It's time to dance around the Maypole and sing!
I can remember when May Day meant a handful of aging Communists wheezing through the Internationale in Thompson Square Park.
Well, over the last 6 years, things have changed. May Day is now a big day in Queens. Thousands of immigrant workers rally in Queens on May 1st. This year, they're rallying in Union Square and will march to Wall Street. It's a lovely day for marching. It will be sunny and warm today. With the weather today, and Arizona flipping Latinos everywhere the bird, the turnout will probably be big.
Apart from Arizona behaving badly, we all have good reason to wake up and sing today. Welcome to the world of "plutonomy." It's a variation of "plutocracy" which means rule by the rich. "Plutonomy" means an economy controlled by and for the wealthy. That word was coined not by some lefty economics professor at Berkeley, but by Citigroup. Citigroup explains it all to you here complete with charts and graphs. You can read part 2 of Citigroup's full report here.
Here is one of many little gems from page 2 of Part 2 of Citigroup's report:
Why as equity investors do we care about these issues? Despite being in great shape, we think global capitalists are going to get an even greater share of the wealth pie over the next five years, as capitalists benefit disproportionately from globalization and the productivity boom at the relative expense of labor. As we believe plutonomy explains away many of the conundrums we highlighted above, we are very relaxed about these issues.
Indeed, if the rich keep getting richer, as we suggest, savings rates might get even worse in plutonomy countries. If plutonomy explains away many conundrums that our equity clients worry about, then this suggests that the risk premia ascribed to equities might be too high.
Furthermore, if the rich will be getting even richer in the coming years, this bodes extremely well for businesses selling to or servicing the rich, for example luxury goods, or stocks, or private banks. The rich are a growing captive market, who have the nice habit of relatively little price elasticity. The plutonomy basket of luxury goods, stocks, private banks, etc. has handsomely outperformed the S&P500 index since 1986, and we expect similar outperformance from these types of stocks in years to come. In the last 3 months these stocks have outperformed the MSCI AC World Index by 7%.
For these reasons, the recently released US Survey of Consumer Finances which confirm that the rich continue to get wealthier and account for a disproportionate share of income and wealth is important. It confirms that the dynamics of plutonomy are still intact.
What all this MBA gobbledygook says is that you and your puny little life are but a tiny cipher in someone else's cost-benefit analysis, that your future will be to service your Princes. The report says that the market for princely services outperformed and out produced the actual productive part of the economy where the rest of us live and work (the Standard and Poor's index), and has done so for more than 20 years. So, you can practice saying "Your Grace," "Your Highness," "Your Ladyship," and "Your Lordship," or you can fight for your homes and families.
Every time I see the American flag on the Stock Exchange building, I remember what a retired corporate VP friend of mine said, "Well of course they fly the flag. They own it." I remember sitting on the steps of the Federal Hall Memorial about a month after September 11th looking at the massive flag on the front of the Stock Exchange and wondering just how patriotic is it to maintain overseas tax shelters in a time of national calamity.
My country and your country (no matter which one it is) mean nothing more to Our Betters than places on a map and another set of regulations and tax laws. Their loyalty is to the Bottom Line over any other loyalty. Perhaps governments should bear this in mind and treat the international "plutonomy" accordingly. When the redcoats are coming by land and by sea, don't count on John Galt.
Our Betters have sold us all down the river. From bishops covering for kid-rapers to epic grand larceny on Wall Street to mine disasters and oil spills, it should be clear by now that Our Betters don't give a rat's ass about us. It's time to take matters into our own hands with co-ops, credit unions, labor unions, new political parties, and elected and accountable bishops.
We cannot have plutocracy and democracy. Two "--ocracies" cannot exist in the same place anymore than two stones can occupy the same space. We can have one or the other, but not both.
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