Former VC Tom Perkins has some interesting thoughts about 1930s Germany and the U.S. today (Reuters)
First, they came for the bailed-out bankers' bonuses, and I did not speak out, because I wasn't a banker.
Then they came for the hedge fund managers' tax loophole, and I did not speak out, because I wasn't a hedge fund manager.
Then they came for novelist Danielle Steel's hedges, and finally I did speak out, because I know her, and I'm a knight—a literal knight of the Kingdom of Norway—so I thought I'd get on my high horse and charge forth in her defense.
This is the Ballad of Tom Joad Perkins, Silicon Valley's legendary venture capitalist. He had to speak out after he saw the appalling way the San Francisco Chronicle disparaged his ex-wife Ms. Steel's plots, prose, and shrubbery.
He showed that, for now at least, the pen is still mightier than even a knight's sword. He wrote a letter in the Wall Street Journal explaining that progressive attacks on today's so-called "1 percent"—the "rich"—are just like the Nazis' attacks on their 1 percent—the Jews. A new Kristallnacht, basically. Oops. That's insensitive. Perkins apologized on Bloomberg TV for using that word ... though he did point out that Occupy protesters broke windows at a Wells Fargo and luxury car dealerships in San Francisco. And that, he reminded us, is how Kristallnacht began.
So don't kid yourself. Today, they're coming for Bentleys. Tomorrow, they'll come for Aston Martins. The time to speak out is now.
Others have. Buyout-king (and actual-billionaire) Steven Schwarzman has said that Obama's plan to tax the income of venture capitalists, hedge fund and private equity mangers like everybody else's, and not as capital gains, is like Hitler invading Poland. And hedge funder (another actual billionaire) Leon Cooperman has pointed out that you know who else came to power amidst an economic crisis. And no, he wasn't talking about Ronald Reagan.
If it all seems historically illiterate and grossly short on perspective, here's why 1 percenters are sure Obama is the new Hitler.
1. They Feel Powerless. They had power, and they lost it. They lost it, because the financial crisis gave Democrats big enough super-majorities to unmake Reagan's world. And unmake it they did. Dodd-Frank didn't get as diluted as they hoped, so it (along with higher capital requirements) might slowly suck profitability out of the big banks. Obamacare will take leverage away from bosses and give it to workers who no longer have to stay in jobs they don't like for fear of being uninsured. And, as a certain bearded Princeton economist points out, average federal tax rates for the "top 1 percent" are higher than they've been at any time since 1979.
Sure, they saved the carried interest loophole for VCs, hedgies, and buyout titans—the Stalingrad of the 1 percent?—and sure, the rich can get Washington to talk about deficits nonstop. But they can't quite get Bowles-Simpson to fix the debt (and their taxes).
2. And They Might Not Ever Get Our Power Back. The tipping point might have already come and gone. America as they know it, a land where everyone dreams and can make it big if they work hard and have the right parents, is gone. The 1 percent knows America is now a nation of takers. Obamacare pushed them over the edge from Social Darwinism into dependency. Indeed, as Mitt Romney courageously pointed out, 4743 percent of Americans only pay federal payroll, not income, taxes. This near majority that's falling as the economy recovers will soon become a majority. Then the populous will vote themselves more and more benefits, and tax the rich more and more to do so. Just as Ayn Rand predicted.
3. Now the Rich Are the Victims. American capitalism had a fantastic run, but now it's over. It died on December 14, 2009, a day that will live in infamy. That's when Obama said he "did not run for office to be helping out a bunch of fat cat bankers on Wall Street."
For 25 years, politicians had understood that greed is good. That, as Perkins says, "it's absurd to demonize the rich for being rich and doing what the rich do, which is get richer by creating opportunities for others." That the best thing to do is to just cut taxes and regulations on the job creators—and then genuflect. Reagan did it, and markets boomed (median incomes didn't, but this is apparently besides the point). Clinton half-did it—he raised taxes but deregulated Wall Street —and everything boomed. And George W. Bush did it. I don't need to tell you how that turned out.
But Obama refuses to. It's no wonder the recovery has been so lousy (for everyone else). How do you expect the John Galts to go out and create value if you don't tell us what heroic entrepreneurs—and traders—they are? They won't. Not even if there are obvious money-making opportunities. That's just basic economics.
Instead, it's been open season on the rich—just like Obama wants. That's obvious from his latest State of the Union. Sure, he barely talked about inequality. And sure, he didn't even mention the notorious "1 percent" when he did. But look at what he did talk about: "Ladders of opportunity." You know who else used ladders? You might think that's paranoid, but Obama's brownshirts clearly got the message. So-called "progressives" have gone from organizing for socialist healthcare to Occupy Wall Street to, now, calling for public pre-kindergarten. Don't they know that's supposed to cost $40,000 a year?
Here's the scariest part for the 1 percent: Obama won't rein in the un-American class hatred he's unleashed. People didn't used to dislike the "rich." They used to want to be rich. But then Obama scapegoated Wall Street for the financial crisis it caused by calling bankers "fat cats"—and suddenly people were angry about the bailouts and being unemployed. It didn't make any sense. Now, Obama could have tried to explain it all, and at least one Wall Streeter asked him to:
The president had won plaudits for his speech on race during the last campaign, the guest noted. It was a soaring address that acknowledged white resentment and urged national unity. What if Obama gave a similarly healing speech about class and inequality? What if he urged an end to attacks on the rich?
Think about it: the 99 percent persecuting a powerless minority. The leader scapegoating that minority and raising their taxes. And a bigger welfare state—because you can't have national socialism without a proper helping of socialism. Yep, Obama's America is basically the same as Hitler's Germany. If only we could all go back to before World War I: before Obamacare, before Nazism, before constitutional income taxes. Ah, 1913. Never forget.