The fallout continues over the elite college admissions scheme known as “Operation Varsity Blues,” three days after charges were announced against 50 people, including 13 college coaches and powerful CEOs, for taking part in a scheme where wealthy parents paid exorbitant bribes to secure spots for their unqualified children in schools including Yale, Stanford, Georgetown, UCLA and USC—University of Southern California—as well as Wake Forest. Parents reportedly paid up to $6.5 million to gain access to the schools.
At the center of the story is Newport Beach, California, man Rick Singer, who promised parents he could get their children into the schools in exchange for a hefty fee. As part of the scheme, he bribed school coaches to give his clients admissions slots reserved for student athletes, in some cases either staging or doctoring photos to make the teenagers seem like accomplished athletes. Earlier this week, Singer pleaded guilty to charges including racketeering, money laundering and obstruction of justice. Singer’s clients included Hollywood stars Felicity Huffman and Lori Loughlin, and Bill McGlashan, a founder of TPG Capital, one of the largest private equity investment firms in the world—all of whom were charged on Tuesday.
elite class of America have worked the system to maintain and consolidate power and wealth, even while doing so under the pretext of helping people and, “changing the world.” On Wednesday, he tweeted, “The college bribery scam is not a college bribery scam. It is a master class in how America—governed by a cheater, ruled by rule breakers, managed by a class that confuses its privilege for merit—functions.”
Anand Giridharadas talking:
I think when a scandal like this breaks, it’s really important for us to understand that we’ve gone from seeing 0 percent of a system to 0.003 percent of a system, right? There’s so much more here. This is a little biopsy of a world that we happen to get.
And what we learned is, as you cover on this show, America is, in many ways, rigged for the wealthy and powerful. And we know that. We have a tax code that is rigged for the wealthy and powerful. We have anti-trust enforcement that’s rigged for the wealthy and powerful. We fund public education according to property taxes, so the nicer mommy or daddy’s house, the better the school you get. America is already rigged for rich people.
The problem is, for some rich people, all that rigging that I just described is shared equally among rich people. Right? You have the same first-class seat on the commercial jet that everybody—all the other rich people have. And what we found in this case was, some rich people are not satisfied with the generalized rigging that they have to share with everybody else. They want special, private, bespoke, bottle-service rigging over and above the standard rigging that rich people receive.
And I read the indictment. This Singer guy is a great character, and he really understood the psychology of these rich people. People like him in that kind role, who are service providers, often do. And he says, “You know, the people I work for, they don’t want to do a million-dollar check and then hope their kid gets a second look. The people I work for, the wealthiest families in America, they want a guarantee. They want this thing done,” he said.
And so, I think this is a phenomenal glimpse, because what—as someone who’s been writing about this plutocracy for a few years, what these folks say when they hear critics like me is, “Don’t be negative. Don’t be zero-sum. We can empower the least among us. We can fight for the poor. And we can benefit and get rich. Right? It’s not zero-sum.” And you know what really is actually zero-sum? When there is one college seat, and a hard-working kid from a poor neighborhood, whose family has never sent anybody to college, but now they have a shot at that seat—they’ve worked hard, their parents took many buses to many jobs, they might be eligible for that seat—and they don’t get that seat, because someone like Bill McGlashan, private equity baron, impact investing impresario, who had a $2 billion impact fund with Bono, has locked up that seat for his son.
as you know and have covered on this show, in the last several years, there’s been a rising chorus of criticism of capitalism. Right? That’s come from Elizabeth Warren and Bernie Sanders in the political sphere, people like them, AOC. It’s also come from the Occupy movement and various other forms of outside pressure.
Within the citadels of capitalism—the banks, the business schools, the big corporations—there have been a couple responses. Some responses are like, you know, “Buzz off.” But there have been a kind of—there’s been a kind of woke capitalism movement within these citadels, saying, “You know what? You critics have something of a point. Right? Something of a point. And what we’re going to do is, we’re going to respond by evolving a kind of new capitalism within. We’re going to do social enterprises. We’re going to do impact investing. We’re going to double bottom line.”
Impact investing is one of these many modalities, and it basically says, instead of investing in ways that destroy communities—which, by the way, why is that legal to begin with?—we’re going to invest in ways that make us money but also benefit communities. Right? So this is a widespread movement. There’s a lot of capital moving in this impact way, but it’s generally a fringy thing.
Bill McGlashan was the leader of perhaps the biggest impact investing fund in the world—$2 billion fund. Real money. And if you want to legitimate this kind of plutocratic do-gooding, you’ve got to get Bono involved. Right? So he and Bono signed on together, like, you know, bros, to do this fund. Bono, the U2 singer. and that makes this story so much more powerful, because you have a guy who’s had a $2 billion fund, called The Rise Fund, that was about empowering people around the world, from Appalachia to Africa, who hadn’t had opportunity. And what we now know is this guy was working to rig the system, when we weren’t looking, to make sure that those people he was supposedly empowering with his fund would never actually be able to compete with his son.
– Singer had this, “nonprofit.” And so, the parents, who are paying, what, half a million, up to $6.5 million to get their kids fraudulently put into a school, gave their money to him, and it’s a tax-deductible contribution. And they said it was to elevate poor students.
there are two things here your viewers really need to understand, because this is why this matters to all of us. First of all, at a more general level, this case is not a one-off, in the fact that the mechanism by which rich people were exerting wealth, influence and rigging things was charity. If you look at the Koch brothers, many others, the mechanism by which a lot of this stuff is done, and the kind of conquest of power is done, is through charity and philanthropy. So it’s very notable, but also very telling, rather than exceptional, that the mechanism here was charity.
But to your tax deduction point, which is so important, there’s several layers of the tax deduction. First of all, the rich people donated to this fake charity—
– Key Worldwide Foundation.
to feed the bribe. That would eventually be reinvented as a bribe. So, that’s tax reduction number one.
Now you’ve donated to this fake charity. You can—let’s say you donated a million dollars to it. You can now take a million dollars off your income—right?—and save $400,000, $500,000. Amy, who do you think pays for that? Everybody watching this. You have to understand, you paid higher taxes last year to make up for the shortfall of giving that rich person a half-million dollars in tax deduction. Great.
Next step. The charity receives that money. Because it’s registered as a charity, it’s a nonprofit. It doesn’t pay taxes, the way other organizations that receive money, income, would pay taxes. Again, you are paying money, because the system requires a certain amount of money, and if they’re not paying it, you’re paying it. OK? And then, some of those donations went to the Stanford Boating Association, other nonprofit, including nonprofit universities, right? And so, they don’t pay taxes on that, either. And again, you are paying taxes for that money a third time passed on.
And these universities, in many cases, are now sending 50 percent of their graduates into consulting, finance, Silicon Valley. So it really raises the question of why, frankly, you need to subsidize them with your hard-earned tax money, for them to not pay taxes.
– the actress Lori Loughlin—her husband isn’t talked about as much, but he was indicted, too, and I don’t know if that goes to some level of sexism—the fashion designer Mossimo Giannulli, their two daughters, to get them into USC, paid half a million dollars, working—they made them look like crew athletes. They had an indoor machine brought in to take photographs of them, but they didn’t row crew. hey sometimes, in different cases, photoshopped the faces of their children on athletes, to send in to a university, and Singer facilitated all of this.
Imagine how little faith you have in your own children, if you think white privilege, millions of dollars in wealth and the various other tailwinds that all those kids enjoyed are not enough. Right? Imagine the stunning lack of confidence in one’s children—basically, the conclusion that your children like really have no chance in the world—that it takes to say, “Over and above the advantages these kids already have, I need to get these kids a guarantee.”
And I will tell you, Amy, as someone who’s reported in this world, “merit” is the byword of these people. The way they push back against me is, “Why don’t you believe in merit? Why don’t believe in free markets? Don’t you—these companies are big because they had a better product than people. I’m rich because I was smarter. I worked hard.” And you know what’s now been revealed? They actually don’t believe in merit. They don’t believe in merit at all. If they believed in merit, they would have sent in an application like everybody else watching this show does. But, no, they actually wanted a guarantee, because they were so confident in what they didn’t deserve.
we live in—I would guarantee you that a lot of the people, a lot of the parents, ensnared in this college bribery scandal embody what I talk about when I say— —”the elite charade of changing the world,” which is, both of the actresses, whom I checked out online, do a bunch of philanthropy. Right? This Bill McGlashan guy from TPG literally ran the biggest impact investing fund in the world, to help people through the power of investing. And so, in many ways, those—while they were rigging the system. Right?
So, let’s zoom out from those parents and think about that duality, which I think applies in many ways to our age and plutocracy in our age. A lot of the—it is hard to walk down the street these days without running into a billionaire who says they’re changing the world. Right? Mark Zuckerberg is changing the world. Jeff Bezos is transforming people through charity. And the Google people are organizing all the world’s information and trying to do this and that. Elon Musk is going to space—which, actually, would be great for everybody. And you really have more money being given away than has ever been given away. Social everything, social venture, social enterprise, social this, impact this, impact that. Every young person—I go to campuses, where I spend a lot of time. Every young person on these elite campuses, they don’t say they want to be bankers anymore. It’s not the ’80s. They say, “You know, I want to sort of go to Africa, sort of help the Africans.” They’ve never been to Africa. And the Africans are getting tired of, actually, all these people coming there to help them and just collecting bracelets. But there is this tendency among the rich and powerful to want to make change and actually do these real activities. And to be clear, some of that activity is really good and does help and save lives. Some of it’s more marketing.
But the uncomfortable fact is that when you actually look at any of the data—these people claim to love data—the data is that the very same people who are giving and doing philanthropy, and doing social this and impact that, are actually also the great hoarders of opportunity in our time. Right? Their share of the world’s wealth increases, not decreases, every year. They’re grabbing more of the pie every year, even as they help. Their share of the nation’s income has doubled since the middle of the 20th century, the 1 percent’s has. And, you know, you know all the things you’ve covered in the show. Half of this country, the bottom half of this country, has not basically seen a pay rise since 1979. You’ve had a tremendous age of innovation that has failed to translate into progress, if progress means most people’s lives getting better.
And the unmistakable fact that I learned through my reporting—I started the reporting with a question: What’s the relationship between the two halves of this paradox? On the one hand, you got all these generous rich people; on the other hand, you have the fact that it’s a age of inequality, an age of anger. America feels rigged to people. The American dream is elusive. What’s the relationship? Is it just that this charity, this philanthropy, this do-gooding is not working? It’s not working fast enough? Or is it actually that this charity and philanthropy and elite do-gooding is part of how they maintain the system that allows them to keep taking all?
And what I found through my reporting was that when these elites get involved in social change, what they do is they change change. They take leadership of change. They Columbus social change. They declare themselves now the people, the CEO of Change Inc. And they edit out, in their capacity as board members, trustees, leaders of organizations, donors to causes—they edit out forms of change they don’t want to—they don’t really like. And they encourage forms of change they believe in. So, on any issue—you take the empowerment of women. You know what they don’t like? Maternity leave. You know why? Because it’s expensive. Costs money—right?—for companies, for the taxpayer, particularly wealthy taxpayers. So what do they like? Lean in. You know why? Because lean in is free. All you got to do is tell women that patriarchy is actually a posture problem: If you just lean at a slightly different angle of recline, patriarchy gone. Well, that’s very cheap. Rich people love lean in.
maternity leave—to do maternity leave, as one example of a social policy that would actually help women, would cost this society a lot of money. Right? Employers would have to—if that was a right, either the society would have to pay for that or private companies would have to pay for that in ways they don’t right now. That’s a way of actually empowering women, that we know from data in other countries, that would be good, it would do the job, but it would be expensive for the winners of our age. So what the winners of our age do, in their capacities as kind of change agents and thought leaders, is they kind of tip the scale and say, “You know that maternity leave? Ah, we don’t need to do that. Let’s just do lean in.” They encourage, they give platforms to—
“Lean in” means telling women to raise their hands more and be a little more assertive in meetings, to fight patriarchy. Right? Which is, I don’t know, like telling the slaves to be nicer? I mean, like the answer to systems of oppression is not to tell people to be more pleasing to their bosses. But this is—but this is the advice from, you know, a billionaire corporate feminist, Sheryl Sandberg, who, while she was telling women to lean in, was also selling women out so that they would live under Donald Trump, because Facebook was so, you know, unwilling to deal with the cyberwar issue and the abuse-of-privacy issue and Cambridge Analytica, etc. Most of the women I know would prefer to live in a democracy, first and foremost, and not live under Donald Trump. So, Sheryl Sandberg was selling them her—you know, selling them her products. But she was selling them out in a much more fundamental way. But she’s not the only example.
If you look at the education issue, when the rich and powerful get involved in that issue, they love charter schools. Why? Because it’s a way for them—put their name on something, get on the board, be involved, tell their friends at a cocktail party in the Hamptons, you know, “I got three black kids into Yale. I feel so—I just—it’s the least I could do.” And it doesn’t require them to actually give up anything. Whereas if you really want to make progress on that issue, you’d have to end the manifest cruelty in this country of funding public schools according to ZIP code, according to how nice your house is. They don’t want to do that. Why? One, they’d lose access to a good public school, which some of them may use and some don’t. Two, a lot of their home values and the niceness of their neighborhoods is actually wrapped up in the access to better public schools than other people have. If you actually made rich people’s public schools fall to the level everybody else is, you know, people would lose $200,000, a million dollars of home value in Greenwich, in Marin and elsewhere—right?—just because now that house didn’t come with this extraordinary perk of an extra-special, super-duper public school. So, again, rich people don’t want to work on that issue, but they’re happy to work on charter schools.
You know, on basic finances, a lot of rich people who get involved in this kind of change making, they love apps. Let’s have an app to help workers with precarious income smooth their income, or let’s have an app, a fintech app, to help women save more for the future. Win-win, easy. Doesn’t hurt them at all. Right? You know what they don’t like? You know, how about an initiative to actually rat out the trillions of dollars hiding in tax havens around the world? How come you don’t really have many of the big billionaires funding philanthropic efforts to expose the tax havens? It’s a serious question. I mean, if they’re really about making the world a better place, that seems like a pretty good cause. It’s revealing that they’re not interested in that cause. Why? Because they’re never—the people who have the most to lose from change can’t be placed in charge of reforming the status quo. But all of us have actually allowed that to happen. All of us have participated in a culture that actually does sort of see Mark Zuckerberg as a change agent, that actually does see Silicon Valley as change agents, that actually does sort of buy it when ExxonMobil tries to rebrand itself as the renewable company. And so we all need to wake up and stop believing the phony story that the people with the most to lose from change can lead change.
MarketWorld is a—you know, I found a long time ago, as a writer, that coinage is a powerful way to make people kind of see reality they’re familiar with in a new way. With the term “MarketWorld”—one word, capital M, capital W—I tried to scoop together a lot of things that I think a lot of your viewers would recognize but see as disparate things. Right?
So, first of all, philanthropy—all these rich people who make money, often by paying people as little as possible, avoiding taxes, lobbying for rigged policies that benefit them, and then donating that money philanthropically. So that’s kind of one thing.
Then there’s a different thing of people who claim their businesses themselves are humanitarian—right?—the way Mark Zuckerberg will say Facebook is creating community, liberating mankind. Right? So there’s that kind of activity. I wanted to scoop that into the ball, as well.
You know, then you have the kind of thought leader circuit—right?—Aspen, Davos, TED—these places where rich and powerful people go to kind of take in ideas like gelato and kind of want to hear ideas that don’t threaten them, and the way that that has incentivized thinkers to kind of clip the wings of their diagnoses of the society and be more palatable to billionaires. I wanted to scoop that into it.
I wanted to write about how young people, 21-, 22-year-olds on campuses, trying to decide what to do with their life, how their idealism has been understood and managed and coopted by JPMorgan, McKinsey, Goldman Sachs and others to convince these most talented young people we have that if you really want to change the world, you’ve got to spend a couple years at Goldman; otherwise, how will you know how to make change?
So, I wanted to take together this kind of complex of people and institutions that is defined by a common religion of doing well by doing good, that the best way to empower others is to also benefit yourself. Win-win. You can fight for social justice, and you can get rich. No problem. And I wanted to slay that BS.
The alternative is going back to politics as the place we go to change the world. Business is great for a lot of things. I actually don’t want my iPhone to be made by the government. I don’t want your coffee cup to be made by the government. I think there’s a lot of things in our society—most things in this room—are best made by the private sector. And so, this will always be a country in which most activity is private activity. But on the biggest problems we share in common. How do you empower women, locked out of opportunity for thousands of years, to be full and equal citizens? How do you deal with the legacy of slavery in a racial-wealth gap? How do you think about restoring social mobility to where it was for many Americans in the last century? Those are the kinds of problems that are only susceptible to big solutions, to solutions that are through public life.
And I often tell young people, if the solution you’re working on is not public, democratic, institutional and universal, it’s actually not solving the problem for everybody. Ice cream that gives 3 percent back to some charity is not changing the world. An app is not changing the world. Movements change the world. Laws change the world. Boring things like Social Security and Medicare change the world. And so I think we need to really relocate our imagination of change, and particularly for any young person watching this, because I know you have a lot of young people who are your fans. It is so important to think about how you actually want to spend your life. If you are a young person in this culture, you are being fed a very phony story, that change, you know, comes from interning with the worst of the kind of status quo, the worst of the establishment. And it’s not true. Change comes from making change in the way that your parent’s and grandparent’s and great-grandparent’s generation made the kinds of changes that allowed all of us to live in the society we’re in today.
Here’s the uncomfortable truth about—this is a tough book, right? This is a book that is critical. I think it’s fair. I spent a lot of time with these people. I tried to understand my characters, which I always do. But I think one of the things that—when I talk about the “elite charade of changing the world,” I think most of the people I write about in this book probably vote for Democrats. And I think this is a conversation that we haven’t wanted to have in many quarters. It’s easy to say Donald Trump and Paul Manafort and the Koch brothers and Richard Mellon Scaife are the problem. We’ve got, you know, a couple of right-wing loons who are pulling the wool over people’s eyes.
The reality is, the Democratic—in the age of markets, the age of capital, ushered in by Ronald Reagan, which we have been living in ever since—we’re still in his stadium—the Democratic Party, in many ways, capitulated to—not joyfully, but capitulated to—a vision that is not unlike what I was describing, a vision in which markets were how you get things done. Even if they didn’t like it, that’s how you get things done. You have Bill Clinton saying the era of big government is over. You have even Barack Obama getting into the White House, creating his first office, new office, the Office of Social Innovation, the website of which said, “Top-down programs from Washington don’t work anymore,” which is a pretty remarkable statement from the administration of a man who wouldn’t have been able to vote for himself in that election without a really effective top-down program from Washington, that was about to be gutted, the Voting Rights Act.
So, you know, I think what is really important to think about with this Democratic primary coming up, there’s going to be a lot of people—there’s going to be a lot of inspiring people. But I think one framework—wherever you land on this, one framework to keep in mind is: Who is actually interested in dislodging rich and powerful people from positions of power they don’t deserve and from kind of rulership they don’t deserve? And who is, instead, in the more MarketWorldy “I believe everybody can do well”? Right? And if you go back to the 2016 race, you know, you really had Bernie Sanders talking about: “I actually believe some people need to do worse, be cramped a little bit, for the greater good to be done.” And you had Hillary Clinton talking more in terms of everybody can do better.
I think, in this race, that’s going to happen again. You know, Beto O’Rourke joined the race yesterday. And what’s interesting about Beto is, Beto is someone who is precommitted to positivity. It’s not that he looks at the issue and says, “Well, on this issue, I should be positive.” He’s precommitted to it. Right? He’s going to be positive. He doesn’t want to be negative. He doesn’t want to name villains. He doesn’t want to go after people. Trump’s an easy villain, right? But he doesn’t like to be negative. He doesn’t like to say anything is wrong with anybody.
Well, the problem with that is, when you have, you know, foxes eating hens, kumbaya is a recipe for slaughter. And I believe right now we have a situation that is not just inequality or not just some people being left behind—all this passive language. We have a situation in which there are people who are hoarding the American dream for themselves, who are making sure that, year by year, when the rain of the future falls on us, very few people harvest most of the rainwater. And if you are running for president and you’re not willing to be against anybody, you’re not willing to tell us who you actually want to make less powerful in order for the greater good to be done, you may be a great president for another era, but I don’t think you’re a good fit for this one.
________
Anand Giridharadas
editor-at-large at Time magazine and former correspondent and columnist at The New York Times, author of Winners Take All: The Elite Charade of Changing the World.
— source democracynow.org | Mar 15, 2019