Citigroup is an international financial conglomerate with operations in consumer, corporate, and investment banking and insurance. In March 2006, it published on the web a fascinating document, titled Revisiting Plutonomy: the rich getting richer, which also features in this video.
Since that time, it seems it has made various efforts to “disappear” the document.
Reading it, one can understand why it might want it to disappear!
Many of us worry about the poverty that stalks the world and the increasing gap in these affluent times between rich and poor.
Marmot’s WHO Commission into the Social Determinants of Health and the work of Wilkinson and Pickett leave us — or at least me — concerned that poverty and inequality in these times of plenty globally remain not merely disgusting morally but such big killers.
Along with others, I despair and am saddened that we cannot do better. As reported recently on Croakey, ordinary informed Australian citizens seem to share these views at least to the extent that they want health services to do more to help those who are disadvantaged, such as the poor and Aboriginal people.
Citigroup has a rather different take on all of this. It notes that the rich have been getting richer and they want to help them to get yet richer! It thus says with respect to good investments: “we like companies that sell to or service the rich — luxury goods, private banks etc.”
It notes that “the rich are the dominant source of income, wealth and demand in … the UK, US, Canada and Australia, countries that have an economically liberal approach to wealth creation”. It suggests “the rich are going to keep getting richer in coming years, as capitalists (the rich) get an even bigger share of GDP as a result, principally, of globalisation”. Fortunately “the global pool of labor in developing countries [will] keep wage inflation in check”.
It asks “what could go wrong?” Well, “the rising wealth gap between rich and poor will probably at some point lead to a political backlash … At some point it is likely that labor will fight back against the rising profit share of the rich …”
But, happily, it “doesn’t see this happening yet, though there are signs of rising political tensions”.
Some readers may well shrug their shoulders and think well, why should we expect otherwise? But silly me, I am rather shocked that in such an open and brazen way the Citigroup feels able to put this sort of “analysis” out to its readers and potential investors.
More importantly those of us — and fortunately there are many — who do want to see more equality in Australia must recognise what we are up against and accept that our government (which has “an economically liberal approach to wealth creation”) is complicit in allowing the increasing inequality to happen.
Between 1960 and 1980 as a percentage of GDP wages rose from 52% to more than 60% while corporate profits remained mostly less than 20%. Over the 25 years to 2005, wages fell to 53% while corporate profits increased markedly to 27%. And of course profits go first and foremost to the top end of the income scale.
Ah but we live in a democracy so what is happening is the will of the people! Yes but which people? JK Galbraith (p8) possibly the most savvy economist of recent times — but certainly no revolutionary — wrote: “There is democracy, but in no slight measure is it the democracy of the fortunate.”
I am not sure what the answer is to dealing with these issues but fiddling while the poor burn, leaving it to our democratically elected representatives (was the last election not a race to the bottom between tweedle dumb and tweedle dumb?), blaming the victims for getting obese and assuming that more and more reliance on the market will solve every problem from Aboriginal disadvantage to global warming do not seem to be working.
Maybe Citigroup is right … maybe we just have to sit and wait for the “political backlash”.
Or maybe we need to stand up and try to promote the political backlash…Galbraith (p 2) again: “To identify and urge the good and achievable society may well be a minority effort but better that effort than none at all …”