Louis Proyect: The Unrepentant Marxist

June 15, 2008

Bruce Kovner: capitalist pig of the month

Filed under: capitalist pig,real estate — louisproyect @ 6:05 pm

Bruce Kovner

Around 8 years ago I was puzzled to see scaffolding wrap the entire edifice of the International Center for Photography (ICP) on Fifth Avenue and 94th Street, about a five minute walk from my apartment. Was the museum, one of my favorite, being refurbished behind the metal cocoon? Nearly every museum in my neighborhood on the Upper East Side, where I am blessed to live at least for the time being, goes through expansion or remodeling from time to time.

Kovner’s house

I soon learned that the ICP had moved to midtown, something I found inexplicable. When a museum moves out of its long-time headquarters, something seemed deeply wrong, especially when I learned that some unnamed party had bought the building in order to turn it into his private mansion–an act I found barbarian.

In this week’s Nation Magazine, in a very good article on the “wealth gap” in New York by Gabriel Thompson, I finally learned the identity of the barbarian who purchased the ICP building. It was Bruce Kovner, a Jewish-American hedge fund manager who earned $715 million two years ago. Kovner is also one of the major funders of rightwing think tanks and journals in the U.S.A., including the American Enterprise Institute (AEI), the Manhattan Institute and the New York Sun. With such lavish sums at his disposal, Kovner decided to purchase yet another home:

The “upside” of income inequality is best considered from above: for example, with a view from the fifth floor of Kovner’s mansion overlooking Central Park, which he purchased in 1999 from the International Center of Photography for $17.5 million. With the infusion of another $10 million in renovations, the structure–which had contained two floors of gallery space, the museum school and offices–was transformed into his private fortress. In the basement is a rare-book vault, where Kovner presumably keeps copies of an edition of the King James Bible that he financed, with a price tag in excess of $20,000 per volume. Other vantage points from which to assess the benefits of growing income inequality in a clear-eyed fashion might include Kovner’s 200-acre estate in Millbrook, New York, or his twelve acres of linked oceanfront properties in Carpinteria, California, which he purchased last year for $70 million in what the Wall Street Journal called “among the largest U.S. residential real-estate deals.”

According to a profile on Kovner that appeared in New York Magazine (more below), the mansion features a two-story bedroom, a media room, a basement library to house his collection of rare European illustrated books, eighteen bathrooms, and one bidet. Since Kovner is supposed to be single, one wonders why he would feel the need for 18 johns. I guess he is a very shitty person.

Like Ira Rennert, the winner of my last capitalist pig of the month in January who provoked his Long Island neighbors into a rebellion against his garish 78,000 square foot mansion, Kovner also alienated his neighbors on 94th street with his plans for turning the ICP into a 35,000 square foot McMansion, as the N.Y. Times reported on October 5, 2003:

The stately, red-brick structure, once the headquarters of the International Center of Photography, was purchased by the hedge fund financier Bruce Kovner in 1999 for a reported $17 million. Mr. Kovner is converting the Federal-style building back to its original form, an opulent private residence. Neighbors, however, have complained of excessive dust, interrupted phone service and obstructed traffic.

Perhaps most frustrating is the timetable; construction began two years ago and will last until 2005, much to the dismay of residents already fatigued by the 7 a.m. wake-up calls via jackhammer. “It can be a royal pain,” Anna Olafsson, a resident of the block, said of the construction. “We don’t call this 94th Street anymore. We call it Construction Street.”

While these sorts of contradictions among the ruling class are of some interest, it is Kovner’s war on the poor that deserves much more of our attention. Gabriel Thompson fills in the details:

Over at AEI, labor unions are a target of visiting scholar Richard Vedder. In 2002 he co-wrote a report with Lowell Gallaway that concluded, with the help of a number of confusing charts, that between 1947 and 2000 unions cost the US economy more than $50 trillion in lost income and output. As an example of how unions damage our economy with their burdensome demands, the authors link the decline of the coal industry not primarily to a shift in other energy sources like oil and gas but to the militancy of the United Mine Workers. Another way to evaluate the worth of the UMW would be to study the number of lives saved through union-won protections, but such calculations hold little interest for Vedder. Vedder is also an enthusiastic cheerleader for Wal-Mart; he penned a book about the virtues of the company and has argued that Wal-Mart is a “force for good” that is “saving America.”

The living wage as socialist plot, unions as massive drain on the economy and Wal-Mart as corporate savior: this is the sort of scholarship that Kovner subsidizes. Without squinting too hard, the outlines of such a capitalistic dream world–imagined by well-paid fellows and funded by a billionaire–comes into focus: out from under the thumb of Big Labor, workers are free to work long hours for whatever wages a boss feels like paying. If they fall ill, they’re free to visit the emergency room. If they’re really sick, they’re free to declare bankruptcy. With Wal-Mart as the model, all workers become associates, free from the bonds of health coverage and overtime pay.

For a glimpse into the personal background of the publicity-shy Bruce Kovner, just one month younger than me, the best place to turn is a New York Magazine profile by Philip Weiss titled “George Soros’s Right-Wing Twin” that appeared in Jul 24, 2005.

As it turns out, Kovner’s ultraright politics ran counter to those of his grandfather Nathan and his great-uncle Benjamin, who were a couple of revolutionaries fleeing Czarist repression. And it didn’t stop there. Two of Kovner’s father’s cousins were accused by HUAC of being communists in the labor movement in the fifties. Both took the Fifth. Pat Kovner, Bruce’s cousin, recalled, “It was a terrible time of repression and people losing their jobs and being humiliated in public. People were frightened to death.” Around the same time, Kovner’s second cousin, Fay Kovner Mukes, was accused of heading the “Hollywood Communist Club.”

Bruce Kovner’s father, Isidore “Moishe” Kovner, a mechanical engineer who moved the family to California, did not share his relatives’ politics. Weiss reports that he crossed a picket line to work in an aircraft factory during World War II. Fay Kovner Mukes recounts, “He was visiting at [his cousin] Julius’s house, and when Julius found out he was a scab, he threw him out and said, ‘I want nothing to do with you.’”

Kovner entered Harvard College in 1962, where he became a prize student of Edward C. Banfield. Banfield had been in Roosevelt’s New Deal farm administration, but eventually became a reactionary, specializing in hatred of the poor. Kovner became part of Banfield’s intellectual circle alongside Daniel Patrick Moynihan, theorist of “benign neglect” and James Q. Wilson, a professor emeritus at Harvard University who argued on behalf of executing mentally retarded people thusly: “Why should being stupid excuse one from a penalty that is routinely imposed on people who are not stupid?” Where is the Jonathan Swift of our age who might be equipped to deal with the genuine stupidity of a James Q. Wilson?

After an unsuccessful attempt at writing a PhD, Kovner moved to New York where he tried began driving a cab while pursuing a free-lance journalism career. Not long afterwards, Kovner discovered the commodities market and began to make money, eventually going to work for an outfit called Commodities Corp that was absorbed by Goldman-Sachs. He started his own company in 1983 and began his long march to the top of the financial food chain.

Although it is beyond the scope of this post to explain hedge funds, a word or two might be useful. These are basically unregulated private investment corporations trading on behalf of extremely wealthy individuals and institutions. They traditionally “hedge” their investments by techniques such as “selling short”, which involves selling securities that one does not own, in the hopes that they can be repurchased at bargain basement prices when their market price has declined. Needless to say, hedge funds are extremely risky as the LTCM fiasco would illustrate. To show how risky they can be, Kovner’s own fortunes have declined in an increasingly unstable market. Last year he earned a paltry $100 million, hardly enough to keep his 18 bathrooms stocked with Charmin’s finest.

In the course of researching this article, I found myself increasingly and morbidly fascinated by Edward C. Banfield, who comes across as one of the meanest intellectuals ever. Banfield served as head of the Presidential Task Force on Model Cities under President Richard M. Nixon, one of the meanest presidents in our history. His best-known and most controversial work is the 1970 “The Unheavenly City”, an excerpt of which appeared in a N.Y. Times op-ed piece that year:

The tangle of social pathologies that people mainly have in mind when they speak of “the urban crisis” arises principally from the presence in the inner districts of the central cities and of their larger, older suburbs of a small “lower class” the defining feature of which is its inability (or at any rate failure) to take account of the future and to control impulses.

The lower (as opposed to working) class person never sacrifices any present satisfaction for the sake of a larger future one. He lives from moment to moment.

This is to say, he does not discipline himself to acquire an occupational or other skill, to hold down a regular job, to maintain stable family ties, or to stay out of trouble with the law. His bodily needs (especially for sex) and his taste for “action” take precedence over everything else. The slum is his natural habitat. He does not care how dirty, and dilapidated his housing is, and he does not notice or care about the deficiencies of public facilities like schools, parks, and libraries. Indeed, the very qualities that make the slum repellent to others make it attractive to him. He likes the feeling that something violent is about to happen and he likes the opportunities to buy or sell illicit commodities and to find concealment from the police.

When I read this garbage, a feeling of déjà vu comes over me. Where have I read this sort of thing before? And then it dawns on me, it is the same kind of hatred of the poor that you could find in the 19th century.

For example, Charles Loring Brace, the head of New York City’s Children’s Aid Society, argued that the “greatest danger” to America’s future was the “existence of an ignorant, debased, and permanently poor class in the great cities. . . . The members of it come at length to form a separate population. They embody the lowest passions and the most thriftless habits of the community. They corrupt the lowest class of working-poor who are around them. The expenses of police, prisons, of charities and means of relief, arise mainly from them.”

Meanwhile, the draconian British New Poor Law of 1834 was designed to save the poor from themselves:

We must make it evident that in the exercise of moral restraint, and by industry, sobriety, a peaceful demeanour, an economical management of their resources, and a far-sighted provision for the day of calamity from which few are exempt, they may escape the misery into which imprudent marriages, insobriety, irregularity, turbulence, infrugality and improvidence plunge men gifted by nature with every quality necessary to procure happiness.

By the end of the 19th century, the very same social process that had condemned the poor to lives of unremitting misery had allowed the Bruce Kovner’s of that time to live like Kings and Queens. If you stroll around Manhattan’s Upper East Side, you can see what their ill-gotten gains bought them. From the Astors to the Rockefellers, there are mansions dotting the landscape–most of which were turned eventually into consulates or museums.

In keeping with the historical regression we are now enduring, it is fitting that one of these very museums is now owned by somebody like Bruce Kovner, who was taught at Harvard University that it good for the poor to fend for themselves. With people like Kovner aspiring to become the new robber barons, it is only natural that outfits like the American Enterprise Institute are churning out propaganda by the day that seeks nothing less than to turn the clock back to 1890.

As it turns out, the mansion now owned by Kovner was built for somebody originally who embodied the contradictions of that age. Unlike an Edward C. Banfield or a Bruce Kovner, Willard Dickerman Straight–the original owner–did not accept Victorian era values unreservedly. Straight was an investment banker and diplomat who served in the hot spots of the American Empire, from Cuba to China. After an anti-colonial revolt in China forced Straight to high-tail it back to the United States in 1912, he founded a new magazine called The New Republic dedicated to the values of Progressivism, a movement that challenged the excesses of late-19th century capitalism. The first editor was Herbert Croly, the author of “The Promise of American Life”, a book that argued for a planned economy, increased spending on education and the creation of a society based on the “brotherhood of mankind”. Some of the frequent contributors to The New Republic in this period were Walter Weyl, Randolph Bourne, Charles Beard, Amy Lowell, Henry Brailsford and H. G. Wells.

Like the Nation Magazine, the New Republic was never quite able to take the side of the working class since its own middle-class prejudices induced the same kind of fears expressed by Banfield, but not to the same extremes. For example, the Progressives as well as their Fabian cousins in Great Britain looked to eugenics as a way of dealing with society’s underachievers. Wells, for example, once wrote: “It is in the sterilisation of failure, and not in the selection of successes for breeding, that the possibility of an improvement of the human stock lies.” Some critics even believe that the “degenerate” man-creatures portrayed in The Time Machine exemplify Wells’s eugenic beliefs.

The recent stock-market slide and the subprime mortgage/credit crisis have led some Marxists and mainstream journalists to speak in terms of a new Great Depression. That decade looms large in our minds since it sparked a massive radicalization that could have succeeded in the abolition of capitalism in country after country if not for the bankrupt policies of Stalin’s Comintern.

I would suggest that the current crisis will eventually work its way through with the usual amount of pain and dislocation experienced by those who are not fortunate enough to live in 35,000 foot mansions on Fifth Avenue.

Moreover, it would appear that the proper time-frame analogy is not 1929 through 1940 but 1880 to 1900 or so. The fact that hedge fund robber barons are once again ensconced on Fifth Avenue, while Harvard Professors write screeds against the poor should wake us up to the period we are living in.

I think that Doug Henwood understands this completely as evidenced by his article in the Nation that appears side-by-side with Gabriel Thompson’s:

It has become a cliché to say that we live in a new Gilded Age. True enough, up to a point. Money, mostly new money, rules politics and culture. Corporations merge into ever larger corporations. You have to go back to before World War I to match today’s levels of income and wealth inequality.

In some ways, the second Gilded Age is worse than the first. Sure, we live longer now, more of us can read and you don’t have to be a white man to be able to vote. But to prove my point, consider two big parties, thrown 110 years apart.

In February 1897 elite lawyer Bradley Martin and his wife, Cornelia, threw a costume ball at the Waldorf. J.P. Morgan dressed as Molière, John Jacob Astor dressed as Henry of Navarre and brandished a sword covered in jewels, and fifty women dressed as Marie Antoinette. But the hosts were so nervous about “men of socialistic tendencies” that they surrounded the hotel with Pinkertons and had the first-floor windows nailed shut.

Given the similarity between our age and the first Gilded Age, we are invited to think about the possibilities for the rebirth of the kind of mass socialist movement that existed in the time of J.P. Morgan. If there is anything that remains true in politics to this day, it is that the poor and the working class will soon learn where their own class interests lie. As a weak and marginalized movement that is still bearing the brunt of the collapse of the USSR and social democracy in Europe and elsewhere, it will be a difficult job to organize a new movement when so many pundits tell us that our time in history has come and gone. We can only reply that as long as there are scumbags like Bruce Kovner lording it over us, we will find a way to struggle and to win.

6 Comments »

  1. 1890, you say? Please, brother. These barbarians aren’t going to be happy until they drive us back to the antebellum south, and they’ve been making that plain with this reborn school of Civil War and reconstruction period revisionism, where Lincoln is viewed as a tyrant, etc. And make no mistake, Lincoln was no Lincoln much of the time (ha!) but as U.S. presidents go, he was teachable. Or so said Frederick Douglass. These brutes, on the other hand, are absolutely shameless.

    I’m not sure we’re going to rise to the occasion, they’re just moving too fast. I know the political climate can change rapidly, but this Obama thing is going to throw “progressives” and “the left” into a real quandary for the forseeable future. And the passive aggressive qualties of this new wave of repression are visible everywhere, with even sneakier content then during the Clinton years. My sister-in-law still lives in your neighborhood, on the corner of 108th and 5th. When i was out that way a few weeks ago, I paid a visit to the school where I once taught at 135th and Edgecombe. I noticed a lot of gentrification in the area the “best and the beautiful” now call SoHa, and the school where we once had some say in the direction of the curricula is now just one more station in the urban reservation programs the owners of NYC call “public schools”. So these bastards are moving fast. Kovner is a shit to be sure, but I’m beginning to wonder if we’re going to see this kind of thing flushed in our lifetime.

    Comment by Michael Hureaux — June 15, 2008 @ 6:41 pm

  2. What is your point? That Kovner could have stopped working years ago?

    His job is to make sure pensions stay well-funded, despite a looming population gap, and a distressed economy.

    Millions of hard-working in the US and beyond owe their retirements to this guy. Let him have his house.

    Comment by - — November 8, 2008 @ 10:14 pm

  3. My point? That Kovner is a character out of 17th century France and that he should have his head chopped off.

    Comment by louisproyect — November 8, 2008 @ 10:21 pm

  4. “he should have his head chopped off” – and people wonder why the guy is secretive…then again, you guys have that “what would Mao do” attitude – kill the rich, the independent thinker, those who expect to be paid for taking on financial risk, pretty much anyone who threatens your own comfortable mediocrity…anyone who would rather rely on their own ingenuity than than state welfare gets jailed or sent to the re-education camps…oh well, this is why god invented swiss citizenship, i guess, LoL…hope you enjoy your socialist paradise while the tax base is fleeing the country, suckas…

    Comment by rj3000 — November 30, 2008 @ 1:55 pm

  5. I know this dates back to ’08, yet I had to comment. I came across the page while researching city architecture. I’m not sure what the hatred or issue is. Have you read “Lost New York”, by Nathan Silver? Thank goodness this house is still here to begin with, and now being used as it was originally intended. Have you visited Newport, RI? Half of America’s best examples of architecture have been chopped up into condos; American works of structural art with a dozen or so McMansion residences within the original walls. Very sad. I’m wondering why you needed to clarify that Kovner is a “Jewish”-American hedge fund manager? I only read the first few paragraphs-I got bored. My advice is be thankful Trump didn’t knock it down to build another plastic tourist trap. Based on the purchase of this building and not knowing much else-I admire this man.

    Ken, Providence, RI

    Comment by Ken Hall — June 13, 2011 @ 1:11 am

  6. Ken: You admire this man because he bought this building? Do you have any idea what he did to this building in a gut renovation? No, I guess you don’t. So, maybe you shouldn’t be so judgmental of the author.

    Comment by Functional Illiterate — June 14, 2012 @ 11:25 pm


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