5 libertarian oligarchs who made fortunes off the government they want to destroy

The lionization of frauds like Tom Perkins has them believing their accomplishments are purely their own doing

Published February 7, 2014 3:50PM (EST)

Tom Perkins             (Bloomberg TV)
Tom Perkins (Bloomberg TV)

This article originally appeared on Alternet.

AlterNet The cult of the libertarian-minded ultra-weatlhy would make an intriguing anthropological case study. But it would be a case study with a twist: its research subjects increasingly control our economy, our politics, and even our personal lives.

We’re dealing with a cohort of highly fortunate, highly privileged and highly unaware individuals who have been inappropriately lionized by society. That lionization has led them to believe that their wealth and accomplishments are their own doing, rather than the fruits of collaborative effort – effort which in many cases was only made possible through government support.

But instead of thanking the government and the taxpayers for their good fortune, they’ve allowed their own good press to go to their heads. And they’re biting the hand that feeds them, attempting to shut down the system of taxpayer support and government action which created their world.

Our money-obsessed society gives them far more praise and then they deserve. Our corrupted political system gives them far more influence than we deserve. And, slowly but surely, they are now turning their considerable resources to dismantling government’s role in society.

Call them the “cool tycoons of libertarianism.” They have neat ideas (when they’re not talking about government or the economy, that is). They have neat toys and neat houses. But what they would do to our society isn’t neat at all.

Here are five of them.

1. Tom Perkins

Perkins has already received well more than his deserved 15 minutes of fame. But, while he’s been appropriately reviled for his infamous “Kristallnacht” comment, comparing the treatment of America's 1% to that of Jews in Nazi Germany, too few people have taken to task for the depth of his ignorance on economic issues.

That ignorance was in full display when he went on Bloomberg television to “apologize” for his Nazi reference – an occasion in which he spent far more time defending his ugly worldview than he did apologizing.

In his original comments, Perkins compared “the progressive war on the American one percent, namely the ‘rich’” with Nazi persecution of Jews. But as we first reported, much of the “persecution” which triggered Perkins’ outrage involved his ex-wife’s hedges; it was a one-paragraph item in the San Francisco Chronicle criticizing author Danielle Steele's landscaping. It wasn’t a progressive critique; it was an aesthetic one.

Nobody’s criticizing all wealthy people, of course. In fact, a number of them showed uncommon good sense during the Perkins kerfuffle. The investment firm which Perkins cofounded tweeted that “We were shocked by his views … and do not agree.” Silicon Valley investor Marc Andreessen called him an unprintable name. (Well, okay: it isn’t unprintable. Andreessen called Perkins an “asshole.”)

Perkins’ defense of his initial comments on Bloomberg betray the shallowness of his libertarian thought. He insisted that his fellow tycoons are “job creators,” despite the fact that they’ve been paying very low taxes for more than a decade – and there are no jobs!

Perkins also insisted that society should “let the rich do what the rich do” and enjoy the expanded job opportunities that will flow from that. But on Wall Street the rich were allowed to do what the rich do and it robbed the economy of millions of jobs and trillions in wealth. Apple and other big tech manufacturers were allowed to “do what they do” and hundreds of thousands of jobs were shipped overseas.

Perkins defended the incivility of the San Francisco tech crowd by saying that “maybe have to put up with some techno-geek arrogance to get those sorts of folks thinking.” But what, exactly, are these geeks thinking about? One of the most stunning things about Silicon Valley triumphalism is the way it celebrates itself for what are, after all, a very mediocre set of inventions.

Truly smart tech companies are few and far between. Facebook? An accidental discovery by two guys who thought they were creating a college students’ app and still can’t design a decent user interface. Uber? An obvious idea with a nice user interface. Zynga? The less said the better.

Nor was Perkins himself the winner of some Darwinian free-market competition. He made his money the old-fashioned way: by meeting two brilliant guys named Hewlett and Packard and getting them to hire him. Perkins himself was never the entrepreneur or the innovator at Hewlett-Packard. He ran the research department, then became general manager of its computer division.

Hewlett-Packard itself would never succeeded without Uncle Sam. As Bloomberg News has reported, “Defense contracts spurred the growth of the instrument-maker Hewlett-Packard not long after its founding.”  (Today HP is one of the nation’s largest defense contractors.)

But guys like Tom Perkins don’t know how to say “thank you.” Instead, when they’re asked to people like him live in a “bubble,” they tend to answer as Perkins did, by claiming that it is “a bubble that has changed the world.”

Actually the government changed the world. So did brilliant inventors like Bill Hewlett and David Packard. Guys like Tom Perkins, while they may have been smart and/or hard-working, mostly caught a lucky break. But they’ve managed to rewrite their own histories as a libertarian fantasy, a Victory of the Supermen upon which all others must gaze in wonderment and awe.

And don’t forget to say nice things about the hedges.

2. John Mackey

John Mackey, CEO of Whole Foods, is one of the nation’s most visible “free-market libertarians.” Mr. Mackey said this about government, and specifically about Obamacare, last year on NPR:

“In fascism, the government doesn't own the means of production but they do control it and that's what's happening with the health care program with these reforms and so I'd say the system is becoming more fascist.”

Presumably that means that the privatization of government services – an effort which includes every major defense contractor in this country – is a “fascist” scheme. We haven’t heard Mr. Mackey make that argument, however.

The “fascist" government Mackey despises provides a number of services which have helped make him become very wealthy. The USDA, for example, certifies that the food sold in his stores is organic. Without that certification, Whole Foods customers would have no way of trusting Mr. Mackey’s claims about his food. His business probably wouldn’t have gotten off the ground without it.

And that’s not all. Government built and maintains the roads and rails which bring Mr. Mackey’s goods to each of his far-flung stores.  Government regulators ensure that his stores’ food is grown, prepared, packaged, and shipped in a manner that is safe and disease-free.

Without government, John Mackey would still be running a little hippie store in Austin.

Mr. Mackey believes that business, not government, is best suited to addressing society’s ills. He points to his corporation’s own health plan as proof, claiming that it’s superior to Obamacare. Actually, it’s quite similar to Obamacare. Like the president’s plan, Mackey’s offers employees a choice of private-sector insurance options.

But the benefits are much worse in Mackey’s program. As Consumer Watchdog points out, Whole Foods employees have “astronomical” deductibles and copayments. If corporations can do the job better than government can, why is Mackey’s plan so much worse?

While government is evil in Mackey’s eyes, he’s a great believer in the existence of “heroic business.” And yet, Mr. Mackey doesn’t exactly practice what he preaches. Consider this quote from Mackey: “Business is based on cooperation and voluntary exchange. People trade voluntarily for mutual gain. No one is forced to trade with a business.”

Really, Mr. Mackey? Whole Foods is well-known for buying out all its competitors in a city or region. Some of the competitors it closed down this way include Wild Oats, Wellspring, Bread & Circus, Mrs. Gooch’s, Food for Thought, and Fresh and Wild.

A former Whole Foods employee described what happened after Mackey’s corporation shut down the competing Wild Oats store or in his town: “Within one year of this merger … prices on many items went up by 15-20%.  At the time our cat food was $13.59 a bag, today it is $16.59 and mostly due to the lack of competition in the market (another nearby WFM in another region has a lot more competition and the food is at its original $.59).”

For a believer in the “free market,” Mr. Mackey certainly seems to do everything he can to suppress it. In fact, the Federal Trade Commission was forced to step in on antitrust grounds over Whole Foods handling of Wild Oats stores. Whole Foods finally settled and agreed to sell off the remaining Wild Oats locations, but by then the damage to the “free market” had already been done.

Mr. Mackey, who is 60 years old and has no children, reportedly views himself as a “daddy” to his employees. If so, he can be a Scrooge-like one. Despite the corporation’s PR campaigns claiming otherwise, Whole Foods pays at or near the minimum wage for many positions in its stores.

Among other things, that means that this anti-government zealot is being subsidized by government programs so that he can keep underpaying his employees. Here’s how that works: Anyone who earns 130 percent of the Federal poverty line or less (currently about $25,400 for a three-person household) is eligible for food assistance. That’s $12.21 per hour for a full-time employee.

The employment website Glassdoor.com lists salaries for a number of Whole Foods positions. Jobs that start in the $8/hour range or below include assistant bulk buyer, cashier’s assistant, bakery assistant, cashier, customer service representative, and associate. There are dozens of jobs whose average pay is less than that.

Why don’t both parents work? Sometimes it’s because there’s only one parent at home, with two kids to raise. That’s no way to treat the grandkids, Pop.

One more thing: Mackey doesn’t think the climate change is real, either. So he doesn’t just think he can do government’s job better than government can. He also thinks he knows more about science than scientists do. Sounds more like an ego problem than a difference in ideology.

3. Peter Thiel

Whatever his shortcomings, John Mackey can also be an engaging and interesting personality. Internet tycoon Peter Thiel, on the other hand, shows all the signs of being a rather unpleasant individual. He doesn’t think women or minorities – excuse me, I mean “welfare beneficiaries” – should be allowed to vote, for one thing. Since 1920,” Thiel fulminated in an essay, “the extension of the franchise to (these two groups) have (sic) turned ‘capitalist democracy’ into an oxymoron."

Give him points for honesty: “I no longer believe that freedom and democracy are compatible,” writes Thiel.  That’s not an unusual point of view in one strain of libertarian thinking. But it’s unusual to hear it stated so plainly.

In his rather comically grandiose essay, Thiel compares the criticism his undergraduate newspaper received at Stanford to the “carnage” of “trench warfare on the Western Front in World War I.” Thiel, who made his fortune at PayPal with Elon Musk, has shown none of his former partner’s genius for technological and business creativity.

And speaking of grandiosity, Thiel tells us that “the founding vision of PayPal centered on the creation of a new world currency, free from all government control and dilution” – and presumably controlled instead by the likes of Peter Thiel. He waxes equally excessive about Facebook and other Internet companies, touting their inability to overthrow democracy and replace it with a newer and “freer” (at least for Peter Thiel) digital regime.

But Thiel’s expansive vision doesn’t end with regime change. “By starting a new Internet business,” he writes, “an entrepreneur may create a new world.” (By now, Star Trek fans may be noticing a growing resemblance between the essay’s author and a certain semi-omnipotent recurring character.)

Thiel is honest about one thing, if only inadvertently, when he writes that “the prospects for a libertarian politics appear grim indeed.” That’s true. His brand of politics is extremely unpopular with the general public. But he fails to take that thought to its logical conclusion: democracy is the free market of governance. When Thiel rejects its judgment he contradicts his own political philosophy.

But Peter Thiel has a much bigger problem than that. He clearly believes that he and his fellow Internet success stories are a brand of Nietzsche ubermenschen.  “The fate of our world,” he writes, “may depend on the effort of a single person who builds or propagates the machinery of freedom that makes the world safe for capitalism.”

In other words: there’s an app for that.

But Thiel, along with the other boys in his treehouse, made his millions by relying on taxpayer-funded and democratically-managed assistance every step of the way.  Like Facebook and the other big tech corporations, PayPal was built on the government-created Internet. It is accessed by computers whose core technology was funded by government research. The vast majority of its customers are able to read its instructions because of government-funded education.

4. Elon Musk

As the old brain-teasers used to say, “one of these things is not like the others.” Elon Musk differs from the other people on this list in one very important way: He’s a smart guy who actually invents things. They are real things, useful things, tangible things. Where the other Silicon Valley libertarians merely imagine they’re real inventors like Ford and Edison, while doing nothing more than making trivial front-ends for existing technology, Musk really seems to be what he appears: an inventor and entrepreneur in the old-school style.

Unfortunately, he also hangs around with the wrong crowd. Some of their silly ideas seem to have rubbed off on him. We don’t know if that happened when he was working on PayPal with Thiel, or even earlier when they were part of the same conservative circle as undergraduates at Stanford.

Whatever it was, the tendency for ideologically-based hypocrisy has not entirely eluded Musk. As Mother Jones reports, Musk was able to save Tesla Motors – and his sizable ownership stake in it – with a low-interest government loan. “Shortly after paying off his $465 million loan,” Josh Harkinson writes, “Musk proclaimed that government should no longer provide such assistance.”

A carbon tax would have been better, Musk argued (ignoring the fact that such attacks appears to be politically impossible right now). The market, Musk then tweeted, “will achieve best solution.”

Unfortunately for Musk, a market-driven economy have never invested in the pure research necessary to develop personal computing technology and the Internet. And without those two platforms, Musk would never have had the financial resources to launch Tesla. So, when Musk tweeted that “"Technically, I 'got rich' from Zip2 & PayPal w zero govt anything,” he wasn’t demonstrating anything except his own ignorance of the economics and history of his own field.

I met Musk once and was quite impressed with his brilliance. Unfortunately, brilliance too easily leads to hubris. It’s like the old saying goes: it’s not what you don’t know that takes you down. It’s what you don’t know you don’t know. Silicon Valley libertarians, take note.

5. Jeff Bezos

And speaking of hubris: Amazon’s Jeff Bezos went on 60 Minutes and told the country that in a few years his corporation will deliver its products by drone. All that claim did was reinforce the stereotype of the Silicon Valley libertarian as someone who doesn’t understand the social realities of the world around him.

Anyone who thinks an unmanned aircraft filled with valuable goods will routinely survive a descent path into the most heavily-armed nation on Earth has got another think comin’.

For some people, the drone claim was a surprise. But it was part of what has become a routine pattern for the admittedly brilliant, if ruthless, leader of Amazon: allow the taxpayers to develop a costly new technology (first computers, then the Internet, then drones), adopt it for your own profit-making ends, then cling to a belief system which says that government played no part in the success of people like yourself.

Much of Bezos’ libertarian worldview has been a matter of private speculation rather than public advocacy, noted in biographical profiles but much less visible in public donations and proclamations. The one exception is education, where Bezos has invested large sums of money in libertarian and neoliberal efforts to replace public education as we know it with a privatized, for-profit, anti-union nexus of corporations.

Whether or not Mr. Bezos is aware of it, the fundamental pattern undermining our educational system is a simple one: first, starve school districts of needed funds. Second, lament their declining performance. Third, claim that something called the “free market” can bring the innovation necessary to rescue it. Fourth, make greater sums of money available for private corporations than you were willing to do for public education.

It’s not clear how much of this Mr. Bezos understands. But, as Lee Fang reported in The Nation, he has aggressively pushed a destructive privatization agenda on our educational system through the Bezos Family Foundation.

Bezos also put a capstone on his hypocrisy by donating $100,000 to defeat an initiative which would have imposed a mild additional income tax on high earners. The computing technology which is made Mr. Bezos wealthy was developed using taxpayer funding which began in the 1950s, when the top federal income tax rate was 93 percent. Today it is 39.5 percent.

Where will the innovations of the future come from if the government doesn’t have the resources needed for investment – either in new technologies, or in the bright young minds of the future who will someday invent them? Government is how we create a better world, Mr. Bezos. It won’t just be delivered to our doorstep by a drone.

By Richard Eskow

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Alternet Dangerous Jeff Bezos Libertarians Peter Thiel Politics Tom Perkins