plutocrats super rich wealthy global super rich

What a 19th-Century Economist Can Teach Us
henry george wealth inequality

The Self-Destruction of the 1 Percent

A great idea got press! We trim, blend, and append two 2012 articles on an earlier economic reform from the New York Times, Oct 13, and the Huffington Post, Oct 21. The author is Global Editor at Large, Reuters, and the author of Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, from which these essays are adapted.

by Chrystia Freeland

As the story of Venice shows, virtuous circles can be broken. Elites that have prospered from inclusive systems can be tempted to pull up the ladder they climbed to the top. Eventually, their societies become extractive and their economies languish.

As the 1 percent pulls away from everyone else and pursues an economic, political and social agenda that will increase that gap even further — ultimately destroying the open system that made America rich and allowed its 1 percent to thrive in the first place.

At the bottom and in the middle, American society is fraying, and the children of these struggling families are lagging the rest of the world at school. In America today it is harder to escape the social class of your birth than it is in Europe; as income inequality increases, social mobility falls.

The tilting of the economic rules favors those at the top. The crony capitalism of today’s oligarchs is far subtler than Venice’s. It works in two main ways.

The first is to channel the state’s scarce resources in their own direction. Those at the top, particularly the tippy-top, of the economic pyramid have been most effective at capturing government support. Exhibit A is the bipartisan, $700 billion rescue of Wall Street in 2008.

The second manifestation of crony capitalism is more direct: the tax perks, trade protections, and government subsidies that companies and sectors secure for themselves.

It is no accident that in America today the gap between the very rich and everyone else is wider than at any time since the Gilded Age. Now, as then, the titans are seeking an even greater political voice to match their economic power. The irony of the political rise of the plutocrats is that, like Venice’s oligarchs, they threaten the system that created them.

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JJS: From problem to solution.

Henry George is the most famous American popular economist you've never heard of. Progress and Poverty, George's most important book, sold three million copies and was translated into German, French, Dutch, Swedish, Danish, Spanish, Russian, Hungarian, Hebrew, and Mandarin. During his lifetime, George was probably the third best-known American, eclipsed only by Thomas Edison and Mark Twain. He was admired by the foreign luminaries of the age, too -- Leo Tolstoy, Sun-Yat Sen and Albert Einstein, who wrote that "men like Henry George are unfortunately rare. One cannot image a more beautiful combination of intellectual keenness, artistic form and fervent love of justice." George Bernard Shaw described his own thinking about the political economy as a continuation of the ideas of George, whom he had once heard deliver a speech.

George is credited by many with ushering in the Progressive Era in American politics. When he died in 1897, he was given a statesman's send-off -- his coffin lay in state at Grand Central Station, where more than 100,000 people came to pay their respects. It was the largest crowd of mourners since Abraham Lincoln's funeral in 1865.

George's political quest was driven by what he relentlessly defined as "the great enigma" of 19th century America -- the puzzling co-existence of, as he put it in the title of his best-seller, Progress and Poverty. "Why should there be such abject poverty in this city?" and "What do we propose to do about it?"

George was an enthusiastic supporter of industry, free trade, and a limited role for government. His culprits were the rentier rich, the landowners who profited hugely from industrialization and urbanization, but did not contribute to it.

America today urgently needs a 21st century Henry George -- a thinker who embraces the wealth-creating power of capitalism, but squarely faces the inequity of its current manifestation.

Globalization and the technology revolution aren't going away -- and thank goodness for that. The great challenge of our time is to devise the new social and political institutions we need to make the new economy work for everyone.

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JJS: Henry George rediscovered a powerful solution discovered a century earlier by the physiocrats, a century before that by Quakers like William Pitt, and millennia ago by thinkers such as China’s Mencius. In the 20th c., some environmentalists and libertarians advanced the reform. Now in the 21st c., hopefully a new leader will arise and capture the public’s imagination in way that will finally win lasting results.


Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

The Rich Get More From Government Than Anyone

Top CEO Pay Equals 3,489 Years For Typical Worker

Pay the Piper, Call the Tune

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