In THE NEW ELITES: MAGA OR TECH BILLIONAIRES, Manuel Hinds analyzes the emergence of two competing new elites: the MAGA political movement, led by populist-nationalist figures like The Prince, and the globally connected tech billionaires like Musk and Thiel. While The Prince believes he is dismantling globalism in alliance with authoritarian leaders like Putin, in reality, both MAGA and these foreign autocrats are playing into the hands of globally dominant tech elites who transcend national boundaries. These global entrepreneurs, empowered by the Connectivity Revolution, are accumulating unprecedented economic and political influence that may allow them to rival or even surpass traditional state power. Hinds warns that while MAGA leaders think they are creating a nationalist order, they are instead facilitating the consolidation of global power by private elites, who may eventually shape a new form of global authoritarianism.
WHO IS WHO?
The phone rang early in the morning.
“Hi, Jack! Do you remember our discussion about the rise and fall of elites throughout the history of the United States—from the Southern planters to the Robber Barons to the Progressives and the liberal, cosmopolitan American of the post-war. Now, another change of elites seems to be taking place. Who will the new elite be? I think that our novel should be about this process.
Thinking of this, I read that Steve Bannon, one of Trump’s closest advisors, said that MAGA could rule for 50 years.[1] That is, he thinks that Trump and his sidekicks, including himself, will become the new American elite. Could it be true?
Bannon assumes that the November election determined the new elite's identity. At least, it accomplished the first step: eliminating the Democrats. Now, he told the Times, comes the second step: struggle against the dissenting elements in the Republican Party.
The change of elite has political implications, but it is essentially a cultural and economic process. Politicians do not create the elites; society creates the elites through its daily chores, which make the politicians. For example, we can see how the transition of power from the Southern states to the North happened.
SOCIETIES AND ELITES IN THE UNITED STATES
When the United States gained independence from Britain, its thirteen new states had evolved into two different societies, so different that they could have been separate countries. While the North had remained democratic and egalitarian, in the South, an aristocratic, unequal society had developed, rooted in slavery. Gradually, this immoral institution had turned the South into a profoundly vertical society, which threatened to pull the entire United States into destructiveness. Slavery had turned the South into the wealthiest region in the country and the source of its elites. Their plantations were the most important source of wealth. An overwhelming majority of presidents of this period came from the South.
In the early 1830s, the French writer Alexis de Tocqueville observed the difference between North and South and the horrible effects that slavery had on both slaves and the people who owned them. He noted that “the influence of slavery affects the character of the masters and imparts a peculiar tendency to their ideas and his tastes.”[2] He described his experiences when floating down the Ohio River, looking at the free state of Ohio on his right and the slave state of Kentucky on his left.
<Upon the left bank of the Ohio, labor is confounded with the idea of slavery, upon the right bank it is identified with that of prosperity and improvement; on the one side it is degraded, on the other it is honored; on the former territory no white laborers can be found, for they would be afraid of assimilating themselves to the negroes; on the latter no one is idle, for the white population extends its activity and its intelligence to every kind of employment. Thus the men whose task it is to cultivate the rich soil of Kentucky are ignorant and lukewarm; whilst those who are active and enlightened either do nothing or pass over into the State of Ohio, where they may work without dishonor.> [3]
The chasm between the two societies was deep and wide, piercing the new country to its core. One society was egalitarian, the other aristocratic. As de Tocqueville noted:
In the South of the United States the whole race of whites formed an aristocratic body, which was headed by a certain number of privileged individuals, whose wealth was permanent, and whose leisure was hereditary. These leaders of the American nobility kept alive the traditional prejudices of the white race in the body of which they were the representatives, and maintained the honor of inactive life. This aristocracy contained many who were poor, but none who would work; its members preferred want to labor, consequently no competition was set on foot against negro laborers and slaves, and, whatever opinion might be entertained as to the utility of their efforts, it was indispensable to employ them, since there was no one else to work.[4]
The South did not have developed industry or finance and did not want to have them, as they believed these activities were the carriers of moral decline and would destroy the rural dream of honest, truthful, landed proprietors — and would inevitably lead to the demise of slavery and the ruin of those proprietors.
This opposition created a growing difference in the level and composition of wealth between the North and the South. Plausible estimates put total wealth per free person in 1860 at $482 in the North and $868 in the South. However, when subtracting the value of the slaves (at market prices), the wealth per free person in the North remained at $482 while that of the free persons in the South went down to $294.[5] The planters were wealthier, but only because they owned slaves.
Free Southerners paid dearly for this wealth differential during the Civil War, when the total wealth invested in other types of capital (railroads, factories, infrastructure) was about three times more in the North than in the South. The South’s lack of infrastructure and industrial resources was one of the main reasons it lost the war. They paid again at the end of the war, when the liberation of slaves removed two-thirds of their wealth, and the South’s plantations became unprofitable overnight.[6] White Southerners lost not just the capital they had invested in slavery but also their business model, and it took them a long time to learn a different one. In 1880, fifteen years after the end of the War, the average per capita wealth of the South was $376, much lower than the average in the other states, which stood at $1,086. All southern states were individually at least $300 below the national average. Slavery left a legacy of poverty that lasted almost a hundred years, well into the twentieth century.[7]
This case shows two lessons. First, how the elites change according to the times and circumstances. An elite cannot be for long in contradiction to the needs of the time. In this way, for example, the Southern planters’ domination of the federal government was sustainable in the decades between the Independence and the Civil War. This was no longer true when the country became a great industrial power at the end of the nineteenth century. You needed people like Theodore Roosevelt, Andrew Carnegie, John D. Rockefeller, and J. P. Morgan. They had to be much more powerful than the Southern planters had ever been, more competent in managing vast enterprises, and more cosmopolitan. The Industrial Revolution catapulted the Robber Barons to wealth, multiplying the power of the muscle.
Second, the process leading to the elimination of the dying elite begins long before the change in elites becomes visible to everyone. The old Southern elite collapsed with their defeat in the Civil War. Yet, the process that led to this outcome—the industrialization that had taken place in the North—had been working for decades.
This technological revolution affected all relationships, altered the social order, and required a new elite to guide the country. Different from what Bannon says, elites do not change arbitrarily in response to the strength of character or the charisma of a leader or one election. They are expressions of changes in the structure of society.
What sort of elite will predominate in the infinitely more complex world emerging from the Connectivity Revolution?
ELITES AND TODAY’S TRANSFORMATION
The Industrial Revolution changed society by multiplying the power of the muscle. Machines became the primary sources of wealth. The Connectivity Revolution is multiplying the power of the mind. Machinery remains essential, but thought has become the primary source of wealth and power. We are moving toward a world that is becoming more connected, globalized, and knowledge-based than ever before. Along with all the changes this transformation is having locally, the new revolution is changing the equilibrium of international power. China became a superpower because it took sound advantage of globalization to access enormous markets with products made by foreign enterprises in China—thus using the products, financial, and knowledge globalization to its benefit.
Many believe that these trends are weakening, that globalization is finished, and that we are going back to the more straightforward realities of the 1950s under the guidance of Donald Trump. That this is a senseless song can be seen by realizing how different Trump is from the elites that produced the 1950s and, even more, from the economic elites that are transforming our society, as exemplified by Elon Musk.
Trump and the 1950s Elite
The elites that presided over the transformation of the United States of the Great Depression into the post-war unprecedented expansion of the American and the world’s economy were the opposite of Trump. That was the elite that understood that the progress of the United States depended on the progress of the rest of the world and that the best defense was to create alliances based on loyalties. This generation emerged victorious from World War II, opened the United States to the world, and led a worldwide process of trade liberalization that brought progress to the world as a whole. Not only that. At the war's end, they did something nobody had done before. They established the Marshall Plan to help European countries, including those that had been enemies, recover from the war's destruction. They also established NATO. They understood that to be strong, the United States needed strong and loyal allies to face the Soviet threat that emerged as soon as Hitler died.
They created an international financial order by establishing the International Monetary Fund (IMF) and the World Bank. Politically, they established the United Nations. They were capitalists but conscious that competition must be combined with cooperation to develop a livable international society.
The world of the 1950s, which the United States elites created with openness and cooperation, is what Trump says he wants to recreate with isolation and rough egoism. Outputs depend on inputs. If you introduce inputs opposite to what you say you want, you will attain its opposite.
. Trump has clearly said that he wants to destroy all those institutions that the statesmen and businessmen of the fifties created to give shape to that epoch.
This shows that Trump is not a member of that 1950s generation. Instead, he might have been a member of the 1920s generation, which isolated the United States from the rest of the world politically and tried to isolate it financially and economically. This generation imposed the infamous 1930 Smoot-Hawley Tariff Act, which resulted, directly and by causing retaliation from other countries, in a 70% fall of international trade from 1929 to 1932 (yes, it is not a typo; global trade in 1932 was only 30% of its value in 1929).[8] As all countries exported less and less, they could repay less and less of their international debts, including to the United States. Banks in Austria and Germany, and then in most other countries began to fail, contributing to starting and maintaining the Great Depression. The experience that economic and political isolation did not free and probably contributed to World War II became ingrained in the post-war elite. Trump is not one of them.
Trump’s generation is the one that misread the collapse of communism in the 1980s and 1990s. They thought that communism had failed because it was based on communitarian values and capitalism had won because it was based on naked individualism. Yet, the opposite is true. The imposition of totalitarianism in the communist countries created an environment of “every person for themselves,” which was the most self-centered you can imagine. During my years working in the Soviet Union for a Western multilateral financial institution, raw egoism was one of the features of the Soviet society that impressed me the most.[9] Communism fell precisely for this self-centeredness, which resulted in a system in which people sold stolen goods and machinery from the industries that employed them, sold on the side the services that public servants had to provide for free, and operated in the black markets as sellers and buyers.
However, if Trump differs from the enlightened elites of the 1950s, he is also foreign to the new economic elites who are now shaping the new American economy, changing it irreversibly. They are changing it in fundamental ways. While the transition from the old planters to the Robber Barons broadened the scope of the elites from regional to national, this one is embedding American society into the worldwide fabric and vice versa. The most vivid example of this new generation is Elon Musk, whom Trump has recently appointed to simplify the federal administration. Finding an elite that could be more different from Trump is impossible. Even the Democrats are closer to Trump because, like him, they also live in the twentieth century. We can call this generation the Silicon Valley, though it goes much beyond California. It is affecting the entire country so much that compared with Trump, they seem like giants.
Trump, Musk, and the Emerging Elite
Trump thinks the United States should be isolated from the rest of the world. Musk is the most globalized among a growing number of globalized entrepreneurs. He owns a network of internet-connecting satellites linked to 150 ground stations that provide internet worldwide. He is also a foundation of globalization through X, formerly Twitter.
For Trump, China is the enemy. Musk has recently invested in China’s massive manufacturing facilities for Tesla cars and batteries. Moreover, he has a broad base of input providers in China, which accompanies him when he invests in other countries. Trump wants to decouple from the rest of the world. Musk is investing in different countries with a strategy that would beat Trump’s policy of high tariffs to force American companies into the United States rather than abroad. He has plants to supply the United States, so if the high tariffs allow American companies to sell their cars at higher prices, he will get that benefit, too. The tariffs would benefit him more than proportionately because now he controls about half of the EV sales in the United States. The other 50% is controlled by Chinese companies, which will see their sales fall to zero because they will have to increase their prices by more than 65%. Then, he would become almost a monopolist in the United States, promoted by a government in which he is a top advisor. He will sell cars made in China, Germany, and other countries for different markets. So, he will benefit both ways from investing abroad. No wonder that the shares of his companies increased so much when Trump won—even if he works against Trump’s strategies.
Musk’s specific government tasks include simplifying regulation. He has several regulatory issues regarding Tesla, where he feels federal controls have been too restrictive, particularly regarding the appropriate functioning of the driverless mechanisms.
But more than these things, he is different from Trump and any other entrepreneur in history, except maybe Dr. No in the James Bond novel; he is more potent than many second-rank country powers, like Europe, and in some aspects, more than the President of the United States. Trump, for example, said that he would end the Ukrainian war in one day by just stopping military aid for the Ukrainian government, which would be forced to cede territory to Russia, which would satisfy his friend Putin, who respects him a lot. Putin already said he would not be happy just making some arrangements about Ukraine. He wants to discuss the world order and end the hegemony of the United States, implying what was evident to everybody but Trump—that he wants to control the world.
Trump will find it challenging to introduce peace in that part of the world. Musk, however, could force the defeat of Ukraine not in one day but in one second because the Ukranian army uses its internet facilities to communicate. If he flipped the switch, the Ukrainian military would lose the war instantly. He has already shown this power when he denied communications for an attack that the Ukrainians attempted against Crimea, which Putin grabbed from them in 2014. The Ukrainians had to cancel the operation.
Everybody noticed. The most powerful political leaders regard Musk as one of them. In some areas, he has more power than them, which has changed the world. Musk is not alone. Many young entrepreneurs now growing in Silicon Valley are developing projects that will give them powers as extraordinary as Musk's.
Trump is not capable of controlling these emerging new elites, and nobody discusses how to deal with them. Will the world be privatized? Will it be split into smaller feudal territories controlled by some of these new mutants? That situation is not probable because people like Musk have power because they are global, a pragmatic demonstration of the superiority of globalization over isolated nations.
The old Southern planters could have used the slogan Make America Great Again. They had a past they wanted to go back to. That world, however, could not come back. The structure of power in the new society made the elite obsolete. The same is happening today.
Yet, for all these dissimilarities between Trump and Musk, they have something significant in common. They have spoken more about what Trump calls the enemy within—the regulators and other federal employees who use their powers to put obstacles to creative enterprise and politicians like Musk’s companies and Donald Trump. Of course, these internal enemies have the support or the approval of Democrats and many Republicans, almost half the population. However, neither Trump nor Musk will try to convince and negotiate with them. One guesses that they will decide on these, and Musk himself will decide on many of them.
Musk is not the only one who has multiplied his fortune in the wake of Trump’s election. Trump himself did. According to Bloomberg, in a rare coincidence, this happened:
<Hours before polls closed on Election Day, Donald Trump’s social media company reported a bleak financial update: It had lost $363 million in the first nine months of 2024 on just $2.6 million of sales. Less than 12 hours later, as it became clear the former president was heading back to the White House in a resounding win, the shares soared 60%, adding an instant $2.4 billion to Trump’s paper wealth.>[10]
But even if Musk may have benefitted from the $200 billion he bet on Trump’s victory and won a lot of money, his fortune is not the result of operations like this. There is a solid entrepreneur there. He is part of a new elite competing for the American crown.
These things and many others bring back the phrase featured in the Royal Arms of the United Kingdom: “Honi soit qui mal y pense.” It means “Dam the evil-minded.” Make sure you mention this in the novel, Jack.”
“Yes, I’ll do…”
The Democratic Party
The Democratic party is also lost in the wilderness of nostalgia for the past century. They still think of themselves as the defenders of the popular classes—initially defined as the poor, today, in a paternalistic way, in terms of the color of their skin, their race, their sex, and so on. The Republicans already ate their lunch in that dimension. They have based their strategy on directing messages to each minority to gain electoral support. If something was evident in the November elections, it is that this strategy does not work. People prefer Trump to this disintegration of the country. They will have to review their notes. Taking this route may result in the internal disintegration of the Democratic Party.
WHERE ARE THE PROGRESSIVES?
This is not a satisfactory condition. None of the three contenders would solve the fundamental problem in the United States: divisionism. It manifests in disintegrating the country's identity into a myriad of smaller identities and in the hatred permeating political parties. Bannon's conception of triumph, destroying political rivals to impose a line of thought, is suicidal. If it continues, divisionism will destroy the United States. Americans must make many fundamental decisions to confront the emerging society, but the first is how they will keep the union alive.
Will they keep liberal democracy in place, or will they opt for a tyrant who will not only throw the country under the bus economically with the absurd idea of going back to the 1950s but also eliminate the freedoms and other rights that have been the foundation of the United States for two and a half centuries?
Americans faced problems like these when the Industrial Revolution hit the country. Three new social classes emerged—the industrial workers, the middle classes, and the prominent industrialists—competing with each other and the two old classes, the peasants and the planters, for economic and political power. The search for a sustainable balance lasted for the better part of sixty to seventy years and culminated in the end of World War II. The adjustment was successful even though some serious problems remained, mainly racial and sexual discrimination. The United States avoided the terrible tragedies of contemporary Germany, Austria, Italy, Russia, and many other European countries. The United States managed to maintain its freedoms while adapting to a new world because it was flexible.
One of the sources of this flexibility arose from a large group of statesmen and entrepreneurs who, across party lines, understood that the United States could not be a healthy society without incorporating the new social classes into its operation. As a true elite, this group did not need a formal organization. They worked for the adjustment within both political parties, prioritizing keeping the country united and progressing under a new set of institutions that would accommodate the new classes. The result came to life with the New Deal in the 1930s. This set of policies had many things to criticize, but its paramount attainment was to readjust the country to accommodate the technological revolution. It kept the country going in freedom.
Roosevelt always insisted that he had saved capitalism by providing a space for people to vent their frustrations and anguish during the Great Depression. He achieved much more than that, but not through his economic policies, some of which were disastrous. His historically successful interventions were in the social and political spheres. The answer that Secretary Morgenthau gave his son when the latter asked him what had the New Deal achieved was true: “[T]he United States had come through this terrific turmoil and …the individual in this country still had the right to think, talk, and worship as he wished”.[11] This truth was an outstanding achievement by Roosevelt, the elite behind him, and the country he led.
The name Progressive has been appropriated by the Democrats, though there were as many Republicans as Democrats Progressives. Seeing how the United States is being ripped apart by party, identitarian, and ideological struggles, it is easy to think that the country needs true Progressives in our times—leaders in both parties who assume their responsibility in keeping the country united, working together to adjust to the new changes of the Connectivity Revolution.
Without these new characters, willing to work across the two parties, the United States will not clear the jungle of divisionism that is sinking it.
This must be shown prominently in the novel.
…..
Manuel Hinds is a Fellow at The Institute for Applied Economics, Global Health, and the Study of Business Enterprise at Johns Hopkins University. He shared the Manhattan Institute's 2010 Hayek Prize. He has worked in 35 countries as a division chief and then as a consultant to the World Bank. He was the Whitney H. Shepardson Fellow at the Council on Foreign Relations. His website is manuelhinds.com
[1] Louise Callaghan, Steve Bannon: Maga can rule for 50 years and Farage will be PM, The Times, November 30, 2024, https://www.thetimes.com/world/us-world/article/steve-bannon-maga-can-rule-for-50-years-and-farage-will-be-pm-93j9np20f
[2] De Tocqueville, Alexis, Democracy in America, Volume I, Kindle Edition, pp. 295.
[3] De Tocqueville, Alexis, Democracy in America, Volume I, Kindle Edition, pp. 295.
[4] De Tocqueville, Alexis, Democracy in America, Volume I, Kindle Edition, pp. 297.
[5] Data on wealth estimated by Roger Ransom and Richard Sutch, quoted in Samuel H. Williamson and Louis P. Cain, Measuring Slavery in 2016 Dollars, MeasuringWorth.com, http://www.measuringworth.com/slavery.php#text21
[6] Source: Estimates by Roger Ransom and Richard Sutch, quoted in Samuel H. Williamson and Louis P. Cain, Measuring Slavery in 2011 Dollars, MeasuringWorth.com, http://www.measuringworth.com/slavery.php#text21
[7] Cashman, Sean Dennis, America in the Gilded Age: America from the Death of Lincoln to the Rise of Theodore Roosevelt, Third Edition, New York University Press, New York, 1993, Kindle Edition, Location 3941.
[8] Manuel Hinds and Benn Steil, Money, markets and sovereignty, New Haven, Yale University Press, 2009, pp. 183.
[9] Manuel Hinds, In Defense of Liberal Democracy, Watertown, MA, Charlesbridge, 2021, and Manuel Hinds, Nuevo Orden Mundial, México, PenguinRandomHouse, 2024.
[10] Tom Maloney, Donald Trump’s Billion-Dollar Windfall After the Election is Just the Start, Bloomberg, November 7, 2024, https://www.bloomberg.com/news/features/2024-11-07/donald-trump-net-worth-djt-mar-a-lago-among-assets-to-benefit-from-presidency
[11] Amity Shlaes, The Forgotten Man, A New History of the Great Depression, Harper Collins Publishers, New York, 2007, pp. 341.
The world exchange collapsed!