How the Billionaires’ Shadow Government Worksby
There is no shortage of billionaires -- the Koch brothers, Carl Icahn, Dan Loeb and, yes, Mike Bloomberg, to name a handful -- who are willing to use their vast wealth to push a particular political agenda or to advocate for a specific social reform. That’s hardly a revelation.
Then there’s Tom Steyer, a former Goldman Sachs Group Inc. arbitrager who was mentored by Robert Rubin and eventually formed the San Francisco hedge fund Farallon Capital Management. Since then, Steyer has made a bloody fortune. He has never spoken publicly about how he raked it in at Farallon. Nor has he talked on the record about his years at Goldman. (He didn’t respond to my interview requests when I was writing a book about Goldman in 2011.)
But now that he has departed Farallon to become a political activist -- some say he is considering a run for the U.S. Senate or the governorship of California -- he is everywhere. Last month, the New Yorker’s Ryan Lizza wrote a lengthy profile of Steyer. This month, Bloomberg Markets magazine explained why Steyer has teamed up with Henry Paulson, like Rubin a former Treasury secretary and Goldman chairman, as well as with Bloomberg, the outgoing New York City mayor and the founder and majority owner of Bloomberg LP, the parent of Bloomberg News, to commission a study about the economic consequences of failing to curb carbon emissions.
On Oct. 1, at a benefit for the North Country School and Camp Treetops in New York’s Adirondack Mountains, Steyer and Bill McKibben, his fellow environmental activist, led a panel discussion on their efforts to defeat the Keystone XL pipeline. That is the controversial pipeline that would transport crude from the oil sands in Canada to the Gulf of Mexico.
Steyer, the billionaire, and McKibben, the Middlebury College professor, founder of 350.org and longtime political activist, make an odd couple, for sure. But their message about the economic consequences of climate change has sufficient resonance to cut through the thicket of today’s political discord.
Steyer dismissed “as baloney” his opponents’ argument that reducing dependence on fossil fuels will result in short-run job losses. If we change our energy consumption “so that we are actually on a sustainable path from an energy standpoint, it will be one of the great challenges we’ve ever taken on, and it will also be one of the great job creators,” he said.
He pointed out that Keystone would create a mere 3,500 jobs during the two-year construction phase and then only 35 permanent jobs. “That’s just a mindboggling low number, and this is supposed to be a jobs program,” Steyer said. “If we wanted to go out and do the kind of energy-saving in commercial buildings that we need to do, that we are inevitably going to do,” that would create between 1.5 million and 2 million jobs. Repairing natural gas pipelines, some of which are made out of wood, would add 1 million to 2 million more jobs, he said. “And they’re going to be American jobs.”
The purpose of the Steyer-Paulson-Bloomberg study, Steyer said, is to debunk the argument that doing nothing about climate change has no economic consequences. “Doing nothing is a decision that’s going to have incredible costs,” Steyer said. “Making no decision is a very definite decision. It’s incredibly foolish and short-sighted.”
McKibben claimed that, in the last year alone, the federal government spent more money cleaning up the effects of Hurricane Sandy and the drought in the Midwest than it did on public education.
It is no longer tenable for people to deny the effects of climate change, McKibben said. The increase in average temperatures worldwide has led to melting icecaps and rising sea levels. “If the emission of carbon into the atmosphere had no other effect” than to drive up temperatures, the drastic changes in the chemistry of the earth’s surface, 70 percent of which is covered by saltwater, should be more than enough reason to convene “every kind of emergency meeting we could think of to get off fossil fuel,” he said.
McKibben also points out that, during Hurricane Sandy, barometric pressure was the lowest ever recorded north of Cape Hatteras in North Carolina. “When we talk about a different world, that’s what we’re talking about,” he said. “There are things that could happen now that could not happen before.”
He said that for every gallon of gasoline (which weighs about 7 pounds) burned, about 22 pounds of carbon dioxide are released into the atmosphere. “The volume is astonishing,” he said.
Both Steyer and McKibben agreed that, while their effort to convince President Barack Obama to reject the Keystone pipeline had made some progress, they have reason to worry that the fossil-fuel industry will win in the end. “You can predict with unerring accuracy how a congressperson will vote, depending on how much money” he or she takes from the industry, McKibben said.
That prompted Steyer to make an impassioned plea for working within the system to change it -- an approach that, thanks to the Supreme Court’s Citizens United decision, allows Steyer to deploy his billions. “We have a system of social change that’s worked for over 200 years,” he said. “It’s called elections. Democracy is not a spectator sport. If we feel strongly about this, we have to embrace that system. We have to participate in that system. We have to use the system the way it’s set up, and pull the levers so that we get across our message and convince people and win actual votes, and that’s what we’re trying to do.”
The promise that Steyer, Paulson and Bloomberg might use their collective billions to slow global warming is reassuring -- and a pleasant change from the dysfunction in Washington that has prevented lawmakers from accomplishing much of anything. Let’s hope their vision can be implemented before it’s too late.
(William D. Cohan, the author of “Money and Power: How Goldman Sachs Came to Rule the World,” is a Bloomberg View columnist. He was formerly an investment banker at Lazard Freres & Co., Merrill Lynch and JPMorgan Chase.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
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