Though the press describes the Milken Institute Global Conference — which will draw thousands of family-offices representing roughly $3 trillion in private wealth to Beverly Hills this week — as a gathering of the elite, it is, in fact, a gathering of the counter-elite. Historically, American elites have been well-connected Mayflower descendants with authority over institutions and a sense of noblesse oblige. That hereditary elite has come down in the world so dramatically — capitulating to an insurgent counter-elite bonded by capital and co-investment – the e-word no longer means what it used to. This was predictable. As Peter Turchin observed in End Times, aristocracies almost never last longer than 150 years. The reason is simple, albeit counterintuitive. To retain control, hereditary elites must admit enough outsiders into their ranks to stave off insolvency, inertia, and inbreeding, but not so many institutions stop transmitting their values. When they fail, counter-elites capture institutions or build their own.
The math is brutal. Elite positions scale linearly; counter-elite power scales exponentially.
The popular story is that American elites overdid the gatekeeping — Harvard still has 1,600 freshmen and the Senate still has 100 seats — but if gatekeeping triggered decline, elite overproduction sped it up. Between the mid-1970s and 2011, the number of lawyers tripled while the US population grew 45 percent. Arguably, the hereditary elite didn't let in too few people. They let in the wrong ones (at least in part because traits predictive of massive success make for massively unpleasant company). Single family offices are now on track to surpass hedge funds in AUM by 2030. Capital that the elite failed to absorb is creating new power centers. Was the Milkenization of America inevitable? No, but exponential beats linear every time.
