Musk, FTX and the politicisation of everything

When notorious Wall Street fraudster Bernie Madoff was arrested in 2008, one of Washington’s leading watchdog groups calculated that he and his wife, along with other senior executives at his investment firm, had made more than $372,000 in political donations, most of them to Democrats. Back in the days before the US Supreme Court undermined many of the legal limits on campaign donations, that was serious money.

But when Madoff died in prison two years ago, none of the obituaries mentioned his political largesse. And rightly so. Madoff’s crimes far outweighed his political activities. Charities were decimated. Lives were destroyed. Endowments laid low. Did his political donations really matter in the grand scheme of things?

When deposed crypto king Sam Bankman-Fried was arrested last month, however, modern finance’s latest (alleged) fraudster was pilloried by the right as a puppeteer of Democratic policymakers in Washington, thanks to his pre-scandal status as an emerging party mega-donor. Some Republican-leaning political analysts have taken to criticising anyone who discusses the FTX bankruptcy without mentioning Bankman-Fried’s campaign contributions.

To be sure, Bankman-Fried’s donations are of a different scale to Madoff’s. The same Washington watchdog calculated that while the FTX founder had made $990,000 in contributions to individual candidates, he gave a stunning $38.8mn to political action committees and other outside groups. Still, in the current age of profligate contributors, that was only enough to make him the sixth-largest donor in the 2022 midterm elections.

Bankman-Fried is also facing criminal scrutiny for his political activities. One of the eight charges brought against him by federal prosecutors in Manhattan is for allegedly using fake names to circumvent the government’s few remaining campaign donation limits.

So it’s a lot of money. And he may have broken federal election laws. But surely given the magnitude of Bankman-Fried’s other alleged sins — which basically amount to stealing $8bn in cash that average punters thought they were investing in cryptocurrencies — his crimes outweigh his politics. Indeed, federal prosecutors have all but acknowledged this: of the 115 years in prison Bankman-Fried faces, the election law violations account for only five and, if found guilty, he’s likely to get a sentence on the order of 16 months.

The right is not the only part of the political spectrum that has attempted to turn a high-stakes business drama into a partisan advantage, however. The left has been targeting Elon Musk’s $44bn acquisition of Twitter and turning it into political theatre — largely, it seems, because the one-time supporter of Barack Obama, Hillary Clinton and Joe Biden has used his new perch atop the sputtering social network to amplify some of the loonier rightwing conspiracies, such as calls to prosecute Anthony Fauci, and reinstating accounts of the more wild-eyed figures of the Trump era, including Michael Flynn and Donald Trump himself.

Leftwing senators Elizabeth Warren and Bernie Sanders have both launched high-profile attacks on Musk since the Twitter deal closed in October, and even the Biden administration has raised the spurious argument that the takeover could be reviewed by the federal government’s Committee on Foreign Investment in the US, a Treasury-led panel legally tasked with reviewing overseas acquisitions of American companies on national security grounds — not domestic deals on political grounds.

Iconoclastic data maven Nate Silver has jumped into the fray, arguing that Musk’s Twitter takeover is “a very interesting politics story, a somewhat interesting business story, and a not-very-interesting tech story”.

But is it, really? Musk the political actor seems to have become something of a caricature, popping off on assorted Washington controversies — did anyone care what he felt about Kevin McCarthy’s candidacy for House Speaker? — like the prototypical misanthrope in his basement using social media to howl at the moon.

Musk the businessman, however, has the chance of becoming one of the most remarkable spectacles of the 21st century. In buying Twitter with about $22bn of his own money and $13bn in loans, a man who is arguably one of his generation’s greatest engineers and technologists may have just made a business decision so hubristic and so ill-conceived that it threatens to bring down his entire empire.

Musk himself has acknowledged Twitter might be headed for bankruptcy, and the banks that loaned Musk the $13bn look like they’ll be left holding the bag for a very long time. Then there is Tesla, Musk’s crowning glory, which has seen its shares fall to a third of the price they were at the day its chief executive announced his Twitter bid, as investors increasingly panic that he has lost the plot.

The rise and potential fall of Elon Musk is one of the great business tales of our age. The alleged crimes of Sam Bankman-Fried ranks with Theranos and Elizabeth Holmes as one of the most important cautionary tales in modern finance. Neither are political, really. But in our hyperpartisan age, we are apparently doomed to see them both as political sagas rather than business melodramas.

Rana, my question for you is whether this will be with us for ever more. I had hoped the end of the Trump presidency and the post-coronavirus pandemic reopening would return politics to its proper place in society — of intense interest to a small group of overeducated enthusiasts, but only of passing interest to the rest of America. For a while, it seemed like everything we did in our daily lives — from watching an NFL game to sending our kids back to school — was weighed with political undertones. We’ve gained back some of that non-political space in the past two years, but not much.

My colleague Alan Beattie once argued that one of the best signs an economy is in crisis is when average citizens are intensely interested in finance, obsessing over sovereign bond yields and currency levels. In stable economies, nobody really needs to know too much about how the financial system works. But during the Argentina monetary crisis, or the Italian sovereign debt crisis, these were the topics of everyday conversations over dinner and drinks.

In my mind, the same can be said for politics — the more the everyday life of society is consumed by partisanship, the less functional that polity is likely to be. By that measure, Elon Musk and Sam Bankman-Fried show us that we’re still in a lot of trouble.

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• Mark Twain is purported to have said about New England: “If you don’t like the weather, just wait a minute.” The same can be said for Russian generals. This week Sergei Surovikin, whose brutality in Syria earned him the moniker “General Armageddon”, was sacked as Ukraine war commander after just three months. But the one Russian who is constantly rising in the Ukrainian battlespace is Evgeny Prigozhin, dubbed “Putin’s chef” because the two men got to know each other when Prigozhin was a Kremlin caterer. Puck’s Julia Ioffe last month wrote the definitive profile of the man who commands Russia’s “shadow army”. Some think he is positioning himself as Putin’s replacement.

• It’s been hard to pick my favourite fabrication by George Santos, the newly elected Republican House member from New York. The New York Times, which has led the pack on uncovering Santos’s fabulism, this week found out that he started lying about his background as early as three years ago, when he submitted a résumé full of falsehoods to the local Republican party. The story also contains my new favourite false claim: that he was on the championship-winning men’s volleyball team at Baruch College. Santos never attend Baruch.

• The weekend storming of Brazil’s parliament building was a potent reminder of just how volatile the country’s politics remains, particularly with rightwing ex-president Jair Bolsonaro continuing to question October’s results. The FT’s interactive team pulled together one of the best accounts of how the rioters managed to breach the facility’s outer defences.

Edward Luce is on book leave and will return in February.

Rana Foroohar responds

Peter, I have two things to say in response. First, I actually have the opposite hope as you, in terms of politics. I want average Americans to care a lot MORE about politics than they do, in the sense that I want them to be really and truly invested in the process rather than being spectators and pawns in a game that is rigged by rich people (like the several you mention).

Also in terms of donations, do we actually think that Bernie Madoff or Sam Bankman-Fried were liberal in some heartfelt way? Weren’t they simply putting their money where they thought it would give them the most/best return from a political capture standpoint? They don’t need to capture conservative capitalists — they need to capture progressives. I’m sure if the opposite was true, they’d shift their giving (indeed, if you look at the roster of C-suite donations, plenty of companies and executives give to both parties just to hedge bets). I mean, at least with Musk, I believe that he really is a libertarian who wants to destroy the demos as a whole. It’s a despicable conviction, but in his case, an honest one.

Your feedback

And now a word from our Swampians . . .

In response to “What we think about when we think about 2023”:

“Kevin McCarthy may be weak, but Jim Jordan who will head the Judicial Committee and oversee the special investigations committee is an individual of limited abilities . . . [with a] talent for headline-making embarrassment. The potential for Jordan to undermine the Republican brand for the 2024 presidential race is high. The White House communications staff should be able to craft a powerful ‘unfit to govern’ messaging strategy around wild man Jordan and weak man McCarthy.” — Paul A Meyers

Responses have been edited for length and clarity.