectations? The Subjective Well-Being of Rural-Urban Migrants in China,” Oxford University Economics Department Working Paper 332, April 2007; and Martin K. Whyte and Chunping Han, “Distributive Justice Issues and the Prospects for Unrest in China,” paper prepared for conference on “Reassessing Unrest in China,” Washington, D.C, December 11–12, 2003.
Betsey Stevenson and Justin Wolfers have found Betsey Stevenson and Justin Wolfers, “Economic Growth and Subjective Well-Being: Reassessing the Easterlin Paradox” (Brookings Papers on Economic Activity, Spring 2008).
I caught a glimpse of it at a World Bank panel “Global Development Debate: Jobs and Opportunities for All,” World Bank Institute conference, Washington, D.C., September 22, 2011.
“If you join the union” Ariel Levy. “Drug Test: Can One Self-Made Woman Reform Health Care for India, and the World?,” The New Yorker, January 2, 2012.
Families in the top 0.01 percent Saez’s complete data set available at http://elsa.berkeley.edu/~saez/TabFig2010.xls.
“A recent academic study of the Forbes list” Wojciech Kopczuk and Emmanuel Saez, “Top Wealth Shares in the United States, 1916–2000: Evidence from Estate Tax Returns,” National Tax Journal, vol. 57, no. 2, part 2, June 2004, 482.
“Although comparable data on the past are sparse” “Global Wealth Report 2011,” Credit Suisse Research Institute, October 2011.
93 percent of the gains Saez, “Striking It Richer.”
“Probably if you had looked at the situation” CF interview with Emmanuel Saez, February 24, 2011.
“Somebody ought to sit down” Scott Turow, Pleading Guilty (Grand Central Publishing, 1994), p. 174.
“men like Henry George” Albert Einstein, letter to Anna George de Mille, 1934. http://www.cooperativeindividualism.org/einstein-albert_letters-to-anna-george-demille-1934.html.
“the battle cry for all” Joanne Reitano, The Restless City: A Short History of New York from Colonial Times to the Present (Taylor & Francis, 2006), p. 101.
“Not even Lincoln had a more glorious death” “Expressions of Regret: The Comments of Many Prominent Persons in New York Upon the Death of Henry George,” New York Times, October 30, 1987.
“I stopped a man” Henry George, Jr., The Life of Henry George (Doubleday and McClure Company, 1900), p. 149.
“Why should there be” Ibid., pp. 468–69.
“The present century has been marked” Henry George, Progress and Poverty (D. Appleton and Co., 1886), pp. 3–4.
“We are coming into collision” Ibid., p. 5.
“Some get an infinitely better” Ibid., p. 7.
“show that their sympathies” Edward Robb Ellis, The Epic of New York City: A Narrative History (Carroll & Graf, 2005), p. 382.
“born rich” F. Scott Fitzgerald, “The Rich Boy,” in The Short Stories of F. Scott Fitzgerald, ed. Matthew J. Bruccoli (Charles Scribner’s & Sons, 1989), p. 317.
“The ordinary progress of a society which increases in wealth” John Stuart Mill, Principles of Political Economy with Some of Their Applications to Social Philosophy (Longmans, Green and Co., 1848), Book V, Chapter 2, Section 5.
“Fat cats who owe it to their grandfathers” Freeland, “The Rise of the New Global Elite.”
“As a consequence, top executives” Thomas Piketty and Emmanuel Saez, “The Evolution of Top Incomes: A Historical and International Perspective,” American Economic Review 96:2 (May 2006), p. 204.
Speaking at a Columbia University conference Paul Sullivan, “Scrutinizing the Elite, Whether They Like It or Not,” New York Times, October 15, 2010.
“Capital income excluding capital gains” “Trends in the Distribution of Household Income Between 1979 and 2007,” Congressional Budget Office study, October 2011, Section XI, p. 17.
This is true even at the very, very top Jon Bakija, Adam Cole, and Bradley T. Heim, “Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data,” working paper, April 2012, p. 4, footnote 3.
“While I have been richly rewarded” Leon G. Cooperman, “An Open Letter to the President of the United States of America,” November 28, 2011. http://www.thestreet.com/tsc/common/images/pdf/Omega%20Advisor1.pdf.
“We are fighting the caste system with capitalism” Lydia Polgreen, “Scaling Caste Walls with Capitalism’s Ladders in India,” New York Times, December 21, 2011.
“We have witnessed substantial changes” Oliver H. Holiet, “Torsten Müller-Ötvös, CEO of Rolls-Royce,” Luxos (Germany), Fall/Winter 2011–2012, p. 46.
“During that 80-year period” Goldin and Katz, Race Between Education and Technology, p. 4.
In one example, the wage premium Ibid.
,
p. 50.
Getting a college degree
Anthony P. Carnevale, Stephen J. Rose, and Ban Cheah, “The College Payoff: Education, Occupations, Lifetime Earnings,” Georgetown University Center on Education and the Workforce, August 5, 2011.
wage premium for a college education
Thomas Philippon and Ariell Reshef, “Wages and Human Capital in the U.S. Finance Industry: 1909–2006,” National Bureau of Economic Research, working paper no. 14644, March 2011.
“Most of the increase in wage inequality”
Thomas Lemieux, “Postsecondary Education and Increasing Wage Inequality,”
American Economic Review
96:2 (May 2006), pp. 195–99.
That contest has prompted absurdities like the story of Jack Grubman
“The Wall Street Fix,” PBS
Frontline
, May 8, 2003.
“With those numbers in mind”
John Quiggin, “Cutthroat Admissions and Rising Inequality: A Vicious Duo,”
Chronicle of Higher Education
, September 11, 2011.
“There’s a kid. You know”
CF interview with Larry Summers, November 22, 2011.
“have the courage to follow your heart and intuition”
Steve Jobs, Stanford University commencement address, June 12, 2005.
“Don’t park ten blocks away”
Drew Gilpin Faust, “Living an Unscripted Life,” 2010 baccalaureate speech, Memorial Church, Harvard University, Cambridge, Massachusetts, May 25, 2010.
But the winner-take-all economy turns out “The New Wave of Affluence,” Ad Age Insights white paper, May 23, 2011.
“of 55 American laureates, 34 worked” Robert K. Merton, “The Matthew Effect in Science,” Science 159:3810 (January 5, 1968), pp. 56–63.
“The conditions of industry change so fast” Alfred Marshall, Principles of Economics, Book VI, Chapter XII, Section 10.
“A lot of professional writers apply here”
David Streitfeld, “Funny or Die: Groupon’s Fate Hinges on Words,”
New York Times
, May 28, 2011.
This volatility makes us unhappy
See Carol Graham,
Happiness Around the World: The Paradox of Happy Peasants and Miserable Millionaires
(Oxford University Press, 2010).
Carlos Slim, who bought his first
David Luhnow, “The Secrets of the World’s Richest Man,”
Wall Street Journal
, August 4, 2007.
“flying class”
Scott Turow,
Pleading Guilty
(Grand Central, 1994), p. 304.
When the European sovereign debt crisis
Eric Dash, “In Euro Era, Opening Bell Is a 2:30 A.M. Alarm,”
New York Times
, December 10, 2011.
“We are Wall Street”
Stacy-Marie Ishmael, “We Are Wall Street…” Alphaville blog,
Financial Times,
April 30, 2010.
“The average tenure of a Fortune 500 CEO”
A. G. Lafley, “The Art and Science of Finding the Right CEO,”
Harvard Business Review
, October 2011.
“If you push towards an Apple world, a Google world”
CF interview with Eike Batista, September 23, 2011.
The famous Whitehall study
The first Whitehall Study, begun in 1967 with a sample of 18,000 male civil servants, found higher mortality rates and prevalence of cardiorespiratory disease among those with lower employment grades.
“and the law of competition between”
Andrew Carnegie, “Wealth,”
North American Review
148:391 (June 1889).
“It’s not possible in tech to frame your ambitions”
CF interview with Eric Schmidt, February 23, 2011.
“Those of you who practice”
Pitch Johnson, lecture of venture entrepreneurship at Moscow’s Polytechnic Museum, October 2010.
“Britain now has a Wimbledon economy”
Harry Mount, “England, Their England: Foreign Money Now Dominates at the Most Traditional of Summer Fixtures,”
The Spectator
, June 18, 2011.
“There’s an interaction between the global elite”
CF interview with Eric Schmidt. February 23, 2011.
“The base of the wealth pyramid”
Global Wealth Report, Credit Suisse Research Institute, October 2011, pp. 16–17.
“A person in Africa”
Chrystia Freeland, “The Rise of the New Global Elite,”
The Atlantic
, January/February 2011.
“I think, in a sad sense, these cities are so similar now”
CF interview with Aditya Mittal, November 11, 2010.
“There are more and more global CEO meetings”
CF interview with Dominic Barton, November 30, 2011.
“There is an emergent power in people”
CF interview with Eric Schmidt, February 23, 2011.
“This is the new wave, the new trend”
Chrystia Freeland, “Global Seagulls and the New Reality of Immigration,”
International Herald Tribune
, October 6, 2011.
“Four out of every five Chinese entrepreneurs today”
GroupM Knowledge–Hurun Wealth Report 2011, p. 19.
nearly 60 percent
Tim Adams, “Who Owns Our Green and Pleasant Land?”
The Observer
, August 6, 2011.
a study of British and American CEOs
Elisabeth Marx,
Route to the Top: A Transatlantic Comparison of Top Business Leaders
(Heidrick & Struggles, 2007). http://www.heidrick.com/PublicationsReports/PublicationsReports/RoutetotheTop.pdf
“I came to GE in 1982”
Chrystia Freeland, “Accepting the Rise of China,”
International Herald Tribune
, January 20, 2011.
“is not going to be the engine”
Chrystia Freeland, “U.S. Needs to Think Globally About Business,”
International Herald Tribune
, October 20, 2011.
“This year, almost 90 percent of our sales”
Freeland, “The Rise of the New Global Elite.”
“they don’t think of themselves as American anymore”
Conversation with author at Council on Foreign Relations, New York, April 5, 2012.
“I have three passports”
Freeland, “The Rise of the New Global Elite.”
“The largest metals group in the world is Indian”
Stephen Jennings, “Opportunities of a Lifetime: Lessons for New Zealand from New, High-Growth Economics,” Sir Ronald Trotter Lecture, April 7, 2009.
“They know how to provide mobile phones”
Chrystia Freeland, “Globalization 2.0: Emerging-Market Cross-Pollination,”
The Globe and Mail
, October 1, 2010.
“The proprietor of land is necessarily a citizen”
Adam Smith,
The Wealth of Nations
, Book V, Chapter II, Section 91.
“We don’t have castles and noble titles”
Benjamin Wallace, “Those Fabulous Confabs,”
New York
, February 26, 2012.
and where, in lieu of noble titles, an elaborate hierarchy of conference badges
Nick Paumgarten, “Magic Mountain: What Happens at Davos?”
The New Yorker
, March 5, 2012.
“Combined, our contacts reach”
“Chris Anderson on TED’s Nonprofit Transition.” TED. February 2002. http://www.ted.com/talks/chris_anderson_shares_his_vision_for_ted.html.
“Name one action”
Ginia Bellafante, “With Vows Exchanged, Break Out the Slides,”
New York Times
, December 16, 2011.
“The new philanthropists believe”
Matthew Bishop and Michael Green,
Philanthrocapitalism: How Giving Can Save the World
(Bloomsbury, 2008), pp. 2–3.
“What they are doing is much more”
CF interview with Matthew Bishop, November 2011.
“If we can apply the entrepreneurial”
Jamie Doward, “Can This ‘Venture Philanthropist’ Save Our Schools?”
The Observer
, May 29, 2005.
“We have to figure out what makes”
Bill Gates, prepared remarks at the 2010 Annual Policy Forum of the Council of Chief State School Officers. http://www.gatesfoundation.org/speeches-commentary/pages/bill-gates-2010-ccsso.aspx.
“Our foundation tends to fund more”
Jeff Guo, “In Interview, Gates Describes Philanthropic Journey,”
The Tech
, April 23, 2010.
“They can also do dangerous things”
Charles Piller and Doug Smith, “Unintended Victims,”
Los Angeles Times
, December 16, 2007.
whose members included two millionaires
Ibid.
“was not Democracy”
Jeffrey A. Winters,
Oligarchy
(Cambridge University Press, 2011), p. 227. Subsequent statistics come from
Oligarchy
pp. 227–31.
“income defense industry”
Ibid., p. xii.
“There’s class warfare, all right”
Ben Stein, “In Class Warfare, Guess Which Class Is Winning?”
New York Times
, November 26, 2006.
“I think people making $5 million”
CF interview with Holly Peterson.
Peering inside the top 1 percent
Brian Bell and John Van Reenen, “Bankers’ Pay and Extreme Wage Inequality in the UK,” CEP Special Report, April 2010. http://eprints.lse.ac.uk/28780/1/cepsp21.pdf.
“There were about 150,000 Americans”
Jeffrey A. Winters,
Oligarchy
, (Cambridge University Press, 2011), p. 214.
compiled a data set chronicling
Claudia Goldin and Lawrence F. Katz, “Transitions: Career and Family Life Cycles of the Educational Elite,”
American Economic Review: Papers & Proceedings 2008
, 98:2, 363–69.
“very poor and destitute respondents”
Carol Graham,
Happiness Around the World: The Paradox of Happy Peasants and Miserable Millionaires
, (Oxford University Press, 2010), p. 151.
“the gains around them”
Chrystia Freeland, “For Dictators, Protests Offer 3 Lessons.”
International Herald Tribune
, December 15, 2011.
there were just 412 billionaires
Oligarchy,
p. 215.
For 47,745 of the 47,763 runners who competed
Dave Ungrady, “As Miles Add Up, So Do the Unforgettable Moments,”
New York Times
, November 1, 2011.
By 2007, the number of women
Daniel J. Hemel, “’07 Men Make More,”
The Harvard Crimson
, June 6, 2007.
women outnumbered men
Catherine Rampell, “Women Now a Majority in American Workplaces,”
New York Times
, February 6, 2010.
In 2010, about four in ten
Sarah Jane Glynn, “The New Breadwinners: 2010 Update,” Center for American Progress, April 2012. http://www.americanprogress.org/issues/2012/04/pdf/breadwinners.pdf.
In 1979, nearly 8 percent
“Jobs and Income Growth of the Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data,” working paper, April 2012, p. 19. http://web.williams.edu/Economics/wp/BakijaColeHeimJobsIncomeGrowthTopEarners.pdf.
CHAPTER 3: SUPERSTARS
“A society in which knowledge workers dominate”
Peter Drucker, “The Age of Social Transformation,”
The Atlantic
, November 1994, p. 67.
“It is probably a misfortune that”
Friedrich A. Hayek,
Law, Legislation, and Liberty, Volume 2: The Mirage of Social Justice
(The University of Chicago Press, 1976), p. 74.
“It is possible that intelligent tadpoles”
R. H. Tawney,
Equality
(Capricorn Books, 1961), p. 108.
samizdat manuscript
György Konrád and Iván Szelényi,
The Intellectuals on the Road to Class Power
(Harcourt Brace Jovanovich, 1979).
The consensus, advanced most powerfully
David Autor, “The Polarization of Job Opportunities in the U.S. Labor Market,” Center for American Progress and The Hamilton Project, April 2010.
In a January 2012 speech about income inequality
Alan B. Krueger, “The Rise and Consequences of Inequality in the United States,” remarks prepared for an event at the Center for American Progress, January 12, 2012.
But the best explanation
See Noam Scheiber, “The Audacity of Data: Barack Obama’s Surprisingly Non-Ideological Policy Shop,”
The New Republic
, March 12, 2008.
“Above all, Obama’s form of pragmatism”
Cass Sunstein, “The Empiricist Strikes Back: Obama’s Pragmatism Explained,”
The New Republic
, September 10, 2008.
Word crunchers found that the president’s 2009 inaugural address
Justin Wolfers, “The Empiricist-in-Chief,”
Freakonomics
blog, February 26, 2009.
Elizabeth Billington was a diva
See Elizabeth Billington’s entry in Philip H. Highfill, Kalman A. Burnim, and Edward A. Langhans,
A Biographical Dictionary of Actors, Actresses, Musicians, Dancers, Managers and Other Stage Personnel in London, 1660–1800
(SIU Press, 1993), pp. 122–29.
“The relative fall in the incomes to be earned”
Marshall,
Principles of Economics
, Book VI, Chapter XII, Section 11.
China’s Ming Dynasty, which ruled the Middle Kingdom
Patricia Buckley Ebrey,
The Cambridge Illustrated History of China
(Cambridge University Press, 2010), p. 201.
“A striking instance is that of writing”
Marshall,
Principles of Economics
, Book VI, Chapter XII, Section 9.
“The number of persons who can be reached”
Ibid., Section 11.
“Even adjusted for 1981 prices”
Sherwin Rosen, “The Economics of Superstars,”
American Economic Review
71:5 (December 1981), p. 857.
In 1900, nearly all spectator entertainment
Gerben Bakker, “Time and Productivity Growth in Services: How Motion Pictures Industrialized Entertainment,” LSE working paper 119/09, March 2009, p. 7 and table B1. http://eprints.lse.ac.uk/27866/1/WP119.pdf.
$670,000 to produce
Ted Okuda and David Maska,
Charlie Chaplin at Keystone and Essanay: Dawn of the Tramp
(iUniverse, 2005).
In 1859, Anthony Trollope
Francis Evans Baily,
Six Great Victorian Novelists
(Kennikat Press, 1969).
“an entirely new economic model”
Chris Anderson, “The Long Tail,”
Wired
, October 2004.
“I’m a pilot, so I understand airplane economics”
CF interview with Eric Schmidt, February 23, 2011.
median salary for American lawyers
William D. Henderson, “Three Generations of U.S. Lawyers: Generalists, Specialists, Project Managers,”
Maryland Law Review
, vol. 70, no. 1, 2011.
In 2011, a year when top partner paydays
See Nathan Koppel and Vanessa O’Connell, “Pay Gap Widens at Big Law Firms as Partners Chase Star Attorneys,”
Wall Street Journal
, February 8, 2011; and Vanessa O’Connell, “Big Law’s $1,000-Plus an Hour Club,”
Wall Street Journal
, February 23, 2011.
David Boies’s hourly rate
Vanessa O’Connell, “With Oracle and Dodgers Waiting, Boies Not Ready to Retire,”
Wall Street Journal
, August 1, 2011.
average starting salary for a law school graduate
See the National Association of Law Placement’s Employment Report and Salary Survey for the Class of 2010. http://www.nalp.org/uploads/Classof2010SelectedFindings.pdf.
average lawyer earned
May 2011 National Occupational Employment and Wage Estimates, Bureau of Labor Statistics. http://www.bls.gov/oes/current/oes231011.htm.
The most advanced example of this trend is e-discovery
See John Markoff, “Armies of Expensive Lawyers, Replaced by Cheaper Software,”
New York Times
, March 4, 2011.
(Meanwhile, DLA Piper, one of the law firms)
See Nathan Koppel and Vanessa O’Connell. “Pay Gap Widens at Big Law Firms as Partners Chase Star Attorneys,”
Wall Street Journal
, February 8, 2011.
In the age of the global super-elite, even dentists
Joan Juliet Buck, “Drill, Bébé, Drill,”
New York Times T Magazine
, August 10, 2011.
Her 2011 single “Born This Way”
Dorothy Pomerantz, “Lady Gaga Tops Celebrity 100 List,”
Forbes
, May 18, 2011; “The Celebrity 100,”
Forbes
, June 6, 2011.
Between May 2010 and May 2011
According to the Census Bureau, real median household income was $49,445 in 2010.
Mrs. Billington’s fabulous £10,000 income
CF e-mail correspondence with Peter Lindert, June 25, 2012.
Mickey Mantle, the New York Yankees star hitter
Baseball Almanac
, www.baseball-almanac.com/players/player.php?p=mantlmi01.
Compare that with Alex Rodriguez
USA Today
Salaries database, http://content.usatoday.com/sportsdata/baseball/mlb/salaries/player/alex-rodriguez.
Adjusted for inflation, Rodriguez’s earnings
According to the Major League Baseball Players Association, the average salary for a Major Leaguer was $3,095,183 in 2011.
In a study of concert ticket prices
Alan B. Krueger, “The Economics of Real Superstars: The Market for Rock Concerts in the Material World,”
Journal of Labor Economics
23:1 (2005).
“very, very lucrative”
Chrystia Freeland, “The Rise of Private News,”
Columbia Journalism Review
, July/August 2010.
As late as 1920
Mary Schenck Woolman,
Clothing—Choice, Care, Cost
(Lippincott, 1922).
“For much of the twentieth century, labor and capital”
Roger L. Martin and Mihnea C. Moldoveanu, “Capital Versus Talent: The Battle That’s Reshaping Business,”
Harvard Business Review
, July 2003.
“In the knowledge society the employees”
Drucker, “The Age of Social Transformation.”
Wall Street investors, such as hedge fund managers
Steven N. Kaplan and Joshua Rauh, “Wall Street and Main Street: What Contributes to the Rise in the Highest Incomes?,”
Review of Financial Studies
23:3 (March 2010). pp. 1004–50.
“When I graduated from college”
CF interview with David Rubenstein, April 27, 2011.
But the real mass revolution sparked by the rise of entrepreneurial finance
Christine Harper, “Goldman CEO Blankfein Gets $67.9 Million Bonus, New Pay Record,” Bloomberg News, December 24, 2007; David Segal, “$100 Million Payday Poses Problem for Pay Czar,”
New York Times
, August 1, 2009.
We got a glimpse of that way of thinking when federal agents
Suzanna Andrews, “How Rajat Gupta Came Undone,”
Bloomberg Businessweek
, May 23, 2011.
twenty thousand people competed
Michael Klein and Michael D. Schaffer, “City Slivers Seen on Philly ‘Idol,’”
Philadelphia Inquirer
, January 17, 2008. Just 0.1% of Philadelphia contestants made it to the next round of
American Idol
auditions; in contrast, 7.1% of applicants to Harvard were admitted that year.
Merton found that scientists who published frequently
Merton, “The Matthew Effect,” pp. 56–63.
You can see the same power of accidental celebrity at work
Alan T. Sorensen, “Bestseller Lists and Product Variety,”
The Journal of Industrial Economics
55:4 (December 2007), pp. 715–38.
Matthew Salganik and Duncan Watts tested
Matthew Salganik and Duncan Watts, “Leading the Heard Astray: An Experimental Study of Self-Fulfilling Prophecies in an Artificial Cultural Market,”
Social Psychology Quarterly,
vol. 71, no. 4, 2008, pp. 338–355.
sent a memo
Jeffrey Katzenberg, “The World Is Changing: Some Thoughts on Our Business,” Walt Disney Company memorandum, January 11, 1991. http://www.lettersofnote.com/2011/11/some-thoughts-on-our-business.html.
The ideas Katzenberg laid out in his 1991 memo
Eduardo Porter and Geraldine Fabrikant, “A Big Star May Not a Profitable Movie Make,”
New York Times
, August 28, 2006.
The terms of the deal were undisclosed
Bernard Weinraub, “Disney Settles Bitter Suit with Former Studio Chief,”
New York Times
, July 8, 1999.
Dick Tracy
cost Disney $47 million to produce. See James B. Stewart,
DisneyWar
(Simon & Schuster, 2005), p. 111.
“the stewards of a rich man”
Smith,
Wealth of Nations
, Book V, Chapter I, Section 107.
a seminal paper published in 1931
Gardiner C. Means, “The Separation of Ownership and Control in American Industry,”
The Quarterly Journal of Economics,
1931.
“the princes of industry”
Adolf Augustus Berle and Gardiner Coit Means,
The Modern Corporation and Private Property
(Transaction Publishers, 1932), p. 4.
“different from and often radically opposed to”
Ibid., p. 114.
Berle and Means were leading architects of the New Deal
Glenn Fowler, “Gardiner C. Means, 91, Is Dead; Pricing Theory Aided U.S. Policy,”
New York Times
, February 18, 1988.
“The average salary plus bonus for top-quartile CEOs”
Michael C. Jensen and Kevin J. Murphy, “Performance Pay and Top-Management Incentives,”
Journal of Political Economy
98:2 (April 1990), pp. 225–64.
The companies under their stewardship
Roger Martin, “The Age of Customer Capitalism,”
Harvard Business Review
, January 2010. Figures on America’s GDP from 1932 to 1976 come from Angus Maddison.
By one measure, the academic advocates of pay for performance
Carola Frydman and Dirk Jenter, “CEO Compensation,”
Annual Review of Financial Economics
2 (December 2010), pp. 75–102.
Between 1993 and 2003 the top five executives
Lucian Bebchuk and Yaniv Grinstein, “The Growth of Executive Pay,”
Oxford Review of Economic Policy
21:2 (2005), p. 283.
These were, of course, the decades when the 1 percent
Marianne Bertrand, “CEOs,”
Annual Review of Economics
1:1 (2009), p. 130.
Until the early 1980s, the chief executive earned
Kaplan and Rauh, “Wall Street and Main Street,” pp. 1004–50.
“A 10 percent increase”
Brian Bell and John Van Reenen, “Firm Performance and Wages: Evidence from Across the Corporate Hierarchy,” CEP Discussion Paper No. 1088, May 2012. http://cep.lse.ac.uk/pubs/download/dp1088.pdf.
The surge in CEO salaries
Kevin J. Murphy and Jan Zabojnik, “Managerial Capital and the Market for CEOs,” (Queen’s Economics Department Working Paper No. 10, October 2006. p. 1).
“The six-fold increase of U.S. CEO pay”
Xavier Gabaix and Augustin Landier, “Why Has CEO Pay Increased So Much?,”
Quarterly Journal of Economics
123:1 (2008), pp. 49–100.
“In the U.S., you can more or less do”
Chrystia Freeland, “Capitalism Without the Capitalists,”
International Herald Tribune
, December 22, 2011.
A decade ago, two young economists
Marianne Bertrand and Sendhil Mullainathan, “Are CEOs Rewarded for Luck? The Ones without Principals Are,”
Quarterly Journal of Economics
116:3 (August 2001), pp. 901–32.
“We cannot continue to see chief executives’ pay”
Julia Werdigier, “British Government Looks to Rein in Executive Pay,”
New York Times
, January 23, 2012.
“The Lin story has broken out into the general culture”
David Carr, “Media Hype for Lin Stumbles on Race,”
New York Times
, February 19, 2012.
CHAPTER 4: RESPONDING TO REVOLUTION
“A lesson from the technology industry”
Reid Hoffman and Ben Casnocha,
The Start-Up of You
:
Adapt to the Future, Invest in Yourself, and Transform Your Career
(Crown Business, 2012), p. 71.
Eight days later, George Soros hosted twenty
Chrystia Freeland, “The Credit Crunch According to Soros,”
Financial Times
, January 30, 2009. Unless otherwise specified, all quotes in this section originally appeared in this piece.
an average of 31 percent
Charles Morris.
The Sages
. p. 3.
According to a study by LCH Investments
Rick Sopher, “Great Money Managers,” self-published by LCH Investments, November 2011. After retiring in 2010, Soros was overtaken the following year by Bridgewater’s Ray Dalio.
“I converted my hedge fund into a less aggressively managed vehicle”
George Soros.
The Crash of 2008 and What It Means
. p. 122.
only one of them had foreseen
Justin Lahart, “Bears Top List of Economic Forecasters,”
Wall Street Journal
, February 13, 2009. The fifty-one did even less well on unemployment—none came close to predicting it would rise to 6.9 percent by the end of 2008.
“No one realized the extent and magnitude of these problems”
Statement of Richard S. Fuld, Jr., before the United States House of Representatives Committee on Oversight and Government Reform, October 6, 2008.
“I made a mistake”
Transcript of House of Representatives Committee on Oversight and Government Reform Hearing on the Role of Federal Regulators, October 23, 2008.
“we always assume regime stability”
McFaul e-mail to CF, February 22, 2011.
“active inertia”
Donald Sull, “Why Good Companies Go Bad,”
Financial Times
, October 3, 2005.
“These failed firms”
Clayton Christensen,
The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail
(Harvard Business School Press, 1997), p. xv.
“vast, silent, connected”
W. Brian Arthur, “The Second Economy,”
McKinsey Quarterly
, October 2011.
Facebook’s Mark Zuckerberg
Zuckerberg attended Ardsley High School for two years before transferring to Phillips Exeter Academy.
“Dopamine, a pleasure-inducing”
Ajay Kapur, Niall Macleod, and Narendra Singh, “Plutonomy: Buying Luxury, Explaining Global Imbalances,” Citigroup Global Markets Equity Strategy report, October 16, 2005.
“I recognize that sometimes survival requires a positive effort”
CF interviews with George Soros, May 2009 and December 2008.
“My theory of bubbles was a translation”
CF interview with George Soros, May 2009.
“That experience has allowed him to see through artifice”
CF interview with Jonathan Soros, July 14, 2009.
“Whenever I read about people not seeing it coming”
CF interview with Keith Anderson, June 26, 2009.
“They have their own style and their own exposure”
CF interview with George Soros, May 2009.
Soros “didn’t interfere in the running of their accounts”
Ibid.
“Basically, it involved a large amount of hedging”
Ibid.
Soros was not only unfamiliar with fancy new derivatives
Ibid.
“In a time like this, where the uncertainty is so big”
CF interview with George Soros, December 16, 2008.
“That’s what makes this macro investing”
CF interview with Keith Anderson, June 26, 2009.
“I was very lucky”
CF interview with Azim Premji, January 25, 2012.
“India is growing at 8 percent”
CF interview with Ashutosh Varshney, November 13, 2011.
“You could start a business”
Kaitlin Shung, “Chinese ‘Fugitive’ Lai Changxing Faces Deportation in Canada,”
China Briefing
, July 13, 2011.
“Well, the U.S., like I said”
CF interview with David Neeleman, September 14, 2010.
“The next ten years”
Chrystia Freeland, “Working Wealthy Predominate the New Global Elite,”
International Herald Tribune
, January 25, 2011.
Following the model of Nucor, which revolutionized
Ibid. pp. 101–8.
“Yes, you need to be bold and extremely committed”
Jennings, “Opportunities of a Lifetime.”
“Slow or hesitant business leaders”
CF interview with Aditya Mittal, November 11, 2010.
“
If Lai Changxing were executed”
Mark Mackinnon, “Lai’s sentencing marks the end of China’s Great Gatsby,”
The Globe and Mail
, May 18, 2012.
He calls that period his “lost years”
Parmy Olson, “The Billionaire Who Friended the Web,”
Forbes
, March 28, 2011.
“There was a period of time”
Miguel Helft, “The Class That Built Apps, and Fortunes,”
New York Times
, May 7, 2011.
“I felt, having been late”
John Seabrook, “Streaming Dreams,”
New Yorker
, January 16, 2012.
published a 143-page report
“Big data: The next frontier for innovation, competition, and productivity,” McKinsey Global Institute, May 2011. http://www.mckinsey.com/insights/mgi/research/technology_and_innovation/big_data_the_next_frontier_for_innovation.
“People have always asked me”
CF interview with Larry Fink, October 20, 2010.
“Firestone’s historical excellence”
Donald Sull, “The Dynamics of Standing Still: Firestone Tire & Rubber and the Radial Revolution,”
The Business History Review
, vol. 73, no. 3 (Autumn 1999), pp. 430–64.
“An ossified success formula”
Donald Sull, “Ingrained success breeds failure,”
Financial Times
, October 2, 2005.
“Basically, we are living in a world”
Stephen Jennings, “Opportunities of a Lifetime: Lessons for New Zealand from New, High-Growth Economics,” Sir Ronald Trotter Lecture, April 7, 2009.
“A disruptive event now needs”
Michiyo Nakamoto and David Wighton, “Citigroup chief stays bullish on buy-outs,”
Financial Times
, July 9, 2007.
“I’ve been through probably six crises”
CF interview with Peter Weinberg, June 25, 2009.
the ability to “pivot”
Caroline O’Connor and Perry Klebahn, “The Strategic Pivot: Rules for Entrepreneurs and Other Innovators,”
Harvard Business Review
blog network, February 28, 2011.
Flickr’s genesis was in 2002
See Jessica Livingston,
Founders at Work: Stories of Startups’ Early Days
(Apress, 2007), pp. 257–264.
“One thing that I’ve both wrestled with”
Chrystia Freeland, “The Credit Crunch According to Soros,”
Financial Times
, January 30, 2009.
“My conceptual framework, which basically emphasizes”
CF interview with George Soros, December 16, 2008.
“It’s an almost aggressive pessimism about his own ideas”
CF interview with Jonathan Soros, July 14, 2009.
“The businesses and institutions underpinning”
Jennings, “Opportunities of a Lifetime.”
“The group of winners is churning at an increasing and rapid rate”
“Measuring the Forces of Long-Term Change: The 2009 shift index”, Deloitte Center for the Edge, December 2009, p. 115.
“There are a lot of young entrepreneurs”
Sam Grobart and Evelyn M. Rusli, “For Flip Video Camera, Four Years from Hot Start-Up to Obsolete,”
New York Times
, April 12, 2011.
“If you want to get a reputation”
Warren Buffett, Berkshire Hathaway Inc. 2006 Annual Report, February 28, 2007.
“Almost to a man, they lay great emphasis”
Merton, “The Matthew Effect,” pp. 56–63.
The power of choosing the right work is equally pronounced
Graeme Wood, “Secret Fears of the Super-Rich,”
The Atlantic
, April 2011.
“sudden wealth syndrome”
“Rich Man’s Burden,”
The Economist
, June 14, 2001.
“I had one friend”
CF interview with Viktor Vekselberg, September 7, 2010.
U.S. political scientists in 1999
Stephen E. Lucas and Martin J. Medhurst, “American Public Address: The Top 100 Speeches of the Twentieth Century,” National Communication Association, Seattle, Washington, November 8–12, 2000.
“It was the middle”
Franklin Delano Roosevelt campaign address on progressive government at the Commonwealth Club in San Francisco, California, September 23, 1932.
“In Russia, all the property”
Chrystia Freeland, “The Next Russian Revolution,”
The Atlantic
, October 2011.
“to buy an apartment”
Ibid.
“When I graduated”
Richard Cree, “Profile: Reid Hoffman,”
Director
, July/August 2009.
“I was focused on my CV”
CF interview with Reid Hoffman, February 17, 2012.
“After the eBay/PayPal deal”
Hoffman and Casnocha,
The Start-Up of You
, p. 169.
“Once-great companies”
Ibid., p. 18.
“You were born an entrepreneur”
Ibid., p.
3.
“the mind-sets and skill sets”
Ibid., p.
4.
“Over the last ten years”
“The Mobile Revolution: Driving the Next Wave of Productivity and Growth,” Council on Foreign Relations meeting, March 30, 2011. http://www.cfr.org/information-and-communication/mobile-revolution-driving-next-wave-productivity-growth/p24545.
U.S. workers take an average 30 percent pay cut
Till von Wachter, Jae Song, and Joyce Manchester, “Long-Term Earnings Losses due to Mass Layoffs During the 1982 Recession: An Analysis Using U.S. Administrative Data from 1974 to 2004,” Columbia University Economics Department Discussion Paper Series DP0910-07, April 2009.
“Your education isn’t fungible”
CF interview with Michael Spence, April 15, 2011.
“For the last sixty or so years”
Hoffman and Casnocha,
The Start-Up of You
, p. 5.
“Remember: If you don’t find risk, risk will find you”
Hoffman,
The Start-Up of You
, p. 188.
“In the past, when you thought”
Ibid., p.
187.
CHAPTER 5: RENT-SEEKING
“They steal and steal and steal”
From Chrystia Freeland,
Sale of the Century: Russia’s Wild Ride from Communism to Capitalism
(Crown Business, 2000), pp. 67–68.
“Eating increases the appetite”
Ibid., p. 233.
risked becoming “an unequal oligarchy, or worse”
Raghuram Rajan, “Is There a Threat of Oligarchy in India?” Speech to the Bombay Chamber of Commerce on its Founders Day Celebration, September 10, 2008.
“quite coup”
Simon Johnson, “The Quiet Coup,”
The Atlantic
, May 2009.
“lower the amount of government spending”
Paul Ryan, “Saving the American Idea,” Remarks to the Heritage Foundation, October 26, 2011. http://blog.heritage.org/2011/10/26/video-rep-paul-ryan-on-saving-the-american-idea/.
“Once more, I am reminding you”
“Ukraine: Country’s Largest Steel Mill Sold at Auction,”
Radio Free Europe/Radio Liberty
, October 24, 2005.
“It was like a football game!”
The Economist
, October 27, 2005.
“hate me—they don’t understand”
See Chrystia Freeland, “Tea with the FT: Yulia Tymoshenko,”
Financial Times
, August 16, 2008.
number of billionaires relative to the size
Ruchir Sharma.,“The billionaires list,”
Washington Post
’s
Wonkblog,
June 24, 2012.
economic historians have found that Russia’s oligarchs
Steven Nafziger and Peter Lindert, “Russian Inequality on the Eve of the Revolution” (working paper, March 13, 2011).
according to calculations by Branko Milanovic
Branko Milanovic,
The Haves and the Have Nots: A Brief and Idiosyncratic History of Global Inequality
(Basic Books, 2011), pp. 41–45.
“A person must be rich or poor”
Smith,
Wealth of Nations
, Book I, Chapter V, Section 1.
the only place in Mexico
Luhnow, “The Secrets of the World’s Richest Man.”
Slim was a vocal supporter of his friend’s reform effort
Slim continued to advocate privatization in subsequent decades. He was the cover boy of the 2012
Forbes
billionaire issue, which named him the richest man on the planet. In the accompanying story,
Forbes
asked Slim for his “plan to reboot the economy” of the world. Among Slim’s recommendations: “Let’s talk about Spain. It has a lot of highways and they are all free. They should charge users and sell [the highways] to the private sector.”
a study by Mexican and American political scientists
Isabel Guerrero, Luis-Felipe López-Calva, and Michael Walton, “The Inequality Trap and Its Links to Low Growth in Mexico,” in
No Growth Without Equity: Inequality, Interests, and Competition in Mexico
, ed. Santiago Levy and Michael Walton (World Bank, 2009).
“When it came to spectrum”
“All Lines Are Busy,”
Outlook
, November 29, 2010.
“India has been overwhelmed”
CF interview with Kiran Bedi, November 11, 2011.
“Corruption is endemic”
CF interview with Rajiv Lall, November 13, 2011.
“The Gini coefficient”
CF interview with Arun Maira, November 13, 2011.
“The tendency is that people”
CF interview with Kris Gopalakrishnan, November 12, 2011.
According to Hurun, the seventy richest members of the NPC
“China’s Billionaire People’s Congress Makes U.S. Peers Look Like Paupers,” Bloomberg News, February 27, 2012.
“There are skeletons”
Chris Hogg, “What Brought Down China’s Huang Guangyu?,” BBC, May 18, 2010.
China’s billionaires understand that notoriety is dangerous
Russell Flannery, “China Leads the World in Billionaire Flame-Outs,”
Forbes
, March 9, 2012.
the party’s official policy of pursuing “harmonious growth”
Liu Jie, Kong Xiaohan, and Tian Ye, “Premier Wen Targets Causes of Instability, Stresses Fair Treatment of Disadvantaged Groups,” Xinhua, February 27, 2011.
“original sins”
Philip P. Pan,
Out of Mao’s Shadow: The Struggle for the Soul of a New China
(Simon & Schuster, 2008), p. 156.
over the past three decades, China’s average per capita income
International Monetary Fund, World Economic Outlook database, April 2012; National Bureau of Statistics of China; Jeremy Page, Bob Davis, James T. Areddy, “China Turns Predominantly Urban,”
Wall Street Journal
, January 18, 2012; “Income of Urban and Rural Residents in 2011,” January 30, 2012.
“What moves this structure is not a market economy”
Carl E. Walter and Fraser J. T. Howie,
Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise
(John Wiley & Sons, 2011), pp. 22–23.
Unlike their Russian comrades, China’s red oligarchs
Laurie Burkitt, “Landed Ladies Top List of China’s Richest Women,”
China Real-Time Report
blog,
Wall Street Journal
, September 29, 2011.
“What would the chairman of China’s largest bank do”
Walter and Howie,
Red Capitalism,
p. 187.
The subtle hand of the Chinese government
Shu-Ching Jean Chen, “China’s Power Queen,”
Forbes
, January 3, 2008; “Li Xiaopeng Appointed Vice Governor of Shanxi Province,”
People’s Daily Online
, June 12, 2008.
Another sign of the political nature of wealth in China
Audra Ang, “Chinese Tycoon Gets 18 Years in Fraud Case,” Associated Press, July 15, 2003.
“If they wanted to, China’s authorities could probably find”
“Face Value: Scandal in Shanghai,”
The Economist
, August 14, 2003.
“If only a few people are rich, then we’ll slide into capitalism”
“China’s Bo Signals Wealth Gap Breached Unrest Trigger Point,” Bloomberg News, March 9, 2012.
But at the same time, Bo was a princeling
Jeremy Page, “Children of the Revolution,”
Wall Street Journal
, November 26, 2011.
(Guagua denies driving the Ferrari)
Andrew Jacobs and Edward Wong, “Disgraced Chinese Official’s Son Tries to Defuse Sports Car Scandal,”
New York Times
, April 25, 2012.
Guagua was educated at Harrow
Jeremy Page, Brian Spegele, and Steve Eder, “‘Jackie Kennedy of China’ at Center of Political Drama,”
Wall Street Journal
, April 9, 2012.
Since Bo Xilai’s fall from grace
“Bo Xilai Clan Links Included Citigroup Hiring of Elder Son,” Bloomberg News, April 23, 2012.
Bo was one of China’s rising leaders
Jamil Anderlini, “Bo Xilai’s Wife Arrested in Murder Probe,”
Financial Times
, April 10, 2012.
“The emphasis once again is shifting much more”
CF interview with Stephen Roach, April 10, 2012.
“Our banks earn profit too easily”
Dinny McMahon, Lingling Wei, and Andrew Galbraith, “Chinese Premier Blasts Banks,”
Wall Street Journal,
April 4, 2012.
“this would be devastating for both our city and nation”
Charles E. Schumer and Michael R. Bloomberg, “To Save New York from London,”
Wall Street Journal
, November 1, 2006.
“When asked to compare New York and London”
“Sustaining New York’s and the US’ Global Financial Services Leadership,” McKinsey report, January 22, 2007.
The arguments in the report are so wrong that it is easy to mock
Aaron Lucchetti, “Moving the Market: Why Spitzer Is Backing Study That Endorses Less Regulation—Restrictive Climate Said to Draw Business Away from New York,”
Wall Street Journal
, January 23, 2007.
Two days before Bloomberg and Schumer took to the op-ed pages
R. Glenn Hubbard and John L. Thornton, “Is the U.S. Losing Ground?”
Wall Street Journal
, October 30, 2006.
“‘Our society seems to have an increased tendency’”
Remarks by Secretary Henry Paulson to the Economic Club of New York, as released by the Department of the Treasury, November 20, 2006.
A final U.S. contribution from the department of irony
John A. Thain, “New York Faces Challenges to Its Market Dominance,” letter to the editor,
Wall Street Journal
, November 25, 2006.
“Gordon Brown patrolled the conference corridors”
Howard Davies, “Balls Must Save Us from U.S. Regulatory Creep,”
The Independent
, January, 27, 2007.
he resigned as director of the LSE
“LSE Director Sir Howard Davies Resigns over Libya Links,” BBC, March 4, 2011.
“I totally understand why Dick Fuld couldn’t do it”
CF interview with John Thain, September 16, 2008.
“The perspective of government”
All attributed quotes from this section originally appeared in Chrystia Freeland, “What Toronto Can Teach New York and London,”
Financial Times,
January 29, 2010.
“The highest earnings by occupation”
Claudia Goldin and Lawrence F. Katz, “Transitions: Career and Family Life Cycles of the Educational Elite,”
American Economic Review: Papers & Proceedings 2008
, 98:2, 363–69.
One of the most comprehensive analyses
Bakija, Cole, and Heim, “Jobs and Income Growth,” p. 55, table 7; see also the explanation on p. 24.
The numbers in the UK, where the ascendancy of finance
Brian Bell and John Van Reenen, “Bankers’ Pay and Extreme Wage Inequality in the UK,” CEP Special Report, April 2010.
“From 1909 to 1933 the financial sector”
Thomas Philippon and Ariell Reshef, “Wages and Human Capital in the U.S. Financial Industry: 1909–2006,” NBER Working Paper, March 2011.
“In the financial industry, the United States”
CF interview with Christopher Meyer, 14644, February 21, 2012.
laws increasing regulation of the finance and real estate sectors
Deniz Igan, Prachi Mishra, and Thierry Tressel, “A Fistful of Dollars: Lobbying and the Financial Crisis,” IMF Working Paper 09/287, December 2009.
“Well, of course, I wrote”
Freeland,
Sale of the Century
, p. 176.
Washington had occupied Wall Street
Sarah Palin, “How Congress Occupied Wall Street,”
Wall Street Journal
, November 18, 2011.
One study of the SEC
“Revolving Regulators: SEC Faces Ethics Challenges with Revolving Door,” Project on Government Oversight report, May 13, 2011.
It is easy to understand the appeal of switching
Philippon and Reshef, “Wages and Human Capital,” p. 21.
CHAPTER 6: PLUTOCRATS AND THE REST OF US
“If you really wanted to examine”
Richard D. Lyons, “Fears of H.E.W. Cuts Spur Protests at Inflation Parley,”
New York Times
, September 19, 1974.
“He was remembering now”
Robert Harris,
The Fear Index
(Knopf, 2012).
“A stranger to human nature”
Adam Smith,
The Theory of Moral Sentiments
(Cambridge University Press), 2004, p. 63.
If you ever have to work at a call center
Unless otherwise specified, all quotes and descriptions from this section are drawn from the author’s August 2010 visit to Zappos headquarters.
“free from boring work environments”
This quote appears on the jobs section of Zappos .com.
“the palace of the millionaire”
Carnegie, “Wealth.”
“the marginal return for extra dollars does drop off”
Jeff Guo and Rob McQueen, “Gates Asks Students to Tackle the World’s Problems,”
The Tech
, April 23, 2010.
“you can drive your Rolls-Royce around”
CF interview with Eric Schmidt, February 23, 2011.
“If a man is not an oligarch”
Chrystia Freeland,
Sale of the Century: Russia’s Wild Ride from Communism to Capitalism
(Crown Business, 2000), p. 320.
“treated business exclusively”
“Prison Exchange: Mikhail Khodorkovsky Looks Back on His Choices,”
Radio Free Europe/Radio Liberty
, September 21, 2009.
“That this talent for organization”
Carnegie, “Wealth.”
“We ended up making twenty-four times our money”
Bloomberg TV interview with Steve Schwarzman, November 30, 2011.
“We live in a bubble”
Brad Stone. “It’s Always Sunny in Silicon Valley,”
Bloomberg Businessweek
, December 26, 2011.
“I recently talked to an IT engineer”
Matt Rosoff, “Eric Schmidt: We Don’t Talk about Occupy Wall Street in the Valley Because We Don’t Have Those Problems,”
Business Insider,
December 23, 2011.
“Is society’s nobility”
Paul Piff, Daniel M. Stancato, Stephane Cote, Rodolfo Mendoza-Denton, and Dacher Keltner, “High social class predicts increased unethical behavior,”
Proceedings of the National Academy of Sciences, 109 (2012), 4086–91.
“You know, historically”
CF interview with B. N. Kalyani, November 13, 2011.
“meet somewhere in the middle”
CF interview with Kris Gopalakrishnan, November 12, 2011.
“So long as our leaders tell us that we must trust them”
Daniel S. Loeb, “Third Point LLC Second Quarter 2010 Investor Letter,” August 27, 2010.
“like when Hitler invaded Poland in 1939”
Jonathan Alter, “A ‘Fat Cat’ Strikes Back,”
Newsweek
, August 15, 2010.
“Since fair is fair, tax loopholes in the financial industry”
Mike Bloomberg, “How the Super Committee Can Balance the Federal Budget,” remarks prepared for Center for American Progress/American Action Forum event, November 8, 2011.
“The top 1 percent of New Yorkers pay over 40 percent”
Shira Ovide, “Billionaire Tells Occupy Wall Street to Get Off His Lawn,” Deal Journal blog,
Wall Street Journal
, October 11, 2011.
“Acting like everyone who’s been successful is bad”
Max Abelson, “Bankers Join Billionaires to Debunk ‘Imbecile’ Attack on Top 1%,” Bloomberg News, December 20, 2011.
“not a question”
CF interview with Jeff Immelt, October 17, 2011.
“Capitalists are not the scourge that they are too often made out to be”
Leon G. Cooperman, “An Open Letter to the President of the United States of America,” November 28, 2011.
“People don’t realize how wealthy people self-tax”
CF interview with Foster Friess, February 9, 2012.
“I think [the ultrawealthy] actually”
Melissa Harris “Billionaire Opens Up on Politics,”
Chicago Tribune
, March 11, 2012.
“We celebrate income disparity and we applaud the growing margins”
Neil Hume, “God Bless Income Disparity,” Alphaville blog,
Financial Times,
November 17, 2011.
“wealth is fleeing the country”
From a February 22, 2012, e-mail, sent out by Lindsay Rafayko of Empower Public Relations.
“We may need an escape plan”
Yardeni Research Daily E-mail Briefing, December 8, 2011.
a few modern-day plutocrats are actually trying to build
Jonathan Miles, “The Billionaire King of Techtopia,”
Details
, September 2011.
“I have yet to talk to anybody who doesn’t say”
“Governance Blueprints from Global Leaders,” signature lecture panel, Centre for International Governance Innovation’s “An Unfinished House: Filling the Gaps in Global Governance” conference, Waterloo, Canada, October 28, 2011.
“For successful people to say the nasty end of the income distribution”
CF interview with Mohamed El-Erian, June 15, 2010.
“No nation can tolerate for long excessive shifts in income”
CF e-mail correspondence with Mohamed El-Erian, October 10, 2011.
Mark Carney is not most people’s idea of a radical
See the following articles in The Globe and Mail: Andrew Willis, Tavia Grant, and Heather Scoffield, “Playing a New Game, in a New Arena,” October 5, 2007; Heather Scoffield, “Mark Carney Takes Up His Mission,” January 25, 2008; Jeremy Torobin, “Mark Carney: A Common Touch, an Uncommon Task,” January 13, 2012.
“I have called it anti-American”
Rachelle Younglai and Philipp Halstrick, “JPMorgan’s Dimon’s Aggressive Style May Hurt Bank Cause,” Reuters, September 29, 2011.
Another participant remembered Dimon’s remarks
Tom Braithwaite and Patrick Jenkins, “JPMorgan Chief Says Bank Rules ‘Anti-US,’”
Financial Times, September 12, 2011.
JPMorgan, which earns around a quarter
According to the bank’s 2011 annual report, total net revenue was $97 billion and managed revenue from outside North America was $25 billion.
After the meeting Blankfein sent Carney
Tom Braithwaite, “Dimon in Attack on Canada’s Bank Chief,”
Financial Times, September 26, 2011.
Dimon, who stands by the substance
This account was drawn from background conversations with Wall Street bankers, as well as Kevin Carmichael, Tara Perkins, and Grant Robinson’s “Bankers, Regulators Square Off amid Turmoil,”
The Globe and Mail,
September 26, 2011. See also “JPMorgan’s Dimon’s Aggressive Style May Hurt Bank Cause,”
“He’s my governor and I’m very proud of that fact”
Kevin Carmichael, “Carney, Waugh Spar over New Banking Rules,”
The Globe and Mail, September 25, 2011.
“It is hard to see how backsliding would help”
Mark Carney, “Some Current Issues in Financial Reform,” remarks to the Institute of International Finance, Washington, D.C., September 25, 2011.
between 2003 and 2011, at least fourteen Chinese
Emma Dong, “China Executes 14 Billionaires in 8 Years, Culture News Reports,”
Bloomberg News,
July 22, 2011.
“In the 1990s, of course, free enterprise, capitalism, and so forth”
Howard Fineman, “Jed S. Rakoff: Federal District Judge of New York’s Southern District (The Inspirationals),”
Huffington Post, December 27, 2011.
“I placed too much confidence”
David J. Lynch, “Dimon-Bernanke Faceoff Shows Frustration over Regulation amid Kohn Regrets,” Bloomberg News, July 7, 2011.
“The Fed listens to Wall Street and believes what it hears”
Willem H. Buiter, “Central Banks and Financial Crises,” Federal Reserve Bank of Kansas City’s Maintaining Stability in a Changing Financial System symposium, Jackson Hole, Wyoming, August 23, 2008.
Dimon even left his own star-studded fifty-second
Kate Kelly, “Inside the Fall of Bear Stearns,”
Wall Street Journal, May 9, 2009.
President Obama’s favorite banker
Jackie Calmes and Louise Story, “In Washington, One Bank Chief Still Holds Sway,”
New York Times
, July 18, 2009.
“Most of the bad actors are gone”
“What Dimon Told Bernanke,”
New York Times Dealbook, June 8, 2011.
“My daughter called me from school one day”
Sewell Chan, “Voices That Dominate Wall Street Take a Meeker Tone on Capitol Hill,”
New York Times, January 13, 2010.
the attitude they betrayed as “jaded”
Mark Carney, “The Economic Consequences of the Reforms,” remarks to the Bundesbank, September 14, 2010.
more than 100 to 1
Jamie Dimon’s 2011 pay package totaled $23 million, compared to Ben Bernanke’s $199,700 salary in 2011.
CFTC officials took the Megabus
Ben Protess. “U.S. Regulators Face Budget Pinch as Mandates Widen,”
New York Times Dealbook, May 3, 2011.
“New and better rules”
“Some Current Issues in Financial Reform”
“The argument that financial institutions”
Dave Clarke, “JPMorgan’s Dimon Loses Clout as Reform Critic,” Reuters, May 11, 2012.
“CEOs have duties to their shareholders”
Harris, “Billionaire Opens Up on Politics.”
“True capitalism lacks a strong lobby”
Luigi Zingales, “Capitalism After the Crisis,”
National Affairs
1 (Fall 2009).
“no car with my name”
Lee Iacocca,
Iacocca: An Autobiography
(Bantam, 1984), p. 108.
“The Foundation exists and thrives”
Text of Ford’s letter to Alexander Heard as published in
Foundation News, March/April 1977.
“He has a right”
Heather Mac Donald, “The Billions of Dollars That Made Things Worse,”
City Journal, Autumn 1996.
Ford was the second-highest-paid
“Who Gets The Most Pay?” and “The Dimensions of American Business: A Roster of the U.S.’s Biggest Corporations,”
Forbes, May 15, 1977.
Ford’s letter crystallized a fear
An example of this anxiety is the 1971 letter Lewis Powell, then a corporate lawyer and a future Supreme Court justice, wrote to Eugene Sydnor, Jr., the director of the U.S. Chamber of Commerce. In it, Powell argued, “The overriding first need is for businessmen to recognize that the ultimate issue may be survival—survival of what we call the free enterprise system, and all that this means for the strength and prosperity of America and the freedom of our people.”
“the academic and business communities”
Irving Kristol, “On Corporate Philanthropy,”
Wall Street Journal, March 21, 1977.
“programs and policies, such as social security”
Mac Donald, “The Billions of Dollars That Made Things Worse.”
the five largest papers
Clifford Marks, “In Media Coverage, Deficit Eclipses Unemployment,”
National Journal, May 16, 2011.
“It just doesn’t make sense for people”
David Burt, “Grad School Scrutinized,”
Yale Daily News, September 21, 2011.
“as bank robber Willie Sutton”
Drew Gilpin Faust, “Baccalaureate Address to the Class of 2008,” Cambridge, MA, June 3, 2008.
“we love Greg Mankiw”
Allison Gofman, “Walking Out on Results,”
Harvard Political Review, November 6, 2011.
“My first reaction was nostalgia”
N. Gregory Mankiw, “Know What You’re Protesting,”
New York Times, December 3, 2011.
The only four fields
Professor salary figures come from the Chronicle of Higher Education’s
2011 Almanac of Higher Education,
August 21, 2011.
Even as they cash their speaking fees
Emily Flitter, Kristina Cooke, and Pedro da Costa, “Special Report: For Some Professors, Disclosure Is Academic,” Reuters, December 20, 2010.
Winner-Take-All Politics
A big hat tip here to Jacob Hacker!
an increasing number of politicians are members
Eric Lichtblau, “Economic Downturn Took a Detour at Capitol Hill,”
New York Times, December 26, 2011.
One academic study has suggested that serving in Washington
Alan J. Ziobrowski, James W. Boyd, Ping Cheng, and Brigitte J. Ziobrowski, “Abnormal Returns from the Common Stock Investments of Members of the U.S. House of Representatives,”
Business and Politics
13:1 (2011).
But a different study by LSE and MIT researchers challenged
Andrew Eggers and Jens Hainmueller, “Capitol Losses: The Mediocre Performance of Congressional Stock Portfolios, 2004–2008,” MIT Political Science Department Research Paper No. 2011-5, December 2, 2011.
Between 2000 and 2007 the Clintons earned $111 million
Kenneth P. Vogel, “Tax Returns Show How Clintons Got Rich Quick,”
Politico
, April 4, 2008.
Tom Daschle, the former Democratic Senate majority leader
David D. Kirkpatrick, “In Daschle’s Tax Woes, a Peek into Washington,”
New York Times, February 1, 2009.
senators were 50 percent Larry Bartels, “Economic Inequality and Political Representation,” in The Unsustainable American State, eds. Lawrence Jacobs and Desmond Kin (Oxford University Press, 2009), pp. 167–96.
You could see the power of these networks Richard Teitelbaum, “How Paulson Gave Hedge Funds Advance Word of Fannie Mae Rescue,” Bloomberg News, November 29, 2011.
“The proportion of people with training and experience in finance” Zingales, “Capitalism After the Crisis.”
“It turns out that if I pay” CF interviews with Dan Ariely, December 2010 and January 2011.
“We are deeply social animals” “Working Wealthy Predominate the New Global Elite,” International Herald Tribune, January 25, 2011.
“‘Yes, he would give them’” Jane Austen, Sense and Sensibility (Dover, 1995), p. 3.
CONCLUSION
“We may have democracy”
Mr. Justice Brandeis, Great American, ed. Irving Dilliard (Modern View Press, 1941), p. 42
“The society that puts equality”
Milton Friedman, “Free to Choose,” PBS, 1980.
The story of Venice’s rise and fall
Daron Acemoglu and James A. Robinson,
Why Nations Fail
(Crown, 2012), pp. 152–56.
“There’s a lot of anger in society because of what the government did”
CF interview with Eric Schmidt, February 23, 2011.
“It’s probably true that some activities are truly creative”
CF interview with Emmanuel Saez, February 24, 2011.
“A truly great business”
Warren Buffett, Berkshire Hathaway Inc. 2007 Annual Report, February 29, 2008.
Great Gatsby Curve
“The Rise and Consequences of Inequality in the United States.”
statistics have shown
See Thomas B. Edsall, “The Reproduction of Privilege,”
New York Times
“Campaign Stops”
blog, March 12, 2012.
worth more than $4 million
See Felix Salmon, “Simmons Leaves Goldman’s Board,” Reuters, February 13, 2010.
whether the legacy system
For a good exploration of this topic, see Elyse Ashburn, “At Elite Colleges, Legacy Status May Count More Than Was Previously Thought,”
Chronicle of Higher Education, January 5, 2011.
“Since, by the Grace of God”
Roger Crowley,
City of Fortune: How Venice Ruled the Seas
(Random House, 2012), p. xxviii.