Recently, I went to my 25th reunion at the Johns Hopkins School of Advanced International Studies. Originally set up as a master’s program for international bureaucrats and diplomats, by the time we graduated in the early 1980s, its administrators had seen the writing on the wall — or on Wall Street — and begun beefing up the curriculum with courses on international economics and finance.
It was the time when financial markets around the globe first took off, and by our 10th reunion most of us were working in the financial services industry. Now, having reached a ruddy middle age, many of my classmates are either catering to the needs of high-net-worth individuals — or have become such individuals themselves.
Indeed, personal wealth has exploded over the past two decades. The Forbes list of 400 richest Americans, when first published in 1982, was headed by a man worth $4 billion in today’s dollars. By 2005, Bill Gates held the top spot with over $50 billion, and you needed at least $900 million to be mentioned — vs. $200 million back then.
As to mere millionaires — people who earn at least $1 million per year — they’ve become a dime a dozen. U.S. households reporting seven-figure incomes totaled 181,282 in 2003, meaning that about half a million Americans live in families earning a million or more. And this is only the tip of the iceberg, since there are probably many more households with net worth in the seven figures.
More recently, the money-making frenzy has spread throughout the world. Russia has the largest number of billionaires after the U.S. and Germany, with 33. China has over 300,000 people with net worth above $1 million. A banker friend recently traveled to India to meet with medium-sized computer and service industry firms. As he talked to his clients, he noticed that they were constantly checking stock prices in exchanges all over the world. Whoever called the ’80s the Decade of Greed obviously jumped the gun.
Dealing with Strangers
What makes so many smart and ambitious individuals around the world pursue wealth so single-mindedly? After all, it wasn’t always the case.
The answer is globalization. It not only creates new opportunities to make money, but it also increases the value of wealth as a measure of success. As traditional societies melt into a global culture, traditional rewards and marks of distinction disappear, and success becomes increasingly monetized — that is, counted in hard cash.
In contrast, feudal societies in medieval Europe were an extension of family relationships. The feudal lord commanded the allegiance of his vassals, rewarding them with honors and valuable gifts. Peasants worked his fields and received protection, lodgings and food. Broadly speaking, all those people were part of the feudal lord’s extended household. Money, which had been widely used in the ancient world, almost completely disappeared in the Middle Ages.
The same is true of traditional societies around the world today, where some 3 billion people live on less than $2 per day. In recent years, millions of Indians have seen their monetary incomes rise sharply. They are just as poor — but they have entered the global money economy.
In his book The Jewish Century, Berkeley historian Yuri Slezkine points out that in traditional societies making a profit off a community member was frowned upon. Commerce and money lending — occupations that have a built-in profit requirement — were often reserved to people “outside” the community. In Europe, such “outsiders” were Jews and Gypsies, in Southeast Asia overseas Chinese, in the Caribbean Indians and in South America Arabs.
Being outside society’s reward system, those groups were forced to seek their success by monetary means. Not surprisingly, all those groups were viewed by the majority population as greedy or money-grabbing.