Forget Putin and Russia. Gazillionaire recluse Robert Mercer rigged the 2016 US Presidential election through his companies Cambridge Analytica and Breitbart News.
What we see on TV is mostly political theater to distract us from reaching the obvious conclusion: American democracy is a joke. Our elections are rigged. Not by foreigners. All-American rigged. We are given nothing but the illusion of choice. That is not the Russians’ fault. It’s ours.
Don’t kid yourself. Americans did this to ourselves.
The day after U.S. President Donald Trump learned a gossipy White House tell-all included quotes that his son was “treasonous” and his daughter “dumb as a brick,” Trump’s mysterious billionaire backers Robert and Rebekah Mercer did a very rare thing and publicly fired back.
Rebekah Mercer issued a statement about Trump’s former strategist and Mercer family friend Steve Bannon — the source of the offending comments — that sawed him off like a gangrenous limb.
“My family and I have not communicated with Steve Bannon in many months, and have provided no financial support to his political agenda, nor do we support his recent actions and statements,” it said.
Five days later, Bannon was fired from his perch at the top of Breitbart News, where Rebekah Mercer is a shareholder.
Most of the commentary that followed focused on whether the Bannon-Trump collaboration was well and truly over. Less attention was given to the news the Mercers’ estrangement from Bannon had actually begun months earlier, and this might be the more consequential breakup.
It seems a year after Trump’s election, their association with Bannon had become an embarrassment for them.
Bannon’s relationship with Robert Mercer is cited in a remarkable lawsuit brought by David Magerman, a former employee of Mercer’s hedge fund, Renaissance Technologies. On its surface, the lawsuit is a wrongful dismissal complaint against Mercer. But at its heart, it is an indictment of Mercer’s character and reputation that draws together his political views, his connections to Bannon and Trump, and racist comments Mercer allegedly made to Magerman directly.
“I have a lot of respect for Bob Mercer. I think he’s a very intelligent person, a very thoughtful person,” Magerman told me recently. But he quickly added, “If the world knew what he was trying to do, they wouldn’t stand for it.”
Seen from a distance, Mercer can appear like a Bond movie villain. A computer scientist-turned hedge fund billionaire, he is reclusive and taciturn. He does not do interviews. He stays out of sight sailing the world in his luxurious, high-tech super yacht, Sea Owl, or holed up in his Long Island estate, Owl’s Nest, while plotting the political transformation of America.
But when he backed Trump’s presidential campaign in 2016 and helped install Bannon to run it, people began asking more seriously, “Who is this man?”
Mercer barely talks to anyone. Trump once joked at a party the longest conversation he’s ever had with “Bob” was just “two words.” That’s an anecdote from Jane Mayer’s 2017 profile of Mercer in The New Yorker, which, like most of what’s been written about him, was based on evidence from people such as Magerman.
Magerman is a multi-millionaire — the lower nine-figure range, he said — who, like many employees at Renaissance Technologies, became rich through his relationship with Mercer. Unlike most of them, Magerman is not afraid to be publicly critical of how Mercer has used his money in politics.
“People weren’t aware of what was going on [in 2016]. It looked like some eccentric billionaire was giving money to political causes the way people normally do,” Magerman said. “I knew he was actually trying to do something different than that.”
Mercer’s fortune and Bannon’s media instincts combined with a shared ideology to produce the anti-liberal, anti-Clinton ecosystem that includes Breitbart, the conservative non-profit Citizens United, the book Clinton Cash, and much more.
Together, they oversaw the data analysis company Cambridge Analytica, whose impact on the UK’s Brexit referendum and the 2016 U.S. election remain troublesomely murky.
For a long time, even Magerman didn’t know about Mercer’s political interests or his ultra-libertarian, minimalist-government goals.
“When I read all that, I felt not only did I have to do something,” Magerman said, “but I’d been negligent in not doing something earlier.”
David Magerman at his estate outside Philadelphia. (Jason Burles/CBC)
Magerman is the first to admit that he has a tendency toward anxiety, a combative disposition and a sense of moral righteousness. He’s fond of talking about the time, years ago, when a colleague he was visiting summoned a helicopter to his estate to whisk them into Manhattan.
There was no life-or-death reason for the extravagance, not even a business emergency. They were just going to a dinner, he says, and his friend rented the chopper to avoid the bother of traffic. From the helicopter, Magerman saw his fellow citizens travelling along a thin ribbon of perfectly good highway below. It became a seminal moment in his life he replayed for me in a series of short bursts.
“Either you are in awe of the grandeur of commuting, taking a two-hour drive and turning it into a helicopter ride, or you can just be, like, disgusted by the waste.” As though there were even a sliver of doubt, Magerman added, “I was in the latter category.”
It wasn’t just the waste that gnawed at him — it was the trespass of a moral principle. The helicopter commute was an example of something that, if everyone did it, would obviously be wrong. ”10,000 people can’t be flying helicopters from their backyard,” he said.
Magerman calls that helicopter trip “extra-societal” and “outside the realm of normal behavior,” words that also fit what he believes is wrong with Mercer’s relationship to the president. Magerman thinks Mercer has bought special access to impose “extra-societal” views on the Trump administration.
Magerman, who now spends much of his time at his sprawling estate in the wealthy Philadelphia suburb of Merion Station, is uncommonly thoughtful about the impact on U.S. political life of rich people like himself, and especially the ones he calls “the instant billionaires,” like Mercer.
“The ultra-wealthy of today differ from the ultra-wealthy in past eras in that they have, a lot of them, no stake in the infrastructure of society,” Magerman said. He’s seen that their wealth does not depend on the health and stability of the country. In fact, they get rich on volatility and instability.
Organizations that track who spends money in politics have noted the same thing. Sarah Bryner, research director at the Washington-based Center for Responsive Politics, said “hedge fund wealth is a sort of recent phenomenon, at least in the campaign finance world.”
“It’s not like you’re working for [big banks such as ] Chase or Wells Fargo, in a very well-regulated and huge industry” with obvious policy aims.
High net worth individuals aren’t like that at all, she said. “With Mercer, we don’t really know much about why he’s getting involved.”
Mercer’s company, Renaissance Technologies, employs a select group of people who are seemingly capable of making money from nothing.
Mercer is not a finance guy; he is a computer scientist. But his research developing speech translation programs through pattern recognition also can apparently be used to discover obscure patterns in the financial markets and make an enormous fortune — as he and his team have done.
Renaissance became what some believe is the greatest hedge fund ever by looking down its nose at the methods of people actually trained in finance.
Renaissance is made up of people like Mercer and Magerman — trained in computer science, physics, mathematics, and statistics. Instead of poring over prospectuses and profit and loss statements, they apply their sciences to the data that affect markets. It’s called quantitative analysis, and they themselves are known as “quants.”
The truly awesome money machine at Renaissance is a private fund called Medallion, which is only open to Renaissance employees. According to a Bloomberg report, “Medallion has pumped out annualized returns of almost 80 per cent a year, before fees.” Even in a bad year, it churns out more than 20 per cent returns.
“The people I worked with were great scientists. I mean, we could have solved a lot of important and interesting problems if we’d worked on different things. Instead, we made hundreds of millions of dollars,” said Magerman. He then added with a rueful chuckle, “Whatever.”
The Medallion investing formula is secret. “Everything I learned, everything I built, I can’t talk about it, I can’t publish it. I can’t share my knowledge with other people. As a scientist, I’ve really done nothing.”
But in the course of our conversations, Magerman made a provocative observation: The problem Renaissance Technologies faced trying to predict market behaviour is, he said, essentially the same problem Cambridge Analytica faces in voter analysis and persuasion.
Data analysts are largely skeptical Cambridge Analytica could have had a decisive impact on the 2016 U.S. election or the Brexit referendum, but Magerman brushes that off with a reminder so-called experts were also skeptical computer algorithms could predict financial markets.
“They said there is no way they can do that with the data available,” he said. And yet, there’s Medallion, with its unheard-of nearly 80 per cent annualized returns. There’s Cambridge Analytica, on the winning side of two political upsets.
And there is Mercer, a brilliant scientist at the helm of both companies.
* * *
In January 2017, before Trump’s inauguration, Magerman called Mercer to chat about politics and the new administration. He wanted to persuade Mercer to withdraw support from Trump.
They talked about Obamacare and the social safety net and disagreed about Trump’s positions on those issues. Then, Magerman says Mercer made a series of comments on U.S. society:
- The United States began to go in the wrong direction after the passage of the Civil Rights Act in the 1960s;
- African-Americans were doing fine in the late ‘50s and early ‘60s before The Civil Rights Act;
- The Civil Rights Act “infantilized” African Americans by making them dependent on government and removing any incentive to work;
- The only racist people remaining in the U.S. are black; and
- White people have no racial animus toward African-Americans anymore, and if there is any, it’s not something the government should be concerned with.
Magerman felt he couldn’t keep that to himself.
“I really thought I was just going to let people know what I know and that would be the end of it,” Magerman said of his decision to do an interview with the Wall Street Journal, which amounted to a warning flare about Mercer to anyone paying attention.
The story quoted Magerman saying that Mercer has contempt for the social safety net and that he now wants to use the money Magerman helped him make to “shrink government to the size of a pinhead.”
But the most sensational part was what Magerman relayed Mercer had said to him on the phone one day. “I hear you’re going around saying I’m a white supremacist. That’s ridiculous.”
Magerman, having cleared his conscience in the Wall Street Journal, expected to go back to work at Renaissance Technologies. Instead, he was suspended.
“If they hadn’t suspended me, I think the story would have kind of died quickly,” he said, but that’s probably not true. After the article appeared, Magerman continued to talk to the media.
He wrote a piece for the Philadelphia Inquirer in which he said during the presidential election, Mercer “was effectively buying shares in the candidate” and “now owns a sizable share of the United States presidency” and “Mercer has surrounded our president with his people, and his people have an outsized influence over the running of our country simply because Robert Mercer paid for their seats.”
After that, Magerman’s suspension was made permanent and he sued his boss for wrongful dismissal.
Famously publicity-shy, Mercer did not welcome any of this attention, but he also began distancing himself from Steve Bannon. In November, he sent an email to staff at Renaissance Technologies to try to reassure them about the lawsuit and the scandal swirling around the company.
“Of many mischaracterizations,” Mercer wrote, “the most repugnant” have been “I am a white supremacist or member of some other noxious group.” He said he found discrimination on the basis of race, ethnicity, gender or creed abhorrent, “but more than that, it is ignorant.”
He said he didn’t intend to impose his political views on anyone else, but he believed ”individuals are happiest and most fulfilled when they form their own opinions, assume responsibility for their own actions, and spend the fruits of their own labor as they see fit.” That’s why he supports conservatives, he said, because they believe in smaller government.
He said he did not share all of the views of Steve Bannon, and he’d passed his share in Breitbart along to his daughters. The email read as though politics were just a hobby he’d put behind him because it no longer held his interest.
In fact, Mercer was the third-largest Republican donor ($25.5 million) in the 2016 presidential race. In the New Yorker profile, a “high-level Renaissance employee” is quoted as saying, “Bob thinks the less government the better. He’s happy if people don’t trust the government. And if the president’s a bozo? He’s fine with that. He wants it all to fall down.”
I asked Magerman if he was the anonymous employee behind the quote. He said he couldn’t remember saying it, but it certainly sounded like something he would say.
Of course it does. One of Magerman’s cautions about “instant billionaires” is that they really don’t understand what the government is for. They didn’t get rich by providing the goods, services and infrastructure that bring people into direct contact with their community and its interests — they got rich in financial markets, making money for the sake of it.
Often cited among the accomplishments of the Trump administration’s first year are the number of regulations that have been eliminated in the name of freeing businesses to create jobs. But the real shrinking of the role of government has been in Trump’s choice of cabinet members, whose aim seems to be to assail the policy goals of their departments.
Thus, the secretary of energy is someone who once campaigned to get rid of the Energy Department; the Secretary of Education has advocated against the public schools system; the Environmental Protection Agency director has a record of repeatedly suing the EPA; and the Attorney General has a reputation for opposing the expansion of civil rights.
Other departments are reportedly withering from neglect, as key positions are filled by unqualified people or not filled at all. The tax cut bill passed in December is forecast to add about a trillion dollars to the federal deficit, forcing further restraint on future governments.
It’s hard to imagine that Mercer would be unhappy about any of that given his thoughts about the size of government and the observation that he “wants it all to fall down” — and especially since his daughter Rebekah was part of the transition team that helped Trump choose his cabinet.
Donald Trump surrounded by his cabinet on March 13, 2017. His cabinet includes two billionaires: Secretary of Education Betsy DeVos, far left, and Secretary of Commerce Wilbur Ross, fifth from the right. (Jonathan Ernst/Reuters)
It’s the government Magerman feared Robert Mercer was angling for, the one Magerman paid a big price for trying to warn us about.
Magerman’s own future is uncertain, though not insecure. He’s got enough money to live luxuriously and not work another day in his life. Plus, he’s been experimenting in the food and beverage industry with a couple of glatt kosher eating spots, and he’s long been an active and generous philanthropist in the Jewish community.
But he misses the passion he had for the problem-solving work he did at Renaissance Technologies. It seems inevitable speaking out against his boss will cost him significant income, but acting against his self-interest inevitably bolstered his credibility.
Was it all worth it?
“It’s like, was having surgery worth it?” Magerman says. “I mean, it was necessary. There was a disease that I thought, like, maybe I had a scintilla of a cure for.”
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