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WeWork founder Adam Neumann. Photo: Jackal Pan/Visual China Group via Getty Images

Sen. Tom Cotton (R-Ark.) last week told CNBC that the WeWork debacle is driving some Americans toward socialism.

The state of play: Cotton's argument is an unintentional critique of American capitalism, at least as codified by legislators like Cotton.

Cotton first raised this line of argument via Twitter in October:

A tweet previously embedded here has been deleted or was tweeted from an account that has been suspended or deleted.

What happened: Neumann did get an insane amount of money from SoftBank, as an effective bribe to effect its rescue package and then relinquish his voting shares and board seat. It was just shy of $200 million. Cotton gets to $1.7 billion by also adding in Neumann's share sale via a SoftBank-backed tender that was available to all WeWork holders, plus a restructure of around $500 million in existing loans.

When it happened: Neumann exited in October. That's the same month that Sanders experienced his lowest average polling of the 2020 presidential race, per the RealClearPolitics average. So perhaps Cotton really meant to cite Elizabeth Warren but, either way, it's hard to argue that their messages only began resonating two months ago.

There continues to be zero evidence that Neumann committed financial fraud at WeWork. Arrogant governance and a surfeit of hubris? Absolutely. But I've spoken to numerous sources, both inside the company and outside advisors, and none of them have found fraud.

  • Conventional wisdom among these sources is that WeWork could have successfully gone public had Neumann fixed governance before publicly filing the company's prospectus. Not at a $47 billion valuation — likely at less than half, which Neumann was said at the time to have accepted — but public nonetheless.

The bottom line: Neumann ran afoul of the markets, but not of the law. Suing him would be akin to suing lightly-regulated capitalism. If that's Cotton's true belief, then he might be backing the wrong presidential candidate.

Go deeper:

Go deeper

Column / Harder Line

New England power fight foreshadows divisive clean energy future

Illustration: Sarah Grillo/Axios

It wasn’t his first choice, but Sean Mahoney isn’t fighting a 150-mile proposed power line sending Canadian hydropower to New England as part of the region’s climate-change goals.

Why he matters: Mahoney, a senior expert at the nonprofit Conservation Law Foundation who lives in Maine, is seeking to compromise in a bitter battle over the proposal. Expect more fights like this as President Biden and other political leaders pursue zero-carbon economies over the next 30 years.

Mike Allen, author of AM
8 hours ago - Politics & Policy

Biden adviser Cedric Richmond sees first-term progress on reparations

Illustration: "Axios on HBO"

White House senior adviser Cedric Richmond told "Axios on HBO" that it's "doable" for President Biden to make first-term progress on breaking down barriers for people of color, while Congress studies reparations for slavery.

Why it matters: Biden said on the campaign trail that he supports creation of a commission to study and develop proposals for reparations — direct payments for African-Americans.

Cyber CEO: Next war will hit regular Americans online

Any future real-world conflict between the United States and an adversary like China or Russia will have direct impacts on regular Americans because of the risk of cyber attack, Kevin Mandia, CEO of cybersecurity company FireEye, tells "Axios on HBO."

What they're saying: "The next conflict where the gloves come off in cyber, the American citizen will be dragged into it, whether they want to be or not. Period."