Penguin Press - Best Articles of 2012
We’re highlighting our favorite articles and stories from the past twelve months or so. Enjoy:

New York Times: “The Self-Destruction of the 1%”
by Chrystia Freeland
In the early 14th century, Venice was one of the richest cities in Europe. At the heart of its economy was the colleganza, a basic form of joint-stock company created to finance a single trade expedition. The brilliance of the colleganza was that it opened the economy to new entrants, allowing risk-taking entrepreneurs to share in the financial upside with the established businessmen who financed their merchant voyages.
Venice’s elites were the chief beneficiaries. Like all open economies, theirs was turbulent. Today, we think of social mobility as a good thing. But if you are on top, mobility also means competition. In 1315, when the Venetian city-state was at the height of its economic powers, the upper class acted to lock in its privileges, putting a formal stop to social mobility with the publication of the Libro d’Oro, or Book of Gold, an official register of the nobility. If you weren’t on it, you couldn’t join the ruling oligarchy.
The political shift, which had begun nearly two decades earlier, was so striking a change that the Venetians gave it a name: La Serrata, or the closure. It wasn’t long before the political Serrata became an economic one, too. Under the control of the oligarchs, Venice gradually cut off commercial opportunities for new entrants. Eventually, the colleganza was banned. The reigning elites were acting in their immediate self-interest, but in the longer term, La Serrata was the beginning of the end for them, and for Venetian prosperity more generally. By 1500, Venice’s population was smaller than it had been in 1330. In the 17th and 18th centuries, as the rest of Europe grew, the city continued to shrink.
The story of Venice’s rise and fall is told by the scholars Daron Acemoglu and James A. Robinson, in their book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty,” as an illustration of their thesis that what separates successful states from failed ones is whether their governing institutions are inclusive or extractive. Extractive states are controlled by ruling elites whose objective is to extract as much wealth as they can from the rest of society. Inclusive states give everyone access to economic opportunity; often, greater inclusiveness creates more prosperity, which creates an incentive for ever greater inclusiveness.
The history of the United States can be read as one such virtuous circle. But as the story of Venice shows, virtuous circles can be broken. Elites that have prospered from inclusive systems can be tempted to pull up the ladder they climbed to the top. Eventually, their societies become extractive and their economies languish.
That was the future predicted by Karl Marx, who wrote that capitalism contained the seeds of its own destruction. And it is the danger America faces today, as the 1 percent pulls away from everyone else and pursues an economic, political and social agenda that will increase that gap even further — ultimately destroying the open system that made America rich and allowed its 1 percent to thrive in the first place.
You can see America’s creeping Serrata in the growing social and, especially, educational chasm between those at the top and everyone else. At the bottom and in the middle, American society is fraying, and the children of these struggling families are lagging the rest of the world at school.
Economists point out that the woes of the middle class are in large part a consequence of globalization and technological change. Culture may also play a role. In his recent book on the white working class, the libertarian writer Charles Murray blames the hollowed-out middle for straying from the traditional family values and old-fashioned work ethic that he says prevail among the rich (whom he castigates, but only for allowing cultural relativism to prevail).
There is some truth in both arguments. But the 1 percent cannot evade its share of responsibility for the growing gulf in American society. Economic forces may be behind the rising inequality, but as Peter R. Orszag, President Obama’s former budget chief, told me, public policy has exacerbated rather than mitigated these trends.
Read on

Illustration by Gianni Dagli Orti/Art Resource

Penguin Press - Best Articles of 2012

We’re highlighting our favorite articles and stories from the past twelve months or so. Enjoy:

New York Times: “The Self-Destruction of the 1%”

by Chrystia Freeland

In the early 14th century, Venice was one of the richest cities in Europe. At the heart of its economy was the colleganza, a basic form of joint-stock company created to finance a single trade expedition. The brilliance of the colleganza was that it opened the economy to new entrants, allowing risk-taking entrepreneurs to share in the financial upside with the established businessmen who financed their merchant voyages.

Venice’s elites were the chief beneficiaries. Like all open economies, theirs was turbulent. Today, we think of social mobility as a good thing. But if you are on top, mobility also means competition. In 1315, when the Venetian city-state was at the height of its economic powers, the upper class acted to lock in its privileges, putting a formal stop to social mobility with the publication of the Libro d’Oro, or Book of Gold, an official register of the nobility. If you weren’t on it, you couldn’t join the ruling oligarchy.

The political shift, which had begun nearly two decades earlier, was so striking a change that the Venetians gave it a name: La Serrata, or the closure. It wasn’t long before the political Serrata became an economic one, too. Under the control of the oligarchs, Venice gradually cut off commercial opportunities for new entrants. Eventually, the colleganza was banned. The reigning elites were acting in their immediate self-interest, but in the longer term, La Serrata was the beginning of the end for them, and for Venetian prosperity more generally. By 1500, Venice’s population was smaller than it had been in 1330. In the 17th and 18th centuries, as the rest of Europe grew, the city continued to shrink.

The story of Venice’s rise and fall is told by the scholars Daron Acemoglu and James A. Robinson, in their book “Why Nations Fail: The Origins of Power, Prosperity, and Poverty,” as an illustration of their thesis that what separates successful states from failed ones is whether their governing institutions are inclusive or extractive. Extractive states are controlled by ruling elites whose objective is to extract as much wealth as they can from the rest of society. Inclusive states give everyone access to economic opportunity; often, greater inclusiveness creates more prosperity, which creates an incentive for ever greater inclusiveness.

The history of the United States can be read as one such virtuous circle. But as the story of Venice shows, virtuous circles can be broken. Elites that have prospered from inclusive systems can be tempted to pull up the ladder they climbed to the top. Eventually, their societies become extractive and their economies languish.

That was the future predicted by Karl Marx, who wrote that capitalism contained the seeds of its own destruction. And it is the danger America faces today, as the 1 percent pulls away from everyone else and pursues an economic, political and social agenda that will increase that gap even further — ultimately destroying the open system that made America rich and allowed its 1 percent to thrive in the first place.

You can see America’s creeping Serrata in the growing social and, especially, educational chasm between those at the top and everyone else. At the bottom and in the middle, American society is fraying, and the children of these struggling families are lagging the rest of the world at school.

Economists point out that the woes of the middle class are in large part a consequence of globalization and technological change. Culture may also play a role. In his recent book on the white working class, the libertarian writer Charles Murray blames the hollowed-out middle for straying from the traditional family values and old-fashioned work ethic that he says prevail among the rich (whom he castigates, but only for allowing cultural relativism to prevail).

There is some truth in both arguments. But the 1 percent cannot evade its share of responsibility for the growing gulf in American society. Economic forces may be behind the rising inequality, but as Peter R. Orszag, President Obama’s former budget chief, told me, public policy has exacerbated rather than mitigated these trends.

Read on

Illustration by Gianni Dagli Orti/Art Resource

Should the top 1% distribute money through a “self tax,” instead of giving it to the government? Chrystia Freeland, bestselling author of Plutocrats, talks to the 92nd St Y about some of the surprising things she learned in her interviews with billionaires.

This credit card is made entirely of gold, diamonds, and pearls. It costs $65,000 to produce and is modestly called the “Visa Infinite Exclusive.” 
What else does the card come with? How about life insurance, a free iPhone 5, and a much heavier wallet?
For more on the buying habits and behavior of the top 0.01%, we refer you to Chrystia Freeland’s excellent Plutocrats (currently a New York Times bestseller!).

This credit card is made entirely of gold, diamonds, and pearls. It costs $65,000 to produce and is modestly called the “Visa Infinite Exclusive.” 

What else does the card come with? How about life insurance, a free iPhone 5, and a much heavier wallet?

For more on the buying habits and behavior of the top 0.01%, we refer you to Chrystia Freeland’s excellent Plutocrats (currently a New York Times bestseller!).

We’re hosting a live discussion of the Presidential Debate at Reuters.com immediately afterward via Google Hangout. Join us!
The roundtable will be hosted by Chrystia Freeland, author of Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, Pulitzer Prize-winner Dan Yergin, author of The Quest: Energy, Security, and the Remaking of the Modern World, and David Nasaw, bestselling author of The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy.
(In other words, an expert on income inequality, an expert on energy, and a biographer of cultural history.)

We’re hosting a live discussion of the Presidential Debate at Reuters.com immediately afterward via Google Hangout. Join us!

The roundtable will be hosted by Chrystia Freeland, author of Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, Pulitzer Prize-winner Dan Yergin, author of The Quest: Energy, Security, and the Remaking of the Modern World, and David Nasaw, bestselling author of The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy.


(In other words, an expert on income inequality, an expert on energy, and a biographer of cultural history.)

"When the original “Wall Street” movie came out in 1987, bankers made $2 to $3 million a year and that was thought of as an exorbitant amount of money. Now, the super-rich can expect to earn $20 to $30 million a year. Those making $5 or $10 million probably don’t feel like they are making enough. As overheard at a Manhattan dinner party, an elite wife commented: “You know, the thing about 20”—by this, she meant $20 million a year—“is 20 is only 10 after taxes.”"

— Chrystia Freeland, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else

Our Google Hangout with Reuters is live! Featuring Chrystia Freeland, Daniel Yergin, and David Nasaw.

Reuters Global Editor-at-Large Chrystia Freeland will host the discussion. Freeland is the author of Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. You may have also seen her amazing New Yorker piece on the 1% this week.

She will be joined by David Nasaw, award-winning author of the bestseller Andrew Carnegie and November’s The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy. Nasaw will provide a historian’s perspective on the cultural and political forces shaping the election.

The roundtable will also include Pulitzer Prize winner Daniel Yergin, the globally recognized expert on energy and author of the New York Times bestseller The Quest: Energy, Security, and the Remaking of the Modern World. The Wall Street Journal recently interviewed him on China, the U.S. oil boom, and what to expect in 2013.

(Source: youtube.com)

Announcing! The Presidential Debate Roundtable,
presented by Reuters and the Penguin Press

Barack Obama and Mitt Romney square off from 9:30-10:30pm EST on Wednesday. Immediately following the debate, join us at 10:40pm for a live Google Hangout with a panel of award-winning authors. (Or, we suppose, you could watch a bunch of pundits analyze their performance.)

We’ll answer questions like: Did Obama sufficiently address income inequality? What would the future of energy look like in a Romney administration? How does the political moment differ from previous elections?

Reuters Global Editor-at-Large Chrystia Freeland will host the discussion. Freeland is the author of Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else. You may have also seen her amazing New Yorker piece on the 1% this week.

She will be joined by David Nasaw, award-winning author of the bestseller Andrew Carnegie and November’s The Patriarch: The Remarkable Life and Turbulent Times of Joseph P. Kennedy. Nasaw will provide a historian’s perspective on the cultural and political forces shaping the election.

The roundtable will also include Pulitzer Prize winner Daniel Yergin, the globally recognized expert on energy and author of the New York Times bestseller The Quest: Energy, Security, and the Remaking of the Modern World. The Wall Street Journal recently interviewed him on China, the U.S. oil boom, and what to expect in 2013.

We hope you’ll join us Wednesday evening. You don’t need to sign up, donate, or register. Simply visit Reuters.com after the Presidential Debate.