The Plutonomy Reports: Download the Economic Analysis Citigroup Doesn’t Want You To See (links at bottom of post)
1. Old News, But Not Enough People Know It
This is old news, but old news that most people don’t know about, because Citigroup has been very successful in suppressing it. Citigroup wrote memos in 2005 and 2006 addressed to investors, basically saying that the world is dividing up more and more into a small group of rich people who drive the economy, surrounded by a large number of poor people whose economic interests can be safely ignored.
They posit a few reasons for this change:
Disruptive technology-driven productivity gains, creative financial innovation, capitalist- friendly cooperative governments, an international dimension of immigrants and overseas conquests invigorating wealth creation, the rule of law, and patenting inventions. Often these wealth waves involve great complexity, exploited best by the rich and educated of the time.
I seem to recall reading a similar analysis in Naomi Klein’s “The Shock Doctrine”, only she went into greater detail about exactly how corporate lobbyists, international financiers, national and international governments, and third-world elites colluded in bringing lax financial regulations that encourage “creative financial innovation”, the worker-unfriendly legal environment that allows “productivity” to skyrocket, the “cooperation” of governments with capitalism (and the installation of new “friendly” ones if they don’t cooperate), stricter patent laws, etc.
Of course, Naomi Klein, being a journalist rather than an investment banker, spent time with the victims of all these policies and thus was pretty pissed off about them. Well anyway, nice to know that great minds think alike, as it were.
Ever since they were leaked to the internet a few years back, Citigroup has been trying desperately to hide these memos from the public. They haven’t been able to completely suppress them, but they’ve shut down enough sources with legal threats etc. to prevent them from becoming mainstream news. More info about that campaign here.
2. What The Elite Really Think Of Us
So what makes Citigroup want to shut this story up? Well, it could be the above quote from memo 1 (a point made several times throughout the document), explicitly linking the trend of growing income inequality to the stuff neoliberal politicians are always trying to push on governments. Or it could be quotes like these, explaining fears of the plutocrats regarding tax policy:
Corporate tax rates could rise, choking off returns to the private sector, and personal taxation rates could rise – dividend, capital-gains, and inheritance tax rises would hurt the plutonomy.
and the kind of tax policy that best favors an economy with no middle class:
in the U.S., the current administration’s attempts to change the estate tax code and make permanent dividend tax cuts, plays directly into the hands of the plutonomy.
It shows that they consider the end of crony capitalism (corporations subsidized by government) to be the equivalent of theft:
However this does not mean that governments are incapable of revoking property rights. While this tends to be something more often seen in countries with a shorter history of capitalist democracy, such as the Ukraine (attempts to undo prior privatizations), or Russia (where some of our clients believe events surrounding Mikhail Khodorovsky to be a form of nationalization), it can happen in the strangest of places. For example, in 2001, UK government withdrawal of financial support bankrupted Railtrack, the UK rail operator, effectively re-nationalizing railway assets on the cheap.
And that the “American dream” is a con played by the rich on the rest:
Perhaps one reason that societies allow plutonomy, is because enough of the electorate believe they have a chance of becoming a Plutoparticipant. Why kill it off, if you can join it? In a sense this is the embodiment of the “American dream”. But if voters feel they cannot participate, they are more likely to divide up the wealth pie, rather than aspire to being truly rich.
Citigroup’s main point, though, is to not worry about the USA’s low savings rate, because the rich are driving the economy, and they have money to burn so why shouldn’t they burn it? (Nice point to remember when your bourgeois-liberal friend starts ranting about those horrible irresponsible Americans with their maxed-out credit cards and gas-guzzling SUVs.) And to not worry about the stuff news reports on the economy always talk about, like lack of consumer confidence and high gas prices. Because the rich, unlike the majority, are plenty confident and can afford all the gas they want no matter how high the price goes, and they’re the ones “dictating economic demand”, so who cares about anyone else?
And of course, to buy luxury-goods stocks.
3. Spread The Word!
Download a copy of these memos. Remember them any time you hear someone saying we shouldn’t tax rich people and corporations because they’re the “job creators”, or using that old saw about a rising tide lifting all boats. These memos prove the opposite, that the elite are perfectly happy to let us drown. Show them to your conservative friends, the ones who believe we still live in a society where everyone can be rich if they just work hard enough. Send them to all your local media outlets.
Download the Citigroup plutonomy memos here:
If the links don’t work let me know, and I will both send you the docs by email and post the entire text of the files on my blog.
Low-end developed market labor might not have much economic power, but it does have equal voting power with the rich.