L. M. Lloyd

I finally got around to watching Michael Moore's anti-capitalist screed "Capitalism: A Love Story," and it left me unbelievably pissed off! Now, before you jump to any conclusions about what I mean, based on the language I use, let me just explain myself, and save you the trouble of trying to guess. Michael Moore is, first and foremost, a brilliant and successful producer of pure AgitProp, plain and simple. I recognize his work as such, and that is why I rightly call it a screed. Most of the time, I don't agree with Moore's view or point, but I always deeply respect the skill and talent with which his movies are made. The man is a master of getting his view of the world across in an entertaining and evocative manner, and no matter how wrong or right I might think he is, I have to acknowledge the brilliance of his work. None of this has anything to do with my anger, however.

I am angry, because for over a decade I have ranted about how this country has become an undemocratic corporate feudal state. I have ranted, but I have also kept an open ear, and mind, as people who, supposedly, know far more than I do about the financial system, have explained to me that my view is naive, uninformed, simplistic, romantic, and just plain wrong. I have always kept at the forefront of my mind, that perhaps I am really not as clever as I think I am. Perhaps my post-punk sensibilities, and peculiar life experience, have left me with a skewed view, which causes me to latch onto statistics that seem to prove my case, yet means something quite different to someone who has more than my, admittedly limited, knowledge of the inner workings of the financial world. Perhaps in my zeal to rage against what I see as one of the greatest injustices in the history of humanity, I lost the perspective to coolly evaluate the motives and actions of the people I excoriate. Maybe, just maybe, I was ascribing evil intent, and a willful subversion of everything I think America once stood for, where there was nothing but business as usual, and the status quo. 

The reason this angers me, is because in Moore's film, he mentioned a single document. Nothing else in the film really mattered to me, but this one document set my mind on fire. I had to find it, and find it I did. It is called Plutonomy: Buying Luxury, Explaining Global Imbalances, and put quite simply, it is a product of Citigroup Research that not just proves every single argument I have made over the past decade, but glorifies it as a wondrous new opportunity for the rich. More to the point though, and thus the source of my anger, it clearly shows that every single one of the people who has lectured me about my unsophisticated naivete, was either less informed than myself, less intelligent than I am, or purposely attempting to mislead me, knowing full well that some of the brightest minds in the financial world (at least if we are to believe the financial sector model of intelligence, where the biggest earner must be the smartest person in the room), not only had come to the same conclusion I had, but were actively advising clients on how to capitalize on the situation.

Now, this is probably one of those rare situations where I should probably just shut up for a second, and let the document speak for itself, because even the remarkably in-keeping-with-my-usual-rant title of this article is lifted straight from the heading of said document. In fact, the whole thing reads so much like one of my own rants, that change a word here, and an implication there, and it would sound like the author was a full-on Marxist, calling for the people to rise up. I would highly recommend reading the entire document, if for no other reason than that the incessant use of words like "bloated, disproportional and imbalance," really put in perspective how keenly the people screwing you, realize they are screwing you, and practically are bragging about how they are putting one over on you. I know if I just say to go read it, however, that most of you won't, so I will go over some choice quotes. For example, the whole thing starts up explaining:

The World is dividing into two blocs - the Plutonomy and the rest. The U.S., UK, and Canada are the key Plutonomies - economies powered by the wealthy. Continental Europe (ex-Italy) and Japan are in the egalitarian bloc.

 So what, exactly is, in Citi's estimation, a plutonomy?

Plutonomies have occurred before in sixteenth century Spain, in seventeenth century Holland, the Gilded Age and the Roaring Twenties in the U.S. What are the common drivers of Plutonomy? Disruptive technology-driven productivity gains, creative financial innovation, capitalist-friendly cooperative governments, an international dimension of immigrants and overseas conquests invigorating wealth creation, the rule of law, and patenting inventions. Often these wealth waves involve great complexity, exploited best by the rich and educated of the time... In a plutonomy there is no such animal as “the U.S. consumer” or “the UK consumer”, or indeed the “Russian consumer”. There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the “non-rich”, the multitudinous many, but only accounting for surprisingly small bites of the national pie... Since we think the plutonomy is here, is going to get stronger, its membership swelling from globalized enclaves in the emerging world, we think a “plutonomy basket” of stocks should continue do well. These toys for the wealthy have pricing power, and staying power.

In a section of this document, written, please remember, by people who have made trillions of dollars so far off these theories, charmingly titled "THE UNITED STATES PLUTONOMY - THE GILDED AGE, THE ROARING TWENTIES, AND THE NEW MANAGERIAL ARISTOCRACY," they go on to say:

Was the U.S. always a plutonomy - powered by the wealthy, who aggrandized larger chunks of the economy to themselves? Not really... With the exception of the boom in the Roaring 1920s, this super-rich group kept losing out its share of incomes in WWI, the Great Depression and WWII, and till the early eighties. Why? The answers are unclear, but the massive loss of capital income (dividend, rents, interest income, but not capital gains) from progressive corporate and estate taxation is a possible candidate. The rise in their share since the mid-eighties might be related to the reduction in corporate and income taxes. Also, to a new wave of entrepreneurs and managers earning disproportionate incomes as they drove and participated in the ongoing technology boom...the resurgence in their fortunes since the mid-eighties was mainly from oversized salaries. The rich in the U.S. went from coupon-clipping, dividend-receiving rentiers to a Managerial Aristocracy indulged by their shareholders.

Please, try to keep in mind, this is written by one of the largest banks in the world, not one of my angry tirades about how you are being crushed, and begging for it like a fool. So, what is the prediction of these financial geniuses, and how do they think governments should respond to this trend that is crushing you and the entire middle class, and reducing the world to nothing but the "Managerial Aristocricy," and their struggling serfs?

We posit that the drivers of plutonomy in the U.S. (the UK and Canada) are likely to strengthen, entrenching and buttressing plutonomy where it exists... Society and governments need to be amenable to disproportionately allow/encourage the few to retain that fatter profit share. The Managerial Aristocracy, like in the Gilded Age, the Roaring Twenties, and the thriving nineties, needs to commandeer a vast chunk of that rising profit share, either through capital income, or simply paying itself a lot. We think that despite the post-bubble angst against celebrity CEOs, the trend of cost-cutting balance sheet-improving CEOs might just give way to risk-seeking CEOs, re-leveraging, going for growth and expecting disproportionate compensation for it.

So, the next time one of you decides to try and convince me that it is a wild conspiracy theory to posit that there is some giant cabal of international banks, sending out memos telling the private sector how they should run their business, with the decided aim of consolidating wealth, and abolishing the middle class, please refer back to this document before even bothering to try.

Of course, the question I always get asked, is what we can do about it, and why we should care? Quite surprisingly, Citi has been nice enough to answer that question as well!

At the heart of plutonomy, is income inequality. Societies that are willing to tolerate/endorse income inequality, are willing to tolerate/endorse plutonomy... So an examination of what might disrupt Plutonomy - or worse, reverse it - falls to societal analysis: will electorates continue to endorse it, or will they end it, and why... a threat comes from the potential social backlash... Perhaps one reason that societies allow plutonomy, is because enough of the electorate believe they have a chance of becoming a Plutoparticipant. Why kill it off, if you can join it? In a sense this is the embodiment of the “American dream”. But if voters feel they cannot participate, they are more likely to divide up the wealth pie, rather than aspire to being truly rich. Could the plutonomies die because the dream is dead, because enough of society does not believe they can participate? The answer is of course yes. But we suspect this is a threat more clearly felt during recessions, and periods of falling wealth, than when average citizens feel that they are better off. There are signs around the world that society is unhappy with plutonomy - judging by how tight electoral races are. But as yet, there seems little political fight being born out on this battleground. Our overall conclusion is that a backlash against plutonomy is probable at some point. However, that point is not now. So long as economies continue to grow, and enough of the electorates feel that they are benefiting and getting rich in absolute terms, even if they are less well off in relative terms, there is little threat to Plutonomy in the U.S., UK, etc. But the balance of power between right (generally pro-plutonomy) and left (generally pro-equality) is on a knife-edge in many countries. Just witness how close the U.S. election was last year, or how close the results of the German election were. A collapse in wealth in the plutonomies, felt by the masses, and/or prolonged recession could easily raise the prospects of anti-plutonomy policy.

So, in short, why you should care about it, is because you are getting played, and what you should do about it, is stop living your life chasing wealth you are never going to get! I've told everyone to wake up before. I've told you that you were getting played. I've explained how worshiping wealth is bad for society. I understand though, that it is all too easy to disregard everything I say as me just being some disgruntled loser who is just jealous because he isn't one of the super-rich, so just sits around dreaming up conspiracy theories, to tarnish the "American Dream." Thing is, everything quoted here, was written by those super-rich you so idolize. This is a straightforward memo on exactly how much they have played you, and a plan moving forward on how to continue to play you. It isn't a conspiracy theory, it is a position paper, detailing the dimensions of how successful the conspiracy has been, and will continue to be, as long as you play your part as the dupe.

As for me, I'm done. I'm picking up and moving to one of those egalitarian bloc countries as soon as my meager finances will get me there, and assuming they will let a plutonomic bloc refugee in. What America stands for in my mind is over, and after more than a decade of ranting and raving about it, I'm tired. If everyone in this country is really chomping at the bit to turn themselves into a slave, just on the off chance that they might luck into being one of that top 1% that really matters, then I have no use for this country, or the people in it. Maybe some day when you all step up, I can be proud to be an American again, but as it is now, I am just embarrassed that we let the country get this way, just because it is more fun to imagine that you might be rich some day, than it is to look out for the well-being of your fellow man. You have fun buying your labor-camp manufactured cheap luxury goods, to make you feel like you are higher up the food chain than you are, and have even more fun when the bill comes due, and there is no money left to pay it, because the banks have taken all the money. I'm going to be busy being a disillusioned and bitter expat.

So, welcome to the Plutonomy Machine, and I'm out of here!