From the June 1999 issue: “Why Billionaires Should Be Outlawed” is a fun, if flawed, feature by David Sheff that argues why there should be fewer billionaires. In 1999 billionaires were a growing group, and projections showed many more being made. Today, those projections are right on schedule, and the arguments made hit close to home.
This is part two of a two-part series. Click here for part one.
Should anyone have a billion dollars—and the power that comes with it? The answer, in my estimation, is unequivocal. No. Absolutely not. For five very good reasons….
REASON NUMBER ONE: BILLIONS MAKE THE BATTY BATTIER
“When you can do anything you want, you can get yourself in big trouble,” British billionaire Richard Branson once told me. “Fantasies are fine when they remain fantasies. But what about when there are no constraints to making them real?”
He was explaining one of his most notorious April Fool’s pranks. It was 1989 in London. Using strings of blinking lights and an ominous-looking facade, Branson disguised a hot-air balloon as a spaceship. When he piloted the contraption over the center of town, three police forces were mobilized, the army was called out and citizens panicked. Officials tracked the UFO to a field where it landed. While police, soldiers and the press gaped, a door opened, and a midget in an ET outfit climbed out.
“Why did I do it?” Branson later mused. “Why not?”
Billionaires do some things because they can. They can get away with bad behavior. Cornelius Vanderbilt liked to pinch his hostesses and wipe his hands on their skirts; J. Paul Getty refused to stand up when the president of the United States entered the room. Hong Kong billionaire Henry Fok, who travels only with his two 747s (one for him and one for his staff), built himself a home in the middle of the China Sea, reachable only by boat or helicopter (its exterior walls are made of 2.5 million hand-carved stones, and the entryways and hallways are ornamented with jade, rubies, and gold). He is never called by name by those who work for him—he is called “the Leader.”
I’d like to think that I have more sense than many of the billionaires. If I had all that money, I’d be magnanimous, wise, modest and generous. But I have to admit that I might be tempted to, say, redesign the bottom of the Pacific Ocean so that I wouldn’t have to rely on nature to create the perfect surf that now arrives but once or twice a year. Come to think of it, I enjoy traveling but hate waiting in lines, so a jet—and pilot and local airstrip—could be made to seem like a necessity. Sushi in San Francisco is good, but there’s nothing like the fish in Japan, so I could see jetting a few friends there for dinner. It doesn’t take long before the distortion sets in.
No wonder (some) rich people tend to become spoiled and eccentric, even downright batty. I have to wonder if this isn’t one reason Jack Kennedy—a president who had firsthand experience with great wealth—tolerated marginal tax rates as high as 90 percent during his time in office. FDR came from wealth, too, and guess what—he initiated the New Deal. Conversely, recent presidents who have favored the rich, such as Ronald Reagan, often didn’t have much personal experience with money but seemed particularly impressed by it.
Sure, the batty might be batty even if they were poorer, but money allows extreme battiness. Howard Hughes, William Randolph Hearst, J. Paul Getty and other famous loons could never have gotten so deeply loony if their eccentricities weren’t indulged.
In his book The Rich Are Different, Jon Winokur chronicles some of their looniness: Not to be outdone by Hughes, Donald Trump admitted, “As time goes on I find myself thinking more and more about Howard Hughes and even, to some degree, identifying with him. Take, for example, his famous aversion to germs. While I’m certainly not as fanatical as he was, I’ve always had strong feelings about cleanliness. I’m constantly washing my hands.” Trump has also asserted that Americans should adopt the Japanese custom of bowing—so as to avoid germ-spreading handshakes.
Famous loons could never have gotten so deeply loony if their eccentricities weren’t indulged.
Ross Perot reportedly had an underling pose as a journalist and call Mrs. Perot to see if she would reveal confidential matters. (She did.) Florence Vanderbilt Twombly steadfastly refused to recognize Labor Day as a holiday. Armand Hammer bought an important manuscript by Leonardo da Vinci and renamed it the Codex Hammer. Doris Duke gave a coming-out party for her two pet camels, both of which had the run of her house. Sane?
Are their parties insane? They can certainly be bacchanalian. The sultan of Brunei’s Caligulan festivals last for days. Closer to home, Sam Zell (known as the “grave dancer,” he specializes in buying assets of troubled companies) stages treasure hunts every Halloween, bringing guests to Chicago, where they follow clues by limousine. Paul Allen flew 200 friends, family members and Hollywood stars to Venice, Italy, and then shuttled them by gondola to a medieval masquerade ball, where they were entertained by a jazz band that included Carlos Santana and Allen himself on guitar.
Yes, there are examples of billionaires whose feet seem firmly planted on terra firma. Computer-publishing magnate Patrick McGovern, who is worth $1.5 billion, flies coach and lives in a small two-bedroom house. “I’m not a man of extravagance,” McGovern has said. “I won’t buy a 747 or rent half a hotel for myself when I travel.” Alfred Lerner, chairman of MBNA, is worth $2.8 billion and eats at a neighborhood all-you-can-eat smorgasbord. Warren Buffett drives an old car, and Sam Walton, the founder of Wal-Mart, was famous for his beat-up pickup truck. (“What am I supposed to haul my dogs around in, a Rolls-Royce?” he asked).
Sane or insane? It could be argued that anyone with a billion dollars and a ratty old car is off the deep end, albeit a deep end different from that of the spendthrifts. Regardless, there are enough over-the-top billionaires to make up for the few who seem to be sensible. It’s also inarguable that the crazy ones would have had to remain more sensible if they weren’t so rich.
REASON NUMBER TWO: BILLIONAIRES MAKE PEOPLE AROUND THEM MISERABLE
It doesn’t take a billionaire to be a sadistic boss or husband or father, but it helps. That’s not to say that there aren’t nice-guy billionaires. Richard Branson’s ex-employees rave about him, Bob Haas is said to inspire his Levi’s workers, George Lucas is known to be generous and appreciative, and David Geffen gave a secretary a present of $5 million. But most billionaires were and are tyrants—in business and in their personal lives.
Paul Getty, said a longtime secretary, “lied, cheated and went out of his way to torture people who let him down or otherwise didn’t perform, and this included his children.” Getty’s hero was Napoleon.
An industry figure who works closely with Oracle’s Larry Ellison once said, “In every private conversation I’ve had with Larry over the past 15 or 20 years, the metaphors when he’s speaking of competitors are always violent. He’d say, ‘This is the quarter we put a knife in their chest,’ or ‘The life will be choked out of them.’ The metaphors don’t come from chess, and they don’t come from the Bible. He sees this as personal combat.”
Charles Wang of Computer Associates is known to be abrasive, aggressive and litigious. Hallmark Cards chairman Don Hall, says a colleague, “will take advantage of any weakness.”
The co-CEOs of Mars, John Mars and Forrest Mars Jr.—who share a secretary, shun private offices and punch a time clock every morning—are reportedly brutally tough bosses, worse even than their father. For years, Forrest senior called from his retirement quarters near Las Vegas to harangue his sons about their shortcomings as managers.
Robert Maxwell, when his fortune was at its pinnacle of $3.5 billion, made employees cry, threatened them with bodily harm and insulted and humiliated them.
In their personal lives, too, they are often cretins. In The Moral Animal, Robert Wright asserts that there’s an evolutionary excuse for womanizing by the species’ most powerful, so it oughtn’t be a surprise that billionaires often have mistresses and practice what Wright calls “serial monogamy,” the modern version of bigamy. Absent a scientific poll, I’d be willing to wager that guys with the biggest wallets often have the most psychologically abused wives.
Absent a scientific poll, I’d be willing to wager that guys with the biggest wallets often have the most psychologically abused wives.
At least divorce tends to redistribute some of the wealth, though billionaires are penurious in settlements. Richard Mellon Scaife, the billionaire heir to the Mellon fortune who uses his wealth to go after Bill and Hillary Clinton, once boasted that he lost “virtually nothing” in his 1991 divorce.
The ex-wife of Ronald Perelman, according to the billionaire’s lawyer, made “excessive” financial demands for child support after pocketing $30 million from their divorce deal. She went back to court, asking for $7 million for a new home for her and the couple’s four-year-old daughter, Caleigh, and $68,000 a month in child support. (Perelman is worth $6 billion.)
Anne Bass, after a contentious court battle, got about $200 million when she and billionaire Sid divorced. (To be fair, there are amicable settlements, too, such as Steven Spielberg’s settlement of nearly $100 million with Amy Irving.)
Wright also predicts that the powerful will remarry (or otherwise retain) younger women—and they do, including a list of maids, nurses and secretaries. Barbara “Basia” Johnson, third wife of John Seward Johnson, the son of the Johnson & Johnson founder, was a chambermaid on the Johnson estate. She married J.S. eight days after his divorce. He was 76; she, 34.
Neither are employees or wives the only ones who suffer at the hands of billionaires. Many of their children haven’t had it easy. Even Soros, humanitarian though he may be, has admitted that he was a terrible father.
The most famously appalling parent was Getty, and his heirs have suffered immeasurably. There was a suicide, a kidnapping, a severed ear and a mental institution. Other billionaire children have become alcoholics and drug addicts, and there have been an impressive number of suicides: a Vanderbilt, a Graham, an Annenberg. The most recent was the son of Texas tycoon Kit Goldsbury, who was found dead in a Laredo tenement, a victim of a heroin and cocaine overdose. Meanwhile, John du Pont is in jail. The sportsman, marine biologist, and murderer shot his “friend,” an Olympic gold-medal wrestler, on his 800-acre estate outside Philadelphia.
It’s also a known fact that huge sums can pit family members against one another; indeed, the scale of the battles inside billionaire families is grand, in proportion to the wealth. Scaife, grandson of Richard B. Mellon, doesn’t speak to many other Mellon family members. (The Mellon clan mistreated his parents, he says.) He’s also estranged from his reclusive sister, Cordelia Scaife May, herself a multi-centimillionaire.
Takeover specialist Harold Clark Simmons was sued by two of his daughters, one from each of first two marriages. They alleged that he had used their trust funds to make illegal campaign contributions and buy jewelry for his third wife.
There have been lawsuits among children in the Getty and Haas families, among many others. Four Koch brothers shared the fortune made by their father, Fred Koch, inventor of a crude-oil refining process. The family feud wound up in court, dividing the brothers into two camps. William and Frederick engaged in and recently lost a 13-year-long lawsuit to recoup their “lost share.” (They’re appealing.)
There have also been lawsuits between billionaires’ children and widows. When her husband died, Basia Johnson contested the will, and there was a contentious courtroom battle with children from his first marriage. She won. The settlement: Johnson & Johnson stock now worth $1.7 billion.
REASON NUMBER THREE: IT’S NOT FAIR
One needn’t be a socialist to question whether anyone should have a billion dollars when a lot of people have almost none. Yeah, it’s a jungle out there, and we know about the laws therein, including survival of the fittest, but let’s nevertheless contemplate the unfathomable: the difference between no money and a billion dollars.
It’s depressing but possible to imagine no money. We can comprehend nothing: There’s no milk; you have to stop at the store. We can further comprehend nothing as no milk and no money to spend at the store and therefore: no milk. We can further comprehend the connection between no milk and hungry children. We may not really be able to understand the desperate feeling of complete or near poverty, but I think we can understand that no money means no money: zero, no cash, no cards, no credit. None. An empty wallet. An empty pocket.
How about a billion dollars? We have already determined it’s not possible to imagine it, so instead of trying to grasp the ungraspable, let’s try to fathom what must be a more modest number—the money generated by a billionaire’s billions. In interest. As club member Edgar Bronfman has said, “To turn $100 into $110 is work. To turn $100 million into $110 million is inevitable.”
Suppose you have only $1 billion. Investing at the most conservative, risk-free interest of 5 percent, you’re bringing in $50 million a year. Fifty million new dollars.
Fifty million dollars a year is enough to fund the most lavish lifestyle. (Even mere centimillionaires these days have Gulfstreams as well as the hangars and pilots to go with them, not to mention collections of mansions, vineyards and Picassos.) Though it might be fun trying, it would be tough to spend the interest on a billion dollars each year.
So if you can’t possibly spend it, one can conclude that no one really needs it.
One needn’t be a socialist to question whether anyone should have a billion dollars when a lot of people have almost none.
Charity, of course, is another option. Soros has done more for charities than almost anyone else. In 1997, he announced a plan to give half a billion dollars, over three years, to Russia—easily outspending the U.S. government—for health care, education, developing the Internet and military reform. And that’s not counting the other hundreds of millions he gives domestically and in other countries.
Duty Free Shoppers co-founder Charles Feeney, through his Atlantic Foundation and Atlantic Trust (combined value: more than $3.5 billion), has given multimillions to such diverse causes as Sinn Fein, the Mount Sinai School of Medicine in New York and Portland State University. (“I simply decided I had enough money,” he once said. We say: Took long enough.)
Bill Hewlett has been giving more than $50 million a year since 1996. Bill and Melinda Gates recently gave $3.3 billion to their two foundations, which focus on world health and population issues and provide computers and Internet access to public libraries. And yet no billionaire’s net worth has been significantly reduced because of his or her donations.
Another question: Have their charities made up for the destruction that so many billionaires have left in their wake? For example, billionaires are responsible for a disproportionate amount of environmental damage. The writer Michael Kinsley once figured out that only one in seven of the rich on the Forbes 400 earned their money in “socially productive” ways.
Soros has helped some countries greatly, but he has been blamed for the worst calamities to befall other ones. Indonesia, for example. Soros is loathed throughout Southeast Asia and was blamed for exaggerating the Asian economic crisis by betting against Asian currencies. The most recent attack on Soros came in 1997, when the prime minister of Malaysia, Mahathir Mohamad, called him a criminal.
Some die-hard trickle downers might maintain that billionaires are good for the have-nots because their money trickles down to them. (More likely, the exhaust from their jets is what trickles down.) Yet even the trickle downers must still confront two things: First, if it’s tough for a billionaire to spend even the annual interest on his billion(s), then a billionaire’s billions ain’t trickling down in terribly significant quantities; second, the trickle-down benefits (to charities and elsewhere) would be far greater if billionaires were forced to part with more of their money. (Having their assets tied up, as they do, also isn’t good for the economy under the principal of the velocity of money.)
The fact that someone has to do the gardening on a billionaire’s estate doesn’t settle the fairness issue. Nor does the fact that a billionaire gives to United Way even though the charity might feed some homeless people. It’s still not fair. Some things are fair, and some things just aren’t. This isn’t.
I was with billionaire Robert Maxwell a few years ago, interviewing him on his yacht and jet. Though he ended up in the briny sea soon afterward, he was sitting pretty (rich) when we met on his yacht, the Lady Ghislaine, docked alongside the Water Club in Manhattan. He instructed me to come along with him to Kennedy Airport, where we boarded his white jet, tail number VR-BOB. The plane had a cream-and-coffee interior, a full-size bed in the fore cabin and plush couches in the aft. When it was teatime, a hostess offered fresh scones and beverages. Maxwell slurped noisily and then spit a mouthful of tea at the woman.
“Cold!” he boomed. “If you can’t make tea, what good are you? Get it right, or I’ll throw you out myself. We’re 30,000 feet up, so don’t antagonize me.”
I didn’t get the impression that he was kidding.
REASON NUMBER FOUR: THEY DON’T DESERVE IT
It’s simply not possible to construct a persuasive argument that anyone could actually do a billion dollars’ worth of work in a lifetime or make a contribution to society worth that much. Billionaires owe their success not just to their own brilliance but also to the labor, imagination, and creativity of many other people—as well as to pure luck.
In one sense, today’s billionaires are no more than statistical flukes—the random byproducts of a vigorous and growing economy. Without such an economy—the collective work of all its participants—there would not be so many billionaires today.
In 1960, there were about a hundred people worth more than $183 million, which is an inflation-adjusted billion today. That’s half as many billionaires as there are now. But let’s not forget that the size of the U.S. economy itself has since doubled and that tax rates have fallen. So guess what? We have approximately as many billionaires today as a specialist in probability and statistics might have predicted 40 years ago.
Billionaires owe their success not just to their own brilliance but also to the labor, imagination, and creativity of many other people—as well as to pure luck.
Bill Gates may have created a software company, but he did not single- handedly create the software itself or, more important, the vast market that buys his company’s products. Things would have been a lot different if IBM had been smarter. Or if Bill Gates had been born in French Guiana.
Does Mr. Softee really deserve to have $60 billion in return for gracing us with his 43 years (so far) on Planet Earth? Before answering that, you might want to know that that amount surpasses the combined wealth of 100 million Americans—the bottom 40 percent of the population. It’s also worth noting that Gates has assembled much of his fortune tax-free. (The profits on his Microsoft stock aren’t taxed—at the lower capital-gains rate—until he actually sells the shares.)
REASON NUMBER FIVE: BILLIONAIRES ARE DANGEROUS
A billion dollars is enough money to do some serious damage here on Earth—if that’s what a billionaire wants to do with his or her money (a la the evil villain in a James Bond novel). It’s no surprise that great wealth most often goes hand in hand with proportionally humongous egos. If a millionaire would likely have a million-dollar ego, a billionaire would be…frankly, irrepressible. And they often are. Soros admitted it in his autobiography—he said he has “messianic tendencies.”
The egos are almost impossible to believe. Henry Ford II reportedly looked at himself in the mirror while shaving and intoned, “I am the king, and the king can do no wrong.” (His grandfather’s anti-Semitism was a source of inspiration for Adolph Hitler.)
J. Paul Getty once said, “The able industrial leader who creates wealth and employment is more worthy of historical notice than politicians and soldiers.”
Prince Jefri, the billionaire brother of the sultan of Brunei, imported the 1992 Miss USA for a series of parties and was appalled that she would not agree to have sex with him. The prince’s head of security explained: “Boss is half man, half god, like Jesus Christ.”
The actions of some modern billionaires demonstrate that they often view themselves as extranational, beyond the control of any government. Some appear to feel they are not accountable to anyone. We might be tempted to allow it, even laud it, when George Soros quietly saves lives in Sarajevo. Ross Perot is famous for a military operation of his own—the rescue of two of his EDS employees from an Iranian prison. (Writer Ken Follett was paid a $1 million to immortalize the “rescue” even though a throng of revolutionaries had actually freed Perot’s men before Perot’s team arrived.) But these examples show that the power that comes from all that wealth is anti-democratic and dangerous.
The actions of some modern billionaires demonstrate that they often view themselves as extranational, beyond the control of any government.
The influence of billionaires on politicians is bad enough. Howard Hughes and William Randolph Hearst literally controlled politicians, while many other titans court and are courted by them. Of the 200 American billionaires, many are friends with this president or past presidents and numerous senators and congressmen. They contribute to political campaigns, host fundraisers and occasionally run for office themselves. Perot, of course. Pete du Pont, who was Republican governor of Delaware from 1977 to 1985. A bunch of Rockefellers.
Their influence on politicians in some cases may be obvious and corrupt. Winokur tells in his book that “when Henry M. Flagler, John D. Rockefeller’s most famous partner…had his first wife committed to a mental asylum and attempted to dissolve their marriage, he discovered that Florida law excluded insanity as grounds for divorce. The Florida legislature, in apparent gratitude for Flagler’s previous largess, quickly passed a law validating insanity as grounds for divorce. Flagler legally rid himself of the unfortunate woman, and the legislature immediately repealed what became known as ‘Flagler’s law.’“
Americans know better than to assume that the one-man-one-vote thing is really the way it works in this country; the rich have always had more power. Billionaires even more so—and this leads to the primary reason their personal assets should be limited.
What if their tactics were less public, more clandestine, similar to the tactics of Soros in Sarajevo and Perot in Iran? What if Timothy McVeigh had been a billionaire or been backed by one? What if he had access to, say, a mercenary squad, fighter planes, and nuclear warheads? They say that with enough money anything is for sale.
Osama bin Laden has demonstrated what money can buy. And bin Laden has only a few tens of millions of dollars. He’s responsible for numerous deaths and countless horror, but what if some nutcase billionaire decided to become Bin’s best buddy? Or what if a batty billionaire tried to pull off a cool Soros- or Perot-like maneuver in, say, Arizona? Sure, America’s infallible CIA and FBI might stop him, but then again…
This is why the members of the Ninth Zero Club pose a threat that is far worse than the good some of them may do. So we’re back to the question: Should anyone be allowed to be that rich? Should anyone have that much power?
A U.S. president can initiate a bombing campaign, but he is accountable to Congress and the American people. But what if a billionaire, for business or political reasons—or, say, because he had a grudge against an ex-wife—decided to take out…how about Hawaii? Maybe the good guys could stop him. Maybe not.
What do we do? Should we really eliminate billionaires? I’d support a Steve Forbes–inspired flat tax, applicable to billionaires alone: Tax anything above one’s net worth of a billion dollars. How much? How about 100 percent?
Or maybe the government could repeatedly hold contests for billionaires — to satisfy their competitive urges—taking away everything they have over a billion only every five years or so. (This might also help avoid unfair treatment of billionaires—I am not entirely without sympathy for the mega-rich—whose net worth can jump up and down with swings in the stock market.) And of course there would have to be elaborate rules and enforcement to keep billionaires from moving assets overseas or tying up their money in corporate shells. Yet given all the revenue it stands to gain, surely the government could afford the brains and resources it would need to police this new policy extremely well.
Eliminating billionaires might put Robin Leach out of business, which is another motivation. The loss of donations to charities could be more than made up by a direct funnel of those tax billions to a pre-approved list of efficient nonprofits. True, the new tax wouldn’t address the threat from foreign billionaires. It might also inspire worse behavior among all those with $999,999,999, since they would all be tied for first place among America’s richest. But the world might be a better place. We’d be reining in some of that battiness, checking the tyranny of the rich toward employees (and wives and children), living in a fairer world, encouraging economic justice, and we’d all sleep better at night knowing that the world was a safer place.
David Sheff, author of Game Over (Random House), is writing a book about the Internet in China.
Reprinted from the June 1999 issue of Worth
Part one of this two-part series.