A Billionaire and His Beach: Capitalism and Douchebaggery
“How people treat you is their karma; how you react is yours.”
– Wayne Dyer
Last Thursday, the case of Surfrider Foundation v. Martins Beach L.L.C. started trial proceedings in San Mateo County Court in California. By way of background, Vinod Khosla, a venture capitalist, purchased a 200 acre lot on the Northern California coast (just 15 minutes south of the world famous ‘Mavericks’ break) for $37m dollars. This property fronts a popular surf break called ‘Martin’s Beach’. Following the purchase, Mr. Khosla shut the only access road to the beach and erected ‘No Trespassing’ signs and hired security to keep people off the property. One of the problems with this move is that surfers have been paddling this break and the public has been using the beach for decades without interruption. Surfrider Foundation and another group, ‘Friends of Martin’s Beach’, came in to press the rights of the public to continue to access the beach. They first tried to negotiate access to the beach with Mr. Khosla and, when this failed, brought lawsuits to try to force it.
Much has been written about the legal intricacies of this case and, as a recovering attorney, I can (unfortunately) tell you that it raises many interesting questions about land planning and land use law (snnnrrr…) I think what is missing in all the commentary, however, is what this case says about our society and what it says about people in general.
First, let’s take a step back. The United States, for better or worse, is the closest economic system on the planet (with a few exceptions) to pure, unfettered, laissez-faire capitalism. As it relates to property, this doctrine basically says that a landowner is entitled to the quiet enjoyment of their property and can do whatever they want with that property including preventing others from using it. In other words, in our system, a billionaire can buy up all the beach property he/she wants and shut down public use. If another group wants access to that property, why all they have to do is band together and buy it from the landowner (in this case, at least a cool $37 million).
Theoretically, our government exists, among other reasons, to provide a check on the power of the landowner by enacting regulations and laws to put at least some restrictions on this right. In this case, the State of California enacted the California Coastal Act which was meant to restrict the development of coastal areas and promote continued public access and usage of the coast. So, since the surfers and the public at large feel that they should have access, there is a mechanism for them to head to the courts to try to enforce that. All sounds good, right?
Well, not so fast. Why does the burden of protecting their rights fall on the public? Why does a non-profit organization have to swoop in and come to the rescue by financing lawsuits costing $100,000’s to enforce the right of the public to go to a beach? Maybe this burden instead should be on the billionaire… If you take a look around the world, particularly in Northern Europe, this is exactly how the system works. Let’s take a look at Norway. Norway, of course, is the Northernmost European country – home to vikings, polar bears and some really good ski jumpers. It is also home to some of the most spectacular scenery on the planet (oh yeah, there are a few good breaks here also…)
Norway, along with other countries such as Sweden, Iceland, Estonia, Switzerland, England and many others, has what are called “Freedom to Roam” laws which basically say that the public has complete and unfettered access to uncultivated lands anywhere in the country. This includes the ability to walk along ANY shoreline and to surf ANY break. If a property owner has a very compelling reason to restrict access to their property they can petition the government. However, the government zealously guards this public right and only allows exceptions in very limited cases. Thus, the entire mindset is shifted from ‘the billionaire can do whatever he wants unless someone stops him’ to ‘the public can do whatever they want unless the billionaire can convince the government to grant extraordinary rights’. Of course, being a billionaire and petitioning the government in this way severely raises the angst of the public at large and most choose to avoid this ugly spotlight.
I have spent quite a bit of time in Norway and I can tell you that this difference in approach has, over time, created some positive effects. First, with great rights comes great responsibilities and there is a tremendous amount of respect and consideration for the land. People do not take their access lightly, they pack in and pack out everything leaving very little to suggest they were there. Second, billionaires lead much more austere lives as they are essentially embarrassed into living in smaller houses given that the public is going to see where they live, sometimes up close and personal (in fairness, there are probably also other cultural reasons for this). Finally and not so coincidentally, you don’t have as much of the resentment that is currently brewing in the United States between the ‘haves’ and the ‘have-nots’. Basically, society is much more egalitarian when you don’t have billionaires popping up and stopping access to what had otherwise been a public beach.
“If you’re a really mean person you’re going to come back as a fly and eat poop.”
– Kurt Cobain
Which leads us to Vinod Khosla and the classic question or ‘what are you thinking?’ Now I am not going to jump on the bandwagon and call Mr. Khosla just another douchebag billionaire, but I do have a really difficult time understanding where he is coming from. I am all for the right of a billionaire to use his capital to buy a beautiful ocean side estate, with stunning views and erect a massive house with, perhaps, an infinity pool overlooking the beach – this is America, congrats, more power to him/her.
But let’s put this all into perspective for a moment. According to Forbes, Mr. Khosla has a net worth of about $1.5 billion dollars. That means that right now, this instant, he could buy forty Martin’s Beaches at a cool $37 million each. Looking at it another way, let’s assume he is getting a modest 5% return on his assets year over year. This means that his annual interest income is probably north of $75 million dollars – in other words he could buy 2 Martin’s Beaches every year with his annual interest income alone.
So the big question is why would Mr. Khosla choose to engage in such douchebaggery? Mr. Khosla instead could buy a Pacific Island, he could buy any other beach, perhaps one that families and surfers haven’t been enjoying for decades. He also could simply build a nice public access to the beach and let the surfers keep on surfing. Why would someone, anyone, bring this kind of karma on themselves?
I don’t know Mr. Khosla and perhaps he has good reasons for his course of action. What I do know, is that I have a difficult time living in a society where someone of Mr Khosla’s wealth and privilege is able to even contemplate doing something like this. It really makes one weep for humanity when you observe someone with such power and wealth using that societal advantage to trample over a group who have less and it makes you weep even harder when our very system of governance encourages such behavior.
Anyway, enough commiserating for the state of human civilization. But let me leave you with one last note. On the ‘sustainability’ page on his website for his venture capital firm, Mr. Khosla says “You don’t do extraordinary things by attempting ordinary things”. Mr. Khosla, you are doing something extraordinary by closing down a beach and claiming it for your own. However, I don’t think that quote was meant to apply to this situation. Peace be with you.
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