Beyond borders

Posted by Mike Walsh

3/16/17 5:59 PM

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It feels like the last twelve months has been all about borders. Keeping people out, in the case of immigrants - or keeping people in, in the case of jobs. And yet, strangely, when it comes to the truly rich, globalization is not a curse at all. It is an invitation to be borderless.

Despite the fact that technology and modern supply chains make a daily mockery of geographic boundaries, borders remain a stubborn fixture of our reality. In fact, if you look carefully, you will find the myriad ways that the agents of globalization are forced to route around them.

The other week in San Francisco, I met up with Jan Chipchase, famed ethnographer, who has been called the 'Jason Bourne' of design research for his adventurous habit of dropping into remote areas with nothing more than a camera, a notebook and a Faraday cage style bag full of cash. Adept at handling suspicious customs officials in exotic locations, Jan was quite sanguine about the challenges of crossing borders. In his words, a truly great border crossing, even with all its difficulties and delays, holds a mirror to the soul, and helps reveal who you really are.

One of Jan's most interesting projects is SDR Traveller, which makes the rugged travel gear that he and his team uses on their trips. At one point, a fan of the brand joined us for a coffee. He was a 'human courier', tasked with the responsiblity of small high value items across borders - whether they be documents or computer chips - when traditional supply networks could not be trusted to be fast, or discrete enough. His story was fascinating, and set me thinking that the very fact that such a job had to exist, was a subtle reminder that while geopolitical borders remain a powerful barrier for most, for the rich and powerful, they are mere distractions.

Walk through the luxury districts of London, New York and Singapore and you will see some of the most expensive properties on the planet – brand new, bought in cash, and generally completely vacant. Capital is now truly global, and wealthy individuals from China, Russia and Brazil buy high-end property with impunity, both as a status symbol and as a safe haven from the uncertainties of their home markets.

While globalization has been labelled as the cause of job losses and the closure of manufacturing plants in the West, it has also helped create a new global class of the ultra wealthy. According to Oxfam, the 85 richest people in the world are as wealthy as the poorest half.

Many of the new rich are from markets once considered poor. According to McKinsey, millionaires in Asia (outside Japan) were estimated to have created $7 trillion in net new wealth by 2016. The latest Wealth Report from Knight Frank reveals that China creates millionaires, at the astounding rate of 100,000 new millionaires per year. Even more interesting is that in China about 80% of millionaires are under 45 years old, compared with just 30% in the US and 19% in Japan.

There is a curious irony at work here. While the angry middle classes in the West demand the protection of their national borders as justice for their economic hardships - for the truly rich, well-defended boundaries are not the key to wealth creation at all. In fact, ignoring them is.

Thomas Piketty, in his book 'Capital in the Twenty-First Century', famously argued that a principle reason for mass inequality is that capital brings higher returns than wages. But perhaps, just as important is the fact that capital in the hands of the wealthy, is also truly borderless, and can flow rapidly to wherever opportunities may arise.

While governments may seek to address the issue through taxation, the truth is that the ultra wealthy are more like institutions than individuals. They operate in the cracks between nation states, and with an army of financial and legal advisors can re-structure reality to their will. As a small but powerful group, they will challenge everything from the pricing of metropolitan real estate to competition for entrance to the best, global educational facilities.

Topics: Global

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