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Max Levchin on AOC's 'tax the wealthy' plan: 'Redistribution does not work'

·Deputy Managing Editor

PayPal (PYPL) co-founder Max Levchin has said he tries stay away from politics — but the Ukranian-born serial entrepreneur does make at least one exception.

Levchin, who lived under the Soviet state until he was 16, seems highly skeptical of so-called democratic socialist policies trumpeted by politicians like New York’s celebrity congresswoman, U.S. Rep. Alexandria Ocasio-Cortez, widely known as AOC.

In a newly released interview, Yahoo Finance’s Editor-in-Chief Andy Serwer asked Levchin for his thoughts on U.S. politicians like AOC who are looking to reduce wealth inequality by, for example, raising taxes on the wealthy.

“In general, what has struck me as amusing — and to some extent, tragic — is that there's not a whole lot of people that are pounding the table for some form of socialism that lived in a socialist setting,” Levchin told Serwer.

“Having ... spent my first 16 years in a socialist country, from personal experience, redistribution does not work, because people doing the redistribution somehow always get a lot more,” he added.

Max Levchin speaks to Yahoo Finance's Andy Serwer.
Max Levchin speaks to Yahoo Finance's Andy Serwer.

Levchin, who was also an early investor in Yelp (YELP), made the comments during a conversation that airs in an episode of Yahoo Finance’s “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.

‘Let’s just give the government all the power’

The 44-year-old computer scientist’s comments regarding “people pounding the table for some sort of socialism” apparently refer, at least in part, to AOC’s sort of socialism — the democratic kind.

And what is democratic socialism exactly? As Maria Svart, national director of the Democratic Socialists of America, told The New York Times last year, “Our ultimate goal really is for working people to run our society and run our workplaces and our economies.”

However, as The Times’s Maggie Astor noted, the definition of democratic socialism varies widely. For her part, AOC has said it “does not mean government owns everything.”

Max Levchin near his office in San Francisco, Calif., on Thursday, March 14, 2013. Levchin , one of the co-founders of Paypal is launching his own mobile payment platform, called Affirm.(John Green/Staff)(Digital First Media Group/Bay Area News via Getty Images)
Max Levchin near his office in San Francisco, Calif., on Thursday, March 14, 2013. (John Green/Staff)(Digital First Media Group/Bay Area News via Getty Images)

Levchin, meanwhile, described the socialist ideal as asserting that “let's just give the government all the power, and all the money, and then everything is going to be O.K.”

He should know about socialism, at least in its earlier forms. Levchin was born in Kiev, Ukraine, in 1975, when it was still part of the Soviet Union, which centered around state ownership of resources.

Fifteen years later, “there were tanks on the streets, because we couldn't — couldn't contain the populace from tearing the country apart,” he told Yahoo Finance.

The Soviet Union had promised low unemployment and equality, but its efforts resulted in shortages of consumer goods, unending bureaucracy, and squalor, according to a 1991 New York Times article on the death of the Soviet Union.

Levchin, who’s Jewish, came to the U.S. that year as a refugee, and his family found “safety & opportunity,” he noted in a 2017 tweet in support of immigrants.

He went on to earn a bachelor’s degree in computer science at the University of Illinois at Urbana-Champaign, and in addition to PayPal, he was also involved in the creation of Slide.com, HVF, and Affirm.

In a more recent tweet, in 2019, Levchin noted the dangers of the economic system where he grew up.

In his interview with Yahoo Finance, Levchin also stressed he’s in favor of reducing wealth inequality in the U.S. through some means other than socialism.

He noted that many people in the socialist democratic movement have an observation in line with his own. “The income inequality, the desperate nature of life in a lot of these communities,” he said, “is very real.”

Erin Fuchs is deputy managing editor at Yahoo Finance.

Read more:

Stephen Ross: AOC is ‘taking us totally in the wrong direction’

‘I love AOC,’ but her criticism of capitalism is ‘headline porn,’ says Mark Cuban

Jamie Dimon attacks populism of AOC and Bernie Sanders

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