The new rich revel in this era of consumption

Click to follow
IT IS, in case you hadn't noticed, Christmas bonus time. The stories circulating are of City bonuses in the millions, with Goldman Sachs having a reported pounds 4.1bn to share among its employees worldwide. Spread evenly, that would work out at pounds 42,000 for each of its employees, though, of course, it will not be spread evenly. The senior partners will get several million, the minions considerably less.

But it is not like that for most of us, is it? The gale of sudden wealth occurs in only a few walks of life. The top people in the performance industries are swept along by it - think Posh and Becks or JK Rowling - and some of the new entrepreneurs in the hi-tech industries are finding themselves bowled along too. While there has been a universal tendency over the last 20 years or so for high-skilled people in every type of job to improve their relative pay, the sudden, almost capricious wealth that the system is now lavishing on stars and entrepreneurs is still unusual.

But not as unusual as it was even five years ago. Five different things are happening that are creating at the end of this century a burst of personal wealth unparalleled since, well, the end of the last century. That wealth is particularly evident in London, because the city is not only home to most of the British-generated personal wealth; it is also chosen as a base for many of the growing band of mobile rich from other countries.

First, we are in a boom. Anyone who thinks back to the late 1980s will see the parallels: the surge in house prices, the take-over speculation and, of course, those City bonuses. I do not feel the scale of the present boom quite matches the excesses of that period, at least here in Britain, but if you look around the world you could argue that the excesses in, say, the US are even greater than in the last decade.

Second, globalisation has raced forward. The links in the world economy have become ever closer, with the result that not only is the world economy pumping out more wealth but the act of building those links itself generates wealth. Every cross-border merger or alliance needs clever people to engineer and manage it.

Third, there is a new set of communications technologies, the implications of which we have hardly begun to understand, but which will transform the world economy over the next generation. The Internet-related technologies began to boom in the second half of the 1990s, after the invention of the World Wide Web and the browser, so they are still in an early stage of development. We cannot yet do more than guess at winners and losers, but it does seem clear that the technology will tend to benefit clever individuals rather than large corporations or governments. And if it benefits individuals, some of those individuals are bound to become very rich - as is already happening.

Fourth, celebrities have become more important. The background noise generated by the surge in communications puts more of a premium on the few exceptional individuals who can cut through it and make their signals heard. The three celebrities mentioned above have each, in their different way, managed to touch an audience far outside British shores. The Spice Girls are global products; Manchester United is the world's most valuable team in the world's most valuable sport; and Harry Potter made the spectacular transatlantic leap from success in the British best-seller lists to top of The New York Times's one.

And finally, fifth, companies are under the gun as never before. The last five years have seen the victory of the so-called Anglo-Saxon financial model, in which firms are under pressure to deliver good profits for their shareholders. As a result, big companies the world over are slimming down, shedding staff and cutting costs. They are also being forced to bid more for corporate stars - the best managers. The effect of that is to make companies more penny-pinching even than rich individuals.

Put these five tendencies together and you can see that a seismic shift of both wealth and power has taken place. It has moved away from large bureaucratic organisations - big companies and governments - and towards talented individuals.

You can see all sorts of examples of that. Our own Government courts high-profile individuals, using its patronage to try to attach the prestige of the famous to its cause. Famous actors receive their knighthood because they are perceived to be useful to the Government. Banks the world over are cutting back on their international company business, where competition squeezes down the margins. Instead they are developing so-called private banks to look after the wealth of rich individuals, who are not fussed about the 0.1 per cent on the cost of a loan.

With this shift of power has come a shift of public perception. It is hard to pin down any social change when that change is still in its early stages, but you can see from the attitude of this Government towards the new rich that sneering at wealth is not acceptable behaviour for the new Left. Conspicuous consumption is all right, provided it is presented in a blokey way. Of course, it has to be the right sort of conspicuous consumption - it's OK to have a personal trainer or hairdresser but not to ride to hounds - and, of course, that human emotion envy does not disappear because a different political party is in power. But there does seem to have been a shift in attitude towards wealth.

There are, I think, two main reasons for the shift. First, the new rich are often young. Most of the people being given those bonuses in the City are under 40; many are under 30. They have won their positions not by seniority but by working ferociously long hours. The Internet entrepreneurs are younger still: a few are still in their teens. You cannot think of yourself as a fat cat, or be thought a fat cat, if you are in your mid- 30s. The old vision of personal wealth, which grated so dreadfully, was of company directors in the back of limos, wearing expensive suits. The new rich wear chinos and drive their own Ferraris, as the players' car park at any Premier League match shows.

If the style of the new rich is less divisive, the way they accumulate wealth is more easily understood. True, hardly anyone outside the City knows what City people do all day, and there is still a certain suspicion towards people who make money by dealing in money. (Curiously there is a much more indulgent attitude towards people who lose money by dealing in it: witness the fact that Nick Leeson, the most spectacularly unsuccessful trader of the 1990s, was chosen to present one of the Comedy Awards last weekend.)

Not only does the proportion of the rich that has inherited its wealth shrink by the year while the proportion that has earnt it rises. It is also much easier to understand what a performer or an entrepreneur has done to earn his or her crust than it is to understand how the chairman of a privatised industry's share-option scheme works.

Those Christmas bonuses, then, are the most spectacular sign of a great social and economic change that is sweeping across the land: a sharp rise in the personal wealth of a small but significant proportion of the nation. Similar changes are happening in other developed countries, though at different speeds. The new economy is creating new money, which leads to new questions for which there are as yet no answers. Are we comfortable with larger differences in wealth, even if some of it does trickle down? To what extent will the wealth spread itself more widely? And will that wealth itself evaporate, when this present boom comes to an end?

Comments