• Fri. Jun 14th, 2024

Why we can’t stop talking about billionaires


Mar 30, 2021
Protesters standing in a scrubby field and holding a cutout of Jeff Bezos’s face along with a sign saying “Jeff Bezos.”
The pandemic created a new class of billionaire-dom, turning tech’s mega-billionaires into mega-mega-billionaires at a time when the rest of the economy was cratering. | Chesnot/Getty Images

Tech billionaires emerged from a year of hardship as more than leaders of iconic companies. They are central — almost too central — characters in American life.

When MacKenzie Scott unveiled last year that she had donated $6 billion to support 500 nonprofits across the country, overwhelming applause rushed in for a billionaire who probably donated more money directly to charities in a single year than any living person ever had before.

But then something weird happened. She ended the year much, much richer.

It happened to Jeff Bezos, Scott’s ex-husband and Amazon’s CEO, too. Ditto for Facebook chief Mark Zuckerberg. And the same went for Twitter founder Jack Dorsey, whose net worth more than doubled over the last year. All of these billionaire philanthropists ended the first 12 months of the Covid-19 pandemic wealthier than when it started, even though some of them are determined to relinquish their money and power to the masses — or to “keep at it until the safe is empty,” as Scott once put it.

Jeff Bezos and MacKenzie Scott walking in 2010.
Matthew Staver/Bloomberg via Getty Images
MacKenzie Scott and Jeff Bezos each got much wealthier during the pandemic.

Instead, they became more moneyed and more powerful. It’s a paradox that neatly encapsulates just how much billionaires won at a time when many Americans lost something.

“This pandemic has been a wrecking ball in the lives of Americans already struggling,” wrote Scott last year, before tartly acknowledging the winners that philanthropists can resist acknowledging. “Meanwhile, it has substantially increased the wealth of billionaires.”

At the outset of the pandemic a year ago, I wrote about how Silicon Valley’s richest people were stepping up to help in the face of an unprecedented crisis — and how relying on them was likely to expand and entrench their power and influence. A year later, that largely happened.

The current crisis has cemented tech billionaires’ status as masters of the universe. They have grown their economic power — both their companies’ market caps and their own personal bank accounts. Many of them now exert greater gravitational pull in civic life through their philanthropic empires and political operations. And we are all more dependent on them and on the private sector more generally, in no small part because of a slow response from a public sector that created a leadership vacuum in the first place.

They have emerged from a year of hardship as more than leaders of iconic companies. They are central — almost too central— characters in American life, according to interviews with philanthropy professionals, critics, advisers to the mega-rich, and, yes, some billionaires.

“If you asked someone, ‘Do you think Jeff Bezos is more powerful than the collective Congress?’ you’d probably have people debating that,” said Ro Khanna, a liberal member of Congress who represents much of Silicon Valley.

That assessment is backed up in new exclusive polling from Vox and Data for Progress that reveals an American public that is uneasy about its billionaire class. The survey finds that Americans have heated feelings about the ultra-rich, saying by a more than 40 percentage-point margin that billionaires aren’t good role models. Many Americans also say billionaires unfairly got richer during the crisis and should have to pay more in taxes, rather than leaving the country depending on their philanthropy. At the same time, though, many dismiss further-left critiques and say they believe billionaires generally do a good job at giving away their money; by a 50 percentage-point margin, Americans strongly reject the idea that a society that allows billionaires is inherently immoral.

Ethan Winter, Data for Progress

That’s because, as the survey results suggest, billionaires are also appreciated — and their power is not always nefarious. Yes, the wealthy got wealthier since the pandemic started, but in many ways because they provided services and products Americans desperately needed. Plus, the influence that billionaires gained through their philanthropic and political operations can easily be overstated and oversimplified, in part because Americans are now more attuned to their power in the first place.

But when someone gives away more money in a single year than any living person ever has before and somehow ends the year richer, it raises questions for everyone involved about the system that produces these winners.

How tech billionaires won the pandemic

If there was already a huge gap between the rich and the poor, this pandemic turned it into a chasm.

The wealthy were able to hop on private jets, decamp to spacious vacation homes, and consult high-end concierge doctors. The poor lost 80 percent of the jobs that disappeared, disproportionately labored on the front lines, and were more likely to die from the virus than wealthier Americans — and racial minorities were hit even harder. The disconnect between the stock market and the economy could not be more stark: The stock market had one of its best years since World War II as America’s economy shed 10 million jobs and dragged millions more into poverty.

Billionaires and their already-big companies were winners of this yawning inequality. Scott and Bezos and Zuckerberg and Dorsey were not anomalies among the billionaire class. The 500 wealthiest people in the world saw their net worth increase by almost one-third in 2020, the greatest increase in the eight-year history of the Bloomberg Billionaires Index.

Mark Zuckerberg speaks virtually on camera during a congressional hearing.
Daniel Acker/Bloomberg via Getty Images
Mark Zuckerberg testifying before Congress earlier this year.
Jack Dorsey speaks virtually on camera during a congressional hearing.
Daniel Acker/Bloomberg via Getty Images
Jack Dorsey testifying before Congress earlier this year.

That spike was driven disproportionately by the tech titans, the richest people in the world: The pandemic created a new class of billionaire-dom, turning tech’s mega-billionaires into mega-mega-billionaires at a time when the rest of the economy was cratering. At the outset of the pandemic, only one billionaire, Bezos, had more than $100 billion. Today, five do.

“The scale of the upside that the wealthiest like the tech billionaires have experienced — in the face of what has happened to the rest of country — should force a fundamental rethink about the society we live in,” said Jenny Stefanotti, who has advised some of Silicon Valley’s ultra-wealthy on philanthropic work. “We can talk all day about why that is the case — because of what happened with the markets and blah blah blah — but I find something fundamentally problematic about that outcome.”

Many Americans agree. Seventy-two percent of those polled said they found that the fact that the rich had gotten wealthier during the pandemic to be unfair, compared to only 19 percent who found it fair.

How did that happen? Tech founders got richer because their companies became more powerful and essential — and they were already dominant before the pandemic. While many non-tech companies surged over the last year, too, the tech giants now account for almost one-quarter of the value of the S&P 500, a sign of just how big they have become relative to the rest of corporate America. Shutdowns around the world forced the economy to pivot to digital, and tech companies were positioned to reap the windfall.

Amazon workers demonstrating in front of the Jeff Bezos’s house, with a sign reading “Amazon hurts working people.”
Kena Betancur/AFP via Getty Images
Jeff Bezos has become a target for critics of wealth inequality.

Defenders of billionaires’ wealth gains have a fairly straightforward argument: Their innovations made Americans’ lives more convenient, cheaper, and safer. They created jobs or vaccines. And public market investors bid up their increasingly successful companies. To fault billionaires for maximizing shareholder value and for getting richer as a result, these defenders say, is to question the capitalist impulses that undergird America’s entire economy.

“There are few things as dangerous to the average, everyday person trying to get by as misplaced rage about this issue,” said one person close with several tech billionaires. The anger should be at the government for not taxing them more, not the Jeff Bezoses of the world. “If Jeff Bezos was stealing money, he’d be arrested. The fact that he’s not stealing money means that probably government officials should be arrested.”

Critics, though, paint a different portrait of American success stories: Their companies made only some Americans’ lives more convenient, cheaper, and safer. They say companies like Amazon put workers at risk and took advantage of third-party sellers, and made it even harder for mom-and-pop retail stores to survive. To hear them tell it, these tech titans are throwbacks to the pillaging robber barons, and a sign that the economic system doesn’t work.

“There’s being in the right place at the right time and you get a certain premium for that. You and I open up a lemonade stand on a hot day in a park and we’re being entrepreneurial,” said Chuck Collins, a progressive critic of billionaires at the Institute for Policy Studies. But that’s not what he thinks the tech giants did. “If it’s a water shortage and you and I set up our table to sell water bottles at twice the price or whatever, then we’re benefiting from adverse conditions for others. And that’s kind of a profiteering scenario.”

So the debate about billionaire tech CEOs in America in some ways boils down to a debate about trillion-dollar tech companies in America. What is a legitimate, hard-earned profit, and what is craven rent-seeking? How much scheming to box out a foe is to-be-expected corporate warfare, and how much is monopolization meriting an antitrust breakup? And amid a pandemic, do companies have any special obligations to society that they don’t have ordinarily, or is their primary calling still to maximize their bottom line?

Those are big questions that people naturally disagree on. What you can’t really debate is the reality that these companies are more powerful today than they were before Covid-19. We’ve all been forced to embrace and depend on Big Tech: Your mall may be closed, leaving you dependent on Amazon Prime. Your school may be closed, leaving you dependent on Google Classroom. Your borders may be closed, leaving you dependent on Facebook Messenger to communicate with family.

One hundred cardboard cutouts of Facebook founder and CEO Mark Zuckerberg are displayed outside the US Capitol in 2018.
Saul Loeb/AFP via Getty Images
Big Tech companies have become more dominant than they were before the pandemic.

Is that good? Americans are evenly split in Vox’s poll on whether these tech companies have done more good than bad for them and their families over the course of the pandemic. But they should get used to it — the long-term power expansion of the industry seems unlikely to reverse any time soon.

One of the few things that could halt that is antitrust action, which has accelerated alongside the tech giants’ pandemic gains. These tech giants have become less optional than ever, but if antitrust advocates have their way, the pandemic would be a high-water mark for their power, rather than an upward inflection point on their path to dominance.

And for the billionaires themselves? One of the few things that could halt their fortunes are proposals for higher taxes, which have multiplied during the pandemic, too.

More net worth doesn’t always translate to more power. There are plenty of no-name billionaires who grew their bank accounts during the pandemic but are just as marginal to public life as they were before. And what often gets overlooked by critics of billionaire power is that tech founder-CEOs are not swimming in actual cash, but in stock that they can be reluctant to sell as long as they are in company leadership.

And so tech billionaires’ power primarily comes from their hand on the wheel of America’s most powerful companies.

“My students get all in a huff about how much money people have made during this time of the pandemic. It’s kind of irrelevant in some ways,” said Akhtar Badshah, who ran philanthropy efforts at Microsoft for 15 years and now teaches at the University of Washington. “To me, it’s pointless. However, what is not pointless is that the gap within certain sectors of the [economy] have increased because of this. And what is the sector as a whole doing to reduce the inequity?”

A testing moment for billionaire philanthropy

One of the ways that tech billionaires can convert their companies’ economic power into personal power is through philanthropy. And billionaire philanthropy faced its biggest testing moment to date at the outset of the pandemic. Would the billionaires save us?

It’s hard to tally exactly how much the ultra-wealthy did. The nonprofit industry is opaque by design. Tech philanthropists in particular are drawn to vehicles that do not require disclosures of gifts, or they see for-profit vehicles — as opposed to nonprofit grants — as their most effective civic-minded work. Some early estimates of philanthropic donations during the pandemic are almost certainly a massive undercount because they rely solely on public disclosures. Better data on 2020 will likely come in the middle of the year.

In this vacuum, proponents and critics of big-money philanthropy gravitate toward their prior beliefs. Proponents point to the dedicated time and eye-popping sums some billionaires spent on responding to the crisis. The other side can’t get over how small even record-setting donations are in comparison to donors’ exploding net worths. And the responses of everyday Americans polled for Vox seem to acknowledge both sides have a point.

By a spread of 14 percentage points, Americans say they think billionaires have done a good job at giving away their money during the pandemic. But at the same time, when asked if the better solution to inequality is more philanthropy or higher taxes, 52 percent chose taxes and only 38 percent favored charity.

Ethan Winter, Data for Progress

“There was a modest increase in giving, but the increase was not equal to the need that existed. And certainly in retrospect, I think the philanthropic sector could have been much more generous,” predicted John Arnold, a billionaire donor who is pushing Congress to impose new regulations requiring philanthropies to give their assets away more quickly.

Ironically, billionaires’ perceived thriftiness in the past year means that the ultra-rich didn’t amass as much power as they might have had they brandished their generosity more visibly.

Charitable gifts from billionaires sometimes allow them to influence policies as if they were political leaders — even though these donors haven’t been elected. For instance, when Zuckerberg donated $100 million to try to fix Newark schools a decade ago, the Silicon Valley billionaire suddenly gained huge influence over education policy in New Jersey’s largest city.

Billionaires and their aides often bristle at the notion that their altruism can give them undue influence, especially when their gifts are addressing basic needs. What power did Craig Newmark gain when he donated $25 million last year to the nation’s food banks to feed the hungry? We asked him.

Craigslist founder Craig Newmark attends the 2016 Time 100 Gala in New York City.
Taylor Hill/FilmMagic
Craigslist founder Craig Newmark donated millions to food banks across the country.

“How did I do that and what’s the secret there? I can show my ignorance and naivete there,” said Newmark. The Craigslist founder said he had not noticed any broader power grab by billionaires during the last year. “I haven’t seen it. Maybe I haven’t been looking.”

It may be unsurprising that a billionaire philanthropist would say that. But the same dynamic has struck some billionaire critics, too. Megan Tompkins-Stange entered the coronavirus pandemic concerned that the rich would make major philanthropic gifts that “would be leveraged into reputation, capital, and more power in the political sphere.” A year later, she says, “I don’t think that happened.”

That’s in part, she said, because philanthropists disclosed smaller donations than she thought they might. But that’s also because many donors tended to focus on basic problems — like the $100 million that Bezos donated to a food bank, Feeding America — rather than trying to place a stamp on US policy.

To her, that’s a nod to the moment (and the polling).

“Billionaires don’t have the same reverence in the eyes of the public that they had five years ago and so I think that some of their purchase in the policy process is not necessarily as palpable as it was even four or five years ago,” said Tompkins-Stange, who studies the policy influence of the rich. “I think the critique about foundations being too involved in policy and the democratic process perhaps maybe counterintuitively has led to a reticence on their part to step in in the case of government failure.”

A year into the pandemic, the polling shows that the general public is not gushing with praise for billionaires or their philanthropic accomplishments. Some billionaire philanthropists, like Microsoft founder Bill Gates, are popular (55 percent approve; 35 percent disapprove); others, like Zuckerberg, are not (31 percent approve; 54 percent disapprove).

Ethan Winter, Data for Progress

Even when philanthropists made gifts that were sorely needed during the pandemic — such as when Zuckerberg and his wife Priscilla Chan donated a needed $450 million to support American election administration — they couldn’t earn easy PR wins and even found themselves dogged by right-wing backlash. And so while billionaire critics also entered the pandemic with concerns that the wealthy would manage to burnish their public profiles with unwarranted praise, the power grab wasn’t as severe as some feared.

The massive exception is, of course, Gates. Since the earliest days of the pandemic, he has been one of the most omnipresent spokespeople for taking the health crisis seriously. The Microsoft founder-turned-public-health expert played an almost governmental role throughout the pandemic.

Gates has corralled drug makers to develop drugs for poor countries; convinced monarchs and presidents around the world to fund the World Health Organization; and served as an informal adviser for Washington policymakers. Whether he is playing diplomat, fundraiser, or doctor, no private citizen has had more reach in the realm of public health over the last year than the world’s third-richest person.

Gates in some ways made the best argument possible for billionaire philanthropy, playing a leadership role when the federal government wouldn’t.

Bill and Melinda Gates on stage with Emmanuel Macron.
Ludovic Marin/AFP via Getty Images
Bill and Melinda Gates acted as quasi-diplomats during the pandemic.

Private philanthropists like Gates say they aren’t trying to grab power, and many of them share a concern that critics are sloppily stereotyping the rich.

Joe Lonsdale, who co-founded the data company Palantir, said private philanthropists like him are merely motivated by trying to do anything they can to help amid all-hands-on-deck crises. For him, that included starting a for-profit biopharmaceutical company, Resilience Bio, that manufactures gene therapies and mRNA.

“Yes, us starting that does ‘increase wealth inequality,’ but it’s not clear it would have been better for us all to go to the beach,” said Lonsdale. “Positive sum wealth creation is not something anybody should be ashamed about, although our culture works better when everybody takes their success and finds ways to contribute.”

Why tech billionaires may have less political power than we think

To hear some people tell it, all of this focus on charity misses the bigger picture of how billionaires truly shaped American society over the past year. Billionaires’ single most significant power flex, they say, has been funneling their millions into politics, specifically to help oust Trump.

Even if you believe that America’s billionaires should have been maniacally focused on combating the coronavirus, you might be inclined to agree that the best return on that mission was achieved not through feel-good philanthropy but by beating Trump, who bungled the federal response.

But at the dawn of the Biden administration, these tech titans may actually have less power than they typically might given their massive donations.

On the surface, Democratic mega-donors played an enormous role in the presidential campaign, financing hundreds of millions of dollars into super PACs that helped back Joe Biden’s campaign. Titans like LinkedIn co-founder Reid Hoffman and former Google CEO Eric Schmidt executed sweeping, often secretive plans to push new political technologies and raise big money for outside groups backing Biden.

But you could make a good argument that billionaires now have less political influence than they have in years past, despite the large checks. That’s because there’s so much other money in politics.

This trend dates back to at least 2016, when GOP presidential contenders competed for the affection of billionaires who could donate to their super PACs. But then Donald Trump ran roughshod over his Republican opponents while being massively outspent — a formula he repeated in the general election against Hillary Clinton, who had her own stable of super PAC-donating Democratic billionaires.

Four years later, the small-donor revolution that Trump and Bernie Sanders popularized was in full swing. Big donors spent more money on the 2020 election than ever before, but the amount of money that other Americans on the whole spent on the 2020 election skyrocketed to $14 billion, twice as much as was spent in 2016. And so while the top 100 donors of the 2020 cycle contributed $700 million more than did the biggest donors in 2016, the proportion of total money raised that came from them actually dropped compared to 2016, according to an analysis done for Vox by the Center for Responsive Politics. And the billionaires who ran for president themselves got clobbered.

For all the exhortations about money in politics, it can seem like the heyday of billionaire influence in politics was five years ago, or even 10 years ago — not today.

And yet, Americans still feel that billionaires had too much influence in the 2020 election: 61 percent of those polled said they thought so, including majorities of both Republicans and Democrats.

“Both of these things can be true at the same time — that billionaires are arguably less important and less powerful because of the ridiculous amounts of money flowing through the system,” said Anthony Nownes, the co-author of a new book about the rise of Silicon Valley political donors. “But it can also be true that they’re still incredibly powerful and important players.”

What further weakens billionaires’ political power is that it’s not clear that their donations will translate to significant influence in the Biden administration — at least publicly.

Biden has sung sanguine notes in the past about billionaires not being “bad guys,” but he does have to watch his left flank, which is led by voices who often cast billionaires as villains. He has promised to raise taxes on the wealthiest Americans. And so while a few tech billionaires like Hoffman and Schmidt certainly have access to the administration, Biden has to be ultra-mindful of how much he acknowledges those ties in public.

Whether you think Biden is too close with billionaires is a question in polling shaped strongly by your partisanship, according to Vox’s poll. But if you’re one of the majority of Americans who thinks that billionaires, in general, have too much influence in politics, there is ample reason to think it is waning.

So where does this leave America?

At the onset of the pandemic, you could squint and envision two possible readings of the country’s thermometer on its billionaires. You could see the mood getting hotter and antipathy toward the mega-rich growing as the pandemic revealed and exacerbated inequities in the economy. But you could also imagine the pandemic serving as a coolant, with billionaire philanthropists’ generosity front and center in America like never before.

Logically, it feels like the answer should be colder — that in a moment of solidarity we came to appreciate the rich. But the impression I gleaned from interviews was that our country is as riven by so-called class warfare as it’s ever been. Billionaires, perhaps because of a skittishness to act publicly, today don’t get as much “credit” for their philanthropy or political wins as they might have in the past. While they should be in a better place reputationally, the bipartisan public conversation is increasingly driven by a desire to tax them at higher rates, break up their companies, and more closely scrutinize their philanthropy.

You need look no further than the guillotines that activists rolled out in front of Bezos’s mansion in August. Or look at our polling: By a margin of 13 percentage points, Americans say they have generally negative feelings about billionaires; and by a spread of 42 percentage points, they say that America’s billionaires do not serve as good role models.

Ethan Winter, Data for Progress

Lonsdale said critics are using the wealthy as scapegoats rather than tackling the root drivers of inequality by fixing America’s education and criminal justice systems, for instance.

“It’s much easier for populists instead to demonize easy general targets, and to play on fear and envy versus doing the hard work of allowing innovation and building to make it easier for everyone to have the opportunity to thrive,” he said.

It feels Pollyannaish to think that these populists will accept that argument when the pandemic is retired to history. Years from now, it may be tough to recall what any billionaire or their company did to mitigate the pandemic’s destruction on the margins. And there’s little evidence that this will somehow lead to a come-to-Jesus moment for billionaires that unleashes billions more in philanthropic capital over the next few decades.

Demonstrators march in front of Amazon’s headquarters in November 2020 holding a sign saying “Tax Bezos.”
David Ryder/Bloomberg via Getty Images
Demonstrators march in front of Amazon’s headquarters in November 2020.

Meanwhile, Americans’ dependence on these billionaires’ tech companies seems unlikely to reverse anytime soon. It’s not totally clear what America’s economy will resemble in the long aftermath of the pandemic, but is there any doubt that some of the digital-first trends that advantage tech giants like Amazon and Google will continue?

A more and more powerful tech industry, led by wealthier and wealthier founders. A group of philanthropists somehow giving away more than ever, but still not enough to appease critics. A political ecosystem that Americans of all ideologies still feel is controlled by the rich.

If this all seems to you like a system waiting to combust, you’re not alone.

David Risher, a top lieutenant to Bezos during the early days of Amazon, worries about that too. He said he was quite bothered that the wealthy — including him and his wife — got even richer over the last year. And he’s simultaneously concerned about the demonization of the wealthy that has made America more tense.

“Wealth can do incredible things,” said Risher. But “it’s hard not to get very, very frustrated — or even angry — with this accumulation of wealth that’s happened so fast, and a tax policy that hasn’t kept up with it.”

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