On days when Hanauer and his wife host political events, a squad of valet parkers wait in their gravel courtyard driveway. Guests enter through a foyer into a library stocked with old books shedding their spines and tapestries on the walls. The back window opens onto a patio, a swimming pool, and, beyond a hedgerow, a sprawling garden.
The garden is one of Hanauer’s favorite metaphors to describe a well-functioning economy. He developed it over 20 years of reading on complex systems, chaos theory, and evolutionary biology. Eventually, he says, he arrived at a place where “you realize that the economy is characterized by the same kind of circle-of-life, natural feedback loops that characterize natural ecosystems.” The plants need the bugs need the birds need the predators. Throw off the balance, and everything wilts.
This is the argument that Hanauer and coauthor Eric Liu made in their recent book The Gardens of Democracy, and the one Hanauer made in his TED talk. It is an abandonment of a moral argument—the rich really should care about the middle class because it’s the right thing to do—in favor of a self-centered one: Caring about the middle class is very good for business. The solution that Hanauer advocates, which jarred TED organizers, is to tax rich guys like him more and spend the money building up schools and other middle-class institutions.
That’s an incomplete prescription, at best. Just as the middle-class is essential for more reasons than the ones Hanauer talks about, so is the fix for the declining middle class more complicated than taxing the top earners. After all, Europe has higher tax rates but has also experienced widening income inequality in recent years.
But Hanauer has his argument, which he loves—loves—to make, on any platform he’s given. He penned a Bloomberg View op-ed in December in which he declared, “I’ve never been a ‘job creator’ ” He celebrates that Bloomberg editors tell him the piece remains one of their most-viewed op-eds of all time. He has debated the theory on cable news with conservatives, and he and Liu defended it in an interview with Charlie Rose on PBS. He raises it with the members of Congress who call him to ask for money.
The day after May Day, Hanauer began extolling the middle class in his office at 3 p.m., starting with a profane tirade against Conard, the former Bain executive who argues that income inequality should widen even more to promote risk-taking. “What risk did Sergey Brin and Larry Page take?” Hanauer demands, invoking Google’s founders. “They got fucking Ph.D.s in computer science at Stanford. They got a bunch of venture capitalists to back them.”
He springs from a couch that backs up to a stunning view of Puget Sound and the Olympic Peninsula, with ferries chugging in between, and waves his arms.
“What’s the worst thing that can happen to those guys?” Hanauer shouts. “Will they starve? Will they be executed? No!” He wheels around. “We have to find ways to get people to innovate. But the idea that lower taxes lead to more innovation—wrong.”
And so it goes for two more hours in the office, and on the Audi ride to pick up Cole, and later in the owner’s box at the soccer match. No one can duck hearing about inequality and its evils, not Cole and a school friend; not Nick’s brother Adrian, who co-owns the Sounders FC; and not a handful of random visitors in the box, including a real-estate scion who may be in the market for a pro soccer team of his own. By the game’s end, Hanauer has been making his case for six hours, nearly half of them in a stadium where 40,000 fans screamed lustily for their team to score a third goal, because it would have meant a free haircut for everyone in the crowd.
Hanauer has a lot more hectoring left, for politicians and peers alike. Friends say that his evangelism has stoked anger in his social circles and pushed some acquaintances to avoid him. Hanauer was so stung by the backlash from other innovator types to his Bloomberg piece that he wrote a follow-up op-ed, as yet unpublished, titled “If Not Job Creators, Then What Are We?” He is dismayed that President Obama talks about equality largely in terms of fairness (there’s that moral imperative again), and not in terms of good business.
Flaunting his wealth is Hanauer’s way of disarming critics of the guy who wants to raise taxes on the rich, but it also turns a lot of people off. “When Nick alienates people, it’s generally because one of those lines about how much money he makes comes flying out of Nick’s mouth,” says J.D. Delafield, an investment banker who lives next door and vacations with him. “He uses that as a provocative contrast,” adds Rich Barton, the executive chairman of Zillow and a cofounder of the travel site Expedia.com, who is another vacation companion. “Sometimes it makes me squirm. Like, geez, Nick, don’t talk about your plane all the time.” But on the question of who creates jobs, Delafield and Barton both say Hanauer has swayed them.
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