Are the Koch’s and Bill Gates really that different? Oligopoly, the ultimate game of power and control.

I’m sure many people would contest that comparing the Koch brothers who deal in fossils fuels with Bill Gates who provides vaccines in Africa a bit of a stretch. However, I’m going to suggest that they have much more in common than we’d like to admit. If we observe their methods and ultimately what is achieved, there are some striking similarities. Sure, conservatives like the DeVos’s and the Koch’s morally conduct their affairs differently to Zuckerberg or Gates, but are they really so distinct? You could sensibly propose that Bill Gates’s life is more virtuous than the Koch’s. This indeed is a compelling argument. But is it true? When we consider the two groups; right wing neoliberal oligarchs and philanthrocapitalists (also oligarchs), apart from obscene amounts of money, both sects share their unquestionable desire for power and control.

I will offer that power and control are intrinsically linked. Some semblance of control over your own group, rival factions or even the general populace is required to gain power. That said, to control certainly on an external level, requires some exertion of power, either through elections, coercion or even physical force. The extent and methods required depends on your resources and who you intend to control to obtain power or conversely who you will overpower to wrestle control. At this stage it would be sensible to lay out what these seemingly opposing tribes, both morally and politically have in common and of course how they differ. To finish I will argue that the overall goals of oligarchs regardless of their flavour are strikingly similar.

By the very existence of their extreme wealth, I think it’s safe to assume that all oligarch’s share a strong, deep conviction towards the ‘free market’. Each side fully subscribes to the idea of utilising their wealth to shape the world, often at the expense of democratic processes. Unsurprisingly, many would argue that the Koch’s and Bill Gates share nothing in common, concluding that one wants to continue extracting fossil fuels at the expense of the planet, while the other tries to save lives.

But, if the outcome is all that matters rather than the process, surely we must ask ourselves hard questions regarding the importance of democracy. This dilemma arises due to billionaires not being democratically elected and yet able to use considerable influence to effect major changes, good, bad or indifferent. It has been offered by philosophers and social psychologists alike that huge wealth generates social distance or “ethical independence”. Put simply the rich have no need to cooperate or partake in democracy to get what they require.

Neoliberal leaders often fit into the more recognisable guise of bombastic, power hungry CEO’s, trampling on all that resembles competition. There’s no doubt that these individuals exist, see Jeff Bezos for details. Worse still, the system justifies their behaviour by spinning yarns of ‘homo economicus’, ‘trickle down’ economics and picturing them as ‘job creators’. However, in our midst are those who present as an arguably more agreeable face of power and control. They appear on Ted Talks, are promoted by the mainstream media and portrayed as modern day saviours. These are the neoliberal ‘left’ or philanthrocapitalists and their influence on society is as pervasive as the Koch brothers. Carefully crafted characters such as Gates and Zuckerberg are considered to be oracles of the 21st century. They mould our world from a position of exclusivity that is only experienced by a handful of people and yet we so easily defer to their perceived wisdom.

FAvH
Friedrich Hayek

Historically speaking, the stage that allowed these actors on both sides to perform so freely is neoliberalism. This was first conceived by among others, Friedrich Hayek and Ludwig von Mises in the late 1930’s, but failed to gain much traction in the west. This all changed when Keynesian economics started to falter in the mid 1970’s. When the time arose, the objective for Thatcher (UK), Reagan (US) and Roger Douglas in New Zealand was to change the moral and political record. A collective society based on human capital, full employment and relative equality was abruptly abandoned, for competition, individualism and the idea that wealth is virtuous. Out of the rubble of a dismantled social democratic society, rose a small number of individuals who were uniquely positioned to capitalise on increased privatisation, laxed trade regulations and an ever financialised world.

This accumulation of capital is rarely reinvested in society and the people within it, but used to create a system that accrues ever more wealth, power and influence. The elite are in a position to apply pressure at the governmental level for maximum effect, with some tactics being cruder than others. Neoliberalism provides the means that ensures money is sucked out from underneath the mattresses of the poor to the heavily guarded vaults of the rich. These mechanisms are the ‘nucleotides’ of the neoliberal DNA; international trade agreements, decreased market regulations, low taxation, privatisation and reduced government spending are just a few examples.

For decades this ideology of neoliberalism has been supported by the likes of International Monetary Fund and the World Bank. These institutions have been instrumental in forcing desperate sovereign nations to adopt strict austerity measures to reduce debt, by offering an all strings attached bailout package, as witnessed in Greece. In effect these loans had nothing to do with Greece’s economic problem. These were purely constructed to pay off their debts to French and German banks. It has since been recorded less than 10% of the cash borrowed was actually used to reform the economy and to help the Greek people.

As if the world’s oligarchs don’t have enough systemic advantages, many invest heavily in ‘think tanks’ and varying institutions solely to persuade government’s to tip the scales further in their favour. One such right wing funding source are the previously mentioned Koch brothers. Charles and David Koch are co-owners of Koch Industries the largest privately owned energy company in the US. The Koch’s favourite past-time is trying to discredit climate change science and policy solutions. In this arena they have spent a massive $127 million funding 92 organisations between 1997 and 2017. The Koch’s claim to be Libertarians, supporting; drastically lower corporate and personal taxes, minimal public services and a massive reduction in regulations.

Koch brothers

Their undeniable self interest doesn’t stop at muddying the waters regarding climate change. The Koch’s fund a group called the American Legislative Exchange Council (ALEC), aimed at making it more difficult to prosecute corporations for violations of environmental and financial law. It’s important to realise that the Koch’s do not do all this in isolation, rallying 100’s of wealthy conservative families in an effort to preserve and promote their privileged way of life. Groups such as Americans for Prosperity are a huge and rich organisation, designed to battle against the Democrats, supporting ultra conservative Republicans, espousing ideological policies, while blocking anything in Congress that may oppose the Koch’s best interests.

They are the masters of organising ‘astroturf’ groups. These are alleged grassroot citizen organisations or coalitions. Groups such as ‘Americans for Prosperity’, the ‘Heartland Institute’ and the ’60 plus association’ support entities such as the Competitive Enterprise Institute and their fight for free speech. Which of course is nothing of the sort, it is a mere cover up for anti-science rhetoric, supported by 47 groups all affiliated to the Koch’s. Further to this, the Koch’s spend millions each election cycle and helped fund the Tea Party, spending upwards of $45 million. The Koch’s also donate millions each year to candidates that suit their ideology, this includes past presidential candidate Mitt Romney. Interestingly, despite spending roughly $900 million during the 2016 election cycle, the Koch’s have already declared that they will not be funding Trump next time around.

In contrast to the Brothers Grim, power and control can also be acquired through more insidious mechanisms such as philanthrocapitalism. Many of these characters involved in this practice are labelled by the right wing media as lefties. This theory seriously suggests that these rich, well connected, privileged people who attended top universities, while using capitalism to rake in huge profits support politics of the left. Just to clarify the Democrats and the left are not synonymous with each other. Politics in the US like much of the west provides nothing more than varying shades of neoliberalism. For the CEO class such as Mark Zuckerberg, Bill Gates, Warren Buffett and Richard Branson, the question is, how can philanthropy be used to reinforce a flawed political and economic system such as capitalism.

Supposedly charitable acts, as seen by Bill Gates are conceptualised using market based solutions, looking at costs and benefits. It’s fair to say that philanthrocapitalism is no more than the social justice arm of a destructive global free market. Gates has certainly taken advantage of his huge giving-power to influence global health policies, including the World Health Organisation, where he is their top donor. The Gates Foundation has spent over $1 billion on policy and advocacy, even investing in training programs for journalists at major media organisations. Further to this, the foundation has heavily funded research which has later gone on to be published in scientific journals. These types of activities must be seen as a threat to global democratic decision making. The Gates Foundation also sits on the board of H8, a self appointed group of 8 health related organisations, who have been instrumental in setting up the health agenda for the G8, a group of self important, self selected nations.

Bill Gates
Bill Gates

Both the pretend left and right wing oligarchs, share another mission, that is to pay as little tax as humanly possible. The Koch’s do this rather bluntly by using ‘astroturf’ groups and lobbyists to coerce the government into lowering tax levels and provide tax breaks. The ‘smarmy’ army to ‘their’ left in contrast use charm offensives. In 2015 Mark Zuckerberg and his wife Priscilla Chan, to much fanfare, proclaimed that they would donate 99% of their shares in Facebook (valued at the time at $45 billion) to the “mission” of “advancing human potential and promoting equality”. Which all sounds very nice, I’m sure you’ll agree. Here’s the catch, Zuckerberg did not set up a charitable foundation which would have automatically held a non-profit status. Instead of this Zuckerberg established limited liability company (LLC). The mainstream media unsurprisingly failed to mention this, instead they continued to gush over this blockbusting moment of perceived altruism.

Unlike a charitable foundation a LLC  allows someone to make investments in a for-profit company, while also permitting the owner to make political donations. Within this framework Zuckerberg is free to lobby for changes within the law and can do whatever he desires with his money. You may ask, “what’s the problem, it’s his money’? Indeed, but is this really the actions of a charity? Zuckerberg can also cunningly use this method to avoid tax. This can be achieved by donating the appreciated shares to charity, which would generate a deduction at fair market value of the stock without triggering any tax. Clever huh?

In a nutshell this means Zuckerberg has made a ridiculous amount of money, for which he is unlikely ever to pay tax on. As a society, do we really want people like Mark Zuckerberg or Bill Gates deciding the direction of our societal needs? All governments have flaws, but at least there are checks and balances deciding where the money is required, with more than one person making the call. These oligarchs could have quite easily aided society by paying tax just like everybody else, but of course this does not afford them the power or control that they feel they deserve.

So, what have we learnt apart from, don’t trust rich people? Well, we know billionaires span the entire (neoliberal) political spectrum from; George Soros to Sheldon Adelson, from the Koch’s to Michael Bloomberg and from Tom Steyer to Robert Mercer. Many of whom remain hidden like puppeteers, but some use public recognition to their advantage, such as Gates and Zuckerberg. We really shouldn’t be remotely surprised that billionaires manipulate governments and society to benefit themselves in some way. I am aware that much of this article is US centric, however, this is not something that is unique to the States. Similar patterns of oligarchic control can be witnessed all over the world, but particularly within the ‘anglosphere’.

All acceptable politics and political parties within the west are shoehorned into a narrow corridor of neoliberalism, with only minor differences separating them. Parties and the politicians from which they belong are criticised and held to intense scrutiny, but rarely is this kind of ferocious attention applied to the primary problem. This being a political/economic system that is thoroughly in chaos, held together by outdated concepts, some questionable politicians and billionaires who desperately fight to maintain the status quo. It’s the same system that assures the elite of ever increasing bank balances, thus securing more power and control over our ailing planet

Lets be honest, this is not a system for you, me or billions of others like us. In many ways capitalism is no different to feudalism, both possess hierarchies, each system serves the chosen few and neither has any interest in the rest of society. I suspect it’s about time we constructed something anew, outside of this tired and repetitive dynamic. How about we construct a society that works for everybody, oh and we need to do this quickly because the world’s a bit screwed up. No pressure!                                                                                                                                                                                                    

The meritocracy illusion.

Here in the west we are led to believe that if we work hard, obtain a good education and put our mind to it, we can achieve anything. This my friends is a blatant lie. It’s the kind of tale that encourages us to be introspective during moments of difficulty or even failure. We trawl through our lives looking for moments where we may have gone wrong; “possibly I should have worked harder at school. If only I’d have put more overtime in I might have got promoted” and so on. Today, however, I can reveal the secret to success, drum roll please…………………………the answer is, luck.

People who are unsuccessful tend to internalise their misfortune, rather than looking at other contributing factors such as; environmental issues, poor education, inadequate parenting or simply bad luck. On the other hand ‘successful people’ commonly declare that they have single-handedly earned everything that has been bestowed upon them. I’m here to tell you that the idea of a “self made man”, for want of a better phrase is bogus. Nobody gains any kind of success, economic or otherwise completely on their own, ever.

Throughout much of the world it is frequently the case that a disadvantaged child will be a disadvantaged adult. Kids with wealthier parents tend to go to the best schools, chiefly because houses in better catchment areas are estimated to be 42% more expensive. Richer kids also have access to nutritious food, opportunities to engage in ‘high culture’ and generally have a suitably quiet place to study. All this leads to poor, bright students being overtaken by less intelligent, wealthy kids in the first few years of schooling. Only 10% of children from the lower end of society make it to university. In contrast, 80% of kids attend university who have parents from a professional or managerial background.

Furthermore a child from private school is 55 times more likely to attend Oxbridge than a pupil in a state school receiving free school meals. Social mobility is indeed rare in the west, however, there is a marked increase in opportunity with more equal societies such as Scandinavia. Sadly in terms of income distribution the US and the UK are two of the most unequal nations on earth, which is reflected by the woeful social mobility observed in both countries. I must firstly qualify the graph below; this was originally taken from the Equality Trust website and has been doctored to highlight the differences between the UK/US and the Scandinavian countries in terms of social mobility. The original graph displayed other countries to the right, indicating even less social mobility namely; Peru, Brazil, Chile and Argentina.

soc mob

At this point, I’m hoping you are starting to conclude that social mobility for the more disadvantaged portion of society is generally unattainable. Success for the rich, however, is almost inevitable, due to a myriad of factors as previously outlined. It’s not too much of an exaggeration to suggest that the dice are severely loaded in favour of the people who already hold a significant advantage. So, what about luck you may ask. Well in 2015 the Harvard Business Review investigated the traits required to be a successful CEO.

Firstly the studies suggested that the positive effect of a CEO aptly named the ‘CEO effect’ varied from 2% to 22% depending on the industry. To arrive at this notion a 26 year study in Sweden measured inductive reasoning, verbal comprehension, spatial ability, and technical comprehension to measure key qualities required for a CEO position. Unsurprisingly CEO’s scored highly, but no more so than doctors, lawyers or engineers. These findings indicated that their innate skills in no way justifies the extraordinary pay these people often command. As an example a Swedish CEO receives a 1200% pay premium over an average worker.

Another reason that success of an actual CEO is thought to be based on luck, is a suggestion that CEO’s on obtaining the position quite often will have to gamble picking long term strategies which may or may not work. These actions undoubtedly will have a profound effect on a CEO’s longevity and perceived success. This guesswork is the product of not possessing a crystal ball and with no means of looking into the future any more than us mere mortals. If however, their guesswork pays off this is then calculated as part of the ‘CEO effect’ and is obviously claimed by the CEO as a completely calculated manoeuvre. A study by Markus Fitza from Texas A & M university in contrast to the Swedish study, concluded that the ‘CEO effect’ that is described as outcomes related to skill is likely to be around 4-5%, the rest is pure chance. This of course is despite what your boss may have you believe through company correspondence.

To push my ‘luck hypothesis’ further, in a recent study from the University of Catania, Sicily, scientists created a computer model of a 1000 people. Some were given more intelligence, talent and money, than the average worker, while others less. During a 40 year period a few of these people experienced “lucky events”, opportunities to boost their career in a way that could be exploited with their natural talent or intelligence. After a 40 year simulation the characteristics of the richest people were analysed. Although it was agreed that successful people did indeed possess some level of talent or intelligence, those who achieved the greatest success were invariably the luckiest. It was concluded by the authors that “maximum success never coincides with maximum talent and vice-versa”.

One of many attributes that is considered when examining success and how this is acquired is overconfidence. Results from one study indicated that overconfidence was often interpreted by many as competence. This in turn results in these self-assured bosses getting paid much more than they are actually worth. Not only that, but these types of people are generally more likely to be promoted, exacerbating their overconfidence, leading to a positive feedback cycle. In other words higher status people will often display these types of characteristics. As most bosses tend to employ like minded individuals, it is not inconceivable to suggest a whole layer of management at the same firm could indeed possess similar traits.

John Thain
Former CEO of Merrill Lynch investment bank and chief narcissist, John Thain.

This behaviour is reinforced by the “just world” bias, which convinces us to believe that the rich and powerful deserve their attained positions in the world. This idea was confirmed in a study which noted that when a student heard that a fellow student had won a random prize, positive characteristics were linked to the winning student. Conversely people are equally misguided the other way and attach negative characteristics to victims. Additionally a paper from UC Berkley concluded that narcissistic CEO’s are paid more than non-narcissistic CEO’s. Following on from UC Berkley’s study, further enquiries could well invite you to consider what are the general personality types of people who obtain vast monetary riches.

This is hard to measure, but what we do know from studies by Paul Piff is the rich are generally meaner. Piff found that lower class individuals are more “generous, charitable, trusting and helpful”. The rich donate less to charity as a share of their income than the middle class, furthermore their decisions are predominantly based on the economic climate and self interest unlike the middle class. During laboratory experiments Piff discovered the wealthy are more likely to take valued goods, lie, cheat and generally behave badly, which is incidentally widely more tolerated if you are rich. This type of conduct is all relatively easy to explain with a help of a friend, who states, “in a society that values wealth, those with wealth are worshipped as well”, Karl Marx, 1844. 

With this in mind let us highlight someone who fully embodies capitalism; lets look at Bill Gates. To begin with, Bill Gates had an upper class background, allowing him to attend a school giving him access to computers. In this day and age this may sound absurd, but at this time only 0.01% of his generation had this kind of computer availability. With these facilities Gates could obtain extra programming practice, which according to Matthew Sayed who advocates in his book ‘Bounce’ that 10,000 hours of practice is essential for mastery, was a huge advantage for Gates. It didn’t harm matters either that Bill Gates’s mother had social connections with the Chairman of IBM, this networking enabled him to gain a contract from what was at the time the largest PC company in the world.

Luck was a consistent factor for Gates during the process of obtaining the contract from IBM. Initially Gates was approached by IBM regarding the development of an operating system, but as he had never built an OS he referred the request on to a programmer called Gary Kildall. However, Kildall’s talks with IBM broke down and IBM returned to Gates. At which point Gates bought another OS cheaply from Seattle Computer Products with the secret backing of IBM. It is certain that if SCP had known about IBM’s backing of Gates the price for the QDOS operating system would have soared.

Gates with Microsoft proceeded to tweak the system and re-named it DOS (disc operating system). He was also successful in negotiating a licensing agreement that allowed him to keep the DOS program, this eventually became the cornerstone of the Microsoft business. Now, nobody is suggesting Bill Gates isn’t intelligent or talented but without a substantial amount of luck Gates would never have had this amount of success or wealth and maybe we would never have heard of him.

So next time you hear the rich or their apologists suggesting that the elite do it all by themselves and are worth every penny they earn, maybe you could do some critical thinking and decide whether those remarks hold any water. It is undeniably true the rich require a whole gamut of skills and characteristics to be monetarily successful; self absorption, narcissism, overconfidence, intelligence, selfishness, some talent and of course lots of luck. But the story of meritocracy that needs to be perpetuated primarily by the ruling elite to maintain the status quo is a very tall one. Although, as right wing voters show there are plenty of useful idiots who will lap this misinformation up and will dutifully do the bidding for their rich masters when required.

The age old story that suggests the best people available will naturally rise to the top and that their ascent is driven purely by merit would be laughable if it wasn’t so derisory. An example of this fallacy is displayed on a daily basis in the form of Boris Johnson. A man who displays such a paucity of interpersonal skills, he should never be allowed within 1000 miles of public office, but still he lingers, currently as Prime Minister of the UK. This meritocracy fable is espoused by politicians and repeated endlessly by the media who are essentially from the same societal tribe. Gloomily this narrative has one purpose, which is to keep the proletariat in their place, while trying to tap in to our subservient nature and lack of self belief. So while we collectively fail to muster the confidence to challenge the myth of class, capitalism and societal standing, the establishment will continue to talentlessly rule as they see fit.