In a recent Atlantic Magazine article Chrystia Freeland charted the rise of the New Global Elite and suggesting “our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition”.
A few days later The Economist followed up this theme with a discussion on whether we should worry about the rising wealth of the entrepreneurial elite.
While there’s no doubt there is a global elite, enjoying fine wines at the World Economic Forum at Davos while congratulating themselves on their successes, wisdom and hard work. The question really should be are these people really entrepreneurs?
Some of the self appointed global elite are highly paid executives. One of the notable aspects of the corporate sector is the majority of managers are not risk takers – in most organisations, public or private, taking risks is going to jeopardise one’s career – instead it’s the risk adverse who are rewarded with the senior management positions.
However even the managerial classes are outnumbered by the financial wizards. The biggest stimulus to the global elite’s riches was the financial market deregulations of the 1980s and 199os. As our society’s forgot the lessons of previous generations and released the regulatory restraints on banks, a whole new wave of opportunities appeared to make huge fortunes. The loose credit of the early 21st Century leveraged and amplified those fortunes.
Financial Innovation became the key to wealth, although as former Federal Reserve chief Paul Volker observed “I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth—one shred of evidence.”
The killer to the idea is that financial innovation is entrepreneurial are the consequences of the two decades where the financial markets reigned supreme – trillions of dollars in bailouts.
That the bulk of the global elite relied up bailouts and government stimulus packages gives lie to the concept that most of these people are entrepreneurs; genuine entrepreneurs take real risks and accept the consequences if their venture doesn’t work out.
While it’s true that some of the “global elite” include individuals who have built up enterprises and taken risks with their personal fortunes and reputations, it would be a mistake to describe this group as being entrepreneurial. The bulk of this global elite are speculators and managers who’ve been richly rewarded by a system setup to guarantee their wealth.
You’ll find more entrepreneurs running stores in your local mall than you will walking the privileged halls of Davos or any of the other expensive haunts of the global elite.