these billionaires, analyzing two different types of publicly available data: Federal Election Commission (FEC) and state- level records of billionaires’ financial contributions to political candidates and causes, and reports of billionaires’ political words and actions that are available in electronic form on the World Wide Web.
Much can be learned from this material. A warning, however: none of
the available evidence is sufficient for us— or for anyone else— to pin down the precise policy preferences, or all the political actions, of all billionaires.
Some scholars— notably including Adam Bonica, who has offered im-
portant insights into campaign contributors— have tried to use FEC con-
tribution data to infer wealthy Americans’ policy preferences.20 Bonica’s approach is to judge a contributor’s policy preferences by the ideologies (as revealed in voting records) of the members of Congress that he or she contributes to. But this approach assumes that political contributions are purely ideologically oriented acts that reveal the contributor’s personal policy preferences, as opposed to strategic acts that may have quite different motivations— such as gaining access to powerful incumbent officials
whose ideologies may not resemble the donor’s at all.
Bonica addresses the potential for strategic giving and presents some
evidence that it does not create significant bias within his model on an
aggregate level. However, billionaires— who have nearly limitless re-
sources to contribute to candidates— may be unusually likely to engage
in strategic contributing. The owners of firms based in a particular state, for example— or the owners of firms regulated by a Senate committee
headed by a particular senator— may have good reasons to contribute to
those key senators, regardless of whether the firm’s owners like or loathe the senators’ policy stands.
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5
Efforts to estimate billionaires’ policy preferences from their contribu-
tions, therefore, may make the billionaires look more “centrist” than they actually are, by averaging in billionaires’ strategic contributions to politicians with whom they disagree along with heartfelt contributions to those with whom they agree.
Another problem is that the best current version of the contributions
approach to inferring policy preferences (Bonica’s) has imposed a one-
dimensional, “liberal/conservative” issue space on donors’ preferences.
Except for party leaders and public officials,21 however, Americans do not necessarily have preferences on both economic and social issues that fit
neatly onto a single liberal/conservative dimension. Many people are lib-
eral on one set of issues but conservative on another. Many billionaires, for example, are “libertarians”: liberal on social matters but conservative on economics. To try to squeeze libertarians— including extreme lib-
ertarians— onto a single liberal/conservative dimension tends to make them look center- right on everything, rather than fairly liberal on social issues and extremely conservative on economics. Indeed, we will see that many
libertarian billionaires contribute money to Republican candidates with
whom they disagree markedly on social issues.
Political contributions by billionaires that are reported to the FEC or
to state- level agencies are very important. They undoubtedly affect the
outcomes of elections in ways that have real consequences for public pol-
icy and for people’s lives. And they do provide some general indications
about what the billionaires want from government (especially, we believe, on economics- related policies). We will certainly discuss them. But they are not sufficient for judging billionaires’ policy preferences, which must be assessed in other ways. In fact, officially reported contributions cannot even give a full picture of billionaires’ political actions, many of which are not reported to any official agency.
Reports to the FEC and other official agencies cover most contribu-
tions made directly to political candidates, to candidates’ committees, or to the political parties. But there is no requirement to report con tri butions— including some extremely large ones— to certain kinds of “out-
side” or “independent” political groups and causes. (We have found that
contributions to outside groups with policy- specific aims often constitute the best single indicator of billionaires’ specific policy preferences.)22 Contributions of dark money to influence elections go unreported. So do
many other political activities, including holding fund- raisers, “bundling”
others’ contributions, and funding think tanks or unregistered lobbyists to
6
introduction
influence policy making and the climate of opinion. To get at such actions requires something more than a purely “public records” approach.
We have been able to come up with some new information about bil-
lionaires’ policy preferences by examining the billionaires’ own media-
reported words— what they have said about specific matters of pub l ic policy. And we have devised a new way to uncover many political actions by billionaires that go beyond the official data.
We have done this by means of a distinctive new research method: the
systematic use of web- scraping techniques to identify virtually all publicly available words and actions— concerning certain specific issues of public policy— by the one hundred wealthiest billionaires, over a ten- year period. (Our techniques are described further in chapter 2.) We have sought to uncover what— if anything— the wealthiest billionaires have said in
public about key political issues. We have also explored what sorts of candidates and causes they have given money to, and what else they have
done politically— held fund- raisers; bundled contributions by others; given money to think tanks; formed, led, joined policy- focused organizations; or anything else.
The resulting new information has allowed us to investigate whether
different sorts of words are spoken, or different kinds of actions are taken, by different types of billionaires— those who enjoy greater or lesser levels of wealth; inheritors versus entrepreneurs; billionaires whose businesses rely on direct interaction with consumers, versus those whose do not; or
those whose fortunes were made in different industrial sectors, such as
financial, high- tech, manufacturing, resource extraction, or retail.
More importantly, this new information has helped us achieve our ulti-
mate aim: to assess how the wealthiest US billionaires fit into democratic politics. We want to know how politically active the billionaires are, in what ways; what political strategies they pursue; and whether they take advantage of their prominence to speak about politics, or whether they limit
themselves to financial contributions or other lower- visibility actions. We want to know what kinds of public policies the billionaires seek, and how similar to or different those policies are from what majorities of Americans want.
We are especially concerned about billionaires’ political accountability.
When billionaires take political actions, how accountable or unaccount-
able are they to the citizenry as a whole? How easy or hard is it for others to tell what the billionaires are up to? Do billionaires take care to explain why they favor the particular public policies that they do? Do they try to
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persuade their fellow citizens to agree? Or do billionaires tend to skip the explanations and just act? Do some go so far as to try to conceal their actions, so that it is particularly hard for others to hold them accountable?
We will see that on several of the most important issues of the day—
in
cluding taxation, Social Security, and immigration— many billionaires
have tended to engage in what we call stealth politics. They try hard to influence public policy. They make large financial contributions to political parties, candidates, and policy- focused causes. They hold political fundraisers and bundle others’ contributions. They establish, join, or lead
policy- advocacy organizations. But despite these billionaires’ prominence and their easy access to the media— which provides abundant opportunities to say just about anything they want to large audiences— they rarely talk openly about public policy.
Our exhaustive web searches indicate that most billionaires have not spoken up publicly at all— not even once, over an extended period of time—
about the specifics of any of the major public policies we have studied.
Our statistical analyses provide evidence that this silence is often de-
signed to conceal billionaires’ advocacy of policies that most Americans
oppose. The unpopular policies that some billionaires quietly favor have
frequently become official government policies with the force of law.
We see the strategy of stealth politics— along with the outsized, un-
equal political clout that billionaires likely wield— as presenting serious problems for democracy in the United States. Unequal influence itself undermines political equality, which may be considered central to the con-
cept of democracy. But our main point in this book is a different one: that with stealth politics, billionaires’ influence is often not only unequal but also largely unaccountable to and unchallengeable by the American citizenry. Stealth politics makes it hard for ordinary citizens to know what
billionaires are doing or to mobilize against it.
Stealth politics is particularly likely to confuse ordinary Americans
about the nature of billionaires’ political actions because most of the
handful of billionaires who do frequently speak out about public policy—
billionaires with familiar names like Bloomberg, Buffett, Gates, or Soros, even (as presidential candidate) Donald Trump— have tended to voice
more moderate (in a few cases even liberal) economic views than most
of their fellow billionaires: views that are much closer to the opinions of average Americans.
If ordinary citizens try to judge the political leanings of US billion-
aires through media reports about Bloomberg, Buffett, and Gates, they
8
introduction
are likely to get a very mistaken impression. They are likely to underes-
timate the extent to which billionaires’ political activity may threaten the citizens’ own values and interests. They may see the (now) highly visible actions of conservatives like the Koch brothers23 as counterbalanced by
the equally visible speech of liberal and moderate billionaires, without
realizing that in the domain of financial contributions and quiet political actions there is no such balance.
Plan of the Book
Chapter 1 introduces our cast of characters: the one hundred wealthiest
US billionaires, those who occupy the upper reaches of the Forbes 400 list of wealthiest Americans. We note the names, fortunes, and backgrounds
of some billionaires near the very top of the list. We inquire where their money came from: inheritance? entrepreneurship? What sorts of businesses? We briefly explore issues of “fair compensation” involving merit
and effort, help from others, and just plain luck. And we consider some
political implications of vast concentrations of wealth.
Chapter 2 outlines the political actions that these billionaires have taken, especially their financial contributions. It describes our web- scraping research techniques. It then analyzes what the billionaires have done or
said, over a ten- year period, about many specific policies related to taxes or Social Security. We report substantial evidence of stealth politics: a number of billionaires took powerful political action on behalf of policies opposed by most Americans, but were mostly or entirely silent in public
about their stands.
Chapter 3 explores in more depth the tax- related and Social Security–
related words and actions of four particular billionaires: Warren Buffett, John Menard Jr., Carl Icahn, and David Koch. These four were carefully
selected to provide methodological leverage on issues of causal inference, causal mechanisms, and possible measurement errors, so that a closer
look at them provides further confirmation of our stealth politics theory.
But the cases are also of interest in themselves. They happen to represent nearly the full range of political philosophies that are embraced by US
billionaires. Buffett occupies a center- left position on the liberal/conservative continuum, not far from the views of average Americans. Menard
is a hard- line economic conservative; Koch a libertarian; and Icahn a sort of populist who served as an adviser to Donald Trump. Missing— not by
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accident— is any billionaire who can be called a thoroughgoing liberal on both social and economic issues. In the United States, economically liberal billionaires are very rare birds.
Chapter 4 applies the same web- scraping and public records techniques
to billionaires’ statements and actions concerning certain social, cultural, or moral issues. We find little evidence of stealth politics on the issues of abortion or same- sex marriage, where billionaires’ policy preferences tend to be less divergent from those of the general public than they are on taxes or Social Security. When it comes to immigration policy, however—
where some billionaires’ taste for cheap imported labor clashes with many Americans’ cultural or economic anxieties about foreign immigrants—
stealth politics reappears. Many billionaires actively work in favor of high levels of immigration, especially for high- skill workers. But few say much about that in public.
Chapter 5 turns from national politics to the state and local level,
where certain billionaires have made major financial investments in poli-
tics. It explores the “boundary- control” strategy, in which some billionaires work to restrict government spending and government regulation at
the national level, while lobbying successfully at the state or local level to win lucrative government subsidies, tax breaks, and favorable regulatory
treatment.
Chapter 6 relates our findings to general ideas about democracy. It
mentions the damage to political equality that may result if the wealthiest Americans wield much more political influence than other citizens can
muster. But it focuses on the special problems posed by stealth politics, which helps billionaires avoid being held accountable by their fellow citizens. The book closes by suggesting some possible remedies that citizens
might want to pursue if they wish to make wealthy Americans more politi-
cally accountable. It also notes the broader types of reforms that would be needed if one wished to increase political equality and reinvigorate majoritarian democracy in America.
chapter one
Who the Billionaires Are
We began our study of the one hundred wealthiest US billionaires in
2013. In that year, the total net worth of the Forbes 400 wealthiest Americans was $2.2 trillion— $2,200,000,000,000. As Forbes noted at the time, this was equal to the annual output of the entire economy of Russia.1
Topping the Forbes list was Bill Gates, with a net worth of $72 billion.
Gates made his fortune by building the Microsoft software firm— which
he founded in 1975, together with Paul Allen— and then diversifying his
investments into such firms as tractor maker Deere & Co., Canadian National Railway, and Mexican Coke bottler Fem
sa. (By 2013, Microsoft
stock represented less than one- fifth of Gates’s fortune.) Despite giving away a lot of money to philanthropy— chiefly through the Bill & Melinda Gates Foundation— Gates had occupied the top perch among the
wealthiest Americans continuously since 1994. In fact, Gates had led the
list of wealthiest Americans during more than half of the thirty years that Forbes had been keeping track.2
Second on the 400- wealthiest list in 2013 came Gates’s friend War-
ren Buffett, with $58.5 billion in net worth. The modest- living “sage of Omaha”— like Gates, a major philanthropist— acquired his fortune mainly
by means of shrewd, highly diverse investments through holding company
Berkshire Hathaway, which in 2013 had just acquired ketchup maker
H. J. Heinz for $23.2 billion and Nevada’s NV Energy firm for $5.6 billion in cash.3
In third place was Larry Ellison ($41 billion), founder of high- tech
firm Oracle, which offers businesses and organizations a wide variety
of hardware and software products, perhaps most notably for database
management. Ellison built the company from an early relational database
that he developed for the CIA. Although he had worked as an employee
who the billionaires are
11
of Ampex Corporation while carrying out that project, he subsequently
purchased the rights to it and became an entrepreneur.4 Having started
in 1977 with assets limited to $2,000 and database source code, Oracle is now the second- largest software company in the world in terms of revenue and is a foundational brand for internet and internal business operations worldwide.5
Ellison, an acerbic critic of Apple and Google, has lived more opu-
lently than Gates or Buffett. In 2013 he owned several houses on Malibu’s Carbon Beach, plus 98 percent of Hawaii’s Lanai island, and had competed in the America’s Cup sailing competition.6 Ellison made headlines
in 2008 when he challenged San Mateo County’s tax assessment on his
Woodside, California, estate— a replica of a sixteenth- century Japanese
palace that cost Ellison $200 million to build. Despite that price tag, Ellison successfully contended that the property was worth only $64 mil-
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