On the Permanent Ascendance of Elites

The mechanisms that in the past would have reshuffled the social hierarchy–boom and bust cycles, recession, war, social upheaval, bear markets, etc.–have all but ceased, the result being an unending boom, a prolonged peace (BLM and antifa skirmishes not withstanding), and a ruling and professional class that is not only wealthier than ever, but more permanent than ever. The Great Depression, the Civil War, the Westward expansion, WW1 and WW2 created opportunity from the aftermath of destruction and chaos. The post-2009 bull market and economic expansion, in stocks and real estate, is the biggest and longest ever, with no signs of slowing. Covid, which could be considered a form of disruption, only accelerated preexisting trends. It’s not uncommon to read stories from before 2008 of fortunes being won and lost, like in real estate, stocks, business,etc. but nowadays it’s like everyone is getting wealthy and staying wealthy. The early 2000s and then again during the 2008 financial crisis saw the implosion of many high-profile firms–Enron, Worldcom, Lehman Bothers, Bear Sterns, Countrywide, etc.–but nowadays one is hard-pressed to find any notable, large recent failures (Theranos being a notable example of a recent, large failure).

Michael Saylor, who founded Microstrategy, in early 2000 had a net worth of $10 billion; a year later, after the bubble burst and due to an accounting scandal, lost all but a tiny fraction of that, where it remained for the next 2 decades, until only recently recovering a bit due to Bitcoin. Contrast that to today’s tech and retail billionaires, whose wealth keeps growing to no end. Bill Gates has been on the top-5 or so of the Forbes 400 list since the 90s. The Waltons have been on the list forever too, as has Warren Buffett. Jeff Bezos and Elon Musk round out the top 5, and will stay there. Mark Zuckerberg and the founders and early CEO of Google have been on it for a decade, and their wealth keeps compounding at 20-30%/year (which is also why the 3x ETF strategy I use is so effective too because you’re compounding it at 3x that, or 60-100%/year).

I predict it will remain this way for a long time to come, decades, even possibly centuries. The wealth of Gates, Bezos, Musk, etc. will keep growing and not suffer the fate of the Rockefeller, Vanderbilt, and Carnegie fortunes, which in a few generations dissolved due to changing economic conditions and proliferate personal spending. In part due to the high IQ of tech founders, the permanent ascendance of ‘big tech’, and the cessation of boom -bust cycles, today’s wealthiest billionaires are much better at preserving their wealth than the ultra-wealthy of 50-100 years ago, and their heirs stand to remain equally wealthy too. Warren Buffett is famously miserly, as is Bill Gates and others, whereas John D. Rockefeller frittered much of his fortune on philanthropic projects of possible dubious economic value. Amazon, Tesla, Facebook, Google, and Microsoft will not suffer the same fate as PG&E, Ford, General Motors, IBM, and General Electric, all of which dominated in the the first half of the 20th century, only to fall from grace by the new millennium. Today’s trillion-dollar tech companies will not suffer the same fate as the Mississippi and and South Sea companies (which in today’s dollars were worth trillions), both of whose share prices collapsed in less than a year. Microsoft stock meanwhile has been in a near-permanent uptrend since its IPO in the 80s, except from 2000-2009, when it dipped monetarily as a consequence of the 2008 crisis and the 2000 tech bubble.

Although there has always been a wide wealth gap in America, in recent years, since 2008 especially, a knowledge gap has also emerged. Many sub elites and PMCs are trying to gain status that cannot be obtained through material/wealth alone, but by knowledge and credentials, which to some extent explains how Covid has divided America in terms of the pro-vaccine (which is a proxy for education) vs. the anti-vaccine side. Science and having to trust it, has become just another wedge to divide America culturally.

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