Tuesday, February 19, 2013

Who the Power Elite Are and Why They Will Lose Power

Gary North explains:

What do I mean by the power elite? The phrase was coined by Leftist sociologist C. Wright Mills in 1956. His book remains a classic. Its main chapter is here. Liberal columnist Richard Rovere in 1956 called it the American Establishment. Conservatives refer to it as the Insiders or the Conspiracy. David Rothkopf, writing from inside, calls them the superclass. Sometimes they are called the PTB: the Powers that Be. I think conservative journalist and historian Otto Scott said it best: the behind-the-scenes fellows who are too clever by half.

Who are they? They are men of influence and wealth who gain a lock on this wealth through political power. They use economic leverage -- debt -- recklessly because they can protect themselves from losses by means of political leverage: government bailouts. Some of them lose, but as a class they do not.

The key to their economic position is their unseen political manipulation. They are the masters of backroom politics. Theirs is not the backroom politics of the old big city political bosses, who were their class enemies, and whom they had generally replaced by the late 1950s. The novel The Last Hurrah (1956) describes this transfer of power, although it ignores the system that replaced the Catholic power base. The battle of the Boston Brahmins -- merchants and lawyers -- who had replaced the Boston Puritans by 1700, vs. Boston's Irish Catholics after 1870 is the archetype. The battle lasted for about 90 years. The triumph of Jack Kennedy, which seemed to be the triumph of the Irish Catholics of Boston, was in fact the victory of the Brahmins, by way of Harvard. His father got Jack into Harvard. Then he bought him the Presidency. "Honey Fitz" Fitzgerald's grandson was the symbol of this transfer of power.

The central battleground has always been the control of the faculty of Harvard, from 1636 until today. This includes the Harvard Business School and Harvard Law School. Harvard is both the symbol and the supreme leverage point. The other Ivy League schools are the second tier in this ring of power. So are the late-comers: Stanford University and the University of Chicago, which were created by two very rich capitalists in the late 19th century, who wanted into the circle of social influence, and who created universities to buy their way in. Leland Stanford never quite made it in. John D. Rockefeller, Sr.'s son did, by way of Brown University and the Rockefeller Foundation, which he took over in 1917.

New York City and Washington, D.C. -- Wall Street and the Beltway -- are where the anointed exercise their rule. This mirrors the circles of power in England: Oxford, Cambridge, and the City of London, a legally separate jurisdiction from the city of London.

Bankrolling the American power elite are fewer than a dozen large banks, mostly in New York City. They have an insurance company: the Federal Reserve System. Bankrolling the British power elite -- called the Old Boy Network -- is a similar system of banks. Their insurance company is the Bank of England, which is the model for the FED.
Note: the transfer of power began in 1660, with the restoration of Charles II to the British throne. Cromwell, the Lord Protector, had died in 1658. The Restoration displaced Cromwell's Puritans. But Cromwell had never consolidated his rule where it mattered: Oxford. He technically ruled over Oxford for almost a decade, but he never made any reforms. Next came the Glorious Revolution of 1688 and the creation of the Bank of England in 1694. This 34-year consolidation of social and economic power -- the displacement of Puritan rule -- was paralleled in Boston in these same years.

The power elite's members do not sit in the cigar smoke-filled rooms of the history textbooks. Most of them do not smoke these days. Indeed, their non-smoking status is one mark of their superior status. But, just like the old political bosses, they depend on politics for their position. That is their Achilles heel. By becoming dependent on politics to protect themselves from free market competition, they will eventually overplay their hand. They will bet the farm -- and ours -- on a busted flush. Imploding debt will remove them from the scene.
Why do I believe this?

To answer this, I begin with North's three laws of bureaucracy.
1. Some bureaucrat will inevitably enforce an official rule to the point of imbecility.
2. To fix the mess which this causes, the bureaucracy will write at least two new rules.
3. Law #1 applies to each of the new rules.
This is a convenient way to express the principle set forth by Ludwig von Mises in his essay, "Middle-of-the-Road Policy Leads to Socialism." Each attempt to fix the problems caused by a previous government intervention creates new problems.

Mises also argued that socialism is inherently irrational, because it destroys the market for capital goods. It destroys market pricing. He wrote that in 1920.

Conclusion: all socialist systems must collapse.

Semi-socialist systems move in the direction of bureaucracy. They fall under North's three laws.

Conclusion: The power elite will blow it. Give them time.


  1. The golden rule, he who has the gold, makes the rules- the money changers.

    All the rest do their bidding.

  2. I've never subscribed to the concept that there is this static power-elite. I think this constant belief that all things happen for a reason and are the direct and deliberate actions of others hails from our Judeo Christian influenced culture. The joke is that there is no one in charge acting as a collective determining what will happen next. There are no plans of the elites since there are no elites in permanent control of anything. I work in the financial world and interface with the super wealthy all the time. The major mistake that people make in understanding this group and their wealth is that nearly all of the ones I deal with are more concerned with wealth preservation than wealth creation. There is no desire to get richer. That happens as a bi-product of wealth preservation but is not its intent. If there is anything I can say this loosely defined group has in common is the desire for social and economic stability and not the populist belief that they desire nothing else but to bleed every ounce of wealth out of society. That's simply leftist myth sold to the ignorant masses.

    I am not saying that wielding political influence is something not done by them (they absolutely do it) or using it to get something they want, but that there is no group of people meeting and setting out a plan for us to follow. They would probably like that to happen, but there is no way to make that happen since most of these people are extremely independent minded and are not accustom to following the direction of others (including fellow super wealthy).

    BTW, if you want to find the truly evil m-f*kers, its those in my field managing and directing the money of the extremely wealthy. Not all, or even most, but the few that are...

    1. "there is no group of people meeting and setting out a plan for us to follow."

      Love your facts backing up what you write.

      ... Oh, wait.

    2. If I close my eyes real tight and pinch my ears closed, I could start to come to your understanding. But if I followed the movement of money and politics over the last hundred or so years, then I might be swayed that a few uber-powerful families have had far too much influence over fiscal and legislative matters in this country and others.

      "...since most of these people are extremely independent minded and are not accustom to following the direction of others..."

      I can't remember the reference, but someone somewhere said something along the lines that a cabal like this would not need to be coordinated. Simply by following their own self-interest a kind of coordination would emerge.

    3. "Love your facts backing up what you write."

      And what facts exist supporting likewise? Yep, I didn't think so. Remember, I am not the one making or agreeing to the claim that such a cohesive group exists. Maybe this will help you understand my point:

      I am in the 1% and I can assure you that I have zero political influence and do not meet up with others in my income group to plan anything. I doubt my local politicians would even take a call from me. But, if you read the nonsense in the blogasphere and in the MSM, we're all suppose to be part of some greedy club looking to fleece the working man out of his worldly possessions so we can live large. I would assume you are informed enough to know this, but what you can't seem to understand is that this is the same kind of silly thing to say about people with incomes and wealth far greater than mine. Do some people in the 1% and super wealthy elite exercise undo influence over the system and exploit it, absolutely! But not all and probably not most. IMO talk about the plans of "the elites", belongs over in the Huffington Post where you'll get lots of takers for this kind of silly conspiratorial thinking. If we're going to talk about "the elites" and their plans, actions, etc, let's at least define who they are and how they are organized.

      tjm, if you would read more than trying to come up with cliche' lines you would understand I am not at all saying that those people with extreme wealth today do not have any influence but that they do not operate as "the elite" or in some kind of collective. How hard is that to understand? Yes people, human civilization and nature all follow cycles. That is documented throughout history. But that would also imply that there is no one in control. God forbid!

    4. I find these conspiracy theories paranoid and delusional. So many people are completely obsessed with it to the point of it being a religious cult. It's hilarious.

      Some people claim it's an "Anglo-American" world conspiracy; some think it's the Freemasons, some think it's The Illuminati; some claim it's Jewish bankers or a Zionist cabal; some (like a couple of my paranoid relatives) think it's the Vatican (LOL!). There's even one that tinks shape-shifting lizard men from outer space secretly control everything (those people belong in a mental ward).

      We're just in a down cycle people. Put away the silly tin foil hat please.

    5. Peter Schiff is also part of the 1%. Many people are. By definition the 1% consists of 3 million Americans at least. That isn't the power elites in question. We're talking old banking blue bloods, heads of state etc.

    6. I said: ...a cabal like this would not need to be coordinated. Simply by following their own self-interest a kind of coordination would emerge.

      I'm not sure we disagree on the point that there's likely not a back-room somewhere filled with cigar smoking fat cats. But a good place to check that theory would be at Bilderberg or FOMC...That doesn't mean self-interested coordination does not emerge. Biologically-speaking, the eyeball supposedly evolved independently on numerous creatures. There was no backroom meeting where creatures met and decided that eyeballs benefited their survival. Could be the same with central banking.

      Congrats on the 1% status but these conspiracies tend to revolve around people who move money in the billions not the millions. More like the 1% of the 1%. If you own a billion in assets then you're apart of the elite and are clearly here to spread misinformation.

      Just curious what information you have read that makes the case that human civilization moves in cycles. Instead of telling me to read more, you should give me a specific reference with which I may enlighten my darkened mind. One in the hand is worth two in the bush.

    7. Do you have any citations you can provide about eye evolution? That seems to be extraordinarily unlikely to me. In particular because extremely primitive life have eyes.

  3. See the film "The American Ruling Class" written by, and featuring Lewis H. Lapham (2005)