What Power Looks Like  

Newsweek had an interesting article recently about the new elite - "They ride on Gulfstreams, set the global agenda, and manage the credit crunch in their spare time. They have more in common with each other than their countrymen. Meet the Superclass.".

The Fed's evolving crisis-management playbook underscores not only the move toward more public-private collaboration on big global issues, but also the concentration of power among a very select and insular group of players—in this case, the heads of the world's biggest financial institutions, as well as gatekeepers like Bernanke and Paulsen.

The people on the recent calls like those described by Geithner, plus a few thousand more like them, not only in business and finance, but also politics, the arts, the nonprofit world and other realms, are part of a new global elite that has emerged over the past several decades. I call it the "superclass." They have vastly more power than any other group on the planet. Each of the members is set apart by his ability to regularly influence the lives of millions of people in multiple countries worldwide. Each actively exercises this power, and often amplifies it through the development of relationships with other superclass members. This new class of elites is both more permeable, and more transient, than elites of the past. The age of inherent lifelong power is largely behind us—to be a member of this superclass one has to hold on to power just long enough to make an impact, be it by leading a revolution or launching a revolutionary Web site. ...

So how does one become a member? As ever, being rich certainly helps. Many superclass members are wealthy, wealthier in relative terms than any elite ever has been. The top 10 percent of all people, for example, now control 85 percent of all wealth on the planet. But wealth is only part of the equation. Power is the other currency of any true elite, and if we want to understand the superclass, we need to look at those who have influence that crosses borders—one of the factors that differentiates them from most of the elites of history, whose influence was predominantly national or even more local in nature. ExxonMobil CEO Rex Tillerson runs operations in 180 countries worldwide, a far cry from the Pennsylvania oil field and U.S. kerosene market roots of the man who founded his company—and set the ball rolling toward the modern multinational—John D. Rockefeller.

That such a group exists is indisputable. It includes the heads of the biggest financial institutions, the 14 families Blankfein joked about, and then some; the top 50 control almost $50 trillion in assets. The heads of the world's biggest corporations are also members; the top 2,000 support perhaps 500 million people, generate almost $30 trillion in sales and have well over $100 trillion in assets. The list also includes top government officials with real cross-border influence: heads of state, of course, leading diplomats and military chiefs, but also central bankers like Geithner and Bernanke, and their counterparts like Chinese Central Bank Gov. Zhou Xiaochuan, reappointed this week, and the other top economic officials responsible for the world's fastest-growing economy and its nearly $1.5 trillion in reserves. ...

A glance at this high-powered class illuminates several key trends. Political elites may be the primary powers where national governments remain dominant—in places like China, Russia and much of the Middle East—yet overall, the list reveals a marked shift from public to private power. Globalization and, to a large extent, privatization, has fueled the superclass (and vice versa). In the 1960s, the average international company had 100 subsidiaries; today many number their subsidiaries in the 10,000s. In the 1950s, the big postwar U.S. defense establishment had a budget that was larger than the revenues of all major U.S. companies put together; today, even though the defense budget is larger in real dollar terms, the sales of two major U.S.-based global corporations—Exxon and Wal-Mart—outstrip it by more than 50 percent.

This concentration of wealth and economic influence has translated into a concentration of power, a trend helped by the fact that the power of national governments is on the wane in many parts of the world. The rise of transnational activities (both public and private), a broad move away from state intervention in national markets and the effective reduction in the state's ability to use force due to the awesomely high price of modern warfare, have all contributed to the declining power of the individual nation-state. In turn, those whose organizations are built for global activity, like multinational companies or financial institutions (or terrorist networks or NGOs), have gained a relative advantage over individual governments and governmental organizations. Consider that the Gates Foundation gives about $1.5 billion annually to support global health initiatives—roughly the entire annual budget of the World Health Organization. ...

Globalization looks different when you can tell the pilot when to leave and where to go, and when there are no security lines to wait in when you are heading off for distant destinations. Those who are free to move about the planet this way come to have more in common with themselves than with their own countrymen. "What happened to us, that we walk through the Davos party and know more people than when we were walking across the village green in the town we live in?" wonders Mark Malloch-Brown, former Deputy Secretary General at the United Nations and now a senior official in the British Foreign Ministry. In fact, Davos is a village green for the superclass. It's at such a gathering that leaders get to know one another, hatch deals and exercise perhaps the greatest power the superclass has collectively: to shape conventional wisdom. ...

Thanks to this kind of social interaction, large portions of the global superclass are well acquainted with each other. Says Stephen Schwarzman, CEO of Wall Street's Blackstone Group, "The world is pretty small. In almost every one of the areas in which I am dealing or in which we at Blackstone are looking at deals, you find it is just 20, 30 or 50 people worldwide who drive the industry or the sector." Numbers tell the same tale. If you take just the people who serve in top management positions or on the boards of the five biggest companies in the world, you'll find they also serve on the boards of an additional 140 other major companies and 22 universities. To Schwarzman, being a member of the superclass means being able to "get to anybody in the world with one phone call." ...

In the future, this may mean the decline of the old transatlantic venues for convening the elite and the rise of new ones in Asia. With members of the changing superclass defining global conventional wisdom, we are likely to see a shift in the very values that shape world affairs. Leaders from Asian nations may, for example, have different ideas about the role of the state and of the individual; they may also seek to define them in terms of narrower self-interests than imperial or proselytizing Westerners often did. The rise of petrol statesmen could undercut the gathering support for the fight against fossil-fueled global warming. The new clout of emerging-market CEOs may slow the movement to make corporations more socially and environmentally responsible "citizens," a campaign many in the developing world see as a rich-company, rich-country luxury.

Cryptogon had some additional notes about this article.

One member of the connected superclass that is the target of a lot of criticism from conservative periodicals, particularly in Canada, is Maurice Strong, with the latest effort that caught my eye coming from The National Post - The new road to serfdom.

Criticisms of Environment Minister John Baird for the vagueness of the moves announced this week to force oilsands to sequester CO2, and prevent construction of "dirty" coal plants reflects the Alice in Wonderland quality of the climate-change non-debate. Opposition parties brayed that he had not been "tough" enough. Media headlines suggested that big emitters had "won."

But nowhere in either the policy or the attacks would you find any suggestion that any measures, whether tough or not, would have the slightest impact on the global climate. How did we get to this ridiculous mess? It is all inextricably tied to the remarkable job that the Left has done in the past 20 years to rescue itself from the brink of extinction by exploiting environmental concerns.

That revival started in 1987 with the report of the UN-based Brundtland Commission. Brundtland was packed with representatives of the old left -- defined as those who seek state control over capitalist enterprise on the basis that it is both morally suspect and practically unstable. The commission played into widespread misconceptions: that the world was "running out" of resources; and that the capitalist rich had achieved their wealth at the expense of "the poor." However, its most important new weapon was that of the alleged despoliation of the environment by industrial society.

From Brundtland emerged the concept of "sustainable development," or SD, that was to be managed so as not to adversely affect future generations. Practically, the notion that the enormous range of private economic activities upon which growth depends could be beneficially monitored and vetted was ridiculous. SD nevertheless maintained that markets' "externalities" justified central co-ordination and control. What gaveSDits great boost was the theory of catastrophic man-made climate change.

The old/new Left was quick to seize upon the potential of climate change at the huge Brundtland follow-up at Rio in 1992. Rio was organized by Brundtland commissioner Maurice Strong, a long-time committed Canadian socialist who was the strategic mastermind of the new environmental Left. From Rio emerged the processes that led to the Kyoto accord.

Why would governments support the theory of potentially disastrous man-made climate change? It was a combination of the success of the environmental Left -- in particular activist non-governmental organizations -- in stoking the concerns of the electorate, and of the desire of bureaucrats and policy-makers to stay relevant, busy and in power. This in turn gave them an interest in supporting the NGOs' radical message, which was amplified by government funding, and by allowing them into the policy-making process. The policy process became self-feeding.

This orientation helps explain why the abject failure of Kyoto was not taken as an indication that such processes were fatally flawed. Rather it was seen as a justification for "redoubling efforts," and for having bigger conferences in more exotic locales.

NGOs were critical in closing down any scientific debate, both by developing close relationships with a generally sympathetic media and by constantly intoning the mantra that the science of climate change was "settled." They were also important in impugning the motives of skeptics, who were dubbed "deniers" and claimed to be in the pay of Big Energy.

The environmental movement has also been astonishingly successful in co-opting education systems, and highly skillful at exploiting universal psychological tendencies to social conformity and deference to "authority." The suggestion that climate change is primarily a "moral" problem has been a masterstroke, of which the masterstroker is Al Gore.

Invoking morality is a powerful weapon in shutting off debate. It employs the so-called "psychology of taboo" to place some claims -- for example, that climate change may be natural, beneficial, or practically unstoppable -- beyond the pale. Those who promote such notions must therefore be evil, or psychologically unbalanced, or in the pay of powerful corporations.

Invoking the authority of science and the democratic value of "consensus" are again both designed to cut off rational analysis. This leads to the strange phenomenon of the discussion of policy alternatives becoming delinked from likely results, as with the responses to Mr. Baird's announcement this week. Thus the finer points of carbon taxation and/or cap-and-trade systems are debated with little or no concern about the fact that they will achieve little or nothing in terms of changing the global climate.

The new environmental Left claims to have recognized the power and efficiency of markets. However, markets allegedly have to be "designed," and the based on the "right" prices. The perverse results of government price-setting and subsidies is readily apparent in the current biofuel disaster.

The Third World supports Kyoto-ism because it offers to provide further wealth transfers via boondoggles such as the Clean Development Mechanism. Third World despots, meanwhile, remain supportive of the notion that the benighted state of the countries they misrule is due not to their own corruption and incompetence but to the fact that the rich West has "exploited" them, and now threatens their very extinction via its selfishness.

The new Left that emerged via Brundtland, Rio, and Kyoto has thus co-opted a huge coalition of self-interested or naive supporters, who are attracted by the prospect of preening as saviours of the planet. Together they are threatening to carry the globe down a new road to serfdom.

You can see similar stuff emanating from the US in publications like the National Review, which likes to repeat Strong's infamous quotation (I assume it is a real one, but its always hard to be sure about these things) about collapsing industrial society from time to time.

If you watch the flow of references to Strong on the internet, you'll see that they largely come out of the fringe right press (and bloggers like these guys that see sustainability education as a form of "state sponsored child abuse") plus less frequent references on some green web sites, usually around Earth Day.

"Chairman Mo", as the wingnuts dub him, isn't as popular amongst the far left as you might expect given some of the accusations made against him by the far right, with theories about his influence and goals being floated in conspiracy venues like Rigorous Intuition and Questions, Questions.

While the National Post guy is probably a fire worshipper at heart, I think its worthwhile making sure that the solutions we adopt to various environmental problems are not totalitarian in nature - and even though the Club of Rome tends to get mentioned in a lot of these conspiracy theories, I think the model they recommend is fine when viewed from that angle.

The main problem with the anti-Strong brigade is not so much their obsession with conspiracies (who knows, maybe they are partly right) but that they refuse to even discuss environmental impacts or any sort of limits that we might encounter in an extraction based economy.

If they argued the merits of particular solutions, they might be worthwhile (its certainly worthwhile arguing what the optimal clean energy sources are and how they can best be harnessed and made affordable to everyone) but instead they just tend to stick rigidly to ideological dogma alone, which is almost entirely useless.

The New York Times has a review of another piece of conservative conspiracism - move on the evil plot against teaching Intelligent Design - "Expelled".

One of the sleaziest documentaries to arrive in a very long time, “Expelled: No Intelligence Allowed” is a conspiracy-theory rant masquerading as investigative inquiry.

Positing the theory of intelligent design as a valid scientific hypothesis, the film frames the refusal of “big science” to agree as nothing less than an assault on free speech. Interviewees, including the scientist Richard Sternberg, claim that questioning Darwinism led to their expulsion from the scientific fold (the film relies extensively on the post hoc, ergo propter hoc fallacy — after this, therefore because of this), while our genial audience surrogate, the actor and multihyphenate Ben Stein, nods sympathetically. (Mr. Stein is also a freelance columnist who writes Everybody’s Business for The New York Times.)

Prominent evolutionary biologists, like the author and Oxford professor Richard Dawkins — accurately identified on screen as an “atheist” — are provided solely to construct, in cleverly edited slices, an inevitable connection between Darwinism and godlessness. Blithely ignoring the vital distinction between social and scientific Darwinism, the film links evolution theory to fascism (as well as abortion, euthanasia and eugenics), shamelessly invoking the Holocaust with black-and-white film of Nazi gas chambers and mass graves.

Every few minutes familiar — and ideologically unrelated — images interrupt the talking heads: a fist-shaking Nikita S. Khrushchev; Charlton Heston being subdued by a water hose in “Planet of the Apes.” This is not argument, it’s circus, a distraction from the film’s contempt for precision and intellectual rigor. This goes further than a willful misunderstanding of the scientific method. The film suggests, for example, that Dr. Sternberg lost his job at the Smithsonian’s National Museum of Natural History because of intellectual discrimination but neglects to inform us that he was actually not an employee but rather an unpaid research associate who had completed his three-year term.

Mixing physical apples and metaphysical oranges at every turn “Expelled” is an unprincipled propaganda piece that insults believers and nonbelievers alike. In its fudging, eliding and refusal to define terms, the movie proves that the only expulsion here is of reason itself.

F William Engdahl has one of his intermittent posts up at Global Research, bluntly claiming "Global warming hoax exposed by record global cold" (based on the latest NOAA data, either someone is very confused or someone is lying). I like the way he combines extreme doomerism with a conspiracy theory about the elite - its not peak oil or global warming that will kill us all - its a lack of sunspot activity and a Malthusian plot by the Rockefellers !

The media and governmental hype over a danger from global warming that already is allegedly causing the polar icecaps to melt and threaten a global climate catastrophe, looks more and more like the political hype it is. This year to date, snow cover over North America and much of Siberia, Mongolia and China is greater than at any time since 1966. According to the US National Climatic Data Center (NCDC) many American cities and towns have suffered record cold temperatures in January and early February. According to the NCDC, the average temperature in January "was - 0.3 F cooler than the 1901-2000 average."

China is surviving its most brutal winter in one hundred years. Temperatures in the normally mild south were low for so long that some middle-sized cities went weeks without electricity because once power lines had toppled it was too cold or too icy to repair them. ...

Russian climatologists believe recent weather changes around the globe are results of solar activity and not man-made emissions. Oleg Sorokhtin, a fellow of the Russian Academy of Natural Sciences, calls the argument for man-made climate change "a drop in the bucket." His research shows that now the recent very active solar activity has entered an inactive phase. He advised people to "stock up on fur coats."

Kenneth Tapping of Canada’s National Research Council, who oversees a giant radio telescope focused on the sun, is convinced we are in for a long period of severely cold weather if sunspot activity does not pick up soon. The last time the sun was this inactive, Earth suffered the Little Ice Age that lasted about five centuries and ended in 1850. Crops failed through killer frosts and drought. Famine, plague and war were widespread. Harbours froze, so did rivers, and trade ceased. ...

The recent Global Warming hysteria is in reality a geopolitical push by leading global elite circles to find a way to get the broader populations to willingly accept drastic cuts in their living standards, something that were it demanded without clear reason by politicians, would spark strikes and protest. The UN’s latest IPCC report on Global Warming calls for diverting a huge 12% of global GDP to “prevent the harmful effects of climate change.” The UN report, for example, estimated that its recommendations to reduce certain manmade emissions would cost about $2,750 per family per year in the price of energy.

Today there are two principal policy options of the Anglo-American power establishment to impose their further control over a world that is rapidly slipping out from under them. We might call them Plan A and Plan B for short.

The first, Plan A, was the option represented by Bush-Cheney and the big oil and military industrial complex behind them. Cheney and his close Houston friend, Matt Simmons, propagated the myth of Peak Oil to lull populations into accepting the inevitability of $100 a barrel or even higher oil prices. In the meantime, the relative strength of the Big Oil and the related US military establishment grew with higher oil prices.

Their global War on Terror provided a cover or pretext to justify military control over the major oil reserves and oil transit passages of the world. From Iraq to Afghanistan to Kosovo, the US and NATO agenda was aimed at future control of the extraordinary economic powers emerging from Russia to China to India to Brazil and Venezuela and beyond. Through China’s effective diplomacy in Africa, many African countries are on the brink of slipping out from under the US or British control into Chinese or more independent status.

If John McCain becomes the next choice of the US power elites to be President, that will signal that that military and oil agenda will escalate, especially as the USA sinks into a severe economic depression in coming months.

The second broad faction of maintaining their control over the greater part of the world economy, Plan B, sees Global Warming and “soft power” as embodied in the organs of the United Nations and IMF and World Bank as the more suitable vehicle to convince people to willingly accept drastic reduction in living standards.

Barack Obama, the apparent choice of the same elites as a “breath of change” to allow them to regroup after the debacle of the Bush-Cheney years, would likely opt for the second faction of the global elite—the Global Warming option to lowering general living standards, ‘Plan B’ of the Anglo-American establishment. In a recent campaign speech in Wallingford Pennsylvania, Mr. Obama replied to a question about Al Gore, the hero of Global Warming. As President, Obama said he would consider putting Al Gore in a Cabinet-level position—or higher. He stated, “I will make a commitment that Al Gore will be at the table and play a central part in us figuring out how we solve this problem. He's somebody I talk to on a regular basis. I'm already consulting with him in terms of these issues but climate change is real."

Today there are two major factions within the Western political power establishment internationally. They cooperate and share broad elitist goals, but differ fundamentally on how to reach these goals. Foremost is their goal of sharply controlling global economic growth and population growth. The first faction is best described as the Rockefeller Faction. It has a global power base and is today best represented by the Bush family faction which got their start, as I document in my book, as hired hands for the powerful Rockefeller machine. The Rockefeller faction has for more than a century based its power and influence on control of oil and on use of the military to secure that control. It is personified in the man who is since 2001 de facto President in terms of decision-making—Dick Cheney. Cheney was former CEO of Halliburton Corp., which is both the world’s largest oilfield services company (now based in Dubai for tax reasons), and the world’s largest military base constructor.

The second faction might be called the Soft Power Faction. Their philosophy might be summed up that they think its “possible to kill more flies with honey than with vinegar.” Their preferred path to global population control and lowering of the growth rates in China and elsewhere is through promoting the fraud of global warming and imminent climate catastrophe. Al Gore is linked to this faction. So is British Prime Minister Gordon Brown. They see globalist institutions, especially the United Nations, as the best vehicle to advance their agenda of global austerity.

The Intergovernmental Panel on Climate Change (IPCC) was created by the United Nations Environment Programme. Its reports have been demonstrated to be fundamentally flawed in scientific methodology, yet they are aggressively being promoted as revealed truth by the powerful media behind this faction. Others in the circle include billionaire speculator George Soros, parts of the British Royal family and representatives of European “old money.”

Bart at Energy Bulletin comments:

The posts by F. William Engdahl are getting stranger and stranger. Years ago he wrote several articles on peak oil. In 2007, he wrote again as an "ex" Peak Oil Believer, expressing disbelief that oil is a fossil fuel and instead that it is generated abiotically. In the present post, he joins the dwindling ranks of climate change deniers. The talk about Rockefeller and other factions is equally weird.

I'll close this bout of weekend weirdness with a rare post from Steve at Deconsumption, pointing to an ACRES Interview with Michael Hudson.

We're long-time subscribers to Acres (the "voice for eco-agriculture"), but I can't help being floored that they're so thematically open-minded as to scoop such a high-quality (and extensive) interview. I literally read it twice. A former investment analyst myself, I've long accepted that the American political and economic systems have become almost entirely closed-doors processes, and as such that there are a myriad details and answers which we might vaguely discern from without, but which can only clearly be grasped by those within. This interview provides a refreshing view from someone who has spent time acting behind that proscenium. So while it generally only reinforces much of what I've been exploring on this weblog the past few years, at the same time it proves stimulating and refreshing enough to warrant promoting here.

Now I know most readers won't be all that interested at delving into an interview with an investment/economic advisor, so I should state that I myself have generally detested the willful ignorance and denial so prevalent throughout our dysfunctional financial industry this past decade. In fact I've long stated here at Deconsumption that the reason I left the investment industry was because I couldn't see anymore how the benefits of publically-traded vehicles (with the cautious exception of short-term treasuries and select CDs, money markets, and foreign currencies) could overcome the frightening risks inherent within the system itself. For me it was no longer a question of simply how to allocate funds based around a pessimistic world-outlook. Rather I became convinced that there could be no safe haven whatsoever when it's the system itself that is losing its structural integrity.

I mean, the real betrayal that should be acknowledged publically is that there is nothing happening now that wasn't entirely forseeable several years ago. And yet, where were the economists and money managers then? Forget clowns like that Cramer guy saying you should hold onto your Bear Stearns, nobody with history in this business has payed any real attention to CNBC since the late '90's. And clearly the majority of professionals, no matter what the industry, are little better than 'intitutionalized' thinkers. But what about a street smart guy like, say, uber-bond-guru Bill Gross? Head-and-tails smarter by far than myself, far more experienced, infinitely better connected.... He was probably the earliest of the large asset managers to start grumbling about economic "mismanagement" in America, and that was little better than a year ago. Of course he never went so far as to say "get your money out of higher-yield bonds while you can". He yet he clearly must have known what was in the cards even 5 years ago. It wasn't like there was any baseless speculation involved -- the writing was on the wall as clear as day. I even sat down and outlined what turned out to be a remarkably cogent attempt at defining coming events for myself (Timeline for Unfolding Crisis), which has been one of the more enduringly popular posts from here. In fact, Deconsumption itself was really only an ongoing attempt at grappling with how to prepare for the various themes I'd presaged then.

And the fact is, I ain't smarter than the best and brightest at our nation's investment houses. The only difference is that I left the industry. As such I didn't have to lie to people any longer, to pretend that what was already beginning to happen wasn't going to happen.

Anyway, to wind my way back around to the subject of this post, I suspect Hudson may be cut from a similarly jaded cloth, and I was certainly encouraged to hear he has an affiliation with the American Monetary Institute -- which I believe is easily the most well-credentialled and determined monetary reform organization in America (I've long linked to the AMI website over on the right).

In one fell swoop Hudson explains....

...the failure of the modern US agricultural system (the wealth created by increased productivity went entirely to the bankers who convinced hapless farmers they had to "get big or get out")

...how the runaway Caribbean off-shore industry was originally established to launder drug-money

...why countries like Panama and Liberia are really "anti-countries", established by American oil interests to avoid paying taxes

...how the University of Chicago economists espoused the torture and murder of everyone who didn't support free market thinking in Latin America

...how to steal your nation's resources using taxpayer money

....and in one of my personal favorite sections, Hudson speculates on the most bewildering aspect of contemporary economics -- why is it that so many foreign economies continue to embrace and support a patently homicidal/suicidal US Dollar-economy.