At the 2010 Aspen Ideas Festival, Michael Splinter, CEO of the Silicon Valley green-tech firm Applied Materials, confessed that if he were starting from scratch, only 20 percent of his workforce would be domestic. “This year, almost 90 percent of our sales will be outside the U.S.,” he explained. “The pull to be close to the customers—most of them in Asia—is enormous.” Speaking at the same conference, Thomas Wilson, CEO of Allstate, told a similar story: “I can get [workers] anywhere in the world. It is a problem for America, but it is not necessarily a problem for American business. . . . American businesses will adapt.”
Paul Volcker, the legendary inflation-fighting former head of the Federal Reserve, told me that at a 2012 dinner with a group of chief financial officers in Manhattan he had been struck by the global outlook of what he described as “so-called American companies”: “Implicitly, they don’t think of themselves as American anymore,” he said. “They are international companies. If the American government doesn’t treat them right they will move their headquarters abroad. These companies are more likely to man their foreign branches with foreigners than they are Americans, and they send foreigners to run their American operations.”
Mohamed El-Erian, the CEO of Pimco, the world’s largest bond manager, is typical of the global nomads gradually rising to the top echelons of U.S. business in this international age. The son of an Egyptian father and French mother, El-Erian had a peripatetic childhood, shuttling between Paris, Cairo, New York, and London. He was educated at Cambridge and Oxford and now works for a U.S.-based company that is owned by the German financial conglomerate Allianz SE.
Though El-Erian lives in Newport Beach, California, where Pimco is headquartered, he says that he can’t name a single country as his own. “I have three passports,” El-Erian told me on a recent visit to New York. “I don’t belong to any one country. I belong to many and to the world.” As he talked, we walked through midtown, which El-Erian remembered fondly from his childhood, when he’d take the crosstown bus each day to the United Nations School. That evening, El-Erian was catching a flight to London. Later in the week, he was due in St. Petersburg.
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Indeed, there is a growing sense, at GE and beyond, that American businesses that don’t internationalize aggressively risk being left behind. For all its global reach, Pimco is still based in the United States. But the flows of goods and capital upon which the super-elite surf are bypassing America more often than they used to. Take, for example, Stephen Jennings, the fifty-two-year-old New Zealander who cofounded the investment bank Renaissance Capital. Renaissance’s roots are in Moscow, where Jennings maintains his primary residence (he also has farms in Oxfordshire and New Zealand, and his children go to school in England), and his business strategy involves positioning the firm to capture the investment flows between the emerging markets, particularly Russia, Africa, and Asia. For his purposes, New York is increasingly irrelevant. In a 2009 speech in Wellington, New Zealand, he offered his vision of this post-unipolar business reality: “The largest metals group in the world is Indian. The largest aluminum group in the world is Russian. . . . The fastest-growing and largest banks in China, Russia, and Nigeria are all domestic.”
As it happens, one of the fellow tenants in Jennings’s high-tech, high-rise Moscow office building recently put together a deal that exemplifies just this kind of intra-emerging-market trade. In the spring of 2010, Digital Sky Technologies (DST), Russia’s largest investment firm, entered into a partnership with the South African media corporation Naspers and the Chinese technology company Tencent. All three are fast-growing firms with global vision—in the fall of 2010, a DST spin-off named Mail.ru went public and instantly become Europe’s highest-valued Internet company, with a market capitalization of $5.71 billion—yet none is focused on the United States. A similar example of the intra-emerging-market economy was Indian telecom giant Bharti Enterprises’ acquisition of most of the African properties of Kuwait-based telecom Zain. A California technology executive—himself a global nomad who has lived and worked in Europe and Asia—explained to me that a company like Bharti has a competitive advantage in what he believes will be the exploding African market: “They know how to provide mobile phones so much more cheaply than we do. In a place like Africa, how can Western firms compete?”
ARISTOCRACY OF IDEAS
Just as the railroad created new cities, private jets and private jet time-shares like NetJets have contributed to the globalization of the super-elite—owning homes and doing deals around the world becomes feasible when you can travel the planet as easily as the middle class steps into a car. New technologies have helped, too—instant and mobile communication makes it possible to live on the move and around the world. So have the political revolutions that have opened up so many of the world’s borders over the past twenty years.
The most important shift, however, was the one foreseen by Adam Smith in The Wealth of Nations. Writing in 1776 at the very beginning of the industrial revolution, he predicted that as fortunes shifted from acres to shares they would become more mobile: “The proprietor of land is necessarily a citizen of the particular country in which his estate lies. The proprietor of stock is properly a citizen of the world, and is not necessarily attached to any particular country.”
Smith could see that manufacturing companies, and the disaggregated owners of their stock, would eventually eclipse land as the engine of the economy. The technology revolution, which has created a new and powerful sphere of economic activity that has almost no physical manifestation at all, has taken that trend exponentially further. The result, as Smith anticipated, is an elite driven by its economic interests to think global: “He [the owner of stock] would be apt to abandon the country in which he was exposed to a vexatious inquisition in order to be assessed to a burdensome tax, and would remove his stock to some other country where he could either carry on his business or enjoy his fortune more at his ease.” But while capital—and capitalists—have gone global, governments and most of their middle-class citizens operate within national boundaries. Figuring out how the plutocrats are connected to the rest of us is one of the challenges of the rise of the global super-elite.
Harry Mount, the Spectator essayist, is grudgingly grateful to the global super-elite for “buying” the traditional summer social calendar of English high society and sprucing it up—“the rackety, amateurish, faded charms of English high summer have been replaced by a professionalised, slick operation, supercharged by oceans of international cash.”
But the irony of this overseas acquisition is that while the debutante balls and hunts and regattas of yesteryear may not be quite obsolete, they are certainly headed in that direction. The real community life of the twenty-first-century plutocracy occurs on the international conference circuit. “We don’t have castles and noble titles, so how else do you indicate you’re part of the elite?” Andrew Zolli of PopTech, an ideas forum and social innovation network, told New York magazine.
The best known of these events is the World Economic Forum’s annual meeting in Davos, Switzerland, invitation to which marks an aspiring plutocrat’s arrival on the international scene—and where, in lieu of noble titles, an elaborate hierarchy of conference badges has such significance that one first-time participant remarked that the staring at his chest made him realize for the first time what it must be like to have cleavage. The Bilderberg Group, which meets annually at locations in Europe and North America, is more exclusive still—and more secretive—though it is more focused on geopolitics and less on global business and philanthropy. The Boao Forum, convened on Hainan Island each spring, offers evidence both of China’s growing economic importance and of its understanding of the culture of the global plutocracy. Bill Clinton is pushing hard to win his Clinton Global Initiative a regular place on the circuit. The annual TED conference (the acronym stands for Technology, Entertainment, Design) is an important stop for the digerati, as is the DLD (Digital-Life-Design) gathering Israeli technology
entrepreneur Yossi Vardi cohosts with publisher Hubert Burda in Munich each January (so convenient if you are en route to Davos). Herb Allen’s Sun Valley gathering is the place for media moguls, and the Aspen Institute’s Ideas Festival is for the more policy-minded, with a distinctly U.S. slant. There is nothing implicit, at these gatherings, about the sense of belonging to a global elite. As Chris Anderson, the curator of the TED talks, told one gathering: “Combined, our contacts reach pretty much everyone who’s interesting in the country, if not the planet.”
Recognizing the value of such global conclaves, some corporations have begun hosting their own. Among these is Google’s Zeitgeist conference, where I have moderated discussions for several years. One of its recent gatherings was held in May 2010 at the Grove, a former provincial estate in the English countryside whose three-hundred-acre grounds have been transformed into a golf course and whose high-ceilinged rooms are now decorated with a mixture of antique and contemporary furniture. (Mock Louis XIV chairs—made, with a wink, from high-end plastic—are much in evidence.) Cirque du Soleil offered the five hundred guests a private performance in an enormous tent erected on the grounds; the year before that, to celebrate its acquisition of YouTube, Google flew in overnight Internet sensations from around the world.
Yet for all its luxury, the mood of the Zeitgeist conference is hardly sybaritic. Rather it has the intense, earnest atmosphere of a gathering of college summa cum laudes. This is not a group that plays hooky: the conference room is full from nine a.m. to six p.m. on conference days, and during coffee breaks the lawns are crowded with executives checking their BlackBerrys and iPads.
The 2010 lineup of Zeitgeist speakers included such notables as Archbishop Desmond Tutu, London mayor Boris Johnson, and Starbucks CEO Howard Schultz (not to mention, of course, Google’s own CEO, Eric Schmidt). But the most potent currency at this and comparable gatherings is neither fame nor money. Rather, it’s what author Michael Lewis has dubbed “the new new thing”—the insight or algorithm or technology with the potential to change the world. Hence the presence of three Nobel laureates, including Daniel Kahneman, a pioneer in behavioral economics. One of the business stars in attendance was then thirty-six-year-old entrepreneur Tony Hsieh, who had sold his Zappos online shoe retailer to Amazon for more than a billion dollars the previous summer. And the most popular session of all was the one in which Google showed off some of its new inventions, including the Nexus phone.
This geeky enthusiasm for innovation and ideas is evident at more intimate gatherings of the global elite as well. Take the elegant Manhattan dinner parties hosted by Marie-Josée Kravis, the economist wife of private equity billionaire Henry Kravis in their elegant Upper East Side apartment. Though the china is Sèvres and the paintings are Old Masters, the dinner table conversation would not be out of place in a graduate seminar. Mrs. Kravis takes pride in bringing together not only plutocrats such as her husband and Michael Bloomberg, but also thinkers and policy makers such as Richard Holbrooke, Robert Zoellick, and Financial Times columnist Martin Wolf, and leading them in discussion of issues ranging from global financial imbalances to the war in Afghanistan.
In fact, the idea conference is so trendy that a couple of New Yorkers recently hosted an ideas wedding. When David Friedlander and Jacqueline Schmidt married in Brooklyn in December 2011, their guests were issued name tags that asked them to declare a commitment. Another card urged, “Name one action you can take in the next twenty-four hours that is aligned with your commitment.” Instead of boozy speeches about the bride and groom delivered by nervous family and friends, the main entertainment was a series of TED-style talks, complete with PowerPoint presentations, about issues the couple cares about—neuroscience, the environment, and holistic healing.
A thought-leadership wedding just might be going a step too far—the Friedlander/Schmidt nuptials were snarkily chronicled in the New York Times and panned by Gawker, although the more earnest Huffington Post gave the pair a thumbs up. But in this age of elites who delight in such phrases as “out of the box” and “killer app,” arguably the most coveted status symbol isn’t a yacht, a racehorse, or a knighthood; it’s a philanthropic foundation—and, more than that, one actively managed in ways that show its sponsor has big ideas for reshaping the world.
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George Soros, who turned eighty in the summer of 2010, is a pioneer and role model for the socially engaged billionaire. Arguably the most successful investor of the postwar era, he is nonetheless most proud of his Open Society Foundations, through which he has spent billions of dollars on causes as diverse as drug legalization, civil society in central and eastern Europe, and rethinking economic assumptions in the wake of the financial crisis.
Inspired and advised by the liberal Soros, Pete Peterson—himself a Republican and former Nixon cabinet member—has spent $1 billion of his Blackstone windfall on a foundation dedicated to bringing down America’s deficit and entitlement spending. Bill Gates, likewise, devotes most of his energy and intellect today to his foundation’s work on causes ranging from supporting charter schools to combating disease in Africa. Facebook founder Mark Zuckerberg has yet to reach his thirtieth birthday, but last fall he donated $100 million to improving Newark’s public schools. Insurance and real estate magnate Eli Broad has become an influential funder of stem cell research and school reform; Jim Balsillie, a cofounder of BlackBerry creator RIM, has established his own international affairs think tank; the list goes on and on. It is not without reason that Bill Clinton has devoted his postpresidency to the construction of a global philanthropic “brand.”
The super-wealthy have long recognized that philanthropy, in addition to its moral rewards, can also serve as a pathway to social acceptance and even immortality. Andrew “The Man Who Dies Rich Dies Disgraced” Carnegie transformed himself from robber baron to secular saint with his hospitals, concert halls, libraries, and universities; Alfred Nobel ensured that he would be remembered for something other than the invention of dynamite. What is notable about today’s plutocrats is that they tend to bestow their fortunes in much the same way they made them: entrepreneurially. Rather than merely donate to worthy charities or endow existing institutions (though they of course do this as well), they are using their wealth to test new ways to solve big problems.
Their approach is different enough to have inspired a new phrase, “philanthro-capitalism,” which is also the title of a book by Matthew Bishop and Michael Green. Bishop and Green explain: “The new philanthropists believe they are improving philanthropy, equipping it to tackle the new set of problems facing today’s changing world. . . . [They] are trying to apply the secret behind their money-making success to their giving.”
“What they are doing is much more trying to copy business techniques and ways of thinking,” Bishop told me. “There is a connection between their ways of thinking as businesspeople and their ways of giving. If you compare it with previous eras, in each era going back to the Middle Ages the entrepreneurs have been among the people leading the response to the destruction caused by the economic processes that made them rich. You saw it in the Middle Ages, you saw it with the Victorians, you saw it with Carnegie and Rockefeller. What is different is the scale. Business is global and so they are focusing on global problems. They are much more focused on how do they achieve a massive impact. They are used to operating on a grand scale and so they want to operate on a grand scale in their philanthropy as well. And they are doing it at a much younger age.”
A measure of the importance of public engagement for today’s super-rich is the zeal with which even emerging market plutocrats are developing their own foundations and think tanks. When the oligarchs of the former Soviet Union first burst out beyond their own borders, they were a Marxist caricature of the nouveaux riches: purchasing yachts and sports teams and surrounding themselves with couture-clad supermodels. Fifteen years later, they are exploring how to buy their way into the world of ideas.
One of the most determin
ed is the Ukrainian entrepreneur Victor Pinchuk, whose business empire ranges from pipe manufacturing to TV stations. With a net worth of $4.2 billion, Pinchuk is no longer content merely to acquire modern art. In 2009, he launched a global competition for young artists run by his Pinchuk Art Centre in Kiev, conceived as a way of bringing Ukraine into the international cultural mainstream. Pinchuk hosts a regular lunch on the fringes of Davos (Chelsea Clinton was the celebrity moderator in 2012) and has launched his own annual “ideas” forum, a gathering devoted to geopolitics that is held, with suitable modesty, in the same Crimean villa where Stalin, Roosevelt, and Churchill conducted the Yalta Conference. The September 2010 meeting, where I served as a moderator, included Dominique Strauss-Kahn, then head of the International Monetary Fund; Polish president Bronislaw Komorowski; and Alexei Kudrin, then the Russian deputy prime minister and finance minister. At a gala dinner, keynote speaker Bill Clinton addressed, ironically enough, the economic consequences of growing inequality.
As an entrée into the global super-elite, Pinchuk’s efforts seem to be working. On a visit to the United States in 2010, the oligarch met with top Obama adviser David Axelrod in Washington and schmoozed with Charlie Rose at a New York book party for Time magazine editor Rick Stengel. On a previous trip, he’d dined with Caroline Kennedy at the Upper East Side town house of HBO chief Richard Plepler. Back home, he has entertained fellow art enthusiast Eli Broad at his palatial estate outside Kiev (which features its own nine-hole golf course and Japanese garden, built by Japanese carpenters), and has partnered with Soros to finance Ukrainian civil society projects.
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