May 21, 2008

Russian capitalists -- Doing their best to make Trotsky look prescient

From Bloomberg News:
It was the 26 toilets that triggered alarm among residents of Greenwich, Connecticut. "Who needs that many toilets?'' asked Charles Lee, who lives across the street from where Russian millionaire Valery Kogan proposes building a 54,000-square-foot (5,000-square- meter) mansion with that much plumbing.

Kogan, chairman of East Line Group, which operates Moscow's Domodedovo International Airport, plans to raze the 20,000- square-foot home on the site, which he bought in 2005. Kogan and his wife, Olga, seek to erect a house with two wings and extensive subterranean space, including room to park 12 cars.

``It looks like they want to duplicate the Winter Palace here in Greenwich,'' said Leslie McElwreath, 45, who lives one street over. ``It'll be an eyesore.''

McElwreath, Lee and other opponents are urging the Greenwich Zoning and Planning Commission to deny a permit when it votes this evening on what would be the largest single-family home built since the town began reviewing plans in 2001. A hundred and seventy-five people signed a petition against the project.

Greenwich, 27 miles (43 kilometers) north of New York, is the hedge-fund capital of the U.S. More than 60 funds occupy 80 percent of its commercial property, according to real-estate broker CB Richard Ellis. The Greenwich Association of Realtors puts the average price of a home in the town of 65,000 at $2.8 million.

Here in Los Angeles, the Executive Director of the city's Los Angeles World Airports department, which manages both the vast LAX and the lesser Ontario airports, makes $305,000 annually. I don't think she can afford to build a 54,000 square foot house in a foreign country. And yet, LA's airports somehow continue to operate without the boss being paid enough to build a palace. If only we had privatized LAX, then the owner of the company that would run LAX could be building colossal homes around the world to flee to when angry Angelenos finally come after him with pitchforks and torches.

My published articles are archived at iSteve.com -- Steve Sailer

21 comments:

Anonymous said...

For starters, look at this.

Average pretax income among the top 1 percent increased 142 percent, to $1.02 million in 1997 from $420,200 in 1979. Among the top 20 percent of households, average pretax income rose 52.9 percent, to $167,500 from $109,500. But pretax income for the lowest 20 percent of households declined 3.4 percent, to $11,400 in 1997 from $11,800 in 1979. All figures are adjusted for inflation.


Conservatives also say that the real issue is not the distribution of income but whether people at all levels are better off.

There is better off and then there is "better off."

That people at all levels are able to afford cell phones, TVs, and more potato chips is true. But the third world invasion has meant that ever fewer working class Americans are able to afford homes in communities where they don't feel like the oppressed minority in a foreign land, and politicians really don't grasp it. Even in the safe neighborhoods that haven't been completely overrun by our future Einsteins, the effects grow wearisome. These people paint their homes the oddest of colors; they may do landscaping and housecleaning for a living, but they sure as hell don't bother with their own homes. And if I had a peso for every Latino home I've seen with Christmas decorations still up in July...

But set aside, if you can, the increased costs of a decent home in a decent part of town. Instead look at this: a handful of very rich Utahns paying $70,000 each to meet with President Bush at Mitt Romney's lush Deer Valley home. The hosts? Romney himself, along with Gov. Jon Huntsman, Jr. - both the centimillionaire sons of powerful men.

The income gap means a helluva lot when it comes to polticial influence - the ability to have your voice heard. You get people who can afford to give tens of thousands - or more - to candidates, and those who would struggle to scrape together $10 to give a candidate.

There are legitimate reasons to be concerned about disparities in relative wealth.

In short, there might be some reasons to celebrate a GOP defeat this fall. The expiration of the Bush tax cuts for the rich will be the biggest one of all. If working class Americans can't get our government to secure the borders, they at least can punish the business supporters of open borders by raising taxes.

Herny Canaday said...

The East Line Group has basically taken over all the functions of airport management, planning and construction, providing maintenance and ground support for airlines, running airport concessions plus building retail centers on airport property and heaven knows what else at or near Moscow's premier airport. This has actually been an improvement on the bare services that existed before. East Line is very modern and collaborates well with western partners. But one does wonder why just one company is doing it all.

Valery not Kogan said...

Valery Kogan is not an ethnic Russian. In English the historical transliteration of that name is "Cohen." And he's gotten wealthy basically operating a business originally created and paid for by the state (the airport). And people wonder why Russian nationalists are gaining more political traction every day...

testing99 said...

Anon that's faulty reasoning.

For one thing, Dems have far fewer and richer contributors than Republicans. Examinations of the FEC data set (you can check this out yourself) show Dems get the overwhelming majority of CEO contributions, those from lawyers, etc.

Obama's whole campaign is oriented around stiffing the working class and pandering to the wealthy. The Laurie Davids who want to save the polar bear by controlling how much ordinary people drive, set their AC, or eat.

Dems in a victory will mean more, much more, intrusive regulation for rich people's causes to make ordinary people's lives miserable. In response to Obama's speech, India is already demanding that Americans eat 1,000 fewer calories per day. Boxer wants to have green house gasses regulated by the EPA, which would outlaw lawn mowers, back yard BBQs, pretty much anything but private jets and the like.

As far as taxes go, no rich person will ever pay taxes. Thats what political influence among Dems (I'll see you Mitt Romney and raise you David Geffen cruising Tahiti in his mega yacht with Arianna Huffington) buys.

Republicans on balance are more populist, and the possibility pioneered by Howard Dean of aggregating small internet donations can allow a "movement" pol the ability to shape or even win races.

It takes, however, organization. Obama was helped by the competence of the Daley machine, compared to the others. This year we had no real movement people with organization skills.

Anonymous said...

Haaretz reports that Kogan went to Israel and spent $17 million dollars on beachfront property there. Again causing concern amongst the locals.

The article reports that East Line, Kogan's company, has a 75 year long contract on the airport.

http://www.haaretz.com/hasen/spages/969661.html

Anonymous said...

Your assumption that higher taxes decreases the influence of the wealthy is, ah, interesting. Does anything show that to be the case?

There will always be elites with unusual access and there will always be the rest of us without it.

And these elites will always be partly based on money and partly on connections and partly on cognitive ability. All we're talking about is adjusting the slider a few percentage points one way or the other. I don't benefit either way. Maybe you do, but why should I get worked up about your personal lust for power?

Graham Asher said...

Actually 26 toilets in a 54000 square foot house is a reasonable ratio - less than one per 2000 sq ft, which is low by the standards of ordinary houses (average UK family house is, say, 1500 sq ft and has two toilets; 'executive dwellings' at 2500 sq ft tend to have four or five bathrooms).

Anonymous said...

Kogan...shouldn't it be Jewish capitalists instead of Russian capitalists?

michael farris said...

"Kogan...shouldn't it be Jewish capitalists instead of Russian capitalists?"

Only if you're stupid. I'd bet a lot of money that linguistically and culturally he's 100% Russian.

anony-mouse said...

1/ Would you rather he left the US and spent his money elsewhere? (Evidently yes)

His big mansion will be built, and the money will be spent-it just depends where.

Here's a job Americans (at least here) won't do-build enormous homes.

2/ I'm sure the airport was (very badly) built by the Soviet state when he took it over (everything was build by the Soviet state then). And I bet its in much better shape now.

And I'm sure there are lots of Russian nationalists who long for the days of 'eeevning wear' and dilapidated public buildings.

3/ Any of his critics here in the construction (especially plumbing) business in CT? I thought not.

But I'll bet if Kogan went and spent a huge amount of money in your business, you'd be the first to welcome him (and his money)

Anonymous said...

For one thing, Dems have far fewer and richer contributors than Republicans. Examinations of the FEC data set (you can check this out yourself) show Dems get the overwhelming majority of CEO contributions, those from lawyers, etc.

The rich have influence on both sides of the divide, so obviously it's not easy to determine which party is better for "the rich" and which is not. But assuming your statement is true, isn't that just one more reason for the Republicans to drop their support for lower taxes on the wealthy - if they don't benefit from it as much as the Dems?

BTW, the data you post varies depending on how you set your definitions. In the 2000 election only 2-3 of the top 25 largest contributors (according to Mother Jones) gave to the GOP. The rest were all Democrats. Forbes found a few years ago, however, that 72% of its 400 Richest Americans gave mostly to the GOP.

And I'm sure there are lots of Russian nationalists who long for the days of 'eeevning wear' and dilapidated public buildings.

Russia seems to have had much greater difficulty with post-Communist life than any of the other former members of the Warsaw Pact. Is it the fault of the peculiar way they privatized their industries, handing them over to a tiny handful of corrupt businessmen who fled with all the capital? (That's a question, not a statement).

Crediting the oligarchs like Kogan with what minor improvements may have occurred after the fall of communism seems a bit presumptuous. Things surely would have gotten better even without putting so much public wealth into a tiny handful of private hands. (That's a statement, not a question).

Anonymous said...

Would you rather he left the US and spent his money elsewhere? (Evidently yes) His big mansion will be built, and the money will be spent-it just depends where.

Bad money has a way of driving out good, no matter where it goes.

He can stick it in Siberia for all I care.

Anonymous said...

"Only if you're stupid. I'd bet a lot of money that linguistically and culturally he's 100% Russian."

Ah, so thats why he is also setting up house in Israel.

Its well known that many wealthy non-jews like to have a pied-a-terre in Israel. Its famously low taxes, relaxed attitude to internal and external security and the ready supply of cheap immigrant labor make Israel is a popular choice of second home amongst rich non-jews from all over the world.

Anonymous said...

Remember how Rome fell? All the rough and tumble military troops from the provincial hinterlands got fed up with the failing empire and turned on the elites in the center.

Speaking of rich and poor, look at who is in the US Military. Lots of rural folk and blue collar folk, including smart people from those backgrounds who have spent their lives being drilled in the art of war.

Robert Kaplan's book "An Empire Wilderness" describes this very well. So what happens when Things Fall Apart and the Center Does Not Hold?

Valery not Kogan said...

Michael Farris would lose that bet. Linguistically, sure he's 100% "Russian." Culturally, he's Jewish first, Russian second. Mr. Farris clearly hasn't spent a lot of time in Russia.

Anonymous said...

Russia seems to have had much greater difficulty with post-Communist life than any of the other former members of the Warsaw Pact.

Maybe that has something to do with the national "IQ lowering experiment" the Leninists and Stalinists performed on the USSR. They shot in the back of the head and worked to death many millions of persons who "threatened" the regime.

Now, do mostly low IQ people threaten the regime? Or high IQ people?

Historians agree at least 20 million people who "threatened" the Soviet regime were murdered. It was probably more like 40 million. Read the excellent Black Book of Communism.

It is a fact of history that the business class and intellectual classes throughout Russia were specifically targeted for mass murder. They were the potential troublemakers.

It is reasonable to conclude that a mass lobotomy was performed on the Russian people by the Soviet leadership through the mechanism of mass murder of all elites who did not demonstrate total loyalty to the regime.

The population has not yet recovered from this negative selection IQ gauntlet.

Svigor said...

Only if you're stupid. I'd bet a lot of money that linguistically and culturally he's 100% Russian.

...Just like all the other "Russian" oligarchs? Are their "get into Israel and out of trouble free" cards in Russian too?

LOL!

Anonymous said...

It is reasonable to conclude that a mass lobotomy was performed on the Russian people by the Soviet leadership through the mechanism of mass murder of all elites who did not demonstrate total loyalty to the regime.

We've pretty much all had those. Western Europe had one for 1,500 years: it was called ROman Catholicism - take your smartest bunch of people and tell them not to breed.

ben tillman said...

Only if you're stupid. I'd bet a lot of money that linguistically and culturally he's 100% Russian.

Can I be your bookie?

michael farris said...

Most Russian 'Jews' are culturally Russian but having some Jewish ancestory was a way of possibly emigrating from the USSR so some people chose to be called Jews.

I once read an article about someone who was teaching English to just such a group of 'Jews' who were indistinguishable from other Russians. They knew nothing (and cared less) about specifically Jewish customs or practices but being "Jewish" was a (very difficult and expensive) way of getting out of the USSR.

Similarly, I bet the Israel connections are a safe haven ploy should things turn hot in Russia (also used by some shady Polish businessmen who could rustle up some Jewish ancestory).

Anonymous said...

The part of the story that interests me is the conflict that goes on in Greenwich. I'd bet that 90% of current Greenwich residents could afford to build a Versailles-like Baroque palace but they choose not to.

The real money in this country has a tradition of not showing off and in Greenwich this is enforced through social sanction. If you move to Greenwich you're trying to join the elite or have your children join the elite; this is undermined if you get marked as an outsider by building an ostentatious mansion so social sanction is quite powerful.

Status is zero sum; if Valery Kogan builds his palace, someone else will top it (and soon). Eventually Greenwich will look like some "rich" neighborhood where you can see the houses from the streets (right now, the most impressive houses can only be glimpsed from the road if seen at all). All that will have been accomplished is a bunch of money will have gone into construction and a group of rich families will be less rich.

How long do you think Leslie McElwreath would tolerate living in a house that is put to shame by that of a neighbor? This is the source of the resistance in the neighborhood.

-Steve Johnson