Posts

 27-11-2018

Dear Partners in thought,

I would like to talk to you about “Winners Take All” from Anand Giridharadas, a book focused on “the elite charade of changing the world” as stressed by its sub-title. Although not presented as such, this book is de facto an insider’s investigation on how the global elite efforts “to change the world” through setting up their own programs, charities, foundations and the likes actually change nothing or not much and preserve the status quo, obscuring, according to AG, their role in causing the problems they later seek to solve. This book is about the global elite, the power of money, the desire to change the world that may be motivated by a range of noble and also selfish reasons, the increasing societal divide and the rise of populism triggered by a backlash against this elite and their galaxy in spite of their many efforts to change the world in ways that some like AG find less than sincere. It makes readers reflect more deeply about the “do gooding” of the global elite that has naturally been always well received in modern times but might be for some a smokescreen to hide the original sins of social inequality globally. If anything this book is a great basis for a needed debate.

AG, whom I discovered on CNN’s Fareed Zakaria’s weekly GPS (one of my favorite shows for its overall set-up, the quality of Fareed’s insights and the high caliber of his guests) last September, is teaching journalism at NYU and is a contributor on the main stage of TED. A recipient of the Pointer Fellowship at Yale and of the New York Library’s Helen Bernstein Award, he was a foreign correspondant for the New York Times from 2005 to 2016 and has written for the New Yorker and The New Republic. An Aspen Institute Fellow and an analyst for MSNBC, he started his career as an analyst at McKinsey which his bright mind, sharp thinking and 21st century “bright new world speak” easily shows.

AG draws a very contrasting view of our world to set the stage for his book. America (the book is US-centred) leads medicine, genetic and biomedical advancements while the average American health remains relatively poor compared to that of peers in the Western world and life expectancy actually declines in some years. America creates new learning ways via video and internet while children test more poorly in reading than in 1992. America becomes “European” in the quality of its food yet obesity and related conditions keep rising. Everybody can access a wider tech toolset to becoming entrepreneurs yet there are markedly much fewer of them than in the 1980s. In spite of Amazon and its online bookstore and Google having coded 25 million books, illiteracy stays the same and less and less Americans read a book a year. AG feels that in spite of all the tech-driven societal advancements America’s “progress machine” allowing people to better their lives have benefitted only a very fortunate minority that was already socially on top with the average pre-tax income of the top tenth nearly doubling since 1980 (seven times for the top 0.001 percent) whereas the bottom half of Americans or 117 m individuals stayed the same, at times mirroring conditions known in the poorest emerging countries (like for life expectancy of poor American males) in spite of 35 years of breathtaking changes mostly led by a continuing tech revolution. In simple terms, the picture shows the 10 percent group owning 90 percent of the wealth. AG provides a long list of similar conclusions which has led many millions of Americans, on the left and right, feeling that the game has been rigged for a very long time, leading to a constant condemnation of the system, a blow to the American dream and the rise of different streams of populism.

AG’s focus is thus on the elite who have decided to take ownership of and manage societal inequality issues using their business approach and while being the beneficiaries of the system they have created. They want to do good to correct the wrongs that they often engineered however unwittingly in the pursuit of their lives and activities. AG goes on a journey into this elite world, notably tech entrepreneurs who amassed fortunes and see a world changing role for themselves, exploring their rationale, and the do gooding galaxy of individuals who created a life for themselves assisting these aspiring existential game-changers.

The common theme of all the exchanges which AG had with various figures for his book is that they are indeed “grappling with powerful myths” that have promoted a unique power concentration in our times, allowing “the elite’s private, partial and self-promotional deeds to pass for real change and leading many “decent winners” believing that doing well by doing good was an adequate solution in an age of exclusion, making them feel better in terms of protecting their own privileges while averting more meaningful change to the status quo.

AG starts telling us about Hilary Cohen a Houston born and raised 2014 graduate from Georgetown at a time when she had to decide what to do after college, looking at management consulting, the rabbinate and the non-profit world. Hilary is representative of the young elite American college students stirred by a desire to “change things” though this time through capitalism and market solutions rather than government, creating a new approach to solving social inequality. Investment committees and driven entrepreneurship start mattering more than sheer democratically-flavored social and political actions of older days. Business encourages this trend awarding scholarships to these elite students to make them focus on “doing good” while “doing well”. One example is Georgetown’s Baker Scholarship named after the founder of Citbank and de facto maker of Harvard Business School and targeted at liberal arts students which Hilary obtains in her senior year. The era of “social” everything dawns on elite campuses: social innovation, social business, social enterprise and of course social and impact investing. Business language starts permeating the sphere of social change with “fostering innovation and providing unique skill sets”, “engaging global leaders to drive social change at scale” or “leveraging the power of capital, data, technology and innovation to improve people’s lives”, all messages that resonate with students like Hilary and equipping them for their new life missions. When Hilary receives an offer to join McKinsey, arguably the leading strategy consulting firm in the world, she does not know what to do in spite of the firm’s strong social message, wondering if she really would fulfil her desire to “doing good” by working on the problems of McKinsey’s corporate clients.

In finally taking that job, Hilary joins what AG calls MarketWorld, which is an ascendant power elite that is defined by concurrent drives to do well and to do good and focused on free market and voluntary action to solve societal issues. MarketWorld that recruits among the best is a combination of “enlightened business people and their collaborators in the universes of charity, academia, media, government and think tanks”. Their thinkers become “thought leaders” and they have their own language and territories, the latter being the famed global elite conferences around the world such as Davos (The World Economic Forum) or Aspen (The Aspen Institute), promoting the culture and state of mind that make them a global network and a community. To MarketWorld social change is not antagonistic to their needs and should be supervised by the winners of capitalism making the biggest winners of the status quo playing a leading role in the latter’s reform. Going back to Hilary, she realises very quickly that while she learns effective tools to solve corporate problems, these tools are not all obvious cure-alls across domains. She starts doubting if that social message, however noble, was not actually a way for top firms’ recruiters to capitalise on the trend for social betterment among elite students. In an ironical twist AG stressed that not content to replace government as the main agent of social change, MarketWorld advises it on how to run countries better as demonstrated by Obama’s closeness to Mckinseyites and his predecessor’s passion for Goldman Sachs alumni. The fact that these business agents of change, notably in the financial sector, having optimised everything and created fewer jobs through automation, layoffs, offshoring and dynamic scheduling while reaping great spoils for themselves along the way did not prevent them from being the self-appointed agents of social change and be accepted as such simply because they could solve problems well. Hilary, her doubts about really being groomed to change the world increasing (was she not a bit naive one might ask) ended up working in the McKinsey team Obama hired to work on his plans for a foundation, a fact that both silenced and conjured her doubts on business and social change. In the end even tough she was conflicted (though still admitting her role at McKinsey also carried prestige and lifestyle that she was not oblivious to), the work was exciting at many levels and she joined the Obama Foundation full-time allowing her to focus more squarely on doing good, even if in a very business-like way given the foundations…of the Foundation.

We then discover a number of MarketWorld examples in action. The common feature shared by all these MarketWorlders, to different degrees, is their belief that business itself is an important agent for good and societal change. Even if one could argue that the inventors and subsequent developers of the PC and internet did change the world, business as a direct force of societal change may not be a universal value in our times beyond making lives of users of products and services more efficient and pleasurable. AG introduces us to Dallas-based Stacey Asher and the world of business executives in top segments, like in her case hedge fund management, who have an epiphany (she in an orphanage in Africa) and decide to go and do good – again the business way, setting up a charity-like hedge fund to help the needy, she in the realm of fantasy sports where football teams are now stocks with proceeds going to the winners’ favourite charities. We then read about Justin Rosenstein, not even thirty, already a Silicon Valley star, having helped start Google Drive and being the co-inventor of the Gmail chat before inventing the dreadful “Like” button on Facebook (he may not be sure about his exact legacy on the latter). Justin who lived very modestly and was deeply spiritual and keen on “values” did not know what to do with his Valley wealth (though he still lives in a California-flavored communal residence) and decided to set up a new company that would connect people through work collaboration software to companies like Uber, Airbnb and Dropbox, thus “doing good” and changing people’s and workers’ experiences if not lives . We then discover Emmett Carson, a young African American who came from the Southside of Chicago focused on “social justice” a terminology too close to “win-losey” for the Valley where he had moved to advise tech entrepreneurs on the matter that he retitled his focus as being on “fairness”, which was better accepted. In doing so Carson understood that “if no one questioned the entrepreneurs’ fortunes and their personal status quo, they were willing to help” so they could also change the world in ways that had their buy- ins.

Here AG makes us discover the beauty of the “win-win” (the fourth commandment or habit of Stephen Covey’s opus named “The 7 Habits of Highly Effective People” and how they should think) promoted by “philantrocapitalists”. Win-Winism, that is rooted in Adam Smith’s social benefits of selfishness, is the mantra of the wealthy do-gooders and brings with it things like social enterprises, social venture capital, impact investing, benefit corporations, double and triple bottom lines, shared value theories of business’s enlightened self-interest, give one-get one products and the likes, all centred on what is good for the winners is good for everyone else. Win-win is also about about giving as it makes you happier and “being selfish and giving”. Win-win looks to be about having its cake and eating it too, more than once, the latest internally minded-win-win having been “Getting Syrians back to work – a win- win for host countries and the refugees”. And all of this against a backdrop of painlessness and promise that what has been very good for me will certainly be good for you who may not have drawn the right set of cards.

We then get a glimpse of one of those elite do gooding gatherings which is the Summit at Sea on a cruise ship and get introduced to a few attendees (many women entrepreneurs among those he describes) and their thought leaders who all seem focused on making sure business itself can bring the most impact and change in the lives of millions in the world. To be sure these gatherings may have the feel of sects as they all vocally and safely express that message, all looking alike in their profiles and win-win aspirations. The Summit at Sea cruise is about having “cascading effects on humanity”, “making friends who are going to impact your pocket books” and while “the boat is not about getting drunk and getting naked. Well it’s sort of about that but it’s also about social justice”. Then AG presents Pishevar a veteran Valley venture capitalist who would have trained Uber’s founder Travis Kalanick in the art of LA clubbing (indeed picking clubbing clothes for him, the bio detail being rather odd) but would see himself as a key architect in the prolongation of life (living longer and healthier of course) right at the corner of the next few years, encouraging all not to take risks (very un-business-like) physically at least so they stay alive to experience the new age. Pishevar and other like him insist they are “rebels” disrupting what is not well in everybody’s life, again stressing the key role of business in win-win changes to alter distant individual conditions while preserving the bigger societal one. As such the two companies he backed, Uber and Airbnb, are shown as disrupters of “monopolies” and providers of other choices for all, even though they ran into myriads of problems with their stakeholders prompting radical changes and a less messianic approach. These live examples are part of a never- ending succession of stories dealing with the do well-do good crowd of entrepreneurs and their thought leaders who give words and ways to the do gooding win-win elite and their galaxies.

The chapter on “thought leaders” is quite interesting as it deals with a core group of the MarketWorld galaxy. AG offers an enlightening comparison of the older, critical though demised public intellectuals like Yin & Yang and now deceased Gore Vidal and Bill Buckley vs. the newer, systemically non-disruptive but fashionable thought leaders like Yin & Yang Thomas L. Friedman and Niall Ferguson. Basically these thought leaders who come from academia or various softer corners of business provide views, usually non-threatening to the status quo built by their elite followers and backers, on how to better lives and also the world. AG provides us a real tour of the new “profession” and how many thought leaders gradually accepted to forget about their once critical approach of society to be part of the MarketWorld tour where they get paid handsomely to do speeches or talks (Niall Ferguson, the well known historian, who understood the power of communication more than most of his academic peers, makes USD 50,000 to 75,000 by speech or talk). Many thought leaders who command hefty fees for their talks happily paid by business attendees so they know how to live better lives, feel better about their success and change the world the win-win way, often start becoming such Market World beacons by stumbling into the limelight realising how easy MarketWorld participants will pay them for feel good stories devoid of culprits. All of them emphasise solutions to improve the system but not to change it due to the fact that attendees and backers are it. So the focus of the thought leaders is squarely on fighting poverty and not the less than backer-welcome “inequality”. Reading AG, one would feel that anybody can be a thought leader as long as one already publishes anything widely read and works through agents who sell their clients on the speaking and talking tours (note on the inside book cover: AG has also an agent which is happy to book him for “select” engagements).

We then travel through the worlds of investment banks and strategy consulting firms and their “protocols” which can be applied to “fight poverty” with McKinsey and Bain being leading examples of AG’s chapter heading that “arsonists do make the best firefighters” in our MarketWorld times. As a former “arsonist” myself, I would argue that the tools one learns at these elite firms are indeed very applicable to managing one’s life and likely to be quite relevant to addressing efficiently mega- issues such as reducing poverty. These McKinsey protocols (Read Ethan Rasiel’s illuminating “The McKinsey Mind”) are in the same vein as and a natural extension to what good colleges teach students so they can “think”, something I notice when observing my young strategy consulting associate daughter when managing her own life. AG points out that the leading advisers to corporate clients which have cemented our system and helped craft what has become a very “winners take all” field are often the ones joining and leading do-gooding platforms, these having usually been founded by billionaire philanthropists having created their wealth through market-astute and well-timed business endeavours. AG takes the example of the Soros Open Society Foundations and especially the Economic Advancement Foundation whose CEO was ex-McKinsey, Goldman Sachs and “extractor” Rio Tinto though had a peculiar Mongolian musicology scholar background in his early days. Taking the example of a Soros foundation is incidentally and unwittingly very interesting as George Soros is not just the 1992 British Pound killer but also someone who tried to change things for the better concretely in Hungary and throughout Central & Eastern Europe and is also subjected to direct and overt antisemitic rants from the likes of Victor Orban to Facebook’s now fired lobbying firm (read FT’s Rana Foroohar’s “Facebook puts profits before democracy” on 19th November). AG’s point however is that taking the master’s tools to dismantle his house is rather peculiar, even if one can see the value and efficiency of the tools that could be deployed for other goals than creating inequalitarian wealth in the first place.

We then go to the world of foundations to see that they were despised when the titans of the early 20th century, like Carnegie or Rockefeller, set them up as they were considered too obvious tools of the plutocrats of the day. Times changed and the many foundations funded by early and modern tycoons focused on improving the lives of many like The Ford foundation and are now seen as the tools of goodness in modern societies. We focus on Darren Walker, the President of the Ford Foundation, a gay African American poster child of the American dream come true, who wants to change his focus from the doing good to alleviate poverty to making his donors focus on the roots of inequality that led to poverty, wanting to force them to look at the origin of their wealth and what could be done to change the system rather than curing its ill developments. We know more about his high profile donors like the Tisches or Sacklers who are engaged in huge philanthropy but whose fortunes also relied in part upon cigarettes or addictive drugs (some key donors like Laurie Fisch being conflicted but not yet ready to be the odd one out to contest the “status quo”). As we follow Darren addressing his audience comprising mostly junior executives at private equity firm KKR, his new mantra does not register as they too prefer to focus on cementing the success of their early careers so they can, one would hope, donate later some of the proceeds of their privileged existence, following the earlier Andrew Carnegie who thought it was fine to maximise one’s financial rewards through business activities so one could then donate lavishly later rather than being less inequalitarian in the first place (Carnegie, who surprisingly was much in favour of steep inheritance tax as he wanted to promote donating most of one’s wealth when alive, could condone on one hand activities that would cut costs and jobs so his bottom line would be higher while making sure that the excess financial rewards resulting from these selfish capitalistic policies would be donated…).

In what I think is the most powerful and relevant part of his book (also as it touches upon the raison d’être of Desperate Measures), AG then leaves the “do gooding” arena and the sheer win-win mantra to focus on the global elite itself and its struggles as of 2016, especially post-Brexit and even before the unlikely Trump ascent, to understand and then deal with the populist outbreak globally. We focus on the Clinton Global Initiative that was launched in 2005 by Bill Clinton and was modelled on the Davos’s World Economic Forum albeit on a smaller scale but focused on world changing projects and sponsor/attendee commitments. In other words tangible deeds beyond just feel-good words. The CGI took place for 12 years during “UN Week” in New York, that is during the United Nations general assembly week when all the heads of state would congregate to the Big Apple. CGI quickly presented itself as the alternative to the public, governmental way of solving world problems right at the time of the colossal state flop exposed by the management of Hurricane Katrina in 2005. Every year the center of gravity of UN Week shifted from the UN itself to CGI as it attracted all the private and public world decision-makers in a Bill Clinton-engineered drive from solving problems away from exclusive government, public service and collective action to the markets via partnerships (key word) among entities private and public. Over 12 years (the last one was in 2016 as Hillary was deemed to go to the White House) CGI inspired 3,600 commitments, improving 435 million lives in 180 countries (a statistic that AG stressed was not easily verifiable). A good example of the CGI business-focused approach on win-win is exemplified by the subject of women’s equality or gender diversity where panels were filled by corporate ladies and men at the expense of feminist intellectuals and fighters for the cause. In typical CGI fashion, a key topic like women’s equality would be packaged in a win-win approach as it was not just the right thing to do, but also the business-smart thing to do given its USD 28 trillion market opportunity.

This CGI gathering of the MarketWorld elite meeting with state leaders was described by Niall Ferguson, a regular, as the “tribe of the rootless cosmopolitans” representing the “the everywhere companies” facing the ire of the “somewhere people” in other words the “One world” vs. the “place”, illustrating a conflict not only involving the rich vs. the poor even if that division could also apply in the new confrontation. As of mid-2016 the focus of CGI attendees was on that new divide and how to manage if not to solve it. Their main initial reaction was that the key problem was that they might have done a bad job of selling “One World” and its open borders, globalisation, technical progress, trade, rule by data and indeed MarketWorld supremacy. To follow AG’s approach, it is is interesting to note that the debate had gradually moved from “doing good” and “how to” to the roots of poverty if not yet inequality as CGI attendees were not yet ready to challenge the system that led to populism and from which they benefitted.

Dani Rodrik from the Harvard Kennedy School, though working from an elitist beacon (and a cosmopolitan himself as being a Turkish-born American), started to say that globalisation should not jut be rescued from the populists but also from its cheerleaders, its new model having put democracy to work for the global economy instead of the other way around. Jonathan Haidt, from NYU’s Stern School of Business, stated that “the new cosmopolitan elite acted and talked in ways that insulted, alienated and energised fellow citizens particularly those having a predisposition to authoritarianism, adding that “globalists were utopians, believing in change” and “the future and that anything that divides people into separate groups or identities is bad; removing borders and divisions is good”. Clearly CGI attendees knew what the problems were but did not know how to address them lest they broke the system. This section of the book is quite key also in helping understand the great divide and the populist outbreak, which is triggered not by poverty but by identity even if the two are linked (incidentally one of the great criticisms one hears of the globally-minded win-win fixation of the elite is that it is focused on exotic, far away lands and not on deprived areas back at home to help fellow citizens).

One of the worries expressed by Bill Clinton himself was actually whether this populist anger against the elite (be it bi-coastal or urban, this across the West) would not lead to a form of elite secession that would leave the left outs even more behind. At the same time, AG reports his presence at a panel comprising market reformers Mauricio Macri, Matteo Renzi and Sadiq Kahn where the latter as Mayor of London, just post-June 2016 British Referendum on the EU, would note that London had voted massively Remain as expected for a prosperous place but that its superior economic status and well-being also benefitted the rest of the UK thus following the win-win scenario, this in spite of London being clearly today a cosmopolitan city for the privileged few be they professionals, investors and/or residents (including the absentee kind for the latter) as some of us know only too well. AG goes at length providing many examples of the disconnect between the globalists and their populist foes noting that global CEOs do not deal with local issues and do need votes, solving problems outside and beyond politics, particularly locally where identity and related issues matter to the residents. It is notable that while well-meaning CGI attendees were debating reacting to populism they did so within themselves in a safe environment with none of the populist propagandists or their followers present (one could argue that the presence of a Nigel Farage or a Marine Le Pen, all acutely vocal and perpetually electorally-focused, might not have resulted in a constructive debate).

AG spent some time on Bill Clinton and his last CGI valedictorian address in September 2016. He then made a passionate plea for people to make the right choices and opting for “bridges over walls” to reflect the CGI mantra, an admirable globalist dream though also itself intolerant of other dreams focused on identity and “the place” however baselessly politically hijacked today for short-term electoral purposes. In doing so Clinton framed the “choices” as not hearing the case for communities wanting to resist the globosphere and smeared at for favouring resentment and difference. Clinton would suffer as Hillary would lose to DT but also as his globalist concerns (so far from his Yale Law School days and early political career) were repudiated by an “America First” campaign or what he saw as the rising conflict between “inclusive cooperation” and “tribal nationalism”, even mentioning the shaping of a long and strange third world war that would actually be a global civil war of epic proportions. In an interesting wink to the lecture circuit and the thought leaders, Clinton stated that he had made (in late 2016) 649 paid speeches since leaving the White House and paid 50% in taxes while giving most of the rest to poor people who needed help, including some of his own family for their medical bills, adding that he took the money from rich people “and that unlike Robin Hood, I didn’t have to hold an arrow on ’em”. (Don’t we miss Bill and the optimistic 1990s?).

Going back to his very core topic, AG finally gave us an interesting viewpoint of an opponent of MarketWorld in the person of Chiara Cordelli, an Italian political philosopher at the University of Chicago who had co-authored “Philanthropy in Democratic Societies”. Chiarelli was attending a panel discussion hosted by a leading hedge fund philanthropist who was also willing to deal with the book’s critical views of modern day “philantrocapitalists”. One of the panellists was none other than Sanford Weil, the maker of Citigroup and the ardent repealer of the Glass-Steagall Act pre-financial cris, whom all who met him know his strong personality. Weil was never keen on government, preferring the private sector involvement, to sort out the ills of the world, this notwithstanding for some his role alongside others in triggering the great financial crisis that led to a massive state bailout of Citi and the banking sector, making now rich people like him having to “step in” as a do gooder as government was broke. Cordelli at some point replied to Weil that “the government is us”. Following the panel, Cordelli reflected on the role of the “very rich” and MarketWorld to address public problems which she saw was like “putting the accused in charge of the court system”. She objected to the fact that the global elite did not see see why so many people in the world needed there help in the first place and whether their actions contributed at all to that. She felt that MarketWorld’s actions, however effective, did not seem to compensate for any harm done, even if unwittingly. She saw a difference among culprits, the worst group marked by “direct complicity” being those having campaigned against inheritance tax, the tax avoiders and the creators of low wages and precarity so common in our gig economy while the better group comprised those who “lived decent lives and attempted to make lives slightly better through the market”. She saw in all these types of efforts not one single moral act with helping but two through a parallel act of acceptance of a system all winners benefitted from, making these elite characters look, in an arguable image, like the owner of a painting who later finds out it had been stolen and has an obligation to return it to its rightful owner, adding that by doing a relatively modest bit of good while doing nothing about the larger problem is akin to keep the painting. Trying to be balanced, she argues that “not every bad thing in the world is your fault if you fail to stop it” though that citizens of a democracy are collectively responsible for what their society allows and have a duty towards those it systematically fails, the burden falling more heavily on those most amply rewarded by the ultimately arbitrary set of societal arrangements. She sees the “winners” as bearing responsibility for the state of the institutions and for the effect they have on others’ lives as we are nothing without “society” (that also allows for a stable environment critically enabling business to thrive) that indeed protects the rights of all without any domination by others. She sees society as giving the “framework for hedge fund managers as well as violinists or tech entrepreneurs to exist” as they indeed can live in a civilisational and regulated infrastructure that is taken for granted. Her solution (a concept keen on MarketWorlders) rather than focusing exclusively on private initiative is to return to politics as the place where we go to shape the world, which MarketWorld might argue is already represented by the likes of Michael Bloomberg, the real mix of a billionaire, philanthropist and keen politician.

While some chapters might be superfluous or repetitive, the book makes for an entertaining read if somewhat tedious at times so grating the description of the elite characters, clearly done on purpose, can be repulsive as if leading the reader to go for revolutionary pitchforks. The book is very rich, almost too much if that were possible. It contains a deep mine of facts though sometimes making for an arduous reading in relation to fluidity. Looking at the core tenet of the book, I am not sure I buy the argument that wealthy people should not try to do good as it serves also their purpose of feeling better and maintaining the status quo and that the younger generations, even at elite universities, should not think about philanthropy even if crafted along a business minded path. It seems to me that the elite wanting to contribute or “to give back” is good in itself and that it is also fine if it helps them feeling better or maintaining the world as we know it. While I also believe in doing good via more democratic and government-related ways, this should not stop the business and entrepreneurial elite from helping improving things along the way even if they have far more benefitted from the system than others. Would we all be better off if the elite including the Bill Gates of this world and their foundations were not “engaged”? Would we be better off if we left the doing good to government only? And going to the core of the matter, would we better off without capitalism which has created these elites as well as its resulting inequalities and if yes what would AG offer us as a viable alternative route short of going the phalanstery way? I am afraid that we live in an imperfect, capitalist but improvable world that has the merit of working, admittedly more for some than others, and that alternatives are non- existent in practical terms. What if the Utopians were not the globalist MarketWorlders but those who are against the system however imperfect and inequalitarian though free enterprising we know? I believe we should fight to reduce poverty and inequality together within the system that we know as it has also the most positive features that we can hope for including freedom and innovation even though it indeed creates an elite that also over time can be self-perpetuating but which may also be a form of a lesser evil.

It is true that some very wealthy entrepreneurs may lose a sense of reality but that does not mean that they are all bad people. The fact that they wish to protect their gains and wish to appear as benevolent is only all too human. I believe that it is important to develop a nuanced approach to this topic of doing well while doing good. I would naturally see those wealthy entrepreneurs who think that business in itself brings goodness as delusional and trying to find shelters for their guilt or covers for their greed. Business by itself is about the bottom line and making entrepreneurs wealthy by serving the needs of customers who buy their goods and services. I see those who genuinely wish to develop a win-win outcome as well intended and see no reason why they should not, knowing it will require a social effort to do good and that business in itself is not enough to do good. I see wealthy entrepreneurs who set up independent foundations and part away with a substantial part of their wealths, the epitomes being Bill Gates and Warren Buffett, as the real leaders of the genuine win-win game through meaningful deeds to indeed change the world, the Bill & Melinda Gates Foundation being a game changer in that respect not only for its peer group but also for whole continents and human ailments. Today the top eight billionaires control as much wealth, six of them tech titans, as the bottom half of the world population so have the means to change lives and be impactful. Yet for one Bill Gates and his eponymous Foundation the current leader of the pack, Jeff Bezos, even if involved in charitable activities, pales in comparison in what he “gives back”, arguably preferring to change people’s lives by giving them a better on-line buying experience though by the same token not pretending to be a goodness game changer. Interestingly enough, Bill Gates, ever the gentleman tycoon, was strangely very laudatory of this book, while a potential “class” target of AG, and wrote a stellar support for it: “In Anand’s thought-provoking book his fresh perspective on solving complex societal problems is admirable. I appreciate his commitment and dedication to spreading social justice”. Bill Gates is definitely coming across as a good man (or, having read AG, could be he very cratfy after all?).

It is very hard to know what AG thinks and whether the book is an activist’s pamphlet or a mere account. At the very least his “critique” should be more clearly stated as reflecting an insider’s and not just an observer’s account, this not taking away that his rich book is a very enjoyable and thought-provoking read. If cynical one could be forgiven for wondering if AG did not find a clearly controversial subject so he could write an engagingly differentiated book on it fulfilling his destiny as a thought leader (even if potentially a risky venture given his critical focus), the very role he seems to castigate in his writings even though he is very part of MarketWorld himself. It should be a moot point as, even if he is indeed part of MarketWorld, he would be entitled to criticizing the current “system” though by the same token should then also offer systemic alternatives, even if likely utopian, focused on replacing capitalism as the roots of all evil. In all fairness, AG stresses the “Cordelli solution” as a possible start and somewhat back to basics way to deal with the societal issues at stake, which could also involve the joint partnership of politics and government taking back some of the lead with MarketWorld more in a critical and well-funded supporting role, which the latter could live with as not lethally system threatening and quite realistic not to mention self-preserving as more politically astute. To go back to an old book note, perhaps we need more RFKs and not just wealthy tech entrepreneurs to show up and take the lead.

Warmest regards,

Serge

Serge Desprat- 27th November, 2018 (Prague)

3-11-18

Dear Partners in thought,

I would like to tell you about “The Corrosion of Conservatism” (Why I left the Right), a book by Max Boot that is quite topical in this mid-term season in America though also stands out given his very author. As we are indeed in a key election week, I will also humbly ask two main questions that I find are critical to the soundness of the American democracy going forward.

The “Corrosion of Conservatism” is a book about a passionate personal and political journey deeply into and away from American conservatism while being flavored by what we knew to be “the American dream”. Max Boot was born in Russia in a Jewish family which emigrated to America when he was six during the start of the Carter Administration. He went to Berkeley, then a hotbed of radicalism built during the late sixties, and on to Yale where he started to mix with the Conservative world ranging from National Review’s WF Buckley Jr. (the pope of modern American conservatism, author of the famed “God and Man at Yale” and the key architect of the Reagan revolution) – of note MB’s own father introduced him to National Review – to the various leaders and donors of the conservative movement and GOP. MB was very impressed by the introduction of morals into politics that was demonstrated by the drive of the likes of Democratic Senator Henry “Scoop” Jackson, the strong defence hawk of the 1970s, to exert pressure on the Soviet Union to let Russian Jews emigrate as part of benefitting from the policy of detente of those days. He grew up looking up to Ronald Regan, his true American hero (although a bit older than MB and growing up in Paris, I felt the same for Reagan with his John Wayne swagger and his resolute confrontentation of the “Evil Empire”). This moralistic approach to foreign policy that departed markedly from the realpolitiks of Henry Kissinger or Zbigniew Brzezinski was to eventually lead MB to the camp of the Neo-conservatives led by intellectuals Norman Podhoretz (Commentary) and Irving Kristol (Public Interest) and their respective sons Bill and John (who launched the Weekly Standard to which MB contributed for ten years until 2017) who “promoted” the invasion of Iraq in 2003. While a columnist for the Washington Post and a global affairs analyst for CNN, MB today is the Jeane J. Kirkpatrick Senior Fellow in National Security Studies at the New York-based Council on Foreign Relations where he has focused on military history, his life passion as demonstrated by his many books on guerilla and small wars (read “The Road Not Taken” the biography of Edward Lansdale and inner tragedy of the Vietnam war). MB’s current book, which is very rich, reflecting the breadth of intellect and knowledge of his author, is about his detailed journey into this American conservative world and how it left him rather than he left it (to paraphrase Reagan about his earlier democratic affiliation) with the unlikely but staggering ascent of DT to the White House.

MB decided to change its voter registration from Republican to Independent the “morning after” (the election of DT). He never saw American conservatism as “blood and soil” and “chauvinistic and pessimistic” as he would see it in Europe but as “optimistic and inclusive”. Conservatism to MB was prudent and incremental policy-making based on empirical study; support of American global leadership and American allies; a strong defense and a willingness to oppose the enemies of freedom; respect for character, community, personal values and family; limited government and fiscal prudence; freedom of opportunity rather than equality of outcome; a social safety net big enough to help the neediest but small enough to avoid stifling individual initiative, enterprise and social mobility; individual liberty to the greatest extent as possible consistent with public safety; freedom of speech and of the press; immigration and assimilation, and colorblindness and racial integration. He believed (and still does) in two documents: The Declaration of Independence and the Constitution as both defining what it is to be an American citizen with rights and duties. His book is a story of first love, marriage, growing disenchantment and eventually a heartbreaking divorce prompted by DT’s highjacking of the GOP. Today MB is a man without a party but he remains committed to conservative principles deeply regretting that his former party and its elected officials sold these out in order to stay in office however the short term-minded objective and the long-lasting damaging effect on American politics and society…and the world.

MB wants us to understand his journey as a a conservative so we get a full picture. He started his real career journalistic career at The Wall Street Journal for the editorial page under the leadership of Bob Bartley, working for a number of leading writers to finally become a leader himself at the young age of 28. He wrote a book on the trial lawyers taking a well known Texan lawyer as target in a prelude to the populist revolt that was first seen in small town America’s large jury awards against large out-of-state bi-coastal corporations (a book he was not happy about retrospectively). He finished the first draft of his book on America’ small wars on 9- 11, the latter which he witnessed first hand downtown Manhattan. He was an unabashed supporter of Iraq II in 2003 to punish and remove from power Saddam Hussein and bring in democracy (he makes the point that the Neo-conservatives that were fingered as the leaders of the Iraqi adventure were in fact following Cheney, Rice, Rumsfeld and all…). Today he regrets his move fifteen years too late as he admits and would no longer commit troops and risk lives simply to promote democracy in an Iraqi-like scenario. In 2008 he was part of the John McCain team and was deeply impressed by the American hero who often knew more about foreign policy than his foreign policy advisers but got undone largely by his VP choice, his relative lack of economic matters mastery and the beginning of the financial crisis. In 2012, he advised Mitt Romney, “less at home in foreign affairs but a very decent man“. He was underwhelmed with Obama who he thought withdrew too early from Iraq in 2011 and failed to stop what his friend David Petraeus called the Syrian Chernobyl. In 2016 he did not back Jeb Bush, finding him not conservative enough (wishing today he could have backed him) and supported Marco Rubio whom he thought would lose to a Jeb Bush. He still wonders how he could have overestimated his fellow Republicans and not see DT coming up from behind to gradually seize the nomination, the presidency and then the GOP.

MB goes through the last GOP primary reminding us of all the tenors of the Republican party falling down one after the other, Ted Cruz being the last one to go in spite of a victory in Texas. He goes through all the rejections and the gradual changes of mind of all the Republican leaders who found redeeming features and then strong qualities to the man they clearly despised only a few months or weeks before, presaging a trend that would be found throughout most if not all the Republican Party and conservative landscape. Supporting “the nominee” took precedence on anything including values among politicians and the leading conservative media commentators such as the cast of Fox & Friends. The number of conservatives that refused to back DT, becoming the Never-Trumpers being far and few, with only two leading GOP politicians refusing to endorse, Mitt Romney and Jeb Bush. MB at this point saw the Republican Party as “dead” and the anti-Trump holdouts as “the real Republican party in exile” hoping “they could return from the wilderness after November”. MB started losing friends with one of his conservative road travellers feeling he was getting angry when talking about Trump, so too emotional. MB goes through a very detailed assessment of both what is wrong with DT and why his positions and style are anything but what should represent conservatism and its followers. He points out the incredible high wire act of the Christian evangelicals (amazingly including the ladies) who strongly back DT in spite of his behaviour with porn stars, Playmates and statements about how “handling” women as if these ranked low and were just “private matters” in relation to ensuring the Supreme Court is secured for thirty years or the U.S. embassy shifted to Jerusalem. The Republican Party and its electorate gives gradually reason to DT boasting that he could kill someone in the middle of Fifth Avenue while not losing any backing.

Putting aside the relish of the Republican and conservative base to “fight back” the liberals and what they stood for like say the hard to stand PC-ness (a key positive, long overdue for them), MB sees the case for DT from the Republican Party and base and its couter-arguments as follows:

• A strong economy: All GOP backers and Trump admirers believe that DT created the strong economy they enjoy, with record low unemployment, low interest rates and a great (until October 2018) bull market. They actually forgive DT his abhorrent personality and poor style as he has presided over what they perceive to be a strong economic performance, which is all that matters to many of them. In fact the US economic performance under DT was largely inherited as is often the case, with job creation and the rise of the Dow Jones being stronger under Obama. Measured by the Brookings Institution against five other presidents who inherited a growing economy since 1960 DT’s record is tied for last place lagging even behind Jimmy Carter.

• The defeat of ISIS: While DT claims that he defeated ISIS, the drive to do so was started by Obama and he almost pulled out of Syria 2,000 US troops that could have jeopardised the gains against ISIS while opening eastern Syrian to Iranian expansion.

• The pullout from treaties like the Paris Climate Accord and the Iran Nuclear Deal: DT is in denial about global warming and pulled out of a treaty with no mandated job-killing regulations while he pulled out of an imperfect nuclear treaty with Iran which the latter was respecting and his own secretary of state and the main US allies wanted the US to keep.

• The move of the US embassy to Jerusalem: DT focused on implementing a symbolic promise made and time and time forgotten by every president but failed far more strategically to strengthen Israel’s security by limiting Iran’s advance in Syria.

• The summit with Kim Jong Un: The meeting between the two leaders was a first and a good step towards working on a peaceful resolution of peninsular issues after very bellicose rhethorics but was also deemed a win for Kim without having produced tangible commitments for the North Korean regime to adhere to.

• The passage of a massive tax bill in his first year of office. Clearly a very well received move even if the “top earners” were the main and some would say only beneficiaries. And a clear break in Republican fiscal orthodoxy so much heralded during the Obama times and which also gave rise to a now forgotten Tea Party.

• The selection of conservative candidates for the Supreme Court: This matter was key to many if not most of DT’s supporters who also forgave him for “the rest” believing that the Court was a guarantor that their values would be upheld in American society for many years to come, all the more by picking relatively young conservative Supreme Court justice candidates.

As seen this past week in a New York Times survey, it would appear that Republican and conservative voters are markedly more supportive of DT than they are of the Republican party which stresses the magnitude of DT’s takeover and the rationale of its elected officials in backing him fully in order to stay relevant.

MB actually recognises a few positive developments such for him as the embassy move to Jerusalem, the intensification of efforts against ISIS, the early sanctions against North Korea and the cut of corporate tax rate to bring the US tax code in line with international standards. The list short is rather short.

MB finds several areas where DT has been willingly or unwillingly destructive as follows (a close read of the argumentation is certainly useful to get a full picture):

• Racism and race relations in America
• Nativism and the opposition to immigration (arguably of the illegal kind)
• Collusion and all matters related to the subject of the “Russian meddling”
• The Rule of Law and the relationship between the executive and judicial branches
• “Fake News” and the relationship between the executive/the country and free press
• Ethics and the lack of them by some administration officials
• Fiscal Irresponsibility and the gifts paid for by future generations
• The End of the Pax Americana and the void created by a leaderless world

I would add a key feature that can be found across the Trumpist offering which is the lowering or degradation of the political discourse with consequences for and on all party sides together with an indirect or subliminal incitation to societal violence and hatred permeating to the level of individual inter-actions. America has become cruder and incivility is more societally acceptable in the Trump era particularly among members of the younger generations as demonstrated by recent surveys.

Interestingly MB, in a quest for “who he is” after all, listed all the key features that define him politically as follows:

• Socially liberal: Pro LGTBQ and pro-choice. Not religious but respectful of those who are as long as they don’t tread on others’ individual rights.
• Fiscally conservative: Deficit reducer and controller of entitlement spending without shredding the safety net.
• Pro-free markets and the welfare state: the latter (he sees as a conservative, Bismarkian, institution) ensuring the success of the former with government working on its imperfections.
• Pro-free trade: Concluding more treaties as they have ensured America’s and the world’s prosperity, all without forgetting those that globalisation have left behind via government aid and related programs so they also don’t support populist policies that end up harming America and the world.
• Pro-environment: Recognising the obvious climate change and not opening indiscriminately federal lands to strip mining and oil digging.
• Pro-gun control: Ensuring extensive testing and safety training is performed on civilians purchasing military-grade weapons like in other democracies
• Pro-immigration: Immigrants, like himself, being a source of America’s greatness; ensuring a path to citizenship to millions of undocumented immigrants and increasing legal immigration to address a shortage of native- born workers and skills all with proper screening to avoid a popular backlash while making the case to white America that changing demography is no threat to their wellbeing.
• Pro-free speech: However opposed to identity politics and rhetorics of both minority groups and the declining white majority. Believing in the melting pot, integration and colour blindness while keeping working on erasing the historical stain of racism.
• Strong on defence: Maintaining a capable military to cope with multiple enemies and rivals (like Russia and China, but also rogue states and non- state terrorist actors); maintaining a presence in Europe, the Middle East and Asia to keep peace and deter aggressors (all with the hard lessons from Iraq learned by this chastened hawk).
• Clear internationalist: Believing in America’s self-interest in promoting and defending freedom and a rules-based international order as performed since 1942 while standing by allies, especially the democratic ones. Rejecting unworkable isolationism in today’s interconnected world.

The first reaction when looking at this list is that DT and his administration do not tick many boxes, at least in their entirety.

Today MB feels homeless from a political party standpoint as no American party reflects this compendium of convictions. Looking back at American history and remembering what Arthur Schlesinger Jr. in 1949 called “the vital center”, MB, having thought of himself for years as a “movement conservative” realizes he is actually a “Rockefeller Republican” even if “Eisenhower Republican” seems more apt for him due to the impressive and competent traits of the man. Ironically, MB fels that historical conservative figures like Barry Goldwater and certainly Ronald Reagan would be seen as RINOs by the current GOP and its backers (Republicans In Names Only).

Strangely enough I relate to that “Rockefeller Republican” appellation which I have used many times for myself over the last two years, trying to find a family for those center right individuals, be they America nor not, who would adhere to most of the features that MB listed. I feel more historically from the center, even if from its right, than I would have thought MB was from, probably due to his Iraq II war drive at one point. His journey seems a real one and not just linked to the fact that the Republican party “left him“ as if there was a degree of humanity and reality that had crept in while reflecting upon his times and their changes. I would adhere to most if not all of the features listed by MB even if some like pro-immigration is a very sensitive one. His take, doubtless flavored by his own, highly positive, experience, is not easy given its magnitude and the times and looks more like an ideal that, everything being equal, America and the Western world could follow. However identity matters and a certain balance in policies should be respected for the natives in their respective countries and indeed nations to feel still at home – echoing, Michel Rocard, a former French Prime Minister (whom inspired a very young Macron): “France (but one can replace it for America) cannot accept/integrate all the misery of the world”, a quote that is undeniably heavy to bear and express but is also dispassionately realistic.

One feels that MB wants for the Democrats to win so the GOP that lost it ways can be reborn even if he does not believe in the Democratic party which he sees having gone way too leftwards – my very concern as well (starting with a “differentiated“ and campus-popular Bernie Sanders in 2016, but now in reaction to the times reflecting its whole leadership and as vividly seen in by-elections in the Northeast) – as the GOP has gone far-right populist, leaving many like MB (and I, should I be American) disenfranchised. MB does not believe that there could be a third party in America today as the libertarians could attest, except perhaps in California where the GOP as we know it is on an extinction path. One could think that a third party needs a man (or a woman) charismatic enough and with fresh and appealing ideas – like an American Macron – to upset the status quo though MB is probably right that the two parties, whatever shape they are in today are too entrenched at the local level for a third party to emerge. It is more likely that a politician from the past will emerge as the one to have a go at ending the Trump era in 2020. Some experts say Elizabeth Warren (surprisingly given her radicality on the spectrum). Others say Biden or even Kerry (I see a one term Biden a very practical and centrist option). Others say (like me too) Romney who is not simply going to the Senate to replace Orrin Hatch but wisely keeps a low profile for now. Wild card thinkers mention newcomer Texan “Beto” O’Rourke who is now facing Ted Cruz in Texas but may be too Bob Kennedy-esque for our times. What is clear is that America needs a candidate that can project the features that MB listed for his own beliefs and bring back to us the America we and the world need. The road is not too long but will be tough and starts on Tuesday.

Reading MB and having witnessed the last two years as an “engaged observer” as philosopher Raymond Aron would have put it (le spectateur engagé) one cannot not think about the way executive and legislative leaderships are chosen in America in the mid-2010s on the basis the Founding Fathers devised 250 years ago. And then they expressly did so (with their successors refining the process) in order to preserve America from the very situation it finds itself in. While taking the risk of being unwittingly iconolistic, I will leave you with two (or three) thoughts to consider:

1. How is it possible in 2018 for a leading, modern, world democracy to elect as the leader of its executive branch someone who gathered nearly three million less votes nationwide than its opponent simply as he would have had a lead of 80,000 votes that let him garner the “delegates” in three states? (It was odd that no public debate really took place post-November 2016 as if the topic was culturally off limits).
2. How is it possible for all the 50 states, given the huge disparities in population sizes at play, to send two senators each to the US Senate, a majority of whom will decide inter alia via the Supreme Court justice confirmation process on how America should eventually “live”? (Would the House not be enough to ensure “smaller states” and their citizens be properly represented? Are state rights more important than democracy in 2018 in America, 153 years after Appomatox?)
3. A subsidiary question would be why there is no mandatory retirement age for Supreme Court Justices simply to ensure that they can “also” fully relate to societal developments and represent the very citizens, especially the younger ones, they should serve.

It is hard not to find that there is a democratic deficit in American politics today where majorities are not properly reflected in election results. I realize that it would be anathema for many, including those who would benefit from it, to alter the enshrined system for its own good if only as it might be an unraveling start of a system that worked well “in the past” (I heard the words “secession risk” in relation to my second question last week, which I find highly unlikely for sheer practical reasons). Would America as a nation (I know I am being an Hamiltonian Federalist here) not benefit from an electoral system that is found in modern democracies? And work hard and decisively to understand the voters of small states, making sure it corrects the imperfections of our modern, globalized, world? I wonder what Max Boot and a contemporary visiting Tocqueville would think.

Warmest regards,

Serge

Serge Desprat- 3rd November, 2018 (Prague)

19-9-18

Dear Partners in thought,

While I believe that it is right today to defend the Western liberal values, very much involving capitalism and free markets, also the big winners of the Cold War and the foundations for a New World in the 1990s, we should recognise that this very capitalism, if unchecked, may create aberrations that go against these very Western liberal values and may with time threaten their very existence. Liberalism and capitalism should go hand in hand. Sometimes they don’t, especially in chaotic environments like in the immediate post-soviet Russia when all had to be rewritten and rebuilt in no time with no local blueprint and where the fittest prevailed as they boldly took advantage of unusual situations and were just seen as a mere necessary evil in a vastly wider game.

This week I would like to talk to you about the rich – the uber-rich and more precisely of the Russian kind portrayed in the great book “Rich Russians” by Elizabeth Schimpfoessl, an Austrian author with great literary skills who wrote it after years of research as part of a post- doctorate fellowship at University College London or UCL, one of the great English universities today. She has taken a very academic stance for a research relying much on the Pierre Bourdieu and Max Weber of the discipline which makes her book very scientific in nature if only a tad pedantic at times.

I discovered the book thanks to the recent review by Max Seddon, the FT’s correspondant in Moscow (Well done and thanks, Max). I will borrow the opening joke from Max’s review that tells about two “New Russians” (as the rich were often called by us in the West) who meet and see they are wearing the same designed tie. “Ah” one brags, “I paid USD 500 for it”. The other guffaws: You fool! I paid USD 1000!” This was a joke depicting the oligarchs born in the nineties and who according to ES are now museum pieces even if we have other funny stories along the same lines. On the low scale of the “New Russian” stories and only a few years back the food and drinks manager of the most elite hotel in Prague was lamenting his cognac bottles were not selling at all. He then quadrupled the price with Russian guests suddenly not stopping buying them within a few days until they were none.

The book deals with the context for the rise of Russia’s upper class, then looks into a shift from crude consumption (which is yet a stereotype many in the West still have), the consolidation of social position and self-legitimation process (also for their children which deals with the passing of the wealth down generations) like what the bourgeoisie did in the West. ES narrates the elite’s path to riches and the quest to seek distinction in terms of family history and lifestyles. The middle section deals with legitimacy that demands the practice of philanthropy and yet the justification of a pronounced social inequality and patriarchic norms. ES finally looks into the future of the Russian bourgeoisie looking at the transfer of wealth to the next generation all against a backdrop of tangled relationships with the West which is an issue as most New Russians live in the West and London(grad) especially (the Salisbury poisoning event being the latest issue that this Russian group had to deal with due to their choice to live in London). ES has interviewed about 80 so-called oligarchs for her book which makes for a very interesting journey into the life of those powerful men (they are all men) we know and some other billionaires who escaped the limelight. There are indeed stories about colourful mavericks and the associated long yachts, latest fast cars and uber-flats in London, villas in Saint-Tropez and same evening “in and out” flights to and from Chamonix for “memorable” parties.

“Many of those leading the Soviet system vanished while strangely those just below, far less visible publicly but very connected and agile, were very successful in taking over”

Those new Russians came into extraordinary wealth at a time of unprecedented economic and social changes previously led by the collapse of the Soviet Union, an event that we just barely came to understand in terms of magnitude and ramifications. The loss of empire led to Putin for restoration purposes but before we had both a land of chaos presided by Yeltsin and a land of unheard opportunity for riches created by a seismic power shift and related void. I lived through those times while working at the EBRD in London and covering Central & Eastern Europe from 1993 to 1998, including Russia at a time when jokingly the bank could have been called The Russian Bank for Reconstruction and Development so the needs were great and our full funding could have been absorbed by this one country even if it was a smaller version of its former self. It is clear that the most massive wealth transfer in history (was it a theft?) that created the “Rich Russians” was not a market event but one of grab with political backing, not only in Russia but in many countries in the region through the aggregation of privatisation coupons and other means. Did we and the West not facilitate this unprecedented state of affairs simply so we could stabilise new Russia and make it a Western market economy where all – and especially us – would benefit? (incidentally without paying attention to history and the basic need for national respect)

The collapse of the Soviet Union and the introduction of market reforms were extreme events in their harshness for the Russians and their living standards, something which was never fully grasped in the West so much we focused on the victory of democratic ideals and having vainquished the arch-enemy. Within three years, the “poor Russians” tripled in population with many in the Soviet intelligentsia being part of this expanding segment. Emigration soared. Male life expectancy went down to 57. Bubonic plague reappeared. Many of those leading the Soviet system vanished while strangely those just below, far less visible publicly but very connected and agile, were very successful in taking over. At the same time, “New Russians” (novye Russkie) emerged, accumulating great wealth and looking like the old caricature of the tasteless tycoon capitalists who throve in a “dog-eat-dog world, celebrating a new hedonism”. It was said that some entered politics, like in the reelection of President Yeltsin in 1996, primarily to protect their young and massive wealth (incidentally, of the six only one survived the new, cleansing Putin Siloviki – ex-security/military – leadership era that was fuelled by the oil boom). And the West helped (or did not oppose) that oligarchic drive as it could see it as a lesser evil to keep Russia from losing our recently acquired ways, not that it would have been a better option then. Today Putin has put the oligarchs in check lest they wish to suffer a dire fate and they do not hold any political power though need to support the regime and at times very personally suffer the sanctions post-Crimea annexion and Ukraine entanglement.

In 2013, post-financial crisis and as the oil slump hit, Russia’s wealth inequality overtook all the emerging markets in the world including Brazil, India, Indonesia or South Africa with Credit Suisse declaring it in its famed Wealth Management Report the country with the highest level of inequality in the world apart from some Caribbean nattions with resident billionaires. In 2014, Credit Suisse contemplated inventing a separate category for Russia so extreme had become the wealth inequality. Within two decades Russia had moved from being a country with relative equality to one where inequality had become far starker in 2017 than during the times of the Czars according to former FT Moscow correspondant and now Canadian Foreign Minister Chrystia Freeland. And in spite of this President Putin enjoyed an approval rating above 90% which was only recently dampened at 70% (which leader – think Macron – would not love this slump?) as he asked Russians to work longer to benefit from their public pensions in a country where age expectancy is still not attractive by Western standards.

ES dwells a lot on the fact that the New Russians in the 1990s did not inherit their wealth from a bourgeoisie class but are nevertheless in the process of becoming one trying to shed away the most abrupt and crass features of their image in the 1990s and 2000s to gentrify themselves. This is a process that can remind us of what America must have gone through with the famed robber barons of the mid-to-late 19th century who likely were close to our New Russians in terms of business practices, manners and ostentation – even if they were builders and developers creating the American Century more than mere asset strippers taking advantage of Russia’s rich natural resources. One notable common feature of power status was the “possession” and display at their arm of beautiful women (a hard statement to make today but one that sociologists will confirm). Those who became rich were in part the managers of the assets they privatised for themselves, this encouraged by the Russian reformers like Chubais and Gaidar around Yeltsin who focused merely on the macro-picture not caring (it would seem) for the emergence of a new class of super-rich privatisers and buccaneers. Many of these New Russians were also most often linked to the Intelligentsia (the thinkers) who may not have been top Communist Party members but were scientists or academics who also had worked at some point to enhance the power of the Soviet Union in areas deemed strategic to the leadership of the days. They were too young during the Soviet days to have been in senior positions in a regime that also naturally encouraged gerontocracy. Besides that, many were Jewish as can be seen from the roster of top oligarchs in the 1990s and even now as if they were barred from political leadership positions they were wanted as economic and scientific managers. The Intelligentsia was to them an alternative to an aristocratic ancestry and accelerated their journey to eventual “bourgeoisification” in a new Russia that was redefining the rules of the game as it went and by the economic sword.

ES believes that today the new Russian bourgeoisie wishes to be convinced that they deserve their position because of who they are and their superior qualities, the approval of their bourgeois peers being far more important than gaining legitimacy by society at large, which is a task that lies ahead for the second generation who is gradually coming of age. ES feels a move from crude ostentation to greater etiquette, a stronger family orientation, and some degree of modesty, philanthropy and patriotism (“they wish to collect paintings and not yachts” even if there was Viktor Vekselberg and his Fabergé eggs in the 1990s, which made him a stand out) which are seen as key also as Russia moves gradually to a post-Putin era.

I dedicate this note to my friend Dmitri, who has seen both “worlds” up close and is one of the few official and efficient, not to say low key, bridges between the West (particularly the U.S.) and Russia today in what is a challenging time for all of us. Men like him, who understand what motivates the Russian as well as the Western leaderships contribute to ensuring we talk and avoid escalation, working in the shadows, modestly and expertly. Bolchoi spasiba!

Warmest regards,

Serge

Serge Desprat- 19th September, 2018 (Prague)