Rupert Murdoch owns the Wall Street Journal, where John Carreyrou first published his take-down of Theranos. Murdoch had a substantial investment in Theranos, about $125 million according to this account. People at Theranos knew that a big, damaging news story was coming. CEO Elizabeth Holmes tried to get Murdoch to bury the story. She met with him four times to plead with him to kill the story. Murdoch repeatedly told her that he trusted the integrity and professionalism of his newspaper's editorial board with regard to running the story. He would not interfere in their decision. Props to Murdoch for his journalistic integrity on this count.
What's more interesting to me than one old man showing journalistic integrity is the broader lesson about how the world works. I don't think this is just an isolated anecdote about one decision made by one man. It repudiates a widely believed worldview that goes something like: The rich dominate the world. There are different versions of this narrative with different degrees of plausibility, and they differ in the degree of paranoia. The most extreme goes something like: a cabal of billionaires totally dominate politics and markets and basically get their way all the time. A less extreme version is given by Martin Gilens in his book Affluence and Influence. This book presents evidence that when the upper class (defined in terms of income quantiles) disagrees with the lower classes about policy, the rich have a slight tendency to get their way. Even this moderate version is probably wrong, but it's widely believed that something like this happens. Presumably there are gradations of this narrative between these two extremes and most people fall somewhere on this continuum between "cabal of billionaires utterly calling the shots" and "gentry class slightly getting their way in policy decisions." In fact, I think most people couldn't even articulate what version of this story they believe, they just vaguely think "the rich call the shots" because it sounds right. (I think most people are sleep-walking with respect to their political opinions, in the sense that they don't give deep or serious thought to what they actually believe.)
By what mechanism might someone in this cabal of wealthy masters exert their influence? Presumably making editorial and staffing decisions at a newspaper that you yourself own is a start. Murdoch could have probably killed the story and fired Carreyrou with little more than a phone call. Or he could have demanded access to all of Carreyrou's information and thus had millions of dollars (maybe hundreds of millions) worth of insider information. There are many ways he could have leveraged his position or private information to unload his worthless investment on someone else. But he declined to do any of these things. It seems like if the "rich cabal dominates the world" narrative is correct, we'd see more instances of this happening.
There are various ways of dismissing this anecdote. "It is just an anecdote, and actual examples of underhanded influence are happening all the time." Maybe, but this just seemed like the prime opportunity for someone to use their influence. Instead this arch-conservative media mogul and business man, kind of a boogie-man of the left, actually showed journalistic integrity. "It was a huge tax write-off for him, so Murdoch didn't care about the loss." This is a fair point, and Carreyrou actually makes it in his book. Still, 65% of a hundred million dollar loss is a big loss. It's nice to offset your gains with your losses, but it's even nicer to not have those losses in the first place. His tax liability would have been higher if Theranos had been a gain instead of a loss, but on net he would have made more money. There are also ways of dismissing the anecdote that actually support my point. "He would have committed insider trading and been criminally liable." If this is the case, then the constraints that apply to the rest of us must also apply to this supposed secret ruling class. "Theranos would have eventually been found out, and Murdoch's huge investment loss would simply have come later." Again, this dismissal implicitly accepts that a media mogul actually doesn't have all that much influence, even with regard to information, even with regard to a story in which his own newspaper is the head of the spear.
I don't want to overstate my case. At the end of the day it really is just one story about one guy making one decision. But combine it with the fact that the richest men in the world are trying to out-do each other in how effectively they can give away their money to charity. Combine it with the fact that politicians get utterly destroyed by even minor instances of campaign finance malfeasance or other untoward behavior. Combine that with the very high rates of taxation on capital (capital gains, the corporate tax (which mercifully was reduced very recently), inheritance taxes, property taxes); either rich people like being taxed or, contra the "rich domination" story, populists actually get their way in public policy. Some version of the "rich people tend to get their way" story might be true, but the notion of utter domination by a moneyed interests is constantly being contradicted. Maybe it can be saved with a "that's what they want you to think" conspiricism, whereby contrary evidence is "really" proof that they have their hooks in everything and can control the narrative. But that's getting paranoid in the extreme.
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I want to preempt a "You would argue something like that, you libertarian you!" kind of response. The argument I'm making above is actually kind of inconvenient for libertarians. Some libertarians like to argue that government is just utterly corrupt to the core, and that's why we should slash the state. I think this is mistaken. For sure there is graft and special interests profit from public funds, but overall out political institutions function with little corruption. I see more of a "Baptist and Bootlegger" story, where some popular cause, perhaps a morally self-righteous one, initially has public support for well-intentioned reasons. But moneyed interests actually do the hard work of writing the laws and allocating the funds and lobbying for funding or regulatory action. Suppose a populist president promises tariffs and other trade restrictions, but then sympathetic interest groups (auto workers, farmers) that are harmed by the tariffs get special dispensations. (Crazy, right?) Those sympathetic interest groups will fight very hard for their special treatment, and perhaps carve out special exemptions from the tariffs that specifically benefit themselves. But the tariffs wouldn't happen in the first place without popular support, nor would the special dispensations be possible without the interest groups being sympathetic (from the point of view of the voting public, as a whole). Rule by secret oligarchs sounds awful, but so does rule by unconstrained populism. I think American politics is dominated more by the latter than the former.
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