There’s a powerful extract in Oliver Bollough’s (superb) Moneyland talking about about the role offshore capital in inflating assets such as wine, art, cars, yachts and most of all real estate, with the latter then used to house these inflated assets. In the process it empowers a new class of fixers, helping manage this wealth at a distance and ensuring its sustained reproduction. From pg 220-221:
In Miller’s analysis, luxury real estate has become in effect a new global currency, with very wealthy people using housing in the world’s premier league of cities as a store of wealth, with the great advantage that they can then use their apartments as storehouses for all their other expensive stuff: their Monets, their Modiglianis, that kind of thing. ‘I don’t want to stereotype and say they’re all flight capital, because they’re not, but the growth in their presence is flight capital. They’re preserving capital. They’re just getting it into something for an extended period of time because they want to preserve it.’ Some 30 per cent of condo sales in large-scale Manhattan developments since 2008 have gone to foreign-based buyers, with the vast majority of them paying the full sum up front. It is a remarkable change, and one that accelerated in the early 1990s, when the collapse of communism created flight capital on a previously unknown scale –particularly in London.
One of these enablers, an information of Bollough’s, opines later in the book about the consequences of this accumulation for the elites themselves. What does it do to you? It’s a good question and one which is crucial to making sense of what I’ve come to think of as defensive elites. From pg 231:
Pichulik was funny and thoughtful about his curious career, and clearly concerned by the kind of inequality he has witnessed. That gave him sufficient insight to realise that spending his days looking at apartments worth $ 50, $ 60 or $ 70 million was doing strange things to his mind, and to wonder about the mind set of people who live their lives surrounded by that kind of luxury: ‘You wake up in an apartment like that when you pretty much command the city, and you have this sort of castle to yourself. What does that do to your life on a daily basis, just waking up with that feeling and seeing that?’