America’s business elite, by contrast, is something of a latecomer to this transnational community. In a study of British and American CEOs, for example, executive headhunter Elisabeth Marx found that almost a third of the former were foreign nationals, compared to just 10 percent of the latter. Similarly, more than three-quarters of the Brits had worked abroad for at least two years, whereas just a third of Americans had done so.
But despite the slow start, American business is catching up. Today’s American chief executives are twice as likely to have worked abroad as their predecessors of a decade ago, and the number of foreign and foreign-born CEOs of U.S. companies, while still relatively small, is rising. The shift is particularly evident on Wall Street. In 2006, each of the eight leading banks on the Street was run by a native-born CEO; today, their number is down to five, and two of the survivors—Citigroup and Morgan Stanley—are led by men who were born abroad.
In fact, Jeff Immelt, the CEO of General Electric, recently told me his successor might well come from an emerging market, because that’s where GE’s future, and the future of American business more generally, lies.
In Immelt’s view, the financial crisis marked the end of the age of America’s economic dominance. “I came to GE in 1982,” Mr. Immelt told me. “For the first twenty-five years, until the bubble crashed in 2007, the American consumer was the definitive driver of the global economy.” But the future will be different, Mr. Immelt said. For the next twenty-five years, he said, the U.S. consumer “is not going to be the engine of global growth. It is going to be the billion people joining the middle class in Asia, it is going to be what the resource-rich countries do with their newfound wealth of high oil prices. That’s the game.
“There are going to be one billion consumers joining the middle class in Asia. I think for us to reduce unemployment, exports are going to be a key way to do it,” Immelt told me. “It’s this country’s only destiny just because most of the consumers are some place other than here.”
As a cautionary counterexample, Immelt cited inward-looking Japanese firms. “Look, when I was a young guy, when I first started with GE, Jack Welch sent us all to Japan because in those days Japan was gonna crush us,” he said. “And we learned a lot about Japan when we were there. But over the subsequent thirty years the Japanese companies all fell behind. And the reason why they fell behind is because they didn’t globalize. They didn’t have to go out and sing for their dinner in every corner of the world. That’s not the case with GE. It’s not the case with other American multinationals.”
At the 2010 Aspen Ideas Festival, Michael Splinter, CEO of the Silicon Valley green-tech firm Applied Materials, confessed that if he were starting from scratch, only 20 percent of his workforce would be domestic. “This year, almost 90 percent of our sales will be outside the U.S.,” he explained. “The pull to be close to the customers—most of them in Asia—is enormous.” Speaking at the same conference, Thomas Wilson, CEO of Allstate, told a similar story: “I can get [workers] anywhere in the world. It is a problem for America, but it is not necessarily a problem for American business…. American businesses will adapt.”
Paul Volcker, the legendary inflation-fighting former head of the Federal Reserve, told me that at a 2012 dinner with a group of chief financial officers in Manhattan he had been struck by the global outlook of what he described as “so-called American companies”: “Implicitly, they don’t think of themselves as American anymore,” he said. “They are international companies. If the American government doesn’t treat them right they will move their headquarters abroad. These companies are more likely to man their foreign branches with foreigners than they are Americans, and they send foreigners to run their American operations.”
Mohamed El-Erian, the CEO of Pimco, the world’s largest bond manager, is typical of the global nomads gradually rising to the top echelons of U.S. business in this international age. The son of an Egyptian father and French mother, El-Erian had a peripatetic childhood, shuttling between Paris, Cairo, New York, and London. He was educated at Cambridge and Oxford and now works for a U.S.-based company that is owned by the German financial conglomerate Allianz SE.
Though El-Erian lives in Newport Beach, California, where Pimco is headquartered, he says that he can’t name a single country as his own. “I have three passports,” El-Erian told me on a recent visit to New York. “I don’t belong to any one country. I belong to many and to the world.” As he talked, we walked through midtown, which El-Erian remembered fondly from his childhood, when he’d take the crosstown bus each day to the United Nations School. That evening, El-Erian was catching a flight to London. Later in the week, he was due in St. Petersburg.
Indeed, there is a growing sense, at GE and beyond, that American businesses that don’t internationalize aggressively risk being left behind. For all its global reach, Pimco is still based in the United States. But the flows of goods and capital upon which the super-elite surf are bypassing America more often than they used to. Take, for example, Stephen Jennings, the fifty-two-year-old New Zealander who cofounded the investment bank Renaissance Capital. Renaissance’s roots are in Moscow, where Jennings maintains his primary residence (he also has farms in Oxfordshire and New Zealand, and his children go to school in England), and his business strategy involves positioning the firm to capture the investment flows between the emerging markets, particularly Russia, Africa, and Asia. For his purposes, New York is increasingly irrelevant. In a 2009 speech in Wellington, New Zealand, he offered his vision of this post-unipolar business reality: “The largest metals group in the world is Indian. The largest aluminum group in the world is Russian…. The fastest-growing and largest banks in China, Russia, and Nigeria are all domestic.”
As it happens, one of the fellow tenants in Jennings’s high-tech, high-rise Moscow office building recently put together a deal that exemplifies just this kind of intra-emerging-market trade. In the spring of 2010, Digital Sky Technologies (DST), Russia’s largest investment firm, entered into a partnership with the South African media corporation Naspers and the Chinese technology company Tencent. All three are fast-growing firms with global vision—in the fall of 2010, a DST spin-off named Mail.ru went public and instantly become Europe’s highest-valued Internet company, with a market capitalization of $5.71 billion—yet none is focused on the United States. A similar example of the intra-emerging-market economy was Indian telecom giant Bharti Enterprises’ acquisition of most of the African properties of Kuwait-based telecom Zain. A California technology executive—himself a global nomad who has lived and worked in Europe and Asia—explained to me that a company like Bharti has a competitive advantage in what he believes will be the exploding African market: “They know how to provide mobile phones so much more cheaply than we do. In a place like Africa, how can Western firms compete?”
ARISTOCRACY OF IDEAS
Just as the railroad created new cities, private jets and private jet time-shares like NetJets have contributed to the globalization of the super-elite—owning homes and doing deals around the world becomes feasible when you can travel the planet as easily as the middle class steps into a car. New technologies have helped, too—instant and mobile communication makes it possible to live on the move and around the world. So have the political revolutions that have opened up so many of the world’s borders over the past twenty years.
The most important shift, however, was the one foreseen by Adam Smith in
Smith could see that manufacturing companies, and the disaggregated owners of their stock, would eventually eclipse land as the engine of the economy. The technology revolution, which has created a new and powerful sphere of economic activity that has almost no physical manifestation at all, has taken that trend exponentially further. The result, as Smith anticipated, is an elite driven by its economic interests to think global: “He [the owner of stock] would be apt to abandon the country in which he was exposed to a vexatious inquisition in order to be assessed to a burdensome tax, and would remove his stock to some other country where he could either carry on his business or enjoy his fortune more at his ease.” But while capital—and capitalists—have gone global, governments and most of their middle-class citizens operate within national boundaries. Figuring out how the plutocrats are connected to the rest of us is one of the challenges of the rise of the global super-elite.
Harry Mount, the
