The 1 percent's sinister inequality lie: How cold-blooded billionaires are pretending to care about the American dream

The Masters of the Universe know they're on the wrong side of history — so now they're pretending they aren't

By Heather Digby Parton


Published August 12, 2015 2:55PM (EDT)

  (AP/Mark Lennihan)
(AP/Mark Lennihan)

One of the more interesting sub-plots of this election season is the newfound interest in income inequality among the billionaire class. It seems odd, wouldn't you say, that they would be suddenly struck by the idea that such drastic disparities in wealth and income aren't simply the natural consequence of the invisible hand rewarding those who deserve it? That has certainly been the line we've heard for decades from the wealthy Masters of the Universe and Titans of Industry (not to mention those who were smart enough to inherit vast fortunes or marry into them). Indeed, after the financial crisis of 2008, virtually all we ever heard from the 1 percent was whining about the terrible unfairness of being held liable for the destruction of millions of lives in the worst economic crisis since the Great Depression.

Their total lack of self-awareness was illustrated by endless quotes such as those reported in this 2011 story about something called the Job Creators Alliance, "a Dallas-based nonprofit that developed talking points and op-ed pieces aimed at shaping the national agenda."

To take just a few examples:

At a lunch in New York, Stemberg and Allison shared their disdain for Section 953(b) of the Dodd-Frank Act, which requires public companies to disclose the ratio between the compensation of their CEOs and employee medians, according to Allison. Stemberg called the rule “insane” in an e-mail to Bloomberg News. “Instead of an attack on the 1 percent, let’s call it an attack on the very productive,” Allison said. “This attack is destructive.” [...]

Asked if he were willing to pay more taxes in a Nov. 30 interview with Bloomberg Television, Blackstone Group LP CEO Stephen Schwarzman spoke about lower-income U.S. families who pay no income tax. “You have to have skin in the game,” said Schwarzman, 64. “I’m not saying how much people should do. But we should all be part of the system.” [...]

Tom Golisano, billionaire founder of payroll processer Paychex Inc. and a former New York gubernatorial candidate, said in an interview this month that while there are examples of excess, it’s “ridiculous” to blame everyone who is rich.“If I hear a politician use the term ‘paying your fair share’ one more time, I’m going to vomit,” said Golisano, who turned 70 last month, celebrating the birthday with girlfriend Monica Seles, the former tennis star who won nine Grand Slam singles titles.

This was during the height of the Occupy Wall Street movement, which these fine fellows referred to as a bunch of "imbeciles." There was some nervousness about all that "populist anger" being directed at the wealthy elites but for the most part, they were merely petulant and pouty about being criticized by inferior people who simply weren't giving them proper credit for being their wonderful selves. The billionaires already had all the money and all the power. Now they wanted to be loved.

In 2012, Mitt Romney was their Barack Obama, saying to all who would listen, "Yes, we can!" When he dropped his bombshell 47 percent comment, he was speaking for them. That didn't work out so well, so now we have a change in strategy. This was recently signaled by the Godfather of Billionaire activists, Charles Koch himself, when he reframed his 50 years of ruthless, capitalist greed and avarice:

Billionaire industrialist Charles Koch on Sunday compared the efforts of his political network to the fight for civil rights and other “freedom movements,” part of a growing effort by the organization to emphasize its commitment to the plight of the disenfranchised.

During remarks to 450 wealthy conservatives assembled in the ballroom of a lavish oceanfront resort, Koch urged his fellow donors to follow the lead of figures such as Frederick Douglass, Susan B. Anthony and the Rev. Martin Luther King Jr.

“Look at the American revolution, the anti-slavery movement, the women’s suffrage movement, the civil rights movement,” Koch said. “All of these struck a moral chord with the American people. They all sought to overcome an injustice. And we, too, are seeking to right injustices that are holding our country back.”

Evidently, they have decided that selling their Ayn Randian libertarian creed on the merits hasn't gotten them anywhere, so they're now engaged in outright propaganda to obfuscate their real agenda. Koch said as much himself:

“If we cannot unite the majority of Americans behind the vision, then we’re done for. So that to me has to be our number one objective. But to do so, we’ve got to do a much better job of understanding what matters most to people, and then to demonstrate that a free society gives them the best opportunity of achieving that.”

But Charles Koch is a very smart man. Why has he only now realized that in order to achieve his policy goals (which have changed very little -- he's just added a few goodies for the rubes) that he must create a better image. As we've seen, it was only a few years ago that his cohorts were damning the peasants as imbeciles and upstarts.

Well, it may be related to what Matthew Pulver wrote in a piece for Salon yesterday: They've finally awakened to the fact that not only aren't they loved -- they are despised.

[F]ormer marketing conglomerate CEO Peter Georgescu [and] his friend Ken Langone, founder of Home Depot, warns his fellow 1 percenters that “[w]e are creating a caste system from which it’s almost impossible to escape.” The column raises the specter of “major social unrest” if inequality is not addressed.

Georgescu writes:

"I’m scared. The billionaire hedge funder Paul Tudor Jones is scared. My friend Ken Langone, a founder of the Home Depot, is scared. So are many other chief executives. Not of Al Qaeda, or the vicious Islamic State or some other evolving radical group from the Middle East, Africa or Asia. We are afraid where income inequality will lead."

The 99 percent are potentially worse than Al Qaeda? No wonder he's scared. He's not the only one:

In June, Cartier chief Johann Rupert — worth an estimated $7.5 billion — delivered the same message to his wealthy colleagues, telling them that the intensifying inequality and what it portends “keeps me awake at night.” He told his fellow elites that “We are destroying the middle classes at this stage and it will affect us.” Like Georgescu and Langone, Rupert feared unrest and asked, “How is society going to cope with structural unemployment and the envy, hatred and the social warfare?”

But ask yourself what it is, exactly, that frightens them so. "Social warfare?" Sure. And maybe that's the real primal fear. But there's something else, something that makes their blood run cold and the hair on the back of their necks stand on end. Johann Rupert explained, “if inequality is not addressed, the income gap will most likely be resolved in one of two ways: by major social unrest or through oppressive taxes.”

The humanity!  "Oppressive" taxes are right up there with revolution and terrorism.

It isn't the first time in recent decades that they've become alarmed about the hoi polloi getting too big for their britches. You'll recall that back in the 1970s, future Supreme Court Justice Lewis Powell wrote a famous call to arms to the captains of industry and commerce to gather together to fight back the invading hordes of anti-capitalist hippies who were threatening the very foundation of our nation.

Paul Pierson and Jacob Hacker wrote about it in their must-read book on this subject, "Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class." They note that from 1969 through 1972, Washington had enacted the most sweeping regulatory programs in history, from the environment to occupational safety to consumer protection:

In corporate circles, this pronounced and sustained shift was met with disbelief and then alarm. By 1971, future Supreme Court justice Lewis Powell felt compelled to assert, in a memo that was to help galvanize business circles, that the “American economic system is under broad attack.” This attack, Powell maintained, required mobilization for political combat: “Business must learn the lesson . . . that political power is necessary; that such power must be assiduously cultivated; and that when necessary, it must be used aggressively and with determination—without embarrassment and without the reluctance which has been so characteristic of American business.” Moreover, Powell stressed, the critical ingredient for success would be organization: “Strength lies in organization, in careful long-range planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.”

This was the beginning of the wealthy business sector organizing politically for its own benefit, something the Kochs in particular pursued, even to the extent of David Koch running for office himself in 1980.

Unfortunately, despite much success over the next three decades, they were unable to make the nation love them through thick and thin, and when the financial crisis happened, their credibility was gravely damaged. For all their money, influence and power, it just wasn't enough. Now, unless they can convince the people to love them, they'll never be sure that they won't have to pay more in taxes. And that is a fate worse than Al Qaeda.

They have another problem as well. All the years of harsh propaganda against the poor, and the blaming of the middle class for losing the American Dream due to their own laziness, has permeated right-wing thinking and it's going to be very hard to shake that loose. Take for instance, the man who should be their poster boy for compassionate libertarianism, Rand Paul:

I think it's both government policy and some of the way that economic fruits are distributed," he said of income inequality. "And I think it would be foolish for anyone to argue that it doesn't have something to do with work and effort, and also doesn't have something to do with the way the public approves of the way you're doing, whether the public approves of something you're selling."

In other words, take a look in the mirror if you wonder why you can't get ahead, you lazy bum.

And his policies, needless to say, are unresponsive to the problem. As are all the other GOP candidates':

The GOP's struggle to connect with working-class voters is not for a lack of trying.

Sen. Marco Rubio (R-Fla.) took a stab at it Thursday during the first GOP presidential debate.

“If I’m our nominee, how is Hillary Clinton going to lecture me about living paycheck to paycheck?” Rubio asked. “I was raised paycheck to paycheck.”

Ohio Gov. John Kasich (R) also made an effort to level with working-class voters during the GOP debate, describing his humble upbringing with a father who was a mailman. “So I understand the concerns of all the folks across the country,” he said.

But promising to raise the minimum wage is typically more popular with middle class voters than talking more broadly about economic growth, O’Connell explained. That’s why the message from Sanders and Clinton is appealing to many workers.

Most Republicans, meanwhile, vigorously oppose such steep hikes in the minimum wage, which they argue would cost hundreds of thousands of jobs. They call for fewer regulations and lower taxes, which they argue will create jobs and naturally push wages higher.

But that message is a tougher sell to working-class voters, O’Connell said.

“What Republicans tell you over and over is, ‘If we increase economic growth, we will increase jobs,’ but what they should be talking about is wages,” he explained.

They cannot talk about it because they have no plan to raise wages. They have a plan to lower taxes and Americans are finally seeing through that trickle-down promise. They also hope to roll back regulations, particularly Dodd-Frank and the Consumer Financial Protection Bureau which will undoubtedly have their rich benefactors breathing easier but won't do anything for the millions of people they are trying to persuade that they really, really care about them.

That's the problem with Charles Koch's great plan: it's not new. Republicans have been selling free-market, low tax, no regulation snake oil for everything that ails you for many years. A whole lot of Americans bought it and it made them sick. After the last decade they are not likely to fall for it again even if it's rolled out with a snappy marketing campaign in a brand new package. The new Koch tastes just like the old Koch. And that's not a good thing.

By Heather Digby Parton

Heather Digby Parton, also known as "Digby," is a contributing writer to Salon. She was the winner of the 2014 Hillman Prize for Opinion and Analysis Journalism.

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Economics Income Inequality Taxes The 1 Percent The Economy Wealth Inequality