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. Last Updated: 07/27/2016

Private Riches Behind the Public Poverty

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Flying out of Moscow recently, I chatted with the head of a medium-size technology firm. His Russian client recently placed an order worth $1.5 million to $2 million. As the company was just gearing up to fill the order, the client called to apologize for making a mistake. Their order would be closer to $15 million to $20 million.

With so much money sloshing around Russia these days it's easy to miss a zero or two. But Russia, being one of the most extreme participants in the global economic boom, is indicative of what has been going on elsewhere. This is the case not only in fast-growing emerging economies, but in the industrialized world as well. The City of London has a similar boomtown feel, for all its moth-eaten lion-cum-unicorn veneer. In the United States, people with serious money to invest have been reeling from an embarrassment of lucrative options.

The board of trustees of New York's Metropolitan Museum of Art consists of highly dedicated, wealthy individuals who have given millions of dollars to the museum. But now they are complaining that any number of nouveaux riches can trump them at a stroke of a pen. Donors to Ivy League colleges wishing to make a mere six-figure gift might find it hard to get anyone to return their calls.

It may be tempting to see this as one of those periodic changes of the guard. Just as in the late 19th century Gilded Age, when the Rockefellers and the Morgans replaced the old Dutch and English families as the moneyed elites in the United States, so hedge fund managers and techno-billionaires, as well as the super-rich from Russia, China and India, are shunting aside established American and European wealth.

Yet something seems to have gone terribly awry in this global boom. Private enrichment everywhere has been accompanied by the impoverishment of the public sphere. While the plethora of money has devalued it at the top of the pyramid, the common good has been starved of funding. What started as a tax revolt by the middle class now looks increasingly like the disintegration of the social compact.

Once again Russia, with its stark customs, casts this process into greater relief. On Moscow streets, numerous hugely expensive, loutishly driven automobiles serve to underscore the absence of anything resembling a community, the willful ignorance of environmental concerns, the blatant disregard for rules and laws and the disrespect for fellow citizens that permeate Russian society from top to bottom.

Ruling over such a society, the Kremlin understandably overreacts to any form of dissent. At Saturday's protests in Moscow, police outnumbered protesters almost 10 to one by some accounts.

My American friends in Moscow often comment on the contrast between private wealth and a dingy public landscape. They should not rush to judgment. The cynical Soviet-era saying "money can't buy everything, but really big money can" is now equally relevant in the United States. Huge, easy money accruing to the top 10 percent of the U.S. population has eaten into the fabric of American society. While small towns still thrive on a collective spirit, there has been a marked degradation in the standards of public service, community and plain honesty at the top. Despite tremendous private prosperity, future generations of Americans are being saddled with an insurmountable public and external debt and denied everything that constitutes the basis for a prosperous life, including arts and sciences, medical research and education.

U.S. leaders should worry as much about domestic social peace as their Russian counterparts already do. The country's Great Society programs of the 1960s have been rolled back, and higher education has become unaffordable, limiting future social mobility. Official Washington is already hated around the world, and the nexus of political, lobbying and corporate power that runs the United States may discover that its hold on the nation is more tenuous than it appears to understand.

Alexei Bayer, a native Muscovite, is a New York-based economist.