State of the Union January/February 2011

The Rise of the New Global Elite

F. Scott Fitzgerald was right when he declared the rich different from you and me. But today’s super-rich are also different from yesterday’s: more hardworking and meritocratic, but less connected to the nations that granted them opportunity—and the countrymen they are leaving ever further behind.
Philanthrocapitalism

George Soros, who turned 80 last summer, is a pioneer and role model for the socially engaged billionaire. Arguably the most successful investor of the post-war era, he is nonetheless proudest of his Open Society Foundations, through which he has spent billions of dollars on issues as diverse as marijuana 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, Peter Peterson—himself a Republican and former member of Nixon’s Cabinet—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’s Zuckerberg has yet to reach his 30th birthday, but last fall he donated $100 million to improving the public schools of Newark, New Jersey. Insurance and real-estate magnate Eli Broad has become an influential funder of stem-cell research; Jim Balsillie, a co-founder of BlackBerry creator Research in Motion, has established his own international-affairs think tank; and on and on. It is no coincidence that Bill Clinton has devoted his post-presidency 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 university; 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. The journalists Matthew Bishop and Michael Green have dubbed the approach “philanthrocapitalism” in their book of the same name. “There is a connection between their ways of thinking as businesspeople and their ways of giving,” Bishop told me. “They are used to operating on a grand scale, and so they operate on a grand scale in their philanthropy as well. And they are doing it at a much earlier 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 Marxist caricatures of the nouveau riche, 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 determined is the Ukrainian entrepreneur Victor Pinchuk, whose business empire ranges from pipe manufacturing to TV stations. With a net worth of $3 billion, Pinchuk is no longer content merely to acquire modern art: in 2009, he began a global competition for young artists, run by his art center in Kiev and conceived as a way of bringing Ukraine into the international cultural mainstream. Pinchuk hosts a regular lunch on the fringes of Davos 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 attended the Yalta Conference. Last September’s meeting, where I served as a moderator, included Bill Clinton, International Monetary Fund head Dominique Strauss-Kahn, Polish President Bronislaw Komorowski, and Russian Deputy Prime Minister Alexei Kudrin.

As an entrée into the global super-elite, Pinchuk’s efforts seem to be working: on a visit to the U.S. last spring, the oligarch met with David Axelrod, President Obama’s top political adviser, 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 townhouse of HBO’s Richard Plepler. Back home, he has entertained his fellow art enthusiast Eli Broad at his palatial estate (which features its own nine-hole golf course) outside Kiev, and has partnered with Soros to finance Ukrainian civil-society projects.

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Chrystia Freeland is the managing director and editor of consumer news at Thomson Reuters.

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