Tuesday, January 24, 2017
Fortress One Percent – Against the Abyss
As global leaders gathered in Davos, Switzerland early in January, there was an elephant in the room, one that was beginning to snort and rampage with explosive anger. That eight private citizens have the net worth of half the people on earth, that global income inequality has created the greatest polarization the world has witnessed since feudal times, suggests a level of rather obviously unsustainable income disparity that gives rise to regime change and violent revolution. “Let them eat cake” resonates like never before.
“For the investors and market-movers at the annual World Economic Forum here, a threat lurks… At cocktail parties where the Champagne flows, financiers have expressed bewilderment over the rise of populist groups that are feeding a backlash against globalization. In the halls of the Davos Congress Center, where many of the meetings [in the third week in January were] taking place, investors have tried to make sense of the political upheaval.
“The world order has been upended. As the United States retreats from the promise of free trade, China is taking up the mantle. The stark shift leaves investors trying to assess the new risk and opportunities in the global economy… ‘This is the first time there is absolutely no consensus,’ said William F. Browder, a co-founder of Hermitage Capital Management who has been coming to Davos for 21 years. ‘Everyone is looking into the abyss.’
“The religion of the global elite — free trade and open markets — is under attack, and there has been a lot of hand-wringing over what Christine Lagarde of the International Monetary Fund has declared a ‘middle-class crisis.’… But while all attendees in Davos have a view on the state of the world, there is little agreement on how to deal with it.” New York Times (DealB%k), January 19th.
As the middle class contracts downwards, the dividing line between the fewer “haves” and the massively growing “have-nots” in the U.S. is adding another element to the volatile income inequality mix among those at the top of the food chain: fear. If you have any of the trappings of wealth, particularly where you live, you are easily identified. So what to do?
“Across the United States, more than 10 million housing units are in gated communities, where access is ‘secured with walls or fences,’ according to 2009 Census Bureau data. Roughly 10 percent of the occupied homes in this country are in gated communities, though that figure is misleadingly low because it doesn’t include temporarily vacant homes or second homes. Between 2001 and 2009, the United States saw a 53 percent growth in occupied housing units nestled in gated communities.” New York Times (3/29/12).
It is obvious to the richest elements on earth that they are at risk by rising populism. Death by revolution. Abandonment by a government no longer able to play by the rules. Not just by crude government action or inaction but by the angry crush of populist anger that has spread like wildfire throughout the bastions of capitalism in the United States and Europe. It’s even gotten to the point where too many in the West are readily willing to opt for a strongman-to-the-exclusion-of-democracy to restructure what has evolved into towards a return to a world where ordinary people have economic hope. As business has followed cheap labor overseas, as automation has rendered too many workers obsolete, all the variables have clearly favored those rich entities able to take advantage of these opportunities at the expense of those who earn their money by working.
Presidential candidate, Bernie Sanders bandied about a word that would have sealed his fate into oblivion a decade ago: socialism. Millennials embraced the word as they staggered under the weight of student loans and unaffordable housing. The advance of artificial intelligence, which places more money into the hands of those who own the robotics at the expense of the workers that have been displaced, has even given rise to serious discussions of a universal basic income across the entire West, including the U.S. “Income redistribution” used to be the anti-Christ that rallied the West against Soviet communism, a system that collapsed under the corruption of a privileged elite and a horrific quality of life. No longer. But can that be done peacefully… or not?
Although most of us think reconciling our economic polarization is something for future Americans to deal with, that we are a stable and solid nation under a clear constitution and functioning democratic legal structure, many others of us think that those drastic changes are no longer waiting for future resolution. With the election of Donald Trump, populist-extraordinaire (despite a cabinet with a collective net worth equal to the bottom third of the entire country), the level of economic consternation that supported his candidacy is sending abject terror through a lot of folks at the top of the economic ladder… even as they hope businessman-Trump is really just one of them. The denial inherent in a strong stock market is denial on steroids.
For those envisioning the “coming class war,” a revolution not unlike our hugely catastrophic Civil War a century and a half ago, there have always been pockets of “survivalists.” While they might dream of orderly secessionism – the nation voluntarily and peacefully deciding to break into smaller, more coherent and homogenous countries (what the South tried to extract from the North in our War Between the States) – their tangible plans are directed at what they expect to be the intervening violence. After all, we live in a country with well over 300 million guns, including lots of assault weapons and oversized magazines. Survivalists expect to withdraw to self-sustainable, isolated plots of land, in dense forests, underground bunkers, high mountains or tiny islands, as the rest of the country battles itself into destruction. They create their own energy, are well-armed and plan to live off the land… or have so much in storage that they can last for years.
For ages, we have envisioned “mountain men,” iconoclasts unwilling to live by legal rules and regulations, or religious fundamentalists preparing for Armageddon as classical survivalists. But that was then. Now, the rich have their own view of survivalism. Writing for the January 30th The New Yorker, writer Evan Osnos, explains in an article entitled Doomsday Prep for the Super-Rich:“[In] recent years survivalism has expanded to more affluent quarters, taking root in Silicon Valley and New York City, among technology executives, hedge-fund managers, and others in their economic cohort.
“Last spring, as the Presidential campaign exposed increasingly toxic divisions in America, Antonio García Martínez, a forty-year-old former Facebook product manager living in San Francisco, bought five wooded acres on an island in the Pacific Northwest and brought in generators, solar panels, and thousands of rounds of ammunition. ‘When society loses a healthy founding myth, it descends into chaos,’ he told me. The author of ‘Chaos Monkeys,’ an acerbic Silicon Valley memoir, García Martínez wanted a refuge that would be far from cities but not entirely isolated. ‘All these dudes think that one guy alone could somehow withstand the roving mob,’ he said. ‘No, you’re going to need to form a local militia. You just need so many things to actually ride out the apocalypse.’ Once he started telling peers in the Bay Area about his ‘little island project,’ they came ‘out of the woodwork’ to describe their own preparations, he said. ‘I think people who are particularly attuned to the levers by which society actually works understand that we are skating on really thin cultural ice right now.’
“In private Facebook groups, wealthy survivalists swap tips on gas masks, bunkers, and locations safe from the effects of climate change. One member, the head of an investment firm, told me, ‘I keep a helicopter gassed up all the time, and I have an underground bunker with an air-filtration system.’ He said that his preparations probably put him at the ‘extreme’ end among his peers. But he added, ‘A lot of my friends do the guns and the motorcycles and the gold coins. That’s not too rare anymore.’…
“How did a preoccupation with the apocalypse come to flourish in Silicon Valley, a place known, to the point of cliché, for unstinting confidence in its ability to change the world for the better? … Those impulses are not as contradictory as they seem. Technology rewards the ability to imagine wildly different futures, Roy Bahat, the head of Bloomberg Beta, a San Francisco-based venture-capital firm, told me. ‘When you do that, it’s pretty common that you take things ad infinitum, and that leads you to utopias and dystopias,’ he said. It can inspire radical optimism—such as the cryonics movement, which calls for freezing bodies at death in the hope that science will one day revive them—or bleak scenarios. Tim Chang, the venture capitalist who keeps his bags packed, told me, ‘My current state of mind is oscillating between optimism and sheer terror.’
“In recent years, survivalism has been edging deeper into mainstream culture. In 2012, National Geographic Channel launched ‘Doomsday Preppers,’ a reality show featuring a series of Americans bracing for what they called S.H.T.F. (when the ‘shit hits the fan’). The première drew more than four million viewers, and, by the end of the first season, it was the most popular show in the channel’s history. A survey commissioned by National Geographic found that forty per cent of Americans believed that stocking up on supplies or building a bomb shelter was a wiser investment than a 401(k). Online, the prepper discussions run from folksy (‘A Mom’s Guide to Preparing for Civil Unrest’) to grim (‘How to Eat a Pine Tree to Survive’).”
You know that uneasy feeling you have about the future? That fear that things just might now work out as you might want? For those with the knowledge, the ability or the extreme motivation to act, well, they really do expect the worst and are planning for it. For those with tons of money, the plans are a bit more elaborate… but these are plans. What’s even more shocking is that we really don’t even think of them as idiosyncratic crazies anymore; many of wish we could join them behind safer walls. Are you one of them?
I’m Peter Dekom, and with radical change comes radical disruption that no one can really fully plan for or understand.