Hiltzik: Our beleaguered billionaire crybabies

Four people in blue coveralls stand in a line

By Michael HiltzikBusiness Columnist

Dec. 16, 2022 11:34 AM PT

Nothing spells “billionaires” in America like a demand that their efforts to exercise control over society be cloaked in secrecy.

Exhibit A, for the moment, is Elon Musk’s suspension of more than half a dozen journalists and commentators from Twitter, the social media platform he owns. Their offense is that they wrote about @ElonJet, a Twitter account that tracked the trajectories of his private aircraft, using public information.

The @ElonJet account was also banned. Some of the suspended journalists had written about the ElonJet banning.

Self-made billionaires are a myth. Just like unicorns.

— Former Labor Secretary Robert Reich

Musk suggested that the reporting of and about @ElonJet was tantamount to “doxxing,” a practice in which someone’s home address and other personal information are exposed online without their permission, often opening the targets to harassment or physical harm.

Other billionaires have been flexing their privacy muscles.

Hedge fund billionaire Ken Griffin sued the Internal Revenue Service on Tuesday for what he says was the “unlawful disclosure” of his tax and income records due to the agency’s “willful and intentional failure to establish appropriate administrative, technical, and/or physical safeguards over its records system.”

The information ended up in a series of articles by ProPublica detailing the taxes of Griffin and other members of the 1%. ProPublica hasn’t disclosed how it obtained the records.

Do billionaires really have anything to complain about? Hardly. They and their fortunes are protected by a bodyguard of laws and regulations.

Their political donations can be kept confidential, thanks to lax enforcement by the IRS of regulations granting donor secrecy only to “social welfare” organizations, not those engaging in politics. As I wrote earlier this year, the IRS practice of handling millionaires and billionaires with kid gloves has been known and documented for ages.

Where does the IRS focus its firepower instead? On the middle class and poor: The agency audits households with less than $25,000 in income at five times the rate for anyone else.

When the Biden administration and Congress enacted an increase in the IRS enforcement capability that would start to redress the imbalance, Republicans on Capitol Hill reacted as though the very bedrock of the republic would crumble.

The fine whine coming from the 1% isn’t particularly new, but it always comes with an element of absurdity.

Back in 2014, venture capitalist Thomas Perkins groused grotesquely (and ungrammatically), in a letter to the Wall Street Journal, about “the parallels of fascist Nazi Germany to its war on its ‘one percent,’ namely its Jews, to the progressive war on the American one percent, namely the ‘rich.’”

Leon Cooperman, a recidivist billionaire whiner, cursed profanely at Sen. Elizabeth Warren (D-Mass.) when she proposed a billionaires tax in 2019: “This is the [blankety-blank] American dream she’s [blankety-blanking] on,” he complained to Politico. (Want to see the quote in its full technicolor glory? Go here.)

Cooperman, who once paid nearly $5 million to settle insider trading charges brought by the Securities and Exchange Commission, resurfaced last year to crab again about a wealth tax.

Venture investor Vinod Khosla has been fighting since 2008 to keep the public off the public beach fronting his property in San Mateo; he keeps losing, including a failed appeal to the U.S. Supreme Court.

At the moment, one gate to Martins Beach, the stretch of sand and ocean in question, is open by government order, and a lawsuit brought by the state to secure the public’s rights once and for all is pending in state court.

(My colleague Steve Lopez has called Khosla “one of the most arrogant people in state history,” which sounds almost charitable given Khosla’s record.)

The billionaires’ complaints can be distinctly counterproductive. Consider the so-called Streisand Effect. This arose from a lawsuit the world-famous entertainer filed to have an aerial photo of her Malibu property removed from the internet as an invasion of privacy. (The photo was part of a project to photograph the entire California coastline.)

Rather than secure her privacy, Streisand’s lawsuit turned it into an internet sensation. It remains easily accessible online.

As an example of the Streisand Effect, the latest privacy whining by the rich reminds us of the truth of the observation, credited to an advisor to Rep. Alexandria Ocasio-Cortez, that “every billionaire is a policy failure.”

What that means is that the extreme concentration of wealth seen in the U.S. today is the result of economic incentives that foment extreme inequality by failing to recognize the economic contributions of the whole of society. Of the top 20 members of the Forbes 400, that magazine’s annual roster of the richest Americans, at least eight got their wealth through inheritance or marriage (more precisely, divorce).

Of all the rest — indeed, all the non-legacy 400 — not a single one accumulated his or her fortune without the help of others, including what may be legions of employees, many of them laboring at minimum wage. Some also built their enterprises by exploiting public investments — highways, airports, basic scientific research, etc., etc.

“Self-made billionaires are a myth,” former Secretary of Labor Robert Reich wrote earlier this year. “Just like unicorns.”

Reich points to the legs up that even proverbial “rags-to-riches” billionaires received from family wealth and influence. Musk, for instance, got at least part of his grubstake from an emerald mine his family owned during the apartheid era in South Africa.

Jeff Bezos didn’t start Amazon.com as a penniless entrepreneur, but with a quarter-million-dollar investment by his parents.

It’s not unusual for billionaires’ fortunes to be based on their own intellectual qualities, but they couldn’t get where they are by themselves. That points to the question of how much wealth they deserve to hold and bequeath to their heirs.

The Founding Fathers had an answer: almost none. The founders had a visceral horror of inherited wealth. In his autobiography, Thomas Jefferson advocated “a system by which every fibre would be eradicated of antient [sic] or future aristocracy; and a foundation laid for a government truly republican.” His goal was to “prevent the accumulation and perpetuation of wealth in select families.”

Jefferson and his fellows would be appalled at the concentration of wealth in America today. Presumably they would find sound economic and social sense in taxing the hell out of excessive incomes and excessive wealth.

Among the advantages that billionaires receive due to their wealth is sedulous defenses by journalists and other camp followers. Responding to that line about billionaires being “policy failures,” the Economist, which is normally the soul of judicious analysis, wrote that, well, not every billionaire fell into that category.

The magazine did acknowledge that “America’s political system is riddled with lobbyists cheerleading for incumbents,” and that about a fifth of America’s billionaires exploited either government largesse or market failure.

Cheerleading for the accumulation of wealth is always with us. The most recent case concerns Sam Bankman-Fried, the would-be king of cryptocurrency, who is currently cooling his heels in a Bahamanian jail awaiting extradition to the U.S. on fraud charges.

In his brief heyday, Bankman-Fried was an adherent and promoter of the concept of “effective altruism,” which held that if life’s purpose is to do good, then the moral imperative is to make as much money as one can, so that one can give it away.

Among the many problems with this notion is that billionaires tend to give their money to causes that benefit them personally, rather than the public interest. They fund personal vanities like space travel by the billions of dollars, and fight efforts to raise the incomes of their employees through, say, unionization, to the last drop of blood. Effective altruism provides a ready pseudo-intellectual justification for such self-dealing: The more resources billionaires hoard, the more good they can do.

To the extent their accumulated wealth deprives the public of resources through low tax rates and ineffective tax enforcement, they deprive the public of rational application of these resources where they’re most needed. Think of the tax breaks showered on donors to elite private universities — how much more money does Harvard need, compared to, say, the University of California?

Billionaires want everything their way. Influence over public affairs without accountability. Publicity and privacy. They want respect, but don’t always feel that big a need to earn it.

If they want to influence society to a level consonant with their wealth, they’re going to have to open their private lives and private business practices to more public scrutiny.

It comes with the territory. Please, can they stop complaining?