President Trump and the Triumph of Private Capital
// The American Prospect
(Photo: AP/Carolyn Kaster)
President-elect Trump and Betsy DeVos, a charter school advocate chosen by Trump as education secretary, pose for photographs at Trump National Gold Club Bedminister clubhouse in New Jersey.
Charles Koch and Donald Trump may not much care for each other, but they share a common interest: a megalomaniacal desire for global power exercised through the unimpeded flow of private capital. That would explain why, despite Koch's one-time description of a choice between Hillary Clinton and Donald Trump as being as appealing as making a choice between having a heart attack or cancer, the Trump administration is expected to be stacked with members of the donor network helmed by Charles and his brother, David, and several veterans of Koch Industries, the second-largest privately held corporation in the United States.
Other names on the shortlist for cabinet posts and high-level administration jobs include millionaire and billionaire principals of privately held companies who are not part of that donor network. But ultimately, a picture is emerging of a government in which private capitalists will have an unprecedented level of control. These are people unaccustomed to accountability. Because their companies are not traded publicly, they don't have to deal with unruly shareholders. The only people who hold shares in their companies are people they've chosen.
Trump himself is a private capitalist, and has already shown a private capitalist's penchant for opacity with his refusal to cough up his tax returns. Add to that the potential conflicts of interest in his roles as president and as head of a company with global holdings that makes deals with foreign governments, and you can see where this is going. It's smelling a lot like oligarchy.
Often lost in discussions of the Koch donor network of billionaires—whose largesse has built a vast infrastructure of extra-party apparatus that serves the Republican Party—is the fact that it is a network of private capitalists. These are not, for the most part, people who got rich as the executives in a publicly traded company. Many are heirs to fortunes made by people who started a business and kept it in the family. They are fiercely anti-union.
Take Betsy DeVos, Trump's nominee to head the Department of Education. As the wife of an heir to the Amway fortune, DeVos is part of the Koch donor network. Amway ranks No. 29 on the Forbes list of America's largest privately held companies. In addition to spearheading nationwide efforts to privatize public education, her family foundation has been leading the charge against unions in Michigan, in part by generous donations to the Americans for Prosperity Foundation, the movement-building organization founded by the Koch brothers. According to Eli Clifton, writing in The Nation in 2014:
The DeVos family foundation contributed $3 million to the AFP Foundation in 2011. … The DeVos family foundation from 2007–11 also contributed $800,000 to the Koch-seeded FreedomWorks Foundation, a conservative and libertarian group that promotes "less government, lower taxes and more economic freedom"; in 2012, they wrote a $500,000 "unrestricted grant" to the Mercatus Center, according to the DeVos family's foundation's tax filings.
(The Mercatus Center is a Koch-funded think tank housed at George Mason University.)
Americans for Prosperity has been instrumental in the attacks on public-sector unions in Michigan and Wisconsin. Clifton also reported that Richard DeVos Jr., husband of the nominee for education secretary, "bankrolled anti-union campaigns in Michigan and gave serious momentum to Republican backed anti-union 'right-to-work' laws across the country, a key policy issue of AFP both in Michigan and nationwide."
Why, you might wonder, would public-sector unions concern private capitalists? The obvious answer is that these unions bring Democratic voters to the polls. Less obvious is the fact that the due process guaranteed to public employees with union representation requires a level of transparency in government. An employee with union rights cannot be summarily dismissed, and in the course of presenting her case, a union member may bring to light the inner workings of government. But private capitalists want a world in which they don't need no stinking badges.
BUT ANTI-UNIONISM IS only part of the private capitalist wish list, which in its totality amounts to nothing less than predation upon the wealth of all nations through the unfettered flow of dark money that private capital, by its very nature, represents.
Consider the list of those said to be under consideration for secretary of energy, private capitalists all. They include Harold Hamm, chief executive officer of Continental Resources, a privately held oil and gas company; Robert E. Grady, partner in the privately held Gryphon Investors; and James L. Connaughton, chief executive officer of Nautilus Data Technologies, a private company.
The energy sector represents 5.9 percent of the U.S. gross domestic product (GDP), according to Statista. Koch Industries has significant holdings in the energy sector, and is a proponent of deregulation of every sort imaginable, especially environmental.
For the position of U.S. trade representative, the Trump team has floated the name of Dan DiMicco, chief executive of Nucor Corporation, a privately held steel company. During the campaign, he suggested on his blog that China was cheating on trade deals. "[Y]ou don't win a Trade War with appeasement or more Free Trade agreements," he wrote.
Who knew we were in a Trade WarTM? Guess we're about to be—private capitalist–style.
Oh, and let's not forget Steven Mnuchin, the man nominated to be our next secretary of the Treasury. He's the co-CEO of Dune Capital Management, "a privately owned hedge fund sponsor," according to Bloomberg Research. In 2009, together with partners, he bought the mortgage lender, IndyMac, paying pennies on the dollar. The group changed the lender's name to OneWest. The group Americans for Financial Reform said in a statement that on Mnuchin's watch, OneWest "aggressively foreclosed on tens of thousands of families." Reporting for the Los Angeles Times in 2010, E. Scott Reckard explained:
The billionaires' club of private financiers who took over the remains of IndyMac Bank from the Federal Deposit Insurance Corp. turned a profit of $1.57 billion last year on the failed mortgage lender—more than they invested less than a year ago.
Yet under the sale agreement, the federal deposit insurance fund still could lose nearly $11 billion on bad loans that the Pasadena institution made before it was sold last March and renamed OneWest Bank.
"This is one hell of a deal for those owners, but hardly a good deal for the banking industry, which pays the FDIC's bills," said Bert Ely, a longtime consultant to banks.
(Liberals will be sad to know that George Soros also invested in the bank. But no one has ever named Soros to head the U.S. Department of the Treasury.)
And there are more: Billionaire Wilbur Ross, founder of the privately held WL Ross and Co. private equity firm, has been tapped for the role of commerce secretary. Ross sold his firm in 2006 to Invesco, a privately held company, and remains involved with the business, according to NPR. He is, according to Forbes, the 232nd richest person in the United States. He got there by snatching up failing companies and "restructuring" them, "often with significant layoffs and budget cuts," according to NPR.
In 2006, not long after he bought the Sago coal mine in West Virginia, there was an explosion that trapped 13 miners underground. Twelve died. Ross said that despite the 202 safety violations lodged against the mine by regulators (most before he purchased the mine), he had been assured by managers that the work environment was safe for the miners.
My colleague Justin Miller wrote here about the floating of the name of Andy Puzder, CEO of the privately held CKE Restaurants, as a potential secretary of labor. He opposes a raise in the minimum wage and persists in promoting the myth, according to Miller, that most minimum-wage workers are young, single people in entry-level jobs. "Puzder as labor secretary is like putting Bernie Madoff in charge of the treasury," Kendall Fells, organizing director for the Fight for 15, told Miller. Fight for 15 is a labor organization that advocates for a $15-per-hour minimum wage.
IN ADDITION TO THE gang of private capitalists poised to control the nation's wealth, there are the functionaries who serve them. Two of Trump's early picks pretty much owe their careers to the Koch brothers: Vice President-elect Mike Pence, and Chief of Staff Reince Priebus. As I wrote of Pence in July, the presumptive vice president has been a favorite speaker at Americans for Prosperity events, and has been described by AFP President Tim Phillips as "one of our favorite governors."
Priebus, meanwhile, was a state party leader in Wisconsin who saw his stock soar with the election of another of the Koch brothers' favorite governors, Scott Walker, and the passage of legislation that disenfranchised members of the state's public-sector unions by barring collective bargaining. On Priebus's watch, members of Tea Party organizations, in collusion with then-AFP Chapter President Mark Block, were caught engaging in a vote-caging scheme in Milwaukee that was designed to discourage students and minorities from casting ballots.
With the GOP takeover of Congress in 2011, Priebus won the party's top spot as chairman of the Republican National Committee. Now he's the president-elect's chief of staff.
At Politico, Kenneth P. Vogel and Eliana Johnson report more than a dozen Koch-linked names who are either on Trump administration short lists or involved with the transition. These include Don McGahn, recently named White House counsel. McGahn is the Jones Day attorney who has represented the Koch network pass-through group, Freedom Partners, in legal filings.
Sighted at Donald Trump's victory party at Trump Tower, as election night spilled into the day after, was David Koch.
DONALD TRUMP IS FAMOUSLY a fan of Russian dictator Vladimir Putin, and of the well-heeled cronies who surround the despot. Boasting of the VIP turnout for the 2013 Miss Universe pageant that Trump staged in Moscow, the man now poised to occupy the Oval Office proudly declared, "almost all of the oligarchs were in the room."
Soon he'll be able to say the same of a cabinet meeting.
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