What Does The Rise Of Super-Fortunes Mean For The Rest Of Us?

Oct 18, 2013
Originally published on April 23, 2015 4:15 pm

Part 2 of the TED Radio Hour episode Haves And Have-Nots.

About Chrystia Freeland's TED Talk

Author and politician Chrystia Freeland says economic inequality is growing by leaps and bounds. She charts the rise of today's billionaire plutocrats and wonders what the concentration of wealth means for the rest of us.

About Chrystia Freeland

In her book, Plutocrats: The Rise Of The New Global Super-Rich And The Fall Of Everyone Else, Chrystia Freeland looks under the hood of global capitalism to explain the technological, economic and structural inequalities pushing society in unforeseen directions.

Along the way, she takes the temperature of a growing caste of super-rich billionaires and shows how the creation of vast fortunes at the top hollow out the middle class in Western industrialized countries.

Freeland began her career as an "accidental journalist" with front-line bulletins from the Ukraine in the heat of the Soviet collapse. She recently left her post as managing director and editor at Thomson Reuters. She's now running for office with the center-left Liberal Party of Canada.

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It's the TED Radio Hour from NPR. I'm Guy Raz. And on the show today, the haves and the have-nots. Chrystia, who is the richest person in history?

CHRYSTIA FREELAND: If you compared the wealth of individuals over time...

RAZ: ...Then you might think it's...

FREELAND: ...The Roman patricians.

RAZ: Or...

FREELAND: ...The Renaissance princes.

RAZ: Or...

FREELAND: ...The American robber barons.

RAZ: But you and I would be wrong because the actual richest man - the winner is...

FREELAND: ...Carlos Slim, the Mexican billionaire.

RAZ: So Carlos Slim is the richest person ever, who ever lived.

FREELAND: Yeah, who ever lived.

RAZ: Wow. So this is Chrystia Freeland. She wrote a book called "Plutocrats," and it is about the super-rich. And she says the fact that the richest man in history is alive right now, it says a lot about what's happening when it comes to the huge gap between the haves and the have-nots.

FREELAND: And that says that we really are living in a time of a disparity of fortune, which is greater than ever before.

RAZ: It's amazing because you think about the richest people, right, and you think about huge disparities and, I mean, I don't know, I think of, like, Andrew Carnegie or JD Rockefeller or J.P. Morgan. You know, these guys that lived at a time when there was no law, there was no regulation and you had massive disparities in wealth. But you're saying it's worse now.

FREELAND: It's certainly greater now.

RAZ: And just how big is that gap between the super-rich and the rest of us? Well, you might have to sit down for this one and brace yourself for some staggering numbers. Here's Chrystia on the TED stage.


FREELAND: In the 1970's, the 1 percent accounted for about 10 percent of the national income in the United States. Today, their share has more than doubled to above 20 percent. But what's even more striking is what's happening at the very tippy top of the income distribution. The 0.1 percent in the U.S. today account for more than 8 percent of the national income. They are where the 1 percent was 30 years ago. Now as it happens, Warren Buffet likes to point out that in 1992, the combined wealth of the people on the Forbes 400 list, the 400 richest Americans was $300 billion. Just think about it. You didn't even need to be a billionaire to get on that list in 1992. Well, today, that figure has more than quintupled to 1.7 trillion. And I probably don't need to tell you that we haven't seen anything similar happen to the middle class, whose wealth has stagnated, if not actually decreased.

I think one reason that we don't notice is because the overall culture is, in many ways, one of symbolic equality in ways that didn't exist in the past. You know, in past times, what you wore was determined by how rich you were. Today, billionaires wear jeans. Today, people like Bill Gates brag about how much they like eating Big Macs. So I think that tends to paper over a little bit how big the gap is. I think the other thing is that today's explosion of super-wealth is partly a function of globalization, right. It's meaningful that the richest person who ever lived is a Mexican. The fact that all of these countries, all of these people - hundreds of millions, billions of people who were left out of the industrial revolution are now coming online. And that is another force, which is creating these super-fortunes.


FREELAND: For the first time in history, if you are an energetic entrepreneur with a brilliant new idea, you have almost frictionless access to a global market of more than a billion people. As a result, if you are very, very smart and very, very lucky you can get very rich very quickly. The latest poster boy for this phenomenon is David Karp. The 26-year-old founder of Tumblr recently sold his company to Yahoo for 1.1 billion dollars. Think about that for a minute - 1.1 billion dollars, 26 years old. Those same, largely positive, forces, which are driving the rise of the global plutocracy also happen to be hollowing out the middle class.

And in contrast with the Industrial Revolution, the titans of our new economy aren't creating that many new jobs. At its zenith, GM employed hundreds of thousands, Facebook, fewer than 10,000. The terrifying reality is that our countries are getting richer, our companies are getting more efficient, but we're not creating more jobs and we're not paying people, as a whole, more. What worries me more is a different nightmare scenario, is a universe in which a few geniuses invent Google and its ilk and the rest of us are employed giving them massages.

RAZ: I mean, it sounds like what you're saying almost is that the way we've implemented capitalism has almost failed most people in the world.

FREELAND: It's not a verdict on the whole history of capitalism, but it is true that it is not delivering for the vast majority of the population, and we have to do something about it. And there is a sort of a group of people at the summit of global business who, as they put it, worry that their social mandate to operate will be taken away if these forces of rising income inequality in a squeezed middle-class are allowed to go too much further. And I think that's a smart thing to worry about because if our economic systems continue to deliver for the very top but not to deliver for everybody else, people are going to say, you know what, this is not an economic system that I agree with.

And I worry that we won't come up with a smart, moderate set of responses in time, but I really think it's going to be, you know, about hard work on many individual fronts. Every time we're looking at a social problem, every time a company is looking at a decision, pause and say, OK, what will the impact be on the squeezed middle-class? And if enough of us start working that way and thinking that way, then I think, collectively, we'll start coming up with a set of answers that work.

RAZ: Chrystia Freeland. She's the author of "Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else." She's also a newly minted politician with the center-left Liberal Party of Canada. You can see her entire talk at TED.NPR.org. Transcript provided by NPR, Copyright NPR.