How American Oligarchy Works

By Robert Reich, Robert Reich's Facebook Page

28 December 19

rom time to time, I’m going to write in some detail about how the American oligarchy is shafting Americans by siphoning up the wealth of the nation for itself and corrupting our politics. Please let me know if you find these short summaries helpful.

Today’s example: Billionaire Paul Singer’s Elliott Management hedge fund, which has launched a campaign to lay off workers, sell off key assets, and extract huge short-term profits at AT&T – the iconic $270 billion company with 257,000 employees.

Singer wants AT&T to save up to $10 billion a year by outsourcing jobs, closing corporate retail stores and outsourcing to dealers, selling off assets (such as its Puerto Rican network).

And instead of using these savings to invest in better services and high-speed broadband internet, Singer wants AT&T to buy back its stock in order to get higher short-term share prices – a boon to Singer’s hedge fund, which has been buying up AT&T.

If Singer succeeds, he will hollow out a major U.S. employer and critical provider of broadband and wireless services.

Singer’s Elliott Management is a leading vulture capitalist with a track record of destroying jobs, reducing wages, abandoning communities, and pumping up share prices in the short term.

Its wrecking ball is worldwide. One of Singer’s few unsuccessful campaigns, to block a merger within Samsung, eventually led to the impeachment and imprisonment of the South Korean President after Singer’s opponents became so desperate to fend off his attack that they allegedly began bribing government officials.

Singer’s ventures generated average annual returns of almost 14 percent, making him and his executives hugely wealthy. The mere news that Elliott has invested in a company often causes its stock price to go up—creating even more wealth for him and his hedge fund. Singer’s own net worth is $3.5 billion.

Singer has been investing some of his riches in Republican politics. In the 2016 election he contributed $24 million, and continues to donate to the Republican National Committee and to individual Republican congressional candidates. Singer contributed $1 million to Trump’s Inauguration, and the two have met at the White House, at Trump’s request.

Not surprisingly, many policies enacted under Trump and Senate Republicans have benefitted Singer -- including corporate tax cuts, the shrinking of governmental agencies, and the aggressive elimination of regulations, particularly in the financial industry.

This is how the American oligarchy works, friends.