Nose-Diving into Moral Relativism

By Noah Rothman

Wednesday, September 23, 2026

 

When the Center for Strategic Politics asked 683 Democrats how they would feel if they “woke up tomorrow morning and saw the following headlines,” each of which revealed that Donald Trump was no longer president, the polling outfit uncovered a crisis of fatuity and injudiciousness among the president’s critics.

 

It seems a significant portion of this poll’s respondents couldn’t see beyond the instant gratification they would derive from Trump’s withdrawal from the political scene, even if the means of his removal were bound to make everything worse.

 

Sure, the republic would remain intact — perhaps even in a healthier state — if some sequence of events culminated in the president’s removal from office via impeachment or the 25th Amendment, presuming the circumstances warrant such an extraordinary intervention into political affairs. Democrats are unlikely to be thrilled with JD Vance’s accession to the Oval Office, but that’s an outcome they clearly hadn’t considered. Likewise, it’s safe to assume that the American left would not welcome a military coup, even an anti-Trump one. But no one who participated in this experiment could see beyond their immediate appetites.

 

Nor could this poll’s respondents apparently channel their humanity. If the president “died in his sleep,” such an event would deprive Democrats of what they should want more than anything: the president’s repudiation at the ballot box. Similarly, the only outcome in this poll that did not enjoy the support of a majority of self-described Democrats — the assassination of Trump on live television — would not benefit the Democratic Party. Trump would be rendered a martyr. The GOP would beatify him and commit itself to his legacy. The cause to which his killer was devoted would be anathematized in all but the most radical of the dimly lit salons where the left would comfort itself. And yet, just about one-third of Democrats polled here would rationalize that epochal murder. After all, he had it coming.

 

Maybe the numbers in this particular poll are off. Back in May, PolitiFact attempted to fact-check the notion that rank-and-file Democrats were growing more comfortable with acts of political violence directed against their opponents, which tells you something about the resonance of that particular allegation. While PolitiFact argued that the numbers don’t indicate that a crisis is upon us, “some polls show Democrats agreeing more” with the violent radicals in their midst.

 

The left does not have a monopoly on either political violence or provocations to commit violence in the name of this cause or that. Agitation in favor of violence is typically the exclusive province of attention-seeking maniacs, and that pathology has no ideological home. Republicans have their own dangerous elements in their ranks.

 

And yet, those on the left speak flippantly not just about violence but about the unalloyed goods that they imagine will accompany politically charged acts of human sacrifice. The comic Bill Burr provides us with only the latest example of this outlook:

 

 

There’s quite a lot of casual paranoia on display here, which is its own problem. It used to be socially undesirable to express so unhealthy a level of mistrust in your neighbors’ motives or suspicion that they’ve been co-opted by powerful interests presumably arrayed against yours (such as, in Burr’s telling, America’s own intelligence agencies); in fact, it would once have betrayed a potentially clinical pathology. Today, that sort of thing is currency on America’s most-listened-to podcasts, which tend to feature one ill-informed layman speaking in generally uncharitable terms about a subject he doesn’t understand to his equally unstudied interlocutor. That stuff just kills these days.

 

Of course, the most troubling element of this clip is Burr’s assumption that the deranged accused killer of United Healthcare CEO Brian Thompson, Luigi Mangione, whose writings betray a clinical level of disordered thinking, had a point.

 

What an admission against interest. If Mangione was making a point, he didn’t elucidate it in his rambling missives, nor did he convey it to the sane and sober by assassinating a man merely because he didn’t like the industry in which Thompson worked. Only through divination could Burr even deduce that there was a point. So maybe it’s not Mangione’s point at all. Burr seemed eager to conclude that the victim of this heinous crime brought it on himself. Maybe he is the one connecting the dots here.

 

Burr is a latecomer to this party. In the aftermath of Thompson’s slaying, media outlets competed with one another in the effort to assign some politically relevant logic to the murder, as I wrote in Blood & Progress. Mangione channeled “pent-up anger at the nation’s complex health insurance industry,” highlighting “the anger and frustration” the killer merely acted on. Artists celebrated Mangione at rock concerts. The mere mention of his name elicited cheers from Saturday Night Live’s audience. And, of course, the progressive politicians who believe they profit from the public’s anger at private American enterprises fanned the flames.

 

Obviously, “people are furious,” said Bernie Sanders. Elizabeth Warren agreed. “People can only be pushed so far,” she exclaimed. We all need to understand that “people interpret, and feel, and experience denied claims as an act of violence against them,” Alexandria Ocasio-Cortez theorized. The killing represented an opportunity, in Senator Chris Murphy’s estimation, “to listen to what people are feeling.”

 

But “people” didn’t do this. One lunatic did. And if Mangione inspired other lunatics to do the same — as he almost certainly has, aided in no small part by the left’s adulation — it would not create a better world for the rest of us. Murder leaves terrible, unhealing scars on those who survive it, and it creates incentives for retribution and retaliation that can transcend the generations. It is the most grievous of sins.

 

To talk about murderous violence as though it was an instrument of political hygiene is not just perverse; it’s a rationalization. It’s designed to assign higher motives to what is, really, just an ill-advised articulation of a variety of hatreds. There’s nothing high-minded about it. At best, it’s a thuggish intimidation tactic. At worst, it’s sadism masquerading as a political philosophy. Either way, it says more about the speaker, and none of it is good.

We Should Probably Stop Murdering People

By Kevin D. Williamson

Monday, June 15, 2026

 

Acting on orders from President Donald Trump, the U.S. military has murdered Héctor Rusthenford Guerrero Flores, popularly known as Niño Guerrero, a Venezuelan drug trafficker and leader of the Tren de Aragua crime syndicate.

 

This was—and ought to be treated as—a straightforwardly criminal act on the part of the American president and those who have carried out his illegal orders. Guerrero Flores had been charged with federal offenses under U.S. racketeering conspiracy laws. But there is no law authorizing summary execution of drug-crime suspects. There is no congressional authorization to carry out military attacks in Venezuela. Guerrero Flores may very well be everything the Trump administration says he is and more—though under the Trump administration the word of the White House is no more reliable than the word of a South American drug dealer—but, even if that were the case, there is no legal authorization for the preemptive extrajudicial killing of crime suspects. The Trump administration explains that it has “determined” that the United States is at war with drug cartels and that Guerrero Flores, like the boatloads of civilians the U.S. military has been massacring at sea for months, is a “combatant.”

 

Under the George W. Bush administration, the power of the executive branch to simply declare so-and-so an “enemy combatant”—in an open-ended war without a well-defined enemy or geographic boundaries—became an entrenched part of the presidential war-making power. Barack Obama extended this to authorize the assassination of American citizens—and their children—and carried out such assassinations, notably in the case of Islamist social-media propagandist Anwar al-Awlaki, who rose to the attention of the American war-making machine owing to his high-profile position as—I hope this descriptor makes it into the history books—“the Osama bin Laden of Facebook.” George W. Bush is a decent and patriotic man, but the aggrandizement of the presidency during his time in office served the country poorly as the office devolved to Barack Obama, a seething would-be autocrat who looks like Dwight Eisenhower next to the man who succeeded him: Donald Trump, an ordinary criminal and would-be caudillo. Trump was succeeded in turn by the vegetative husk of Joe Biden, who had been a vain imbecile in his prime, and who promptly returned the office to Donald Trump, an ordinary criminal and would-be caudillo.

 

Trump, presumably writing with every color crayon in his box, declared: “Tren de Aragua terrorists no longer have safe haven in Venezuela or anywhere else and, under my leadership, we will find these vicious murderers and drug lords anytime, anyplace, and send them to the depths of hell where they belong.”

 

That is, shall we say, beyond the presidential remit.

 

The president of the United States is the chief officer of the executive branch of the federal government. His job is to carry out laws passed by Congress. That is it. That is the executive function: to execute. There is a reason—an excellent, wise, experience-grounded reason—that it is Congress, and not the president, that has the power to declare war, levy taxes, spend money, ratify treaties, and make law. Trump’s enablers—and presidential imperialists of both parties—have cited the Bush-era Authorization for Use of Military Force (AUMF) as well as some supposed inherent powers of the presidency to justify everything from Trump’s global campaign of lunatic violence to Biden’s crackpot industrial policy to Obama’s decision to assassinate Americans.

 

The worst enabler of all, of course, has been Congress itself, which has invested the presidency with an ever more expansive capacity for imperial violence, not only through such explicitly military measures as the AUMF (part of Congress’s long and cowardly history of wanting wars to be fought without the political risk of declaring them) but also through notionally economic legislation such as the Trade Expansion Act of 1962, which invests the president with the power to restrict imports on national security grounds and provides the supposed authority of the Section 232 tariffs (a plainly unconstitutional tax) imposed by Trump and Biden.

 

The Romans gave their dictators temporary emergency powers, expecting these to be held exclusively by such paragons of republican virtue as Cincinnatus. What they got was Julius Caesar, Augustus, and, soon enough, Caligula. As Brian Bethune observed in a review of Aloys Winterling’s biography of Caligula in Maclean’s:

 

The Roman Empire was founded by Caligula’s great-grandfather Augustus, who established his one-man rule by keeping to the outward forms of the moribund republic. He would pretend to be first among aristocratic equals and “suggest” measures to the Senate, which would pretend to debate them before doing exactly what Augustus wanted. But Caligula had no tolerance for double-talk: he was supreme ruler and wanted it openly acknowledged. That spawned ever more conspiracies against him and increasing paranoia and vicious reprisals from him. Inevitably, a plot did succeed in killing Caligula, a day before his planned move to Egypt—a culture open to the idea of a divine monarch.

 

Gaius Julius Caesar Augustus Germanicus was known by his childhood nickname, “Caligula,” meaning “little boot,” because as a child he liked to play dress-up and pretend to be a soldier. Trump has a similar puerile fondness for military pomp and martial posturing—and, more to the point, his pretensions include both the divine and the monarchical. And, deepening the unfortunate trend originating with earlier presidents, he has leaned into the constitutionally undefined notion of the president as “commander in chief,” or, as the Romans would have put it, imperator.

 

Which is to say: This is not really about Niño Guerrero. This is about the United States of America, what kind of government we mean to have, and what kind of nation we mean to be. The question is not: “What would we do if faced with a lawless president who is willing to carry out crimes up to and including murder and who attempts to stay in office when voted out?” The question is: “Now that we have a lawless president who is willing to carry out crimes up to and including murder and who already has once attempted to stay in office when voted out, what are we going to do?”

 

I suppose we could sit around and wait for the great patriots and constitutionalists such as Sen. Ted Cruz to rediscover their manhood, but that is a long wait for a train that ain’t coming.

 

Economics for English Majors

 

To quote the great economist Frito Pendejo: “I like money.”

 

Elon Musk likes money, too, though it is not always entirely clear why he likes money. He does not seem to have a lot of interest in ordinary rich-guy consumption—certainly not the kind of interest that would necessitate a net worth exceeding $1 trillion. (On paper, anyway.) I don’t know what one even does with $1 trillion—keep score, I guess. Trinkets and toys and trophies and such—that’s more Jeff Bezos stuff, I think. Musk is at his best—and also at his most pathetic—when it comes to those things that money cannot buy. The part of his character that is responsible for the rocket company is probably the same part of his character that is responsible for the idiotic, destructive, and at times probably criminal DOGE shenanigans, along with the social media buffoonery (both as a user and as an owner) and the political misadventures and the rest of it. I don’t have any beef with rich people per se—but rich people who want to be loved and need to be talked about and feel important very often end up being kind of gross and sad, or worse than that.

 

(When I think of the dumb things I would buy if I had dumb money ... I have a hard time getting up to more than $1 billion, to be honest: Maybe $100 million for the airplane, a little bit of real estate, possibly a new truck … I’d think of dumb ways to spend money, for sure, but it’d turn into some reasonably sober version of Brewster’s Millions pretty quickly. I would be happy to accept the challenge, should it come to that. But the part of one’s disposition that would make one entirely contented with the first $1 billion instead of $10 billion or $100 billion is the part that also keeps one from making the first $1 billion.)

 

About Musk’s new money (“I am nouveau riche, but then it’s the riche that counts”) a few thoughts:

 

First: Economics writers should stop comparing Musk’s notional wealth to national GDPs. I get it as a handy scale thing, but comparing stocks (a certain amount at a given time) to flows (the passing of a quantity over time) is, strictly speaking, a no-no. If Musk’s annual income exceeded that of his native South Africa, then the GDP comparison would be reasonably apt; but even if we take Musk’s $1 trillion-plus net worth as fixed, the proper comparison would be against South African assets, which of course amount to much more than GDP.

 

Second: People should probably stop writing about Musk’s payday as though it were a moral scandal. It isn’t. This is how things are supposed to work. Mostly.

 

Business management is one of the many places in public life in which we see the “principal-agent problem.” The problem is that when you hire someone to do something for you, or entrust someone with your interests, you almost always create a situation in which the interests of an asset’s owner (the principal) are somewhat at odds with those of the manager he has hired (the agent). The simplest example of this, which also happens to be the one more relevant to this discussion, is the question of executive compensation. The CEO wants to get paid as much as he can, whereas the shareholders want to spend no more than is necessary. Good management costs money, of course, as does good help in general, and intelligent investors know that, but it nonetheless is the case that every $1 that goes home in an employee’s pocket is $1 out of the shareholders’ collective pocket. Spending other people’s money always presents a temptation to corruption, which is why we have bidding and oversight procedures for government contracts and compensation committees and reviews in the corporate world.

 

Paying executives partly, largely, or exclusively in equity (which is to say, in an ownership stake in the company) or through payments tied to specific performance metrics is one way to try to align the interests of the agents with those of the principals. If I have 100,000 shares of stock and you have 1,000 shares, or 10,000 shares, or 1 million shares, our wealth may be different and our exposure to the price of those shares may be different, but our incentives are pretty well aligned, at least as far as that share price is concerned. The real world is complicated, of course, and there are all sorts of ways executives (and others) game different compensation systems.

 

(There is a reason it generally is illegal for a CEO to short his own stock.)

 

And, in the U.S. context, there is the added consideration that we tax income from long-term investments differently from how we tax salary income. If shareholders had just written Musk a check for $1 trillion, he’d have been liable for a 37 percent income tax on practically all of it; if he holds his shares before selling them—and why wouldn’t he?—he’ll pay the lower capital-gains rate. And he’ll pay that tax only on realized income—and he may never feel any particular need to realize most of that income, which ultimately would become an estate tax issue for whatever number of children and other heirs he leaves behind. That bugs the heck out of some people, though it shouldn’t.

 

There are all sorts of different ways we could handle this stuff as regards taxes and other issues. But it is worth keeping in mind that current practices emerged for good reasons, and the incentives that have been created were created for well-meaning and generally intelligent reasons. We could start taxing investment income at the same rate as salary income, and what we would expect to see would be a shift away from equity and performance-based compensation toward cash compensation: If the tax rates are the same, then $1 in the pocket today is more valuable than the uncertain possibility of $1 in the pocket tomorrow.

 

Maybe that gets us to a different number on the Gini coefficient one of these days. Maybe not. But I don’t think that should be our top priority. (In truth, I do not think that should be a priority at all; economic inequality is a non-issue, in my view.) One of the reasons the United States has the kind of innovative, high-tech economy it has is that a guy with a big idea and a guy willing to bet his own money on that big idea can get stupid rich in the United States, thanks in part to the way we do business and thanks in part to the culture that goes along with that. The average European Union country has a GDP per capita about half of that of the United States. Even the relatively rich countries lag behind more than you might expect: The United States is about half again as affluent as Germany, twice as prosperous as Italy, and going on three times as rich as Japan. Those are all nice countries with a lot of good things going for them—but they do not have anything like American economic performance.

 

I do not know whether Musk’s space-and-AI business will thrive. Maybe investors will get hosed—or maybe they will look back in a few years and decide those shares were a bargain. What I do know is that it was Tesla that made Musk a billionaire (he was a mere $200 million guy before that!) and that Tesla has created a lot of nifty and valuable technology that helped drag one segment of the automotive industry into the future, and that shareholders who bought in 10 years ago and held would have made a total return of roughly … 2,700 percent, which is nothing to complain about. And they’re pretty fun cars!

 

Words About Words

 

“Words mean things,” as Rush Limbaugh often said.

 

The Trump administration, here personified by quondam pornographer/retired game show host/serially bankrupt Village People fanboy Donald Trump and Secretary of Thirst Pete Hegseth, argues that the Department of Don’t You Dare Call It a War (But, You Know, It’s a War) excludes applicants on gender-dysphoria grounds because such candidates lack the “honesty, humility, and integrity” necessary to serve in the U.S. military. I have some opinions about the transgender controversy that are very much at odds with the opinions of other people I like and respect and believe to be good-faith disputants. But if there is one thing that all of us should be able to agree on, it is that watching the Trump administration make arguments based on “honesty, humility, and integrity” ought to make a mentally normal person throw up in his mouth.

 

Not since Jared Kushner’s push for a merit-based immigration policy necessitated seeing the words “Jared Kushner” and “merit-based” in the same sentence have I laughed so hard or so bitterly.

 

To quote Henry II (the cinematic one, not the historical one): “I would spit.”

 

Honesty. Humility. Integrity. Words used to mean things.

 

In Closing

 

In anticipation of the sort of response I am used to getting to newsletters such as this one, I will offer this: It isn’t catastrophizing; it is catastrophe. I am not raising the alarm about unlikely events that may come to pass in the future—I am pointing out what is actually happening, today, in this country, under a government of our own choosing. I will stop writing about how our government is murdering people when our government stops murdering people.

San Francisco Puts Another Nail in Its Own Coffin

By David L. Bahnsen

Wednesday, December 09, 2020

 

Media coverage of San Francisco’s recent passage of a citywide “wealth tax” has been hard to come by, to say the least. One can be forgiven for wondering if leftist media outlets even see the writing on the city’s wall. It is not just that this bill will do little to provide additional net revenue to a city facing financial ruin; it is that this bill will surely do the exact opposite. Even critics of modern income inequality see policy prescriptions such as this as counterproductive. Indeed, in the present COVID-19 moment, San Francisco needs all the help it can get to attract businesses and well-paid taxpayers. This couldn’t come at a worse time.

 

So, what is this new tax? Supporters call it the “overpaid executive tax.” (Kudos to them for framing so bluntly.) Technically, the citywide tax will operate as a levy of at least 0.1 percent on companies that pay their CEO more than 100 times the median pay of their workforce. That 0.1 percent tax can reach as high as 0.6 percent depending on how far above the company’s median pay the CEO’s total compensation is. Embedded in the name attached to this new legislation is the belief that disinterested third parties should determine fair and appropriate pay. Whether that be city bureaucrats or voters unconnected to the company in question, the notion that such actors should serve as the arbiters of proper pay levels is nothing more than a form of price-and-wage control. An easy retort to my concern here may be, “Why care about a mere 0.1 percent hit?”

 

Well, if what we are seeking to address is really egregious, unfair, socially contemptible income inequality — robber-baron stuff — why should we stop at 0.1 percent? In other words, if the rationale for this 0.1 percent is what its proponents say it is, why are we only talking about 0.1 percent? If a Silicon Valley tech billionaire makes an amount considered to be unfair relative to the money paid to, in all probability, administrative support staff, shouldn’t voters and bureaucrats up the ante here, seeking far more than a 0.1 percent surtax?

 

The fatal flaw of this bill and others like it lies in the idea that fair compensation should be defined by people other than those who have skin in the game — namely, a company’s principals, board of directors, and ultimately the shareholders to whom it reports. Once one concedes the principle that legislative intervention is required to force those within a company to change the way it pays people, the door is opened to an arbitrary exercise of power. Make no mistake: There is no magic behind the 0.1 percent figure. Setting the tax at that level was arbitrary, and arbitrary judgments are easy to change. Sure, it remains there today, but perhaps 1 percent or 5 percent will be the “right” number next year. And perhaps even higher the year after that. The lack of limiting principle here is frightening, and the slippery slope is easy enough to see.

 

Making it all the more dangerous is that San Francisco is already on the slide. The wealthy are leaving the city in record numbers and at a record pace. And unlike many of the wealthy in New York City still waiting out the pandemic from their beach houses, the San Francisco defectors are not coming back. The very nature of the largest businesses in San Francisco makes them tech-forward, not just able to take advantage of different work environments, but rewarded for doing so. Throw in the recent increase in the transfer tax on expensive real estate in the city, and the slew of recent business tax increases embedded in Proposition F, and there is almost no confusing the message the city is sending to wealthy businesses and their proprietors: Your kind is not wanted here.

 

This brings us back to the key practical problem faced by those who want to soak the rich in a city or a state. In a country that allows mobility, there is no reason for a wealthy employer to stay in inhospitable business environments. San Francisco’s new wealth tax seeks to address that by saying businesses must pay the 0.1 percent tax if they have any office presence in the city, even if they are not headquartered in San Francisco. Why quit while you’re behind? Force company headquarters out, and their satellite offices too.

 

Every day brings a new headline of high-profile companies and executives leaving the Golden State. The 13.3 percent top state tax rate is punitive enough. The regulatory environment is infamous. And while tech company CEOs may not mind the stratospheric price of real estate, their employees certainly do. What a COVID-damaged city such as San Francisco needs is to plead with Sacramento to decrease taxes and regulations, so that its city can retain major revenue contributors. Instead, it has chosen to add insult to injury by adding to incentives to leave the state, and even more inexplicably, by encouraging those who stay in the state to do so just outside the city. That’s right — San Francisco may not just push successful tech companies to Denver and Austin — they may even push them to Palo Alto!

 

And while we’re discussing this sort of approach to taxation, it’s worth adding that a true wealth tax on the balance sheets of ultra-high net-worth people does not work. As I wrote back when Elizabeth Warren raised the issue during her presidential campaign, the rationale is misguided, the legal propriety is dubious, the amount of money it raises is over-stated, and the misallocations of capital that it creates are significant. San Francisco’s modified version of a wealth tax is equally misguided. It will lead to diminished revenue as more businesses leave the city, and even more on top of that as new businesses seek a more friendly neighborhood in which to start. Income inequality is not solved by making poor people poorer, or by making them unemployed.

 

San Francisco would be wiser to pursue what it is chartered to do as a city — addressing high crime and homelessness — rather than what it is inherently incapable of doing — serving as the arbiter of what wages should be. So far, it is not doing either very well.

Populism of the Elites

By Jim Geraghty

Monday, January 27, 2020

Indian Wells, Calif. — The elegant and massive Renaissance resort ballroom is hosting an American populist’s nightmare this Saturday morning: more than 600 wealthy donors and allies of Charles Koch, who collectively lead businesses employing 2 million people, finishing up breakfast and listening to three powerful executives discuss how the business world must further shape society: Daniel Lubetzky, the billionaire founder and executive chairman of Kind Snacks; Jason Ballard, the CEO of construction startup ICON, which envisions using 3-D printing and robots for home construction; and Chase Koch, Charles Koch’s son and the president of Koch Disruptive Technologies, the conglomerate’s venture-capital arm.

And yet the two main messages from the stage are ones that would probably leave quite a few populists nodding in agreement: Cronyism is destroying people’s faith in the systems they live in, and business has a responsibility to take care of people while creating profits — a philosophy that Lubetzky calls “not nonprofit, but ‘not-just-for-profit.’”

Cronyism is “deeply seeded in our culture,” Chase Koch laments.

Businesses are seeking handouts, and then you’ve got politicians that are constantly going out [and providing them], like it’s their business model. If you get one business that gets a goodie or a handout, and then all the competition comes along, saying, ‘If they get it, I want it too,’ it becomes this destructive cycle. There’s a terrible incentive here.

Washington and state capitals have always had difficulty distinguishing pro-free-market policies from pro-business policies, and almost any spending can be justified with a promise that it will create jobs in the future. The policies denounced as corporate welfare usually involve big announcements, high hopes, photo opportunities, holding shovels . . . and a public that rarely pays close attention again; if public attention returns, it’s usually too late.

Tim Phillips, president of Americans for Prosperity (AFP), sees cronyism, in the form of government policies designed to support particular interests and businesses, as something of a Rosetta Stone for the tensions of the current political moment.

“Government spending is the fuel for special-interest politics,” Phillips declared at a subsequent session. “Seventy percent say the economy is rigged to favor special interests, and 80 percent say government has too much influence over the economy.” AFP has launched a new campaign, “Unrig,” aiming to make it politically toxic for politicians to hand out money to particular special interests. With messages like “62 percent of Americans believe the economy is rigged against them — they’re right!” the rhetoric would not feel out of place in an Elizabeth Warren speech.

“Where we differ from an Elizabeth Warren is that she would say that this is proof that businesses are corrupt, that as a matter of their nature they just don’t operate in a way that looks out for the interests of people,” says Russ Latino, an AFP vice president focusing on economic opportunity. “We would look at it and say, ‘There are principled businesses all over this country that create massive opportunities for people and enrich people’s lives, but there is an element of business culture that had started to seek success based upon the relationship with government that they have, and that is harmful in a multitude of ways.’”

Special deals of tax cuts and incentives for corporate relocations are another example of crony capitalism, according to Chase Koch. He contended that the process almost always generated more losers than winners:

The existing businesses that have been there for decades, that didn’t get that deal, they’re not getting a level playing field. The taxpayer, because the money is coming out of their pocket to pay for it, and the business that takes that [deal] on, I think ultimately loses long-term as well. Because they’re moving to a location that may be not suited for their products or their services, or [for] the talent they need for their business.

He didn’t specifically mention Amazon’s HQ2 search, but that was the most high-profile example of localities fiercely trying to outbid one other to “win” a new corporate headquarters within city limits.

Koch also pointed to Enterprise Florida — a longtime foe of AFP’s Florida branch — as an example of a state “slush fund.” Founded in 1996 by Democratic governor Lawton Chiles to diversify the state’s economy, AFP found itself in a contentious fight with former Governor Rick Scott, usually an ally of the organization. Pressure from the group helped end Florida’s Quick Action Closing Fund and last year helped push through the repeal of Florida’s “certificate of need” approval process to build new hospitals.

“The strongest leaders against business handouts are business leaders who don’t want handouts,” Phillips said.

The other recurring focus of the Koch meeting attendees is to emphasize how businesses can help solve societal problems, and there are probably no missionaries for this faith in business who are more passionate than Ballard, whose company has created large-scale 3-D printers that can basically use quick-poured concrete to build whole houses and has unveiled its first 500-square-foot homes, in Tabasco, Mexico, created for impoverished families living on less than $3 per day.

Ballard’s mouth rapidly fires funny homespun aphorisms. After his company’s first model home was completed, the orders came in, and he was “busier than a one-legged man in a butt-kicking contest.” Confused housing regulators responded to him like “a cow staring at a shut gate.” Lamenting the slow pace of innovation in housing, he cries, “It’s 2020! Where’s Wakanda? Where’s Rivendell?”

But amid the one-liners, Ballard makes some key points about the accountability of the business world. “If you really care about outcomes and you want to get it done, business is held accountable by the market! Not to say anything bad about nonprofits, but if a nonprofit’s products and process aren’t working, you just go have another golf tournament and get more money!” (The audience really laughed at this one; some attendees probably attended plenty of charity golf tournaments and wondered how effectively their donations were being used.)

In business, Ballard continued, “you get up every day and make sure what you’re doing is delivering the outcomes you want, or you’re toast, you’re done! . . . If you succeed in business, you want to keep going — and profits put the gas back in the tank, you get to keep going.”

Ballard wore a distinctive white Stetson during his panel discussion and used it to make a point about how the private sector has an irreplaceable role in tackling big problems at the national and even the global level:

When you look at humanity’s most vexing challenges — curing cancer, curing neurodegenerative diseases like Alzheimer’s, finding ways to sustainably feed 7 billion and growing people, desalinating salt water so we have freshwater to drink — I’ll eat my hat if those problems aren’t solved by for-profit companies.

Despite a lot of ideas and discussion that would probably reassure populists that the top 1 percent — or, like some in the audience, the top 1 percent of the top 1 percent — is thinking about the same problems, that doesn’t mean that the Koch-meeting attendees are at peace with the populist currents running through American politics. When people feel despair, “the extremes swoop in, and that’s what’s happening today,” warned Brian Hooks, president of the Charles Koch Foundation. “Born of socialism, nationalism, and other failures of the past, they reject the very principle that everyone has something to contribute.”

Lubetzky was the most outspoken about the current wave of populism in American politics. “Both political parties have moved toward populism, and I think it has to do with how a lot of people feel left behind. . . . I think both [President] Trump and [Senator Bernie] Sanders are a response to this movement.”

Moments earlier, he had laid out how his family history fuels his wariness: “I was born in Mexico City, where the rule of law is not what it is in the United States, so I don’t take it for granted. I’m the son of a Holocaust survivor who was in the Dachau concentration camp and was liberated by American soldiers. I’ve seen through my father’s eyes what can befall people who lose democracy, and a sense of respect toward one another, and a sense of dignity to one another. I think the stakes are very, very high.”

California’s Crusade against CEOs

By Kevin D. Williamson

Thursday, January 23, 2020

As the Second Amendment protests loomed in Virginia, one Democrat in the state senate scoffed that right-wing groups were getting their members — and their donors — riled up over silly legislative proposals that were unlikely ever to become law. There is some question-begging in that: What happens at the margins of the political debate matters, and sometimes matters a great deal, because it helps to define the universe of policy possibilities.

An additional consideration is that there exists a place called “California,” which under single-party Democratic rule today functions as the nation’s great loopy clearinghouse for dotty left-wing ideas — and, in today’s California, these stand a reasonably good chance of eventually becoming law. That fact should be of some concern to gentlemen such as Tim Cook and Mark Zuckerberg and other executives of California-based companies that are being targeted for a new regime of punitive taxation as part of the progressive crusade against “income inequality,” the pejorative term for the reality, uncontroversial outside doctrinaire Marxist circles, that some jobs pay more than others.

Under legislation put forward by a state senator and Democratic whip with the wondrously Dickensian name “Nancy Skinner” and relentlessly hawked by Abigail Disney, a trust-fund doofus who has grown bored of flying around in her father’s 737, the largest California-based companies would face a heavy corporate-tax surcharge if they did not keep to Sacramento’s preferred ratio of CEO pay to median worker pay. Nonconforming companies would pay a tax rate of 14.84 percent rather than the 10.84 percent levied on those that knuckled under to the state’s political mandate. At the higher rate, California would have the nation’s highest corporate tax, along with the nation’s highest state income tax and highest state sales tax.

The measure, Senate Bill 37, is unlikely to raise a great deal of revenue, but this tax bill is not about taxes per se — it is about weaponizing the tax code for moralistic political purposes. It is, in effect, a sin tax on CEO pay — a sin tax on “obscenity,” according to Skinner. “We must shrink the obscene gap between what wealthy CEOs make these days and what the average worker takes home,” she says.

There are three problems with Skinner’s analysis, to the extent that this half-digested bolus of self-righteous preening can be described as an analysis. The first problem is that the more important variable in the ratio of CEO pay to median worker pay is worker pay, which varies much more greatly than does CEO pay among firms according to their lines of business: A company with 10,000 cannery workers typically will have a lower median wage than one with 800 software developers. The second problem, related to the first, is that it is not the case that the median worker in any given firm earns less because the chief executive earns more; labor markets are complex, and firms do not enjoy the plenipotentiary power to set wages at will. The third problem is that Skinner ignores the genuinely meaningful correlation: Workers in the subset of companies under consideration in this debate tend to earn much more at firms that are smaller, whether measured by revenue or by number of employees, while executive compensation moves in the opposite direction, with the bosses at the biggest firms earning much more than their smaller-firm counterparts.

The reasons for that are easy enough to understand and do not fit into Skinner’s adolescent moralistic narrative. This is attested to by the data gathered by scholars at the Harvard Law School Forum on Corporate Governance for a study of the compensation data from 2018, the first year for which the relevant disclosures are available under the Dodd-Frank Act.

Globalization has, simply by increasing the size of markets, greatly increased returns for successful investors and managers — and, giving the cynics their due, for those who are able to convince corporate compensation committees that they are likely to be successful managers. Small gains in efficiency or growth in a $1 trillion market typically will bring bigger rewards than similar gains in a $1 billion market. But very large, complex, global firms typically have workforces that are paid less relative to other publicly traded companies, often because their workforces are disproportionately seasonal and located abroad.

So it is no surprise to learn from the Harvard study that the CEOs whose compensation was highest relative to the median worker were also those with the largest share of overseas workers on their payrolls and the largest firms overall by revenue. The chief executives who earned the most relative to the median worker were not Wall Street bankers or Silicon Valley nerds but the CEOs of big consumer-goods companies: CEOs in the consumer-discretionary sector earned on average 384 times what the median firm worker did, and those in the consumer-staples sector earned 295 times what the median worker did. The ratio for CEOs in information technology was less than half that (140 times the median), and it was even lower for energy (80 times the median) and financials (67 times the median).

Firms with revenue of less than $300 million had CEOs who were paid on average about 32 times what the median worker earned, but firms at the $10 billion mark had CEOs earning nearly 300 times what the median worker took home.

There is not very much reason to believe that a California tax provision is going to have the effect of raising wages at a paper-goods factory in China enough to change the compensation ratio that interests Skinner, though it could conceivably have some effect on corporate-domiciling decisions.

The CEO–median ratio is pronounced among consumer-goods companies, but similar trends hold true across large firms in general: Companies with fewer than 500 employees had a median wage of $127,000, but those with more than 10,000 paid a median wage of only $56,000. “The difference is likely the result of large overseas and part-time workforces inherent in larger companies,” the authors of the Harvard study conclude.

Interestingly, the consumer-discretionary and consumer-staples sectors were the only two corporate groupings with CEO–median ratios above the average of 144. Every other sector came in below that average, meaning that a disproportionate chunk of the difference between CEO pay and median worker pay is being driven by a relatively small number of firms in a narrow slice of the economy — the one that simultaneously has the most to gain and the most to lose from globalization, and the one that has the sort of “good, middle-class” factory jobs that politicians are always talking about.

The trend in household income does not seem to be very much correlated with developments in executive compensation. The turn of the century was marked by two recessions, one of them relatively mild and one of them very deep. The median real household income began a steep decline in 2000 and went into formal recession in 2001. In real (which is to say, inflation-adjusted) terms, household incomes did not exceed their 2000 levels until 2016, having plunged by a tenth from 2007 to 2012 before rising sharply from 2014 until now. (I forgo the convention of tracking household income by presidencies, because I am not a superstitious boob who believes that the magical priest-king makes the crops grow by propitiating the gods.)

There are many factors at work there, from globalization to changing social norms (the workforce-participation rate of men 25 to 54 has declined just a smidgen since 1998, but the workforce-participation rate of men 20 to 24 has declined by a tenth) to catastrophically stupid experiments with subsidizing subprime mortgages and then basing a whole bunch of economic assumptions on the resulting asset bubble. During that time, CEO compensation at the big firms went up and down, too — it fell by half from 2000 to 2002, to a measly $10.3 million! — but what executive pay at publicly traded companies tends to track most closely is, no great surprise, the performance of the S&P 500, as data from the Economic Policy Institute and others confirm.

The California proposal is nonsensical from an economic point of view, and it is unlikely to do the thing that its sponsors say they want it to do, which is to raise wages for workers with modest earnings. But the data brought to bear in this discussion do suggest a desirable course of action for American workers: Get a job at a company that is required to file Dodd-Frank disclosures. The average annual wage for a worker in the United States was just under $50,000 in 2018, but the average pay of workers at the companies required to make disclosures under Dodd-Frank was nearly $81,000.

It is not obvious from that figure that their CEOs are victimizing their employees.

A Distorted View of CEO Pay

By Kevin D. Williamson

Friday, May 24, 2019

Peter Eavis has written a very odd column for the New York Times.

It begins: “This is not a difficult time to be a chief executive,” and it takes as its centerpiece Tesla CEO Elon Musk and his compensation package, which is worth — notionally — about $2.3 billion.

I am not sure that this is an easy time to be the CEO of Tesla. I doubt that there’s ever a particularly easy time to start an automobile company from scratch. Musk seems to be having a hard time of it just now.

Eavis himself notes that it is highly unlikely that Musk will meet the business goals that trigger that $2.3 billion payday. To do so, Musk would have to make the shareholders of Tesla about $615 billion, raising the market value of the company from $35 billion to $650 billion. Here is a question that I am sure is not on any final exam at the Harvard Business School: How many times would you trade $2.3 billion for $615 billion? I’d take that trade eight days a week.

Musk’s theoretical bonus for hitting that goal would be less than 1 percent of the increase in shareholder value that had been realized under his leadership. That does not seem to me excessive. Commissioned salesmen routinely make substantially bigger commissions than that as a percentage.

If Eavis really thinks that it is easy to add to the profitability of a large and complex enterprise, he might consider visiting a few of the executives of the New York Times Company and see what they think. I will bet they tell a different story. The Times is doing pretty well of late, but getting there surely has not been easy.

The study he cites calculating the median pay increase for the 200 highest-paid CEOs is defective as well. It lists Musk’s change in pay at 4,575,310 percent and his total compensation at $2,284,044,884 — the figure that Eavis himself acknowledges that Musk is unlikely to actually realize. By far the most common entry on the study’s change-in-compensation metric is . . . “N/A.” That is because the compensation of lists such as this change from year to year, because this year’s highest-paid executives will not be the same as next year’s; in fact, more than a quarter (51 out of 200) of the CEOs listed in the study had “N/A” for their change-in-compensation figure.

This reminds me a little bit of the headlines you see every few months claiming that the income of the households in the top 1 percent has grown by x percent — without accounting for the fact that the compensation of the top 1 percent changes from year to year. The top 1 percent households in 2018 were not the same as they were in 2017 or 2008. If you track the actual incomes of households that are in the top 1 percent in any given year, you get a different story — over time, a considerable share of them fall out of the top 1 percent. (Many households end up in the top 1 percent because of a one-time payday, as when an entrepreneur sells a business or an executive cashes out options before retirement.) What the data those headlines are misrepresenting actually tell us about his how much income it takes to be in the top 1 percent, not the change in income of the households that were in the top 1 percent in in any given year and those households’ incomes in later years.

Musk is an interesting character with some obvious shortcomings. But he didn’t take Tesla from being a $200 billion company to being a $235 billion company — he took it from zero to $35 billion, going from whimsical notion to putting hundreds of thousands of cars on the road and capturing a big piece of the electric-car market in a remarkably short period of time. And even that may prove to be insufficient to ensure the firm’s success.

Not difficult? Try it.

Big Business: Tyler Cowen’s Compelling Case for Large Corporations

By Kevin D. Williamson

Thursday, April 18, 2019

Professor Tyler Cowen of George Mason University and the Mercatus Center — and Marginal Revolution, and the New York Times, and much else — is consistently one of the most interesting and original thinkers on human affairs that our public discourse has to offer. He is an economist, but an economist who understands economics in the very broad sense of praxeology — “human action,” as Ludwig von Mises put it. And so you can read Cowen on street food in Singapore; the “market underpricing of autistic labor”; art collecting (his review of Doug Woodham’s Art Collecting Today contains this quibble: the author “should have done much more to explain how art is used for money laundering, and also tax arbitrage through donations at inflated prices, based on corrupt appraisals”); and, from time to time, on more straightforwardly economic questions as such.

Professor Cowen has a reputation as a contrarian, but that is not exactly right. He has a great talent for revealing truths that are right under our noses but oddly overlooked — or willfully obscured. His latest book, Big Business: A Love Letter to an American Anti-Hero, is an excellent, easily digestible exercise in exactly that. Why is it, he asks, that Big Business is not more widely admired and appreciated? Large-scale corporate enterprises provide a great many jobs; relative to smaller firms, they typically pay their workers more and treat them better, invest more in research and development, are more productive and more innovative, and conduct their business at least as ethically. He knocks down a series of myths about excessive executive compensation, “quarterly capitalism” obsessed with short-term profits, monopolistic temptations, and the purportedly outsize role of finance in our economy.

On the last of those, Professor Cowen offers one of his extraordinarily useful, obvious-if-you-think-about-it insights: The argument that finance has grown too large as a share of U.S. economic activity is based in part on the fact that in the 1960s finance accounted for about 4 percent of GDP whereas it recently has been above 8 percent. That’s the wrong comparison, he argues: Finance is engaged in the business of managing wealth, not in the business of managing current income flows exclusively; it makes more sense, then, to examine the share of assets that the financial sector controls, which, as is turns out, has not changed very much over the years, floating around 2 percent. While other social critics have written great volumes about “financialization” — where it comes from, what it means, whether it is desirable — Professor Cowen first stops to ask whether the thing that everybody knows is happening is in fact happening.

Big Business is particularly useful at the intersections of these questions. For example, the belief that CEOs are paid too much is closely linked with the belief that corporations are excessively and unproductively oriented toward the short-term concern of quarterly reports and share prices. But the evidence does not support that conclusion. The reality is that firms undertaking aggressive and in the end unprofitable expansions into China were, like many investors in technology start-ups, suffering from excessively long-term thinking and

failed to be hardheaded enough about short-term limitations. Tesla in 2017 achieved a higher market value than either Ford or General Motors, even though there are no visible signs that the company is capable of selling electric cars at an affordable price for a profit. . . . You can see the same kind of price spikes with a lot of biotech stocks, often before they have brought their products to market.

From where I sit right now in 2018, I don’t know which of these high valuations are the mistakes, and that is part of the point — most critics don’t either. But for sure, in many of these cases the market is thinking too long-term and should be worried about the lack of revenue today. More generally, price-to-earnings ratios are historically high. . . . My point is that these currently high P/E ratios are directly inconsistent with the charge of excess short-termism. In essence the price has been high because the market is expecting high forthcoming earnings, not because earnings are high enough today to justify those valuations.

He goes on to consider the case of Amazon and Jeff Bezos, who has become the wealthiest man in the world while famously forgoing short-term profitability goals in favor of reinvesting revenue in the company and its remarkably ambitious long-term strategy. He notes that in 2015, the average Fortune 500 CEO had been in his job for eleven years, the longest average tenure in more than a decade. And CEO compensation increasingly is performance-based, with pay structures that reward the achievement of long-term goals: Very few billion-dollar fortunes are built on salaries and quarterly bonuses

Professor Cowen has a great gift for simplification. His subject here includes complex and nuanced questions of economics and business organization, but his presentation of them is perfectly lucid. In an introductory note to his famous Brief History of Time, Stephen Hawking relayed his publisher’s observation that every equation in the book would cost him half his readers. Professor Cowen here spares the reader equations and most economic and financial jargon: If you can read the Wall Street Journal, nothing in this book will prove esoteric.

The book does have a slightly catalogue-ish feel to it, as though Professor Cowen has been (as I suspect) keeping a list of college students’ most common complaints about Big Business (and about capitalism generally) and addressing them in series: “Are the Big Tech Companies Evil?” “What Is Wall Street Good for, Anyway?” “How Monopolistic Is American Big Business?” Etc. It goes: Here you go. Next? Here you go. Next? Not boom. There is nothing of the cable-news/social-media mode of discourse here, and there is no temptation to write “Tyler Cowen DESTROYS!” . . . this or that argument. If it seems like the book does not build to a dramatic conclusion, that is because the case is pretty clear from the beginning.

In fact, Professor Cowen’s approach to these questions as a matter of argumentation is, while neither fussy nor even formal, pleasantly anachronistic. Another way of putting that is to say that he is unusually evenhanded and intellectually honest. Of course, there is plenty of evidence that runs contrary to his theme: Big businesses and their executives sometimes do awful things. (But are they more unethical than the rest of us? Cowen asks.) He is forthright on the issue of crony capitalism, noting, for instance, oil companies’ tolerance (or encouragement) of corruption in badly governed African countries. He does not attempt to explain away real abuses but puts them in context: “On the whole, American corporations would rather invest in Canada than in Bhutan or Cameroon, and that is a more important reality than any stack of anecdotes.”

The book offers a good return on investment, even when its conclusions and sense of proportion seem not quite right. There are certain homogenizing effects of Big Business that are of immediate present concern, and Professor Cowen is a good deal more comfortable than I am with Silicon Valley’s emerging role as global arbiter of political speech (and other kinds of speech). He asks important questions about our relationship with our employers (“is work fun?”) but is more blasé than he might be about the cultural consequences of employment’s growing role as a locus of meaning, especially when the corporation is being programmatically transformed into an explicit instrument of political and social discipline. Perhaps these issues are not as easily treated with economic argument. Or perhaps Professor Cowen thinks better of general corporate culture than some less generous observers do. Consider his observations on monopoly power:

The American economy today does have some pretty notable superfirms. At the time of writing the list would include Google, Facebook, Amazon, Walmart, Apple, Exxon, the major auto companies, United Health, CVS, and AT&T, to name just a few.

But most of those companies are not best understood by invoking the traditional theory of monopoly. Rather, they are dynamic organizations that track markets and innovate repeatedly. . . . You could say these organizations are receiving a lot of intangible capital at very low expense, often in the form of expertise about information technology, but also in the form of pretty healthy corporate cultures. For that reason, these businesses often make high profits without charging high prices; furthermore, it will be hard for competitors to copy them. Individual products perhaps can be copied, but the idea of superstar firms as potent learning organizations indicates that the underlying formula is quite complex and involves a lot of expertise in finding, hiring, cultivating, and then retaining talent.

It is difficult to disagree with that in any particular, but it is not necessarily the excessively cynical alone who are not much looking forward to the Kafkaesque culture of the corporate HR department — its aggressive conformism, its petty obsessions — taking on even more weight as an enforcer of social norms and general gatekeeper. F. A. Hayek and Erich Fromm were as politically different as two men could be, but both worried about the dominance of salaried work in large organizations as a mode of public life and the subsequent elevation of corporate habits of mind and manners. Professor Cowen writes with admiration about the ways in which purportedly cold-hearted and greed-bound corporate executives actually pursue missions with a social or even religious character, and that is admirable — up to a point. Starbucks does coffee better than it does social justice.

Professor Cowen’s book may not be quite the “love letter” of its title, but he makes his case with style, care, and earnestness, and his prose is a pleasure to read. Big Business is an issue that tends to produce big polemics — big rhetoric and big claims that are in many cases bigger than reason or experience will justify. This book is a smart contribution to a subject all too rarely treated with the depth or intelligence here brought to bear.

The Happiest Census

By Kevin D. Williamson

Thursday, March 15, 2018

Our friends at Forbes have made a fortune out of ranking the nation’s and the world’s wealthiest people, and their annual billionaires list, published in March, is a fascinating look at how to get filthy, stinking, ugly rich in America — as remarkable for who is not on the list as for who is.

Ironically, the Forbes billionaires list contains some of the best evidence there is against the argument one hears from Senator Sanders et al. that the United States is an oligarchy characterized by hereditary privilege and corporate hoarding.

Two of the remarkable absences from the list: heirs and CEOs.

There are a few familiar surnames that crop up repeatedly on the list — Walton, Pritzker, Mars — but not very many. There are children of wealth at the top of the list, including Bill Gates, whose father was a successful attorney, and Charles and David Koch, whose father established a successful engineering business with an interest in a refinery and a cattle operation, which the brothers built into the modern business giant that is Koch Industries. (Disclosure: David Koch was on the board of a nonprofit where I once worked.) But there’s nobody in the top ten who simply inherited and husbanded a fortune, and very few elsewhere. (Three Waltons are Nos. 14, 15, and 16 on the list.) The wealthiest American on the list, Jeff Bezos, is the son of a teenaged mother who, after a short-lived marriage to Bezos’s father, married a Cuban immigrant and moved to Houston, one of the great cities for young people who aren’t rich but want to be. Bezos’s stepfather went to work for Exxon, and Bezos attended excellent public schools before enrolling at Princeton. He thought it might be a good idea to try to sell books online. It was.

According to the Bureau of Labor Statistics, inherited wealth accounts for about 15 percent of the assets of the wealthiest Americans. And wealth that was inherited came from somewhere. The Waltons probably will be very rich for several generations, but you do not see a lot of old names on the Forbes list. One exception: the Dorrances, heirs to the Campbell’s Soup fortune. Theirs is a familiar American story: John Dorrance, an MIT graduate, went to work for the Joseph Campbell Preserve Company, where he invented a method for condensing soup. He became president of the company, bought out the Campbells, and built the firm into a soupy empire. (The Dorrances’ enthusiasm for soup is boundless, as evidenced by the Dorrance wing at Winterthur, home of what is surely the world’s finest collection of soup tureens.) But that, too, is one of the great themes in American wealth: the inventor who makes a marked improvement to a humble consumer good, the “better mousetrap” model of striking it rich.

Few heirs, and few billionaires who made their fortunes as business executives. Which isn’t to say there aren’t a lot of CEOs on the list: The Forbes list is neck-deep in CEOs, but they are not, for the most part, men and women who got MBAs and made their money in business management. They are, overwhelmingly, business founders. The founding generation of Microsoft is all there, not just Bill Gates but also Steve Ballmer and Paul Allen. Current Microsoft CEO Satya Nadella? With an estimated net worth of $1.34 billion, he’s somewhere on the billionaires list, but not in the top 1,000, and his fortune is about half that of the aptronym-sporting vodka entrepreneur Bert Beveridge, nicknamed “Tito.” There’s a lesson in that: If you want to fly around on someone else’s jet, be a CEO. If you want to fly around on your own jet, start the company.

And what kind of companies did the wealthiest Americans start? Overwhelmingly, America’s billionaire entrepreneurs grew wealthy by providing goods and services to middle-class families and people of modest means. The wealthiest European on the list is Bernard Arnault, the guy behind Louis Vuitton, while the wealthiest Americans on the list brought you Amazon, Microsoft, Dairy Queen (one of Berkshire Hathaway’s many holdings), Facebook, Dixie Cups (a product of Koch Industries), Google, and everyday low prices at Walmart.

And consider those Walmart heirs. Yes, the subsequent generations of Waltons have undertaken a great deal of philanthropy with their fortunes, much of it admirable, but none of that philanthropy has done as much good for ordinary people — and for poor people — as Walmart itself. Progressives hate Walmart for its Arkansas roots and déclassé clientele, but in its 50-odd years of leaning on consumer-product giants such as Procter & Gamble and Coca-Cola to accept lower margins in exchange for access to its vast customer base, Walmart has done more to transfer wealth from the shareholder class to the poor than every tweedy Piketty-quoting intellectual in the Western world combined. By one estimate, Walmart alone knocked a full percentage point off the U.S. inflation rate, and its data-driven approach to business, combined with its 800-pound-gorilla position in the retail marketplace, has empowered it to force less forward-looking companies into adopting state-of-the-art inventory-management practices and logistics systems. In doing so, it has, penny by penny, shaved billions and billions of dollars off the grocery bills and other household expenditures of the people it serves — most of whom are not in M. Arnault’s demographic.

Another large contingent of billionaires comes from the world of finance, the people who manage the capital that helps to make the Googles and Apples of the world possible.

Give or take a Dorrance or two, both individually and corporately, the billionaires list is nouveau riche. (But then, it’s the riche that counts, as Jim Williams said.) And that’s the really interesting part: Very few of the wealthiest Americans are associated with businesses that are more than a few decades old. The firms with which the top ten Americans on the list are associated are on average less than 40 years old. (Berkshire Hathaway and Koch Industries are the outliers.) If Facebook were a child instead of a corporation, it would be in middle school. Google was founded in 1998, Amazon in 1994. The science-fiction fantasy of the eternal corporation, globe-bestriding and monolithic — which was also the anti-capitalists’ nightmare — has not come to pass. Instead, the opposite has happened. Upstart Google didn’t get swallowed up by some ancient corporate giant: It bought and sold them, most notably Motorola. Amazon has beaten the hell out of retail giants such as Barnes & Noble and now is whacking the stuffing out of long-established media companies. Old corporate bulls such as AT&T and IBM are obliged to watch their backs thanks to competition from companies that didn’t exist a few years ago. Companies that began in dorm rooms (Dell Computer) and California garages (take your pick) have transformed big chunks of the American economy — for the better — as much as Walmart, Amazon, and Dell have brought ordinary people lower prices and more choices.

There is a great deal that is wrong with the American economy. There is crony capitalism, subsidies, and favoritism, and advocates of free-market policies should be open about those abuses and rigorous in opposing them. But where our progressive friends are most mistaken is in this: If you want to see what’s wrong with American society, you won’t find the answers on the list of who is rich — you’ll find it in the account of who is poor, how they got that way, and why they stay that way. It isn’t Amazon keeping them down.