By William K. Black
October 20, 2016 Kansas City, MO
The New Democrats and their Republican counterparts’ economic policies have created a rigged system of crony capitalism. Crony capitalism produces devastating epidemics of elite fraud that have shrunk the overall economic “pie” and distributed the “pie” overwhelmingly in favor of corrupt corporate elites like Donald Trump and their political cronies like the Clintons. Wall Street has been open about being ecstatic about the rise of what Citigroup infamously labelled and celebrated — a “plutonomy.”
In a plutonomy there … are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the “non-rich”, the multitudinous many, but only accounting for surprisingly small bites of the national pie.
Citigroup, in 2005, years before Occupy Wall Street, identified the tiny slice of Americans receiving this “gigantic slice of income and consumption.”
In early September  we … introduced the idea that the U.S.is a Plutonomy – a concept that generated great interest from our clients.
[T]he top 1% of households account for 40% of financial net worth, more than the bottom 95% of households put together.
[These inequalities are] almost entirely driven by the fortunes of the top 0.1% (roughly 100,000 households).
Citigroup sounded a note of caution about the rise of the Imperial CEO, which it termed the new “Managerial Aristocracy.” Their depredations could only continue as long as shareholders and voters failed to reclaim control of their corporations and nations.
[This top group represents a] Managerial Aristocracy indulged by their shareholders.
Society and governments need to be amenable to disproportionately allow/encourage the few to retain that fatter profit share. The Managerial Aristocracy, like in the Gilded Age, the Roaring Twenties, and the thriving nineties, needs to commandeer a vast chunk of that rising profit share, either through capital income, or simply paying itself a lot.
Citigroup made clear that the New Democrat’s and their Republican counterparts’ embrace of policies that enhanced crony capitalism would cause the already obscene inequality to increase.
We project that the plutonomies … will likely see even more income inequality, disproportionately feeding off a further rise in the profit share in their economies, capitalist-friendly governments, more technology-driven productivity, and globalization.
Lest there be any doubt where Citigroup was coming from, they evoked Ayn Rand’s fantasy in Atlas Shrugged that the Managerial Aristocracy was akin to the stud on the cover of cheesy romance novels – “the muscular arms of … entrepreneur-plutocrats.”
The earth is being held up by the muscular arms of its entrepreneur-plutocrats, like it, or not.
Really? The data Citigroup cited said nothing about the plutocrats helping the overall economy much less the earth. The story that Atlas held up the earth was a myth. There is no “up” when it comes to earth and gravity is quite reliable in holding earth to paths that we can predict. The plutocrats despoil the earth and are the gravest threat to life on earth. Picturing the Managerial Aristocracy as muscular unpaid laborers selflessly protecting the earth is a farcical lie – but Citigroup was writing for the Managerial Aristocrats it hoped to attract to its “wealth” divisions and knew that the Trumps of the world demand abject sycophancy.
Citigroup was honest about three key facts.
- Extreme inequality is fundamental to plutonomy
At the heart of plutonomy, is income inequality.
- Citigroup showed that it favored plutonomy
[A]n examination of what might disrupt Plutonomy – or worse, reverse it – falls to societal analysis….
- The key to whether plutonomy persists is not economics, but whether the public will summon the will to rise up to recover its Nation.
Societies that are willing to tolerate/endorse income inequality, are willing to tolerate/endorse plutonomy.
Citigroup also correctly framed the fundamental question that voters should have demanded each candidate answer with a resounding “No.”
[W]ill electorates continue to endorse [massive inequality], or will they end it, and why?
Citigroup warned the Managerial Aristocrats that the great risk to their rigging of the system was that workers might vote the Aristocrats’ political cronies out of office.
Citigroup Plutonomy Report Part 2
Mar 5 2006
RISKS — WHAT COULD GO WRONG?
Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This thesis is not without its risks. For example, a policy error leading to asset deflation, would likely damage plutonomy. Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfrachisement remains as was — one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation on the rich (or indirectly through higher corporate taxes/regulation) or through trying to protect indigenous [home-grown] laborers, in a push-back on globalization — either anti-immigration, or protectionism. We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.
Note how blatant Citigroup’s leaders were – restoring democracy and ending the obscenity of plutonomy in America was “wrong.” Citigroup volunteered to keep a “close eye” on any such effort so that the “Managerial Aristocracy” could continue to “commandeer a vast chunk of that rising profit share, either through capital income, or simply paying itself a lot.”
Let’s Do What Citigroup Said We Could Do to Take Back our Nation
The most critical votes are in the primaries and caucuses. Unless we turn out in huge numbers and ensure that candidates dedicated to taking our Nation back from the “Managerial Aristocracy” win the nomination we will end up with nominees for both major parties who are Managerial Aristocrats or their servants. Remember that Citigroup’s official position is that maintaining America as a plutonomy is the bank’s goal. Citigroup’s official position is that it would be “wrong” to restore democracy to America by voting the Managerial Aristocrats’ cronies out of office. Regardless of political affiliation, we owe it to Citigroup’s leaders to work together to nominate and elect candidates that will make the Managerial Aristocracy howl as they lose their ability to rig the economic and political systems.