It’s a New American Dream and it’s only for the Super Rich

By Paul B. Farrell, MarketWatch

So you haven’t read Thomas Piketty’s “Capital in the Twenty-First Century?” The new bible on the history and future of global economic growth? Well, you’re in good company. Neither did Alan Greenspan, former Fed chairman, before his recent speech on the same subject, “worldwide prospects for economic growth.”

Worse, Greenspan was delivering his speech before 170 members of the eliteCouncil on Foreign Relations, whose 4,700 members include power players like Colin Powell, Madeleine Albright, Robert Rubin, Tom Brokaw and David Rockefeller.

And it gets even more bizarre: Not only haven’t most power players in politics and business, liberal or conservative, read it, they probably never will read the No. 1 international bestseller that’s igniting a revolution in economic thought.

So why aren’t America’s leaders reading it? Because they don’t have to read it. They believe they instinctively “know” its message. It’s that obvious. That Piketty was simply putting a solid statistical research foundation under a New American Dream for the Super Rich of the 21st century.

To fully understand, here’s some background on Greenspan’s speech, which was delivered two months after “Capital’s” early March pub date. He had lots of time to read it. Why didn’t he?

Why won’t American leaders read the most important economic book of the century? Why? Because Piketty’s bottom line is obvious: “When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based.” In short, the original American Dream is dead, the new one is only for the Super Rich.

Yes, instinctively our leaders understand Piketty’s bottom line. They already have their own preconceived theories of economic growth and inequality in the 21st century. They already have hard convictions on why, by 2100, the Super Rich will be richer and the poor poorer. So why waste time reading a boring 685-page book of facts? It won’t change their minds.

Nothing’s new from this behavioral psychology principle: Remember Greenspan’s congressional testimony a few years after the 2008 crash. After 18 years as Fed chair he finally admitted that trickle-down free-market economics failed America: “I made a mistake,” there was “a flaw in the model. Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief,” he told Congress. Unregulated markets were his mantra for decades. But then “the whole intellectual edifice, however, collapsed.” We’re still making the same mistake.

Why read Piketty? Your mind’s made up

Here’s how venture capitalist Michael Pocalyk explained this psychological phenomenon later in a newsletter for authors, the Algonquin Redux, under a simple headline: “Nobody Actually Reads Piketty.” Listen to Pocalyk:

“I’m a life member of the storied Council on Foreign Relations. … Greenspan was our luncheon speaker … was discussing worldwide prospects for economic growth.” After the host, Diane Farrell, global head of McKinsey’s Center for Government, and Greenspan finished, “the audience of CFR members got to ask questions.”

Sitting up front was Mitzi Wertheim, head of special projects at the Naval Postgraduate School. Her “hand shot up. She clearly wanted to ask the chairman something pressing. Diana Farrell nodded to her.” Wertheim’s question was about Piketty’s book, “which is of course the ‘it’ book of the moment, especially among political and economic liberals.”

The question: “Had Greenspan read it? What did he think?” Things suddenly got dicey. Diana Farrell interrupted: “Wait a second, before you answer, let me ask all of you . . . How many of you have read it? Show of hands, please.” Ooops.

Pocalyk presses you to “think about this for a moment. 170 Washington-based members of the Council on Foreign Relations and a major complement of the U.S. and international press corps — economic reporters — are in the room. Listening to Alan Greenspan. Arguably the most august assembly of economic policy elites that it is possible to assemble in America.”

Pocalyk “looked around and counted four hands!” Just four out of 170. Wertheim’s “was one of them. Mine was not. Neither was Alan Greenspan’s.”

Next, Farrell’s interrogation dug deeper: “‘OK. How many of you have read some review or commentary about it?’ You guessed right. Every hand in the room went up.”

Now here’s the lesson Pocalyk got out of this show-of-hands expose: “There have always been books whose impact and significance — particularly in high-literary and politico-cultural spheres of influence — are about their act of publication rather than their content because nobody reads them. We’ve all suspected that this is the case. Rarely do we get real empirical proof, much as I disagree with him.”

So America’s finally got the empirical proof. But so what? If we all already know it. Conservative and liberal, Republican and Democrat, everybody’s brain already knows instinctively how Piketty clearly distilled the New American Dream from a 685-page book to several words: By 2100, the Super Rich will be richer, the poor will be poorer. Obvious, right? So why read a long, boring book of facts, figures, charts and research about something you already know … or at least have ironclad convictions about it.

Debate’s settled. No reading. Find more opportunities. Get Super Rich

Yes, forget Piketty: Here are the real facts you need to know about a world mass-producing billionaires. Forbes, Bloomberg and CNBC all report an explosion of billionaires. From 322 in 2000 to 1,847 in 2014. China alone now has 358 billionaires. Africa has 29, added nine just last year. What’s more, the income of the world’s 85 richest billionaires is greater than the 3.5 billion in the bottom half. Plus Credit Suisse Bank predicts 11 trillionaire families in the world by 2100.

In “China Minting Millionaires in Global Wealth Surge,” Bloomberg BusinessWeek’s Dexter Roberts reports: “The number of millionaire families around the world reached 16.3 million last year, up from 13.7 million the year before.” The magazine’s Max Abelson also adds that individuals “worth $100 million or more has jumped 62% since 2003, to 37,104. Data confirming the Piketty trend, that the value of global private wealth grew far faster than global economic output, up 14.6% to $152 trillion, compared with an 8.6% increase in 2012,” and “much of the new money originated in the Asia-Pacific region.”

Forget politics. Irrelevant. The race to get super-richer is on, says Huffington Post’s Mark Gongloff in “Big Bank Explains To Rich People How To Profit Off Inequality.” He focuses on a Merrill-Lynch Hong Kong report: “On Wall Street, the debate about wealth inequality is all but over, except for finding ways to make tons of money from it. The rich are going to keep getting richer all over the world,” just as Piketty has been predicting.

Gongloff next makes a fascinating cultural observation: “Reminiscent of the ‘debate’ over climate change: While partisans might still haggle over its importance and/or existence, companies and governments with lives and treasure at stake are already adjusting to its reality. So too with rising wealth and income inequality,” especially in resource-rich nations.

In fact, Merrill Lynch, like Credit Suisse and other global banks, has been predicting Piketty-style inequality for over a decade in “economies where economic growth is powered by and largely consumed by the wealthy few …. While this might sound like a nightmare world,” especially for the middle class and poor, “it is also a chance to make a bunch of money, for those (mostly rich people) with the means to invest in companies that most profit from the wealthy elite. This includes luxury-goods makers, money managers and private banks.”

Surrender America, the Super Rich are winning … jump on the bandwagon

Face facts, this New American Dream is raging. Surrender to the inevitability of the Piketty Principle, that the Super Rich will get vastly richer, own more and more of the world. They won. They rule America. Rule the world. Have redefined the American Dream as the New Global Super Rich Dream. The old American Dream inspired all Americans, everyone in the world. But no more. The new dream is about a rapidly emerging world where more is never enough, ruled by the wealthiest one percent.

But at what cost? For in this dream world of our future … we are addicted to wealth … we have lost our moral compass … our inner spirit, our collective conscience … America has lost its soul.

Paul B. Farrell is a MarketWatch columnist based in San Luis Obispo, Calif. Follow him on Twitter @MKTWFarrell.