$uperHubs: How the Financial Elite and their Networks Rule Our World

$uperHubs: How the Financial Elite and their Networks Rule Our World by Sandra Navidi, Nicholas Brealey, 310 pages, $29.95, Hardcover, January 2017, ISBN 9781857886641

We like to think of the global financial system as being built on the rule of law, unshakable institutions, and perhaps a dash of economic theory to power it and regulation to reel it in. But, according to Sandra Navidi, it is more a series of very human networks, and is powered by personal relationships, connections and interconnections, interactions, access to information, and individual decisions. 

Previous analyses of the financial system and its risks have focused primarily on the interconnectedness of financial institutions, the validity of macroeconomic theories, and the power of quantitative models, while giving less consideration to the networks of people who preside over the institutions that comprise the system. Yet, in the end it all comes down to people, because it is they, not abstract entities, who make decisions …

So, in her new book $uperHubs, Navidi takes “a look at the financial world through the prism of networked systems,” how three phenomena—technologization, financialization, and globalization—are accelerating the concentration of power in the hands of this network of powerful people, and pulls back the curtain on this intricate, influential world. Like any self-organizing system, it consists of nodes, links, and hubs. Also, like most self-organizing systems, those with the most powerful and influential networks tend to attract ever more power and influence, as everyone wants to be connected to them. Those people, the most powerful in this complex human network, Navidi calls superhubs.

But Sandra Navidi's book is not a journalist's exposé of the group. She is, in fact, a member of the very elite she’s writing about, with invitations to most of the invite-only events that dot its calendar year. Though perhaps not a superhub herself, she counts many as friends and allies, and has directly interacted with most of them at the financial world’s most exclusive conferences and events. Nouriel Roubini, who she does deem a superhub, even wrote the foreward to the book. And she takes you inside those most exclusives, invite-only (it’s a phrase you’ll read often in the book) events of the financial world. The big one is the World Economic Forum in Davos, which she begins the book by describing. But you’ll also read about lesser known annual events and the individuals who rub shoulders at them. It is a cast of intelligent and often eccentric individuals—one, Bill Gross, wrote a highly respected investment outlook that doubled as an ode to his dead cat—used to making and losing money on a scale only nation-states could imagine a generation ago.

(I would love to do a side-by-side comparison of this book and Valley of the Gods: A Silicon Valley Story by Alexandra Wolfe soon, as the stories of extreme wealth and eccentricity, and concentration of alternative philosophies and world views, have more than a few parallels.)

So, if it's not an exposé, what is it? Many things. It is a scientific examination of the financial system and the network dynamics within it. And, as the financial system is the basic operating system of the modern world, it also acts as a kind of users guide or manual to that system. But it is also a warning—about the fragility of the financial system.

While new linkages are formed at an unprecedented speed, our capacity to fully grasp the resulting complexity has not quite caught up with the new system we have created—as was evident in the miscalculation of the impact of Lehman Brothers' failure or the challenges of dealing with the eurozone crisis.

Navidi, in additional to laying out the scope of the financial landscape in exacting detail and introducing us to many of the powerful individuals who the public does not necessarily know but should, examines the increasing fragility of this system and how it leads to ever-wider gaps in wealth and opportunity, and greater inequality. This, in turn—especially the opportunity gap—has lead to a greater distrust in the system itself. At the same time, it has long been a system fueled by the consumer debt of “regular people” as extreme, almost obscene wealth concentrates fortunes at the top of the system over the last four decades.

Between 1979 and 2013, the wages of the top 1 percent grew by 138 percent; today they earn over 20 percent of the national income, and CEOs on average make 296 times what a typical worker earns. In contrast, real wages of the bottom 99 percent have remained flat over the last four decades, while productivity has increased by 80 percent. If wages and productivity had grown in lockstep, the minimum wage would currently be over $18 per hour.

So, the average American has essentially traded real earnings for debt in order to afford a lifestyle comparable to previous generations, and many of them simply can’t keep up. And while Wall Street was being bailed out after the crisis it created, many Americans lost their homes and life’s savings. It is no wonder that many of the financial elite want a correction through taxes and regulation, as many see the only alternative as revolution. Navidi, in fact, sees an “evolving revolution” already unfolding across the world.

$uperHubs is a cross between an anthropological study of the financial class and network science analysis of how human networks form and propagate themselves—a scientific examination of the financial system and the network dynamics within it. And, as the financial system is the basic operating system of the modern world, it also acts as a manual to that system—perhaps even a user’s guide for those with enough influence and power to use it as such. But it is also a warning—about the fragility of the financial system—and a clarion call to begin creating a more “diverse, equitable, and sustainable system that benefits all.”