Friday, January 4, 2013

Put Away Those Bootstraps

A couple more thoughts on the post about the wealthy Chinese oligarchy descended from Mao's revolutionaries. Once these things become entrenched, they have a very long staying power. It reminds me of this post from last year about class mobility in Sweden. Per Matt Yglesias:

A productive line of recent research has shown there's much less social mobility in the United States than we like to think. That same research has tended to find much more mobility in the Nordic countries where, for example, a father's earnings are much less statistically predictive of a son's earnings. But UC Davis economic historian Gregory Clark asks what happens on a longer time frame and finds that even in Sweden there's not that much mobility.

What Clark is doing is an analysis of surnames. Sweden stopped minting new noble houses in the seventeenth century, so we can be sure that anyone with one of those noble surnames in the 21st century is patrilineally descended from a high status man from hundreds of years ago. By contrast, low status Swedes tended to end up with patronymic surnames ending in "sson" illustrative of a lack of noble status or noteworthy occupational skill. So take the super-common Swedish surname Andersson and you're looking at people who are patrilineally descended from families that were low status hundreds of years ago. You can see that to this day people with aristocratic surnames are much likelier to be rich than people named Andersson. Clark repeats this kind of analysis for wealth, for presence in high status occupation groups like doctors and lawyers, and also compares lowly "sson" names to middling names. Over and over again you see the same thing. Despite the ups and downs of fortune, despite the possibility of marrying up and marrying down, and despite the fact that there's probably some false paternity down the line somewhere surnames are meaningfully predictive of 21st social status.
Even In Sweden There's Not Much Real Social Mobility (Slate)

And from this review of Michael Apted's new movie '56 Up':
With few exceptions and despite potential path-changing milestones like marriages and careers, everyone seems to have remained fairly locked in his or her original social class. At 7, Andrew Brackfield and John Brisby already knew which universities they would or should attend. “We think,” John said in “Seven Up!, “I’m going to Cambridge and Trinity Hall,” though he landed at Oxford. Like Mr. Brackfield, who did attend Cambridge, Mr. Brisby became a lawyer and still sounds to the manner born, with an accent that evokes old-fashioned news readers and Bond villains. The two hold instructively different views about whether the series corroborates the first film’s thesis about the rigidity of the British class structure, never mind that their lives are strong evidence that little has changed.
The British Class Divide, on a Personal Scale (NYT)

And some select tidbits from the Bloomberg article:
“My generation and the next generation made no contribution to China’s revolution, independence and liberation,” said Song Kehuang, 67, a businessman whose Immortal father, Song Renqiong, oversaw China’s northeastern provinces after the revolution in 1949. “Now, some people use their parents’ positions to scoop up hundreds of millions of yuan. Of course the public is angry. Their anger is justified.”

While the Immortals vilified the “bourgeois individualism” of capitalist nations, almost half of their heirs lived, studied or worked abroad, some in Australia, England and France. The princelings were among the first to travel and study overseas, giving them an advantage not available to ordinary Chinese.

“There were four families under Chiang Kai-shek; now we have 44,” said Roderick MacFarquhar, a Harvard historian who studies elite Chinese politics, referring to the Nationalist leader who lost to Mao. “To change the system will demand some traumatic national experience, when people say, ‘enough is enough.’”

“The Communist Party wanted all the people to be rich so their lives could be better,” Wang Jun said Nov. 30, as he smoked a cigarette and sipped tea in the clubhouse at the Dongfeng Nissan Cup. “During the revolution, if they were full after eating and they had enough clothes to stay warm, they were very satisfied. ‘‘But now people’s desires just keep getting greater and greater,’’ he said.

“It’s no surprise those with connections got the best stuff in the ’80s,” said Fraser Howie, co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.” “The problem is that 20 years on, they’re still getting the best access because the playing field has not been leveled.”

“The evidence is unambiguously clear: The descendants and the immediate families of those Eight Immortals have derived enormous wealth, enormous power and enormous privilege from the market reforms of the state-owned enterprises in the 1990s and into the 2000s,” said Glenn Maguire, former chief Asia economist at Societe Generale SA in Hong Kong.

The princelings also used their overseas educations and connections back home to get into finance and deal making. At least 12 of the 31 grandchildren and their spouses worked in finance, including six in private equity or venture capital, according to the Bloomberg data.

His sister, Chen Xiaodan, also known as Sabrina, attended Tabor Academy in Massachusetts, where annual tuition today for boarding students is about $50,000. She then went to Duke University in North Carolina, and finally Harvard for her MBA, graduating earlier this year, according to school records. She has worked at Morgan Stanley in New York. This year Permira Advisers LLP, a European private equity firm, hired her in Hong Kong. Permira last year signed a partnership with China Development Bank, run by her father. The companies agreed to pursue investment opportunities in China and support Chinese firms as they look to expand in Europe.

The lifestyle of some members of the third generation tracks that of the global affluent class -- people who were their schoolmates in Swiss, British and U.S. boarding schools. Sabrina Chen made headlines when she appeared at a debutante ball in Paris in 2006, dancing alongside a Belgian princess and an Italian countess, according to the event’s website.

While Hui waits for changes in his life, the general’s great-granddaughter, Clare Wang, broadcasts on social media websites the changes in hers: cramming late at night on a design project for her architecture course at a Sydney university; vacationing at a hot springs resort in Japan; a new scarf for her 21st birthday; her royal-blue hair dye. She posted a picture in February of herself with movie star Jackie Chan at what she described as an exhibition of her paintings. Clare declined to be interviewed when reached by telephone. She said in an e-mail that she respects her great- grandfather, without answering further questions.
And if you haven't already done so, do click through to look at this graphic. It's very informative. Of course, if one were to document the incestuous relationships among Americas upper class (there was an artist who did this, but I forget his name), you would probably get a very similar result, just with a larger circle. Most people know that all the crowned heads of Europe are related, too. In every city I've been in, I've noted that there is a small core of wealthy families who seem to control everything who are usually descendants of the first professionals (lawyers, industrialists, engineers, real estate speculators, judges, etc.) who located there. Just look at he names on public buildings, donor plaques, and the names of the big law/architecture firms.

Wealth, like eye color, runs in familes.

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