By: Maurice E. Duhon, Jr.
Maybe the 70's weren't that bad?
The following are excerpts taken from a Citigroup, Inc. memo, distributed within its ranks in 2006. Citigroup entitled the original memo, “Revisiting Plutonomy” in 2005. As you read the contents of the “Part 2” extension to the the 2005 memo please keep in mind, the word “plutonomy” is a newly created word. The word “plutonomy” was created by the very author or authors of the original 2005 Citigroup memo. As I write this entry and type the word plutonomy into my laptop’s keyboard, the word processing program refuses to recognize plutonomy as a word found in the English language.
The authors of this memo believe the word plutonomy to be defined as:
- Economic growth that is powered and consumed by the wealthiest upper class of society. Plutonomy refers to a society where the majority of the wealth is controlled by an ever-shrinking minority; as such, the economic growth of that society becomes dependent on the fortunes of that same wealthy minority.
Plutonomy, is being used by Citigroup, Inc. as a “gentle” word to explain the incredible growth of the U.S. economy during a period of increasing interest rates, commodity prices and an inflated national debt. Citigroup analysts believe if an economy continues to grow in the face of hardships and economic struggle for its middle and lower class citizens, the more important the ultra-rich of our country become and thus will be expected to control all commerce and maintain such growth. Citigroup believes the U.S., Canada, Great Britain and China are all becoming plutonomies.
The word that actually does exist and is very similar to the coined phrase “plutonomy” is the word Plutocracy. According to Webster’s Dictionary, Plutocracy is defined as-
n. 1. A form of government in which the supreme power is lodged in the hands of the wealthy classes; government by the rich; also, a controlling or influential class of rich men.
Our United States of America was founded by men who were attempting to create a constitution that would prevent a Plutocracy from becoming our nation’s ruling class. Our founding fathers, some political heretics are so willing to exploit, believed the United States of America would be a land, for the people, by the people.
It was once noted, in a European courtyard in the later years of Benjamin Franklin’s life, he approached a group of men in Europe who were involved in an argument that concerned who would claim the throne after their King’s recent death. Benjamin Franklin was heard to say, “In America, the people govern themselves.” Does this still ring true today?
Citigroup’s so-called “plutonomy” is the inner-core of the wrecking ball that has been used to demolish the present- day American middle class. The concept of a functioning and legislatively supported “Plutonomy” is the anti-thesis to our beloved and hallowed United States Constitution and, until it is addressed, will continue to exist as a dark stain that only hinders and is the enemy to any progress for the betterment of the working class American citizen, for our nation’s days to come.
Citigroup Mar 5 2006 Plutonomy Report Part 2:
Revisiting Plutonomy: The Rich Getting Richer
“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 enfranchisement 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”
The memo goes on to state…
“Our thesis is that the rich are the dominant drivers of demand in many economies around the world (the US, UK, Canada and Australia). These economies have seen the rich take an increasing share of income and wealth over the last 20 years, to the extent that the rich now dominate income, wealth and spending in these countries.
“Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in the plutonomy countries.
“Also, new media dissemination technologies like internet downloading, cable and satellite TV have disproportionately increased the audiences, and hence gains to “superstars” – think golf, soccer and baseball players, music/TV and movie icons, fashion models, designers, celebrity chefs, etc.
“These ‘content’ providers, the tech whizzes who own the pipes and distribution, the lawyers and bankers who intermediate globalization and productivity, the CEOs who lead the charge in converting globalization and technology to increase the profit share of the economy at the expense of labor, all contribute to plutonomy.
Citigroup then gives us some hope for the future…
“Despite being in great shape, we think that global capitalists are going to be getting an even greater share of the wealth pie over the next few years, as capitalists benefit disproportionately from globalization and the productivity boom, at the relative expense of labor. As we believe plutonomy explains away some of the conundrums [low consumer confidence, high consumption, low savings rates, etc.].”