Robert Frank at the Wall Street Journal contends that the rich don’t need the rest of us all that much (hat tip reader Don B):
Late last year, the U.S. economy experienced a surprising decoupling.
As stocks boomed, the wealthy bounced back. And while the Main Street economy was wracked by high unemployment and the real-estate crash, the wealthy–whose financial fates were more tied to capital markets than jobs and houses– picked themselves up, brushed themselves off and started buying luxury goods again.
Who knows what the next few months and years will bring. But one thing seems clear: the economic fate of Richistan seems increasingly separate from the fate of the U.S.
Some argue that the decoupling has gone even further. Michael Lind, a policy director for the Economic Growth Program at the New American Foundation, argues in Salon that the American rich no longer need the rest of America.
He says the wealthy increasingly earn their fortunes with overseas labor, selling to overseas consumers and managing financial transactions that have little to do with the rest of the U.S. “A member of the elite can make money from factories in China that sell to consumers in India, while relying entirely or almost entirely on immigrant servants at one of several homes around the country.”
This is an interesting line of PR. To the extent those at the top of the food chain believe it, and better yet, can get the great unwashed to buy into it, the more they will be able to get their way.
Yes, the rich increasingly live lives apart from those not in their economic cohort. But separation is not the same as independence. The Southern plantation owner had little interaction with his slaves (his overseer took care of that), yet he clearly depended on their labor. The financial crisis resulted in the greatest looting of the public purse in history. While the banksters were the obvious beneficiaries, most of the rest of the rich were carried along with them. The sudden recovery in the fortunes of the wealthy was no accident, but the result of a host of policies to prop up asset values.
This line of thinking is hardly new. James Galbraith, in The Predator State, discusses how the corporate elite have come to serve their own interests rather than those of their companies, and have become adept at using the state to further their personal aims. Thus the profit potential of remaining engaged in the US (albeit at as much of a remove as the top echelon can manage) is too great to be ignored.