Billionaires and Stealth Politics Read online

  lion— $99 million less than the county’s $163 million appraisal— due to

  the small market for sixteenth- century Japanese architecture and a lack

  of luxury amenities in the home. The break on property taxes Ellison

  received as a result of the adjusted appraisal cost local public schools

  alone an estimated $1.4 million.7

  The brothers Charles and David Koch— highly active in libertarian and

  conservative Republican politics— came next on the 400- wealthiest list, with a net worth of $36 billion each. Their fortunes— which had enjoyed

  a big head start, thanks to their father, Fred Koch— were derived from the oil, natural gas, and chemical firm Koch Industries, which they rapidly expanded by reinvesting 90 percent of earnings and acquiring all or part of such diverse firms as electronics- component maker Molex, cellulose fiber producer Buckeye Technologies, and glassmaker Guardian Industries.8

  Ranking sixth, seventh, eighth, and ninth on the 2013 Forbes 400-wealthiest list were four members of the Walton family— Christy, Jim, Alice, and S. Robson— with $33.3 to $35.4 billion each. Most of their money had been inherited from the Walmart fortune built by their father Sam

  Walton and their uncle James. Walmart, which started out in Bentonville,

  Arkansas, in 1962, grew into a huge retailing empire that (as of 2013) employed 2.2 million people in 11,000 stores worldwide.9

  Tenth on the 400- wealthiest list in 2013 was Michael Bloomberg, whose

  fortune consisted mainly of his 88- percent ownership of the financial services firm Bloomberg LP, which he founded in 1982. By 2012, Bloom-

  berg LP was producing annual revenue of $7.9 billion. Bloomberg— like

  the Koch brothers— has been very active politically; he served for twelve

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  years as mayor of New York. In contrast to the Kochs, however, Bloom-

  berg’s policy views have been centrist to liberal, including strong advocacy of gun control.10

  The next ten wealthiest Americans in 2013 included Sheldon Adel-

  son, with $28.5 billion from resorts and casinos in Nevada, Macau, and

  Singapore— another very conservative political activist and donor— and

  Jeff Bezos ($27.2 billion), the founder and CEO of Amazon.com, who later

  (in 2017) added Whole Foods Markets to his portfolio. Then came Larry

  Page ($24.9 billion), cofounder and CEO of Google, an enthusiast of clean energy; Sergey Brin ($24.4 billion), cofounder of Google; and Forrest Jr., Jacqueline, and John Mars ($20.5 billion each), third- generation heirs to Mars, the world’s largest candy maker— which then had some $33 billion

  in annual sales of such brands as 3 Musketeers, Juicy Fruit and Wrigley’s gum, Twix, Skittles, Milky Way, Snickers, and M&M’s. Next on the list were Carl Icahn ($20.3 billion), an activist investor and takeover artist; and George Soros ($20 billion from investments and currency speculation through his hedge fund firm), a major philanthropist in human rights, democratization, and education around the world, especially in his native Hungary— and one of the most politically active billionaires, donating to Democratic candidates. Number twenty on the list was Mark Zuckerberg

  ($19 billion), the then- twenty- nine- year- old founder of Facebook, whose stock had doubled in value in the past year. Zuckerberg was active in lobbying for immigration reform and technology education.11

  The top wealth holders on the 2013 Forbes list continued with twenty billionaires who held between $10 billion and $18 billion each. In descending order: Steve Ballmer (Microsoft), Len Blavatnik (diverse investments

  in Russia and elsewhere), Abigail Johnson (third- generation executive at Fidelity Investments, the second- largest US mutual fund firm), Phil Knight (Nike athletic apparel and shoes), Michael Dell (Dell computers), Paul

  Allen (Microsoft and investments), Donald Bren (Irvine Co. real estate),

  Ronald Perelman (private equity investing), Anne Cox Chambers (inheri-

  tor of media conglomerate Cox Enterprises), Rupert Murdoch (21st Cen-

  tury Fox and News Corp media), Ray Dalio (Bridgewater Associates,

  the world’s biggest hedge fund firm), Charles Ergen (Dish Network and

  EchoStar), Harold Hamm (Continental Oil), James Simons (Renaissance

  Technologies hedge fund, a wizard at mathematical models for trading),

  Laurene Powell Jobs and family (inheritors of stakes in Apple and Dis-

  ney), John Paulson (Paulson & Co. hedge fund), Jack Taylor and family (Enterprise, Alamo, and National rental cars), Philip Anschutz (invest-

  who the billionaires are

  13

  ments in oil, railroads, telecom, and sports), Richard Kinder (Kinder Morgan Energy Partners), George Kaiser (oil, banking), and Harold Simmons

  (buyout investor).12

  The remaining sixty of our top one hundred billionaires from the 2013

  Forbes list ran from Andrew Beal ($9.8 billion, banks and real estate) down to three brothers tied at #98: Daniel, Dirk, and Robert Ziff, each

  with $4.6 billion derived from their father’s Ziff- Davis magazine empire plus subsequent investments.13

  Conspicuously absent from our set of the one hundred wealthiest bil-

  lionaires is Donald Trump, whose fortune in 2013 was estimated by Forbes at $3.5 billion. That fell below the cutoff for the top one hundred: only enough for Trump to make #134 on the list.14 As a result, Trump has not

  been included in our systematic web scraping or statistical analyses. But we will have a word or two to say— here and in later chapters— about the

  United States’ first billionaire president.

  During the 2016 presidential election campaign, Trump claimed to have

  a net worth of $10 billion. Trump has notoriously offered highly divergent estimates of his net worth, however. During the mid- 2000s, he mentioned

  figures that ranged from $1.7 billion to $9.5 billion. In a deposition for a lawsuit in which the billionaire alleged that a journalist had slandered him by publishing a low estimate of his net worth, Trump explained the variation:

  “My net worth fluctuates, and it goes up and down with markets and with

  attitudes and with feelings, even my own feelings. . . . Yes, even my own feelings, as to where the world is, where the world is going, and that can change rapidly from day to day. Then you have a September 11th, and you don’t

  feel so good about yourself and you don’t feel so good about the world and you don’t feel so good about New York City. Then you have a year later, and the city is as hot as a pistol. Even months after that it was a different feeling. So yeah, even my own feelings affect my value to myself.”15 Still, even late in 2017, four years after Trump failed to make our top- 100 cut, Forbes magazine— perhaps not privy to Trump’s mood changes— estimated the

  value of his fortune to be just $3.1 billion, lower than it had been in 2013.

  That caused him to drop to #248 on the 2017 list.16

  A complete list of our one hundred wealthiest billionaires— ranked in

  descending order of net worth as of 2013, and (for comparison purposes)

  including figures on their net worth in 2016 as well— is given in appen-

  dix 1. In 2016, most of the dollar figures were bigger— some much big-

  ger— than three years before. Some reshuffling among the rankings is

  also evident. Most dramatic was the rapid rise of several computer- and

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  internet- related fortunes. Amazon’s Jeff Bezos leapt from #12 on the list (with $27.2 billion) in 2013 to #2 on the list (with $67 billion) in 2016.

  Facebook’s Mark Zuckerberg jumped from #20 ($19 billion) in 2013 to

  #4 ($55.5 billion) in 2016. Google’s founders also rose significantly: Larry Page from #13 to #9, and Sergey Brin from #14 to #10. (But Oracle’s Larry Ellison sl
ipped from #3 in 2013 to #5 in 2016.)17 And, of course, a few of 2013’s wealthiest billionaires dropped out of the top one hundred group

  or dropped off the Forbes 400 list altogether.18 But most of the names stayed the same in both years, with all but nine of 2013’s top one hundred remaining among the 400 wealthiest Americans three years later.

  Rich, Old, White, Anglo Men

  US billionaires as a group are much older (mostly in their sixties and

  seventies), much more often male, and much more frequently white and

  of Anglo- Saxon or other Western European origin than the very diverse

  American population as a whole. The average age of the one hundred

  wealthiest billionaires who were studied for this book is seventy years

  old, with sixty- nine individuals aged sixty- five or older. Of the one hundred, ninety- eight (a whopping 98 percent) are white, eighty- six are men, and eighty- five are white men.19 Compare this to the general US population, which is approximately 77 percent white, half female, and only

  about 15 percent sixty- five years of age or older.20 And of course, unlike the vast majority of Americans, all billionaires are— by almost anyone’s definition— rich.

  This need not mean that billionaires are generally prejudiced against—

  or insensitive to— women, minorities, the young, or the poor (although

  the possibility of such prejudices cannot be ruled out). But the billionaires’

  life experiences and their values and beliefs are often quite different from those of less- affluent Americans, most of whom are female, comparatively young, and/or members of minority groups. It may well be difficult for billionaires to understand or empathize with exactly what their fellow Americans are thinking, feeling, or needing— for example, what they want the

  government to do.

  The largest and most self- evident gaps between billionaires and their

  fellow citizens involve money itself and related aspects of social and economic class. For most of their lives, most very wealthy Americans (even some we think of as having worked their way up from the bottom) have

  who the billionaires are

  15

  enjoyed good nutrition, comfortable housing, nurturing parents, stimu-

  lating and helpful friends, and safe, pleasant neighborhoods to live in.

  Their work has mostly focused on building up a business and accumulat-

  ing capital, and their periods of economic hardship have mostly involved

  entrepreneurial risk taking rather than a continuing day- to- day struggle to pay rent and put food on the table. Once people attain great wealth,

  their lives tend to be spent in well- protected bubbles— dwelling in expensive, well- guarded apartments or gated communities; working in comfort-

  able top- floor offices; interacting chiefly with fellow elites rather than with working- class or middle- class Americans.21

  As a result, billionaires can easily lose touch with what most Ameri-

  cans are doing and thinking. Moreover, most billionaires have unique eco-

  nomic interests— in advancing their own particular businesses and in pro-

  tecting wealth itself— that can conflict with the interests of most of their fellow Americans.

  If billionaires wield outsized political power, therefore, there is a danger that they may exercise that power in ways that (deliberately or not)

  harm rather than help their fellow citizens. Billionaires’ political actions may fail to further the public good. They may become a serious threat to

  democracy.

  Age

  It takes time to build a great fortune. Even just waiting to receive an inheritance can take up many years of a person’s life. (Ask Prince Charles

  of England.) Those who eventually become billionaires— who generally

  enjoy supportive environments and top- notch medical care— tend to live

  longer than most people do, so they usually stay on the most- wealthy lists for quite a while. (David Rockefeller Sr. died at 101 years old in 2017.) For all these reasons, billionaires tend to be much older than the rest of us.

  Most billionaires are in their sixties or seventies, with quite a few in the eighties or nineties. This is particularly true among the very wealthiest.

  Among the top one hundred wealthiest Americans we identified in 2013,

  for example, Bill Gates was a relatively youthful fifty- seven years old, but Warren Buffett was eighty- three; Larry Ellison was sixty- nine; Charles

  Koch seventy- seven; David Koch seventy- three; the four Waltons fifty-

  eight, sixty- three, sixty- five, and sixty- nine; Michael Bloomberg seventy-one; and Sheldon Adelson eighty. You had to reach down to #12, #13, and

  #14 on the list to encounter Jeff Bezos (forty- nine years old), Larry Page

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  (forty) and Sergey Brin (forty). More seniors followed: the three Mars

  heirs (seventy- three, seventy- seven, and eighty- two); Carl Icahn (seventy-seven); and George Soros (eighty- three).22

  Despite the recent rapid growth of young entrepreneurs’ high- tech

  fortunes, under- forties are still relatively rare among US billionaires. In 2016, thirty- two- year- old Mark Zuckerberg, whose Facebook fortune had

  just leapt up to $55.5 billion, stood nearly alone as a relative youngster near the top, at #4 on the Forbes list. Only thirty- year- old heir Lukas Walton (#37 in 2016, with $11.2 billion) and Facebook’s thirty- two- year- old Dustin Moskovitz (#44 in 2016, with $10.4 billion) came anywhere close.

  Just fourteen under- forties made the richest- 400 list that year; they constituted only 3.5 percent of the list. Most of them were founders or owners of recent internet startups (e.g., Facebook, Airbnb, Snapchat), and most

  ranked toward the bottom of the wealthiest list.23

  Even among the broader category of all billionaires, under- forties

  are rather scarce. In spring 2017, there were 565 US billionaires. The list included— besides several founders and co- owners of Facebook, Airbnb,

  and Snapchat— just a handful of young newcomers from Stripe, Instagram,

  Uber, Pinterest, and Dropbox.24

  Gender

  Most billionaires are men. In 2013, for example, just forty- eight (12 percent) of the wealthiest 400 Americans were women. Most of those had

  inherited their money; only seven (less than 2 percent of the whole list) were judged by Forbes to be “self- made” rather than inheritors. In fact, only three women got started without a husband’s help.25

  In these modern times, one might expect to find more and more women

  ascending to the peaks of corporate management, running startups, and

  amassing large fortunes. But there is little sign of it. In 2016, one had to go all the way down the Forbes 400- wealthiest list to #309 before reaching Meg Whitman, who made her $2.3 billion fortune leading auction website

  eBay and then serving as CEO of Hewlett Packard Enterprise.26

  Race and Ethnicity

  US billionaires— especially the wealthiest billionaires— are nearly all white.

  Scarcely any African Americans can be found among them, and none at

  all among the wealthiest one hundred we studied. Hardly any Latinos ap-

  who the billionaires are

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  pear either. On the 2016 Forbes 400 list, the wealthiest Americans of Hispanic origin were Alejandro and Andres Santo Domingo at #111 and their

  lower- ranking relative, Julio Mario Santo Domingo, at #290 (all heirs to a Colombian beer magnate), along with Jorge Perez at #239 (Florida real

  estate) and Arte Moreno at #335 (billboards and professional sports).27

  There are considerably more Asian- origin names on that list, but not

  a huge number, and none near the very top. The wealthiest Asian Ameri-

  cans included #47, Patrick Soon- Sh
iong (pharmaceuticals); #70, Shahid

  Khan (auto parts); #90, John Tu and David Sun (computer hardware);

  #190, Roger Wang (Los Angeles real estate); #214, Kieu Hoang (medical

  equipment); #222, Romesh Wadhwani (software); #222, Do Won and Jin

  Cook Sang (fashion retail); #232, Andrew and Peggy Cherng (fast- food

  restaurants); #246, Min Kao and family (navigation equipment); #274,

  Bharat Desai and Neerja Sethi (IT consulting and outsourcing); #321,

  Rakesh Gangwal (airlines); #321, Jerry Yang (Yahoo!); #335, John Ka-

  poor (pharmaceuticals); #361, Ram Shriram (tech); and #395, Jen- Hsun

  Huang (semiconductors).28

  In 2016, Forbes made a special point in its 400- wealthiest issue of celebrating immigrants to the United States— including the magazine’s

  own 1917 founder, B. C. Forbes, and Andrew Carnegie, both from Scot-

  land— as sources of innovation and as embodiments of the American

  Dream. The number of immigrants making the 400- richest list has indeed

  grown, doubling from just twenty in 1986 to forty- two (10.5 percent of the list) in 2016. But those immigrants mostly came from relatively advanced

  countries. Forbes’s favorite stories of overcoming poverty, disappointment, or oppression were those of Jan Koum (CEO of WhatsApp), born

  in Ukraine; John Catsimatidis (owner of Gristedes, Manhattan’s largest

  supermarket chain), from Greece; Peter Thiel (founder of PayPal and

  an early investor in Facebook), from Germany; and Thomas Peterffy, a

  moneyless refugee from communist rule in Hungary who learned about

  computers, founded a pioneering electronic- trading firm, and went on to

  build the $14 billion Interactive Brokers Group. All these people are from Europe.29

  Spectacular examples of immigrant success also include Google’s Ser-

  gey Brin, from Russia (#10 on the richest list, with $37.5 billion); hedge funder George Soros, from Hungary (#19, with $24.9 billion); Len Blavatnik, from Russia (#22, with $18.2 billion from diverse investments—

  mostly in Russia); Elon Musk, from South Africa and Canada (#34, with

  $11.6 billion derived from PayPal, Tesla, and SpaceX); Rupert Murdoch,

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