Reuters Magazine: The one percent war

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http://uk.reuters.com/article/2012/01/27/us-chrystia-freeland-the-one-percent-war-idUSTRE80Q02920120127

When Anders Aslund, a Swedish economist who has studied and advised most of the leaders in the former Soviet Union, visited Kiev in late 2004, at the height of the Orange Revolution, he returned to his office in Washington, D.C., with a surprising observation. Most reports depicted the Orange Revolutionaries, with their determined, subzero encampment of the capital city's central square, either as western Ukrainians rebelling against the government's pro-Russian stance, or as idealistic students who were unwilling to stomach political repression. Both characterizations were true, but Aslund saw a third dynamic at play. The Orange Revolution, he told me, was the rebellion of the millionaires against the billionaires. Ukraine's crony capitalism worked extremely well for the small, well-connected group of oligarchs at the very top, but it was stifling the emerging business class. This ambitious haute bourgeoisie was finally fed up and it was fighting for more equitable rules of the game.

A version of that battle of the millionaires versus the billionaires has been playing out around the world over the past twelve months. It was a decisive factor in the Tahrir Square uprising, whose most visible organizer was Wael Ghonim, a Google executive based in Dubai with an MBA degree; the protests also quickly won the support of the country's well-heeled military elite. The same class struggle was on display in India, where veteran social activist Anna Hazare's anti-corruption hunger strike was hailed as the political awakening of the prospering Indian urban middle class. And it could be seen last month in Moscow, where the unexpected revolt against Vladimir Putin's "party of crooks and thieves" was catalyzed by a blogging lawyer and drew fur-clad professionals into the streets - it is being called the "Mink Revolution." In the United States, Occupy Wall Street has drawn the political battle lines somewhat differently - between the 99 percent and the 1 percent. But when you drill down into the data, you can see another, even steeper division inside the 1 percent itself. The ultra-rich of the 0.1 percent have pulled far ahead of the merely rich who make up the other 0.9 percent at the tip of the income pyramid. The divide is cultural and it is economic - and if it becomes political it could transform the national debate.

The wider public discussion about income inequality hasn't much touched on the divisions within the 1 percent. That is partly because it can be a little stomach-churning to consider the gradations of wealth at the very top at a time when unemployment is close to 9 percent and middle-class families are being hammered. Nor is this queasiness about studying what's happening on Olympus confined to liberal do-gooders. Branko Milanovic, a World Bank economist who is one of the leading students of global income distribution, writes in his latest book, "The Haves and the Have-Nots," that it is far easier to secure funding for research about poverty than about income inequality. The reason for that is "rather simple even if often wisely ignored," Milanovic says. "Inequality studies are not particularly appreciated by the rich." Indeed, Milanovic says he was "once told by the head of a prestigious think tank in Washington, D.C., that the institution's board was very unlikely to fund any work that had income or wealth inequality in its title. Yes, they would finance anything to do with poverty alleviation, but inequality was an altogether different matter. Why? Because 'my' concern with the poverty of some people actually projects me in a very nice, warm glow: I am ready to use my money to help them... But inequality is different. Every mention of it raises in fact the issue of the appropriateness or legitimacy of my income."

[Demeter]

1. Interesting Read

[snagglepuss]

2. K & R