The American upper class is rapidly disappearing and in a generation will probably be too small to concern us anyway or have died out. How can this be true? It’s obvious from all the income and wealth figures that we see that the upper class is alive and well in the United States of America. It is a major source of socio-political controversy.
Call it a play on words if you like, but I think of a “social class” as a specific type of group traditionally found in the United States and elsewhere. Certainly, there is a very large upper income group in the United States as there are in other nations, but they are no longer a class in my mind.
The old American upper class typically lived in the same cities in the United States, spoke the same language, went to the same universities, created businesses in the US, cooperated with each other professionally in the US, and otherwise functioned as a real class. Indeed, they often intermarried. Here is your trivia question for today. When future four-term President Franklin D. Roosevelt married Eleanor, what was Eleanor’s maiden name? Trust me, you know it well. Bonus trivia question: since Eleanor’s father was dead at the time of her marriage, who took her place to “give her away” at the wedding? I will leave it to you to find the answers. It will not be difficult, but it will help make my point.
Yesterday’s American upper class is becoming part of a new global upper class. The upper income group in the United States still exists, of course, but they are no longer really an American social class. They have been thoroughly globalized.
Given the collapse of the Soviet Union, the opening of China, the rise of new emerging markets, and other changes, the wealth-creation opportunities available to them greatly increased. However, the same was true for the upper classes in other nations as well. So you could not do it from the US alone, you had to hit the road. And they did!
In five decades of working in economic development, both as an employee and as a consultant, I have personally witnessed the dramatic growth of the new global upper class. They are citizens of one nation or another, but they live everywhere, travel everywhere, do business everywhere, and profit (or not) everywhere. They have a shared language now, English, and its impact is undeniable. These days, seemingly no matter where you go if it’s a major city, there are modern airports, major hotel chains, a variety of upper-end restaurants, big shopping malls, and a whole raft of services and products available that twenty years ago, even ten, were not available. Many of the nations I worked in barely had anything recognizable as an “upper class”, beyond a tiny number of families. In most of the world, that is now history.
If you are not familiar with the growth of the global upper class, I could supply plenty of personal experiences, but that takes too much space. For an idea of how things have gone, I recommend you download the latest annual report from Knight Frank, a large global real estate firm that focuses on “high net worth individuals”. Reading through the report, even scanning, will give you an idea of the truly “global” nature of this new upper class. You can download The Wealth Report here. Their numbers will include all qualifying people who reside in a given city, foreign residents as well as citizens. The fact that they have identified 11 individuals with wealth ranging from $100 million to a billion, plus another 103 between $30M and $100M, and an estimated 4,700 between a million and $30M (nearly double what it was in 2007) in my current city of residence, Panama City, Panama, comes as no surprise at all. The link to the complete report is found near the bottom of that page.
So the upper class is now global, so what?
This is not something amenable to statistics, charts and graphs, but it is something I have seen happening in my work all over the world, especially in the last two decades. The nature of consulting in economic development typically requires working with members of national upper classes, among others. They are the ones who either make the decisions because they are also the leadership, or whose influence directly impacts their leadership’s decisions.
For the first three decades of my work, I found that the upper classes of nations other than the wealthiest were very isolated and knew it. Not only were they wealthier, they were much better-educated, much better-informed globally, and much more traveled. They often sought me out for informal dinners or conversations, if only to have the opportunity to speak with someone who, despite being middle class in his own society, shared enough in common with them to make for good conversation, the kind of conversation they simply could not have with 99% or more of the people surrounding them at home. For all their money, there was something often a little pathetic in their sense of isolation and, although a few were not the finest people I have met, I couldn’t help but feel a little sorry for them. It has been years since that last happened.
I first really noticed this in 1995 when I re-visited Accra, the capital of Ghana in West Africa where I had lived and worked in prior years. The city had new hotels, far better than anything there before, and they were packed with businesspeople from all over the world looking for opportunities, something you never saw in the 70’s and 80’s. In talking to Ghanaian friends, I found they were far better off now and far more likely to have had real experience outside Ghana. In addition, they were much more comfortable talking to these foreigners who were filling the hotels. Their sense of connection with the “outside world” had dramatically improved, but they were not yet part of a global upper class.
In the two decades since, that experience has become rare indeed. Today, upper-income people from every nation are linked together as never before and the pace continues to accelerate, regardless of the North Atlantic and its “crises”.
As money has become available to more and more people everywhere, life has changed. National upper classes grew in size and in wealth. The foreign upper classes started arriving in their search for investments and the national upper class did the same in the opposite direction. They found each other. And wherever they go, they find other people much like themselves with whom they now have more in common than they do with the great majority of the folks back home. They mix, meet, and do business so continuously that they may have different traditions and customs, but they now understand and can deal with those whose traditions and customs are quite different. They “speak the same language” in more ways than one.
The upside of all this is that they no longer feel isolated, either in their home nations or abroad.
The downside of all this is that they are so thoroughly interconnected that they spend nearly no time with the rest of us. They are losing contact with the middle class, even the upper-middle class.
For a very long time, I have received newsletters written by people who oversee a lot of money and who are wealthy themselves. In decades past, they focused on their own nation or those similar to it, the so-called First World. They talked about their national politics and their own people of all classes, understanding that these people were the source of much, if not all, of their wealth and that the decisions their fellow citizens made would directly impact on them and their wealth in a very real sense.
Today, I read the same kind of newsletter, sometimes from some of the same people, and they run along lines like this, “I had a very interesting visit at the conference in London last week when I spoke with A, B, and C (people of their global class). I am having a great time here in Jo’burg where I spoke with two members of the National Assembly and the Minister of Economic Development and I will leave on Saturday for a conference on global economics in Tokyo, stopping for a couple days to visit government officials in Mumbai.” That sort of thing.
Sometimes they “lighten it up” by mentioning that they spoke to the owner of a restaurant where they had lunch or with their taxi driver on the way to the airport or with a barber who cut their hair, and will share a few comments these gentlemen made as some kind of profound insight into the feelings of the common people.
They will share a half-dozen graphs and charts of economic statistics for a given nation, and nothing from opinion polls on related topics in that nation (they all have polls, even Afghanistan) that are the only “voice” most of the rest of us have that might catch their attention. They have lost touch with the rest of us. They are a global class now and more than sufficient in number to fully consume each other’s time and attention.
Life is not just economic. It is, at the very least, social, economic, and political. Their “analyses” are much too limited and short-sighted. I can tell you this. When I was hired to do an economic analysis in any nation, I always included sections on the social and political environment, and then weave them together to get a full picture. I was expected to do this, by myself as well as by my clients. It only made sense. It still does.
You know, to be honest, when I read these flawed analyses from people who are, themselves, part of the global upper class, I can’t help but think three things. They are too often 1) the people who created, implemented, marketed, or at least encouraged the very policies that brought on the global financial crisis that has yet to conclude and 2) did little or nothing of any substance to warn the rest of us or demand changes in policies from their fellow global upper-class friends when that was still possible, but 3) seem to have benefited from it all. It wasn’t just the bankers who ran the crazy mortgage schemes who got off with only a reprimand and a brief period of negative publicity before getting back to making money off their own failures. Most of these analysts got off a lot easier than that. But those who listened to them? Maybe not so much.
So, do I hate the global upper class? No, not at all. Their behavior was and is human behavior. Let he who is without sin cast the first stone. However, professionally, much of it has been distinctly unimpressive, if not downright stupid, but humans are humans. However, this doesn’t mean I appreciate their inability to see what is happening to them now and, as a result, how that is affecting their high-priced analysis of the world the rest of us live in. If they screw up again, which is entirely possible, they better move along to other things or they may end up at least ignored or, if what comes is bad enough, hated. If they are genuine analysts, they will figure this out for themselves.
They cannot participate in it, pontificate on it, and profit from it, without taking their share of responsibility for it.
My next commentary will attempt to answer another related question. Is there evidence of the birth of a global middle class?
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