Soros by Michael T. Kaufman
Soros: The Life and Times of a Messianic Billionaire
by Michael T. Kaufman
Knopf. 344 pp. $27.50
Nobody has ever satisfactorily explained the magical accomplishments of the Hungarian Jews. A persecuted minority in a land whose language is unfathomable to all others, they have been fantastically over-represented among high achievers in almost every field of cultural and scientific endeavor. Émigrés from this small community have included John von Neumann, Leo Szilard, Eugene Wigner, Theodore von Kármán, and Edward Teller, all major players in America’s World War II military/ scientific research effort. In his Memoirs, which I reviewed in these pages last December, Teller mentions the mischievous explanation put forward by von Kármán (founder of the Air Force Scientific Advisory Board) that they were really all extraterrestrials. In recent years, the most astounding of them all has been George Soros, the billionaire money-manager, philanthropist, and “stateless statesman.”
Soros, now the subject of a workmanlike, readable biography by Michael T. Kaufman—a journalist long based at the New York Times—is like no other billionaire. His bundle ($6.9 billion, according to the most recent Forbes listing) is smaller than that of many other Americans (22 others, according to Forbes). It is nowhere near the $50-odd billion that Microsoft founder Bill Gates is worth. But Soros is unique in his relentless, somewhat obsessive, determination to use his money to change the world.
Soros is a deadly serious person. During his 46 years in the United States, Kaufman tells us, he has apparently never watched a baseball or football game. He is possibly the only private citizen on the planet who could have stated (in 1999): “Yes, I do have a foreign policy, and now I have it more consciously. My goal is to become the conscience of the world.” Kaufman assures us that those words “sounded less pompous in conversation than they appear in print,” but one can have no doubts as to the speaker’s earnestness.
Soros wants not only to change the world, but to persuade the world that he is a deep thinker. He has written several books on assorted global issues, and an endless number of op-eds. He has recurrently shown up at conferences to study, say, the Kyoto Protocol on climate change (which he strongly endorses), or the expansion of NATO (about which he has reservations). Bold as brass, he keeps thrusting himself and his ideas on world statesmen, and has at various times been close to South Africa’s Nelson Mandela, the Czech Republic’s Václav Havel, Poland’s General Wojciech Jaruzelski, and America’s Henry Kissinger. (Yes, Kissinger takes him seriously. Or, at least, says he does.) Once, eager to meet a Gorbachev adviser named Tatyana Zaslavskaya, whom he hoped to recruit for one of his world-bettering enterprises, Soros learned that she was visiting the U.S. as part of a 170-member delegation. He unabashedly invited the whole delegation to dinner at his Fifth Avenue apartment and arranged for Zaslavskaya to sit next to him. They had, he later reported, a “wonderful meeting of minds,” although she apparently declined to join the board of his Russian foundation.
Designed to implement Soros’s vision for change is a worldwide network of national foundations, social initiatives, and miscellaneous grants, not to mention the Soroscreated-and-endowed Central European University in Budapest. I kept looking in Kaufman’s book for some kind of total program count, but it is not there, possibly because nobody knows how to count it all. One learns that Aryeh Neier, who took over in 1991 as the manager of all these efforts, needed many months to figure out what it was he was running, and even then kept bumping into surprises, like the $13 million a year Soros was spending to support Yugoslav students abroad. (Neier had previously managed the American Civil Liberties Union, Helsinki Watch, and Human Rights Watch.) If you check in at Soros’s website (www.soros.org) and try to make your own tally of all the operations, you will instantly find yourself in trouble.
Whatever the total, the national foundations are intended to sustain “open societies”—in effect, liberal democracies—in countries previously dominated by dogmatism and dictatorship. So what does the Open Society Foundation for Albania do with the $5 million or so per year that Soros bestows on it? It runs advisory centers for college students. It somehow helps the country’s Institute of Contemporary Studies contribute “alternatives to government policy debates.” It provides training and technical assistance for a theatrical program. It trains librarians, supports programs that resist violence against women, assists government agencies trying to improve local services, assists a networking program that encourages skilled young people to stay in Albania, and has supported a TV campaign addressing “issues of ownership, conflict, and blood vengeance.” And a lot more. And that is just Albania.
There appears to be nothing in George Soros’s early years to suggest either his future riches or his “messianic” propensities (note the subtitle of Kaufman’s book). Like just about everybody else who survived the Nazis and Communists in Central Europe, he has a riveting story to tell about his escape to freedom, although, on Kaufman’s rendering, he seems to have viewed his family’s survival as a kind of marvelous adventure rather than as a terrifying ordeal.
George’s father was a thoroughly assimilated Jew named Tivadar Schwartz. For much of his life, he was a somewhat irresponsible playboy and ladies’ man, but he rose to the occasion as the Nazi threat drew closer. In 1936 he changed the family name to Soros. After the German takeover of Hungary in 1944, he contrived to get phony papers establishing all family members as Gentiles. George, who was sixteen at the time, was cast as the godson of an official in the agriculture ministry. In 1946, when the Communists took over, his father again correctly read the handwriting on the wall and arranged for George and his older brother to get out of the country before the borders were closed. George made his way abroad on the strength of an invitation to, of all things, an Esperanto conference in Switzerland. (His father was a lifelong student of this artificial language, the invention not of a Hungarian but of a Polish Jew, and even wrote his memoirs in it.)
Soros spent the decade between 1946 and 1956 in England, where he continued to show no signs of money-making talent, but had an epiphany of sorts while studying at the London School of Economics (LSE). There he fastened on the philosopher Karl Popper, one of the university’s academic luminaries. Popper is associated with two large, loosely related ideas. One is that scientific knowledge advances only via “falsifiability”: no proposition may be accounted scientific unless there is a possibility of testing it empirically and finding it to be false. The other idea, elaborated in The Open Society and Its Enemies (1945), is that freedom is possible only in those societies that shun dogma and doctrine and assume all public policies to be potentially falsifiable in a manner analogous to scientific propositions.
Soros sparked to these ideas, identified himself as a disciple of Popper, and persuaded his hero to administer a certain amount of what is now called mentoring. He also seems to have showered his mentor with ideas of his own, including a long paper assailing psychoanalysis as unscientific. Long after he had left the LSE and come to America, Soros was still besieging Popper with his own philosophical musings, and also bestowing honors on the philosopher, the source, he said, of his own concern for open societies. What Popper himself made of all this is not exactly clear. There is, however, a pregnant sentence in Kaufman’s book: “The fact that [in the 1980's] Popper would admit to having completely forgotten Soros may indicate the deterioration of age, but perhaps he had found Soros’s work less than memorable.”
In 1956 Soros got a job offer from a small American financial firm. He was soon at work on Wall Street handling arbitrage (profiting by taking advantage of price discrepancies in different markets) in foreign securities. He was an instant success at the firm and at several others he worked for in the next few years, and soon graduated from arbitrage to wide-ranging searches for undervalued securities. Here, too, he made repeated killings even as—in a hilarious detail—he ignominiously flunked the examination that would have formally qualified him as a financial analyst.
During the 1960′s, he increasingly gravitated to money management, and in 1969, while working for a firm called Arnhold & S. Bleichroeder, he began running a hedge fund—essentially, an unregulated partnership that invests in just about anything, anywhere, typically with sizable amounts of borrowed money, which radically increases both risks and potential gains. Hedge funds are now all over the place, but then they were a rather esoteric proposition. After a few years at this, Soros left the firm amicably and offered its investors a chance to move their accounts into his own Soros Fund, later renamed the Quantum Fund.
Soros’s single most famous exploit as a money man was earning a fast $1 billion in 1992 by aggressively betting that the British pound would fall while the government of Prime Minister John Major was engaged in futile efforts to prop it up. Investors who stayed with Soros from 1969 to the end of 1997 had $353 million for every $100,000 they put up at the beginning. (The figures were somewhat less dazzling after a nettlesome fall-off in 1998-2000.)
The record is doubly astonishing because right in the middle of this long run, when he was approaching fifty, Soros went through an extraordinary personal crisis. He left his wife and three children, broke up with his longtime partner in running the fund, decided that his business life was hollow at the core, and began looking for someone else to run the investment portfolio. Perhaps strangest of all, he went into psychoanalysis, which—“unscientific” or not—he said helped him a lot.
What Kaufman calls this “midlife transformation” ended after several years, with Soros remarried, this time to a talented woman of twenty-eight, and electing to remain in control of Quantum and other investments. But at the same time, he made it clear that he now wished to be a much more public figure—a do-gooder on a worldwide scale. It was in the 1980′s that he launched this extraordinary effort.
What is one to make of Soros’s philanthropic accomplishments? Kaufman nowhere squarely addresses this question, but he offers many substantive clues, and more are available in Soros’s own writings and on his expansive Internet sites.
My own scorecard rates his earlier efforts far higher than those recently on display. Back in the 1980′s, in what turned out to be the last years of European Communism, Soros was a powerful presence in Poland, Hungary, and the Soviet Union, in each case imaginatively using his financial muscle to support the opening of closed societies. Much of what he did in Poland involved funneling resources to the Solidarity movement, including funds that ultimately sustained a vast nationwide network of illicit publishing ventures.
In Hungary, Soros was aided by the desire of the Communist-party boss, Janos Kadar, to cast himself as a reformer sympathetic to private initiative. After long negotiations, Soros concluded a deal to set up a quasi-independent entity called the Hungarian Academy of Science/ George Soros Foundation. Despite a certain amount of hassling by the security forces, the foundation was soon flooding libraries with otherwise banned works on politics, economics, and sociology. Much more important, as it turned out, was Soros’s decision to provide hundreds of state-of-the-art Xerox copiers (with three-year service contracts) for educational and other institutions. Previously unknown in Communist societies, the ability to copy anything, from one’s own research papers to censored materials, proved highly subversive, and a huge coup for the foundation, now identified as a serious challenger of party rule.
Soros’s single biggest venture was the Soviet-American Foundation Cultural Initiative, launched in 1987 and continued in the post-Soviet era. Soros has spent hundreds of millions of dollars in the USSR and Russia. As of 2000, Kaufman tells us, the program had over a thousand employees and offices in 156 Russian cities and towns. In the Gorbachev era, it invested over $100 million to support Soviet scientists when the government was unable to pay them, and another $100 million or so in efforts to free social-science education from the Marxist-Leninist bureaucracies then still in charge. In the post-Soviet years, the foundation has served up tens of thousands of grants for assorted special projects. The largest, on which scores of millions were spent, included aiding elementaryand secondary-school education in Russia, retraining military officers for lives as private entrepreneurs, and combating an especially virulent strain of tuberculosis that has been devastating the country.
Kaufman mentions at several points that Soros believes philanthropy cannot be successfully bureaucratized—that it works best when the donors are themselves involved in selecting the projects. Foundation managers, he believes, tend to be timid and conventional in the causes to which they gravitate. Eyeballing the causes that Soros funds have supported in recent years, I believe that in some measure they have fallen prey to precisely the pitfall he identified.
But a large footnote needs to accompany this thought: it is not entirely clear that bureaucracy is the sole problem. For Soros himself seems to have changed his politics and priorities during these years. Where once he crusaded for free markets and global capitalism, in recent years he has written that laissez-faire capitalism is itself a threat to open societies, and he has argued, in a long 1997 pronouncement in the Atlantic, that a “common interest ought to take precedence over special interests.” Not to put too fine a point on it, he has increasingly looked like a rather conventional, politically correct liberal.
Soros-supported programs today call for strict gun control in the U.S. They oppose capital punishment, and also oppose long prison sentences, favoring instead a movement toward “defense-based sentencing” in which convicted criminals do good works in the community. They oppose criminalization of drug sales and instead advocate needle-exchange programs. They look for economic analysis to the Economic Policy Institute, a creature of organized labor.
Soros-backed operations opposed the 1996 welfare-reform bill, deeming it not wholly compatible with open-society principles. They support the rights—and continued presence—of illegal aliens. One relatively small ($30,000) program in 2000 supported “Free Zone, an interactive photodocumentary exhibit by lesbian, gay, bisexual, transgender, queer, and questioning youth.” A barrage of grants and programs underwrites women’s “empowerment” in the U.S. and abroad. Typical is a program operating in several former Soviet republics that “helps high-school teachers integrate gender sensitivity and multiculturalism into their curricula in a participatory and nonhierarchical fashion.”
Soros has made it clear that from here on out, his money-management operations will be much less aggressive. The Quantum Fund is now the Quantum Endowment Fund, and its goal is to reduce his investment risks and settle for modest growth. Unfortunately, there is no sign yet that Soros is reining in his efforts to change the world.