Patagonia is Accelerating the End of Democracy

Note: a followup to this story has been published here.

You’ve all heard it.

• Patagonia founder Yvon Chouinard is “giving away” his company to a pair of trusts that will direct all the company’s future profits to climate change.
• Chouinard is characterizing himself as the “reluctant billionaire” supposedly turning capitalism on its head by redefining corporate responsibility
• Patagonia has (hilariously) changed its Twitter bio to “Earth is now our only shareholder.”

As a guy more familiar than I’d like to be with the way wealthy people — especially as they approach the end of the their lives — protect their private fortunes as they prepare to transfer them to their heirs… to see this action on the part of Chouinard lauded as a game-changer by critical minds that arguably ought to know better is baffling to me.

Here’s the reality of what’s going on here:

First, there’s nothing new about what Chouinard is doing. Barre Seid did the exact same thing with Tripp Lite, wrapping it into a 501(c)(4) that helped fund the conservative takeover of the Federal Judiciary that recently removed a big chunk of women’s reproductive rights.

Second, there’s the fact that the trusts are STILL controlled by the Chouinard family, vesting $100M/year of political influence into a handful of unelected, unaccountable oligarchs sitting in a smoke-filled room. You have no vote (except indirectly, by maybe buying Patagonia gear, like the U.S. military does), but the billionaire family gets to avoid a $700 million capital gains tax bill that would have resulted from a sale or traditional transfer.

The third and most important thing to think about isn’t the Chouinard family itself, but rather what this pattern they’re following implies about the fate of democracy. Extremely wealthy individuals, families, and corporations are taking an increasingly open stake in American politics and political speech — from Citizens United to SuperPACs to Tripp Lite to Musk’s attempted takeover of Twitter to, most recently, Patagonia.

We need to be very concerned about the normalization of extraordinarily wealthy entities, with no accountability to the public, using the tax code to do an end run around democracy and use their massive wealth to influence politics. Progressives are tripping over themselves to laud Patagonia while somehow failing to realize that conservatives can, and have, been using the same playbook for far longer and to far greater effect. While there may be some satisfaction in e.g. Koch money being offset by a little bit of Chouinard money, that satisfaction is predicated us being OK with our fates being determined by dueling billionaires instead of a fair democratic process.

As an advocate of democracy, I’m not OK with this even when the occasional billionaire’s (stated) political interests seem to more or less align with mine. And that’s because billionaires whose interests DON’T align with mine get to drive on those same roads.

These people aren’t going to save the world. Saving the world is going to have to come from a much deeper and profound commitment to grassroots political engagement… or eco-fascism, which will save the environment while simultaneously making life profoundly unlivable.

In the end? Encourage political engagement; support social entrepreneurship; and tax the d*mn rich.

**Updates, Based on Commentary

This article has received a few good and interesting questions over on Instagram in particular, so I’ll try to address some of them here:

“He did wind up paying taxes on the deal, though?”

That’s absolutely correct. Chouinard wasn’t able to pull this off tax-free; they ended up paying $17.5 million in taxes, as opposed to the roughly $700 million they would have been on the hook for through a traditional sale. This is a tax rate of just under 6%. You, working class person, will never, ever, ever have a tax rate that low. Billionaires are really good at publicizing multimillion or multibillion dollar tax bills (think Elon Musk’s historic $11B tax hit) that seem enormous to us in absolute terms, but disguising the fact that they’re often paying much lower effective tax rates than working class people, and that billionaires often go years at a time paying no taxes at all.

“They’re giving up $100M in profits and over $2B if they’d just sold the business”

Two things here. First, rich people don’t live on cash flow, they live on their balance sheets. Second, no rich person is going to turn a $3B asset into a $2B asset just to get their hands on the cash, unless they’re facing insolvency. That $100M of corporate profit, meanwhile, would be taxed somewhere between 21–25%, and then taxed again if it flowed through the corporation to the family as income. Ultra-wealthy people don’t have to secure income the way the rest of us. These guys live and die on avoiding taxes, and the best way to do this is to avoid declaring income, which is why rich people in need of cash typically finance their lifestyles by securing tax-free lines of credit against their assets.

“What would you have done if you were Chouinard? What should he have done?”

This essay isn’t about what Chouinard should have done, it’s about what we regular people should do. I’m not arrogant enough to presume what I’d do with a billion dollar company; for all I know I’d literally go mad with power and use the money to hunt hedge fund managers on a private island. This essay is largely a plea for working class people to put their faith and effort into restoring democratic institutions instead of following conservative “thought leadership” into placing that faith in billionaires and corporations.

“I trust Chouinard with $700M more than I do the government.”

The government does what wealthy people and corporations tell them to do. That’s why capital and wealth are taxed less harshly than labor and income. That’s why wildly popular policy proposals like universal healthcare can’t even get a vote in congress. It’s why legislatures vote overwhelmingly in favor of money and against popular interests. Saying you trust a billionaire and not the government is like saying you trust your wife but you don’t trust your spouse. Money in politics is the problem -> Chouinard is dumping more money into politics -> just because he seems to be “on your side” doesn’t make it OK.

“Chouinard never wanted to be a billionaire; he’s trying to do the right thing.”

This essay isn’t about taking down Chouinard, despite the fact I don’t buy the whole “I never wanted to be a businessman/billionaire” shtick — if he didn’t want to be a billionaire, then not selling plastic to the U.S. military probably would’ve done the trick. Again, this essay is 1.) about money in politics, and 2.) what WE should be doing, not what billionaires should be doing. And one thing I believe we should NOT be doing is leaning in to cynicism to declare democracy dead, choose our billionaire champions, and somehow hope that feudalism won’t repeat itself.

Chris Newman is the founder of Sylvanaqua Farms, Skywoman, and the soon-to-launch Blackbird Poultry Cooperative. Support this work by sharing this article, signing up for Chris’ Patreon, and/or making a donation to our farm’s mutual aid pool.