Wealth and Delusion

Frau Klatten spricht…

Sociology’s cardinal hypothesis is that circumstance affects human perception and behavior, often to a degree that rivals or excels biological factors.

There are interesting empirical tests of this claim here and here.

One thing modern researchers seem to be confirming is that too much money is quite bad for individual mental health.

With this hypothesis in mind, get a load of this excerpt from an interview of Suzanne Klatten, the German heiress who became a billionaire by accomplishing the extremely difficult task of being born to the majority owners of the BMW corporation:

Q: The concern is that society is breaking up into poor and rich people…

A: Klatten: There is a degree of mistrust in the social space that worries us as entrepreneurs. We know that redistribution has never worked. 
I think fairness is when everyone can take advantage of their abilities and develop their full potential. And if you actively promote that, then many people can get very far. Our [own] potential reveals itself in [our] having inherited and developed a legacy. We work hard every day. 
This role as guardian of fortune also has personal sides that are not so beautiful: you are constantly visible and at risk, must protect yourself. 
Added to this is envy, a trait widespread in Germany in particular. 
That’s why I feel misunderstood, to be honest: they focus on dividends. 
The rest that connects with it, is hidden. My brother pointed this out in an interview and asked: Who would want to trade with us?

This, of course, is straight-up Marie Antoinette. In a supposed meritocracy, noblesse oblige is alive and well, with the usual psychotic analysis of what constitutes the noble.

Meanwhile, would that the German people were given an actual chance to answer Madame Bimer’s question about trading places…

Pew-Pew-Pew: Shots from the Class War

The new Pew Foundation report on trends in “middle class” wealth and public opinion about class relations is worth a read.

Here, for instance, is the latest on how U.S. residents perceive the nation’s class structure:


Interestingly, though Pew lumps together upper and upper-middle in its own data reporting, the population isn’t far off on the definition of “upper class.” Only 2 percent place themselves there. Not unreasonable, though such a wide definition obscures the true heights of wealth and clout.

Conversely, you also see here what happens when “working class” has been banned from a capitalist culture, as it has been in market-totalitarian “America.” WAY too many people think they are some kind of “middle class.” The only reasonable definition of “middle class” is the group of people who have the capacity — via special training and credentials — to receive abnormally high wages and buy or bargain for small claims against corporate capitalisms’ various property-income streams. “Working class,” meanwhile, denotes all those who lack such protections and claims, and must therefore rely only on their raw ability to do labor to make ends meet (or not meet).

In a society where only 2/3 “own” their own housing, and in which only a quarter of all mortgage holders have greater than 50% of their mortgage paid off, the fact that 89% of us see ourselves as “middle class” members speaks volumes about the power of ideology and vested interests.

The Life Cycle of Social Classes

Here’s a new item for those who are, like TCT, tracking the theme of the rise and decline of dominant social classes.  The prevailing spin on this new result is to see it as a question of “culture.”  In reality it is pure class: the aspiring hegemons are at the top, and the declining emperors are in laughable decline.  And it absolutely figures:  Comparatively wide-spread educational excellence is meaningful and important in societies whose ruling elites are still young and open enough to at least consider exploring unconventional, reality-based answers.  In places like the United States and Britain, meanwhile, the superannuated corporate overclass nailed its windows shut 30+ years ago, and keeps adding new layers of boondoggle and cant to wall out the world.  Despite its de rigueur claim to care about “catching up” again, few things would be more threatening to long-established patterns of domestic stratification than a sudden wave of actual concern for good teaching and popular educational advancement.


[Source: The New York Times, December 7, 2010]

Twin Quotes for Late 2010

“It’s not just the fact that the elites have all the wealth in a society, but that they are disconnected from the problems. If the rich and powerful still live the good life as society is spinning downhill, they are not motivated to solve the problems.” (Jared Diamond)

marie antoinette

Sanford C. Bernstein analyst Ali Dibadj saw in the third quarter a “decoupling” of the luxury and prestige markets, also including LVMH and Elizabeth Arden, from the mass marketers. And the results extended beyond beauty, as Macy’s and Nordstrom showed increases in customer traffic year over year last quarter even as the U.S. Walmart division last week reported continued year-over-year declines in traffic for the quarter ended Oct. 31, albeit improvements from the prior quarter.

“The luxury consumer is shopping again, and we are seeing our strategy contribute to … prestige beauty growing faster than mass in many parts of world,” said Estee Lauder CEO Fabrizio Freda on a conference call with analysts last month. He pointed to U.S. beauty sales in department stores and Sephora growing 4% last quarter, according to NPD Group, while sales in mass channels grew only 1%.  (Advertising Age, “Prestige, Luxury Products Thrive as Mass Market Sputters,” November 22, 2010)

American Symmetry

Today’s New York Times contains a piece reporting that:

The United States has less than 5 percent of the world’s population. But it has almost a quarter of the world’s prisoners.

In other words, our rate of jailing is generally equal to our rate of hogging and squandering the Earth’s natural resources.

The Times’ explanation of this shocking, disgusting, embarrassing, massively wasteful and evil incarceration rate is utterly stupid, of course: all speculation about culture, and zero consideration whatsoever about our equally shocking, disgusting, embarrassing, massively wasteful and evil levels of class inequality.

“Pain” Reaches the Overclass

One way to understand the connection between corporate capitalism and social classes is to think of it in terms of the “last hired, first fired” problem faced by victims of racism. In reality, the racial version of the first/last process is part of a larger class patterning, in which the prior possession of money, education, and other assets places people in different places in the social line-up.

Corporate capitalism, of course, exists to enrich corporate shareholders. In practice, because the ownership of corporate shares and claims is so radically concentrated at the top, the normal operation of the system primarily* serves those who are already established, rich and mega-rich “major” investors.

But the inequality of wealth and income is not the whole story. There is also a huge inequality of timing that occurs: As big business performs its core function of further enriching the already rich, it also generates powerful differences in peoples’ first/last situations.

For the working class — those who have little or no accumulated wealth, and therefore have no choice but to seek paid work in order to survive — corporate capitalism ensures that the pain of bad economic times will hit first and hardest. Lay-offs, pay cuts, debt collectors, eviction notices, shrinking government programs, suffering schools — such is the stuff of recession for most people. In other words, the class of those who must find a job, any job, is always the first to suffer, and the last to “prosper.” (Note the parentheses.)

So how do things go at the top of the social pyramid, where major investors own a huge chunk of the nation’s income-generating assets and only work when they choose to do so? Well, check out this story from today’ s New York Times. In a story titled “In Rare Miss, G.E. Profits Fall Short,” the Times reports the tragic facts of recession at the top:

General Electric reported a 5.8 percent decline in first-quarter profit on Friday, falling far short of expectations and stunning investors who consider the company one of the nation’s most reliable earners….a company known for rarely missing its estimates,.

The company reported net income of $4.3 billion for the quarter, or 43 cents a share, down from $4.57 billion, or 44 cents a share, in the period a year earlier. Analysts had been expecting about 51 cents a share in net earnings, and the company had projected earnings of 50 to 53 cents a share.

As he fielded questions from disgruntled analysts on a conference call Friday morning, Mr. Immelt insisted that “the core business remains solid.” But he acknowledged that recent financial developments, including the collapse of Bear Stearns, took a severe toll. Earnings at the company’s financial services operation plummeted 19 percent for the quarter.

Mr. Immelt said he regretted the poor performance. “We hate missing our numbers,” he said.

Months and months after hiring has halted and the must-workers have lost jobs and homes at an accelrating pace, the overclass starts to receive (perhaps) a shade less property income from one of its Old Faithfuls.

In other words, the first to prosper are the last to “suffer.” (Note well the parentheses.)

*In his generally apologetic Pulitzer Prize-winning 1977 book, The Visible Hand: The Managerial Revolution in American Business, Harvard business historian Alfred D. Chandler admitted that the super-rich “remain the primary beneficiaries” of corporate enterprise.