One Root of Our Inequality Featured

One Root of Our Inequality

We’ve heard a multitude of comments over the years about the growing wealth gap in this country. Many have attributed this to high CEO salaries and the growing differential in executive pay vs. average pay. And this can’t be denied. However, I would propose that other factors are at play, factors that have left the typical Trump voter in the middle of the country troubled by an unsubstantiate-able suspicion that the system is rigged. Let me explain. Let me begin with a story.

About two weeks ago, a technologist working on an exciting new area of invention asked me to find a connection to a high profile venture fund that was just launched. Because this discussion is alive and well, I’ll use a fictitious name in the hopes that the webcrawling robots don’t connect the dots. Let me call it BSD Capital. That’s vague enough.

BSD Capital was announced to the media as the big swinging deal in energy investing with $1 billion to play with. It was spearheaded by none other than Bill Gates and had names like George Soros, Julian Roberston, and Jeff Bezos on its board. I would have thought that a fund with such a public profile was intended to fund ideas from well…the general public. You’d think. So when I went to the website, I was a little disappointed to see this:

“As you know, BSD (name changed) is just getting started, so we aren’t considering any unsolicited investment opportunities at this time.

When our team is assembled and we are ready to evaluate proposals, we will post more information on our website about how best to engage.”

It took me exactly 4 days to figure out a workaround to this obstacle. After lamenting my great flaw of losing most of my business cards in my dusty mess, some of which belonged to the Soros-complex, I found a way in. It’s called a network.

I should have been glad, but I was miffed. If a professional or personal network was the most effective way to get an idea in front of BSD Capital, what about the average person who went to school in a square state and yet came up with the brilliant idea of creating clean and infinite power out of (just an example), say, emotional distress. Talk about an infinite source, at least in my life. Square State girl—because it will be a girl—will remain sadly out of the loop, that loop that takes a good idea, adds a little capital, stirs, shakes and gives you odds on your first billion. It factors into why one part of the country is languishing while another is funding missions into outer space. The concentration of the network, the natural cluster of connection in specific geographies, has exacerbated the wealth gap.

There is a reasonable rebuttal to this. This week, I met with an investor who did just this kind of angel funding. He put much more weight on his network, he told me. It is a natural sieve that allows him to depend on the judgment of those he knows. It is reasonable for someone to depend on his network for sourcing investments and very reasonable that private investors should be allowed to source investments by any means they like as long as those means are compliant with the law of the land.

Just wondering…could this behavior change on its own? If these big swingers at BSD Capital thought through the broader effect their clubbishness is having on society, would they make an effort to be more democratic in the way they allocate the opportunities they are creating? After all, if they are trying to change the world by giving society better energy alternatives, wouldn’t they also be motivated to democratize the opportunities they create? Moreover, if public money like CalPers and CalSters and the teachers unions understood the clubbishness of the private equity investments they are funding (this does not apply to BSD as it is private money), would they demand more democratic behavior? I have my all-powerful forward button to help me find out. I’ll let you know in a subsequent column what thoughts are shared back.

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