political: “They have a strike… then they ask for money, it takes a long discussion, they have to stop manufacturing for like one month.” By contrast, she noted, “In China, we have no strike. If they have a strike, the government will get involved, tell workers, ‘I will help you, but go back to work.’”
At this point, I couldn’t resist asking whether in the authoritarian People’s Republic, harsh measures might be used to force protesters back to work. Strikers might even be sent to jail, I suggested.
“No,” Ms. Li replied instantly. “It is just the government nicely talking, ‘What do you need? I’m taking care of you. Don’t worry. But you should go back to work.’”
BYD’s response to India’s more aggressive unions, Ms. Li said, was to back away from its initial plan to make the country “kind of our backyard for manufacturing… So, we have five thousand to six thousand employees there. Initially we wanted to grow huge, like we can be over fifty thousand jobs over there.”
As in the West, moving production somewhere else is one response to bolshie unions. The other is technology. As Kiran Mazumdar-Shaw, India’s richest self-made woman entrepreneur, said to her employees: “If you join the union, I’m going to automate, and you’ll all be out of jobs.” And here’s the twist—she made this comment to a
THE WINNERS: THE DATA
We do know one thing for certain—whether it is Indian entrepreneurs like Shaw, or Chinese executives like Li, or Western financiers like O’Neill, those at the top around the world are doing very well indeed in this era of the twin gilded ages. One of the most respected students of today’s surging income inequality is Emmanuel Saez, a lanky, curly-haired forty-one-year-old Frenchman who teaches economics at UC Berkeley and won one of his profession’s top prizes in 2009. Working with his colleague Thomas Piketty of the Paris School of Economics, Saez has documented the changing shape of income distribution in the United States over the past century.
From the mid-1920s to 1940, the share of income going to the top 10 percent was around 45 percent. During the Second World War it declined to around 33 percent and remained essentially flat until the late 1970s. Since then, it has been climbing dramatically. By 2006, the top 10 percent earned 50 percent of national income, even more than it did in 1928, at the height of the Roaring Twenties.
But the biggest shift in income isn’t between the top 10 percent and everyone else—it is
Here’s how that translated into U.S. average family income in 2010, according to Saez: Families in the top 0.01 percent made $23,846,950; that dropped sharply to $2,802,020 for those in the top 0.1 to 0.01 percent. Those in the top 1 percent made $1,019,089; those in the top 10 percent made $246,934. Meanwhile, the bottom 90 percent made an average $29,840.
Even among the super-super-rich—the people on the annual
In 2011, in its annual report on the world’s rich, Credit Suisse, the international investment bank, noted that the number of super-rich—whom it delicately dubs “ultra high net worth individuals,” or UHNWIs, with assets above $50 million—surged: “Although comparable data on the past are sparse, it is almost certain that the number of UHNW individuals is considerably greater than a decade ago. The general growth in asset values accounts for some of the increase, along with the appreciation of other currencies against the U.S. dollar. However, it also appears that, notwithstanding the credit crisis, the past decade has been especially conducive to the establishment of large fortunes.”
Overall, Credit Suisse calculated that there were about 29.6 million millionaires—people with more than $1 million in net assets—in the world, about half a percent of the total global population. North Americans are no longer the largest group—they account for 37 percent of the world’s millionaires, slightly fewer than the 37.2 percent who are European. Asia-Pacific, excluding China and India, is home to 5.7 million (19.2 percent), while there are just over 1 million in China (3.4 percent). The remaining 937,000 live in India, Africa, or Latin America.
There were 84,700 UHNWIs in the world in 2011, of whom 29,000 owned net assets worth more than $100 million, and of whom 2,700 were worth half a billion dollars—nearly enough to maintain the level of perks Naguib Sawiris deems acceptable. A total of 37,500 UHNWIs are in North America (44 percent); 23,700 (28 percent) are in Europe; and 13,000 are in Asia-Pacific excluding China and India (15 percent).
When it comes to super-wealth, the United States is unassailably at the top. America is home to 42 percent of all UHNWIs, with 35,400. China is in second place, with 5,400, or 6.4 percent of the total, followed by Germany (4,135), Switzerland (3,820), and Japan (3,400). Russia has 1,970, India 1,840, Brazil 1,520, Taiwan 1,400, Turkey 1,100, and Hong Kong 1,030.
Given the underlying economic forces that are roiling the globe, Saez said he sees no reason that this trend won’t continue. The rapid emergence of the very rich from the financial crisis would seem to support that view: Saez has found that in the 2009–2010 recovery, 93 percent of the gains were captured by the top 1 percent. The plutocrats did even better than the merely affluent—37 percent of these gains went to the top 0.01 percent, the 15,000 Americans with average incomes of $23.8 million. Another example: in 2009, the country’s top twenty-five hedge fund managers earned an average of more than $1 billion each—or more than they had made in 2007, the previous record year.
“Probably if you had looked at the situation in the late nineteenth century, it would have looked like today. You would have said, ‘Look, those guys are also self-made,’” Saez told me when I visited him in his office in Berkeley. “The way I see it is first you have a wave of innovation that creates self-made wealth, and then that wealth is passed on to the next generation and then you have heirs. So really the big question for the new era is whether the new rich, the self-made rich, are going to pass their wealth to their heirs or whether it’s going to be given to charity and to what extent. It’s probably going to be both, but I think the wave of heirs should happen down the road, barring an extreme change in behavior in charitable giving.”
On February 13, 2007, almost exactly 120 years after the Martin ball, a leader of a new, ascendant American plutocracy hosted another epoch-making gala, also on Park Avenue, this time at the Armory, less than a mile directly north of the grand hotel rooms where the Martins and their friends had frolicked.
The guests at Steve Schwarzman’s sixtieth-birthday bash didn’t come in costume, and they arrived at eight p.m., not ten thirty p.m., but in many other ways his celebration echoed New York’s most famous nineteenth- century entertainment. The ladies were bejeweled, many of the guests were moguls (Mike Bloomberg, John Thain, Howard Stringer), and the entertainment was lavish—its highlight was a half-hour live performance by Rod Stewart, for which he was reportedly paid $1 million.
Schwarzman’s friends evoked the same economic stimulus defense of the lavish celebration Martin’s supporters had voiced a century earlier. “This is good for the entire economy,” argued Julian Niccolini, a co-owner of the Four Seasons restaurant (where both Schwarzman and Peterson pere keep a running tab) and a guest at Schwarzman’s party. “People spend money on champagne, they spend money on flowers, they spend money on music, and that creates jobs for all of us.”
As in 1897, public opinion didn’t buy it. Unlike the Martin ball, Schwarzman’s party took place in a generally roaring economy. But seven months later, the bubble began to burst with a freeze in the global credit markets, and within eighteen months America was suffering its worst financial and economic crisis since the Great Depression. Schwarzman didn’t leave the country for good—though he did move to Paris for six months in 2011—but he did
