We can thank the author for posting all the three leaked infamous documents from Citigroup. Up till now I was only aware of this document--“Revisiting Plutonomy: The Rich Getting Richer”. We can especially thank the conscientious person who leaked the documents.
For your convenience here are the three documents with their links as of this date. (Be aware that Citigroup has previously succeeded in removing these documents from various websites and may continue to do so.)
- “Plutonomy: Buying Luxury, Explaining Global Imbalances” Oct. 16, 2005 (35 pages)
- “Revisiting Plutonomy: The Rich Getting Richer” March 5, 2006 (18 pages)
- “The Plutonomy Symposium — Rising Tides Lifting Yachts” Sept. 29, 2006 (64 pages)
I would like to direct your attention to his report entitled "The Political Economy of Bubbles" (pdf), where he offers numerous charts and data and his analysis in relation to these three Citigroup documents.
The first graph tells the main story of what has occurred in the US under neoliberal policies that largely began under the Reagan administration with the result that ordinary incomes remained flat for the bottom 90% and skewed upward for the 1 %. This, of course, does not account for the other consequences for the 90% like loss of homes, jobs, and deepening indebtedness.
The difference between charts 1 and 2, that is, regarding the 1% including capital gains and the 1% excluding capital gains, can be a bit confusing if you ignore the difference in the income scales on the right sides of the graphs. If the same scale were used you would see a much greater income gain for the 1% when capital gains are included.
The next chart, Exhibit 3 could be clearer. I would have arranged the income brackets more logically starting with the green bracket, the top .1%, followed by the top 1% (blue), then the top 1-5% (amber), then the 5-10% (red).
This chart is interesting to me in that it appears to indicate that once one gets below the 1% the income from capital gains largely disappears. Hence, those below this income level in the 1-5% and especially those in the 5-10% bracket, people who might be considered "middle class" have not benefited much from stock ownership simply because they are less likely to own many stocks. Also it is likely that they have incurred more debts and taxes than the upper brackets. This might explain observations often made about the "disappearing middle class".
The author's commentary regarding the charts reflect a politically liberal point of view in that it frequently refers to "democratic process" as being contaminated by this new "plutonomy" or capitalist class. This is nonsense. Democracy, that is, a genuine participatory democracy has been an unfulfilled dream of working people since the rising class of capitalists who promised it during the American and French Revolutions. They made such promises when they needed the support of ordinary people in their struggle against the British and French aristocracy and monarchy. We have had class structured societies for the past 10,000 years where income has been skewed upwards. The rise of the industrial capitalist class has accentuated this trend, and now under neoliberalism we have financial capitalists where this trend has even accelerated.
Nevertheless, his analysis of the charts and the Citigroup reports has much to offer in understanding current social-economic issues. For example, the evidence clearly indicates that there is little significant difference between the two parties in the US. They both serve the ruling One Percent and they both function to promote policies favoring the One Percent through secrecy and deception.
But, unlike what the author implies, this has always been the case in the US. The difference now is that the skewed income distribution is more extreme than ever and it is having negative effects on the middle class (managerial, professional, highly trained scientists and technicians, small business owners) who constitute a very important sector of the population that has sustained the capitalist system, and disastrous effects on everyone below them. This is a decided threat to the ruling One Percent and their beloved system of capitalism. That is precisely why we see them creating a climate of fear (terrorism), instituting many police state type laws, and ignoring legal and Constitutional protections on civil rights.
Another disturbing development which the author points out is the tendency under financial capitalism to promote bubbles (dramatic expansion and contractions) in the economy. Financial capitalists like contractions (economic crashes) because then they have the opportunity to buy up assets cheaply. Hence, he suggests that we will likely be experiencing more booms and busts and related social-economic chaos. And I predict that we will continue to devolve into a fascist state--unless we in the 99% can stop them.
He concludes his report with this insightful statement:
For pro-democracy people the recent emergence of the Occupy or 99 Percent Movement is both a positive step and the sort of thing that the Citigroup reports cite as the ultimate danger to continued plutonomy rule. But that movement still exists only at the margins. It is much too early to tell if it will grow to have, directly or indirectly, an influence at the polls, nor even through what channels such influence might be realized. Furthermore there is not yet at the public level a narrative that identifies and focuses on the relevant political-economic structures, and explains how their policies have created and will in the future create financial bubbles which end with global crises and further upward redistributions of income. In short, regarding the political economy of today’s world, in key countries ignorance prevails.
