‘Should you exist?’ Billionaires face rising criticism alongside rising power.

The United States was at the precipice of a financial crisis – and the wealthy and well-connected worked out a plan to avert disaster.

That was the narrative in 1907, as John Pierpont Morgan brought fellow financiers into a room and coaxed them to prop up a tottering banking system. Their action eased a potentially devastating financial panic. But it also troubled many Americans by revealing how, even within an already mighty nation, a relative few wielded extraordinary power. 

Today, those concerns still resonate. They punctuated the 2016 presidential race when candidate Donald Trump poured $66 million into his campaign and went on to become the first billionaire president in the United States. Last week they became especially pointed in a Democratic presidential debate, as a billionaire candidate on stage confronted another candidate’s assertion that “billionaires should not exist.” 

“We’re in this populist moment, and the populist sentiments are playing out in different ways,” says David Callahan, editor of Inside Philanthropy. Where President Trump has tapped into anger at the media and coastal elites – even while being a person of big wealth himself – on the left “Bernie Sanders is really tapping into anger at the billionaires and wealth inequality, also taking on his party establishment.”

At the same time, another American billionaire is throwing his wealth behind one of the pressing problems of the day. Jeff Bezos, the world’s second-richest person pledged an astronomical sum – $10 billion – toward addressing a climate crisis in the absence of federal leadership.

No one thinks the money of Amazon founder Mr. Bezos or even other billionaires could by itself become a viable solution to climate change. But, as 100 years ago, the financial and political power of the very rich today is stunning. And, although the public mood isn’t one of complete hostility toward wealth and big-money philanthropy, there are signs of heightened questioning of that power. 

All this is very different from the mood that prevailed when, in 2005, Time magazine named Bill and Melinda Gates “Persons of the Year” along with rock star Bono for their varied efforts in global philanthropy. It’s not that the mega-rich faced no scrutiny then or that actions to rein in their wealth and power are inevitable now. But the throes of a modern-day financial crisis, an era of financial struggle for average Americans, and an ongoing rise in big wealth have all contributed to a shift.

“The billionaire backlash is part of this larger populist moment that we’ve been living in since the tea party and Occupy Wall Street in 2010 and 2011,” Mr. Callahan says.

Turning money into influence

Even as the sheer number of billionaires has surged in recent years, so has their ability to translate money into influence. For instance, U.S. Supreme Court rulings like the 2010 Citizens United case have removed constraints on political giving.

Whether wielded through political spending, philanthropy, or their business decisions, the influence of the rich often occurs with little direct accountability to the voting public. 

“This is a huge issue,” says Alexandra Acker-Lyons, who advises individual campaign donors in California and her home state of Colorado.

One example of the potential for disconnects: Polls show broad public support for higher taxes on the rich, even among Republicans. Yet the 2017 tax cuts reduced taxes on the wealthy, even as President Trump said the measure would be “bad” for his own personal finances. (He has not disclosed his personal taxes to the public.)

“The issue of income inequality and of equity generally has risen” as a priority, says Ms. Acker-Lyons, as members of her party increasingly see interconnections with other big issues the nation faces, such as climate change. “People are just seeing it in their daily lives.”

In her own life, it means she is supporting Elizabeth Warren as a presidential candidate, even though the senator from Massachusetts is seeking campaign finance reforms that, symbolically at least, seek to put Ms. Acker-Lyons out of her current job.

It’s not so much that campaign donations necessarily buy direct political results, Ms. Acker-Lyons says. But in her view, Senator Warren understands the unfairness that exists when “money gets you in the room to make your case.”

The left’s currents of outrage were on display on the debate stage in Las Vegas, Nevada, on Feb. 19. Instead of being welcomed as a big donor to the causes of gun control and combating climate change, billionaire Michael Bloomberg faced relentless criticism in his first appearance alongside the other Democratic candidates in a televised debate. 

“We have a grotesque and immoral distribution of wealth and income,” Senator Sanders said at one point. “Mike Bloomberg owns more wealth than the bottom 125 million Americans. That’s wrong. That’s immoral.”

Wealth and inequality are nothing new, of course. And the influence of money in society has antecedents dating back to the linkage of voting rights to property ownership in the nation’s early years. 

But inequality has widened as corporate fortunes have skyrocketed. When Forbes magazine introduced its “richest 400” list in 1982, the top-ranked American was shipping executive Daniel Keith Ludwig, with wealth equal to less than $6 billion in today’s dollars. Today Mr. Bezos and Bill Gates each surpass $100 billion. 

Despite the excesses and imperfections, some social scientists warn against a frontal assault on big wealth. They say it could easily backfire, since economic innovation and job creation are tied to inventor and investor ability to profit. 

“Jeff Bezos is fabulously wealthy, but he has captured only a small, small share of the total value that he’s created for society. So that doesn’t strike me as unjust at all,” Michael Strain, an economist at the conservative American Enterprise Institute, said in a recent podcast. 

In the debate, as a moderator paraphrased Mr. Sanders to ask, “should you exist?,” Mr. Bloomberg replied that he “worked very hard” for his fortune. “And I’m giving it away.”

Even within the Democratic Party, the concern about inequality is balanced for many by an enduring allegiance to free enterprise – and a fear that the “socialist” part of Sanders’ self-described democratic socialist agenda might hurt Democrats politically or even damage America’s economy. 

Rise of the billionaire philanthropist

Similarly, experts see tension over the role of billionaires in philanthropy. Often they can pioneer new ideas that are then passed along for further adoption, by governments or other institutions.

Yet often billionaires appear to give their money away only when facing public pressure. Mr. Bezos’ company, Amazon, has been criticized for not doing enough on climate change, for example. 

There’s also the risk that philanthropists’ actions are taken as a justification for government inaction. 

Aaron Horvath, a doctoral candidate at Stanford University who studies philanthropy, has co-authored research finding a shift in recent years toward “disruptive philanthropy” that, while it may have an entrepreneurial-style energy, is distanced from public accountability.

Mr. Horvath supports the idea of higher taxes on the very rich, encouraging more dialogue with citizens in their philanthropic efforts, and expanding “the ability for citizens to have a voice ... and to reform government so it works for their interest.” 

Back in the wake of that 1907 crisis, the fallout led to the creation of the Federal Reserve system to safeguard the economy. Other Progressive Era reforms curtailed the power of Gilded Age business leaders. 

Today, too, it’s possible that populist dissent could result in new policies that curb the wealth and influence of billionaires. At the same time, with billionaires now in the White House or seeking it, it’s far too soon to know if any “billionaire backlash” will become more than outcries.

“The wealthy have too much power. We need to find ways to reduce that influence,” says Mr. Callahan of Inside Philanthropy. But whether in politics or the related realm of nonprofits, “that’s easier said than done.”