After a disastrous day of congressional testimony, Penn’s president and board chair resigned, and the presidents of Harvard and M.I.T. are under intense pressure. The cause is easier to diagnose than the mechanics of the firing. Over the past several decades, universities have morphed from centers of excellence into self-appointed arbiters of political and social engineering. I’ve experienced this firsthand, watching as faculty who can’t teach or pen relevant research create a weapon of mass distraction from their mediocrity: DEI. [Diversity, Equity, and Inclusion.] But that’s not what this post is about.
The more surprising, and illuminating, feature of this chapter in history is who actually fired President Magill. Sidenote: Before clutching your pearls too tightly, remember she wasn’t actually fired; she will just return to the law school as a tenured faculty member … who can’t be fired. Anyway, Congress didn’t ax Magill, nor did the governing board of trustees: She was fired by the billionaire alum and donor Marc Rowan. His official role at Penn is chair of the business school advisory board. Rowan’s unofficial role is that he gives tens of millions, and that, as CEO of Apollo Global Management, he has “half of Wall Street” on speed dial. He and other billionaire donors have been challenging Magill over speech and culture issues for months.
In order to fund unproductive departments, administrators and faculty at universities have created a new class of shareholder: donors. It may be a good thing, bringing some private sector accountability and common sense to an insular culture. When donors speak, the university may choose to listen, but when they “close their checkbooks,” as Rowan urged them to do, they have to. As Bob Dylan sang, “Money doesn’t talk, it swears.”
Person of the Year
Time’s 2023 Person of the Year is Taylor Swift. Time has never selected an artist for their work before, and I’m not sure it did this year either. The article opens with a story from early in Swift’s career, when she received a check for “more money than I’d ever seen in my life.” That sets the stage for a description of her $1 billion “empire,” and the “mini economic boom” generated by her current tour (projected to gross over $1 billion). Before we read anything about Swift’s music, we learn that tickets in the secondary market reached “more than $22,000,” and that in Glendale, Arizona, the tour “generated more revenue for its businesses than the 2023 Super Bowl.” The impact of her artistry is measured in craft store sales, not cultural resonance. The reporter saw fit to interview a Duke finance professor. Were Joni Mitchell, John Lennon, Billie Holiday, Bob Dylan, or Maya Angelou less relevant, or less wealthy?
Time’s “Athlete of the Year” is Lionel Messi. Not for winning his first World Cup — that was last year. Time gave him the nod for his megacontract. The year Messi did win the Cup, the Athlete of the Year was Aaron Judge, who did not break baseball’s home run record that year (he was 11 short) but did “sign the richest free-agent contract in the game’s history.”
The real Person of the Year in 2023? A: Money.
War and Peace
Last year’s Person of the Year was Volodymyr Zelensky (along with “the Spirit of Ukraine”), which was a) an obvious choice and b) not about money. In 2022, that is. In 2023, however, it’s becoming clear that Zelensky’s heroic stand against Russia is, like it or not, going to be decided by money. In that Ukraine’s ultimate victory/defeat hinges on money from the U.S. and Western Europe. Zelensky was in D.C. this week — his third trip since Time put him on the cover a year ago — trying to save his country’s economic lifeline. If his fundraising efforts fail … Russia is going to be a bigger country.
Economic power has always been central to war: America’s rise to global dominance in the first half of the 20th century was a function of assembly lines and shipyards. Great powers have long manipulated events at a distance by funding client states and rebellions. Persia funded the building of the Spartan fleet that won the Peloponnesian War. But money — pure capital, distinct from infrastructure and economic output — is the fuel of modern warfare. Putin’s most effective fighters aren’t in the Russian Army; they are a mercenary force who prop up African autocrats. He’s only been able to prosecute his criminal misadventure in Ukraine thanks to the hard cash Russian oil commands on the international market. His victory does not hang on valor or strategy, but cauterizing Ukraine’s flow of American money.
Vacuum
Congressional inaction isn’t limited to Ukraine. This session will go down as one of the least productive in history. Americans may not like one another, but our elected representatives flat out refuse to work together. Into the void has rushed money. Lobbying spending is increasing; at midyear 2023, it was well ahead of 2022. And lobbying money is mainly spent lobbying about money. More lobbying money is spent on appropriations than any other subject, and taxes are in third place. Why don’t we we have a stronger social safety net, universal health care, tuition-free college, a $15 federal minimum wage, more government action on climate change, and higher taxes on corporations and the wealthy to fund all of it? It’s not because those proposals aren’t popular — all enjoy large majority support. But corporations and wealthy people invest in the instrument whose returns outpace those of Nvidia or beachfront real estate: giving money to our elected representatives. I began giving money to campaigns about a decade ago. I’m not surprised at the access it affords me, but how cheap it is.
Maybe it’s good that campaign spending sets new records every cycle, so buying Washington gets more expensive. Spending for 2022 was up 33% from 2018, the last non-presidential-year cycle. Candidates spent almost $6.5 billion on the 2020 presidential race (aka 6.5 Taylor Swift Eras Tours), and that’s projected to grow by a third in 2024. The candidate who spends the most money wins their House or Senate race around 90% of the time, and in this year’s presidential cycle the three leading candidates are the three leading spenders: Trump, Biden, and DeSantis have together spent $130 million on ads thus far — more than the rest of the candidates combined. Meanwhile, in the U.K., Boris Johnson cut out the middleman, selling peerages for £3 million. The steam engine, radar, Premier League relegation/promotion, and direct-to-donor prestige. Who says the English can’t innovate?
$peech
Last year, perhaps the most influential global communications platform was purchased by one man who didn’t even need to appoint fiduciaries (i.e., a board) to represent stakeholders or check his power. By virtue of unprecedented concentration of wealth, one person influences the global flow of information without guardrails. Nothing better highlights our idolatry of innovators and money than people deciding Musk is a victim, being “blackmailed” by advertisers who don’t want their logo next to a swastika. Every person reading this newsletter has had clients or customers decide to take their business elsewhere. Maybe we’re being blackmailed, too, and my employees who demand raises are terrorists.
Across the pond, a UAE billionaire is attempting to take over the Telegraph, the U.K.’s paper of record, over the protests of establishment Britons. The English are sensitive about the creeping influence of foreign wealth after discovering they let Russian oligarchs burrow into London’s wealthiest and most powerful enclaves. Sensitive, in this case, means there will be a lot of hand waving and faux concern before the deal goes through.
$port
In June, Saudi Arabia bought an entire sport, “merging” LIV golf with the PGA Tour. The terms of that deal are to be finalized by the end of the year; in a flex, LIV signed the reigning Masters champ, Jon Rahm, to dispel the PGA of any notion it’s not on bottom.
$chool
Sixty years ago the academic gap between Black and White students was double the gap between rich and poor. Fast-forward to today, and the ratios have reversed, signaling a type of progress, and decline. America is becoming more like itself every day: Money is the arbiter of … everything.
The premier indicator of a child’s success is how much money their parents have. A 2023 study provided the most detailed look yet at how parental income drives student success. It concludes: “In the last five decades, as the country has become more unequal by income, the gap in children’s academic achievement, as measured by test scores throughout schooling, has widened.” What the latest data show is that this isn’t just a rich vs. poor distinction, but an advantage that accrues as one climbs the income ladder. Children of parents in the 0.1% (average income: $11.3 million) get “far better scores than even the children of families just below them.” It’s not the schools (or inherited smarts), but the prep programs, tutors, contacts, and extracurriculars that make the difference.
Old $chool
If 2023 showed us all the new stuff money can buy, it also reminded us of all the old stuff money can buy. Turns out rich people still like cars, yachts, mansions — only we’re now reaching a cosmic scale. Last month the most expensive car in U.S. auction history was sold for $51 million. A week later, Jeff Bezos’ 610-foot megayacht docked at Port Everglades in a special section reserved for industrial oil tankers. (The same yacht for which the authorities in Rotterdam agreed to dismantle a historic bridge to let it pass through.) Ken Griffin set the record for world’s most expensive house this year: $1 billion. It’s often said that Mansa Musa, the 14th century king of Timbuktu, was the richest man of all time. Historians say he was “richer than anyone could describe,” citing ancient depictions of golden scepters, golden thrones, golden crowns, and a 200,000-person army. Maybe it’s just me, but I’ve seen how the Kings of Silicon Valley live. Mr. Musa sounds poor.
$o What?
There’s a view that the rise of money is a good thing. Or at least not all bad. Human society has never been fair, and as long as people are status-seeking, competitive animals in a world of scarce resources, it won’t ever be. Historically, many of the lines that divided society traced innate characteristics like race or sex, were based on inheritance, or were determined by the exertion of physical strength. Money doesn’t care about any of these things, and it has washed away barriers in ways that potentially make institutions more accessible. There are now nine Black American billionaires. Good news — and their rise is correlated to an increase in civil rights.
Taylor Swift, in the Person of the Year article, made this very point about the commodification of her art, and the way the music industry treats female artists: “What has existed since the dawn of time? A patriarchal society. What fuels a patriarchal society? Money, flow of revenue, the economy. So actually, if we’re going to look at this in the most cynical way possible, feminine ideas becoming lucrative means that more female art will get made. It’s extremely heartening.” Women control most consumer spending, and as we are seeing with university politics right now, the hand that holds the checkbook is the Iron Bank — it rules the world.
What stops this from being a Hallmark channel version of capitalism is that money, when not reinvested/redistributed (pick your word) quickly pools and concentrates, and innovation and competition decline. “Competition is for losers,” is how Peter Thiel puts it. And he’s following through, buying Senate seats (his protégé, J.D. Vance, is leading the charge to defund Ukraine) to secure the influence of his money. We aren’t going to end the power of money any time soon. In an economy increasingly run on financialization, with so much wealth in circulation, our objective should be to ensure that it keeps circulating. Money = power, and power should be distributed as widely as possible.
The Sexiest Man Alive: Benjamin
I read that, on dating apps, a 5-foot-7 man needs to make $60,000 per annum more than a man who is 6-foot-2 to achieve parity in attractiveness to potential romantic partners. The data was meant to highlight how looksist our society is. What struck me was that money can replace physical stature. Two in three women under the age of 30 have a romantic partner, vs. 1 in 3 men. In sum, women are dating older. TikTok will tell you that’s a function of emotional viability, which makes sense, as our nation is producing too many men who, for a variety of economic, biological, and societal factors, are still boys. However, there’s no denying that women can do math. And the math says the quickest way to get a house five years before your peers is to date someone 10 years older.
Love Me
In America, to have money is to be more interesting. People are drawn to you, give you the benefit of doubt, laugh at your jokes, and are apt to want to help you and your family. In sum, to be rich in America is to be loved. If America is a family, the household has never been more prosperous and full of love. However, like the future, it’s not distributed equally.
As we’ve written before, ground zero for America’s problems boils down to one thing: For the first time in our history, a 30-year-old is not doing as well as his/her parents were at 30. This is a fundamental break and, more disturbing, a function of deliberate decisions (i.e. social and economic policies that transfer wealth from young to old). Nimbyism, rejectionism, seniors voting themselves more money and bailouts, financed by future generations, to preserve the wealth of incumbents are generational theft, full stop. A 70-year-old is, on average, 72% wealthier than four decades ago; a citizen under 40 is 24% less wealthy.
Mom and Dad are on Crystal cruises with Nana and Pop Pop. The oldest (boomer and Gen X) kids will drive home for Xmas in new Audis wearing Panerais. However, the youngest boys and girls are wearing hand-me-downs, and household debt is so enormous, the youngest will only inherit liabilities, they cannot attend the same schools as their older siblings, much less buy a home. America’s youngest are more depressed and anxious than any previous generation. And why wouldn’t they be? Their family doesn’t love them.
Life is so rich,
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