Leon Cooperman is a very sensitive billionaire. His is a delicate ego, easily wounded by any hint that his riches were ill-gotten or that his very existence is a sign of social dysfunction. He is therefore upset by Elizabeth Warren’s moderate suggestions that there should be a greater semblance of a social safety net, and that the rich should contribute a bit of their fortunes to make this happen. In response to a tweet arguing that he should “pitch in a bit more so everyone else has a chance at the American dream, too,” Cooperman has written Senator Warren a five-page letter, vigorously protesting. She is “vilifying” the rich, he says, and “ignoring” the “sources of their wealth” and the “substantial contributions to society they already make.” Cooperman’s letter is a follow-up to earlier comments in which he accused Warren of “shitting on” the “fucking American dream.” (Ironically, Cooperman’s letter ends with a plea for Warren to “elevate the dialogue.”)
Over the course of his letter, Cooperman makes the following points:
- Many people who are rich did not start off rich.
- Many people who are rich did things that earned them their money, such as having ideas.
- Many people who are rich donate large portions of their money to philanthropic causes.
- The tax system is fairer than Warren believes it is.
- We should focus on opportunity rather than equality.
- Perhaps taxes should be slightly more progressive, but not much.
- The post office ought to be privatized.
Cooperman wrote a similar letter to Barack Obama in 2012. It ran 1500 words and took him two weeks to write, requiring “a lot of time using a dictionary and a thesaurus” as well as the assistance of a subordinate. All that labor resulted in this kind of prose:
“The divisive, polarizing tone of your rhetoric is cleaving a widening gulf, at this point as much visceral as philosophical, between the downtrodden and those best positioned to help them… It is a gulf that is at once counterproductive and freighted with dangerous historical precedents.”
(Cooperman had also compared Obama’s election to the rise of the Third Reich, and said of Obama that “When he ran for President, he’d never worked a day in his life. Never held a job.”)
I think it’s worth having a look at Cooperman’s new letter, because some people who are not billionaires may occasionally wonder whether rich people do, in fact, have special brilliance and insight that makes them worthy of their riches. After all, they say they do, and they’re the ones with the billion dollars, not you, so how do you know?
But it’s also the case that rich people have always insisted that they have a special worthiness that justifies their position. The sociologist Max Weber, writing in 1915, noted that “the fortunate man is seldom satisfied with the fact of being fortunate, beyond this he needs to know that he has a right to his good fortune. He wants to be convinced he deserves it and above all that he deserves it in comparison with others.” Leon Cooperman is certainly convinced that he deserves it in comparison with others.
Let us just quickly consider some of the things Cooperman says in his letter. We will see if they justify the conclusion that he has better insight into the nature of justice than his leftist and leftish critics.
First, Cooperman simply recounts his own biography, as he did in his letter to Obama. He informs us that he is the child of immigrants and that his father was a plumber. “When I joined Goldman Sachs following graduation from Columbia Business School,” he says, he had no money and a newborn child to support. He says that he had a successful 25 years at Goldman Sachs and then went off to start a private investment firm. His story, he says, is not unique, and many of his fellow billionaires share stories of “humble origin and hard-won accomplishment.” He cites, for example, Ken Langone of Home Depot, Michael Bloomberg, and the founders of Google. Their stories, he says, are “the very embodiment of the American Dream,” and “for you to suggest that capitalism is a dirty word and that these people, as a group, are ingrates who didn’t earn their riches, through strenuous effort and (in many cases), paradigm-shifting insights” means either being “grossly uninformed” or “knowingly warping the facts.” (Note: Warren has never said capitalism is a “dirty word” and in fact has repeatedly asserted that it’s great and she loves it. He may be thinking of Bernie Sanders, who becomes almost physically ill when he hears the word.)
Here I think we should point out a fallacy that many rich men seem not to notice themselves indulging in. They appear to believe that because (1) they worked hard and (2) they got their riches because of an idea they had, (3) they deserve their riches. But it’s interesting, when you listen to their actual life stories, they offer details that undermine the whole theory. Cooperman says he attended excellent public schools, had parents that encouraged him, and admits that he had “a great deal of good luck.” Cooperman concedes, in the part where he boasts of his philanthropy, that there is not really “equal opportunity” yet. I don’t really see much “desert” here. If you were the only person in the world who worked hard, you might deserve a bit more than other people, I suppose, maybe. (Although do people who are disabled deserve less because they cannot work?) But if you just won a lottery, whether of parents, genes, education, random opportunity, or whatever, I’m not buying the idea that you deserve to be a billionaire and the people who worked hard cleaning toilets don’t.
Ken Langone, the aforementioned Home Depot co-founder, wrote a book called I Love Capitalism, and said that because of his humble origins, “If I can make it, anyone can.” Henry George pointed out in the 19th century that people who say this are saying something like: “If I won the race, everyone could have won the race.” If only one person wins, then the majority of people were going to be losers no matter what. This is what’s so exasperating when people point to Oprah as an example of an American success story. They want you to believe that because there is an Oprah, there could be millions upon millions of Oprahs. Now, perhaps there could. But the existence of several successful people who worked hard proves nothing. Let us say that we lived in a society that was explicitly a lottery: Every year, 10 hardworking people would be picked to be given an enormous fortune. The rest would remain poor. Would the distribution of rewards in this society be “fair”? And would the winners be justified in saying that they won “because they worked hard” and that “anyone” could have won like they did? It might be true in the sense that because the giant fortune was bestowed randomly, every hard worker had an equal chance of being selected. But the fact would remain that most people would work hard and see no rewards whatsoever, while a few people would work hard and see some ludicrously enormous reward, far more than they could ever need, even though they had done no more than anyone else.
Of course, Cooperman doesn’t just talk about hard work. He also talks about innovation. The interesting—and funny—thing here is that he doesn’t actually mention anything he innovated or contributed. He does mention Mark Zuckerberg, who created a time-sucking, data-harvesting alienation machine. But even then: Under Warren advisers’ Emmanuel Saez and Gabriel Zucman’s proposed wealth tax, Zuckerberg would have ended up with about $20 billion rather than $60 billion. Do I believe Zuckerberg’s contribution makes giving him a mere $20 billion an injustice? I do not. Besides, even Peter Thiel has pointed out that innovators actually do not tend to be the ones who make the fortunes. The scientists very rarely get rich. For the most part, the people who get rich are people like Cooperman and Warren Buffett. Now, those people undoubtedly do have a theory as to why what they have contributed (such as, in Buffett’s case, predatory mobile home lending) is of social worth. But often they seem embarrassed to put the case before the public. So instead of talking about why the public should be grateful for what he did at Goldman Sachs, Cooperman talks about Google and Facebook, which he did not invent.
The system under which Cooperman made his money rewards the things Cooperman himself was good at. “Hard work” is not the relevant factor. (My colleague Aisling McCrea has problematized the whole concept of “hard work,” and suggested that people like Cooperman should merely say “I worked,” which sounds much less impressive.) What people like Cooperman actually have is, well, just plain greed: He didn’t try to invent something that would help people, he just tried to make a lot of money, and he did. This, for the most part, is what the extremely rich have in common: They are the ones who wanted money the most. (WeWork’s Adam Neumann announced that he intended to be the world’s first trillionaire. After completely destroying his company, alas he only ended up a billionaire, though his workers ended up being laid off by the thousands.)
Now, Cooperman’s next point is that he is a very generous man. He speaks of the university programs he has donated to, including at Hunter College and Columbia Business School. He has, he said, with a “very large gift,” established “Cooperman College Scholars,” which identifies students of talent and “good character” who are “children of color, impoverished children, children facing situational challenges…” in “Essex County (including Newark),” and supports them through college. He says that in the next few years, he intends to put 500 “splendid youngsters such as these” through college.
I confess that when I read this, the first thing that popped into my head was the “Little Lebowski Urban Achievers” from The Big Lebowski, “inner city children of promise but without the necessary means for a higher education.” The point being not that Cooperman is wrong about the kids, but that every horrible rich guy has a thing like this that helps him soothe his conscience and tell himself, as Weber observed, that he is deserving of his status. We should make a note here about philanthropy, which is that it shouldn’t really be considered benevolent unless it entails any sacrifice on the giver’s part. I mean, it might be useful, it might do good. But it doesn’t require any greater strength of character than purchasing a luxury yacht. Once you get beyond a certain amount of wealth, you can’t really improve your living standards any further. You have everything you could possibly want. At this point, the rich turn to philanthropy in part because it is extremely satisfying to dole out sums to people and have them thank you. It is not much different than a feudal lord bestowing some trinket on some social inferior. It is pleasurable to be the one deciding who gets what. It reminds you that you are important and powerful. The scholarship will even be named after you. They are Cooperman Scholars. You did this.
I think there’s something rather sick about billionaire philanthropists, actually. They seem to want to play God. I get to decide what gets funded in this community. Me. Not the democratic process, but my whims, and it will have my name on it. This is why I don’t really respect Bill Gates very much: Why is it considered noble to spend money that will not reduce your living standard at all but will cause everyone to praise you as a saint who is saving the world? (If Bill Gates had only $40 left after all his giving, I’d be impressed.) In fact, those other billionaires are just fools: They should do some philanthropy. It costs them nothing in utility terms and reaps huge reputational rewards. Establish a scholarship. Put some “urban achievers” through college. Then you can send indignant letters to presidential candidates about how they are unfairly demonizing you.
Next, Cooperman talks about the tax system. In particular, he mentions Emmanuel Saez and Gabriel Zucman, whose book I actually just reviewed two days ago. Saez and Zucman argue that when you look at all the taxes people pay, the American tax system is far more “regressive” than the rich want us to believe, and the rich pay the same rates—or even, at the very top, slightly less—than the rest of us. Cooperman says that Saez and Zucman “have drawn a lot of media attention for their contention that the U.S. federal income tax system is flat… and therefore fundamentally unfair to low-income Americans.” He responds to this in a few ways. For example, he says that Saez and Zucman’s analysis
“…include[s] excise and sales taxes which are by their nature regressive (and therefore overstate the outsized tax burden on low-income Americans) but have nothing to do with federal fiscal policy and tax-code structure—it’s simply how state and local governments have chosen to fund themselves; excluding those and other similar taxes from their analysis would again yield a result counter to the economists’ thesis.”
Huh? He seems to be saying “Of course if you include all the regressive taxation, taxation is regressive, but if you ignored it, it wouldn’t be.” I thought this was a bizarre point to make, but then I realized that it does make sense in response to what he claims Saez and Zucman say, namely that “the U.S. federal income tax system is flat.” And so he thinks he has a point: State taxes are not part of the U.S. federal income tax system!
But Cooperman did not read Saez and Zucman’s book. The whole point of their analysis is that you shouldn’t just look at federal income taxes, you need to look at all the taxes, otherwise you’re not going to understand the full tax system. In fact, funnily enough, the exact thing they’re saying is that rich people like to pretend that federal income taxes are all there is, because when you just look at federal income taxes taxation seems progressive. Here Cooperman comes along and confirms their thesis, by saying that we need to ignore taxes other than federal income taxes.
One other point he makes is a common response to Saez and Zucman, which is that they look at taxes before transfer payments, like Social Security, Medicare, and even the Earned Income Tax Credit. This, critics say, means that Saez and Zucman paint a distorted picture, because they don’t look at what people ultimately end up with. I find this point rather funny, because if you start to think this way, you might indeed end up thinking that the American government is redistributive, but you’ll also come to see why taxes aren’t really much of a burden at all. Because, if we’re looking at what people get for their taxes, why stop at Social Security? Why not look at the public school system, the libraries, the military, the courts? If we subtract what you get for your taxes from what you pay, then it’s no longer the case that Medicare for All raises taxes, because people get their money back in coverage! It’s no longer the case that Scandinavian countries have high taxes, because they have a generous welfare state. Saez and Zucman actually have a very clear explanation for why they only look at taxes and not at the benefits returned for those taxes: because it’s impossible to actually calculate the value of what government returns to each person for their tax money. What is the value to Leon Cooperman of a court system that protects his property from being looted by resentful proletarians? I’d say it’s worth quite a lot!
We’re getting close to the end. Cooperman then repeats a common talking point about how we should focus on expanding “opportunity” rather than reducing inequality, because you can reduce inequality by creating equal misery. I have responded to the argument that “equality doesn’t matter” at considerable length before, and do so again in my upcoming book about why you should be a socialist called Why You Should Be A Socialist. The two critical points are, first, that while equality is not the only value you should pursue (since, indeed, everyone is equal if they’re all dead), inequalities of wealth are in fact unjust, because they confer vastly disproportionate social power on a small number of people who then get to decide the fate of everyone else. Second, people who talk of “opportunity” rarely discuss what it would actually mean to give everyone the opportunity to succeed as Cooperman has. If it is to mean anything real rather than purely theoretical, it would require a radical restructuring of society.
Cooperman finally proposes some tweaks to the tax code that he could live with, and that wouldn’t hurt his bottom line too much or unduly “vilify” him. I do not know how much revenue his proposals would raise, but he doesn’t appear to have thought about it much either, and seems mostly to want to propose some new taxes in order to be able to say, as he often does, that he Supports Progressive Taxes and Does Believe The Rich Should Contribute More. Thus, while not actually believing in anything that would create a fair society, he can say that he is a reformer rather than a reactionary.
In fact, Elizabeth Warren’s plans should be treated as moderate, and I don’t think Cooperman really has much to fear from her. But billionaires have been overreacting to economic reforms for quite some time, and understandably so. I see why people like Cooperman and Steve Schwarzman compare Obama to Hitler. Conservatives’ plan to fight to the death over the tiniest little compromise has been very successful. If you call the Consumer Financial Protection Bureau literal socialism, then you drag the discourse to the right, or so the theory goes. But the strategy seems to have backfired, and may partly explain why so many young people are becoming proud socialists. If obviously moderate reforms are considered socialism by billionaires, and those reforms clearly aren’t enough, well socialism should just be the start!
I won’t even deal with Cooperman’s comment about how the post office ought to have been privatized, except to say that it shows you what these guys really believe in: destroying the commons, having big business run our lives, taking public assets out of public hands and turning them over to people like Cooperman himself. In this letter, Cooperman poses as Mr. Reasonable, who simply wants a Bit More Civility and wishes that good men like himself wouldn’t be so demonized. But you can see hints of the kind of society he wants: one where men like him rule, and if you get to go to college, it’s not because there are good free public colleges just like there are good free public high schools. Rather, it’s because you have kissed Leon Cooperman’s ring, and he has decided you have good enough character to be a Scholar.
In fact, the one thing I respect Cooperman for is his willingness to state his views in public. While most billionaires want their names on buildings, they tend to lay low and keep their political activities in the background. Even though they could easily buy fame, as Trump did, they don’t really want the mass public to know who they are, since they know we’d probably hate them if we got to know them. But I’m glad Cooperman is so open and proud about it. It gives us all a much better sense of who the enemy is and what they think. And in writing this letter, Cooperman has given us the gift of never having to think again that the super-rich might be smart and talented enough to deserve their fortunes.