Today’s billionaires fund the engine of their own destruction.
In the past, ruling classes sought to protect the system that secured their coveted positions. But sometimes, as in the era before the French or Russian Revolutions, some in the ruling circles stopped believing in their religion, their traditions, and their state, only to be exiled, executed, or turned into what the Soviets called “former persons.”
Like our current elites, many French aristocrats lived dissolute lives but also supported revolutionary ideas which threatened “their own rights and even their existence,” as Alexis de Tocqueville noted. Today a large, even dominant portion of the wealthiest and most privileged parts of our society—including the heirs of nasty capitalist titans such as Henry Ford or John D. Rockefeller—are key funders of an increasingly anti-capitalist left. Others are still young tech billionaires and—increasingly—their discarded or former spouses.
This elite has arisen at a time when, as in France before 1789, inheritance is becoming ever more important as a vehicle for upward mobility, which is otherwise increasingly remote for most of the population. Home ownership among middle income Americans, for example, the primary means for asset accumulation for the non-rich, has dropped by over 8 percent in the past decade, while the wealthy have garnered the greatest gain from increased housing prices. American millennials are three times as likely as boomers to count on inheritance for their retirement. Among the youngest cohort, those ages 18 to 22, over 60 percent see inheritance as their primary source of sustenance as they age.
To be sure there will be a lot of wealth channeled to the offspring of the affluent. The consulting firm Accenture projects that the Silent Generation and baby boomers will gift their heirs up to $30 trillion by 2030, and up to $75 trillion by 2060. But this will benefit only a relatively small group, given the intense concentration of assets in ever fewer hands, with the top 1 percent in the U.S. increasing their share by roughly 50 percent since 2002. The class implications of this process are profound. There are over 70 million millennials in the U.S., and fewer than 1 percent of them are millionaires, while the median millennial household earns around $40,500, 20 percent less than boomers at the same stage of life.
The great disconnect
Given this vast wealth, we might expect a ruling class with a strong desire to protect capitalist accumulation. But instead, we have one that almost invariably, and perhaps suicidally, adopts progressive positions. Figuring out the psychological personal motivations of this impulse is way above my pay grade, but the economic underpinnings are fairly clear. The elites on Wall Street, and even more so in Silicon Valley, emerged from a highly competitive economy that impressed even leftists. At the Occupy Wall Street protests in 2011, anti-capitalist demonstrators held moments of silence and prayer for the memory of Steve Jobs, a particularly aggressive capitalist. One progressive writer, David Callahan, portrays the tech oligarchs, along with their allies in the financial sector, as a kind of “benign plutocracy” in contrast to those who built their fortunes on resource extraction, manufacturing, and material consumption.
Yet the tech elite today, as well as their Wall Street allies, no longer resemble the entrepreneurs of the past. The masters of our increasingly “woke” corporate elites are, for the most part, now second-generation bureaucrats presiding over the wealthiest, most pervasive monopolies on the plant. Controlling 90 percent of a market like search (Google), operating system software (Microsoft), dominating the cloud and on-line retail (Amazon) or 90 percent of phones (Google and Apple) does not turn executives into-risk takers but acquirers. Three tech firms now account as well for two-thirds of all on-line advertising revenues, which now represent the vast majority of all ad sales. Once paragons of entrepreneurial vigor, these firms, as Mike Lind has noted, have morphed into exemplars of “tollbooth capitalism,” which receive revenues on transactions that far exceed anything they lose in failed ventures and acquisitions.
Finance, the other pillar, has also become markedly more concentrated, with the number of banks down a full third since 2000 in the U.S. while Europe experienced a slower, but similar consolidation. The five largest banks control more than 45 percent of all assets in the U.S., up from under 30 percent twenty years ago. The five largest investment banks control roughly one third of investment funds: the top 10 control an absolute majority.
This growing concentration fosters a greater acceptance and even eagerness for state regulation. In the earlier open, entrepreneurial period, tech and even finance executives tended to a variety of views, with most leaning towards libertarianism. Historically, Silicon Valley elected middle-of-the-road Republicans—liberal on defense and culture but fiscally conservative—like Pete McCloskey, Ed Zschau, and Tom Campbell. Democrats certainly were present and competitive, but those too tended towards the center.
Today the Valley and Puget Sound are among the most uniformly progressive communities in the country. Tech and financial elites have become primary funders of the Democratic Party. They hated Donald Trump not only for his crudity but also because he was anti-China, where many have major ties. He won in 2016 in part due to superior use of technology. In 2020 the tech world boosted the Democrats’ chances at the grassroots level, notably by the Chan-Zuckerberg Initiative, which poured in $300 million to stoke turnout, concentrated, as conservatives claim, in high-propensity Democratic areas. It constituted what Time Magazine—owned by oligarch Mark Benioff—gleefully described as “a conspiracy unfolding behind the scenes.”
Yet the oligarchy’s embrace of the left goes well beyond opposition to Trump. It was de rigeur among overwhelmingly white and Asian-led tech firms—Amazon, Doordash, Microsoft, Airbnb, Tinder, Dropbox—to pledge their allegiance to the proudly Marxist oriented Black Lives Matter, whose platforms favor socialist economics to battle what its founders call “racial capitalism.”
Yet support for BLM was not just a case of temporary insanity. Arabella Advisors, a “dark money” group that funds “grassroots” progressive groups, has collectedmassive amounts of money from tech and rich progressives; in the 2019-20 election cycle they collected $2.4 billion, nearly twice as much as the Republican and Democratic national committees combined. In the 2019-20 election cycle they collected $2.4 billion, nearly twice as much as the Republican and Democratic national committees combined.
Just the beginning?
It might be comforting to think this surge of oligarchic money will fade out as political fashions change but this may be wishful thinking. Non-profit foundations, the primary vehicle for inherited wealth, have been growing rapidly, with assets growing nine-fold since 1980. In 2020 non-profits brought in $2.62 trillion in revenues, constituting over 5.6 per cent of the total economy.
Critically, the progressive CEOs and top executives tend to be young, meaning we will live with their predilections and those of their offspring for a generation or more. In contrast the conservative funders like Charles Koch, Oracle founder Larry Ellison, Rupert Murdoch, and Irvine Chairman Don Bren are well into their seventies or eighties.
Overall the new “enlightened” rich have consistently outraised and outspent the political “right” in recent years by a margin of nearly 2 to 1. By 2017 billionaires like Tom Steyer, and powerful foundations like Rockefeller, Doris Duke, Walton, MacArthur, Hewlett, Packard and George Soros’ Open Society have poured hundreds of millions to leading progressive groups; in comparison, the largest right-wing foundation, Heritage, attracted fifty percent or less in funds than most of the big progressive non-profits. Jeff Bezos, amidst his pandemic bonanza, announced $10 billion in gifts aimed mostly at woke and green non-profits.
Ironically, many of these foundations made their fortunes in a carbon-based economy that they are now trying to destroy as rapidly as possible. The Rockefellers, heirs to the Standard Oil fortune, have become some of the stiffest advocates of radical climate policies, centered around austerity, so damaging to the western working class and those in the developing countries. Indeed, they now wish to punish corporations that follow the road to riches of their founders. To control information they are now paying the salaries of reporter at Associated Press and National Public Radio to mimic the party line.
These elites are even willing to use their power to censor opponents, increasingly in sync with state power. Google’s announced “crackdown” on climate policy skeptics—even including well-known scientists—has been eagerly embraced by EPA director Gina McCarthy.
The embrace of “woke” investment ideology has led investment banks to shun loans to fossil fuel companies, with the strong backing of the Administration, even as energy prices surge. The transition to ESG standards—including at the World Bank—seeks to prevent funding for fossil fuels of any kind. Wall Street mogul jet-setting Michael Bloomberg wants to go even further and essentially shut down the entire petrochemical industry, with little concern for how to replace it. This kind of thinking has sparked a major legal challenge from 19 states that depend on energy and related industries.
In the coming decade, we can expect this trend to continue. Not only do we have to deal with the predictably left orientation of the oligarchs but also from their discarded wives. Bezos’ former spouse McKenzie Scott is worth an estimated $60 billion, and has already given $130 million to a group pushing woke education as well as gender fluidity and other progressive causes. Melinda Gates, the former wife of the Microsoft founder, is worth at least $6.4 billion and also backs liberal causes like gender equity and the Clinton Foundation.
A formula for suicide
Yet despite their beneficence things may not turn out so well for the “benign plutocracy.” The tech elite is increasingly more an object of fear than admiration. The Democrats, the party they fund, is shifting away from capitalism, a position particularly popular among younger party members. Already, more Democrats, the party they finance, favor socialism than capitalism. There’s even a growing socialist movement among woke—indoctrinated employees in Silicon Valley.
So in their endless search to prove their virtue, our masters fund a basic agenda opposed to both classical liberalism and capitalist enterprise.This is much what happened in the runup to the French Revolution, when many French aristocrats embraced polemics that threatened “their own rights and even their existence,” as Tocqueville noted. Watching Howard Schultz, a self-defined progressive capitalist, fight off a unionization drive recalls French aristocrats who supported radical ideas before losing their heads.
The next phase of class war may soon be upon us. Up to now, policies advocated by the progressive left have come mostly at the expense of the lower and middle classes. But young activists may no longer view with equanimity the oligarchy’s excesses. After all, if the world is on the verge of apocalypse, and also suffering elevated levels of inequality, how can the luxurious lifestyles of so many of the world’s most public green advocates—from King Charles III and Richard Branson to Leonardo DiCaprio and Al Gore—be acceptable? The environmental left sees that it is not great advertising for climate change zealots to fly their private jets to discuss the “crisis” in places like Davos.
This may be particularly damaging when “net zero” meets “degrowth.” Today Democrats largely eschew a strong economy, in part due to environmental concerns, leaving them seeking ever more aggressive re-distribution. Climate activists here and abroad are melding environmentalist green with socialist red. They do not distinguish between good billionaires and bad ones but believe, like Bernie Sanders, that billionaires should not exist at all. The red-green contingent generally agrees with the view of Barry Commoner, a founding father of modern environmentalism, that “capitalism is the earth’s number one enemy.”
Of course, the oligarchy will not disappear, but will secure its place in a regime of state-oriented corporatism. Monopolies like Google or Microsoft may still exist, but as quasi-government utilities that collect fees and squash or acquire innovative upstarts. Such a corporate state may please the inheritors, particularly if married to race, gender, and climate ideology. But this scenario will rob capitalism of the dynamism that marked its ascendancy and built our prosperity.
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