Posted on 06/26/2014 10:44:53 PM PDT by 2ndDivisionVet
Memo: From Nick Hanauer
To: My Fellow Zillionaires
You probably don’t know me, but like you I am one of those .01%ers, a proud and unapologetic capitalist. I have founded, co-founded and funded more than 30 companies across a range of industries—from itsy-bitsy ones like the night club I started in my 20s to giant ones like Amazon.com, for which I was the first nonfamily investor. Then I founded aQuantive, an Internet advertising company that was sold to Microsoft in 2007 for $6.4 billion. In cash. My friends and I own a bank. I tell you all this to demonstrate that in many ways I’m no different from you. Like you, I have a broad perspective on business and capitalism. And also like you, I have been rewarded obscenely for my success, with a life that the other 99.99 percent of Americans can’t even imagine. Multiple homes, my own plane, etc., etc. You know what I’m talking about. In 1992, I was selling pillows made by my family’s business, Pacific Coast Feather Co., to retail stores across the country, and the Internet was a clunky novelty to which one hooked up with a loud squawk at 300 baud. But I saw pretty quickly, even back then, that many of my customers, the big department store chains, were already doomed. I knew that as soon as the Internet became fast and trustworthy enough—and that time wasn’t far off—people were going to shop online like crazy. Goodbye, Caldor. And Filene’s. And Borders. And on and on.
Realizing that, seeing over the horizon a little faster than the next guy, was the strategic part of my success. The lucky part was that I had two friends, both immensely talented, who also saw a lot of potential in the web. One was a guy you’ve probably never heard of named Jeff Tauber, and the other was a fellow named Jeff Bezos. I was so excited by the potential of the web that I told both Jeffs that I wanted to invest in whatever they launched, big time. It just happened that the second Jeff—Bezos—called me back first to take up my investment offer. So I helped underwrite his tiny start-up bookseller. The other Jeff started a web department store called Cybershop, but at a time when trust in Internet sales was still low, it was too early for his high-end online idea; people just weren’t yet ready to buy expensive goods without personally checking them out (unlike a basic commodity like books, which don’t vary in quality—Bezos’ great insight). Cybershop didn’t make it, just another dot-com bust. Amazon did somewhat better. Now I own a very large yacht.
But let’s speak frankly to each other. I’m not the smartest guy you’ve ever met, or the hardest-working. I was a mediocre student. I’m not technical at all—I can’t write a word of code. What sets me apart, I think, is a tolerance for risk and an intuition about what will happen in the future. Seeing where things are headed is the essence of entrepreneurship. And what do I see in our future now?
I see pitchforks.
At the same time that people like you and me are thriving beyond the dreams of any plutocrats in history, the rest of the country—the 99.99 percent—is lagging far behind. The divide between the haves and have-nots is getting worse really, really fast. In 1980, the top 1 percent controlled about 8 percent of U.S. national income. The bottom 50 percent shared about 18 percent. Today the top 1 percent share about 20 percent; the bottom 50 percent, just 12 percent.
But the problem isn’t that we have inequality. Some inequality is intrinsic to any high-functioning capitalist economy. The problem is that inequality is at historically high levels and getting worse every day. Our country is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.
And so I have a message for my fellow filthy rich, for all of us who live in our gated bubble worlds: Wake up, people. It won’t last.
If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.
Many of us think we’re special because “this is America.” We think we’re immune to the same forces that started the Arab Spring—or the French and Russian revolutions, for that matter. I know you fellow .01%ers tend to dismiss this kind of argument; I’ve had many of you tell me to my face I’m completely bonkers. And yes, I know there are many of you who are convinced that because you saw a poor kid with an iPhone that one time, inequality is a fiction.
Here’s what I say to you: You’re living in a dream world. What everyone wants to believe is that when things reach a tipping point and go from being merely crappy for the masses to dangerous and socially destabilizing, that we’re somehow going to know about that shift ahead of time. Any student of history knows that’s not the way it happens. Revolutions, like bankruptcies, come gradually, and then suddenly. One day, somebody sets himself on fire, then thousands of people are in the streets, and before you know it, the country is burning. And then there’s no time for us to get to the airport and jump on our Gulfstream Vs and fly to New Zealand. That’s the way it always happens. If inequality keeps rising as it has been, eventually it will happen. We will not be able to predict when, and it will be terrible—for everybody. But especially for us.
***
The most ironic thing about rising inequality is how completely unnecessary and self-defeating it is. If we do something about it, if we adjust our policies in the way that, say, Franklin D. Roosevelt did during the Great Depression—so that we help the 99 percent and preempt the revolutionaries and crazies, the ones with the pitchforks—that will be the best thing possible for us rich folks, too. It’s not just that we’ll escape with our lives; it’s that we’ll most certainly get even richer.
Well, let’s see. The mess in Mississippi is due to powerful 1%ers who want to keep their bought politicians, and the rest of us who voted differently. Who does he support? Does he support a representative republic? Does he, like Suckerberg, want to flood these 99% of the workers with competitors who will accept cheaper wages?
I doubt that opportunity that comes from a private sector that grows faster than the government is part of his plan.
Democrats are the Neo-Fuedalists
Republicans RINOs are the Classical Feudalists
The Tea Party is the Anti-Fuedalist Faction
Wait, who's been president the last five years?
To the extent that "inequality" is a problem, high corporate tax rates and crony capitalism are to blame.
Mr. Hanauer is a venture capitalist, very successful, and he is rich by most measures (he’s the one that hillary complained about as being ‘truly well off’).
No gripes about his wealth or his stature.
While his essay is interesting, his conclusion is that the middle class will go away if current policies persist.
His solution? Government. The government must legislate solutions.
My question is why doesn’t the government get out of the way and let us go?
Mr. H has succumbed to his ego - he made it to his status, but no one else is smart enough to do the same. He thinks FedZilla has the answer. Of course, he can buy big enough chunks of FedZilla to satisfy his ego.
Hmmmm.
I would say the top 1% and virtually ALL global interests are funding our decline and supporting the Marxist regimes in power, here and wherever until collapse, and then reshaping the world as a petrie dish begins.
They should fund freedom and conservatives who work, produce and innovate.
I read a recent listing of the 10 most corrupt states, and Mississippi was number 1. So eliminating corruption is high on the list.
Corporate welfare, fascism, govt corruption. None of the aforementioned trespasses reflect true capitalism of any magnitude.
He’s fairly intelligent and fairly articulate but his logic and inference are lacking. One can see in his mannerisms and speech patterns as reflecting his positions that he is steeped in laid back liberalism.
He’s had time to ponder things and learn a few choice terms and concepts.
But he can’t penetrate the veil to the truth. The truth is not in him.
He does identify basic relations and some correlations, but he doesn’t have the sophistication and experience to test his suppositions. He’s basically an amateur philosopher.
Many people with time to ponder can typically like him foresee where things are going, where they are trending. But still they are also often wrong or ineffective.
The vast majority of people, and all progressives, fail to understand that an economy is first and foremost the product of a culture.
The creation of the great American middle class was the product of a great American culture — we were a people who held traditional values in high esteem and exhibited a high degree of individual initiative, hard work, sacrificing for the future, commitment to family and children, etc.
The reason our economy is trending in the direction of a Latin American-style economy of a small class of uber-wealthy and a great mass of poor people longing for socialism along with a relatively small middle class is because our culture is trending in the direction of a Latin American-style culture.
The progressives have caused an explosion in the percent of poor people in the country by massive importation of the Latin American peasantry and by the destruction of the traditional family, especially among African-Americans.
The constituency of the progressives is government employees and government dependents (broadly defined, including for example university faculty living off of bloated tuition subsidized directly or indirectly by government).
What the progressives do is to attack and loot the rest of society in order to reward its constituency of government employees and government dependents, which is why the middle class is weakened and shriveling.
The other thing I meant to say is, socialist, government based solutions to “the inequality problem” will only make it far far worse.
The most unequal regimes of all are the socialist ones. Castro, Hugo Chavez, Mugabe, etc. , all ended up with billions in personal bank accounts.
Gee that’s well said.
Free markets are the best way to raise the fortunes of all economic classes - poor, middle or rich. See Milton Freeman for a clear explanation.
Communists always seek to crush the middle class (bourgeoisie). They can better agitate the poor to revolt, and better control the weak and dependent while in charge. The last thing they want a is bunch of uppity people thinking that they make their own decisions.
Communism is really about gaining dictatorial power. The whole “narrative” that Marx created was a consciously designed BS story to get more people to go along with it. As Saul Alinsky put it, destroy the middle class while pretending to be for them. Their whole economic agenda is designed to bring the middle class to heel. Lenin said that taxation and inflation were the millstones between which he would grind the bourgeoisie. The modern left has added regulation to that toolbox.
The ways that they are implementing policies to bring down the middle class are too numerous to count - choking businesses, increasing energy costs, flooding poor immigrants into the labor market, driving up essential (or mandated) costs like health care and building pitfalls into the law to drain nest eggs and make the jump from dependence to becoming self-sufficient harder and higher.
At the age of retirement, I have modest but “comfortable” financial resources, and I feel my die is cast with the super-rich, because my money, however paltry a sum it may represent, still sticks up far enough to be mown by the same scythe.
Well said. The progressives’ jihad to create their “new man,” inevitably destroys foundational institutions. That which makes us Americans must be ripped out, root and branch. They are well on their way to achieving their goal.
To have a successful free market capitalist economy, it must be governed by morality.
If the sin of gluttony is not recognized, if there is no shame in excess, the results are as described in this article.
I know several incredibly well off people that live relatively modestly. They are happy people more concerned with their fellow man than with “more”.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.