Revealed: The Full Membership List of Wall Street’s Secret Society

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Revealed: The Full Membership List of Wall Street’s Secret Society

• By Kevin Roose

 

Back in January 2012, I crashed the annual induction ceremony of Kappa Beta Phi, a secret society for elite Wall Street financiers. You can read the story of what happened here.

In addition to writing down details of what I saw, I also procured the official Kappa Beta Phi membership roll, a list that includes prominent Kappas like former Mayor Michael Bloomberg, AIG CEO Bob Benmosche, the former heads of Lehman Brothers and Bear Stearns, and Jon Corzine, the former New Jersey politician.

Here, as of 2012, is everyone who belongs to one of the most controversial and secretive organizations on earth.

First, here's what the program for the evening looked like:

And here's the member list:

Wall Street Chapter

Duff P. Anderson (1994)

Silas R. Anthony, Jr. (1993)

Andrew Arno (2001)

Peter A. Atkins (1977)

Walter E. Auch, Jr. (2000)

Sara Ayres (2009)

George L. Ball (1975)

Vincent Banker (2003)

David C. Batten (1981)

Bernard Beal (2007)

Robert Benmosche (2002)

James A. Benson (1995)

Jonathan M. Berg (2006)

Alfred R. Berkeley (2000)

Rosemary T. Berkery (2006)

Michael A. Berman (2000)

E. Garrett Bewkes III (1993)

Jessica Bibliowicz (1999)

John Birkelund (1981)

Ronald E. Blaylock (1999)

Michael R. Bloomberg (1995)

Andrew Blum (1972)

Howard L. Blum, Jr. (1986)

Magnus Bocker (2009)

Mike Bodson (2009)

Geoffrey T. Boisi (1989)

Kay Ryan Booth (1999)

Livio Borghese (1977)

Whitney Bower (2009)

Curt Bradbury (2006)

James W. Braham (1999)

Alan Breed (2010)

Joseph Breen (1980)

Howard M. Brenner (1990)

Robert G. Britz (1998)

Michael C. Brooks (1991)

Marianne Brown (2009)

Candace Browning (2008)

Samuel Butler (1974)

Barbara M. Byrne (2011)

Andrew Cader (1992)

John D. Carifa (1992)

Michael A. Carpenter (1990)

William M. Carson (1998)

Jolyne Caruso-Fitzgerald (2006)

Douglas J. Casey (1998)

Arthur D. Cashin (2000)

John K. Castle (1983)

James E. Cayne (1990)

John S. Chalsty (1990)

Alger B. Chapman, Jr. (1972)

Mac C. Chapman, Jr. (1987)

Suzanne Charnas (2011)

Adam D. Chinn (2005)

Todd J. Christie (2003)

Howard L. Clark, Jr. (1981)

Abram Claude (1970’s)

Patricia M. Cloherty (2001)

Sarah E. Cogan (2009)

Peter A. Cohen (1986)

Timothy C. Collins (2007)

Christopher M. Condron (1999)

Anthony Conroy (2011)

Jill M. Considine (2000)

Richard F. Conway (2005)

Langdon P. Cook (1984)

Gerald Corrigan (1989)

Jon S. Corzine (1990)

Michael Cosgrove (2008)

Lawrence Creel (2009)

Noreen M. Culhane (2005)

John N. Daly (1971)

John M. Damgard (1998)

Elizabeth B. (Beth) Dater (2004)

James M. Davin (1983)

Rafe de la Gueronniere (1987)

Francois de Saint Phalle (1980)

Jerry M. de St. Paer (1996)

Richard M. DeMartini (1991)

Ralph D. DeNunzio (1965)

Robert M. Devlin (2005)

Joseph S. DiMartino (1989)

Eric S. Dobkin (1996)

Carl H. Doerge, Jr. (1979)

Donald Donahue (2009)

Robert N. Downey (1988)

Stephen M. DuBrul, Jr. (1975)

Richard B. DuBusc (1984)

John Duffy (1988)

John G. Duffy (2007)

James J. Dunne III (2003)

Dexter D. Earle (1976)

John E. Eckelberry (1966)

Christine Edwards (1997)

J. Anthony Ehinger (1996)

Roger D. Elsas (1993)

Mary Farrell (2003)

Michael A.J. Farrell (2006)

Fred Federspiel (2008)

Laurence Fink (2002)

John D. Finnegan (2005)

Lawton W. Fitt (1999)

Martin Flanagan (2008)

Gregory J. Fleming (2007)

Alphonse Fletcher, Jr. (1995)

Thomas M. Flexner (2000)

Bruce S. Foerster (1983)

William E. Ford (2006)

Archibald McGhee Foster, Jr. (1992)

A. Hampton Frady, Jr. (1973)

Richard S. Fuld, Jr. (1995)

Nathan S. Gantcher (1992)

Neal S. Garonzik (2000)

John J. Gavin (1991)

Peter Georgiopoulos (2010)

Elbridge T. Gerry, Jr. (1982)

Louis V. Gerstner (1987)

William S.R. Gilbreath III (1973)

Jane Gladstone-Wheeler (2010)

Pam Goldman (2010)

Gary Goldring (2000)

Joe Goldsmith (2010)

Arthur H. Goldstone (1982)

Lesley Goldwasser (2004)

Joseph Grano (2002)

Richard A. Grasso (1990)

Peter T. Grauer (2003)

Micah Green (2003)

Alan C. Greenberg (1980)

Robert F. Greenhill (1985)

Martin Gruss (2009)

Randolph Guggenheimer, Jr. (1980)

Edmund A. Hajim (1996)

George E. Hall (2003)

Joseph Hardiman (1988)

J. Ira Harris (2004)

Jon M. Harris (2004)

Joshua Harris (2011)

William Harrison (1987)

Gates H. Hawn (1980)

Edward D. Herlihy (2003)

James F. Higgins (1993)

J. Tomilson Hill (2009)

Landon B. Hilliard III (1996)

Franklin W. Hobbs IV (1992)

Frank J. Hoenemeyer (1982)

Clark Hooper (2003)

George R. Hornig (2006)

Gedale B. Horowitz (1980)

Ruth Horowitz (2004)

Brian P. Hull (2006)

Samuel C. Hunter (1984)

James Hurlock (1989)

Bradley H. Jack (1999)

James A. Jacobson (1988)

A. James Jacoby (2000)

Francis P. Jenkins, Jr. (1988)

David Jennings (2003)

Wm. Mitchell Jennings, Jr. (2006)

Richard H. Jenrette (1976)

Thomas Johnson (1987)

Michael J. Johnston (1984)

William R. Johnston (1994)

Graham E. Jones (1977)

James Jones (1991)

Paul Tudor Jones II (2002)

Thomas M. Joyce (2005)

William M. Kearns, Jr. (1975)

Charles (Kirk) Kellogg (2004)

Peter R. Kellogg (1979)

James C. Kellogg IV (1983)

T. Richard Kendrick IV (2005)

Jerome Kenney (1989)

Hans W. Kertess (1981)

Richard Ketchum (1995)

Candace King-Weir (2010)

Mark Kingdon (2008)

James M. Kingsbury (1969)

Catherine R. Kinney (1997)

Michael S. Klein (2005)

Frederick A. Kingenstein (1973)

William Lee Knowles (1988)

David H. Komansky (2002)

Arthur Kontos (1998)

Doug Kramer (2011)

Peter S. Kraus (2007)

Sallie Krawcheck (2002)

Ron Kruszewski (2001)

Michael LaBranche (2000)

Marc E. Lackritz (1994)

Maria Elena Lagomasino (2005)

Jeffrey B. Lane (1988)

Steve Langman (2010)

Kenneth G. Langone (1996)

John J. Lauto (2007)

John G. Layng (1999)

Alexandra Lebenthal (1998)

James B. Lee, Jr. (1999)

Stephen M. Lessing (2002)

Arthur Levitt, Jr. (1979)

William Lewis (2008)

Robert D. Lindsay, Jr. (2010)

Robert V. Lindsay (1979)

Robert E. Linton (1981)

Martin Lipton (1987)

Bruce Lisman (2001)

Hugh P. Lowenstein (1990)

Nigel S. MacEwan (1972)

John G. MacFarlane III (1998)

John J. Mack (1993)

James J. Maguire (1993)

Thomas (Tom) Maheras (2004)

Andrew Malik (2011)

Amy Margolis (2011)

Donald Marron (1985)

Robert J. McCann (2003)

Robert H. McCooey, Jr. (2006)

Raymond J. McGuire (2005)

Shawn McLoughlin (2009)

Terence S. Meehan (1996)

Doris P. Meister (2001)

Carl B. Menges (1996)

Mitch M. Merin (1995)

Barrant V. Merrill (1981)

Eduardo G. Mestre (1995)

Roberto Mignone (2010)

John Miller (2010)

Howard Milstein (2006)

Joseph V. Missett III (1973)

Robert E. Munchin (1983)

Joseph H. Moglia (2005)

Samuel L. Molinaro, Jr. (2002)

Christopher S. Moore (1988)

John Moore (2009)

Charles F. Morgan (1960)

John C. (Hans) Morris (2006)

Averell Mortimer (2009)

David J. Mullan (2004)

Donald R. Mullen, Jr (2001)

Peter J. Murphy (2006)

Robert Murphy (2003)

Thomas Murphy (2011)

Jeanne L. Murtaugh (2004)

John H. Myers (2006)

Sarah E. Nash (1998)

Kenneth R. Natori (1980)

George Needham (2003)

Crocker Nevin (1970)

Donald E. Nickelson (1981)

Fares Noujaim (2005)

Seth Novatt (2010)

Michael Novogratz (2008)

Edward I. O’Brien (1977)

Timothy O’Hara (2008)

E. Stanley O’Neal (2002)

Michael J. Odrich (2006)

Morris W. Offit (1997)

Vikram S. Pandit (1884)

Paul G. Parker (2011)

Leland B. Paton (1995)

Douglas Paul (2003)

Richard S. Pechter (1991)

Joseph R. Perella (1990)

Norman H. Pessin (1984)

John R. Petty (1988)

John J. Phelan, Jr. (1979)

Peter V.N. Philip (1967)

Thomas L. Piper III (1978)

Michael Pizzuto (1982)

Grant A. Porter (2007)

Christopher Quick (2002)

Leslie C. Quick III (2002)

Peter Quick (2001)

Michael L. Quinn (1996)

Paul E. Raether (1993)

Maribeth S. Rahe (2001)

Lewis S. Ranieri (1987)

Alan C. Rappaport (2006)

Peter S. Rawlings (1976)

Robert L. Reynolds (2007)

Joseph Rice III (2006)

Reuben F. Richards (1973)

Robert Ritterseiser (1985)

Rachel Robbins (1997)

Julian H. Robertson (1987)

James D. Robinson III (1982)

James D. Robinson IV (2011)

Linda Robinson (2003)

Joe L. Roby (1992)

John Roche (1984)

E. John Rosenwald, Jr. (1982)

Wilbur L. Ross, Jr. (2006)

Mitchell J. Rubin (2010)

Robert E. Rubin (1982)

Thomas A. Russo (2002)

Heather L. Ruth (1999)

Michael Ryan (2011)

Thomas F. Ryan, Jr. (1997)

T. Timothy Ryan (2009)

Gregory E. Sacco, Jr. (1983)

William R. Salomon (1971)

Jim Sampson (2010)

Charles S. Sanford (1980)

Ralph S. Saul (1969)

Thomas A. Saunders III (1979)

Anthony Scaramucci (2011)

Peter Scaturro (2009)

Ralph Schlosstein (2003)

Richard J. Schmeelk (1983)

Joseph Schmuckler (2009)

Edward C. Schmults (1979)

Peter Schulte (2010)

Alan D. Schwartz (1989)

Robert G. Scott (1993)

Kevin R. Seth (2011)

Robert S. Shafir (2005)

Gene Shanks (1989)

Mary L. Schapiro (1997)

Robert F. Shapiro (1969)

Theodore P. Shen (1983)

Martin Siegel (1986)

Brandon Sim (2011)

Craig S. Sim (1984)

Hardwick Simmons (1989)

John C. (Hans) Sites, Jr. (1995)

Philip M. Skidmore (1980)

Alfred Smith IV (1998)

Michelle Smith (2008)

Richard A. Smith (1982)

Winthrop H. Smith, Jr. (2000)

Salvatore (Sal) Sodano (2004)

Warren J. Spector (1997)

Esta Stecher (2006)

George C. Stephenson (1991)

James Stern (1999)

James M. Stewart (1982)

Donald Stone (1975)

Thomas W. Strauss (1986)

Mark B. Sutton (2001)

Richard F. Syron (1995)

Anne Tatlock (2002)

Diana L. Taylor (2004)

Michael Tennenbaum (2010)

Pamela Thomas-Graham (2002)

Todd S. Thomson (2005)

Richard E. Thornburgh (2002)

Allen Thrope (2011)

Carl H. Tiedemann (1975)

David J. Topper (2006)

Robert A. Towbin (1975)

Jamie Townsend (2003)

Remy Trafelet (2008)

Michael K. Travers (1975)

Bruce N. Tullo (1983)

Thomas I. Unterberg (1983)

John O. Utendahl (2004)

John J. Veronis (1989)

John L. Vogelstein (2006)

Robert G. Wade, Jr. (1980)

George Walker (2008)

Andy Walter (2010)

Dennis Weatherstone (1980)

Lisa M. Weber (2005)

David Weild IV (2003)

Sanford I. Weill (1980)

Keith S. Wellin (1970)

Curtis R. Welling (1999)

Kim White (2004)

John C. Whitehead (1971)

Meredith Whitney (2010)

Frederick B. Whittemore (1968)

George Wiegers (1968)

Christopher J. Williams (2006)

Dave H. Williams (1987)

Kendrick Wilson III (1995)

Sam H. Wolcott III (1977)

James D. Wolfensohn (1979)

Kurt Wolfgruber (2006)

Frederick Wonham (1970)

Ward W. Woods, Jr. (1984)

A. Jones Yorke IV (1975)

Montgomery Street Chapter

Charles Haynor – Grand Swipe

Robert S. Basso

Richard M. Beleson

D. Kent Clayburn

James F. Dowley

John C. Helmer

Douglas C. Heske

William D. Hobi

John P. Hullar

John T. Hyland

Andrew J. Jennings

David Kavrell

George A. Miller

Francis X. Roche

John P. Roediger

John L. Sullivan

Joseph E. Sweeney

Spring Street Chapter

Warren Wibbelsman – Grand Swipe

James Ford

Michael O. Healy

Kenneth Tang

1% Jokes and Plutocrats in Drag: What I Saw When I Crashed a Wall Street Secret Society

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1% Jokes and Plutocrats in Drag: What I Saw When I Crashed a Wall Street Secret Society

By Kevin Roose 

Recently, our nation’s financial chieftains have been feeling a little unloved. Venture capitalists are comparing the persecution of the rich to the plight of Jews at Kristallnacht, Wall Street titans are saying that they’re sick of being beaten up, and this week, a billionaire investor, Wilbur Ross, proclaimed that “the 1 percent is being picked on for political reasons.”

Ross's statement seemed particularly odd, because two years ago, I met Ross at an event that might single-handedly explain why the rest of the country still hates financial tycoons – the annual black-tie induction ceremony of a secret Wall Street fraternity called Kappa Beta Phi.

Adapted

from Kevin Roose’s book Young Money, published today by Grand Central Publishing.

 

“Good evening, Exalted High Council, former Grand Swipes, Grand Swipes-in-waiting, fellow Wall Street Kappas, Kappas from the Spring Street and Montgomery Street chapters, and worthless neophytes!”

It was January 2012, and Ross, wearing a tuxedo and purple velvet moccasins embroidered with the fraternity’s Greek letters, was standing at the dais of the St. Regis Hotel ballroom, welcoming a crowd of two hundred wealthy and famous Wall Street figures to the Kappa Beta Phi dinner. Ross, the leader (or “Grand Swipe”) of the fraternity, was preparing to invite 21 new members — “neophytes,” as the group called them — to join its exclusive ranks.

Looking up at him from an elegant dinner of rack of lamb and foie gras were many of the most famous investors in the world, including executives from nearly every too-big-to-fail bank, private equity megafirm, and major hedge fund. AIG CEO Bob Benmosche was there, as were Wall Street superlawyer Marty Lipton and Alan “Ace” Greenberg, the former chairman of Bear Stearns. And those were just the returning members. Among the neophytes were hedge fund billionaire and major Obama donor Marc Lasry and Joe Reece, a high-ranking dealmaker at Credit Suisse. [To see the full Kappa Beta Phi member list, click here.] All told, enough wealth and power was concentrated in the St. Regis that night that if you had dropped a bomb on the roof, global finance as we know it might have ceased to exist.

During his introductory remarks, Ross spoke for several minutes about the legend of Kappa Beta Phi – how it had been started in 1929 by “four C+ William and Mary students”; how its crest, depicting a “macho right hand in a proper Savile Row suit and a Turnbull and Asser shirtsleeve,” was superior to that of its namesake Phi Beta Kappa (Ross called Phi Beta Kappa’s ruffled-sleeve logo a “tacit confession of homosexuality”); and how the fraternity’s motto, “Dum vivamus edimus et biberimus,” was Latin for “While we live, we eat and drink.”

On cue, the financiers shouted out in a thundering bellow: “DUM VIVAMUS EDIMUS ET BIBERIMUS.”

The only person not saying the chant along with Ross was me — a journalist who had sneaked into the event, and who was hiding out at a table in the back corner in a rented tuxedo.

 

Several Kappas at the table next to me, presumably discussing the coming plutocracy.

 

 

I’d heard whisperings about the existence of Kappa Beta Phi, whose members included both incredibly successful financiers (New York City's Mayor Michael Bloomberg, former Goldman Sachs chairman John Whitehead, hedge-fund billionaire Paul Tudor Jones) and incredibly unsuccessful ones (Lehman Brothers CEO Dick Fuld, Bear Stearns CEO Jimmy Cayne, former New Jersey governor and MF Global flameout Jon Corzine). It was a secret fraternity, founded at the beginning of the Great Depression, that functioned as a sort of one-percenter’s Friars Club. Each year, the group’s dinner features comedy skits, musical acts in drag, and off-color jokes, and its group’s privacy mantra is “What happens at the St. Regis stays at the St. Regis.” For eight decades, it worked. No outsider in living memory had witnessed the entire proceedings firsthand.

 

A Kappa neophyte (left) chats up a vet.

 

I wanted to break the streak for several reasons. As part of my research for my book, Young Money, I’d been investigating the lives of young Wall Street bankers – the 22-year-olds toiling at the bottom of the financial sector’s food chain. I knew what made those people tick. But in my career as a financial journalist, one question that proved stubbornly elusive was what happened to Wall Streeters as they climbed the ladder to adulthood. Whenever I’d interviewed CEOs and chairmen at big Wall Street firms, they were always too guarded, too on-message and wrapped in media-relations armor to reveal anything interesting about the psychology of the ultra-wealthy. But if I could somehow see these barons in their natural environment, with their defenses down, I might be able to understand the world my young subjects were stepping into.

So when I learned when and where Kappa Beta Phi’s annual dinner was being held, I knew I needed to try to go.

Getting in was shockingly easy — a brisk walk past the sign-in desk, and I was inside cocktail hour. Immediately, I saw faces I recognized from the papers. I picked up an event program and saw that there were other boldface names on the Kappa Beta Phi membership roll — among them, then-Citigroup CEO Vikram Pandit, BlackRock CEO Larry Fink, Home Depot billionaire Ken Langone, Morgan Stanley bigwig Greg Fleming, and JPMorgan Chase vice chairman Jimmy Lee. Any way you count, this was one of the most powerful groups of business executives in the world. (Since I was a good 20 years younger than any other attendee, I suspect that anyone taking note of my presence assumed I was a waiter.)

I hadn’t counted on getting in to the Kappa Beta Phi dinner, and now that I had gotten past security, I wasn’t sure quite what to do. I wanted to avoid rousing suspicion, and I knew that talking to people would get me outed in short order. So I did the next best thing — slouched against a far wall of the room, and pretended to tap out emails on my phone.

 

 The 2012 Kappa Beta Phi neophyte class.

 

 

After cocktail hour, the new inductees – all of whom were required to dress in leotards and gold-sequined skirts, with costume wigs – began their variety-show acts. Among the night’s lowlights:

• Paul Queally, a private-equity executive with Welsh, Carson, Anderson, & Stowe, told off-color jokes to Ted Virtue, another private-equity bigwig with MidOcean Partners. The jokes ranged from unfunny and sexist (Q: “What’s the biggest difference between Hillary Clinton and a catfish?” A: “One has whiskers and stinks, and the other is a fish”) to unfunny and homophobic (Q: “What’s the biggest difference between Barney Frank and a Fenway Frank?” A: “Barney Frank comes in different-size buns”).

• Bill Mulrow, a top executive at the Blackstone Group (who was later appointed chairman of the New York State Housing Finance Agency), and Emil Henry, a hedge fund manager with Tiger Infrastructure Partners and former assistant secretary of the Treasury, performed a bizarre two-man comedy skit. Mulrow was dressed in raggedy, tie-dye clothes to play the part of a liberal radical, and Henry was playing the part of a wealthy baron. They exchanged lines as if staging a debate between the 99 percent and the 1 percent. (“Bill, look at you! You’re pathetic, you liberal! You need a bath!” Henry shouted. “My God, you callow, insensitive Republican! Don’t you know what we need to do? We need to create jobs,” Mulrow shot back.)

• David Moore, Marc Lasry, and Keith Meister — respectively, a holding company CEO, a billionaire hedge-fund manager, and an activist investor — sang a few seconds of a finance-themed parody of “YMCA” before getting the hook.

• Warren Stephens, an investment banking CEO, took the stage in a Confederate flag hat and sang a song about the financial crisis, set to the tune of “Dixie.” (“In Wall Street land we’ll take our stand, said Morgan and Goldman. But first we better get some loans, so quick, get to the Fed, man.”)

A few more acts followed, during which the veteran Kappas continued to gorge themselves on racks of lamb, throw petits fours at the stage, and laugh uproariously. Michael Novogratz, a former Army helicopter pilot with a shaved head and a stocky build whose firm, Fortress Investment Group, had made him a billionaire, was sitting next to me, drinking liberally and annotating each performance with jokes and insults.

“Can you fuckin’ believe Lasry up there?” Novogratz asked me. I nodded. He added, “He just gave me a ride in his jet a month ago.”

The neophytes – who had changed from their drag outfits into Mormon missionary costumes — broke into their musical finale: a parody version of “I Believe,” the hit ballad from The Book of Mormon, with customized lyrics like “I believe that God has a plan for all of us. I believe my plan involves a seven-figure bonus.” Amused, I pulled out my phone, and began recording the proceedings on video. Wrong move.

 

The grand finale, a parody of "I Believe" from The Book of Mormon

 

“Who the hell are you?” Novogratz demanded.

I felt my pulse spike. I was tempted to make a run for it, but – due to the ethics code of the New York Times, my then-employer – I had no choice but to out myself.

“I’m a reporter,” I said.

Novogratz stood up from the table.

"You’re not allowed to be here," he said.

I, too, stood, and tried to excuse myself, but he grabbed my arm and wouldn’t let go.

“Give me that or I’ll fucking break it!” Novogratz yelled, grabbing for my phone, which was filled with damning evidence. His eyes were bloodshot, and his neck veins were bulging. The song onstage was now over, and a number of prominent Kappas had rushed over to our table. Before the situation could escalate dangerously, a bond investor and former Grand Swipe named Alexandra Lebenthal stepped in between us. Wilbur Ross quickly followed, and the two of them led me out into the lobby, past a throng of Wall Street tycoons, some of whom seemed to be hyperventilating.

Once we made it to the lobby, Ross and Lebenthal reassured me that what I’d just seen wasn’t really a group of wealthy and powerful financiers making homophobic jokes, making light of the financial crisis, and bragging about their business conquests at Main Street’s expense. No, it was just a group of friends who came together to roast each other in a benign and self-deprecating manner. Nothing to see here.

But the extent of their worry wasn’t made clear until Ross offered himself up as a source for future stories in exchange for my cooperation.

“I’ll pick up the phone anytime, get you any help you need,” he said.

“Yeah, the people in this group could be very helpful,” Lebenthal chimed in. “If you could just keep their privacy in mind.”

I wasn’t going to be bribed off my story, but I understood their panic.  Here, after all, was a group that included many of the executives whose firms had collectively wrecked the global economy in 2008 and 2009. And they were laughing off the entire disaster in private, as if it were a long-forgotten lark. (Or worse, sing about it — one of the last skits of the night was a self-congratulatory parody of ABBA’s “Dancing Queen,” called “Bailout King.”) These were activities that amounted to a gigantic middle finger to Main Street and that, if made public, could end careers and damage very public reputations.

After several more minutes spent trying to do damage control, Ross and Lebenthal escorted me out of the St. Regis.

As I walked through the streets of midtown in my ill-fitting tuxedo, I thought about the implications of what I’d just seen.

The first and most obvious conclusion was that the upper ranks of finance are composed of people who have completely divorced themselves from reality. No self-aware and socially conscious Wall Street executive would have agreed to be part of a group whose tacit mission is to make light of the financial sector’s foibles. Not when those foibles had resulted in real harm to millions of people in the form of foreclosures, wrecked 401(k)s, and a devastating unemployment crisis.

The second thing I realized was that Kappa Beta Phi was, in large part, a fear-based organization. Here were executives who had strong ideas about politics, society, and the work of their colleagues, but who would never have the courage to voice those opinions in a public setting. Their cowardice had reduced them to sniping at their perceived enemies in the form of satirical songs and sketches, among only those people who had been handpicked to share their view of the world. And the idea of a reporter making those views public had caused them to throw a mass temper tantrum.

The last thought I had, and the saddest, was that many of these self-righteous Kappa Beta Phi members had surely been first-year bankers once. And in the 20, 30, or 40 years since, something fundamental about them had changed. Their pursuit of money and power had removed them from the larger world to the sad extent that, now, in the primes of their careers, the only people with whom they could be truly themselves were a handful of other prominent financiers.

Perhaps, I realized, this social isolation is why despite extraordinary evidence to the contrary, one-percenters like Ross keep saying how badly persecuted they are. When you’re a member of the fraternity of money, it can be hard to see past the foie gras to the real world.

Copyright 2014 by Kevin Roose. Reprinted by permission of Grand Central Publishing. All rights reserved.

Can Right-Wingers and Plutocrats Be Stopped from Destroying Social Security?

  Economy  

AlterNet / By Steven Rosenfeld

Can Right-Wingers and Plutocrats Be Stopped from Destroying Social Security?

 

There's momentum in the fight to strengthen, instead of gut, social security.

Photo Credit: Image by Shutterstock

 

 

 

February 12, 2014  |  

 

 

A new effort to build bipartisan consensus on fortifying Social Security was unveiled in Washington on Friday that shows the promise and perils of the evolving debate on the how tens of millions of aging Americans will support themselves in coming years.

On the promising side, an extensive public engagement process by a new centrist group, the Program for Public Consultation (PCP), found vast bipartisan agreement to strengthen Social Security now through progressive tax increases and even increasing some benefits. On the perilous side, the starting line for its discussion is the tedious rightwing drumbeat about revenue shortfalls two decades from now, which distract from focusing on today’s retirement security crisis and what steps can address more immediate human needs.

“They did not brief respondents on the retirement crisis or ask them if they had saved enough for retirement,” said an analyst with one of the more progressive reform groups, who attended the PCP briefing but commented on background. “So respondents were tasked with the narrow job of eliminating the shortfall, rather than devising the best Social Security policy.”

After several decades where the political debate on Social Security has been dominated by right-wingers who want to either eliminate, privatize or cut it, there’s new momentum in Washington to step back and starting discussing how Social Security can be fixed for today’s recipients and Americans who will soon retire. Like all political debates, how the problem is defined has a lot to do with what solutions are offered.

What’s needed now, the analyst said, was “a discussion of people and their retirement insecurity—especially Generation Xers and millenials. Those advocating cutting Social Security say it is to protect our children and grandchildren, yet they will need it even more than today’s retirees do.”
The Program for Public Consultation is a relatively new group whose board is made up of a dozen former Democratic and Republican congressmen, and another two-dozen experts who wear many hats as policy centrists in Washington. Their foundation-funded initiative is noteworthy not only because it will be repeated in congressional districts in 2014, but because its early findings support taking specific steps now that progressives have been touting for years—and for which there is huge public support to do so.

For example, after holding workshops last July where 738 people took part, PCP polled participants and found that 76 percent backed the most progressive revenue solution: eliminating the little-known cap on taxable income that funds Social Security. People only pay taxes on the first $117,000 of their income, not investments, for the social insurance program. That step alone would eliminate the projected shortfall two decades from now and generate a surplus funds to expand current benefits by one-sixth, PCP Director Seven Kull said at the press briefing.

PCP also found strong support, 72 percent, to increase the minimum monthly benefit for retirees—which, at $760, is below the federal poverty line. And it found that 73 percent also favored increasing benefits once people reach age 80. The majority, 59 percent, also supported reducing Social Security payments to wealthy Americans who didn’t need it. Those poll results reflect sizeable majorities to act now to expand the program.     

But on the perilous side, the starting line for PCP’s exercise reflects the conservative bias that elevates concern about projected finances in 2033 above whether today’s benefits are enough, let alone in two decades. PCP mostly frames the challenge as ensuring retirees do not see a 23 percent cut in benefits in 19 years due to inadequate income tax revenue. Anti-tax Republicans and Wall Street financiers have cited those projections to call for cuts now, or political compromises that will not ensure that tens of millions of people age with dignity and stay out of poverty—why it was created in the 1930s.

Seizing The Political Third Rail

Nonetheless, this new Washington-based initiative signals a changing political landscape and willingness to tackle an issue that was long thought to be political suicide—tinkering with America’s most popular government-run social insurance program.

“When we talk about Social Security, many of us will immediately think about the third rail idea—that you can’t really touch this because it’s too hot,” said Marvin Kalb, the ex-CBS and NBC reporter, in opening remarks as he moderated a panel presenting PCP’s findings. “Well this study that’s before us today is called, ‘Is It Really a Third Rail’ and ‘How the American People Would Reform Social Security.”   

“The overall ground is to show public respondents and people who want to take the exercise how is the problem painted by the people who are responsible for painting it—for showing the elected members of Congress how the problem looks,” Kull said, going through the project’s policy-shaping process. “It goes back to trying to simulate the experience that members of Congress have.”
PCP’s project, dubbed “Voice of The People,” comes amid growing awareness that much of the 76-million-member Baby Boom generation—in all demographics—has not saved enough for their retirement, making Social Security and Medicare their primary means of support. That’s because employer-provided pensions have been vanishing for decades, and the private investment plans that replaced them, such as 401Ks, are insufficient. Only 20 percent of seniors, earning more than $58,000 a year, will not rely on Social Security as their main income, the National Academy of Social Insurance has found.

Last July, PCP enlisted 738 people from around the country in a process that they call the “citizen cabinet model.” They first briefed the participants as Congress’s staffers would brief elected officials—using staff Republican and Democratic analyses from House and Senate committees that deal with Social Security. They also used papers from advocacy groups: the conservative American Enterprise Institute and liberal National Academy Of Social Insurance. Then they convened groups to go through the policy options, starting with separating facts from partisan opinions. They noted the pros and cons of choices, and finally polled participants on solutions.

The briefings started by explaining Social Security’s basics, which are not complicated. The social insurance program is funded by payroll taxes on the first $117,000 of taxable income. Benefits are calculated by averaging lifetime earnings, although lower-income people receive a larger percentage than wealthier people. Today, average retirees receive $1,290 a month. The foremost problem presented was that after 2033 the revenue paying for this level of support, after future cost-of-living increases, will run out and benefits will have to be cut by 23 percent unless “reforms” are undertaken.

The solutions presented were not just what’s been noted on progressive websites—which favor increasing Social Security taxes to cover the far-off shortfall and to expand benefits now. Participants were asked whether benefits should be cut for high income people who don’t really need them. They were asked if the retirement age should go up; it’s now 66 and becomes 67 in 2027. They were asked if payroll taxes should be increased slightly, and if the cap on taxable earnings should raised or be scrapped.

They also were asked if minimum benefits should be higher, and whether benefits should go up again at age 80. Finally, they were asked what cost-of-living formula should be used for calculating annual increases; one cutting future benefit levels compared to what is used today (the so-called chained CPI, which has been endorsed by President Obama) or another one that’s more targeted to elderly buying trends, called the CPI-E.

Surprising Results

To start, 72 percent of participants—66 percent Republicans, 82 percent Democrats—had “positive” views of Social Security. Slightly more than half said that the average monthly benefit was “about the same as you expected.” More Republicans, 57 percent, said that they knew about “the [revenue] shortfall,” compared to 50 percent of Democrats.

The way these discussions unfolded—from prior knowledge, to briefings, to discussing reform pros and cons, to voting on options—was noteworthy. The longer people talked, the more certain approaches emerged with growing bipartisan support, Kull said, until popular ideas crossed a threshold. For example, two-thirds found it “at least tolerable to reduce benefits for the top 25 percent of earners. Just under half found tolerable reducing benefits for the top 40 percent,” PPC reported. “Reducing benefits to the top 50 percent was found tolerable by only one-in-three, with little difference among the parties.”
In other words, means-testing for Social Security benefits, is seen as a fair policy—as long as people who will really need the monthly stipend don’t see unnecessary cuts.

On raising the retirement age, “six in ten found [it] at least tolerable raising the age to 68, with no difference between the parties.” But 69 was too high for most Democrats and for half the Republicans. And raising the onset of benefits to 70 was opposed by 75 percent.

Perhaps the most intriguing results concerned raising or eliminating the cap on taxable earnings. When provided with narrow partisan arguments, pro and con, for raising the cap from $117,000 to $215,000 over 10 years, 66 percent agreed with the case for raising it, while 59 percent agreed with the case against it. Kull said this result wasn’t entirely a contradiction, but more a measure of the strength of different positions.

When the case was offered for eliminating the cap—“the incomes of the wealthy have been growing by leaps and bounds, while the incomes of the middle class have been stagnating”—76 percent agreed. Meanwhile, the argument against eliminating the cap— “high earners just saw their income taxes, investment taxes and Medicare taxes increased”—was the least convincing of all, garnering only 47 percent support. Thus, the more time that people took to understand the issue, the more support there was for the most progressive solutions—raising taxes on those most able to pay in order to fortify present and future benefits.
PCP’s spokespeople said that their policy-making exercise, which they plan to take to congressional districts in coming months, showed there was a middle path possible to modernize the nation’s biggest social insurance program.
“One of the central issues that I get from reading this study is that for those people who feel that there is no way around this third rail, there is,” Kalb said. “If you address it from the point of view of what the American people think about a possible solution, what you come up with is that by sizeable majorities, both Democrats and Republicans, the American people do feel that a sensible compromise is the way to go. And that sensible compromise involves, on the one hand, obviously, raising taxes, and on the other, limiting benefits that are available. But balancing the two, in an intelligent way, can be done in the opinion of overwhelming majorities of the American people.” 

“I think this is a wonderful moment to tackle Social Security because we’re not going to have budget action for the next year or two,” said Alice Rivlin, ex-Clinton White House budget director. “One of the cogent arguments that the advocates for the elderly make was, ‘We do need to solve the Social Security problem, but not in the budget context: don’t balance the budget on the backs of the elderly and do it as something separate.’ Well now is our chance to do something separate.”

Living Wages And Minimum Benefits

Even though these conclusions point to solutions championed by progressives for a long time, it’s important to note that PCP’s public engagement process is by no means the whole discussion. At PCP's press conference, Ben Veghte, research director for Social Security Works, said the discussion about “shortfalls” was not just about money, but also about Social Security’s public purpose. When he asked if that was part of PCP’s briefings, Kull replied that their process mostly relied on congressional reports for issue analyses, and that point seemed like an argument—a secondary concern—but he’d note the suggestion.

What seniors who outlive their savings will live on in coming years—which is forecast for tens of millions of baby boomers—is what gets lost when the focus is mainly on preventing a projected 23 percent cut in benefits in 19 years. However, PCP’s report offered some stiking statistics that highlight how different policies can mean big shorter-term differences between falling into poverty or not.

For example, today’s minimum benefit, about $770 a month, is currently below the federal poverty line. To raise that to 125 percent of the poverty line, or about $1,150 a month, “would increase the [projected 2033] Social Security shortfall by 7 percent,” they reported. But at the press conference, Kull said that eliminating the income tax cap would bring the Social Security Trust Fund in 2033 to 117 percent of projected payouts. In other words, that’s one simple way to strengthen and expand current and future benefits.

The framing of this discussion, especially at this early stage, is crucial. Another missing piece today would compare Social Security benefits to the the minimum wage—since the idea of Social Security is a social insurance program that provides a basic pension for people with little other income.

Today’s average monthly retiree benefit of $1290 would break down to $8.06 an hour if it were calculated based on 40 hour weeks. That’s poverty-level income. Even President Obama in the State Of The Union speech called for raising the federal minimum wage to $10.10 an hour, which equates to $1616 a month. In California, where living costs are higher, Republican Ron Unz is bankrolling a fall 2014 state ballot measure to lift the state’s minimum wage to $12 an hour—which translates to $1920 a month.

It’s eye-opening to contrast what’s being discussed today as a minimum living wage to what’s under discussion for Social Security payouts. As groups like Program for Public Consultation take their policy-creating process on the road, they are likely to hear that America’s retirement security crisis is at hand now, and involves much more than just balancing the projected books in 2033.

These are the individuals who have contributed to AlterNet's Retirement Crisis Reporting Fund:

Nancy Adams | Maria Alvarez | Dolores Amato | Sara Baker | Jerry Banks | Catherine Barnes | Patti Batchelder | Maryann Bayne | William Bell | Hugo Benoit | Werner Bergman | Lisa Beutler | Patricia Bewley | Gary Billey | Gary Binderimz | Rosemarie Blake | Bhikkhu Bodhi | Robert Bottman | Christopher Boutelle | Angus Bowen | B. Bowers | Charles Brainard | Kern Braswell | Catherine Brave | Jody Breslaw | Kim Brown | Marilyn Bruning | Bonnie Burkart | John Burke | Jeffrey Cancilla | Alice Canty | Dorothy Cinquemani | Kenneth Clark | Suzan Clausen | Robert Cohen | Harriet Cohen | Sandra Colombo | Michael Conley | Casey Conner | | Eugene Constant | Rachel Cooke | Peter Costello | Sydney Crawford | Iris Culter | Kathleen Daugherty | Gary Davis | Michael Davis | Richard Dawson | Jorge De Cecco | Kenneth Deed | Nandi Devam | Kim Dexter | J.A. Dingman | Elizabeth DiPalma | Patricia Dodds | John Doheny, Jr. | Gloria Donohue | Don Dougherty | Albert Driscoll | Stu Duckman | Ronald Dumont | Kim Ecclesine | Nancy Eckel | Cynthia Ellsmore | Edwin Engelmann | Judith Espovich | Virginia Eyman | Matthew Farrell | Karen Fedorov | Perrin Ferris | Thomas Firpo | Carolyn Fletcher | Christopher Flores | Terry Fontenot | Barbara Ford | Thomas Friel | Linda Fulton | Larry Gaylord | Marion Gehlker | David Glater | Nancy Goldberg | Donald Goldmacher | Alison Gomez | Florence Granowitter | Emily Greene | David Griscom | Terrence Grywinski | Shawn Hansen | Debra Harpole | Louise Harris | George Hart | Stuart Hartley | Bill Healey | Geoffrey Hendricks | Robert Henning | Marion Hirseman | Martin Hittelman | Cathy Hoot | James Hopkins | David Huhn | Will Husa| Ayed Hyder | Linda Irenegreen | Aaron Jacobs | Bobie Johnson | Wynn Kapit | Elizabeth Kelley | Jae Kenworthy | Ronald Kestler | Anita Kichefski | Jeremy Kilborn | W. Kimzey | Kerry Kleiber | Denise Kobylarz | Sandra Korn | Nancy Kranich | John Kyper | Bruce Lee | Marilyn Lee | Theodore Leibowitz | Carol Lemieux | Henry Lesnick | Betty Leyerle | Ellen Linnemanstons | Robert Lipsyte | Joan and Wallace MacDonald | Susan MacMillan | Charlene Maker | Barry Maloney | Josepha Maly | Tommy Mandel | Lawrence Mar | Louis Mariani | Joseph Mastalski | Annie Masters | Chris Matthews| George Matkovits| Kay Matthews| Frank McEvoy| Gail McMullen| Kevin Meismer| Elizabeth Mewhinney| Mary Micek| Rosemary Migas | Claire Mills |  Jonathan Morris | Nina Murano | Christine Murphy | John Murrill | Deborah Mytels | Jean Naples|  Peter Nasatir| Aileen Nelson| Terrance Newton| Deborah Nitasaka| D. Ocker| Janet Ohlhausen| Clifford Olin| Judith Pearson| Charles Percival | Jeanne-Marie Peterson | Mary Peterson | Cynthia Peterson | Ted Pfeiff | Brian Porter | Rudolph Radau | Joseph Rainho | Richard Rayford | Lisa Reswick | Debbie Richards | Sharon Richey | Leonard Rifas | Marvin Ritzenhaler | Nancy Roca | Edwin Rogers | Sue Rosen | Richard Ross | Nancy Ryan | Susan Salazar | Joseph Sanchez | Terry Sanders | Elizabeth Sands | Carole Sauriol | Carol Scher | Scott Scherman | Wanda Schertz | Gerda Seaman | Carolyn Semiglasow | Marlene Shaner | Elaine Simon | Crystal Sloa | Sara Sogut| Helen Sohne| Priscilla Solomon| Wayne Stinson| Patricia Stroud| Francis Sullivan, Jr.| Jyun Takagi| Tasmin Taylor| Diane Thatcher | C. Thompson | Keith Thornton | Lisa Tomchesson | Priscilla Toth | Catherine Twohill | Eric Weis | Teresa Welborn | Wilma A. Wheeler | Joel White | Dolores Whitman | Terry and Barbara Williams | Hugh Wilson | Liddy Wilson | Carroll M. Wilson | Eric Wilson | Jack Wilson | Charles Witt | William Woodward | James Woolsey | Eleanor Wynn | Christine Wynne | David Yamada | Leroy York, II | James Young | Marian Zaouk | Susan Zencka

Steven Rosenfeld covers democracy issues for AlterNet and is the author of "Count My Vote: A Citizen's Guide to Voting" (AlterNet Books, 2008).

Crybabies of the 1 Percent: The Rich Complain While Getting Away With Everything

  Culture  

Salon.com / By Paul Campos

Crybabies of the 1 Percent: The Rich Complain While Getting Away With Everything

 

Forget affluenza. The rich's real "disease" is failing to get that their privileges come at a price: our contempt.

 

Photo Credit: Shutterstock.com/Felix Mizioznikov

 

 

 

February 8, 2014  |  

 

 

 

More than half a century ago, “West Side Story” satirized the idea that what was then known as juvenile delinquency was a product of poverty and the psychological maladjustments it produced, and that therefore “this boy don’t need a judge, he needs an analyst’s care.”

Since then, America has been busy transforming itself into an unabashed plutocracy: while median household income has barely budged since the mid-1960s, the annual income of the top 1 percent has increased by an average of approximately 200 percent in real terms.

So perhaps it’s not surprising that the belief that economic deprivation leads to psychological hardship, which in turn inspires youthful crimes, has not merely been discarded but, in some cases, actually inverted.

Consider the case of a Texas teenager who killed four people and severely injured two others while drunk-driving in his father’s pickup truck. Prosecutors wanted to send him to prison for 20 years, but a judge decided to give him no jail time at all after an expert witness for the defense testified that the defendant was suffering from “affluenza.”

This affliction, the psychologist testified, was a product of the defendant having spent his life in the lap of luxury. Having his parents’ cash between himself and reality had left the killer of four of his neighbors unable to make the connection between his decisions – such as his decision to drive a two-ton truck down a residential street at 70 miles per hour while drunk out of his mind – and the potential consequences of those decisions.

In short, the defense team argued, their client was depraved because he wasn’t deprived.

This argument seems to have worked on the judge, who sentenced the defendant to 10 years of probation after his wealthy family offered to pay for their son’s confinement in a $450,000-per-year in-patient facility, where apparently young scions are therapeutically guided toward the insight that randomly slaughtering your fellow citizens as a predictable consequence of your own selfishness and stupidity is a bad thing to do.

Understandably, the judge’s decision has outraged many people, including the families of the victims. Eric Broyles, whose wife and daughter were killed by the defendant, argued that “had he not had money to have the defense there, to also have the experts testify and also offer to pay for the treatment, I think the results would have been different.”

That’s probably true.  The rich can to a significant extent buy their way out of suffering the full consequences of their crimes and those of their children – not primarily through crude (and, and in the American justice system, fairly rare) mechanisms such as bribing judges and prosecutors, but because to be rich means that you will have almost limitless opportunities to manipulate the system toward working in your favor.

All this brings to mind the recent controversy over Tom Perkins’ remarks, comparing animosity toward the rich to the kind of hatred that eventually culminated in the genocidal persecution of the Jews by the Nazis. Perkins’ absurd exaggeration elicited a storm of condemnation, and rightly so.
Perkins’ remarks (which have been echoed by various other 1 percenters) point to the real affluenza, rather than the fake syndrome conjured up by an expert witness to help get a rich kid off the hook for four homicides. The real affluenza is the failure of the rich to appreciate that their special privileges – such as the privilege of operating under what is, from a practical perspective, a substantially different justice system than everyone else – must come at a price.
That price is paid in the form of the growing contempt of their fellow citizens, a contempt that grows in proportion to the ever-increasing gap in America between the children of privilege and everyone else.

Paul Campos is a professor of law at the University of Colorado at Boulder.

Turn on, Start Up, Drop Out

Slate

Politics

Who's winning, who's losing, and why.

Oct. 16 2010 7:49 AM

Turn on, Start Up, Drop Out

Hyper-libertarian Facebook billionaire Peter Thiel's appalling plan to pay students to quit college.

By Jacob Weisberg

 

Peter Thiel

If you've seen The Social Network, you may have caught a passing glimpse of Peter Thiel. Thiel was the first outside investor in Facebook, putting up $500,000 to finance the site's original expansion in 2004. In the film's version of events, he connives with Sean Parker, the founder of Napster, to deprive Mark Zuckerberg's friend Eduardo Saverin of his 30 percent stake in the company. Though the character based on Thiel appears on-screen only briefly, Aaron Sorkin's screenplay demolishes the German-born venture-capitalist in a single line: "We're in the offices of a guy whose hero is Gordon Gekko."

Jacob Weisberg

 

Jacob Weisberg is chairman and editor-in-chief of The Slate Group and author of The Bush Tragedy. Follow him on Twitter.

While he clearly enjoys playing Richie Rich—various profiles have commented on his Ferrari Spyder, his $500,000 McLaren Supercar, an apartment in the San Francisco Four Seasons, and a white-jacketed butler—Thiel fancies himself more than another self-indulgent tech billionaire. He has a big vision and has lately been spending some of the millions he has made on PayPal, Facebook, and a hedge fund called Clarium trying to advance it. Thiel's philosophy demands attention not because it is original or interesting in any way—it's puerile libertarianism, infused with futurist fantasy—but because it epitomizes an ugly side of Silicon Valley's politics.

To describe Peter Thiel as simply a libertarian wildly understates the case. His belief system is based on unapologetic selfishness and economic Darwinism. His most famous quote—borrowed from Vince Lombardi—is, "Show me a good loser and I'll show you a loser." In a personal statement produced last year for the Cato Institute *, Thiel announced: "I no longer believe that freedom and democracy are compatible." The public, he says, doesn't support unregulated, winner-take-all capitalism and so he doesn't support the public making decisions. This anti-democratic proclamation comes with some curious historical analysis. Thiel says that the Roaring 20s were the last period when it was possible for supporters of freedom like him to be optimistic about politics. "Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women—two constituencies that are notoriously tough for libertarians—have rendered the notion of 'capitalist democracy' into an oxymoron," he writes.

If you want to go around saying that giving women the vote wrecked the country and still be taken seriously , it helps to be handing out $100 bills. What differentiates Thiel's Silicon Valley style of philanthropic libertarianism from Glenn Beck's screaming-raving-weeping variety is a laissez-faire attitude toward personal behavior and the lack of any demagogic instinct. Thiel, who is openly gay, wants to flee the mob, not rally it through gold-hoarding or flag-waving.  Having given up hope for American democracy, he writes that he has decided to focus "my efforts on new technologies that may create a new space for freedom." Both his entrepreneurship and his philanthropy have been animated by techno-utopianism. In founding PayPal, which made his first fortune when he sold it to eBay for $1.5 billion in 2002, Thiel sought to create a global currency beyond the reach of taxation or central bank policy. He likewise sees Facebook as a way to form voluntary supra-national communities.

Offline, Thiel is the lead backer of Seasteading, a movement to create law-free floating communes based on voluntary association. Led by Milton Friedman's pajama-wearing  grandson,  this may be the most elaborate effort ever devised by a group of computer nerds to get invited to an orgy. (Let's build our own Deepwater Horizon with legal prostitution!) Thiel is also an investor in space exploration, with the avowed aim of creating new political structures even farther offshore. That could take some time, but Thiel—who loves robots and science fiction—has a plan for that, too. He has given millions to the Methuselah Foundation, which does research into life-extension based on the premise that humans can live to be 1,000 years old. At PayPal, he proposed making cryogenic storage an employee perk. 

It should be noted that Thiel has also supported some genuinely good and useful causes, like the Committee to Protect Journalists. But Thiel's latest crusade is his worst yet, and more troubling than the possibility of an unfrozen caveman venture capitalist awaking in the 22^nd century and demanding his space capsule. The Thiel Fellowship will pay would-be entrepreneurs under 20 $100,000 in cash to drop out of school. In announcing the program, Thiel made clear his contempt for American universities which, like governments, he believes, cost more than they're worth and hinder what really matters in life, namely starting tech companies. His scholarships are meant as an escape hatch from these insufficiently capitalist institutions of higher learning.

Where to start with this nasty idea? A basic feature of the venture capitalist's worldview is its narcissism, and with that comes the desire to clone oneself—perhaps literally in Thiel's case. Thus Thiel fellows will have the opportunity to emulate their sponsor by halting their intellectual development around the onset of adulthood, maintaining a narrow-minded focus on getting rich as young as possible, and thereby avoid the siren lure of helping others or contributing to the advances in basic science that have made the great tech fortunes possible. Thiel's program is premised on the idea that America suffers from a deficiency of entrepreneurship. In fact, we may be on the verge of the opposite, a world in which too many weak ideas find funding and every kid dreams of being the next Mark Zuckerberg. This threatens to turn the risk-taking startup model into a white boy's version of the NBA, diverting a generation of young people from the love of knowledge for its own sake and respect for middle-class values.

There is, of course, another model of Silicon Valley politics, which finds its exemplars in the clean-tech race, in Google's self-driving cars and wind farms, and Bill Gates' philanthropy. Zuckerberg too shows signs of actually caring about other people, having just donated $100 million to support change in Newark's blighted public schools system—as opposed, to say, an orbiting satellite base for unregulated short-selling. Tech prodigies sometimes grow up late. Perhaps Peter Thiel will one day as well.

Correction, Oct. 17, 2010: This article orginally referred to the Cato Institute as the Cato Foundation. ( Return to the corrected sentence.)

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