Interviewed on CNBC, Leon Cooperman, described by Marketwatch as the “billionaire boss at Omega Advisors,” complained ominously about the prospect of Elizabeth Warren or Bernie Sanders being elected US president. He explained why it would be bad for the economy. The author of the article, Shawn Langlois, dared to quote what he refers to as the “Financial Twitterati,” who cite historical statistics to call into question Cooperman’s dire forecast.
In his interview, Cooperman offers two powerful truisms, complemented by a third from the pen of Langlois: “You don’t make the poor people rich by making rich people poor” (Cooperman); “That’s the thing about markets … they’re hard to predict” (Langlois); and “[C]apitalism is what brought America into the position we’re in today” (Cooperman).
Here is today’s 3D definition:
A statement that is objectively or at least superficially true because it announces something that is already obvious while often inadvertently revealing a meaning opposite to the message the speaker intended to convey
It’s always worthwhile to examine how truisms work and where they come from. Let’s start with the first one: “You don’t make the poor people rich by making rich people poor.” This is so obviously true that it might appear to be a convincing proof that discredits any argument in favor of the sharing or redistribution of wealth. Its logic nevertheless rests on the manifestly false premise that transferring money from rich people impoverishes them or makes them poor.
A simple thought experiment demonstrates the speciousness of the claim. Imagine the case where a person with $10 billion is obliged to give away $1 billion or even $5 billion — or why not, while we’re at it, $9.5 billion — to feed the starving, improve communal infrastructure or provide education for thousands of people. The operation of taking their money will definitely reduce the person’s fortune, but it will not make them poor. Poorer, yes, but certainly not poor.
Most people consider someone with a mere $1 million in assets to be rich, though clearly such a meager fortune leaves such people at the bottom of the scale of a class we call the “wealthy.” If the threshold between poor and rich is $1 million or even $5 million (the exact figure is of no importance), then only a tax policy that pushed people below that threshold could be called “making rich people poor.”
Now if we imagine that a brutal socialistic regime chose to “steal” and redistribute $9.9 billion of the $10 billion a rich person like US President Donald Trump claims to have, with half a billion remaining, that person would, in the eyes of most speakers of the English language, still be rich and in no circumstance could not be called poor.
For the statement to have its intended meaning and remain truthful, it would have to be reformulated as: You can make the poor people rich by making rich people poorer while still remaining rich.” But that would defeat the point of the truism. A further consideration might add another level of nuance by highlighting the fact that enrichment is not necessarily uniquely monetary: You can make the rich richer by using their wealth to enrich the rest of society, of which they are a part and in whose wealth they share.
This actually has strong standing as a truism because everyone accepts its validity. Socialists will claim it is fundamental to a culture that emphasizes solidarity. Militant capitalists, unconcerned by solidarity, will nevertheless agree on the basis that the rich are already enriching the rest of society by investing their wealth in the economy. The implication is that expecting any more from them (taxing them) is unjust because it limits their ability to create jobs for others by investing. But just as Cooperman intended the initial truism to prove that socialism is bad, the second truism is designed to prove that capitalism is unjust and impoverishes everyone (including the rich).
Langlois, rather than Cooperman, offers this truism: “That’s the thing about markets … they’re hard to predict.” No one could possibly contest this easily observable truth. But what does it add to the conversation?
Langlois presents statistical evidence in the article that two Democratic presidents have had a more positive impact on the markets than Republicans. This counters Cooperman’s claim that if either of two Democratic primary candidates, Warren or Sanders, is nominated, “the market will be lower.” Langlois is right to call into question Cooperman’s prediction because it is only a prediction. He is less justified in supposing that Warren or Sanders would, simply because they’re Democrats, produce the same effect as a Clinton or an Obama. Cooperman, after all, claims in the interview that he “could live with” the Democrat Joe Biden, who would certainly follow the model of Barack Obama and Bill Clinton.
With the final truism, Cooperman wants the public to believe that it’s dangerous to threaten the historical heritage of capitalism: “[C]apitalism is what brought America into the position we’re in today.” This time, because it appeals to history rather than logic, the apparent truth of the statement requires a further level of reflection.
Capitalism has been in place for a good 200 years, so everything that exists in today’s world can be called a result of capitalism. According to the same logic, as fascism was in place in the 1930s, during which Germany’s prosperity grew under Adolf Hitler, you could just as justifiably say that fascism (and capitalism) brought Germany to its dominant position in Europe.
Cooperman claims that Warren’s “policies are counterproductive,” presumably because they deviate from the capitalist orthodoxy that he claims brought the US to its current position. But historians have noticed that the enviable economic and geopolitical position of the US today was also brought about by other factors, such as land grab that implied the organized genocide of the Native American population, centuries of slavery and manifestly unjustified wars that include crimes against humanity.
For Cooperman’s truism to be not just true but meaningful, we must accept that only one significant condition be considered as the unique, necessary cause of the dominant position attained. But history and the success of nations grow from both the convergence and divergence of multiple conditions. Choosing one and neglecting all others is unscientific. Therefore, even if it sounds like a truism, Cooperman’s claim cannot be literally true. Implying that there is one unique cause of anything is at best naive, and more likely disingenuous.
But there is a moral dimension that makes this kind of truism even more suspect. To see it as true requires assuming and accepting that what Cooperman deems a successful “position” in history can only be measured by the health of its “markets.” And even that term is loaded, since “markets” itself no longer designates places of human exchange, but principally stock markets governed by the logic not of human and social needs, but of speculative investment.
The truth of this last truism can also be tested by what Cooperman certainly didn’t intend to be noticed. When considering “the position America is in today,” beyond the stock market, on the one hand, and the nation’s global reach on the other, it would be negligent not to include what many observers and historians have now noticed: the decline of the empire. Decline in prestige, in credibility of its diplomacy, in respect, in sustainability and in internal unity. That is without mentioning specifics, such as health, life expectancy, financial security for the average person, psychological balance, stability of families, social integration, job satisfaction and belief in shared values.
In the eyes of professionals like Cooperman, asset value is the unique measure of growth and decline. So long as that well-tracked scale is kept in public view — and the news media keep a running tab on “the markets” 24/7 — the factors of decline will be written off as blips on the radar or annoying behavioral variations. Consequently for the public of CNBC, Cooperman’s truisms will remain as well-founded and convincing as they appear to be in this TV interview.
*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]
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