From Citizen Kane, chairman of the board Bernstein quips, “it’s no trick to make a lot of money… if what you want to do is make a lot of money.”
Downright laughable was Washington Post’s catchy headline a week ago, “The moral calculations of a billionaire,” featuring the conundrum facing CNBC notable, ex-hedge fund, multi-billionaire Leon Cooperman. “Moral” here hardly invokes “morality” (as in goodness, virtue, or compassion) but pressing, rather business-like calculations – how before death to best dispose of billions you can’t spend, nor want your children to inherit.
The iconic capitalist, Cooperman got rich solely from the money game – savvy stock picking for himself and clients. “Savvy” means buying discounted (termed “oversold”) equities, then selling later to the so-called “greater fool” when the price rises to its fair-market (profit-driven) value. In short, know enough and have risk capital to buy low and sell high. If you gain control or direct input, say as a board member, there are a myriad of ways, some honest, some sleazy, to maximize “distributions” (taxable and not) to big owners.
What you won’t find in this overly sympathetic WaPo feature are the covert machinations of making a fortune. Not one citation how this very “moral” billionaire was fined $5 million in 2017 after conceding insider trading (without admitting guilt – how nice). He’s worth $3 billion so this surtax hardly impacted his life-style (unlike the naive Martha Stewart, whose insider trading conviction sent her to prison). Also underplayed: in 2012, Cooperman openly chastised Obama for “class warfare” and “villainizing success” – still stuck in his heavily, life-long Republicanism. More recently, he made a TV splash with dire predictions that a “soak-the-rich” President Elizabeth Warren would crash the stock market by 25% (because of a tiny percentage tax on only super-rich assets?). Still the addicted wheeler- dealer, Cooperman rails against socialism and gags at “wealth tax” proposals. He glorifies capitalism and its suspect trickle-down nonsense; curiously, we never learn whether this Costco shopper banks his social security payments or refuses socialistic Medicare.
A mover, a maker or a taker?
Notably, Cooperman made billions not by inventing products or services to improve living conditions, nor being a corporate CEO piloting new technology to market (vs. much richer innovators at Google or Microsoft, Amazon or Facebook). Nope, this “Wall Street legend” simply manipulated capital, but what’s unusual is his blue collar childhood (son of a NY plumber, first family member to attend college). In fact, Cooperman was a star for 25 years at investment banker Goldman Sachs, then went big-time, heading his hedge fund and “wealth creator” Omega Advisors for decades. No doubt he worked hard, did exceptional analysis, read well the handwriting on the wall, and mastered expert timing. The question isn’t whether he deserved superior winnings – but about the “moral” correlation between this self-serving skill-set and the three billion dollars he pocketed, admitted to be more than he will ever spend.
Around 2019 (at 75) he switched from substantially taking to serious giving, thus transformed into “moral” philanthropist. An old school investor, he has and had no qualms about fossil fuel and energy titans, purveyors of alcohol, tobacco and junk food, student loan profiteers, the pawn shop industry or environmentally-suspect companies whose profits depend on “externalities” (like unmitigated air and water pollution) others pay to clean up. “Morality” didn’t govern his money-making, so what justifies his transition now to “moral” benefactor?
The agony of ecstatic winnings
What, have we no sympathy for the painful choices facing generous billionaires? With irony doubling down on itself, the very grail – higher and higher profits (enabled by tax and estate loopholes, research credits, and subsidies) – have produced exactly this enigma: too many assets worth too much. It should amuse Cooperman, no dummy, who must “defund his earnings” and forfeit what he worked so hard to amass. Here’s the more accurate headline, “The ironic contradictions of the charitable billionaire.”
Why not, like so many others, bequeath billions to children and family? Ah, there’s the rub: because he grew up poor, this self-made tycoon presumably learned over time how to manage having millions. Aptly, Cooperman worries that dumping hundreds of millions could incite unhealthy responses in his less self-made children. The odd if logical (though unproved) extension: only those who capture wealth best know how to dispose of it. Research shows the very rich are no happier than the upper middle-class. Having too many bank notes (item: spendthrift lottery winners) can poison families as easily as liberate them. Handling money, as my CPA father taught me, is a life skill that requires knowledge, patience, judgment, and discipline. Though having too little is worse, having much too much can devastate, too.
There are intriguing political, if not major philosophic implications. First, what fair-minded, “democratic” system allows 775 families (total, American billionaires) to control ten thousand or a hundred thousand times more money than they need to live very, very well? Blame distorted tax collections for causing the tenth of one per cent to face this dastardly problem: too many dollars and not thousands of heirs to divide spoils. Second, doesn’t private, billionaire charitable distribution wholly reflects the biases of winners, not prudent, public good? At least taxation collects a big pot spendable via elected political filters.
Where’s the school for good giving?
Big cultural and social problem: where’s any evidence that a lifetime of obsessive money-grubbing (instead of liberal education, travel among the poor, time off, or evolving awareness) prepares the super-rich to be wise benefactors? What have billionaires done to qualify themselves as especially talented, creative, or effective donors? The better-educated Bill Gates made billions early enough so he had time to teach himself how to spread the wealth to help global millions (though hardly without controversy). Earning well is a very different skill-set from donating well, and our unjust tax system produces a monumental contradiction: amassing a treasure is hardly the best education for spreading the wealth with widespread, effective, even democratic, humane impacts.
Further, grossly unjust taxation (vs. top 1950’s rates of 90% plus hefty inheritance taxes) has enabled obscene concentrations of wealth by the undeserving rich. There’s no built-in Obscenity Quotient inhibiting Jeff Bezos from owning a $200 billion fortune. Too many voters refuse to elect lawmakers aware that concentrated wealth stops huge majorities from any real chance at life, liberty and the pursuit of happiness.
Cooperman is hardly the worst, most selfish billionaire, yet his hatred of everything “socialistic” hardly makes him the ideal donor IMO. He is conventional in his donations so far, much to Jewish entities (his tribe), along with less denominational medical and educational programs. There appears no commitment to offset climate change, awareness that his wealth was made on the badly-paid backs of millions, befitting hierarchical capitalism. Has he ever correlated his wealth with predatory, racialized lending practices, let alone the ruination of irreplaceable landscapes, clean air, water and soil, n or how pollution infects poor people stuck living near toxic dumps?
What even this billionaire (who voted for Biden because he feared Trump’s dictatorial impulses) misses is all too typical — that “making money” without asking truly moral questions exposes tunnel vision. While capitalism involves risk, even gambling, old school “free-market” investors suspend humane terms when profits beckon. And not only does the system enable mass accumulation, thus leaving a nation’s concentrated treasure in private hands – but charitable deductions cut taxes beyond other loopholes. Only the richest benefit from accumulation while foisting government funding on everyone else with less income and fewer deductions. Time for the richest few, per Eliz. Warren’s surtax described below, to pay up – and allow the people’s government many more financial options to improve living conditions for the many.
P.S. Per Alternet, over the next few decades, the richest American families are poised to avoid paying about $8.4 trillion in taxes, four times the cost of the stalled Build Back Better package, according to the Americans for Tax Fairness report, Dynasty Trusts: Giant Tax Loopholes that Supercharge Wealth Accumulation. The report urges “Congress to fix the federal tax code to address dynastic wealth. . . ‘This hoarding of wealth is inexcusable,’ declared the report’s principal author, Bob Lord . . . ‘The BBB legislation now before the U.S. Senate should be amended to close loopholes in the three components of America’s wealth transfer tax system: the estate, gift, and generation-skipping tax,’. . . . the group also encourages U.S. lawmakers to “impose an annual 2% wealth tax on the portion of a dynasty trust’s holdings that exceed $50 million, and an additional 1% on dynasty trust accumulations in excess of $1 billion.”
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