By Sam van de Schootbrugge 14-10-2020

Which Country Has the Best-Quality Elites?

(6 min read)
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Executive Summary

Elite members of economies currently face intense scrutiny, yet not all are created equal. Academics at the University of St. Gallen have developed a measure for the quality of a country’s elites. They find that some run ‘value creation business models’ that give more to society than they take, while others do the opposite. And then they rank them (Chart 1).

So, who comes out on top? Singapore. While elites there have too much political power, they more than make up for it by being the highest value creators on the planet. Next come the Germanic elite models of Switzerland (2nd) and Germany (3rd) which foster a high level of value creation. The Anglo-Saxon elites follow, led by the UK (4th) and the US (5th). Interestingly, American and British elites manage to rent seek more than power scores would suggest.

Other noteworthy results include China (12th), which has the highest score for a middle-income country. It scores better than France and Italy. At the low end are Egypt (last), Argentina (second last) and South Africa (third last).

Background

Elites are narrow, coordinated groups with business models that successfully accumulate wealth. And they have entered the firing line in recent years, whether due to automatization creating a new digitally illiterate underclass, rising social and economic inequality, or growing ESG concerns. Yet the quality of elites varies across countries, and so the researchers constructed an index, the EQx, to measure both elite power and value creation.

Countries more prone to discontent are those with ‘low-quality elites’ that choose business models which extract value or are rent seeking. Rent seeking is obtaining unearned rewards through a quest for privilege. This value extraction is inefficient because it redirects resources into less productive uses, e.g. legislation that prevents new innovative businesses from competing. On the other side of the coin is value creation. ‘High-quality elites’ will use business models that create more value than they capture. That is, they grow the size of the pie, benefiting themselves and society in general.

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