Evil Geniuses: The Unmaking of America - A Recent History

Copyright©2020byKurtAndersen

Allrightsreserved.

PublishedintheUnitedStatesbyRandomHouse,animprintanddivisionofPenguinRandomHouseLLC,NewYork.

RANDOMHOUSEandtheHOUSEcolophonareregisteredtrademarksofPenguinRandomHouseLLC.

SomepassagesinEvilGeniuseswereoriginallypublishedinadifferentforminVanityFair.

LIBRARYOFCONGRESSCATALOGING-IN-PUBLICATIONDATANames:Andersen,Kurt,author.

Title:Evilgeniuses:theunmakingofAmerica:arecenthistory/byKurtAndersen.Description:NewYork:RandomHouse,[2020]|Includesbibliographicalreferencesandindex.

Identifiers:LCCN2020017081(print)|LCCN2020017082(ebook)|ISBN9781984801340(hardcover)|ISBN9781984801364(ebook)

Subjects:LCSH:Wealth—Politicalaspects—UnitedStates—History.|Bigbusiness—UnitedStates—History.|Corporatepower—UnitedStates—History.|Democracy—UnitedStates—History.|UnitedStates

—Economicconditions.|UnitedStates—Socialcondtions.|UnitedStates—Politicsandgovernment.Classification:LCCHC110.W4A532020(print)|LCCHC110.W4(ebook)|DDC330.973—dc23

LCrecordavailableathttps://lccn.loc.gov/2020017081LCebookrecordavailableathttps://lccn.loc.gov/2020017082

EbookISBN 9781984801364

randomhousebooks.com

BookdesignbySusanTurner,adaptedforebook

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ep_prh_5.5.0_c0_r0

“Wemustmakeourchoice.Wemayhavedemocracy,orwemayhavewealthconcentratedinthehandsofafew,butwecan’thaveboth.”

—LOUISBRANDEIS

“Thecrisisconsistspreciselyinthefactthattheoldisdyingandthenewcannotbeborn;inthisinterregnumagreatvarietyofmorbidsymptomsappear.”

—ANTONIOGRAMSCI

“Strategicinflectionpoints…canmeananopportunitytorisetonewheights.Butitmayjustaslikelysignalthebeginningoftheend.”

—ANDYGROVE

Contents

CoverTitlePageCopyrightEpigraphIntroduction

PartOne:ABriefHistoryofAmericaChapter1:LandoftheNew:Americafrom1600to1865Chapter2:LandoftheNew:AnEconomicHistoryfromthe1770stothe

1970sChapter3:ApproachingPeakNew:The1960s

PartTwo:TurningPointChapter4:The1970s:AnEqualandOppositeReactionChapter5:The1970s:LiberalismPeaksandtheCounterrevolutionBeginsChapter6:The1970s:BuildingtheCounter-EstablishmentChapter7:The1970s:FromaBicentennialPageanttoaPresidencyChapter8:The1970s:NeoliberalUsefulIdiots

PartThree:WrongTurnChapter9:TheReaganRevolutionChapter10:RawDeal:WhatHappenedinthe1980sDidn’tStayinthe

1980sChapter11:TheRuleofLawChapter12:TheDeregulationGenerationChapter13:TheCultureofGreedIsGoodChapter14:HowWallStreetAteAmericaChapter15:WorkersoftheNewWorld,YouLose

Chapter16:InsecurityIsaFeature,NotaBugChapter17:SociallyLiberal,FiscallyConservative,GenerallyComplacentChapter18:ThePermanentReaganRevolutionChapter19:The1990s:RestrainedandReckless

PartFour:SameOldSameOldChapter20:Rewind,Pause,Stop:TheEndoftheNewChapter21:ThePoliticsofNostalgiaandStagnationSincethe1990sChapter22:RuthlessBeatsReasonableChapter23:WinnersandLosersintheClassWarChapter24:AmericanExceptionalism

PartFive:MakeAmericaNewAgainChapter25:WinnersandLosers(SoFar)intheDigitalRevolutionChapter26:HowtheFutureWillWorkChapter27:ThisStrategicInflectionPointChapter28:WhatIstoBeDone?Chapter29:ThePlagueYearandBeyond

DedicationAcknowledgmentsBibliographyByKurtAndersenAbouttheAuthor

INTRODUCTION

Whenyoureachyour fifties, itgetseasier tonotice thebigways inwhich theworld has or hasn’t changed since youwere young, both the look and feel ofthingsandpeople’sunderstandingsofhowsocietyworks.Ahalf-centuryoflifeisenoughtoprovidesomepanoramicperspective,lettingyouseeandsensearcsof history firsthand, like when an airplane reaches the altitude where thecurvatureoftheEarthbecomesvisible.

Someofthearcsofhistoricalchangeareobvious,theirpathsaswellastheircauses.Theequalityandempowermentofwomenisoneofthosebigduhones.But other important historical arcs, more complicated or obscure, have to befiguredout.

That’s how I came to write my last nonfiction book, a not-so-obviousAmericanhistorycalledFantasyland:HowAmericaWentHaywire.I’dnoticedthat in somanyways,asStephenColbert jokedon the firstepisodeofhisoldnightly show, America had become increasingly “divided between those whothinkwiththeirheadandthosewhoknowwiththeirheart.”Fromthe1960sand’70son, I realized,Americahad really changed in this regard.Belief in everysortofmake-believehadspunoutofcontrol—inreligion,science,politics,andlifestyle, all of themmergingwith entertainment inwhat I called the fantasy-industrialcomplex.In thatbookIexplainedthedeep,centuries-longhistoryofthisAmericanknackforcreatingandbelievingtheexcitinglyuntrue.AssoonasI finishedwritingFantasyland,weelectedapresidentwhowas itssinglemostfloridandconsequentialexpressionever,aposterboyembodyingallitsthemes.

Butthatlong-standing,chronicAmericanconditionthatturnedintoanacutecrisis is justhalf thestoryofhowandwhywe’vecometogrief these last fewdecades. This other part concerns the transformation of our social system thatstarted in the 1970s and ’80s, helped along by a simultaneous plunge intocompulsive nostalgia and wariness of the new and unfamiliar. WhereasFantasyland concerned Americans’ centuries-old weakness for the untrue and

irrational, and its spontaneous and dangerous flowering since the 1960s,EvilGeniuses chronicles the quite deliberate reengineering of our economy andsociety since the1960sby ahighly rational confederacyof the rich, the right,andbigbusiness.

Frommyparents’youngadulthoodinthe1930sand’40sthroughmyyoungadulthood in the 1970s, American economic life became a lot more fair anddemocratic and secure than it had beenwhenmyparentswere children in the1920s and early ’30s. But then all of a sudden around 1980, that progressslowed,stopped,andinmanywaysreversed.

Ididn’t start fullyappreciatingandunderstanding thenatureandenormityof that change until the turn of this century, after the country had beentransformed. In2002,whenseveralspectacularcorporatefinancial fraudswereexposedandtheirCEOperpetratorsprosecuted,IpublishedalongscreedinTheNewYorkTimesblamingWallStreet.“Ifinfectiousgreedisthevirus,NewYorkisthecenteroftheoutbreak,”Iwrote,becauseit

is also, inarguably, the money center of America and the world, thecapitalofcapitalism….ItwasNewYorkinvestmentbankerswhodrovethemergers-and-acquisitionsdealcultureofthe80’sand90’sandwhomost aggressively oversold the myth of synergy that justified it….Itwasthey…whoinventedthenovelfinancialarchitecturesofEnronandWorldCom. It was the example of New York investment bankers,earning gigantic salaries for doing essentially nothing—knowing theright people, talking smoothly, showing up at closings—thatencouragedbusinesspeopleoutintherestofAmericatofeelentitledtosmoke-and-mirrorscashbonanzasoftheirown.

A few years later, one very cold morning just after Thanksgiving, I hadanotherslow-road-to-DamascusmomentfromwhateverIhadbeen(complacentneoliberal?) to whatever I was becoming (appalled social democrat?). I wasactually on the road to Eppley Airfield in Omaha after my first visit to myhometownsincebothmyparentshaddied,sharingaminivanjitneyfromahotelwith a couple ofCentralCasting airline pilots—tall, fitwhitemen aroundmyage,onewearingaleatherjacket.Wechatted.Tomysurprise,evenshock,bothof them spent the entire trip sputtering and whining—about being baited andswitched when their employee ownership shares of United Airlines had been

evaporated by its recent bankruptcy, about the default of their pension plan,about their CEO’s recent 40 percent pay raise, about the company to whichthey’ddevoted their entire careersbutno longer trustedat all. Ineffect, aboutchanging overnight from successful all-American middle-class professionalswho’d worked hard and played by the rules into disrespected, cheated,sputtering,whiningchumps.

Whenwegottotheairport,Isaidgoodbyeandgoodluckand,atthelittlebookstoretherethatcontainsakindofshrinetothelocalgodWarrenBuffettandhis companyBerkshireHathaway, bought a newspaper. In it I read an articleaboutthatyear’srecord-settingbonusesonWallStreet.TheannualrevenuesofGoldmanSachsweregreater than theannualeconomicoutputof two-thirdsofthecountriesonEarth—atreasurechestfromwhichthefirmwasdisbursingtheequivalent of $69 million to its CEO and an average of $800,000 apiece toeverybodyelseattheplace.*

This was 2006, before Wall Street started teetering, before the financialcrash, before theGreatRecession.The amazing real estatebubblehadnot yetpopped,andtheeconomywasstillapparentlyrocking.

IwaswritingaregularcolumnforNewYorkmagazine,soafterreadingandthinking some more, I summarized my understanding of how an egregiouslyrevised American social contract had been put in place, take it or leave it,withoutmuchrealdebate.

“ThisisnottheAmericainwhichwegrewup,”Iwrote.By which I meant America of the several very prosperous decades after

WorldWarII,when“theincomeshareofthesuperrichwasreasonablycutback,by more than half. The rich were still plenty rich, and American capitalismworkedfine.”Iwroteabouthow,sincethe1980s,“thepieceoftheincomepietakeneachyearbytherichhasbecomeashugelydisproportionateasitwasinthe 1920s,” how “an average CEO now gets paid several hundred times thesalaryofhis averageworker, agap that’s anorderofmagnitude larger than itwasinthe1970s,”andhowmostAmericans’wageshadbarelybudged.Iwrotethat“duringthepast twodecadeswe’venotonly leteconomicuncertaintyandunfairness grow to grotesque extremes, we’ve also inured ourselves to thespectacle.”ByweImeantthemostlyliberal,mostlyaffluentNewYorkersandothercosmopoliteswhoreadNewYork.

After this twenty-five-year “run of pedal-to-the-metal hypercapitalism,” Iwrote, it was “now time to ease up and share the wealth some. Because the

futurethatfrightensmeisn’tsomuchatoo-HispanicU.S.causedbyuncheckedMexican immigration, but a Latin Americanized society with a…callousoligarchygatedofffromagrowingmassofscrewed-overpeons.”WeneededtotakeseriouslytherisingangeranddisgustaboutanAmericaneconomicsystemthatseemsmoreandmoreriggedinfavoroftheextremelyfortunate.

Populism has gotten a bad odor, and not just among plutocrats—formostofthepoliticalchatteringclass,itisatleastfaintlypejorative.ButI think that’s about to change:When economichope shrivels and therich become cartoons of swinish privilege, why shouldn’t themiddleclassbecomepopulists?

I remember thinking,Thiswaswhymyprofessors incollegehadused theterms political economics and the political economy as distinct from simplyeconomics and the economy. For one thing, economics has the connotation ofpurescience,suggestingthatorganizingproductionandpayandinvestmentandtaxes and all the rest is just…math.Whereaspolitical economics contains thecrucialreminderthatreal-lifesocietiesandeconomiesaretheresultofallkindsoffightsandnegotiationsandfeelingsandchoicesabouttherulesofthegame,what’s fair, what’s not, what to maximize, how to optimize for the majorityinsteadofmaximizingonly for somepowerfulminority. It’s fine to call it theeconomywhenwe’re discussingwhat’s happeningmonth tomonth or year toyear—the ups and downs in the stock market and rates of employment andinflation and growth.Whereas if we’re talking about the wholemegillah, thewaywe’vestructuredourcapitalismversustheversionsinCanadaorDenmarkorRussia orChina, I thinkpolitical economy ismuch better.The economy isweather,thepoliticaleconomyisclimate.

I also thought:Mea culpa. For those last two decades, I’d prospered andthrivedinthenewpoliticaleconomy.Andunhurtbyautomationorglobalizationorthenewsocialcontract,I’deffectivelyignoredthefactthatthemajorityofmyfellowAmericansweren’tprosperingorthriving.

—

Iseldomhaveepiphanies,butafewmonths later, in2007,Ihappenedtohaveanother, thisoneconcerning theculture,and itwouldeventuallycross-fertilizewithmynewsenseofthehijacked,screwed-uppoliticaleconomy.Thissecond

ahamomentstartedwithanobservationIhadonemorningconcerningpersonalstyle.Lookingataphotointhenewspapertakentwentyyearsearlierofalargegroupof very stylishpeopleon aU.S. city street, I closely examined thewayeach of them looked, their clothes and hair andmakeup. They were virtuallyindistinguishablefrompeopleofthepresentday.Ithoughtaboutthat,conductedsome research, and realized it was a broad phenomenon, true throughout theculture—music, design, cars, more. Apart from cellphones and computers,almostnothinganymorethatwasneworjustabitoldlookedorsoundedeitherdistinctlynewordistinctlyold.

Thiswasnotonlynot theAmerica inwhich I’dgrownup,when the lookandfeelofthingschangedaloteverydecadeorso,itwasn’tthewaythingshadworked in themodern age, for a century or two. In the past, certainly inmylifetime and that ofmy parents and grandparents, over any given twenty-yearperiod, whenever you glanced back, you’d notice how culture and what wasdeemedcurrentchangedunmistakablyfromtoptobottom.Sincethedawnofthemodern,ordinarypeoplecoulddateculturalartifactsandephemeraoftherecentpast andpreviouseras.During the twentiethcentury, eachdecade had itsownsignaturelookandfeel.Bythelate1960s,the1950slookedso’50s,andbytheearly 1980s, the 1960s looked so ’60s. But then, starting in the 1990s, thatunstoppableflowofmodernity—thedistinctlynewcontinuouslyappearingandmaking styles seem old—somehow slowed and nearly stopped. The dramaticnewchangeinthecultureseemedtobethatthingswerenolongerdramaticallychanging.

Howstrange.And why? The shortest and simplest answer is that a massive

counterreactiontomultipleoverwhelmingwavesofnewnessonmultiplefronts,oneafteranother,sentallsortsofAmericans,forallsortsofdifferentreasons,toseek the reassuranceof familiarityandcontinuitywherever theycouldmanagetofindorfakeit.

The first wave was in the 1960s, a decade in which everything seemedrelentlesslynewnewnew.WhichforseveralyearsfeltexcitingandgoodtomostAmericans, and thenoveltyglut seemedunder control by the forcesof reasonandorder.But thencame theupheavalsof thesecondhalfof the1960s,whensocietyandculturechangedstartlinglyinjustafewdozenmonths.Intheearly1970s, exhausted by that flux, still processing the discombobulating changesconcerninggenderandraceandsexandothernorms,peopleallatoncestarted

looking fondly back in time at the real and imaginary good old days.Enoughwith the constant shocks of the new! Hollywood revived and celebrated therecentpastinabigway,rightaway,withnostalgia-festslikeAmericanGraffiti,HappyDays,andGrease.SoonnostalgiaforallperiodskickedinthroughoutallmediaandallculturalformswithabreadthanddepththatwereunprecedentedinAmerica.

Aspeoplegave themselvesover to findingandfondlingquaint things thathad been stored away in the national attic during the century of novelty andprogress, we inevitably amended our view of the entire American past,romanticizingandidealizingit,tendingtoignorethebadparts.Asitturnedout,curating and then reproducing pieces of thepast extendedbeyondpop cultureand style into politics and the economy. I’m not saying the freshly nostalgia-swamped culture of the 1970s and ’80s caused people to become morepolitically conservative. But it wasn’t a coincidence that the two phenomenaemergedsimultaneously.Theyoperatedintandem.Thepoliticalrightrodeinonthat floodtide of nostalgia, and then, ironically, the old-time every-man-for-himselfpoliticaleconomytheyreinstalled,lessfairandlesssecure,drovepeopledeeper into their various nostalgic havens for solace.This new fixation of thecultureon theoldand the familiardidn’t subside. Itbecamea fixedbackwardgaze. Then almost without a pause came another wave of disruption anduncertainty, caused by the digital technologies that revolutionized the wayspeopleearnedlivingsandlived,andwhichmadeeconomiclifeformostpeopleevenmoreinsecure.Andthecultureinturnfocusedevenmorecompulsivelyonrecyclingandrebootingfamiliarstylesandfashionsandmusicandmoviesandshows.

Thenwemovedontotheweirdnextstage,thelateststagethatIfirstnoticedin the2000s,aftermydouble-takeat thatoldphoto—thestasis: inaddition toletting the past charm us, in the 1990s we also stopped creating thefundamentally, strikingly new, perfecting a comfortableMatrix illusion that insomesensetheworldwasn’treallychangingallthatmuch.

—

AsIwasworkingonFantasyland,readingandthinkingaboutAmericanhistory,I noticed more connections between the two phenomena—between oursimultaneous switch in the 1970s and ’80s to a grisly old-fashioned politicaleconomyand to a strenuously, continuously familiar culture.Which ledme to

spendacoupleofyearsreadingandthinkingmoredeeplyaboutboth.Alotmoredeeplyabouttheeconomicsandpolitics.That’swhatI’dmainly

studiedincollege,butsincethenI’dmostlyjustreadthenews,skimmedalongdaytodayandmonthtomonthlikeanybodywhosejobneverrequiredknowinga lot aboutderegulation, antitrust, taxcodes,pensions, thehealthcare industry,thelegalfraternity,constitutionallaw,organizedlabor,executivecompensation,lobbying, billionaires’ networks, the right wing, the dynamics of economicgrowth,stockbuybacks,thefinancialindustryandallitsinnovations—somanysubjectsofwhichIwasmostlyignorant.

My immersion was revelatory. Reading hundreds of books and scholarlypapersandarticlesandhavingconversationswithexpertsmadememoreorlessfluent in those subjects and, more, taught me many small things and oneimportantbig thing:whathappenedaround1980andafterwardwas largeranduglierandmoremultifacetedthanI’dknown.Inequalityisthebuzzword,mainlybecause that’s so simple and quantifiable: in forty years, the share of wealthowned by our richest 1 percent has doubled, the collective net worth of thebottomhalfhasdroppedalmost tozero, themedianweeklypayforafull-timeworkerhasincreasedbyjust0.1percentayear,onlytheincomesofthetop10percent have grown in sync with the economy, and so on. Americans’ boatsstopped rising together;mostof theboats stopped risingatall.Butalongwitheconomic inequality reverting to the levelsofacenturyagoandearlier,sohaseconomic insecurity, aswell as the corrupting political power of big businessand the rich, oligarchy, while economic immobility is almost certainly worsethanit’severbeen.

Before I startedmyresearch, I’dunderstood thechanges in the1970sand’80shadn’talljust…happened,spontaneously.ButIdidn’tknowhowlongandconcerted and strategic the project by the political right and the rich and bigbusiness had been. One of my subjects in Fantasyland is how conspiracy-theorizingbecameanAmericanbadhabit,awayourchronicmixingoffictionand realitygot thebestofus.Ofcourse thereare secretivecabalsofpowerfulpeoplewhowork tomake big bad things happen, actual conspiracies, but theproliferation of conspiracy theories since the 1960s, somany so preposterous,hadtheunfortunateeffectofmakingreasonablepeopleignorerealplotsinplainsight.Likewise,thegoodreflextosearchforandfocusonthecomplexitiesandnuancesofanystory,ongraysratherthansimplewhitesandblacks,cantendtoblindustosomeplaindarktruths.

IstillinsistonapreponderanceofevidencebeforeIdrawconclusions.Istillresist reducingmessy political and economic reality to catchphrases like “vastright-wingconspiracy”and“thesystemisrigged,”butIdiscoveredthat inthiscase the blunt shorthand is essentially correct. It looksmore like arson than apurely accidental fire, more like poisoning than a completely natural illness,more like a cheating of the many by the few. After all, as the god of theeconomic right himself, Adam Smith, wrote in capitalism’s 1776 bible, TheWealth of Nations: “People of the same trade seldommeet together, even formerrimentanddiversion,but theconversationends inaconspiracyagainst thepublic,orinsomecontrivancetoraiseprices.”

Evil Geniuses is the book I wish had existed a dozen years ago to helpclarifyandorganizeanddeepenand focusmy thinkingandunderstandingandanger and blame.Likemost people over the past decade, I’d noticed this facthereorthatinfographicthereaboutinequalityorinsecurityormaligncorporatepower, but quickly moved on, flittered off to the next headline. But then Idecidedtogodeepintotheweedsinordertounderstand,thencomeoutoftheweeds toexplainwhat I’d learnedasclearlyas Icould. Iwanted todistillandgatherandconnecttheimportantfactsandexplanationsinonecompactpackage,tomakeacoherentpictureoutofallthepuzzlepieces.Therearelotsoffactsandfiguresinhere,butnotmuchjargonatall.BychroniclingCEOsandbillionairesand intellectuals and zealots andoperatorsplanning and strategizing foryears,togetherandapart,networkingandplotting, evenmemorializing someplots inmemos—somanyjaw-droppingmemos—I’vetriedtotellacompellingstoryaswellasmakeapersuasiveargumentaboutwhat’sbecomeofus.

—

Sohowdidbigbusinessandtheveryrichandtheirpoliticalalliesandenablersmanage to convince enough Americans in the 1970s and ’80s that thecomfortableeconomic rulesandexpectationswe’dhad inplace forhalfof thetwentieth century were obsolete and should be replaced by an older set ofassumptionsandprotocols?

Mostpeopleatthetimedidn’trealizejusthowimmenseandpervasivethechanges were and certainly not where they’d lead. Reagan’s election andlandslidereelectionwereplainlybigdeals,somesortofnationalmandate,butatthe time the1980sseemedmore likeapost-1960s reversion to thehistoricallytypical,notreallyitsownmomentofwrenchingtransformation.Whereasduring

the 1960s, everyonewas awarewewere experiencing a great turning point inculture and politics, with almost everything changing in obvious ways—likehow in the ’30s peoplewere aware in real time that theDepression andNewDealweretransformative,thebeginningofanewAmerica.Thespecificpolicychangesin the1980swereprofoundin theaggregate,butbeyondthenostalgicReaganiteMorning inAmerica and freer-free-marketsmessaging,most of thechangeswerecomplicatedandesotericandseemedsmall,sotheyhadastealthquality. Itdidn’t feelquite likeaparadigmshiftbecause itwasmainlycarriedoutbymeansofa thousandwonkyadjustments togovernment rulesand laws,andobscurefinancial inventions,andbigcompaniesonebyonechanginghowthey operated and getting away with it—all of it with impacts that emergedgradually,overdecades.SocialSecurityandMedicarebenefitswerenotcut,theEPAwasn’tabolished,laborunionsweren’tbanned.Asitturnedout,the1980swere the ’30sbut in reverse: insteadofa fast-actingNewDeal, a time-releaseRawDeal.

But the reengineering was helped along because the masterminds of theeconomicrightbrilliantlyusedthemadlyproliferatingnostalgia.Bydressinguptheirmeannewrich-get-richersysteminold-timepatrioticdrag.Byportrayinglow taxes on the rich and unregulated business and weak unions and a weakfederal government as the onlywaysback to somekindof rugged, frontiersy,stronger,betterAmerica.Andbychoosingastheirfrontmanawinsome1950sactor in a cowboy hat, the very embodiment of a certain flavor of Americannostalgia.

Of course, Ronald Reagan didn’t cheerfully announce in 1980 that ifAmericanselectedhim,privateprofitandmarketvalueswouldoverrideallotherAmerican values; that as the economy grew nobody but thewell-to-dowouldshare in the additional bounty; that many millions of middle-class jobs andcareerswouldvanish,alongwithfixedprivatepensionsandreliablehealthcare;that a college degree would simultaneously become unaffordable and almostessential to earning a good income; that enforcement of antimonopoly lawswouldend;thatmeaningfulcontrolofpoliticalcontributionsbybigbusinessandthe rich would be declared unconstitutional; thatWashington lobbying wouldincreaseby1,000percent;thatourrevivedandpracticallyreligiousdeferencetobusinesswouldenableabizarreAmericandenialofclimatescienceandabsoluterefusaltotreattheclimatecrisisasacrisis; thatafterdoublingtheshareofthenation’s income that it took for itself, a deregulatedWall Streetwould nearlybringdown the financial system, ravage theeconomy,andpaynoprice for its

recklessness;andthatthefederalgovernmenthe’dcommittedtodiscreditingandunderminingwouldthusbeespeciallyill-equippedtodealwithapandemicanditsconsequences.

Rather,whenwewerepromisedin1980thewonderfulold-fashionedlifeofBedfordFalls,wedidn’tpaycloseenoughattentiontothefineprintandpossibledownsides,andfortyyearslaterhereweareinPottersvilleinstead,livingintheworld actually realized by Reaganism, our political economy remade by bigbusinessandthewealthytomaximizethewealthandpowerofbigbusinessandthewell-to-do at the expenseof everyone else.Wewerehoodwinked,andwehoodwinkedourselves.

Ourwholesalenationalplungeintonostalgiainthe1970sandafterwardwasan important part of how we got on the road toward extreme insecurity andinequality,toAmericaneconomiclifemoreliketheeraofplutocratsandrobberbaronsofthe1870s.Allourclocksgotturnedback—thepoliticalandeconomiconesbydesign,theculturalonesmoreorlessspontaneously.Economicprogressended, and cultural innovation stagnated except in information technology,where unchecked new industrial giants arose—resembling those of that firstGildedAge.Themorphingof thenostalgia addiction into cultural paralysis inthe 1990s helped to keep us shackled in an unpleasant perpetual present eversince.Thatculturalstasis,almosteveryoneandeverythinglookingandsoundingmoreorlessthewaytheydidagenerationago,provideddailyreinforcementofthesensethatthestatusquoispermanentandunchangeableacrosstheboard—inotherwords,akindoffatalistichopelessnessofthekindthatwasstandardbeforedemocracy existed, before revolutions, before the Enlightenment. We’ve thusbeendiscouragedbythecultureaswellasbymuchofpoliticsfromimaginingthat the economy might be radically redesigned and remade once again,encouragedto thinkthatfundamentalchangeiseithernolongerpossibleornolongerdesirableorboth.Ifthepresentismoreorlessindistinguishablefromtherecentpast,whywon’tthefuturebeprettymuchthesameasthepresentbutwithmorerobots?Therearethegadgetsandbitsoffreshsoftware,butotherwisewehavebecomeunaccustomed to thenew,manyofusskepticalandafraidof thenew,confusedabouthowtothinkofthepastorcopewiththefuture.

Unlike longing for a fairer economy of the kindwe used to have, whichwouldrequireacollectivedecisiontobringback,theitchofculturalandsocialnostalgia is easy for individuals to scratch and keep scratching. So for manyAmericans,who spent several decades losing their taste for the culturallynewand/or getting screwed by a newpolitical economybased on new technology,

fantasies about restoring the past have turned pathological. Thus the angriestorganizedresistancetothenew,thenostalgiasdrivingtheupsurgeofracismandsexism and nativism—which gave us a president who seemed excitingly newbecauseheassertedan impossibledreamofrestoring thenastily,brutishlyold.The recent wave of politicized nostalgia is global, of course, taking overgovernments fromBritain toRussia to India.But those countries at least havetheexcuseofbeingancient.

—

“We respect the past,” President Obama said of Americans when I was justbeginningworkonthisbook,rightbeforehewasreplacedbyPresidentTrump,“but we don’t pine for it. We don’t fear the future; we grab for it. We areboisterousanddiverseandfullofenergy,perpetuallyyoung inspirit.”Aswashiswont,hewasbeingaspirational,wishful,remindingusofourbetterangels.Itwashisgentle,upbeatwayofsayinghey,youknow,folks,wereallyhavebeenobsessivelypiningforthepastandexcessivelyfearingthefuture.

But he was correct about our history and founding national character:opennesstothenewwasadefiningAmericantrait.Fromthestart,fourcenturiesago, we were eager to try the untried and explore the uncharted, even orespecially when it looked risky or terrifying. Americans’ innovative, novelty-seeking, risk-taking attitudes were key to most of the country’s exceptionalsuccesses.TheUnitedStateswasaself-consciouslynewspeciesofnation, thefirst one invented fromscratch andbasedonnewconceptionsof freedomandfairness and self-government and national identity.Our story at its bestwas aprocessofcollectively,successfullyimagining,embracing,andexemplifyingthenew—thengloatingwhenevertherestoftheworldfollowedourlead.

Of course, that process of perpetual reinvention and refreshment alwaysinvolved tension between people pushing for the new and people resisting it,sometimeswith existential ferocity: irreconcilable differences over status quosresultedfirstintheAmericanRevolutionandthenintheCivilWarandthenthepolitics of the Depression. In our history so far, at the critical junctures, theforcesofthenewhaveeventuallytriumphedovertheanciensrégimes.

Almost a half-century ago, the country began a strange hiatus from itsfoundingmissionof inventing and reinventing itself inpursuit of thenewandimproved.SincethenAmericanshavegottenvariouslyconfusedandcontentiousandparalyzedconcerningtheolddays,aboutwhichpartsoftheAmericanpast

canorcan’tandshouldorshouldn’tberestored.So theessentialnewnationalprojectI’mproposinghereisparadoxical:amajorityofushavegottorediscoverandrevivetheolddefiningAmericanpredispositiontorejectoldcertaintiesandfamiliarways,plungeforward,experiment,imagine,andthentrytheuntried.

It’simportanttorevisitanddissectandunderstandwhathappenedwhenthisriggingbeganandtheswampwasfilled,andnotjusttoknowwhotoblameforourpresentpredicament.Rather, asweattempt to fix the terriblemess that anunbalanced,unhinged,decadentcapitalismhasmadeofAmerica,therevampingof our political economy that started fifty years ago is also an essential casestudy forenvisioning thenext fifty.Because ifyouneedproof that ideashavepowerandthatradicalchangeispossible,it’sthereintherearviewmirror.Evilgenius is genius nonetheless. In the early 1970s, at the zenith of liberal-leftinfluence,an improbable,quixotic,out-of-powereconomic right—intellectuals,capitalists, politicians—launched their crusade and then kept at it tenaciously.The unthinkable became the inevitable in a single decade. They envisioned anew American trajectory, then popularized and arranged it with remarkablesuccess. How was that fundamentally different American future—that is, ourpresent—designed and enacted? And howmight it happen again in the otherdirection? There are lessons to be learned: having big ideas and strongconvictions,keepingyoureyeon theball,playinga longgame.Therearealsosome relevant cautionary tales from the last few decades—it’d be nice if insuccess the leftcouldavoidsomeof theviciousness, lying,cynicism,nihilism,andinsanitythatovertooktherightaftervictory.

—

EarlierIcalledtherichrightandbigbusinessandlibertarianideologueshighlyrational.Selfishnessisrationaluptoapoint,evenextremeandcruelselfishness,andthiseliteconfederacywonitswarbymeansofcold-bloodedrationality.Onthe other hand, their increasingly essential political allies in this project areamongthemostirrational,emotional,unreasonable,andconfusedAmericansofall—religiousnuts,gunnuts,conspiracynuts,science-denyingnuts,lying-blond-madman-worshiping nuts. The response to the pandemic showed vividly howthisunholyallianceoperates:formonthsearlyin2020,right-wingmediaandthepresidentpursuedatwo-trackpropagandaeffortthatmadeacatastropheworse.Fantasyland’smagicalthinkingandconspiracismandmistrustofsciencefueledthewidespreaddenialofand indifference to thecrisis, and fusedwith theevil

geniuses’immediate,cold-bloodedcertaintythatarapidrestorationofbusiness-as-usual must take precedence over saving economically useless Americans’lives.

What I said at the end ofFantasyland I’ll restate (and I first drafted thisparagraph,it’simportanttonote,ayearbeforeCOVID-19existed):societiesdocome to existential crossroads andmake important choices.Herewe are. Thecurrent political and economic situationwasn’t inevitable, becausehistory andevolution never are.Nor is any particular future.Wherewewind up, good orbad, is the result of choiceswemake over time—choicesmade deliberativelyandmoreorlessdemocratically,choicesmadebywhoevercaresmoreorwieldsmorepoweratthetime,choicesmadeaccidentally,choicesignoredorotherwiseleft unmade. Even before the pandemic and its economic consequences, andbefore theprotests andchaos following themurderofGeorgeFloyd,wewerefacingado-or-dienationaltestcomparabletothebigoneswepassedineachofthe three previous centuries—in the 1930s, the 1850s and ’60s, and the 1770sand’80s.ForgivetheHero’sJourneytalk,butthisisAmerica’sFourthTesting.

Wecancontinuedownour recentpaths.Wecan leave inplace, as is, the1980paradigmshiftinthepoliticaleconomyanditssuicidalexcessesthathavemademostAmericansworse off.We canmaintain a superficially unchangingculturetofoolandcomfortourselves.Wecanrageagainsttheirreversiblesocialanddemographicchanges.Wecantreat theimminenttsunamiof technologicaltransformations of work and life the same way we’ve dealt with the techrevolutionso far—by letting it justhappenaccording to thepreferencesofbigbusiness,lettingitoverwhelmusandreshapetheeconomyandsocietywithoutanycollectivevettingornegotiationorconsensus.

Wecan, inotherwords, fail tochangewhatneedschanging—and therebyguaranteeAmerica’s continueddecline and fall.Orwe can try tomake fairer,smarterchoicesaboutwhichnewtoacceptandwhicholdtorecoverandhowtoshape them. We can rediscover the power of collective action and thegovernment to make progress. We can actually aim for a new, improvedAmerica.Thispresentinflectionpointreallyisn’t justamatterofchangingtheways we think and operate in order to escape national doom. After we passthroughthelatestrecession(ordepression),thetechnologicalpossibilitiesforaflourishingofabundanceandleisuremightactuallyallowustodesignandbuildatwenty-firstcenturythat’sclosertoutopiathantodystopia.

Howdoweaimforthatfuture,onemorelikeStarTrekthanMadMax?

Onewayisbyemulatingthesocialpremisesandpromisesandpoliciesthatare in place elsewhere in the rich, developedworld. In the 1980s someof thesmartestofthesesocietiesredoubledtheircommitmentnotonlytomarketsbutalso,unlikeus,tomakingtheirmarketeconomiesworkforthemajorityandforthe long run, by buffering economic insecurity and inequality and otherdownsidesofnewtechnologiesandthenewlyglobalizedeconomy.

I’m inclined to believe the theories thatAmerican history tends to run incycles, sociopolitical and economic eras that last for decades before thependulumswingsinadifferentdirection.Myhunchandhopeisthatwe’reattheendofthelongerathatbeganforty-oddyearsago,andthatAmericamaynowbeon the verge of positive change and a bracing cascade of thewildly new andinsanelygreat.Butitwon’thappenbyitself.Pendulumsmustbepushed.

*Historicalsumsofmoneyareprettymeaninglessbecauseofinflation—$1,000in2020isthesameas$850in2010,$500in1990,$150in1970,andsoon.Sothroughoutthisbook,unlessIspecifyotherwise,alldollaramountsareinflation-adjusted,evenwhenIdon’tmentionthatI’verenderedahistoricalsumin“today’sdollars”orthatitwas“equivalentto”thelargerpresent-dayamount.

I’ ve referred to America as Fantasyland, but it was always alsoTomorrowland. Four hundred years ago, back in the time thatwe think of astotallyrusticandprimitiveFrontierland,newwasinthename—theNewWorld.That was the brand from the start, exciting and attractive because it was anentirelyunfamiliarblankslate.PeoplebythethousandsleftEurope,abandoningtheOldWorld,sailingtotheNewWorldtoimprovisenewlivesandnewwaysof life, to inventnew identities.Thenew inhabitantscreatednewcommunitiestheycalledNewEngland,NewNetherland,NewAmsterdam,NewHampshire,NewSalem,NewYork,NewOrleans,NewHaven,NewLondon,NewJersey,neweverything.

The religion of the newcomerswas itself new—Protestantism had existedfor less than a century when the English Protestant settlers arrived. Theparticularsectsoftheearlysettlerswereallsofeverishlynew—Puritans(heretobuild theNew Jerusalem),Quakers, Shakers,Mennonites,Amish,Methodists,Baptists—thattheyrequiredanewplace,emptyoftoomanydisapprovingwhitepeople, in which to practice and propagate their peculiar faiths. And then,uniquelyinChristendom,Americansproceededtocreateandspinoffnewnewreligions,massively successful ones, fromMormonism toChristianScience toPentecostalismtoScientology—astheycontinuetodo.

Here in America we embraced and encouraged, as no other country hadbefore us, a new and different approach to making and selling things—entrepreneurialism, whereby almost anybody was unusually free to give any

business(orreligion)ago.“ThediscoveryofAmericaofferedathousandnewpaths to fortune,” Alexis de Tocqueville wrote after spending most of 1831crisscrossingtheUnitedStates,“andplacedrichesandpowerwithinthereachofthe adventurous and the obscure….The passions which agitate the Americansmost deeply are not their political but their commercial passions….Americansaffectasortofheroismintheirmanneroftrading[that]theEuropeanmerchantwillalwaysfind…verydifficulttoimitate.”

TheyoungTocquevillehadbeendispatchedby theFrenchgovernment tothe young United States to study its new approaches to incarceration, but hechronicled and marveled at every variety of non-European novelty he cameacross.“Anewscienceofpoliticsisindispensabletoanewworld,”hewroteinDemocracyinAmerica,andAmericans’“loveofnovelty”wasbeingrestrainedonlybylawyersand“theirsuperstitiousattachmenttowhatisantique.”

He realized that theAmericancharacterderived froma self-conceptionofbeingnewandalwaysembracingthenew.

TheinhabitantsoftheUnitedStatesareneverfetteredbytheaxiomsoftheir profession; they escape from all the prejudices of their presentstation; they are not more attached to one line of operation than toanother;theyarenotmorepronetoemployanoldmethodthananewone;theyhavenorootedhabits,andtheyeasilyshakeofftheinfluencewhichthehabitsofothernationsmightexerciseupontheirmindsfromaconvictionthattheircountryisunlikeanyother,andthatitssituationiswithoutaprecedent in theworld.America is a landofwonders, inwhicheverythingisinconstantmotion,andeverymovementseemsanimprovement.Theideaofnoveltyisthereindissolublyconnectedwiththe idea of amelioration.No natural boundary seems to be set to theefforts ofman; andwhat is not yet done is onlywhat he has not yetattemptedtodo.

InAmerica, the idea of novelty is indissolubly connectedwith the idea ofamelioration,newequalsimproved,progressapparentlybuiltin.

ThecreationofAmericaandthentheUnitedStatescoincidedexactlywiththeAgeofEnlightenment,theearly1600stolate1700s.Ourswasanationbuiltfromscratchmeant toembody thebestEnlightenmentprinciplesandhabitsofmind.Freedomofthoughtandspeech.Embraceofreasonandscience.Andmost

importantly for this discussion, a foundational belief in the idea of humanprogress.TheUnitedStateswasaself-consciousincarnationofthemodernideaof purposeful, rapidprogress—that is, of seeking and expectingone’s life andsocietytobeperpetuallynewandimproved.

Soourexpectationofconstantsocialandculturalchangehasitsrootsinthenew Enlightenment thinking in which America’s founders and many of itspeopleweresteeped.Butthecountry’sbirthalsooccurredsimultaneouslywithanexplosionofthemateriallynewaswell.Youprobablyimagine,asIdid,thatthe average European’s standard of living gradually improved as the MiddleAges ended in the 1400s. In fact, in the economies of America and Britain,measured by the average person’s share of total production, as the economistRobert Gordon says, “there was virtually no economic growth before 1750.”Andthatchangedonlybecauseinthe1760sand’70spracticallarge-scalesteamengineswereperfected,justasmanufacturingwasbeingotherwisemechanized.Suddenly life was transformed: the industrial revolution began at the samemoment as ourRevolution. In fact, one reasonAmericans fought thewarwasbecause theEnglish back homeweren’t eager for the colonies to industrializeand had even banned somekinds ofmanufacturing inAmerica.When victorycame, it seemed all of a piece, like providence or destiny: an amazing newnation, amazing new technology, amazing new systems of manufacture andtransportation—landofthefree,homeofthenew.

It wasn’t just a one-time change, this sudden proliferation of intertwinednew technology and new economics starting around 1800, the change frommuscle-poweredlaborandzero-sumeconomicstasistosteam-poweredgrowth,boom and done. The enthusiastic embrace of new new technologies and newbusinessesandnewwaysoflivingbecameapermanentAmericancondition,thebeginning of perpetual flux, an ongoing flood of newness.Once the economywasgrowingataratebeyondthatofthepopulation,eachcitizen’sshareoftheeconomy increasing by 1 or 2 percent a year, and thus doubling in size everycouple of generations, constant change in all parts of American life wasessentiallyguaranteed.Itmeanttherewerenewsortsofbusinessesandjobs,newrelationshipsbetweenworkersandbosses,newkindsofbuildingsandbridges,new and more and bigger newspapers, new varieties of hope and dreams foroneself and one’s children and grandchildren, and some new kinds ofunpleasantnessandmisfortuneaswell.

Tocqueville wasn’t the only young European to understand how thiscommitmenttotheendlesslynewwasthedefiningfeatureofthezeitgeistfrom

which theUnited States emerged.KarlMarx never visitedAmerica, and as ayoungmanatamomentofpoliticalfervorinquasi-feudalEurope,hecouldnotforesee the resilience of new, industrializing political economies like ours toadaptandthriveforanothercenturyortwo.Butin1848heabsolutelynailedthenew condition of perpetual, contagious reinvention that America most purelyexemplified.“Constantrevolutionizingofproduction,uninterrupteddisturbanceof all social conditions, everlasting uncertainty and agitation distinguish [this]epoch fromallearlierones,” twenty-nine-year-oldMarxandhis twenty-seven-year-oldco-authorFriedrichEngelswroteintheirManifesto.

Allfixed,fast-frozenrelations,withtheirtrainofancientandvenerableprejudicesandopinions,aresweptaway,allnew-formedonesbecomeantiquatedbeforetheycanossify.Allthatissolidmeltsintoair,allthatis holy is profaned, andman is at last compelled to face with sobersenseshisrealconditionsoflife.

OnewaythenewpoliticaleconomycouldsustainitselfintheUnitedStateswastheexceptionalwesternexpansesthatwereavailableforsettlement.BeforeAmericaexisted,thewordfrontierhadexclusivelymeanttheboundarybetweentwocountries,butthenwegaveititsnewandenduringAmericanmeaning—thefrontierwasthenceforththeendpointofthesettledandfamiliarandtheexcitingstart of new and barely known lands. The technologies thatwere built out sogiddily and fast, steam-powered railroads and electric telegraphy, kept ourfrontierlinemovingwest,allowedmoremillionsofpeople,newimmigrantsanddescendantsofformerimmigrants,tofashionnewlivesinnewtownsandcitiescloser to the frontier. In less than twentyyears, from the early1840s to1860,America’s railroads grew from about 3,000miles to 30,000, and its telegraphlinesfrom38milesto50,000.

IfanAmericandislikedbeinga factoryworkeroranyotherkindofwageslave, he could light out for the territory ahead of the rest, or at least sustainhimselfwiththefantasyofdoingso,tohomesteadorbuildtherailroadorhuntfor gold or silver or for suckers to grift. He or even she could leave anoverfamiliaroldhometownforsomenewplacetobecomesomeonenew,withareworked or fictitious identity. In the early 1900s, for instance, one of mygrandfathersescapedhisstrictMennonitecommunityinPennsylvania,wherehisfamilyhad livedforacenturyafterarrivingfromGermany;movedbyhimselftwelve hundred miles west to Nebraska, where he’d never been and knew

nobody;becamealawyer,anoccupationforwhichhehadn’tbeeneducated,anda Unitarian, a religion previously unknown to him; and met a socialist andsuffragist,probablyhisfirstever,whomhemarriedjustaswomenwontherighttovote.

IntheOldWorld,ithadtakenhalfamillenniumforafewancientcitiestogrow from populations of thousands to hundreds of thousands. In the UnitedStates,newcitieswereconjuredintoexistenceandmanagedtogrowthatmuchinafewdecades.Chicagowentfromfivethousandpeopletomorethanhalfamillioninthirtyyears.NewYork,doublinginsizeeverydecadeortwo,reacheda half-million population in 1848. Inmy novelHeyday, set inNewYork thatyear,apractitionerofthenewmediumofphotographyconsiderstheastonishingnewhigh-techbrightnessofhissuddenlyenormouscity.

To be modern, he thought, is to be artificially aglow…gaslightspreadingintoeveryparlorandrespectablestreet…thelaughablylargenew panes of plate glass that amounted to architectural magician’stricks…the unearthly rays of light beaming from burning lime thattransformed any actor on a stage into a shining angelic or demonicfigure;thenew,exceptionallyyellowyellowpaintsandnewbrightredprinters inks, all mixed up by chemists in laboratories; the telegraphwires that sparked and blushed against the night skies….ModernAmericaglows.

Newness generated on such a scale at such speed was probablyunprecedentedinhumanhistory—andthenwiththeadditionof telephonesandelectriclightsandskyscrapersandcars,andairplanesoverhead,thosehugenewcitiesbecamenewalloveragain.

Backin1850,beforerailroadsextendedeventotheMississippiRiver,SanFranciscogrewintwoyearsfromatownoffivehundredtoacityof25,000,thelargest west of Chicago. That was thanks to the Gold Rush, which instantlyadded a dreamier new piece to the modern American dream—that anybodycould get rich overnight. The Gold Rush was the beginning of California’sevolutionintothemostAmericanpartofAmerica,aplacewhereeverykindofnewiscreatedandthrivesandthengetsadoptedbytherestofthecountryandthe world—new religions, new forms of entertainment (movies, television,theme parks), new technologies (aerospace, digital), new lifestyles based on

driving,ondressingdown,onbeingoutdoors,onlifestyleperfectionism.California would become internationally synonymous with the casual as

well as the new. But from America’s earliest days, foreign visitors likeTocqueville noted this new culture’s characteristic informality, in dress, inspeech,inthelackofdeferencebycommonpeoplefortheelites.SodidastutenativeslikeWaltWhitman,whoinasinglesentenceofhisprefacetoLeavesofGrasspointed tobothof thesedefininghabitsofAmericans—“thepicturesqueloosenessof theircarriage”and“thePresident’s takingoffhishat to them,notthey to him,” as well as their extreme “welcome of novelty.” Thecounterculturalism of the 1960s, an extremely picturesque extreme ultra-looseness, was just one of a series of self-consciously new modes that haveseriallydefinedtheAmericanzeitgeistbeforeandsince—theTranscendentalistandBoweryB’hoysubculturesofthe1830sand’40s,theJazzAgeofthe1920s,the TV-besotted 1950s, the 1970sMeDecade, the yuppie 1980s, the hip-hop1990s—eachofwhichmadedailylifelookandfeelnewalloveragainfornewgenerationsofAmericans.

Duringthenineteenthandtwentiethcenturies,newtechnologiesappliedtomakingandgrowingandminingandmovingandcommunicating thingsdroveeconomicgrowth.“Ifthereisonethingthateconomistsagreeon(andtherearenotmany),” theeconomistand innovationexpertMarianaMazzucatowrites, it“is that technological and organizational changes are the principal source oflong-termeconomicgrowthandwealthcreation,”perhapsasmuchas80percentofit.It’sacycleinwhich“inventionsareoverwhelminglythefruitsoflong-terminvestmentsthatbuildoneachotheroveryears.”ThosetwocenturiesofgrowthcontinuedtomakethecountryseemperpetuallyfreshandtoenableAmericans’characteristicoptimismandtasteforthenew.

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Alongtheway,apeoplewhodefinedthemselvesasseekersandpersonificationsof novelty, rushing toward a blindingly bright future, also sought occasionalrespite from the accelerating shocks of the new. Almost as soon as the newUnitedStateswasestablished,Americansdevelopedanoccasionalcultural tic,indulging in nostalgic entertainments of a whole new kind, most notably forAmericantimesandplacestheythemselveshadn’texperienced.Ourforefatherscreated a nostalgia industry that fictionalized our recent past, turning DanielBooneandBuffaloBillCodyinto livingcelebrity-heroartifactsandreenactors

of the frontier days, in the nineteenth century devouring James FenimoreCooper’sromanticstoriesoftheuntamedeighteenthcentury.WaldenwasdrivenbyHenryDavidThoreau’s nostalgia for the era of his childhood in the 1820sand’30s,beforerailroadsandthetelegraph,andhisdreamywish“nottoliveinthis restless, nervous, bustling, trivial Nineteenth Century.” As that centuryturnedintotheevenmorerestless,nervous,bustlingtwentieth,theUnitedStatesrelentlesslymodernized and urbanized. Then came our biggest act of nationalnostalgia, creating and moving en masse to suburbs, brand-new green andpeacefulsimulationsofold-timeAmericantownsandvillagesandhomesteads.

Butthesuburbsofthetwentiethcenturyalsoembodiedanuglynostalgia,ofcourse, because theywereplaces towhichnative-bornwhiteAmericans couldescape the city to live almost exclusively among their own kind. America’stragic flaw isour systemic racism, and it’s a residueof a terribledecisionourfoundersmadetoresistthenewandperpetuatetheold:theenslavementofblackpeople.SlaveryhadendedinmostofEuropebythe1500s,butnotinitscoloniesin theNewWorldandelsewhere.FranceandSpainandBritainoutlawed theirslave trades and slavery itself decades before the United States did, and theyfound it unnecessary to fight civil wars over the issue. Tsarist Russiaemancipated its serfs before democratic America emancipated its slaves. Onabolitionwewerenotearlyadopters.

The most important foundations for slavery, of course, were racism andeconomics. In the antebellum South, enslaved blacks constituted half of allwealthandgeneratedaquarterofwhitepeople’sincome.ButwhiteSouthernersalso clung to slavery due to nostalgia for the timewhen slaverywasn’t underserious challenge by their fellow citizens, and anticipatory nostalgia for theidealizedpresenttheyfearedlosing—asagovernorofTennesseewroteaftertheCivilWar, for “the cotton fields, alivewith the toiling slaves,who,without asinglecaretoburdentheirhearts,sangastheytoiledfromearlymorntillcloseofday.”WhiteSouthernnostalgiawasalsoforthefictionalfeudalpastsdepictedinthenovelsofWalterScott,setinyeoldeEnglandandScotland,publishedinthe 1820s and ’30s, and particularly, phenomenally popular in the AmericanSouth because the fictions served to romanticize their own slave-basedneofeudalism. Mark Twain blamed secession and the Civil War on suchSouthern“love[of]shamchivalriesofabrainlessandworthless long-vanishedsociety.”

The brand-new party of the North was the most progressive party—Republicans were not just antislavery but in favor of building railroads and

publicuniversitiesandgivingfreelandtohomesteaders.Lincolnandhispartyofthenewwon thewar thatkilled4percentofAmericanmen in fouryears, theequivalent of 7million today. The country at large looked to bemore or lessback on an Enlightenment path and catching upwith the rest of the civilizedworld—letting go of the hopelessly obsolete and irrational, changingdramaticallywhen necessary.Despite powerful backlashes along theway (theSouth’s replacement of Reconstruction with Jim Crow, the fundamentalistChristianupsurgeoftheearly1900s,theresistancetocivilrightsahalf-centurylater,theinsidiousandongoingsystemicracism),overthelongrunthecountrywasmoreopen to thenewthanfixatedon thepast.Progressfitfullyprevailed.Formostofthetwentiethcentury,mostAmericansseemedtohavepermanentlylearnedlessonsaboutthemortaldangersofpathologicalnostalgiaandresistanceto change, so that a large governingmajority remained committed to makingAmericaperpetuallynew.

T orecap:

1. While not everything new is good or desirable, an exceptionalopennesstothenewwasAmerica’sfactorysetting.

2. Wecallthedesirablenewprogress.3. From the late 1700s to the late 1900s, economic growth helped

make the United States perpetually new, thus enabling socialprogress.

4. Economic growth comes overwhelmingly from incorporating newtechnologiesintothewayworkisdone.

Iwanttoreturntothatlastpoint,andtowhatIsaidearlierabouthow,justastheUnitedStateswasgivingbirthtoitself250yearsago,thesteam-poweredindustrialrevolutionbeganturningasocietyoffarmersandartisansintooneofworkers tending machines in factories and elsewhere, thereby permitting theU.S.economytogrowandgrow.

That’salltrue,butit’snotthewholetruth.BecauseasI’vesaid,andasI’llnow explain in more detail, every economy, including ours, is a politicaleconomy.Sohere’sacrucialfifthpoint:

5. Onewayoranother,wechoseandchooseasasocietyhowtomake

economic use of new technologies and of the new wealth thatresultsfromeconomicgrowth.

Of course, when I say “as a society,” I mean the people who exerciseeffectivepoweroverthechoicesasocietymakes.Forinstance,evenbeforethegame-changing steam-powered contraptions of the industrial age came alongafter 1800 and transformed the nature of more and more jobs, bosses for acentury or two had been redesigningwork to suit themselves.During this so-called industrious revolution, manufacturers began gathering their artisanalworkerseachdayintobuildingsthattheybegancallingfactories.Thusgathered,aCornellUniversityhistorianofworkexplains,“thelaborcouldbedividedandsupervised. For the first time on a large scale, home life and work life wereseparated. People no longer controlled how theyworked, and they received awageinsteadofsharingdirectlyintheprofits.”

The industrial revolution’sgreatAmericancelebritypromoterEliWhitneybecamefamousinthe1790s,justoutofYale,forinventingamachinethatwasatthecenterofAmerica’sindustrialrevolution—anew,improvedcottonginthatmechanizedtheprocessofremovingthedozensofseedsfromeachcottonboll.At the time, growing cotton was a new and very small part of Americanagriculture.Oneworkerusingjusthisorherhandsspentawholedaytoproduceonepoundofcleancotton.ButusingWhitney’sgin,thatoutputsuddenlyleapedto twenty or twenty-five pounds per day. In the early 1800s, cotton replacedtobaccoasthebiggestU.S.export,andproductionincreased3,000percentoverthenexthalf-century.

ThecottonginisaperfectillustrationoftheeconomicfacttowhichIkeepreturning: a new technology makes workers more efficient, increasedproductivity results inmore profits, and the economy grows. But as I’ve alsosaid, every economy is a political economy, and the story of the cotton gin isalsoanextremeillustrationofthatfundamentaltruth.Cottongrowinghappenedin the South, of course, and the people whose productivity dramaticallyimprovedwereenslavedAfricanAmericans,atleasttwo-thirdsofwhomworkedproducing cotton. And the profits that dramatically improved as a result, ofcourse, all went to the plantation owners. So this remarkable piece of newtechnology, in addition to driving overall U.S. economic growth, wasresponsibleaswellformakingslaveryafoundationoftheU.S.economy.

EliWhitneyalsohappenstobeafabulouscasestudyoftheoverenthusiasm

andoverpromisingthatsurroundtechnologicalprogress—especiallyatmomentsofrevolutionaryeconomicchange,suchastheearlynineteenthandearlytwenty-first centuries.We learn in school thatWhitney came up with another, morefoundational piece of the industrial revolution: manufacturing things out ofstandardizedbitsandpieces, interchangeableparts, fromgearsandlevers thentoEthernetplugsandsemiconductorchipsnow.

Comingoffthesuccessofthecottongin,youngWhitneyconvincedthenewU.S.governmentthathewastheirmantomass-producetenthousandmuskets,eventhoughheknewnothingaboutmakingguns.Twoyearslater,afterfailingtomeethiscontractualdeadline,hewenttoWashingtontokeephisremorsefulbuyers on the hook. His state-of-the-art musket was taking a bit longer thanexpectedtogetright,hetoldPresidentAdamsandPresident-electJeffersonandthe secretary of war, because it would consist entirely of fantastic newinterchangeable parts,meaning thatmanufacturewould be cheaper and faster,and repair easier. He spread a hundredmetal pieces on a tabletop. Sirs, herebeforeyouarealltheordinarypartsfromtenofmynewgunlocks,heexplained.Handmeoneof each,anyyouwish,at random,and from those,usingonlyascrewdriver,Ishallassembleaworkingapparatus!Whichheproceededtodo,wowingeveryone,gettinghisdeadlineextended,moremoney,andacontractforstillmoremuskets.

Whitney’s demonstration in Washington, however, had been almost allshow. According to the MIT technology historian who wrote the definitiveaccount of that episode, “Whitney must have staged his famous 1801demonstration with specimens specially prepared for the occasion. It appearsthatWhitney purposely duped government authorities” into believing “that hehadsuccessfullydevelopedasystemforproducinguniformparts.”(Vaporwarewouldbethewordcoinedtwocenturieslater.)

TheinventorandnailmanufacturerJefferson,who’dbeenexcitedforyearsabout the prospect of interchangeable parts,waswildly enthusiastic.Not longafterthefakeddemo,hewrotealetterofintroductiononWhitney’sbehalftothegovernorofVirginia,hisprotégéJamesMonroe.Whitney“hasinventedmoulds& machines for making all the pieces of his locks so exactly equal,” thepresidentwrote,andthus“furnishestheUS.withmuskets,undoubtedlythebestthey receive.” None of that was true. In fact, Whitney wouldn’t deliver anymusketstothegovernmentuntil1809,nineyearslater,andinterchangeablepartsweren’tperfecteduntilafterhisdeath.*1

Whitneywas absolutely honestwhen he admitted in 1812 that thewholepointofusingidentical,interchangeablepartstomakethingsinfactorieswouldbe to renderold-fashionedcraftspeopleobsolete—that is, “to substitutecorrectandeffectiveoperationsofmachineryfortheskilloftheartist.”Thisnewwayoforganizing production, and using technology to replace skilled workers withcheapunskilledworkers,wasknownatthetimeastheAmericanSystem.

I also told not-the-whole-truth in the last chapter when I wrote that theindustrial revolution made the average citizen’s share of the economy startgrowing.That’s true,but is alsomisleading, as aremany statements involvingmathematical averages.*2 For the first half of the 1800s, workers in theindustrializing economy didn’t actually get a fair share of the new bounty. Infact, their overall incomes probably stagnated or shrank,while the capitalists’share doubled, dramatically increasing inequality. Which led many peoplestartinginthe1840sinAmericaandEuropetoimaginethattheseboomingnewcapitalistsystemswereunsustainablyunfairandmightpresentlybust.

In Britain, a twenty-four-year-old executive at a cotton mill nearManchester, thesonofoneof thecompany’sfounders,wrote inan1845bookthat“themostimportantsocialissueinEngland[is]theconditionoftheworkingclasses,whoformthevastmajorityoftheEnglishpeople.Whatistobecomeofthese propertyless millions who own nothing and consume today what theyearned yesterday?” The “industrialists,” this young industrialist wrote, “growrichonthemiseryofthemassofwageearners,”but“prefertoignorethedistressoftheworkers.”

The writer was Friedrich Engels, about to become Karl Marx’s lifelongfriend,collaborator,andpatron.Insteadofcollapsing,thenewcapitalistsystemadapted.America’shas alwaysbeen a free-market economy,but as apoliticaleconomy, the societyconstantly redesignsand tweaks the systemandenforcesits operating rules and norms. And so from the mid-1800s onward, as newtechnologies keptmakingworkersmore productive—by1840 the productivityofU.S.factoryworkersexceededBritain’s—andastheeconomykeptgrowing,workers startedgettingaproportionately larger shareof the enlargingpie, andthentheykeptdoingso.Tousetheotherstandardmetaphoragain,forthenextcenturyandahalf,allboatsrosetogether.

ThatprincipleofeconomicfairnesswasattheheartofourAmericansocialcontractasweevolvedfromrough-and-readystart-upnationtosuccessfulglobalsuperpower.Itdidn’thappenbecausethenewcapitalistsofthe1840ssuddenly

becamekindandbegansharingtheirwealth,likeDickens’sEbenezerScrooge.*3Encouraging virtue among the well-off—that is, creating good, strong socialnormsandshamingviolators—doeshaveaplaceinthisstory.Butthebigshifttowardeconomicfairnessthatbeganinthelater1800swastheresultofanewsystemofcontrolsthatwedemocraticallybuiltintoourpoliticaleconomy.

“Private economic power is held in check by the countervailing power ofthose who are subject to it,” the supremely lucid economist John KennethGalbraithwroteinAmericanCapitalismin1952.“Thefirstbegetsthesecond.”Countervailing power is a political economic concept that Galbraith naileddown. From the late 1800s through the 1900s, that powerwas organized andbuilt throughoutU.S. society by citizens andworkers and customers to checkandbalancethenewandrapidlygrowingpowerofbigbusiness.Wealmostonlytalk about “checks and balances” concerning Washington politics, presidentsversus Congress versus the federal courts. But economies—especiallymodernfree-marketeconomies,looselysuperviseddaytoday,operatingmostlywithoutgovernment commanders-and-controllers—also need systems of checks andbalances.

Itcanbeusefultothinkofaneconomyasagame,thehighest-stakesgamethere is.As inD&DorbackgammonorChutesandLadders,someplayersareextremelyavidandothershavebetterthingstodo,someplayersareveryskilledandothersjust…keeptossingthedice.Butunlikeothergames,intheeconomyeveryone is a player. And we all need one another to keep playing forever.Becausethewholepointisnever-endingplay,withoutoverwhelminglydecisive,permanentwinnersor somany losers thegamedoesn’tworkaswell as it canandshould.Allgameshaverules,butunlikeothergames,therulesbywhichaneconomy operates only seem like they’re handed down by a godlike gamedesigner—whereas in fact, they’re amended and sometimes dramaticallyrewrittenbytheplayersovertime.

Meanwhile, back in real-life American economic history, starting in the1800stheindustrialrevolutionchangedthegame,moderncorporationsformed,and one player, big business, began acquiring unparalleled new economic andpoliticalpower.Amajorinherentadvantagethatbusinesshasoverotherplayersin the economic game is its centralized, undemocratic nature: no matter howsprawlingcompaniesandfinancialinstitutionsmaybe,theyhaveheadquarters,strategies, and bosses who give orders that are obeyed—whereas individualworkers and customers and small businesses and citizens in this vast country

are…individuals,spreadout,disparate,disorganized,relativelypowerless.So individual Americans got together and organized new checks and

balances in the new economy. Workers formed unions. “The operation ofcountervailingpower is tobeseenwith thegreatestclarity in the labormarketwhereitisalsomostfullydeveloped,”GalbraithwroteinAmericanCapitalism.Just thirtyyearsearlier, in the1920s,“thesteel industryworkeda twelve-hourdayandseventy-two-hourweekwithanincredibletwenty-four-hourstinteveryfortnightwhentheshiftchanged.Nosuchpowerisexercisedtoday,”bybossesinthe1950s,onlybecausetheoverworkedworkershadrisenupand“broughtittoanend.”That is,duringthe1930s, inadditiontoenactingaminimumwageandchildlaborlaws,citizensthroughtheirgovernmentcreatedasystemthatletworkers’unionsorganizeandnegotiate fairly,and instantlyunionmembershipmorethantripled.Bythe1950s,athirdofalljobsatprivatecompanieshadbeenunionized.

But the new countervailing power wasn’t just about employees forcingbusinesses to share more of their profits. Citizens elected legislators andgovernorsandpresidentstoenactnewrulesconcerninghowbigbusinesscouldandcouldn’tconductitselfinotherways,andcreatednewregulatoryagenciestoenforce those rules. Someof the agencies andmissionswere very specificallypurpose-builttodiscouragebusinessesfromharmingandkillingpeople.In1906wecreated theFoodandDrugAdministration toprevent thesaleofdangerousfood and phony medicines, just as in 1970 we created the EnvironmentalProtectionAgencytopreventbusinessesfromputting toomanytoxins into theairandwaterandland.

Before and after the turn of the twentieth century, America decided thateven if businesses weren’t physically harming people, a few companies hadsimplybecometoolargeandtoopowerfulforthegoodofoureconomyandourdemocracy—the so-called corporate trusts. In 1910 President TheodoreRoosevelt, a rich Republican, said that “corporate funds” used “for politicalpurposes”were“oneoftheprincipalsourcesofcorruption”andhad“tendedtocreate a small class of enormously wealthy and economically powerful menwhose chief object is to hold and increase their power.” Antitrust laws werepassedtopreventcorporationsfromusingtheireconomicpowertokeeppricesunfairlyhighorwagesunfairly low.Foracentury, those lawssaw to it that ifoneorafewbigcompaniescontrolledthesupplyofbasicproductsorservicesina region or the whole country—railroads, gasoline and steel, electrical andtelephone service, banking, TV and radio—those companies had to be more

closely regulated. Or broken up into smaller, less powerful enterprises thatwouldcompetewithoneanother—thewaywedidintheearly1900stothenewcompanies that controlled 90 percent of the suddenly humongousmarkets forpetroleum(StandardOil)andcigarettes(AmericanTobacco).Thegovernment’senforcementoftheselawskickedintoevenhighergearundertheNewDealinthe1930s;inadecade,theJusticeDepartment’santitrustdivisiongrewfrom15lawyersto583.

America also decided in the early 1900s that itwould be fairer andmoresensible to fund the federal government mainly by a new direct tax on theincomesoftheaffluent,withprogressivelyhighertaxationpercentagesonhigherincomes.Whichmeantthataquarter-centurylater,inthe1930s,wecouldaffordto decide that in this country becoming old should no longermean becomingpoor. In 1940, the year Social Security benefits started, three-quarters ofAmericanssixty-fiveandolderlivedinpoverty;by1980theaverageretireewasgettingtheequivalentof$14,000ayearfromthefederalgovernment,auniversalbasicincomefortheold.

The countervailing powers that we built into our free-market politicaleconomy from1880until1980didnotamount toananticapitalist conversion.Rather, it was really the opposite, essential to the system’s evolution andrenewal,makingourversionofcapitalismmorefair, lessharsh,andpoliticallysustainable, a robust foundation for a growing middle class whose spendingfueled more economic growth and a society that made most of its citizensreasonablycontentandproud.“TheeconomicphilosophyofAmerican liberalshad been rooted in the idea of growth,” the influential sociologistDanielBellwroteinthe1970s,aroundthetimehetaughtaseminarItookincollege.“Oneforgetsthatinthelate1940sand1950s,”itwaslaborleaders“andotherliberals[who] had attacked the steel companies and much of American industry forbeing unwilling to expand capacity. The idea of growth has become so fullyabsorbed as an economic ideology that one realizes no longer howmuch of aliberal innovation it was.” Even as Democratic president Harry Truman waslaunching the Cold War in 1950 to protect capitalist America from foreignCommunists, he emphasized in hisState of theUnion speech that the countryneededaneventougherantitrust lawtoprotectoursystemfromfalling“underthecontrolofafewdominanteconomicgroupswhosepowerswillbesogreatthat theywill be a challenge todemocratic institutions.”Restraining excessivebusiness power was a bipartisan consensus. A decade later President DwightEisenhower, a moderate Republican, boasted in his final State of the Union

addressabouthiseightyearsof“vigorousenforcementofantitrustlaws.”Citizens also created hundreds of other important nodes of countervailing

power outside government and the labormovement. Inmany places—such asNebraska,whereIgrewup—citizenschosetoownandoperatetheirownlocalelectric and gas systems, and farmers formed cooperatives that gave themleverage in the marketplace. Blue Cross (1929) and Blue Shield (1939) werefounded as national nonprofit associations to provide inexpensive medicalinsuranceatonerateforanybodywhowantedtosignup,regardlessoftheirageor health or how they earned a living.*4 Later on, philanthropic foundationscreatedoutofthespareprofitsofoldindustrialfortunesbecamecountervailingforces:withkarmicperfection,forinstance,thefoundationcreatedbythesonofthe founder of the Ford Motor Company began funding environmentalorganizationsinthelate1960s.

All the new laws and formal codes and institutionalized arrangementsweenacted to increasefairnessandsecurityand to lookout for thecommongoodalso had the effect of reinforcing the norms from which they emerged, theAmerican attitudes and informal codes concerning fairness and mutual socialobligation. It was a virtuous cycle. In 1965 the CEOs of the largest U.S.corporations were paid twenty times as much as their average employees notbecause itwould’vebeen illegal to pay themonehundred times asmuch, butbecause to do so would’ve struck everyone as unacceptably unfair. Yes,governmentstartedprovidingSocialSecurityand then, in the1960s,MedicareandMedicaid,butduringthesameperiodmoreandmorecompaniesvoluntarilyprovidedmoreandmoregeneroushealthinsuranceplansandpensions.In1939barely5percentofAmericanswerecoveredbyinsuranceforhospitalization,butbythemid-1950sitwas60percent.Overthesamebriefperiod,thefractionofAmericanworkerssettogetfixedpensionsfromtheircompanieswentfromjust7percenttoone-fourthofthem,onitswaytoamajoritybythe1970s.

Inshort,themainplayersinthepoliticaleconomy,businessandemployeesandcustomersandcitizens,workedoutaroughpowerequilibriumthatfeltmoreor less fair, which helped keep the economy prospering and growing. Thisbalancingact, andall thenewsocial safetynetsandcushionsandbackupswecreated, allowed the American economy to evolve quickly and momentouslyduringthe1900sastechnologykeptimprovingproductivityandputtingpeopleinnewkindsofjobs—byandlargebetterjobsuntil the1980s.In1900fourintenworkingAmericanswerefarmers,butinthe1950sfewerthanoneintenhad

anythingtodowithagriculture,andby1970itwas3percent.Similarly,betweenthe end ofWorldWar II and 1970, the fraction of workers inmanufacturingshrank fromalmosthalf toaquarter—becauseby1970half theworkforce, allthose tens of millions of would’ve-been farmers and factory workers, wereearning their livings inofficesand stores. Inotherwords,before the twentiethcenturywasover, agriculture andmanufacturingbetween themhadgone fromemploying76percentofallworkerstojust10percent.

For most Americans, it didn’t play out too badly, especially during theexcellentthirdeconomicquarterofthecentury.Ifyouwereluckyenoughtobeathirty-year-oldin1970,youwere92percentcertainofhavingahigherstandardof living thanyourparentshadhadwhen theywereyourage.Fromthe1940sthroughthe’70s—whenourrichestcitizenswerepayingratesof70and80and90percentonthemillionthdollarstheyearnedeachyear—U.S.productivityandGDPperpersonandmedianhouseholdincomeafterinflationalldoubled.

“Productivity isn’t everything,” the Nobel Prize–winning economist PaulKrugmanhaswritten,“but in the longrun it isalmosteverything.Acountry’sabilitytoraiseitsstandardoflivingdependsalmostentirelyonitsabilitytoraiseits output per worker.” A country’s willingness to raise the majority of itspeople’sstandardoflivinginsyncwithincreasingproductivityandgrowth—tosharethegoodfortunefairly—depends,ofcourse,onpolitics.

*1JeffersondidincludethisboilerplatedisclaimerneartheendofhislettertoMonroeaboutWhitney:“Iknownothingofhismoralcharacter.”*2Anoteonaverages:afewtimesI’vebeeninroomswithahundredordinarypeopleandmyacquaintanceWarrenBuffett,whichmeanttheaverageperson’snetworthinthoseroomswasnearly$1billion.*3CharlesDickens’sfantasyofacapitalist’sredemptionandEngels’schronicleofreal-lifeScroogesindifferenttotheiremployees’miseryareamatchedpair:EngelswaswritingTheConditionoftheWorkingClassinEnglandinManchesterattheendof1843,justasDickenswroteandpublishedAChristmasCarolinLondon.*4TheyearIwasborn,myparentshadaBlueCrossinsurancepolicyforwhichtheypaid,tocoverthemselvesandmythreesiblingsandme—intoday’sdollars,adjustedforinflation—theequivalentof$700ayear.

I t’s true, therewasno Internet yet.*1But nobodyyoungor evenyoungishtoday has lived in an America where almost everything seemed constantly,excitinglynew,wherecelebratingnewnessineveryrealmwasakindofgiddy,overridingnationalpassion.Intheearly1960stheUnitedStateswasstilltakingitspost–WorldWarIIvictorylaps,whichseemedtobespiralingupwardtowardan ever better, shinier future. Vaccines for crippling and deadly childhooddiseaseswerenew.Suburbswerestillnew,televisionwasstillprettynew,colortelevisionandlivetransatlantictelevision(beamedbytheTelstarsatellite)weretotallynew.

Rock music was new, and couples dancing without touching was newer.Driving ourMustangs andVistaCruisers on interstate highways (andwearingseatbelts)was new.Steel-and-glass high-riseswere new.Shoppingmallswerenew, as were credit cards and plastic everything else, along with Dacron,Spandex,fastfood,frozenfood,instantfood,andubiquitousartificiallycoloredfood.Weevenhadtwonewstates,thefirstsinceoldentimes.

Airtravelwasnew,andonlyaluckyminorityofAmericanshadeverflown.Thespaceprogramwasanapotheosisofnewness,aswellasagenuinenationalobsession.We had a new president, the youngest ever, who’d prebranded hisadministration as the New Frontier, and in a famous speech about “the newfrontierofscienceandspace”rightafterthefirstU.S.astronauthadorbitedtheEarth,hepromisedwe’d“gotothemooninthisdecade.”*2AweeklateraTVseriessetonehundredyearsinthefuture,TheJetsons,premieredinprimetime,

andthreemonthsafterthatthepresidentspokeatthegroundbreakingceremonyfortheU.S.pavilionattheNewYorkWorld’sFair,whichhesaidwouldshowtheworld“whatAmericaisgoingtobeinthefuture.”Andsoitdid.MymostvividmemoryofmytenthyearwasatriptoChicago,myfirsttoabigcity,andtheafternoonwespent at theMuseumofScienceand Industry,where Ihadalong-distance Picturephone conversation with a stranger at the Bell System’sWorld’s Fair pavilion in New York City. General Motors’ fair pavilion wascalledFuturama.GeneralElectric’s,calledProgressland,hadbeendesignedbytheDisneyCompany,andWaltwasatthatmomentdreaminguphismasterworkinFlorida,theExperimentalPrototypeCityofTomorrow,EPCOT.

AmajorityofAmericanwomenmakingthemselvesappearnewbycoloringtheirhair(andasmallminoritybysurgicallyenhancingtheirfacesandbodies)wasanewphenomenon.Thismidcenturymaniaforthenewhaditsdownsides,particularlywhencombinedwithEstablishmenthubris.Amongtheunfortunateeffects was the national consensus that the way to deal with urbanneighborhoods full of old buildings (and black people) in older cities waswholesale demolition and replacing them with massive new buildings andhighways. In 1963 New York City began demolishing one of its two grandrailway terminals, Pennsylvania Station, just fifty-three years old—mainlybecauseitwasnotnew.Federallyfunded“urbanrenewal,”asitspromotershadjust rebranded it, wrecked and maimed many more neighborhoods than itrenewed or revived. Just before the policies of the best and brightest inWashingtonstarteddestroyingvillagesinVietnaminordertosavethem,akindofnonlethaldressrehearsalhadtakenplaceinAmericancities.

WhenwetalkaboutTheSixties,weusuallymeanthefull-onVietnamWarera, not the first few years of the decade. The differences between 1963 and1969weredramatic—theclothes,thehair,thesound,thelanguage,thefeelings—and the changes happened insanely fast, in a couple of thousand days fromshiny earnest Apollonian Progressland to crazed and furry Dionysian hordes.However,onceyoustartthinkingofAmericaoveritswholehistoryasthelandofthenew, thatabruptseguefromthesquare1960stothewild1960smakesalotmoresense.*3

Having successfully survived theDepression (bymeansof theNewDeal)andwonWorldWarII(intheendbymeansofawhollynewweapon),Americashiftedintohighgearandfortwodecadescruisedalong,blithelyspeedingintothe future. Transformative federal laws—Medicare and Medicaid, the Civil

RightsandVotingRightsacts,theImmigrationandNationalityAct,allenactedin a single year’s time, the year of the New York World’s Fair—seemedstrikinglynewbutalsotheinevitablenextphaseofmodernAmericanprogress,theplanned,sensible,well-managednew.Thenallofasudden,in1965,awarpdrivekickedinandblastedthecountryintoanunchartedgalaxyofpsychedelicanti-Establishmentangryandecstaticanything-goessuper-new.

Butnearlyallthebig1960schanges,thevariousdifferentvarietiesofnew,had a common source, in addition to the deep-seated national predisposition:after twenty-plus years of exceptional prosperity and increasing economicequality that were both still going strong, a critical mass of Americans feltaffluent and secure, which made their native self-confidence and highexpectations for the next new thing still more intense. That run of sharedaffluenceallowedthegrown-upsinchargetodecidewecouldaffordMedicareandMedicaidandthevariousWaronPovertyexperiments,anditeasedthewayformorepeopletoobeythebetterangelsoftheirnatureconcerningequalityforAfricanAmericansandwomen.

AfteragenerationofDepressionandworldwar, thethrivingnewpoliticaleconomyalso inclinedpeople tohave lotsmorechildren.Thosechildrenwereraised almost as if they were a special new subspecies who required moretendernessandunderstandingthanprevioushumans,thenewapproachfamouslycodified by Dr. Benjamin Spock’s mega-bestseller Baby and Child Care,published in the first yearof thebabyboom.Distinctlynew, faintly futuristic,immensely popular toys were invented and manufactured just for these newmodernchildren—whenIwasbetweenthreeandeleven,Frisbees,HulaHoops,Slip ’N Slides, and Super Balls all appeared. Most of that stupendous mobbecame teenagers during the 1960s. There were half again as many youngpeopleinAmericaduringthe1960sasthere’dbeenjustfifteenyearsearlier.

Adolescentsby theirnature canbe attention seekerswho feel theyhaveauniqueunderstandingoftruthandvirtue,butuntiltheAmerican1960s,probablyno generation anywhere ever had been the center of somuch attention or hadtheirspecialnesssoextravagantlyvalidatedbytheirelders.Inthe1960sanysortof distinct national teenage sensibility and culture were still new phenomena,having emergedonly in the 1950s alongwith rock and roll.What’smore, theboomingpoliticaleconomyalsomeantthatmoreofthemthaneverbeforeweregathered together on college campuses. This new concentration was ideal formaximizing the contagious spread of new cultural values and turning ecstatic-righteous-angryadolescenceitselfintoakindofideology.Whentheparentsof

babyboomershadbeenyoung,1or2millionattendedcollegeatanygiventime;in the fallof1969,8million studentswere incollege, fouroutof tenof themwomen.

Women of no earlier generation had been able to prevent pregnancyreliably,butin1960theFoodandDrugAdministrationapprovedthePill,andby1965itwasthecontraceptiveofchoice.Amongthenewtechnologiesofthelasthundredyears,onlypenicillin,television,andcomputersreshapedlifeasmuch.A single newpharmaceutical freed unmarried young people to havemore sexmore casually than had ever been possible—in otherwords, to create entirelynewsocialnormsalmostovernight.ThePillembodiesandstraddlestheearlierandlaterpartsofthedecade—anartifactofcorporatescienceandthetechnologyofconvenience thatenabled free-for-allgrassrootssocial transformations, fromtheWorld’sFairtoWoodstockinasingleastoundingleap.

The baby boomers’ lurch into anti-Establishment sex-drugs-and-rock-and-rollismwas also a result of their comingof agewith awhole newunderlyingexistentialangst:theUSSRacquiredintercontinentalnuclearmissilesonlyinthelate 1950s, and the new possibility of instant global apocalypse surely helpedpredispose a critical mass of American kids to become hedonists, renegades,utopians,and/ornihilists,at least temporarily.But thatwasonlyahypotheticalwar.When the actualwar came in 1964 and 1965, just as the oldest boomersturnedeighteenandnineteen, it triggered thefull-scalecountercultural reaction—thenkeptfuelingitastheU.S.deploymentinVietnamincreasedfromafewthousand advisers to 445,000 troops in less than two years, and as the rate atwhich young Americans were killed increased eventually to five hundred perweek.

Oneoftheideasunderlyingthisbookisthatuntilrecentlythelookandfeelof American life dramatically changed every couple of decades, making theworld seem continuously new. During the 1960s, the decade of maximumAmerican new, everything dramatically changed every couple of years. Thewholesocietywassuddenlygearedtorunonthetimeframeofyouth,whentwoyearsisalargefractionofone’slife.

In the summer of 1963Martin Luther King, Jr., the avatar of nonviolentcivilrightsprotest,ledthemarvelouslypeacefulMarchonWashington.Justtwoyears later, in the summer of 1965, theWatts riot was the first of themega-uprisingsbyAfricanAmericans,andin1966theBlackPanthersandtherestofthenon-nonviolentblackpowermovementemerged.

Attheendof1963,theTimesranalongfront-pagearticlewiththeheadlineGROWTHOFOVERTHOMOSEXUALITYINCITYPROVOKESWIDECONCERN.Butafterthe1969 riot during a police bust of theLGBTQpatrons of the Stonewall Inn inGreenwichVillage,alongfront-pageTimesarticlewasheadlinedHOMOSEXUALSINREVOLT.

In 1963 the journalist (and suburban housewife) Betty Friedan publishedTheFeminineMystique,shockingAmericawithherdeclarationthatthiswas“acountryand…atimewhenwomencanbefree,finally,tomoveontosomethingmore” than housewifery. Even though her book was a Times bestseller forweeks,thefirstarticlereferringtoFreidanatlengthapparentlywasn’tpublishedin the paper of record until 1965—about a female ad executive ridiculingFriedaninaspeechatanadvertisingconvention.Buttheninthespringof1968,the Times Magazine ran a long, approving article by a woman referring toFriedan’s new National Organization for Women (NOW) and reporting that“feminism,whichonemighthave supposedasdeadas thePolishQuestion, isagain an issue.” Not many weeks later, after a feminist anarchist shot AndyWarhol(andajournalist),thepresidentoftheNewYorkNOWchapterappearedincourtonherbehalf.

“We must back Lyndon Johnson in 1964,” instructed Students for aDemocraticSociety(SDS), the1960sorganizationforyoungleftists,“notonlyforwhat he could be, but because he is at least a responsive politicianwith acertain amount of freedom to move in a positive direction.” Five years later,after the assassinations of Martin Luther King and Bobby Kennedy and theteargassing and beating by Chicago police of antiwar protesters at theDemocraticNationalConvention,SDSdeclared“theneedforarmedstruggleastheonlyroadtorevolution”intheUnitedStates.

In 1965 fewer than amillionAmericans had ever smokedmarijuana, noteven one-half of 1 percent. By the end of the decade, a majority of collegestudents had smoked, and more than 24 million Americans in all, one in sixcitizensofsmokingage.

Inearly1965thebighitsingleswere“KingoftheRoad”byRogerMiller,“Mrs.Brown,You’veGotaLovelyDaughter”byHerman’sHermits,“It’sNotUnusual”byTomJones, and theBeatles’ “EightDaysaWeek.” In the fallof1966 the Beatles recorded the psychedelic “Strawberry Fields Forever,” andthreemonthsafteritsreleasecamethesimultaneousholy-molynewnessofSgt.Pepper’sLonelyHeartsClubBandandJimiHendrix’sAreYouExperienced.

In1964longhaironmenmeantjustovertheirearsandforeheads;by1966itmeantdowntotheirshouldersandbeyond.In1964theshortesthemlineswerejust above the knee. In 1966, according to a femalewriter forTheNew YorkTimes, “theTodaygirl, theWith-it, the Ingirl…thenewgirl in fashion”woreskirts “at least 4 inches above the knee,” which was “a flag of protest, anemblemofmoralsandmoresintransition.”In1964anadultwearingbluejeansin a city was eccentric, but in 1968 a Times story reported that “on fivecontinents,”bluejeanshadbecome“thelinguafrancaofyoungmalefashion.”

Anewfashionforlongerhair,shorterskirts,andjeans?Thoseseemtrivialin retrospect, but at the time they struck seriousmiddle-agedadults asdeeply,meaningfully new. Short skirts, the photographer Irving Penn said in a 1966newspaperstory,are“spittingintheeye,protestingagainstbourgeoisvaluesandgenerationspast,against theEstablishment. It’s realprotest.Muchof thenewsisn’tfittoprint.Thingsarehappening,andthat’swhattheyoungareliftingtheirskirtsabout.”Fouryears later, inhishugebestsellerTheGreeningofAmerica—“There is a revolution coming…the revolution of the new generation”—theYaleprofessorCharlesReichdevotedthousandsofwordstosuchrevolutionarysignifiers.The“choiceofalife-styleisnotperipheral,itistheheartofthenewawakening,” because wearing “wrinkled jeans and jackets made of coarsematerial”was“adeliberaterejectionofthe…lookoftheaffluentsociety.”And“theviolencewithwhichsomeolderpeoplehavereactedtolonghair[onyoungmen]showsthattheyfeelathreattothewholerealitythattheyhaveconstructedandlivedby.”And“marijuanaisamakerofrevolution,atruth-serum.”

—

From the end ofWorldWar II through the New YorkWorld’s Fair, as I’vedescribed,thefuturelookedprettyfabuloustomostAmericans,butthenduringthe roiling late 1960speoplegot confused and scaredof thenew.Specificallyconcerningwhat computers implied for the future ofwork and jobs, however,the consensus suddenly did the reverse: for two decades, experts hadworriedaboutwhereautomationwasleadingoureconomy,butstartinginthelate1960sthesmartsetcouldn’twaittogettosuperautomatedTomorrowland.

A significant earlyworrierhadbeen themathematicianNorbertWiener—collegegraduateatfourteen,Harvardprofessoratnineteen,atMITthegodfatherof artificial intelligence—who back in 1948 published Cybernetics, agroundbreaking book that gave a new technological field a name. It was

remarkably popular, and talking about it to a reporter back then, Wienersuccinctlyandaccuratelyforesawthefutureofwork—that is,ourpresent.Justas“thefirstindustrialrevolutiondevaluedhumanlabor”suchthat“nopick-and-shovel ditch-digger can sell his services at any price in competition with asteamshovel,”beforetoolongthesecondindustrialrevolutionwouldcompletelyautomateafactory

withoutahumanoperator…Suchmachineswillmake itverydifficultfor the humanbeing to sell a service that consists ofmaking routine,stereotyped decisions. The electronic brain will make these logicaldecisionsmorecheaply,morereliably,and,ofcourse,morequickly.

In an article he wrote right afterward in 1949 for the Times (that wasn’tpublishedbecause theeditordemanded toomanyrewrites),Wienerelaborated.“Thesenewmachineshaveagreatcapacityfor…reducingtheeconomicvalueofthe routine factoryemployee to apoint atwhichhe isnotworthhiringat anyprice.” So unless we change “our present factory system…we are in for anindustrialrevolutionofunmitigatedcruelty….Wecanbehumbleandliveagoodlifewiththeaidofthemachines,orwecanbearrogantanddie.”

ReadingWiener then,youngKurtVonnegutwas inspiredtowritehisfirstnovel,Player Piano, which depicted that cruel, arrogant, dystopian Americanfuture. In the early 1960s plenty ofWashington studies and reports appearedwarning of the existential challenges of automation. In 1964 the Oxfordmathematician and AI expert who was about to advise Stanley Kubrick oncreating HAL for 2001: A Space Odyssey wrote that although “this point ismade…seldom outside of science fiction,” in fact “the first ultraintelligentmachineisthelastinventionthatmanneedevermake,”raisingthe“possibilitythatthehumanracewillbecomeredundant.”

But then in 1967 Herman Kahn, an inspiration for the title character inKubrick’spreviousmovie,Dr.Strangelove, saidnot toworry,keep loving thenew—automation would lead in no time to four-day workweeks and threemonthsofvacationforeverybody.And to theutopianyouthof the late1960s,computer-generatedultra-prosperity lookedsweet: ifworkwouldsoonbecomeunnecessary, conventional ambition could be abandoned. The New Left’sfavorite livingMarxist,HerbertMarcuse,wrote that automationwas “the firstprerequisiteforfreedom”togiveeveryindividual“histime,hisconsciousness,

hisdreams.”Infact,Marxhimself,acenturyearlierinnotebooksfirstunearthedandpublishedinthe1960s,foresawapleasantfuturewith“anautomaticsystemofmachinery…itselfthevirtuoso,withasoulofitsown,”towhich“thehumanbeingcomestorelatemoreaswatchmanandregulatortotheproductionprocessitself.”Andinthebestselling1969bookthatcoinedthetermcounterculture,theauthor, a young Bay Area professor, wrote that “economic security” was“something[youngAmericans]cantakeforgranted”nowbecause“wehaveaneconomyofcybernatedabundancethatdoesnotneedtheirlabor.”Ingeneraltheutopiansat thatgiddymomentdidn’tverycarefullyaddresshowcapitalism intheUnitedStatesandothercountrieswouldhave tochange toavoidWiener’seconomicfutureofunmitigatedcruelty.

—

As the 1970s began, the cultural and political Sixtieswere still going full tilt,accelerating.Single-sexcollegeswereallrushingtogoco-ed—Princeton,Yale,Bennington, and Kenyon in 1969, Johns Hopkins, Colgate, the University ofVirginia,andWilliamsin1970.Ayearearlierahalf-millionyoungpeoplehadassembled for Woodstock, a new species of American event, and another,record-breakinghalf-millionhadassembledinWashington,D.C., toprotest theVietnamWar.TheNewLeftspunoffaterroristfactionthatwassettingoffanaverage of ten bombs a week in government buildings and banks aroundAmerica.Aconstitutionalamendmenttolowerthevotingagefromtwenty-oneto eighteen was about to be passed by Congress (unanimously in the Senate,401–19in theHouse), thenratifiedbythestates inahundreddays,faster thanany amendment before or since. Congress promptly passed anotherconstitutionalamendment,onetoguaranteeequalrightsforwomen,bymarginsalmostaslarge.

Given howmuch had changed during just the last few years, if that tidalwave of new continued through the 1970s—and why wouldn’t it?—whatadditionalshockingchangesmightliejustahead?

Infact,intheearly1970s,wehadreachedPeakNew.

*1AlthoughtheInternetwasinventedinthe1960s—itsfundamentaltechnologiesweredevelopedstartingin1963,andtheprototypesystemARPANETtransmitteditsfirstcomputer-to-computermessagein1969.*2“Wesetsailonthisnewsea,”Kennedysaidinthatfamousspeech,“becausethereisnewknowledgetobegained,andnewrightstobewon,”becausewe’d“beenrichedbynewknowledgeofouruniverseandenvironment,bynewtechniquesoflearningandmappingandobservation,bynewtoolsandcomputers.”

*3Afterall,Apollo(rational,reasonable,orderly)andDionysus(instinctual,emotional,sensual)werebrothers,botharrogantsonsofZeus.

“E verythinghappenedduringthesixties,”thedystopianfictionwriterJ.G.Ballardsaidaftertheyended.He’dturnedthirtyin1961,theoptimalagetobea trustworthyreal-timechroniclerof thatdecade.*1“Thanks toTV,yougotstrangeoverlapsbetweentheassassinationsandVietnamandthespaceraceandtheyouthpopexplosionandpsychedeliaandthedrugculture.Itwaslikeahugeamusementparkgoingoutofcontrol.”

Iwasonlyfifteenat theendof the1960s,but it reallywas like that,eventhough not the entire park was haywire, and some astoundingly great newattractions (civil rights, expanded social welfare, feminism, andenvironmentalism)werebeingbuiltatthesametime.FutureShock,publishedinthesummerof1970,becameoneofthebestsellingbooksofthedecade.“Thisisabookaboutwhathappenstopeoplewhentheyareoverwhelmedbychange,”wrote theauthors,whose lecture inOmahaIexcitedlyattendedat fifteen,“theshatteringstressanddisorientation thatwe induce in individualsbysubmittingthemtotoomuchchangeintooshortatime,”the“roaringcurrentofchange…sopowerfultodaythatitoverturnsinstitutions[and]shiftsourvalues.”

Atthatsamemoment,asthebesottedforty-two-year-oldProfessorReichatYalepublishedTheGreeningofAmerica,themoretypicalreactiontothetumultwas that of Harvard’s fifty-one-year-old professor Daniel Bell, definitely notfeeling groovy. “Noone in our post-modern culture is on the side of order ortradition,” hewrote in a famous essay called “The Cultural Contradictions ofCapitalism.”Hedespaired that the“traditionalbourgeoisorganizationof life—

itsrationalismandsobriety—nolongerhasanydefendersintheculture.”As with all zeitgeists, not everybody and probably not evenmost people

wereentirelyonboardwiththespiritofthetime.Frightenedandangryreactionstotheculturallyandpoliticallynewhadgerminatedinstantly.Formanypeopleduring the 1960s, the perpetual novelty that had been at the heart of modernAmericancapitalismandmodernAmericanculturechangedfromamazingandgrand to disconcerting and traumatic.WhatMarx andEngels hadwritten 120yearsearlieraboutcapitalism’scollateralimpactswascomingtrue,tootrue—allfixed relations swept away, all new-formed ones antiquated before they canossify,all that isholyprofaned,all that is solidmelts intoair. Inculture,Bellwroteinthat1970essay,therewasnowanoverriding

impulse towards thenewand theoriginal, a self-conscious search forfuture forms and sensations….Society now…has provided a marketwhicheagerlygobblesupthenew,becauseitbelievesittobesuperiorin value to all older forms. Thus, our culture has an unprecedentedmission:it isanofficial,ceaselesssearchingforanewsensibility….Asociety given over entirely to innovation, in the joyful acceptance ofchange, has in fact institutionalized an avant-garde and charged it—perhaps to its own eventual dismay—with constantly turning upsomethingnew….Thereexistsonlyadesireforthenew.

Aspeoplegetolder,theydotendtoloseinterestinthenew.AndwhatIcallPeakNewhas a statisticaldemographicunderpinning:Americans’medianagehadbeen in the teens and twenties for ourwholehistory, and itwasdroppingagain in the1950sand ’60s—but thenafter1970 it began increasing,quickly,theaverageAmericangettingtwoorthreeyearsoldereachdecade.By1990itreachedthirty-three,higherthanithadeverbeen,andithascontinuedgoinguptowardmiddleage.

During the 1970s, just coming off the ’60s and their relentless avant-gardism,peoplereallydidfeelexhausted,readytorelaxandbereassured.Evenlots of peoplewhowere delighted by the 1960s, by the new laws intended toincrease equality and fairness and by the loosey-goosier new laissez-fairecultural sensibilities and norms, were in a kind of bewildered morning-afterslough. In response,more andmoreAmericans began looking back fondly totimes before the late 1960s, times that seemed by comparison so reassuringly

familiar and calm and coherent. In other words, that curious old Americannostalgiaticexpresseditselfasithadn’tfordecades—infact,ittookoverwithan intensityand longevity itneverhadbefore.Themultipleshocksof thenewtriggeredawide-rangingreversiontotheold.ItturnedoutIsaacNewton’sthirdlaw of motion operates in the social universe as well as physics: the 1960sactions had been sudden andpowerful, and the reactions starting in the 1970swereequalandopposite,withfollow-oneffectsthatlastedmuch,muchlonger.

Someoftheoriginsofthis1970splungeintonostalgia,infact,hadshowedthemselvesabitearlier.Paradoxically,asAmericawasapproachingPeakNewduring the 1950s and ’60s, somemembers of the cultural avant-garde led thewayinmakingthepastseemstylish,embracingcertainbitsandpiecesoftheolddaysinordertobeunorthodox,countercultural,cooler.Itwasselectivestylisticnostalgiaasawayofgoingagainstthegrain,rejectingearnestupbeatspic-and-spancorporatesuburbanmidcenturyAmerica.Backinthe1950s,whenvintageapplied only towine and automobiles, theBeats and beatniks had bought andproudly worn used clothes from the 1920s and ’30s. Jack Kerouac’sOn theRoad,theclassiccutting-edgeBeatnovel,isactuallyanexerciseinnostalgia,asthe critic LouisMenand says, published and set in 1957 but actually “a bookabout the nineteen-forties,” the “dying…worldof hoboes andmigrantworkersandcowboysandcrazyjoyriders.”Hiscool1950scharacters,Kerouacwrote,allshared“asentimentalstreakabouttheolddaysinAmerica,…whenthecountrywaswild andbrawling and free,with abundance and anykindof freedom foreveryone,” and the character Old Bull Lee’s “chief hate was Washingtonbureaucracy; second to that, liberals; then cops.”The simultaneous folk-musicrevival,fromwhichBobDylanemerged,alsoconsistedofcoolkidsscratchingthesamenostalgicAmericanitchaheadofeveryoneelse.Collegestudentsandhepcats in theearly1960salso rediscoveredandworshiped1940smovies likeCasablancaandTheMalteseFalconatsmokyrevivalmovietheaters.

In1964Kerouac’sroad-tripbuddyNealCassadyjoinedyoungKenKeseyandhisbandofprotohippies,drivingthemacrossAmericafromtheSantaCruzMountains to New York City to visit, yes, the World’s Fair. They werepioneering inventors of the counterculture—which presently became a massphenomenonandinheritedsomeoftheBeats’sentimentalstreaksconcerningtheAmerican old days.Even as youth circa 1970 thought of themselves as shocktroops of a new age, part of their shocking newness was nostalgic cosplay.Dressedinreproductionnineteenth-centuryartifacts—bluejeans,fringedleatherjackets, boots, bandanas, hats, men mustachioed and bearded—they fancied

themselves hoboes and cowboys and joyriders and agrarian anarchists as theygothighandlistenedto“Maggie’sFarm”(BobDylan),“UponCrippleCreek”(theBand),and“UncleJohn’sBand”(theGratefulDead).OvernighttheymadetheuncoololdVictorianhousesinSanFranciscocool.Thevisionofthefuturesold starting in 1968 by the Whole Earth Catalog, the counterculture’sobligatoryomnibusalmanac,wasagrarianandhandmadeaswellas—soaheadofthecurve—computerizedandvideo-recorded.

In1969,at theWoodstockFestival, themusicof the finalperformer, JimiHendrix,wasabsolutelate’60s,disconcertinglyanddeliciouslyfreakyandvain.Playingrightbeforehim,however,hadbeenagroupalmostnobodyknew.ShaNaNa,ledbyaColumbiaUniversitygraduatestudent,sangcoverversionsofadozen rock and doo-wop songs from 1956 to 1963, wearing 1950s-stylecostumes and doing 1950s-style choreography. To the crowd and to theWoodstock movie audiences in 1970, this was spectacularly surprising andamusing.Itwasintenseinstantnostalgia,ameasureofjusthowmuchandhowquicklyeverythinghadchanged.Songsonlysixor twelveyearsold, themusicof their childhoods and earlier adolescence—“Jailhouse Rock,” “The Book ofLove,” “At the Hop,” “Teen Angel,” “Duke of Earl”—already seemed soridiculouslydated.Evenattheeventthatremainsadefiningpeakmomentofarevolutionarynewage thathadonly justgottenstarted—thephraseWoodstockGeneration actually preceded baby boomers—Americans began turningbackward for the reassuring, unchallenging gaze back at a past that wouldn’tchangeorsurpriseorshock.

Nostalgia was the charming sanctuary to which people retreated to feelbetterduringtheirpost-1960shangover—andthenneverreally left.Theywereencouraged by a culture industry that immediately created a wide-rangingnostalgiadivisionofakindthathadn’texistedbefore.

TheLastPictureShow,setin1951,cameoutin1971,madetonsofmoney,andwonOscars.ThemusicalGrease,setin1959,appearedin1971,becamethemostpopularmovieof1978(featuringShaNaNa,whobythenhadtheirownpopularTVvarietyshow),andranonBroadwayforthewholedecade.TheWayWeWere, the fifthmost popularmovie of 1973,was setmainly in the 1950s.GeorgeLucas’sAmericanGraffiti,setin1962,wasthethirdmostpopularmovieof1973andsoftenedthegroundforthepremiereafewmonthslaterof itsTVdoppelgängerHappyDays,whichin1976spunoffLaverne&Shirley,setinthelate1950sandearly’60s.AnimalHouse,alsosetin1962,cameoutinthelate1970sandwasoneofthemostsuccessfulmoviesofthedecade.

“IsawrockandrollfutureanditsnameisBruceSpringsteen,”aninfluentialyoungrockcriticwroteinareviewofaliveperformancein1974,thenhelpedmakeitsobybecominghisproducerfortwodecades.Hearingtheseventy-year-oldSpringsteensinginghissongstoday,rhapsodizingaboutcharactersandtalesofhisyouth,thenostalgiaseemsearnedandreal.Butbackintheearly1970s,asa twenty-four-year-old, he came across as a superior nostalgia act, an earnesthigher-IQ Fonzie. He “seems somewhat anachronistic tomany—black leatherjacket, street-poet, kids-on-the-run, guitar as switchblade,” another influentialyoung rock critic wrote in his positive review of Born to Run in 1975.“Springsteenisnotaninnovator—hisoutlookisrootedintheFifties;hismusiccomesoutofearlyrock’n’roll,hislyricsfrom1950steenagerebellionmoviesandbeatpoetry.”

Itwasn’tjusttheAmerican1950sonwhichAmericanpopculturesuddenly,lovinglygorgedinthe1970s.Everyerabecameanostalgicfetishobject.Duringthe 1970s, fans of the Grateful Dead began bathing in nostalgia for the late1960s, “obsessively stockpiling audio documentation of the liveDead,” as theculturalhistorianSimonReynoldsexplains,indulgingtheir“deepestimpulse:tofreeze-frame History and artificially keep alive an entire era.” And that hascontinued into the twenty-first century—“the gentle frenzy of Deadheads is aghost dance: an endangered, out-of-time peoplewilling a lostworld back intoexistence.”

“EverythingOldIsNewAgain”becameapophitin1974forareason.TheGodfather (1972) fetishized the look and feel of the 1940s,TheGreatGatsby(1974) of the 1920s—and at the heart of both were notions central to theemergingAmericaneconomiczeitgeist:“It’snotpersonal,it’sstrictlybusiness,”asMichael Corleone said, and greed and ostentatiouswealth and gangsterismwereallherebycool.MostoftheearnestbitsinWoodyAllen’sworkconsistofnostalgia, starting in 1972withPlay It Again Sam.Most of themost popularmoviesreleasedin1973traffickedintwentieth-centurynostalgia,includingthegorgeousDepressionofTheStingandPaperMoon.TheWaltons,asentimentalTVdramasetduringtheDepressionandWorldWarIIinasmallVirginiatown,premiered in1972 and ranuntil 1981.Even theone enduringnewHollywoodgenre that arose in the mid-1970s and early ’80s, what Lucas and StevenSpielbergcreatedwithStarWarsandRaidersoftheLostArk,wasactuallyjustabig-budget revival of an old genre, forgettable action-adventureBmovies andserialsfromthe1930sand’40sand’50s.

In the 1970s I was too young to perceive this sudden total nationalimmersion in nostalgia as unprecedented and meaningful, so I’ve wonderedsince if itonly looks like that inretrospect. Iwas thereforedelighted,asIwasalmost finished with this book, to discover a somewhat shockedcontemporaneousaccountofthephenomenon.It’saremarkableRosettaStone.

Robert Brustein, the dean of the Yale School of Drama at the time,published a magazine essay in 1975 called “Retread Culture.” Back then, bytoday’s standards, revivals and remakes and multiple sequels were stillextremelyrare.Thefirstmodernsuperheromovie(Superman,1978)hadn’tyetbeenmade.ButBrusteinwasstruckbythestrangenessof“thecurrentnostalgiaboom,”the“revivalsofoldstagehits,”“retrospectivesoffilmsfromthethirtiesandfortiesbyauteurdirectors,authenticlookingreconstructionsofperiodstylesin new films,” “revived musical forms,” and so on. “Much of contemporaryAmericanentertainment,”hewrote,“isnotsomuchbeingcreatedasre-created,”each“recycledcommodity”presentedintheplaceofsomethingactuallynew.

Andheconnectedthischangeinpopularculturetochangesinpoliticalandsocialsentiment,assomekindofreactionto“adeepAmericandiscontentwiththepresenttime.”ThiswasstillfiveyearsbeforeReaganwaselectedpresident.

ThecultureispartiallyreflectingAmerica’scurrentconservativemood.Anationwhichalwayslookedforwardisnowintheprocessoflookingbackward,withconsiderablelongingfortherealorimaginedcomfortsofthepast.Whereaudiencesoncewereeagerforwhatwasnovelandinnovative, they now seemmore comfortable with the familiar, as ifthey wished to escape from contemporary difficulties into the morereassuringterritoryofthehabitualandtheknown.

He saw too that what made the nostalgia different than earlier blips ofcultural revivalism was “its multiplicity and universality,” turning outreproductionantiquesineverypartoftheculture.

Why,itisevenbecomingdifficulttoidentifyadistinctivelookforouragewhichisnotacompoundofpastfashions.Thecutofourtrousers,theshapeofourdresses,thestyleofourfurs,coiffures,cosmeticsandjewelry, our very advertising techniques and printing models, are allderived from earlier periods—a mishmash of the frontier West, Art

Deco,andtheflapperera.

BrusteinmentionedE.L.Doctorow’sfinenovelRagtime,abigbestselleratthetimethatwasalsoesteemedbytheelite,abouttowintheveryfirstNationalBookCriticsCircleAwardforfiction.Historicalfictionhadn’tbeenconsideredliteraryfictionforquiteawhile,butsuddenlyitwasrespectableagain.

Seeming to be strikinglymodernwasn’t exactly the same as looking likesomething from the future, but the two had frequently overlapped during thetwentieth century, especially indesign and art—in the1930s, for instance, theconcrete slabs of Frank Lloyd Wright’s Fallingwater and Raymond Loewy’sstreamlined locomotiveswere both.That overlap of the newand the futuristicmaxedoutin1964and1965,theWorld’sFairyears,theyearsthenewlycoinedphrases Jet Age and Space Age achieved their peak usage. The hot women’sfashion line of 1964 consisted of short Lycra-and-plastic dresses printed withgiantbrightstripesanddots.Infashion,SimonReynoldssuggeststhat1965was“the absolute pinnacle ofNewness andNowness.” In the later 1960s, “almostovernight,everythingstoppedlookingfuturistic”infashionandinsteadbecameriffsontheexoticallyforeignor—becauseinthe’60sthepastwasanespeciallyforeign country—the bygone “Victoriana, Edwardiana, twenties and thirtiesinfluences.”Allatonce,thepaststartedtoseemcharmingtomanymorepeople,while purely excited, hopeful visions of the future came to seem naïve orabsurd.*2

EarlierImentionedmidcenturyurbanrenewalasanexampleofAmerica’sloveforthenewturningsingle-mindedandreckless.Itwaslikeanautoimmunedisease,whenmisguidedantibodiesdestroyhealthyhuman tissue.Butevenasthatdemolitionofoldbuildingsandneighborhoodswasgoingfullspeed, localactivists (in New York City most of all) and a few enlightened owners (inOmaha,forinstance)startedtobeatitback—anotherexampleofhowAmericancitizenshaveplacedessentialchecksandbalancesonexcessiveandmisguidedpower. The Death and Life of Great American Cities, by the Manhattanjournalist-turned-activistJaneJacobs,becamethemanifestoofasuccessfulandpowerfulnewmovementin1961;bytheendofthedecade,historicpreservationwas fully institutionalized, and in the 1970s saving and renovating nice oldbuildingsandneighborhoodswasbecomingthedefault.*3

At the same moment, architecture and urban planning rediscovered theamusements and lessons of history. Architects were designing new buildings

withcolumnsandpitchedroofsandpedimentsandcolorfulfinishes—aso-calledpostmodern reaction by elite architects, who used the old-fashioned designmoves and materials that the modernist elite had declared taboo for half acentury.Whatbegan in the late1960sand’70sas fond,bemused takesonoldarchitectural styles morphed during the ’80s into no-kidding reproductions ofbuildings from the good old days. Serious architects and planners callingthemselves New Urbanists convinced developers to build entirely new towns(firstandmostnotablySeaside,Florida),urbanneighborhoods(suchasCarlyleinAlexandria,Virginia), and suburbanextensions (TheCrossings inMountainView, California) that looked and felt like they had been built fifty or onehundredyearsearlier,withnarrowstreetsandbackalleysandfrontporches.Aconvincinglyfaux-oldbaseballpark,CamdenYardsinBaltimore,establishedanewdefaultdesignforAmericanstadiums.

Thattwo-steprediscoveryofthepast—atfirstamusedandabitironic,butsoonwholeheartedlysincere,makingtheoldanduncoolcoolandthennormal—wasasensibilityshiftmadebytensofmillionsoflifestylizingAmericansnotyetknownasthecreativeclass.Duringthe1970s,retrobecameatrendyword.

TheOfficialPreppyHandbookbecameacrypto-nostalgicbestsellerin1980by good-naturedly satirizing a certain archaic strain of rich white Americanprivilege as if the1960s cultural upheavalshadn’t happened.Everyone startedusing the new term comfort food, only a bit ironically, to destigmatize old-fashioned American dishes that were familiar, unchallenging, unvirtuous—biscuits, cupcakes,meatloaf,grits,mashedpotatoes,macaroniandcheese.Themeaningwas soon extended to celebrate any and all of our newly unshackledandunapologetic tastes for the old and familiar. J.G.Ballardwrote that rightafterWorldWar II,whichendedwhenhewas fifteen,“peoplesimplybecameuninterested in the past”—until the 1970s, he noticed in the 1990s, whensuddenly“nobodywasinterestedinthefuture.Nowtheyareonlyinterestedinthe past in a sort of theme-park-likeway.They ransack the past for the latestdesignstatement.”

Butasitturnedout,notjustfordesignstatementsandlifestyleinspirations.ThirtyyearsagomyfriendPaulRudnickandIwroteacoverstoryforSpyabouthow the recent spate of “Hollywoodnostalgia productions [had] portrayed thefiftiesandearlysixtiesassomethingtobepinedfor,somethingcuteandpastelcoloredandfunratherthanracistandoppressive.”Andhowinthe1980s,whenwewerewriting, the new omnipresent nostalgiameant that “you can becomeDanQuayle,”theforty-two-year-oldconservativeRepublicanvicepresident,“or

youcanbecomepartoftheironyepidemic.Orifyou’reofamindtoorganizeanabsolutely nutty GeorgeHamiltonmemorial limbo competition at the countryclub, both.” In other words, post-1960s irony turned out to be “away for allkinds of taboo styles to sneakpast the taste authorities—don’tmindus,we’rejust kidding—and then, once inside, turn serious.” America in the 1970s and’80s gave itself permission not only to celebrate the old days but also toreproduceandrestorethem.Pickingandchoosingandexploitingelementsofthepastextendedtopoliticsandthepoliticaleconomy.

—

To understand how that worked, how the opening of the nostalgia floodgatesthroughout culture helped the political tide to turn aswell, it’s useful to lookback barely a generation—when it spectacularly failed to work in the early1960s.Thenationalpoliticalrighthadtrieddemonizingliberalmodernitybeforeenough Americans were fatigued or appalled by accelerating newness forpoliticianstoexploitthatreactionsuccessfully.

BarryGoldwater—aconservativeRepublicanwhenthatwasn’tredundant,anot-very-religious right-winger when that wasn’t an oxymoron, a libertarianbefore they were called that—halfheartedly tried to use the incipient culturalbacklashwhenheranforpresidentin1964.He’dgottenintopoliticsfightingtheNew Deal when it was still new, and ever since had advocated for the U.S.economy taking a sharp right turn or full U-turn back to the days before the1930s.MiltonFriedman,anavatarofthatultra-conservativeeconomicstrainthesame age asGoldwater,was one of his adviserswhen hewas theRepublicannominee, themost right-wingnomineeever.Heproposedcuttingpersonalandcorporateincometaxesby25percentforstarters,scrappingnewandimminentsocialistprogramslikeMedicareandfoodstamps,keepingSocialSecurityfromgetting any more generous, and ending “this cancerous growth of the federalgovernment.”

The political economy (including maximum anti-Communism) was hisoverridingfocus.Butnoneofthatappearedinthehalf-hourcampaignadthatateam of Goldwater operatives produced and bought time to run on 150 NBCstations just before the 1964 election. The film is an extraordinary artifact,remarkably ahead of the curve for its hysterical depiction of the scary new—teenagers,blackpeople,protests,unbelievers,cosmopolitanismrunamok.Itwasa propaganda ur-text for today’s ongoingAmerican culture war, which at the

timealmostnobodyconsideredawar. It tied togetherandsensationallystokedalloftheembryonicbacklashes.

Thefilmstartswithoutnarrationforninetyseconds,justanexcitingquick-cutmontageofyoungpeopledoingtheTwist,acrowdofblackpeoplesingingonacitystreet,copsarrestingpeople,apairofapparentlygaymen,toplessgo-go dancers, all intercut with shots of a recklessly speeding car and with asoundtrack of frenzied rock guitar riffs.As the narrator begins his voice-over,cut to the Statue of Liberty, a small town and its church, white childrenobediently pledging allegiance to the flag—then cut back to another frenziedmontageof blackpeople protesting andbeing arrested and somewhite peoplehavingtoomuchfun,inparticulardancingwomenshotfrombehindorwithouttops.That’sthestructureoftheentirethirty-minutefilm,threepartsdecadenceinterposed with one part good-old-fashioned America, back and forth. “NowtherearetwoAmericas,”thenarratorbegins,

the other America—the other America is no longer a dream, but anightmare….Our streets are not safe, immorality begins to flourish—wedon’twantthis….ThenewAmerica—asknotwhatyoucangivebutwhat you can take….Illegitimate births swell the reliefrolls….Teenagers read theheadlines, see theTVnews, anythinggoesnow….Theyseethecancerofpornographyfestering.

Cuttoanextremelylongsequenceofpornfilmposters,stripclubmarquees,andpaperbackcoversincludingCallMeNympho,JazzMeBaby,andMaleforSale.Allofwhichwere,infact,publicrarities.

But thenewAmericasays,“This isfreespeech.”In thenewAmericatheancientmoral law ismocked.“NationunderGod—who’sHe?”…No longer is a uniform a symbol of authority.The rules of the gamehave been changed now….Up through the courts of law, justicebecomesasickjoke,newloopholesallegedlyprotectingfreedomnowturn more and more criminals free on the nation’s streets….By newlaws it’s not the lawbreaker who is handcuffed, it is thepolice….Vigilantecommittees,goodcitizens,gropeforasolution.

Cut to shots of theU.S.-Mexican border—frommore than half a century

ago.

Over the borders—dope. Narcotics traffic setting a new depravedrecord.And thevictimssooftenare thedefenseless—thekids….Howdidthishappen?Isthereareasonweseemedtohavechangedsomuchinsoshortatime?

Areally short time—according to this film, themoraldecaygotbadonlyduring the previous eleven months, since the assassination of the “young,inspiring”PresidentKennedy.AfterNBCaskedfordeletionsof“60ofthemostrisquéseconds,”Goldwateratthelastmomentdecidednottoairthefilm,eventhoughhiscampaignsenttwohundredprintstoconservativegroupstoshowalloverthecountry.

HelostbyalandslidetoPresidentLyndonJohnson,ofcourse,whoseshareof thevote remains the largest ever.At the timeone takeawaywas that right-wingeconomicideaswereatotalpoliticalnonstarter,anachronismsthatwouldremainso.ButinfacttheGoldwatercampaignwasjustthefirstrolloutofanewAmericanpoliticaltemplate,anunsuccessfulbetatest.IttriedtoexploitpopularuneasewiththeculturallynewasawaytogetagreenlightfortherollbackthatGoldwater and the serious right really cared about—a restoration of old-styleeconomicandtaxandregulatorypoliciestiltedtowardbusinessandthewell-to-do.

That lashing of cultural fear to political economics was just ahead of itstime.Because 1964was before the proliferation of hippies andmarijuana andpsychedelics,beforealargefeministmovementemergedandworkplacesstartedfillingwithunprecedentednumbersofwomen.ItwasbeforeU.S.combatforceswenttoVietnam,beforetheantiwarmovementblossomed.Itwasbeforeviolentcrimereallyshotup—murdersintheUnitedStatesincreasedbyhalfduringthefiveyearsfrom1964to1969,and inNewYorkCityby thatmuchin just twoyears,from1966to1968.

Goldwater’slandslidedefeatwasbeforetheepicblackuprisingsthatcamelater in the 1960s (Watts, Newark, Detroit) along with the black powermovement. But it was just after a couple of years of spectacular civil rightsdemonstrations and confrontations and immediately after the Civil Rights Actbecame law—which is why the Goldwater film had somany shots of unrulyblack people andwhy five of the six statesGoldwaterwonwere in theDeep

South.ItwasalsobeforeacriticalmassofwhitepeopleoutsidetheSouthstarted

feeling the way most white Southerners felt—besieged by blacks, theirwhitenessno longerquitesuchaguaranteedall-accessVIPpass. Itwasbeforewallowing in nostalgia for a lost Golden Age ruined by meddling liberaloutsiders fromWashington andNewYork, previously awhiteSouthernhabit,becamesuchacommonwhiteAmericanhabit.Itwasbeforerespectableopinion,having spent a century trying tomakeethnic tribalism seemanachronistic andwrong,beganacceptingandembracingalotofit.“Oneofthecentralthemesinthecultureofthe1970swastherehabilitationofethnicmemoryandhistoryasavitalpartofpersonalidentity,”theleftistprofessorMarshallBermanwroteinhiswonderful 1982 book All That Is Solid Melts into Air: The Experience ofModernity. “Thishasbeena strikingdevelopment in thehistoryofmodernity.Modernists todayno longer insist, as themodernistsofyesterdaysooftendid,thatwemustceasetobeJewish,orblack,orItalian,oranything,inordertobemodern.”

Goldwaterwastrouncedbeforefantasiesabouttheolddaysbecameacrazeandthenanationalculturaldefault.Ashepreparedtoannouncehispresidentialcandidacy, the Arizona department store heir appeared on the cover of Lifemagazine—circulation 8 million, 1960s America’s single most respectablyglamorousmassmedia pedestal—wearing a cowboy hat, work shirt, and bluejeans,cuddlinghishorse.ButlikehisOMG-decadence-black-people-chaosfilm,that toowas ahead of its time in 1963—more than a decade before the post-1960snostalgiccounterreactionmadeamajorityofAmericansreadytofallhardforaprospectiveOldWestpresidentinaMarlboroMangetup.

By1971,however,nostalgiawasseriouslycross-fertilizingwithgrassrootspoliticalattitudes.That’swhenthecomedyAllintheFamilywentontheairandbecameforsixyears themostpopularAmerican televisionshow.ThepremisewasArchieBunker’sperpetualpoliticizedangeratpost-1960sAmerica,buttheshow’sthemesong,sungbytheBunkercharacterandhiswife,wasapieceofcutting-edge nostalgia combining resentment and fondness about politics andculture.

Didn’tneednowelfarestate…GirlsweregirlsandmenweremenMister,wecoulduseamanlikeHerbertHooveragain…Idon’tknowjustwhatwentwrong

Idon’tknowjustwhatwentwrongThosewerethedays

RichardNixonwonthepresidencytwice,in1968and1972,butbothtimesmainlyduetoArchieBunkerism,toreactionagainst the1960s’cultural tumultand new civil rights policies,not out of any popular cry for freermarkets. In1968, Nixon and his Democratic opponent, Hubert Humphrey, receivedessentiallyidenticalfractionsofthevote,butsociologicallyitwasn’tclose:thecombinedvoteofNixonandGeorgeWallace,thewhite-supremacistthird-partycandidate, was 57 percent, an anti-hippie-anti-Negro-anti-crime landslide. In1972Nixonwon inanactual landslideoverhisDemocraticopponent,SenatorGeorge McGovern—61 percent of the vote, forty-nine states, still the third-biggestmargin inU.S.presidentialelectionhistory—becausehippieswerestillproliferatingandantiwarprotestsandbombingsbyNewLeftfugitiveswerestillhappening.*4

Thenightmareofthenewthathadbeendepictedin1964inthatGoldwaterfilm had been more than realized in just eight years—LSD! free love!Woodstock! blasphemy! women’s lib! gay rights! anti-Americanism! riots!bombings!—andwasnowatthecenteroftheconservativepoliticalpitch.Someofthosevisceralnegativereflexesinthelate1960s—confusion,disgust,anger—had started to congeal, become fixed. Many of the people who’d had strongspontaneous reactions in 1967 had by 1972 turned into full-on culturalreactionaries,activelyencouragedbytheorganizedpoliticalright.

Thesloganeeringhadimproved.“Aspiritofnationalmasochismprevails,”Nixon’s vice president famously said, “encouraged by an effete corps ofimpudent snobswhocharacterize themselves as intellectuals.” In the springof1972, during the primaries, a liberal Democratic senator was anonymouslyquoted in an article warning that “the people don’t know McGovern is foramnesty,abortion,and legalizationofpot.”TheNixonianscondensed that intoan effective alliterative caricature of McGovernism—Acid, Amnesty, andAbortion.*5

Paradoxically,theotherbigreasonPresidentNixongotreelectedbysuchanenormousmargin in 1972was because on policy he did not swim against thelingering, dominant leftward ideological tide. Unlike Goldwater, he wasn’tcommitted to a superaggressive global anti-Communist crusade but insteadoversaw the slow-motionU.S. surrender inVietnam (“peacewithhonor”) andthe remarkableU.S.diplomaticopening toCommunistChinaanddétentewith

theSovietUnion.UnliketheGoldwaterright(asI’lldiscussinthenextchapter),he definitely did not try to roll back Johnson’s Great Society social welfareprograms, let alone FDR’s New Deal. His administration actually built uponthem.Hewasn’ta liberal, justacanny,stone-coldcynicgoingwith the liberalflow.

Economic equality, as a result of all those countervailing forces I talkedabout,wasatitspeakinthemid-1970s.ItwasthesameintheUnitedStatesthenasitisinScandinaviancountriestoday,theshareofthenation’swealthownedby nonwealthy Americans larger than it had been sincemeasurements began.Thesystemwasworkingprettywell,andthenationalconsensusaboutfairnessendured.Peopletookforgrantedalltheprogresswe’dachieved.Itreallyseemedirreversible.

*1NormanMailerwasabitolder,thirty-sixasthedecadebegan,butTomWolfeturnedthirtyin1960,JoanDidionin1964,andHunterThompsonin1967.*2Whichiswhystartinginthe1970s,forinstance,thehumoristandillustratorBruceMcCallcouldhaveacareerpaintingpanoramasoffantasticalflyingmachinesandinfrastructurefortheNationalLampoonandthenTheNewYorker,grandfuturesasifdepictedbyoveroptimistsofthepast,whathecalled“retro-futurism.”*3Between1964and1969,universityarchitectureschoolsbeganteachingpreservation;thefirstoldAmericanfactorywasturnedintoawarrenofupscaleshops(inGhirardelliSquareinSanFrancisco);theManhattanneighborhoodwhereartistshadstartedmovingintooldindustrialloftswasnamedSoHo,andNewYorkCitycreatedacommissionthatcouldpreventdevelopersfromdemolishinghistoricbuildingsandneighborhoods;CongresspassedtheNationalHistoricPreservationAct;andSeattlecreatedthePioneerSquareHistoricDistrict.*4Andtheanti-civil-rightsbacklashwasstillerupting:GeorgeWallaceranin1972intheDemocraticprimariesandwonsixstates,includingMichiganandMaryland,andgotalmostasmanyvotesinallasMcGovern.*5Infact,McGovernsupportedmarijuanadecriminalization,notlegalization;blanketamnestyfordraftresistersbutnotmilitarydeserters;andeachstatecontinuingtodecideitsownabortionlaws.AndtheDemocraticsenatorwhosoeffectivelyslaggedhimbehindhisback,ThomasEagleton,becamehisvice-presidentialnominee.

M ore Americans more intensely loathed President Nixon the wholetimehewasinofficethantheyloathedanyRepublicanpresidentbeforeDonaldTrump.Thatwas partly becauseNixonwas simply so unlikable. Itwas partlybecause of his policies, in particular continuing and widening the war inSoutheastAsia.But theyalsohatedhimasaresultofwhenhehappenedtobepresident. Liberals at that time couldn’t appreciate that Nixon wasn’t reallygoverningmuchtotherightofthethreepreviousDemocraticpresidents.Hewasamoderateconservativeadaptingtoaveryliberalera,sotheliberalsofthateragavehimnospecialcredit.*1

In addition to thediplomaticopenings to theCommunist powers,militarybudgets underNixon decreased, despite the ongoingwar inVietnam.And heended the military draft. But even more, his domestic and economic policieswere not particularly friendly to business and the rich, or approved of by hisparty’s right wing. In 1969 he supported and signed a bill that abolishedinvestment taxcredits forbusinessand, for the rich,he increasedcapitalgainstaxes and cut off loopholes by introducing aminimum tax.His administrationcreatedseveralwholenewregulatorybureaucraciestargetingbusiness,between1970and1972aloneestablishingtheConsumerProductSafetyCommission,theOccupational Safety and Health Administration, and the EnvironmentalProtection Agency—the last empowered by two expansive new laws that setstrict standards on air and water pollution. After he signed the EqualEmploymentOpportunityAct to root out racial andgender discrimination, his

administrationquadrupleditsstaffandincreaseditsenforcementpower,almosttripledthebudgetforcivilrightsenforcement,andinstitutedthefirstaffirmativeactionpoliciesthroughoutgovernmenttohiremorenonwhiteworkers.

“IamnowaKeynesianineconomics,”thepresidentsaidin1971,officiallysurrendering to the New Deal consensus, certifying his rejection of theGoldwater right. He proved it beyond doubt that summer by undertaking aradicalinterventioninthefreemarket,orderingathree-monthfreezeofallU.S.prices and wages in order to slow inflation—a year after Milton Friedmanhimselfhadwarned therewas“nothing thatcoulddomore inabriefperiod todestroy amarket system” than imposing “governmental control of wages andprices.”Afterward,eventhoughourmarketsystemwasn’tdestroyed,FriedmancalledNixon’saction“deeplyandinherentlyimmoral.”

Nixon also significantly enlarged the U.S. welfare state, making cost-of-livingincreasesinSocialSecurityautomatic,creatinganentirelynewbenefitfordisabledworkers,andexpandingthefoodstampprogram.Heoftenrhetoricallyand sincerely attacked federal programs for the poor—they engaged in“paternalism, social exploitation and waste” of a “seemingly inexhaustibleflood”ofmoney—butitwasjustlipservice.Duringhisfiveandahalfyearsinoffice, federal spendingon social services doubled.Hewouldhavegone evenfurtherifCongresshadcooperated.DemocratscontrolledtheHouseandSenate,but with smaller majorities than during the Kennedy and Johnsonadministrations. Nixon proposed a universal health insurance plan not unlikeObama’sAffordableCareAct,whichRepublicans forty years laterwould callsocialism. Still more remarkably, his administration pushed a grand welfarereformplanthatwouldhaveprovidedaguaranteedbasicfamilyincomeequaltoaround $16,000, thereby tripling the number of Americans receiving publicassistanceandquadruplingfederalsocialwelfarespendingaltogether.*2

I’ve catalogued thisdespisedRepublicanpresident’s leftishpolicies in theearly 1970s to suggest how accustomed Americans had become over thepreviousfortyyearstotheirnationalgovernmentcushioningthemfromsomeofthe sharpest insecurities and injustices of raw capitalism. During the moreconservative 1950s, President Eisenhower, who fashioned himself a “modernRepublican,” had said that “only a handful of reactionaries harbor the uglythoughtofbreakingunionsanddeprivingworkingmenandwomenoftherightto join the union of their choice” and “hold some vain and foolish dream ofspinningtheclockbacktodayswhenorganizedlaborwashuddled,almostasa

haplessmass.”Duringthe1960sthepoliticalhistorianRichardHofstadternotedthe inevitable complacency that liberal success had created. Earlier in thecentury,hewrote,“theUnitedStateshadanantitrustmovementwithoutantitrustprosecutions,” whereas now it had “antitrust prosecutions without an antitrustmovement.”

Problemslikecompaniesbustingunionsandhavingexcessivemarketpowerseemed tohavebeenmoreor lesssolved,orat leastwereproperlypoliced. Inthe 1960s, IBM’s president and CEO until 1971, the son of the founder,publishedabookallabouthisearnestvisionofvirtuouscapitaliststewardship.The company’s official “basic beliefs” were to treat individual employeesrespectfully,providegreatcustomerservice,andachieve“excellence”—plustoact in society’s general interest, all balancedwith trying tomake a reasonableprofit. It wasn’t just PR. Americans took for granted their modern, softened,fairer free-market political economy. It had been moving in the direction ofprogressformostofacentury—fasterat thebeginningof the1900s,slowerinthe1920s,veryfastinresponsetothecrashandDepressioninthe1930s,abitslowerinthe1950s,fastagaininthe1960sthroughtheearly1970s.Itseemedthat while the forward progressive momentum occasionally slowed, it wouldneverpermanentlystopormovebackward.

Over on the economic right, meanwhile, especially among people whoownedorranoradvisedbigbusinesses,theflipsideofthatliberaltriumphalismaround1970wastheoppositeofcomplacency—itwasalarm,dread,panic.Thenational consensus remained in favor of government acting on behalf of thepublicgood,requiringbusinesstooperatefairlyandcleanlyandaffluentpeopletopayhigh taxes,givingahand to thepoor. In1964and1965 theDemocratshadactuallyreducedthetoppersonalincometaxratesontherichestAmericansfrom 91 to 70 percent—but after that everything was moving in the wrongdirection.Inthelate1960santibusinessattitudesamongtheU.S.publicspiraledoutofcontrolalongwiththegeneraldistrustoftheEstablishment.Thatdefaultantipathywasnowmainstreamandnotdiminishing.

Respectableopinionseemedtohaveturnedagainstbigbusinesssoquicklyandsohard.Anexposéofthedangersofsyntheticpesticides,RachelCarson’sSilent Spring, had become a number-one bestseller formonths and introducedtheideaof“theenvironment”tomillionsofAmericans,whichleddirectlytothecreation of the EPA. There was young Ralph Nader, the tenacious lawyer-investigator-activistoutofHarvardLawSchool,whoseowndamningexposéofcorporateirresponsibility,UnsafeatAnySpeed:TheDesigned-InDangersofthe

AmericanAutomobile, becameabestseller in1966andby the endof theyearinspired a new federal regulatory bureaucracy to improve car safety. As the1970s began, Nader was an immensely effective antibusiness celebrityexpandinghispurviewandappearedonthecoverofTimeforastoryabout“TheConsumerRevolt.”TimemarveledthatFord’sCEOandchairman,HenryFordII, was now “acknowledging the industry’s responsibility for polluting the airandasked—indeed,prodded—theGovernmenttohelpcorrectthesituation.Theauto companies must develop, said Ford, ‘a virtually emission-free’ car, andsoon.” By then Nader had assembled a team of even younger lawyer-investigator-activistswhoweremakingtroubleforotherbigbusinesses.Onlyinprivate,meetingwith auto executives,was theRepublicanpresidentwilling tovent,sayingthat theseliberalactivists“aren’treallyonedamnbit interestedinsafetyor clean air,what they’re interested in is destroying the system, they’reenemiesofthesystem.”

ThesurveyfirmYankelovich,Skelly&WhitehadstartedaskingAmericanseveryyearwhethertheyagreedwiththestatementthat“businesstriestostrikeafairbalancebetweenprofitsandtheinterestsofthepublic.”In1968,70percentstillagreed;in1970,only33percentdid.Capitalistswerefreakingout.Soweretrue-believingfree-marketintellectuals,whowereneververynumerousandhadlately felt pushed even further to the fringe.All those various “countervailingpowers” thathadbeenbuiltupforacenturyonbehalfofcitizensandworkersseemedtohavebecomecrazilysupercharged.

The early 1970s still felt like the very late ’60s.Maybe the revolutionarymadnesswaspeaking,butsofarthegrassrootsreactionarieswerereactingonlyagainsttherapidlychangingculture—againstthenewpolicyofbusingofblackstudents to white schools, against acid, amnesty, and abortion, againstempowered women. The national flip-flop concerning the Equal RightsAmendmenttracksthatculturalmomentperfectly.

Inthespringof1972, the535membersofCongresspassedtheERAwithonly thirty-two nay votes. Just a week later the legislature of RepublicanNebraska,whereIstilllived,becamethesecondstatetoratifythatamendmenttotheConstitution—unanimously,38–0—andbysummerithadbeenratifiedbyanothernineteen,includingIdaho,Texas,Kansas,WestVirginia,Kentucky,andTennessee. Hard-core cultural conservatives, who hadn’t been much of anorganized national political force, were suddenly galvanized to stop this newabomination. And so less than a year after rushing to approve the explicitguarantee that “equality of rights shall not be denied on account of sex,”

Nebraska was a bellwether again, becoming the first state to rescind itsratification.At that verymoment, at thebeginningof 1973, theU.S.SupremeCourt happened to decide by a vote of 7–2 that abortion was an implicitconstitutional right. SowithERA ratification stopped in its tracks, the freshlymobilized cultural right now turned its attention to trying to recriminalizeabortion.

But those kinds of backlash by the religious and the provincials weren’tdirectlydoingbesiegedcorporateAmericaand theserious right, theeconomicright,anygoodatall.SilentSpring,UnsafeatAnySpeed—andtheninthefallof1970,denouncingbigbusinessmoreexistentially,Reich’sGreeningofAmerica.It appeared with every possible mainstream blue-chip imprimatur: Yale lawprofessor, prestigiousmajor publisher,Times bestseller list for ninemonths—andathirdofthebookfilledalmostanentireissueofTheNewYorker,sothattens of thousands of members of the business classes could have a savagecountercultural attack on their oppressive and doomed capitalist systemdelivereddirectlytotheirdoorsteps.

ReichtoldNewYorkersubscribersthattheyand/ortheirwell-compensatedfriends and neighbors were all prisoners of “an inhuman consciousnessdominatedbythemachine-rationalityoftheCorporateState”that“literallycaresabout nothing else than profits” and that had added “to the injustices andexploitation of the nineteenth century” by the robber barons a new “de-personalization,meaninglessness and repression” that threatens “to destroy allmeaningandalllife.”

Hespecificallyridiculedthedie-hardeconomicright-wingers,

the businessmenwhowere themost vocal in their opposition, [who]had a pathological hatred of the New Deal, a hatred so intense andpersonalas todefyanalysis.Why thishatred,when theNewDeal, inretrospect,seemstohavesavedthecapitalistsystem?PerhapsbecausetheNewDeal intruded irrevocablyupon theirmake-believe,problem-freeworld inwhich thepursuit of businessgain and self-interestwasimaginedtobeautomaticallybeneficialtoallofmankind,requiringofthemno additional responsibilitywhatever. In any event, therewas alarge and politically powerful number of Americans who neveraccepted the New Deal even when it benefited them, and used theirpowerwhenevertheycouldtocutitback.

ItwasasignofthosetriumphalistliberaltimesthatReichreferredtohatersoftheNewDealinthepasttense,asifsuchweirdoldcootswereextinct.

In fact, exactly twoweeks beforeAmerica’smost elite weekly publishedReich’sastoundinghurrahforrevolution,andexactlytwoblockswestonForty-thirdStreet inManhattan,America’smostelitedailypublished itsantithesis,amanifesto telling businesspeople that they should literally care about nothingother than profits and that they had no additional responsibility to societywhatever.Theessaywasas intemperateandself-righteousasTheGreeningofAmerica,and in theend ithadmoreconsequence.According to theeconomistMarianaMazzucato, it became themodern “founding text…inmanyways, ofcorporatemanagement.”

It was written byMilton Friedman, the University of Chicago libertarianeconomist, andpublished across five pages ofTheNewYorkTimesMagazineundertheheadlineAFRIEDMANDOCTRINE—THESOCIALRESPONSIBILITYOFBUSINESSIS TO INCREASE ITS PROFITS.Friedmanhadbecome famousduring the1960s, asthedecadeoffreespeechandanything-goesoutlandishnessmadehisoutlandishideasseemworthierofconsiderationinrespectablecircles.Theopeningspreadof the splashyTimes article is decorated with headshots of a few of the newbreed of meddling crypto-socialists—an EPA official, a federal consumerprotectionbureaucrat,membersofNader’slegalteamthatwasproddingGMtoreducecaremissionsandhiremoreblackpeople.

The essay is a cri de coeur for cold-heartedness. Friedman hadmade thesame basic case in his 1962 book Capitalism and Freedom, but like BarryGoldwater, itwasabit aheadof its time.By1970Friedmanhadconcentratedandsuperchargedhisarguments,movedtohighdudgeonbywhathadhappenedinthelate1960s—“thepresentclimateofopinion,withitswidespreadaversionto ‘capitalism,’ ‘profits,’ the ‘soulless corporation’ and so on.” He viciouslyderided the squishy-minded business executives and owners and shareholderswho’dcometobelieve—thatis,pretendedtobelieve—thattheyhadanydutytodecencyorvirtueoranythingbutmakingmoneyand(grudgingly)obeyingthelaw.

Heused the phrase “social responsibilities” in scare quotes a dozen timesanddidthesamewith“socialconscience”andeven“social.”Anyhypothetical“majoremployerinasmallcommunity”whospentmoney“providingamenitiesto that community” was simply indulging in “hypocritical window-dressing,”tactics “approaching fraud”—and indeed, Friedman had “admiration” for

miserlyowners andmanagers “whodisdain such tactics.”The“influential andprestigiousbusinessmen,”bleedinghearts “who talk thisway”aboutcorporateresponsibility—responsibility “for providing employment, eliminatingdiscrimination,avoidingpollutionandwhateverelsemaybe thecatchwordsofthe contemporary crop of reformers”—were indulging “a suicidal impulse” by“preachingpureandunadulteratedsocialism.”Theywere“unwittingpuppetsoftheintellectualforcesthathavebeenunderminingthebasisofafreesociety.”

In1970itwasstunningforsuchafigure—leaderoftheso-calledChicagoSchool of economics, Newsweek columnist, respected if not yet quitemainstream—to deliver such a ferocious polemic at length, particularly in theTimes.InAChristmasCarol, thebusinessmanScroogeisredeemedonlywhenheabandonshisnarrowlyprofit-madviewof life—andforacenturyhisnamehadbeenasynonymfornasty,callousmiserliness.InIt’saWonderfulLife,thebusinessmanMr.Potteristheevil,irredeemable,un-Americanvillain.HerewasMiltonFriedman tellingbusinesspeople they’dbeenmisledby the liberalelite,thatScroogeandPotterwereheroestheyoughttoemulateproudly.

Although Friedman was reacting against the 1960s surge in support forsocial and economic fairness, andwanted the political economy to go back intime,hedidso in thenewspiritof the1960s.Withultra-individualismfreshlyflowing in all directions, everyone wanted to feel free to do their own thing,includingselfishbusinessmenangryabouttheintensifiedsuspicionofbusiness.For those readers, seeing the righteous candor andmilitancy of the FriedmanDoctrineinTheNewYorkfuckingTimesayearafterWoodstockwasthrilling,liberating.Capitalists of the world, unite! You have nothing to lose but yourchains—chains of “social conscience,” chains of self-loathing guilt! I don’tmean this as a joke, or poetically. Two ascendant countercultures, the hippiesandtheeconomiclibertarians,sharedabrazenprimedirective:Ifitfeelsgooddoit,followyourbliss,findyourowntruth.

Ofcourse,profitsareaprimegoalforanybusinessenterprise,aswellasthegoalmosteasilymeasured.Whenpushreallycomestoshove,businessowners’need tomake profitwill inevitably count formore than any duty they feel toemployees,customers,orsociety.But intherealworld,wherehumansoperatebusinesses somewhere in the large range between break-even and maximumprofitability, theyalwayshave leeway tobeunnecessarilyanduneconomicallyfair,trustworthy,decent,andresponsible—thatis,totakeslightlysmallerprofitmarginsfor thesakeofgoodvaluesandvirtuousnorms.Friedman,andfellowfree-market purists ever since, constantly refer toAdam Smith, who came up

with the “invisible hand” idea in the 1700s. But they distort him. Smith alsoargued in favor of sensible government intervention to improve and optimizefreemarkets.

Within a few years of the FriedmanDoctrine, elite executives-in-traininginternalized and felt free to espouse it. Asked in a class in the late 1970s atHarvardBusinessSchoolaboutahypotheticalCEOwhodiscovershisproductcould kill customers, young Jeff Skilling said he “would keep making andselling the product. My job as a businessman is to be a profit center and tomaximize return to the shareholders. It’s the government’s job to step in if aproduct isdangerous.” (Twodecades laterasCEOof thebigenergycompanyEnron,Skillingwasthemainorganizerofthevastfinancialfraudthatdestroyedthecompanyandforwhichheservedtwelveyearsinprison.)

As for the government protecting the public from profit-mad companies,Friedman’s doctrine included a heads-I-win-tails-you-lose catch-22. Anyvirtuous act by businesses beyond what the government legally requires issimpering folly, yet according to him and the economic right, almost anygovernment regulationofbusiness for thepublicgood isoppressive“statism,”thebeginningoftheendoffreedomanddemocracy.Friedman’swasanextremecapitalism,unhinderedbyanyhumanfeelingormoralcompunction—orbythepublic interventions and guardrails with which we’d improved it since thenineteenth century. His vision of a free-market system was a reductio adabsurdum purification of our well-tempered and actually successful one, afundamentalistcapitalism.

JustasFriedmanwaspreparingtothrowdownhisgauntletinthatsummerof 1970, an Establishment éminence grise not prone to hysteria also beganraising alarms about rampant anticapitalist sentiment. Lewis Powellwas a toplawyer in Virginia, a former president of the American Bar Association whoserved on many corporate boards. Among his clients were PhilipMorris, thelargest cigarette company, aswell as themain tobacco industry trade group—whoseproducts thefederalgovernmenthadrecentlydeclaredcarcinogenicandforgoodmeasure,inthespringof1970,hadbannedfrombeingadvertisedanylongerontelevision.AtabigannualSouthernbusinessconferencethatsummer,Powell delivered a keynote speech inwhich hewarned that “revolution couldengulf thiscountry”because theU.S.politicaleconomywas“underbroadandvirulent attack”by“whiteandblack radicals”whose“heroesareFidelCastro,CheGuevara,HoChi-minhandMaoTse-tung”andwhobehavelike“Hitlerandhisstormtroopers.”

In his speech, Powell said that because “the media and intellectualcommunitiesofoursociety[have]builtuptheseextremistsintonationalfiguresofprominence,powerandevenadulation,”madethem“lionizedonthecampus,in the theaterandarts, in thenationalmagazinesandon television,”moreandmoreyoungAmericans,“oftenfromourfinesthomes,[are]vulnerabletoradical‘mind-blowing’ ” and now believed “the destructive criticism…that our freeenterprisesystemis‘rotten’andthatsomehowwehavebecomeawhollyselfish,materialistic, racist and repressive society.”And concerning “this incongruoussupport of revolution,” he quoted none other than Milton Friedman and hiswarnings about the media and intellectual establishments exposing “thefoundations of our free society” to “wide-ranging and powerful attack…bymisguided individualsparrotingoneanotherandunwittinglyservingends theywouldneverintentionallypromote.”

But thatwas just tobea firstdraft.Ayear laterPowellwasstillalarmed,still fuming, and wrote a longer, more elaborate manifesto that eventuallybecame widely known. One of his neighbors in Richmond, a retail-chainpresident and local politician, was a national officer of the U.S. Chamber ofCommerce, thecountry’smainorganizationofbusinesspeople.Powell’s friendpushed him to take the next step—to draft a national counterrevolutionarystrategyandplanofaction,likehe’ddoneasacolonelinAirForceintelligenceplanning D-Day. For the thirty-four-page memorandum he submitted to thechamber’s leadership and staff, marked CONFIDENTIAL and entitled “Attack onAmerican Free Enterprise System,” Powell borrowed heavily from his speechtheyearbefore,whichhe’dcalled“TheAttackonAmericanInstitutions.”

He reused the“system isunderbroadattack”memeaswellas theMiltonFriedman quote and added his own version of the FriedmanDoctrine’s class-suicide trope. “One of the bewildering paradoxes of our time is the extent towhichtheenterprisesystemtolerates,ifnotparticipatesin,itsowndestruction.”Thatis,whyweremillionaire-fundeduniversitiesandrichpublishersandownersofTVnetworknewsdivisions(thataired“themostinsidioustypeofcriticismofthe enterprise system” providing the venues for attacks on business? Theenemieshe’dwarnedaboutbefore,CheandMao,werereplacedinthismemobycelebritytraitorswithintheAmericanelite.Nader,“alegendinhisowntimeandanidolofmillionsofAmericans,”was“thesinglemosteffectiveantagonistofAmericanbusiness,”and“YaleProfessorCharlesReichinhiswidelypublicizedbook ‘The Greening of America’ ” had made a “frontal assault on the freeenterprisesystem.”Throughoutacademiaandthenewsmediawere“thosewho

propagandizeagainstthesystem,seekinginsidiouslyandconstantlytosabotageit,” alongwith their fellow travelers in governmentwho have “large authorityoverthebusinesssystemtheydonotbelievein.”Hewentfurtherthanhehadtheyear before in his speech, now suggesting that leftist government bureaucratswereintentionallypursuinganticapitalistends.

Itwastheredscareofthe1940sand’50salloveragain—exceptthistimethe right’s problemwas that the general publicwasn’t scared at all of crypto-socialism, now galloping instead of merely creeping. Powell encouraged hisreaders to feel like victims—“the American business executive is truly the‘forgottenman.’ ”Buthealsotoldthemtheywerepathetic:“Thepainfullysadtruthisthat…theboardsofdirectorsandthetopexecutivesofcorporationsgreatand small and business organizations…have responded—if at all—byappeasement,ineptitudeandignoringtheproblem.”

Itwas an existential problem,with the “survival ofwhatwe call the freeenterprise system” in doubt. Polite American “businessmen have not beentrained or equipped to conduct guerrillawarfare” against such subversion, butnow they needed to mobilize for a massive counterinsurgency, a projectrequiring “long-range planning and implementation…over an indefinite periodofyears,inthescaleoffinancingavailableonlythroughjointeffort,andinthepolitical power available only through united action and nationalorganizations….Thisisalongroadandnotoneforthefainthearted.”

Powellproposedwaging thiswaron four fronts—inacademia, themedia,politics, and the legal system—and doing so with unheard-of budgets andferocity.Forthefirsttwofronts,theywouldneedtofindandfundscholarsandotherintellectuals“whodobelieveinthesystem…whowilldothethinking,theanalysis, the writing and the speaking” to effect “gradual change in publicopinion.” Political power needed to “be assiduously cultivated…[and] usedaggressively…without embarrassment and without the reluctance which hasbeensocharacteristicofAmericanbusiness.”Inordertotiltthegamedecisivelyinthedirectionofcapital,capitalistsneededtocopytheACLU,“laborunions,civilrightsgroupsandnowthepublicinterestlawfirms”—thatis,createjudicialactivism in reverse. “The judiciarymay be themost important instrument forsocial,economicandpoliticalchange,”Powelladvised.“This isavastareaofopportunity”if“businessiswillingtoprovidethefunds”—andindeedthewholewar would “require far more generous financial support from Americancorporationsthan”anysucheffort“everreceivedinthepast.”

Finally, thecourtlyanddecorousPowelladvised:NomoreMr.NiceGuy.From now on, no businessmen should be “tolerant…of those who attack hiscorporationand the system.”Rather, they should“respond inkind,”engage in“confrontation politics….There should be no hesitation to attack theNaders…and others who openly seek destruction of the system” nor “to penalizepolitically”anyandallopponents.

ThreemonthsafterPowellsubmittedhismasterplantotheU.S.ChamberofCommerce, he was nominated by Nixon and quickly confirmed as a U.S.Supreme Court justice. A year later, that made his secret memo newsworthyenough to be leaked to a reporter. But it didn’t become a big story. JusticePowell had been privately intemperate before he was on the Court…so? Theeconomicmainstreamwasstillflowingtowardtheleft,andlibertarianswerestillpowerless cranks. Nobody was alarmed by old man Powell’s alarmist call toarms.

Butoneof the effectsof that leakwas that theChamberofCommerce in1972 released the entire confidential Powell Memo to its entire membership.Whichmeantthatpeopleinbusinessandonthewealthyright,who’dregardedFriedman’s Times essay as a kind of motivational St. Crispin’s Day speechdeliveredbytheirHenryV,nowhadanactualbattleplanfromanexperiencedand distinguished general, their Duke of Richmond. According to the NewYorker journalist Jane Mayer in her important 2016 book Dark Money, thePowell Memo “electrified the Right, prompting a new breed of wealthyultraconservatives to weaponize their philanthropic giving in order to fight amultifront war of influence over American political thought.” Among theelectrifiedweretheyoungishindustrialheirRichardMellonScaife,whoduringthe1960shadincludedPowellinaconservativediscussiongroup—okay,cabal—plotting to keep America from moving too far left economically. The richyoung right-winger Charles Koch, who’d recently taken over his family oilcompanyinKansas,wasalsoaclosereaderofthememo.

AsI’vesaid,I’mdisinclinedtoexplainhistoryorcurrenteventsintermsofconspiracies, neat just-so stories that impute too much genius and power toconspirators.IfLewisPowellhadneverwrittenhismemoorifithadneverbeenwidely distributed, the right’s campaign to reconstruct our political economymight have proceeded more or less as it did. Around the same time, right-wingersinWashingtonhadstartedtalkingabouttheneedtocreatemoremilitantandeffectiveinstitutions.

ButbeyondtheparticulargalvanizingeffectsofthePowellMemo,itandtheearlier,virtuallyunknownPowell speechclearlyshow thestateofmindof therichrightandalotofthecapitalistEstablishmentatthetime—frightened,angry,andmotivatedtoresistbeforeitwastoolate.Ignoredfordecades,thememoisnowanuncannyand invaluableforensicartifactof theearly1970sformakingsenseoftheremakingofoursystemthatbeganatthatmoment.

Conspiracy theories, because they tend to emulate fiction, often imagineDanBrownianplotswithgreatsecretsattheircenters.Butfrom1972on,JusticePowell’splaybookwasn’t secret at all.For instance, in a1974 speechCharlesKoch gave to business executives inDallas, he quoted its final line—“As thePowell Memorandum points out,” he said, without further explanation,“ ‘businessand theenterprise systemare in trouble, and thehour is late.’ ”Heassumedthateveryoneinhisaudiencewasfamiliarwithit.

Almostnobodyelsewaspayingmuchattention to thenewmovementandgenerationalprojectforwhichPowell’smemowasapieceoffoundingscripture.Center-left hegemony and (thus) complacency were real. According to thatannualnationalYankelovichsurveyaskingpeople if “business tries to strikeafair balance between profits and the interests of the public,” Americans werecontinuing to falloutof lovewitheven thenicer, fairerU.S.capitalismof thetime—from33percentwho’dagreedin1970aboutthat“fairbalance”downtojust19percentin1974and15percentin1976.Acampaignbybusinessandthefarright topushconventionalwisdomandourpoliticaleconomyitselfbacktothe1920s,orfurther?Averylongshot,faintlyridiculous,arguablyimpossible.

Butbigbusinessandtheextremelyrichgotthememo.They’dbeentrolledand attacked during the late 1960s, felt besieged, and started imagining orpretending to imagine that some kind of socialist revolution might actuallyhappen.Theywerebecoming,pardontheexpression,classconsciousandbeganorganizingandmobilizingforalong-termstruggle.

*1Likewise,conservativesinaconservativeeratwentyyearslaterwouldgiveBillClintonnocreditforhismoderatelyconservativepolicies—balancingthefederalbudget,continuedderegulationofbusiness,tighteningwelfareeligibility,signingtoughanticrimelegislation,andsoon.Clintongetscreditandblameforinventingpolitical“triangulation”inthe1990s,butNixondiditfirst.*2NixonalsosupportedtheconstitutionalamendmentguaranteeingequalrightsforwomenandsignedtheTitleIXlawthatrequiredfull-fledgedschoolathleticprogramsforgirls.Inaddition,hisadministrationwasthefirsttoenableNativeAmericantribalautonomy,anditincreasedtheNationalEndowmentfortheArts’budgetby500percent.A1971billpassedbybothhousesofCongress,gettingthevotesofmostSenateRepublicans,wouldhavecreatedfederallyfundedchildcarecentersnationwide,availabletoeveryfamilyandfreeforpoorandlower-middle-classones—butthepresidentfinallyvetoeditattheurgingof

hisyoungright-wingaidePatBuchanan.

T he newlymilitant capitalists, superrich industrial heirs, and leaders ofthelargestcorporationspromptlybeganexecutingaversionofPowell’splan—aversion, in fact, much more ambitious than he’d urged on the Chamber ofCommerce. The mission was twofold: turn elite discourse and general publicsentimentmoreintheirfavor,andwheedleandfinaglethefederalgovernment—thediscreditedfederalgovernment—tochangelawsandrulesintheirfavor.Thegoalwastocreateapowerfulcounter-Establishment.Whattheyaccomplishedinadecadewasastonishing.Itastonishedeventhem.

Changing theskepticalconsensus inacademiawouldbeagradualproject,buttherichrightrealizeditcouldinstantlycreateafewfauxmini-universitiestocrank out business-friendly public policy research and arguments. Until then,thinktanks,asthey’dcometobecalledinthe1960s,conceivedofthemselvesasnonpartisanandobjective,not really in thebusinessofaligningwithparticularpoliticiansorpushingparticularprograms.In1970theconservativethinktankinWashington,theAmericanEnterpriseInstitute(AEI),hadatenththefundingofthebigestablishedliberalone,theBrookingsInstitution,astaffoften,andonlytwo resident scholars. By the end of the decade AEI’s budget was equal toBrookings’s,anditsstaffhadgrownto125.

TheHooverInstitutionatStanfordhadbeenaroundforyears,asaforeignpolicy library founded by Archie Bunker’s man Herbert Hoover before hebecamepresident.Inthe1960s,shortlybeforeHooverdied,hegavetheplaceanaggressivenewmission,“todemonstratetheevilsofthedoctrinesofKarlMarx

—whetherCommunism,Socialism…oratheism.”Heinstalledanewdirector,aright-wingeconomistwho’dworkedfortheU.S.ChamberofCommerceandrunAEI. The strictly international focus remained—until 1972, when the HooverInstitution announced that it would now be “devoting the same amount ofattentionto‘thesocialandpoliticalchanges takingplace in thiscountry.’ ”Bythe end of the 1970s, the annual budget had quintupled and the endowmentincreased from$20million to $300million, and former governorReagan andMiltonFriedmanwereHooverInstitutionfellows.

Insteadofmerelyleaningrightoneconomics,asinthepast,thesenewandrebornthinktankswouldbeexplicitly,unapologeticallypoliticalandright-wing.Themostimportant1970sbenefactorsofthethinktanksandtherestofthenewcounter-Establishmentwere, in addition to Scaife andCharles and his brotherDavidKoch, thebeer heir JosephCoors and the industrial heir JohnOlin.Allfive have curiously similar backgrounds. They grew up in the middle of thecountry, between the Alleghenies and the Rockies, and all five were heirs toindustrial fortunes that their fathersorgrandfathersstartedamassing in theolddays, before the New Deal. All but Scaife ran their eponymous familycompanies, and all but Olin were young, members of the so-called SilentGeneration.*1

In the early 1970s they all felt besieged by the federal government anddemonized by the business-skeptical spirit of the age. As an operator of oilrefineries,KochIndustrieswasnowunderpermanentscrutinybythenewEPA.Coors faced suits and boycotts for racial discrimination and a sudden giganticfederal estate tax liability. The Olin Corporation was one of the largestmanufacturers of the pesticide DDT—which the EPA had just banned. “Mygreatestambitionnow,”JohnOlinsaidinthe1970s,“istoseefreeenterprisere-established in this country. Business and the publicmust be awakened to thecreepingstrangleholdthatsocialismhasgainedheresinceWorldWarII.”

Scaife’s boast to JaneMayer, decades later, that he’d funded “133 of theconservative movement’s 300 most important institutions,” suggests theambitionandultimate scaleof thenetworkof start-ups theybeganbuilding inthe1970s—those threehundred are just the“most important” think tanks andfoundations and programs and law firms and advocacy and lobbying groups.DavidKochwasexplicitabout this long-gamestrategyofdonating largesumsovermanyyearstoalargenumberofnewright-wingnonprofits.Hisgoalwas

tominimize the role of government and tomaximize the role of theprivateeconomy….Bysupportingallofthesedifferentorganizations,Iam trying to supportdifferent approaches to achieve thoseobjectives.It’salmost likeaninvestor investinginawholevarietyofcompanies.Heachievesdiversityinbalance.Andhehedgeshisbets.

In fact, not just almost like what an investor does: the absolutely directeffect of the Kochs’ political donations was to maximize their income andwealth,andtominimizethetaxestheypaid.

Themostimportantofthethinktanks,asitturnedout,wasanentirelynewone dreamed up by a pair of young right-wingers born a year apart, bothGerman-AmericanCatholicmidwesternerswhoworked formiddle-of-Americaright-wingmembersofCongress.In1973Coorsgavethetwotheequivalentof$1.5 million to start the Heritage Foundation. Soon Olin was contributing aswell, and Scaife donated millions a year for decades.*2 Heritage startedpublishing papers and making arguments to the right of the conservativemainstream—turningSocialSecurity intoanoptionalsystem, for instance,anddenying food stamps to striking workers. “We are different from previousgenerationsof conservatives,” oneof the cofounders,PaulWeyrich, explainedlater. “Weare radicals,working tooverturn thepresentpower structureof thecountry.”What’smore,withinWashington’sideologicalecology,theexistenceofHeritage had the effect ofmakingAEI seem comparatively reasonable andcentrist.

Becauseitmeanttomaximizeitspoliticalinfluenceandimpact,Heritage’sultra-conservatism encompassed the two big strange-bedfellow constituencieswithin theRepublicanright, the libertariansand theuncomfortable-with-libertyfundamentalist Christians. The second most influential right-wing think tankborn in the 1970s, Charles Koch’s creation, was the strictly libertarian CatoInstitute. He poured in the equivalent of $10 million to $20 million to get itgoingandtensofmillionsmoreafterward.

Libertarianismwasdefinitelyoutsidethemainstream.Intheearly1970s,ataconferenceinWashingtonofwhatitsorganizerMiltonFriedmancalled“freeenterprise radicals,” he said that it was “important for people of our politicalpersuasiontocometogetherandrealizethatthey’renotsuchkooksastheyaresometimesmade to appear in their communities.”Among his fellow kooks atthatmeetingwasthenot-yet-widely-knowneconomicconsultantandAynRand

associate Alan Greenspan. The new Libertarian Party’s 1972 presidentialcandidate,anentirelyunknownphilosophyprofessorthenandnow,wonatotalof3,674votesnationally.

Forafewyearsduringthe1970s,CharlesKochpublishedastylish-lookingSan Francisco–based magazine called Libertarian Review. In it he wrote anessaythatreiteratedthegistsoftheFriedmanDoctrineandthePowellMemobutwent further, arguing that their “movement…for radical social change” mustseek to take over American conservatism, radicalize it. Businesspeople andmainstreamconservatives ought to support the extreme libertarian demands of“ ‘the(radical)agitator,’ ”Kochwrote,because“ ‘themoreextremedemandofthe agitator makes the politician’s demand seem acceptable and perhapsdesirable.’ ”ButwhoreadtheLibertarianReview?Andwho’deverheardofthisCharlesKochguy?

Slowlybut surely, the littlemovementmadeprogress against progress. In1974, for instance, a few weeks after Nixon resigned, President Ford namedGreenspanchairmanofhisCouncilofEconomicAdvisers.Hissurrogatespouseattheswearing-inwassixty-nine-year-oldAynRandherself.

—

The right-wing mediascape was still tiny, a few small magazines withcirculations in the tens of thousands, the most important of themWilliam F.Buckley’sNationalReview, andhardly any radio; cablenews and the Internetdidn’t exist. The only influential right-wing venue of any scalewas the dailyopinionpagesofTheWallStreetJournal,whosecirculationhadrecentlypassed1million on itsway tomore than 2million. In 1972 the young editorRobertBartleytookoverthesectionandenforcedamorerigorouslyhard-edgedscrew-the-liberals libertarian economic line in the new post-1960s spirit, moreunapologeticallyantitax,antigovernment,pro-wealthy.HehiredIrvingKristol,aprominent former leftistwhohadbeensoundoneby thecountercultural1960sthat he’d turned into the original neoconservative—a teacher and intellectualwhobegansavaginginAmerica’scapitalist-classdailypaper,“theNewClass,”“our scholars, our teachers, our intellectuals, our publicists,” liberals now“engagedinaclassstrugglewiththebusinesscommunityforstatusandpower.”

Starting in the 1970s, too, plain old-fashioned Republican tax hatredacquired a new set of academic rationales, thanks to a new generation ofeconomists—and Bartley’s Wall Street Journal editorial page was their

absolutelyindispensablecornerofthepublicsquare.“Ourpagewastheforum,”Bartleysaidadecadelater.“Thesepeoplehadtofindeachother.Andtheyhadto have publicity to get other economists thinking about it. It wouldn’t havehappenedwithoutsomeoneplayingtheroleofbroker.”

Bartley hired a right-hand man at the Journal, Jude Wanniski, a formercolumnist at theLasVegasReview-Journal.One of his dutieswas cultivatingandhandlingayoungeconomistattheUniversityofChicagobusinessschool—ambitious, eccentric, second-tier—named Arthur Laffer. Laffer’s particularbrandofoldwineinanewbottlewastheideathatbydramaticallyslashingtaxratesonbigbusinessandtherich,you’dmakepeopleworkandearnandinvestmore, producing such fountains of prosperity that tax revenues would growenough to prevent excessive federal deficits or draconian budget cuts. Do themath!A35percenttaxon$2millioninincomegeneratesthesameamountasa70percenttaxon$1million.Everybodywins!Theoretically.Becauseonlytherich would definitely and immediately win. Wanniski made up a legitimate-sounding name—supply-side economics. For anyone else to benefit, whatDemocratssincetheDepressionhadcalledtrickle-downeconomicsalsohadtooperate—thatis,thesupply-sidetaxcuts(andderegulation)wouldhavetomakebusinesses boomand richpeople profit so gloriously that someof thatmoneytrickleddowntoproducejobsandbetterpaychecksforthelittlepeople.

During the1970sBartley,Wanniski,andLafferhadregulardinners,oftenweekly, sometimes with Kristol, near the Journal’s offices in Manhattan’sfinancial district. In 1974 Kristol commissioned Wanniski to write a ten-thousand-wordarticleaboutLafferandhisnotionsforthepolicyjournalheran,ThePublicInterest,thusintroducingthemtotheintellectualworld.Thepremiseof the essay was that the last few years of high inflation and slow economicgrowth proved that conventional economists had no clue, and that the younggenius renegade Laffer could bring about a “ ‘Copernican revolution’ ineconomicpolicy.”

At thesame time,according toWanniski,hewent toWashington todrumup interest there in the radical-tax-cut revolution.Hemetwith the newWhiteHousechiefofstaff,DonaldRumsfeld,whointurnorderedhisdeputytomeetwithWanniskiandLaffer.AndsooverdrinksatarestaurantthreeblocksfromtheWhiteHouse,Lafferexplainedhimself to thedeputyWhiteHousechiefofstaff,DickCheney,bysketchingonacocktailnapkinwhatlaterbecameknownastheLafferCurve,asifitweresomewell-establishedprincipleofeconomics.

In 1976 Wanniski introduced supply-side talking points to the Journal’sreaders.BythenLafferwasteachingattheUSCbusinessschoolinLosAngeles,whichmadeiteasyforhimtothrowadinnerpartyforGovernorReagan—andteachhimthesupply-sidecatechism—justbeforeheannouncedhe’dberunningfor president in 1980. “Supply side economics,” thepolitical journalistSidneyBlumenthalwrote inhis remarkablygood1986bookTheRiseof theCounter-Establishment: The Conservative Ascent to Political Power, “was a theologyspawned almost overnight” but “presented as radically innovative” as well as“ancientwisdom.” Itwas“soold”—from thearguments fiftyandeightyyearsearlieragainstincometaxesandtheNewDeal—“thatitseemedincrediblynew.”Theologically dogmatic, both old and new—and as Wanniski wrote in hisCopernicanrevolutionarticle,amagicalcureforourproblemsthat“wouldnotinvolveaperiodofsuffering”or“politicallyimpossibleprescriptions.”Itwasaworkofevilgenius.

—

Asthe1970sproceeded,thegatesofallsortsofmainstreambastionsopenedupto intellectuals and ideas from the economic right, giving conservatism andlibertarianismshinynewimprimaturs,andtherebymadetheliberalgatekeepersfeelmoreexquisitely,magnanimously liberal.TheFordFoundationawardedagrantworththeequivalentof$1.8milliontoAEI,theconservativethinktank.*3TheNew York Times hiredWilliam Safire, a speechwriter forNixon (and hisnasty criminal vice president, Spiro Agnew), as one of its main politicalcolumnists—andthePulitzerauthoritiessoongaveSafireaprize,astheydidayear later to the Journal’s Bartley. Nobel Prizes for economics went both toFriedman and to his Austrian émigré mentor, Friedrich Hayek, in the 1970s.Harvard had two young superstars of the libertarian right on its faculty, thephilosopherRobertNozickandtheeconomistMartinFeldstein.*4Nozick’s1974book Anarchy, State, and Utopia argued that anything beyond minimalgovernmentalactivity,suchasredistributinganymoneyfromrichpeopletopoorpeople,isimmoral—andwontheNationalBookAward.Feldsteinwasskepticalof Social Security and government unemployment benefits and even generoushealth insurance provided by employers. A decade after the Times Magazinedelivered the FriedmanDoctrine and eightmonths beforeReaganwas electedpresident, it published a long, gushing profile of Feldstein for its 3 millionSunday readers, headlined SUPERSTAR OF THE NEW ECONOMISTS. The opening

scene depicted him as an exciting celebrity at a conference of Wall Streetexecutives—andseemedtolove“thefactthatsotitillateshisaudience—heisaconservative,” “the most influential among a cluster of young conservativeeconomists”whosaytheeconomyhadbeen“overregulatedandovertaxedintodeeptrouble.”

Making old right-wing economic ideas seem fresh and respectable wasessential, but so was making them operational. As the Powell Memo hadinstructed, Scaife two years later provided the funds to some members ofGovernorReagan’sstaffinCaliforniatocreatethePacificLegalFoundation,anew kind of pro bono right-wing law firm devoted to litigating againstgovernmentregulations,especiallyenvironmentalones.AfewyearslaterCoorsputupthemoneyforanother,theMountainStatesLegalFoundation.

But themain locationforweaponizingright-wing ideas, thisgrandprojecttoundermineandrollbacktwentieth-centuryreformsofthepoliticaleconomy,wasnaturallyWashington,D.C.ThecorrectsenatorsandHousemembershadtobehelpedorhurt,electedorbeaten;Congressandtheexecutivebranchhadtobeaggressivelylobbiedandeffectivelybribed;lawshadtobedefeatedandpassed;thetaxcodehadtobemadeeasierontherichandbigbusiness;andregulationsonbusinesshadtobebluntedorrepealed.

TheChamberofCommerceand theothermainbusinessorganization, theNationalAssociation ofManufacturers, had arisen at the turn of the twentiethcenturyduringtheProgressiveEra,toopposeunionization,andtheylaterfoughtthe New Deal. Because they were so large, representing Ford and GeneralElectric as well as thousands of local widget companies, they tended to becumbersome and ineffectual. In otherwords, for decades corporate executivesand the rich simply hadn’t been exercising maximum political leverage—noteventocadgegovernmenttreatsforparticularcorporationsbutdefinitelynot,asPowellcomplainedinhismemo,toservetheinterestsofthecapitalistside.

You’ll notice I didn’t say capitalist class. I’ve never had any hesitationusing the termsworking class ormiddle class, of course, but as an educatedAmericanliberalcomingofageinthe1970s,Ilearneditwassimple-mindedandvulgar-Marxisttospeakoftheeconomicoverlordsandtheveryrichasaclassoreven as capitalists. And while I still resist defaulting to conspiracistexplanations,piecesofthisstorydolookandswimandwalkandquackanawfullot like ducks—that is, resemble a well-executed conspiracy, not especiallysecret,bytheleadersofthecapitalistclass,attheexpenseofeveryoneelse.

Inlate1971,asthePowellMemowasstillfreshandessentiallysecretbutripplingthroughAmerica’sC-suites,thechairmenandCEOsofGeneralElectricand Alcoa started dreaming up a powerful new alliance of exclusively bigbusinesses, like theirs, that would exercise serious power inWashington in awaythathadn’tbeendonesincetheolddays,beforetheCrashof1929andtheNewDealandthedeathsofthelastoftheoriginalindustrialoligarchs.

TheheadsofGEandAlcoametinearly1972inWashingtonwithNixon’sDemocrat-turned-Republican treasury secretary, John Connally, and FederalReserve chairmanArthur Burns—who emphatically told them, according to aparticipant, that business had “to shape up in sophistication and techniques inWashington or go down the political tube.”*5Weeks later, theGE andAlcoaorganizersconvenedotherCEOsfromamongAmerica’slargestcorporationsataprivatemen’sclubonManhattan’sUpperEastSidecalledtheLinks,andmadeit official. A year later, at the same club, theymerged their groupwith somesimilar new antiunion, antiregulation, antitax cabals created by other suddenlymilitant CEOs, and the Business Roundtable was born. Unlike their weaker,wankerish predecessor groups, theBusinessRoundtablewould consistonly ofthe CEOs of the biggest businesses, and they were all expected to attendimportantstrategyanddecision-makingmeetings themselvesandlobbyelectedofficialspersonally.*6Organizedlaborhadhaditsrun,andnowitwastimefororganizedcapitaltogiveitaseriousgo.

Notforafewmoreyears,afterWashingtonhaddispensedwithWatergateandNixon,didthepressbarelybeginnoticingthesenewpiecesoftheemergingcounter-Establishment.In1975theTimespublishedafront-pagestoryaboutthespectacularsuccessof“acarefullyorganizedlobbyingeffort,chieflydirectedbya little-known organization whose members are all giant corporations”—theBusiness Roundtable. In the Democrat-majority House, by means of CEOspersonally lobbying, the Roundtable managed to kill a bill to expand theenforcementoflawsagainstexcessivecorporatepower.

The sameyearTheWashingtonPost ran a story announcing its discoverythat Joseph Coors had been “funneling millions of dollars to new right-winggroups,mainlybasedinWashington.”TheworldwasstilllargelyunawareoftheKochs and their funneling. The Times passingly mentioned each of them,apparently for the first time, in 1979—“David Koch, a New York lawyer,”because he was going to be the Libertarian Party’s 1980 vice-presidentialnominee,andhisbrotherinaseparatestorysimplyforbeingsoextremelyrich

yetsolittle-known.Butstayingintheshadowswasastrategicchoicebackthen.For one of the annual libertarian conferences that Charles Koch sponsoredduringthe1970s,hewroteapaperrecommendingthatbecausetheir“radicallydifferentsocialphilosophy”couldattract“undesirablecriticism,”exactly“howthe organization is controlled and directed should not be widely advertised.”Evenwhenhefinallysteppedoutfrombehindthecurtaintwodecadeslater,hetoldareporter,“Idon’twanttodedicatemylifetogettingpublicity.”*7Duringthe1970shisCatoInstituteapparentlywasn’tmentionedatallintheTimes,andtheHeritageFoundationonlyveryoccasionally.

—

“Historydoesn’trepeatitselfbutitrhymes,”MarkTwainisallegedtohavesaid.As I discussed earlier, the Civil War had been a struggle between plungingforwardandclingingtothepast,betweennewandoldAmericas.Assoonasthewar ended, the country underwent an explosion of nostalgia andmass-marketcorninessandself-celebratoryAmericana—Currier&Ivespictures,JohnPhilipSousamarches,thenewChristmasandpopularmusicindustries,thesix-month-long U.S. Centennial Exhibition in Philadelphia with a reproductionseventeenth-century“NewEnglandFarmer’sHome”andcolonialwindmill.

And thenacentury later,history rhymed. In the1960sour struggleswerebetweenoldandnew,onceagain involvingraceandawar, this timeaforeignwar,thatterriblydividedAmericans.Andinthe1970sasinthe1870s,wegotanostalgia explosion: the pop cultural nostalgia, the social nostalgia amongArchie Bunkers for more subservient blacks and women—and a de factoeconomic nostalgia among the wealthy for the unregulated businesses anduntaxed fortunes of the 1920s and earlier, the economic foundation of whatTwainin1873namedtheGildedAge.

The political reality of that firstGildedAgewas thatwealthier andmorepowerful businessmen than ever before bribed and otherwise improperlyinfluencedU.S.officialsandlegislatorsonamuchbiggerscalethaneverbefore.Thenduringthe1900slawsandnormsrestigmatizedandcriminalizedthemostbrazen corruption and indifference to the public good. OrganizedWashingtonlobbying by big business and the rich was relatively small-scale, even whenSenate majority leader Lyndon Johnson was distributing Texas oil money tosenators to persuade them to vote his way in the 1950s—until history startedrhyming in the 1970s. Along with capitalists’ post-1960s-specific ideological

grievances—the loss of public and political respect and support, the second-guessingandmeddlingbycitizensandtheirgovernment—theywerealsoeagertoenrichthemselvesdirectlythewaystheircapitalistforebearshaddoneintheolddays.

In1971about175bigcompanieshad full-time lobbyists—that is, “publicaffairsoffices”—inWashington.By1978fivehundreddid,andjustfouryearslater, in the second Reagan year, nearly 2,500 corporations employedWashington lobbyists.While today amajority of senators and congresspeoplebecomelobbyistswhentheyleaveCongress,in1975,asadefinitiveWashingtonPosthistoryofmodernlobbyingexplains,“therarehiringofaformermemberof Congress as a lobbyistmade eyebrows rise.” In other words, as the 1970splayedout,behindandbeneathalltheferventandwonkyideologicalargumentsforunfetteredcapitalismlayaparticulartypeofanimalspirit—piggishness.

And 1975, remember, was in the very wake of Watergate. Much of theWatergate criminality had been funded by the Nixon reelection campaign, towhichcorporationsandrichindividualshadsecretlydonatedlargesumsofcash,actuals bags of paper currency. So even as suddenly jacked-up, lobbying-madcorporations began systematically ravishing the federal government, theWatergate scandal promptedCongress to pass campaign finance rules to limitdonations’sizeanddisclosewhowasgiving.Thenewlypoliticizedcorporationspromptly subverted those new rules in order to increase their power inWashington.AreportbyAEI,theconservativethinktank,smirkinglyexplainedat the time how those reforms had unintentionally “legitimized the role ofcorporationsandbusiness-relatedgroupsinfederalelections,greatlyimprovingtheirpositionvis-à-vislaborandothersocialinterests.”

Bythefallof1975,threehundredcorporationsandbusinessgroupshadsetuponeofthesenewspeciesofdonationpipelines—politicalactioncommittees.The new Federal Election Commission ruled that it was entirely up to acompany’s executives, without their shareholders’ approval, to decide whichcampaignsandcandidatestofund.Twomonthslater,inacasebroughtbybothconservativesandliberalcivillibertarians,theSupremeCourtruledthatdonorsnot formally connected to candidates—such as corporate PACs—couldcontributetopoliticalcausesasmuchastheywanted.Andinanotherimportantcase, the Court ruled that corporations were free to finance state and localreferenda unrelated to their business.*8 Corporations, they decided, just likecitizens,havefreespeechrightsthatmaynotbelimited.

Thus began a “quiet revolution,” the head lawyer of the NationalAssociation of Manufacturers marveled at the time, by “corporations in thepoliticalarena,whichwouldnothavebeenpossibleonlyfouryearsago.”Andright after the decision removing limits from PAC donations, the number ofbusiness PACs increased from three hundred to twelve hundred, generatinggushersofmoney thathelped triple thecostofcampaigns foraHouseseatbythemid-1980s,whichinturngavePACsmorepower,andsoonithasgoneeversince,aviciouscyclecorruptingdemocracy.

Once again the economic right and big business keenly channeled andtwisted the democratic anti-Establishment 1960s spirit. The first spectacular1960s protests had happened in 1964 in Berkeley,where pissed-off, idealisticstudents refused enmasse to submit to the university’s rules restricting publicpolitical activity—the Free Speech Movement. The free speech movementlaunchedjustadecadelaterbypissed-offrichadultswithalong-termstrategytopursuetheireconomicinterestswasatleastastransformativeandconsequential.

*1Curiously,fourofthefivetrainedaschemicalengineersatMITorCornell—andhadfatherswho’dalsostudiedchemicalengineeringatMITorCornell.*2AnotherfunderofHeritageandotherright-wingstart-upswasRichardDeVos,acofounderofAmway,theunorthodox,somewhatcultishMichigan-basedmerchandisingcompanythatwasthesubjectofaFederalTradeCommissioninvestigationinthe1970s.Hewasthefather-in-lawofTrump’ssecretaryofeducation,BetsyDeVos.*3Thatwasn’tenoughtopreventHenryFordII,soenvironmentallywokein1970,fromresigninginahuffin1977fromtheboardoftheFordFoundationbecauseitwastoo“anticapitalist.”*4Onedatapointrefutingthenotionthateliteuniversitiesarestrictlyleftistindoctrinationcamps:from1984through2019,Harvard’sintroductoryundergraduateeconomicscoursewastaughtonlybyconservativeprofessors—firstFeldstein,whoservedasReagan’schiefeconomicadviser,thenhisstudentGregMankiw,whowasGeorgeW.Bush’schiefeconomicadviser.*5AtthebeginningoftheGreatDepression,whentheyoungBurnstaughteconomicsatRutgersUniversity,oneofhismostdevotedstudentswasMiltonFriedman.*6Not-so-funfact:In2019,nearlyhalfacenturyaftertheBusinessRoundtableformed,nolessthan83percentofits182CEOmembers—amongthemitschairmanJamieDimon,JeffBezos,TimCook,MichaelDell,andStephenSchwarzman—werestillwhitemen.*7Notuntil1994didtheTimesrunanarticleallabouttheKochs,andthenalmostentirelyabouttheirbusiness—itincludedjusttwoparagraphs(ofsixty)abouttheirtwodecadesofworld-changingpoliticalwork.*8Themajorityopinioninthissecondcase,FirstNationalBankofBostonv.Bellotti,waswrittenby…JusticeLewisPowell.ThatdecisionformedthefoundationfortheCourt’sdefinitiveCitizensUnitedv.FederalElectionCommissiondecisionin2010thatinvalidatedlimitsoncampaignspendingbygroupsthatcandidatesdon’tofficially,directlycontrol.

I mentioned howMilton Friedman’s confrontational bluntness and zealotry—telling it like it is, in 1960s-speak—gave his 1970 manifesto oomph andtraction.Infact, ironically, itwasaparticularsetofquintessentially late-1960sattitudesthatenduredandmadeAmericaripefortheprojectundertakenbytheeconomic right starting in the 1970s. It wasn’t so much that people weresuddenlyprimedtorespectandglorifybusinessandbusinesspeopleastheyhadsometimes done in the past. Rather, the reflexive fear and loathing of thegovernment that had become a left-countercultural and right-wing reactionaryhabit during the 1960s grew and spread during the 1970s and found newexpressions.

Themurderousness(andincompetence)oftheVietnamWar,togetherwiththemisconductoftheFBIandintelligenceagenciesinspyingonantiwargroups,andthewarondrugs,wereonesetofreasonstohatethefederalgovernmentinthe1960sand’70s.Forsomewhitepeople,passageandenforcementoflawstohelpblackAmericanswereanother.Violentcrimecontinued to increase in the1970s, especially in cities, on its way to more than doubling again—whichmeant that government was failing, and althoughWashington had next to noinvolvementwithlocallawenforcement,itwasWashingtonthathadpassedcivilrights laws and expanded antipoverty programs, so it was easy for racist andracist-ishwhitestoconflateallthatandblameWashingtonforthenewcriminalmayhem. The increase in violent crime also prompted modest gun control—which in turn provided people who liked guns excessively with a new, self-

righteous,1960s-styleindividualistreasontodespiseandfearthegovernment.Everytwoorfouryears,agold-standardacademicsurveyasksAmericansif

they“trustthegovernmentinWashingtontodowhatisrightjustaboutalways,mostof the time,oronlysomeof the time?”In1964,77percentof themsaidalways ormost of the time. By 1970 thatmajority had shrunk to 54 percent,whereitremainedforacoupleofsurveys.ButtheVietnamWarcontinued,andwe continued losing it. The one universally approved recentU.S. governmentachievement, the manned space program, was abruptly kaput. Starting in the1970s, the phrase good enough for government work became a piece of viralsnark.Andofcourse,thereweretheWatergatecrimescommittedbyNixonandhislieutenants.Betweenthesurveysof1972and1974,theWashington-trustingcohortofAmericansshriveledto36percent.Inthenextpresidentialelection,theincumbent Republican president said in a debate that the “considerable anti-Washingtonfeelingthroughoutthecountry…ismisplaced,”buthisDemocraticanti-Washingtonopponentwonaftersaying, in thesamedebate, thathewouldundertake“agreatreductioninagenciesandprograms”andendthe“grosswasteofmoney.”

Once a large majority of Americans came to believe that the federalgovernmentwas uninspiring or incompetent or corrupt or evil, as they rapidlyhadover thepreviousdecade, itwasgoing tobea loteasier for theeconomicrighttopersuadepeoplethatregulatingbigbusinessandtaxingtherichwerejustplain wrong. Those people wouldn’t necessarily become crusaders for freeenterprise,butiftheystartedfocusingmoreoftheirresentmentandangeronthefederalgovernment,thesmartright-wingersknew,itcouldhavethesameeffect.

—

On the first Sunday of 1976,Washington journalism’s elder statesman at thetime,JamesReston,theformereditorofTheNewYorkTimesandthenitsmainpolitical opinionwriter,wrote a column called “Presidential JobDescription.”Hesaidthat“anewmajorityinAmerica,…increasinglyself-concernedandevencynical, is not impressed by…the smooth theatrical conservative nostalgia ofRonaldReagan.”YetoverthenextmonthReaganrananextremelyclosesecondto President Ford in the Iowa andNewHampshire primaries and very nearlywon the nomination. As that presidential election got going, another leadingpoliticaljournalistnotedthat“layeredovereverything”inthepoliticallandscape“areapathy,nostalgiaandcynicism.”

Reston’s idolWalterLippmann, thegreatAmericanpoliticalcommentatorand author who’d recently died, had derided politicized nostalgia sixty yearsearlier,atthebeginningofhiscareerandthemodernage.“Mengenerallyfindinthepastwhattheymissinthepresent,”hewrote.

Formostofusinsistthatsomewhereinthepasttherewasagoldenage.But people who are forever dreaming of a mythical past are merelysayingthattheyareafraidofthefuture.Thepastwhichmencreateforthemselves is a place where thought is unnecessary and happiness isinevitable. The American temperament leans generally to a kind ofmysticalanarchism.

In 1976 the Republicans were not yet the party of unhinged mysticalanarchism they became over the next four decades. Rather, after theunhappiness,unfriendliness, cynicism,paranoia, and finally thehighcrimesofRichardNixon,AmericanswereeagertoinstallMr.RogersintheWhiteHouse—thatis,sincere,low-key,straightforwardJimmyCarter,adevoutlyProtestantgoody-goody complete with toothy smile and cardigan sweater whom Restonhadn’tevenmentionedasacontenderinhisNewYear’selectionpreview.

The choicewas between two basically boring,moderate nice guyswhomnobody’d heard of a couple of years earlier—a governor running againstWashington,Carter,andalifelongWashingtoncongressionalhackwhosteppedin to replaceNixon’s criminal vicepresident and thenpardonedNixon for hiscrimes,GeraldFord.NotonlydidCarterappeartobeNixon’sopposite,healsoseemed tofit thezeitgeist’snostalgia requirement:a farmerfromasmall towncalledPlains,aSundayschoolteacher,andonracealatter-dayAtticusFinch.

Electing JimmyCarter in the fall of 1976was a natural follow-up to theU.S. bicentennial summer. The bicentennial commemorations were asurprisingly big-deal reboot of national solidarity—a Fourth of Julynostalgiapalooza that came along at a ripe moment. In addition to the twohundredth national birthdayparty, they served as a de facto celebration of theendoftheSixtieshangoverthathadincludedthefinalesofVietnam(1975)andWatergate (1974). I’d just graduated college and arrived in New York City,where people—jaded, sophisticatedNew Yorkers—were fully, enthusiasticallyengagedinthisAmericanaspectacle.TheGrandParadeofSailingShips,sixteenoldsquare-riggerseachahundredyardslong,glidingintotheharborasiffrom

out of the nineteenth century and past the Statue of Liberty! Plus dozens ofmilitary shipsdisgorging thousandsof excited sailors all over the city,On theTowncometolife!

Butafterhopefulvisionsofold-fashionedAmericanvirtuehelpedelecthim,Jimmy Carter couldn’t manage to play the nostalgia card worth a damn, andPresidentCarternevercameacrossasa leadingman.Americansdon’t requirepresidents (or leading men) to be cheerful or manly all the time, but in themoderneratheyreallycan’tabidemopesandwimpsandscolds.

—

The previous paradigm shift in the U.S. political economy, embodied andenacted by the New Deal in the 1930s, had been triggered by economiccatastrophe—aquarterofallworkerssuddenlyunemployed,thepayoftheonesstillworkingsignificantlycut, savingswipedoutby the failuresofalmosthalfthe banks, stock prices down 89 percent in three years. Nothing remotely ashorribleastheGreatDepressionhappenedinthe1970stopersuadeAmericanstomakeasharprightturnorreversecoursefromthecountrytheNewDealhadbuilt. Our successful free-market system, as rebuilt in the 1930s and tweakedsince,hadnotteeteredorcollapsed.Infact,despitearecession,the1970swereagreat decade for business: from1970 to 1979, corporate profits overall nearlydoubled,gettinghigherthanthey’dbeensince1951.Inequalitywasasmoderateasithadbeeninthetwentiethcentury.Buttwoveryunpleasantandunfamiliarneweconomicconditions—highinflationyearafteryearandmuchhigher-pricedoil and gasoline—made citizens more willing to accept big changes in theeconomy.

For the threedecades since theTrumanadministration, inflationhadbeenpracticallyimperceptible,mostlyrunningbetween1and3percent,asitisinthetwenty-firstcenturyandhasbeenforthreedecades.Butfrom1973to1975,theannual rateof inflation rose from less than4percent tomore than12percent,and in 1980 it nearly reached 15 percent. The prices of everything wereincreasingbyhalformoreeveryfewyears.Inflationmadeforasenseofout-of-control flux that almost nobody enjoyed, as if the 1960s’ dismaying rate ofchangewerecontinuingbutwithoutanyof thegoodor funparts. Inadecade,prices more than doubled, meaning that the value of cash savings shrank bymore than half. Interest rates on loans naturally doubled as well. ManyAmericansweredisconcerted, angry, and a little panicky. If yourmiddle-class

salary doubled between 1973 and 1980, for instance, your purchasing powerdidn’tactuallyincreaseatall,andyetbecauseofinflation,yourmarginalfederaltaxratecouldhavegonefrom24to30percent.Whichmightwellinclineyouinthe next election to vote for the candidates of a Republican Party that wasstartingtomakelowertaxesitscentralpromise.

When inflation had begun creeping higher at the end of the 1960s, theeconomy was still growing fast. But in the mid-1970s there was a doublewhammy—crazily inflating prices were accompanied by a long economicrecession, a combination so unusual the newword stagflation was coined. Infact, it was a triple whammy: during the 1970s in America (as in the wholedeveloped world), a post–post–World War II slowdown in growth andproductivitywasbecomingapparent.Duringasinglerecessionaryyear,100,000U.S.steelworkerswerelaidoff.Butevenduringamoreeconomicallyordinaryyear,1979,theautoindustrylaidoffathirdofitsworkforce.

Themid-’70s recessionhadbeen triggeredbyasuddenquadruplingofoilprices by OPEC, the dozen-nation cartel that produced most of the world’spetroleum.YetforAmericans, theoilcrisiswasn’t justabout theoilcrisisandthehighergasolineandhomeheatingprices—itwasroutinelycalledtheAraboilcrisis.OPECconsistedofthirdworldcountries,andwewerealsomonthsawayfromofficially losingourdisastrousdecade-longwar toa thirdworldcountry,North Vietnam. On multiple fronts, the end of America’s twentieth-centuryinvincibilitysuddenlyseemednigh.

While there was nothing in the 1970s economically comparable to theDepression to trigger an equivalent political about-face, there were severalsimultaneous and mutually reinforcing narratives about our failing nationalmoxie.Thefederalgovernmentseemedmanifestlyincompetentandweak,bothat home and abroad, and—don’t forget Watergate, don’t forget the newrevelationsofFBIandCIAmisdeeds—eviltoboot.Itdidn’tusedtobethisway.Whycan’tthingsbeliketheyusedtobe?

—

The pivotal year for the energized economic rightwas 1978. Its dreamswerestarting tocometrue.Americanswerenowmoreskepticalofgovernment thanof big business. At the beginning of the year a CBS News/New York Timessurvey found that 58 percent of Americans agreed that “the Government hasgone too far in regulating business and interfering with the free enterprise

system,”upfrom42percentduringthe1960s.Acriticalmassof thepeopleelected to run thegovernmenthadalsobeen

persuaded togivebigbusinesswhat itwanted.Democratsheld thepresidencyanda two-to-oneHousemajorityandahistoricsixty-two-seatSenatemajority.Yet in early 1978, a bill to create a new consumer protection agency wasdefeated in the House because 101 Democrats voted against it, including amajorityoftheDemocraticfreshmen,thanksinlargeparttolobbyingbyCEOsfromtheBusinessRoundtable.

And1978wasalsoa tipping-pointyear in theeconomicright’scrusadetopersuade people that because government now sucked, all taxes paid to allgovernmentsbyeveryone,nomatterhowwealthy,werewaytoohighandalsosucked.TheoverwhelminglyDemocraticCongressoverwhelminglypassedandtheDemocraticpresident signed into lawahuge reduction in taxeson incomefrom selling stocks, capital gains—a definitive turn towardmaking extra-surethe rich got richer faster. Just five years earlier, when he was governor ofCalifornia,RonaldReaganhadpushedaballotinitiativetocutandpermanentlylimit various state and local taxes; it was decisively defeated. In 1978Proposition13,aCaliforniastateconstitutionalamendmenttocutpropertytaxesbymorethanhalfandpermanentlylimitincreases,wasdecisivelyapproved.

—

Carterwaselectedasthesweet,honestanti-Nixon.Ironically,therapidzeitgeistshift of the 1970smeant that after a Republicanwho’d governed as a liberal,certainlybythestandardseversince,hisimmediatesuccessorgovernedas“themostconservativeDemocraticPresidentsinceGroverCleveland,”according totheliberalhistorianArthurSchlesinger,Jr.Butconservativesweren’tbuyingit,anymorethanliberalshadboughtNixon’sliberalism.Bythesummerof1979,even though he’d presided over no disasters (yet), only about 30 percent ofpeople told pollsters they approved of the job the president was doing, fewerthanforanypostwarpresidentsofarexceptNixoninhisfinalWatergateyear.

So how did Carter respond? By canceling a big televised Fourth of JulyOvalOfficeaddressatthelastminuteandspendingthenexttendayswritinganewone.Hiscalltoactionwasausterity,reducingouruseofimportedoil—notforenvironmentalreasonsbutbecauseoilhadgottensoexpensive.Thespeech,however, was like a scene from a remake ofMr. Smith Goes to Washingtonwritten by and starringWallace Shawn. Carter spent the first two-thirds on a

half-hour jeremiad about America’s “crisis of confidence,” wondering “whyhavewenotbeenabletogettogetherasanation,”bewailing“thegrowingdoubtabout themeaningofourown lives”and“a systemofgovernment that seemsincapable of action”—but it’s worse than that, he said, because “all thelegislation in theworld can’t fixwhat’swrongwithAmerica.”After this dirediagnosis,heofferednocureexceptavaguewavebacktothewonderfulpast—somehow restoring “faith in each other” by relying on “all the lessons of ourheritage”—and then fired half his cabinet. Because he privately referred toAmerica’s malaise as he’d prepared the speech—“the President will try totransfer the wide dissatisfaction with his own performance into a ‘nationalmalaise,’ ” the Republican ex-speechwriter Safire previewed in his Timescolumn forty-eight hours beforehand—journalists afterward named it “themalaisespeech,”andthatstuck.Thepresidentcontinuedwithscoldingjeremiadsfor therestofhis term,suchasoneabouthighinflationinwhichheremindedAmericansofthe“discipline”thattheyneededtostartexercisingandthe“pain”and“painfulsteps”they’dberequiredtosuffer.*1

Americanswanted to feela joltofold-fashionednationalsolidarity,of thekindtheyrememberedorimaginedfeelingbeforethelate1960s,notmerelyberemindedbyParsonCartertheyweren’tfeelingitanymore.Oneofthepointsofthe1970spivottowardtheolddayswastofeelhappieraboutbeingAmericans—HappyDayswasthenameoftheTVshow—becauseVietnamandtherestofthe 1960s had made so many people feel ambivalent or worse. Carter wasunwilling or unable to indulge the manic performative patriotism that wasbecomingobligatoryforAmericanpoliticiansinthe1970s.

—

Inmanysenses,America’s1970swerenotarepudiationbutanextensionofthelate 1960s. The new norms and habits of mind spread and scaled, becameentrenched,andnolongerseemedremarkablynew.Femaleandnonwhitepeoplewere treatedmore equally.The anti-Establishment subjectivity and freedom toignore experts and believe in make-believe that exploded in the ’60s wasnormalized and spread during the ’70s and beyond. Freedoms of religion andspeech continued to be exercised extravagantly. The signifiers of bohemiannonconformity—long hair, drug use, casual sex, casual clothes, rockmusic—became ubiquitous, standard, mainstream. A single two-year period in themid-’70sseemslikeahingemomentinthisregard:theVietnamWarended,the

oldestbabyboomersturnedthirty,theyoungestbabyboomersenteredpuberty,Rolling Stone moved from a hippie dump in San Francisco to a fancyEstablishmentbuilding inmidtownManhattan, thenewpresidentwasaDylanfan, Saturday Night Live went on the air, the Apple II was invented, andMicrosoftwasfounded.

In retrospect, Milton Friedman’s 1970 manifesto on behalf of shamelessgreedamountedtoapreliminaryofferbythephilosopher-kingoftheeconomicright to forge a grand bargain with the cultural left. Both sides could findcommon ground concerning ultra-individualism and mistrust of government.And by the end of the 1970s, only the formalities remained to execute theagreement. Going forward, themasseswould be permitted as never before toindulge their hedonistic and self-expressive impulses.And capitalists in returnwould also be unshackled, free to indulge their own animal spiritswith fewerand fewer fetters in the forms of regulation, taxes, or social opprobrium. “Doyour own thing” is not necessarily so different from“everyman for himself.”Thatcouldmeancalling itquitsonamarriagemorequickly—thedivorce ratedoubledinthe1970s—oroptingoutofmarriagealtogether,orsmokingweed,orwearing blue jeans every day, or refusing to agree to gun regulation—or richpeople paying themselves as much as they wanted, or banks misleadingborrowersandspeculatingrecklessly.Deal?Deal.

So around when TomWolfe named it theMe Decade in 1976, the newhyperselfishness expanded beyond personal vanity and self-absorption andextremereligiontoencompassthepoliticaleconomyaswell.Andindispensableto thatwas the oneway theAmerican sensibility definitely changed after the1960s:nostalgiabecameamania.WithsomanyAmericanssocharmedbythecultural past in somanyways, itwas easier to persuade them that restoring aversion of the economic past would somehow make them happier—the pastwhenthefederalgovernmentdidn’tgiveawaysomuchtotheundeservingpoorandfoughtwarstheydidn’tlose.

Thegreatpoliticalopportunityattheendofthe1970swastoplaytotheMeDecade’s narcissism by using nostalgia—cynically, smoothly, theatrically—tocut through the despondency.A newmajority ofAmericanswere ready to beimpressedbyapresidentwhoconvincinglyandcomfortinglypromised to leadthemintoanAmericanfutureresemblingtheAmericanpast.Comfortwaskey.Sincetheearly1960s,theconservatives’politicalharnessingofbacklashagainstkindly liberalismhadbeenunsmilingandscary,all ferociouscontempt.That’swhyBarryGoldwater lost in a landslide,whyGeorgeWallacewas a national

pariah,whygrimRichardNixonwassmartenoughnoteventotrytomaketheright-wing economic case. A reframing was required. Instead of emphasizingconservativedisgustwiththenew,somebodyhadtoserveupdelicious-lookinggobsofthebeautifulpast.

Ronald Reagan was an ideal figure to take advantage of the moment ineveryconceivableway.

Hedidn’tjusttalkaboutthegoodolddays,hesteppedrightoutofthem,ascheerful and easy to like as his genius palWalt Disney’smake-believeMainStreetUSA.ReaganwasanavuncularartifactofHollywood’sgoldenage,sixty-eight when he announced in 1979 but a very modern American kind of old,sunny and ruddy and energetic and fun, riding the horse, wearing the jeans,doingphoto-opchoresaroundhisfancyCaliforniaranch.*2Foryearshe’dbeenpoppinguponTVinoldmoviesandanoldTVserieshehosted,playinggenericgood guys and war fighters from various old days. He was familiar, acharismatic celebrity (like Jack Kennedy) but never such a star that voterscouldn’t easily accept him in this new role, an old-fashioned midcenturyAmericanTVdadwhowasn’taweenieoratooloracrooklikehisimmediatepredecessors.LongbeforeDadJokesbecameameme,Reaganwasachucklingvirtuoso of the formwho put a fun candy coating on right-wing propaganda:“TheninemostterrifyingwordsintheEnglishlanguage,”helovedsaying,“are‘I’mfromthegovernmentandI’mheretohelp.’ ”

He was also a twinkly quasi-Christian, unlike his authentically Christiansermonizing predecessor. Reagan appealed to America’s newly extreme andpoliticizedProtestants,repeatedlyaffirminghisbeliefintheEndTimesandtheSecondComing.ButhedidthatwithoutanyofhisMoralMajorityallies’angrynostalgia for the old days,which alienated other voters. American Protestantswereundergoingtheirownrapidandextremetheologicalmakeover,fromaboutathirdbelongingtoevangelicalchurchesintheearly1970sto60percentbythemid-1980s,andhewastheidealpoliticalrecruiterforbindingthemtotherebornpartyoftheold-fashionedhard-coreeconomicright.

But in addition to being in sync with the new post-1960s conditions—extreme individualism, extreme religious belief, a sweeping embrace ofnostalgia—Ronald Reagan also found himself at the convergence of threelonger-termhistoricaltrends.Andhepossessedtheperfectcombinationofskillsandtemperamenttotakepoliticaladvantageofthoseaswell.

The first was the general national hankering for friendly familiarity and

calmfollowing the frenziedcirca-1970 finaleof thecenturyofnonstopnew, aconservative reaction that wasmuchmore about culture and psychology thaneconomics.

The second was that the natural evolution of the political economy hadreached a critical point. Forty years after the cascading flood of change thatgushedforthduringthe1930s,theNewDealhadlostitspropulsivepowerasitwidenedintoabigboringAmericanreservoironwhicheveryonedependedbutlately took for granted or held in contempt.That finally gave theNewDeal’senemies their chance to undo asmuch of it as they could. In this effort, theyexploited another definitive late-1960s change.Reaganwas a conservative butwassofarrighthecameacrossasarenegade.“Theoneunifyingthingaboutthebaby boomers,” a Republican strategist told a reporter back then about thatyounger generation, “is that they are anti-Establishment and anti-institution,”and“theReaganappealistopeoplewhodon’tgofortheEstablishmentandforbiginstitutions.”

Thethirdlong-termhistoricaltrendwastheevolutionofmodernmediaandcelebrity from words to pure images. Thirty years into the TV age, showbusiness and presidential politics became so intertwined that Americans werereadytoelectaprofessionalentertainer-in-chief.RonaldReagan’sjobfromthe1930s through themid-1960shadbeen toperform forcameras, recitingwordswritten by other people, so cynics are apt to look no further than that for anexplanation of his subsequent political success—good-looking TV dummy,stringspulledbyright-wingpuppet-masters.Butthat’snotcorrect.

Reagan was no intellectual, but he’d always been a cheerful, politicallyengaged ideologue, and by the time he ran for office, he was more fluent inpoliticaleconomicsthanmostpoliticians.Atagethirty-five,aftermorphingfromsincere left-winger to sincere anti-Communist liberal, he continued makingpoliticaladsdecryingcorporations’“biggerandbiggerprofits”andRepublicantaxcutsfor“thehigherincomebracketsalone,”andherepeatedlygotreelectedpresident of his show business union, the ScreenActorsGuild. But before hewas fifty, after reading books like Hayek’s libertarianmanifestoThe Road toSerfdom and giving hundreds of speeches a year as GE’s $1 million–a–yeartravelingambassador,he’dturnedintoasincereright-winger.

Way before the liberal 1960s, Reagan was a Milton Friedmanite givingspeechesaboutthe“stultifyinghandofgovernmentregulationandinterference,”the “little intellectual elite in a far-distant capital” that presumed to “plan our

livesforus,”and—remarkablyright-wing—“theimmoralityanddiscriminationof theprogressive tax.”Then in the fall of1964, thereonNBC inprime timewasthestaroftheweeklyWesternseriesDeathValleyDays,butnowinasuitandtie,nominallyendorsinghispalBarryGoldwater—thiswasthehalf-houradthecampaigndidrunnationwide—butinfactintroducinghimselftoAmericaasapoliticalfigure.Becausehewasn’trunningforanythingyet,hewasfreetobeblunt, even extreme—in favor of letting the well-to-do opt out of SocialSecurity, declaring that “government does nothing as well…as the privatesector,”warningagainstMedicareasproofthat“itdoesn’trequireexpropriationorconfiscationofprivatepropertyorbusinesstoimposesocialismonapeople.”Oneweek after his networkTV talk, voters repudiated that ultra-conservatismdecisively—for now. But with Goldwater done, the right had a new avatar,anotherhorseback-riding, fifty-something southwesternerwhowasn’t too sternorscary.

And when he ran for president in 1979 and 1980, Reagan suggested hisadministration would resemble those of beloved dead Democrats, fondlyalludingtoFDRandTrumanandJFK.Itwasnostalgiaforoldheroesandforhisownyoungerdays—probablysincerebutalsowellplayedatatimewhenvoters’ownnostalgicyearningshadbecomeall-embracing.Asheambledbrisklytothepresidency, Reagan’s ultra-conservative agenda for the political economywascloakedbehindanold-timey,almostnonpartisanscrim.

“Extremismindefenseoflibertyisnovice,”BarryGoldwaterhadfamouslysaid inhis speechaccepting theRepublicannomination.Heowned it and lost.Asthe1980electioncyclegotunderway,Goldwatermarveledinhisdiaryaboutthe normalization of the hard right since then,whichwas about to permit hisfellowtravelertobeelectedpresident.“Itisinterestingtometowatchliberals,moderatesandconservativesfightingeachothertoseewhocancomeoutontopthequickestagainstthosemattersthatItalkedsoferventlyandsomuchaboutin1964”—againstregulationandunionsandtaxesandsharingmoreofthewealth,against government. “Almost every one of the principles I advocated in 1964havebecomethegospelofthewholespreadofthespectrumofpolitics.”

Infact,MiltonFriedmanthoughtGoldwaterhadself-sacrificiallyfoughtthenecessaryopeningskirmishforthelongwarthatheandtherestoftheeconomicrightandbigbusinessseriouslylaunchedinthe1970sandwon.“IdonotbelieveReaganwouldhavebeenelectedin1980,”Friedmansaidduringhispresidency,

ifGoldwaterhadnotcarriedouthiscampaignin1964.You’vegotsetsofpoliticalideasandvaluesthattakealongtimetodevelopandhavean enormous momentum. It takes a long time to turn them around.Goldwater was enormously important in providing an impetus to thesubsequentmoveawayfromNewDealideas.

*1Onitseditorialaboutthisspeech,TheBostonGlobeaccidentallyandinfamouslyprintedajokeheadline—MUSHFROMTHEWIMP.*2Inadditiontobeingtheoldestpresidentuntilrecently,hewasthefirsttohavebeendivorced—justtherightdashoflouchetosuggestthathisconservatismwasn’ttheunpleasantold-fashionedjudgmentalkind.

D uringmy first visit toWashington,D.C., in June 1972—on the veryeveningoftheWatergatebreak-in,asithappened—amodyoungDepartmentofEducation bureaucrat informedme over dinner that the liberal political era inAmerica was ending. As a seventeen-year-old fresh from Nebraska lookingforward to wearing my MCGOVERN FOR PRESIDENT button to a White Housereception for a hundred new high school graduateswithVice President SpiroAgnewthenextday,thiswasashockingrevelation.

Theguyturnedouttoberight,ofcourse.AndwhenIstartedcollege,Isawfirsthand that theyouthquakeandstudentmovementandgreeningofAmerica,everything I’d spent the past few years getting stoked about, was palpably,rapidly ending.TheU.S.war inVietnamwaswinding down and nobodywasgetting drafted, so fighting theMan started to seemmore like a pose than anauthenticpassion. Iwas still politically liberal, but theoverwhelming focusofmycollegeyearswasbeingonthestaffofTheHarvardLampoon.ThehighlightofmysophomoreyearwasapublicLampoonroastofandraucousprivatedinnerwith the right-wing icon JohnWayne, who arrived at our headquarters in anarmored personnel carrier a year before the U.S. surrender in Vietnam. Mysenior year I volunteered for the 1976 presidential campaign of Democraticsenator Fred Harris, an economic populist from Oklahoma whose campaigncatchphrases included“Theissueisprivilege”and“Taketherichoffwelfare.”He’d been the one member of the Senate to vote against confirming LewisPowell to the Supreme Court. My senior thesis argued that more and more

white-collar jobs, thanks in part to technology,were apt to becomemore andmore proletarian, and it discussedwhether workers in such professionsmightfollowtheleadoffederalairtrafficcontrollers,who’drecentlyunionized.

Iwasn’tromanticorenthusiasticaboutunionsthewayliberalsusedtobe.The basic college-educated-liberal attitude toward unions was evolving fromsolidarity to indifference to suspicion, the result of a crackup at that verymoment of the old New Deal political coalition. The antiwar movement andcounterculture, coming right after the successful civil rights movement, hadgenerated intense mutual contempt between the two main kinds of whiteDemocrats,members of theworking class and the expandingNewClass. Thetelevised beatings by Chicago police of protesters outside the Democraticconvention in 1968—beatings encouraged by Mayor Richard Daley, theprincipalnationalwhite-working-classDemocraticpowerbroker—wasthemostspectacularearlyepisodeinthecrackup.Butalesser-knowninstancetwoyearslater in New York City was an even more perfectly focused display of thatcultural-politicalfissureinitsearlystages.

Itwas1970,acoolMaymorninginNewYorkCity.Twomonthsearlierasquadofyoungleft-wingbomb-makershadaccidentallyblownthemselvesupinaGreenwichVillagetownhouseownedbytheircomrade’sdad,anadexecutivewho’dbeenvacationingonSt.Kitts.And inanother twomonthsJoe,amovieabout a factoryworkerwho hates liberals and teams upwith aManhattan adexecutive to massacre hippie communards, would become a big hit. On theMondayofthatweekinMay,NationalGuardtroopsatKentStateUniversityinOhiohadshotthirteenstudentsinandaroundanantiwarprotest,killingfourofthem. So that Friday in lowerManhattan onWall Street, around the statue ofGeorgeWashingtoninfrontoftheFederalHallNationalMemorial,athousandpeople,mostlystudents,gatheredforanantiwarprotestandmemorialvigil.Notfar away atCityHall, theAmerican flag hadbeen lowered to half-mast.NewYorkpolicewereinpositionaroundthedemonstration.

Suddenly a couple of hundred union construction workers, a lot of themwearing hard hats and carrying tools, swarmed into the crowded intersection,chantingAll the way,U.S.A. andLove it or leave it. “Theworkers,marchingbehind a cluster ofAmerican flags, swept policemen aside andmoved on thestudents,”accordingtotheTimesaccount.Theybeatupscoresofprotestersaswellasrandompassersby,kickedthem,bashedthemwithhardhats,andstruckthemwithcrowbarsandpliers.Theattackwasorganizedby the leadersof theworkers’union;aWallStreetexecutivetoldtheTimeshe’dwatched“twomen

in gray suits and gray hats ‘directing the construction workers with handmotions.’ ”Thenthemobmovednorth,wheresomesmashedthewindowsofacollegebuildingandpulleddownandburnedapeacebanner.Acrossthestreet,othersburst intoCityHallandraised the loweredflag.Afteracityofficial re-loweredit,angryworkersbulliedadeputymayorintoraisingitagain.

The Hard Hat Riot got extensive national press attention—as a kid inNebraska,IwatchedfilmofitonTVandreadaboutitinTime.Plastichardhatsbecameanationalistantiliberalicon.AndunionworkersinNewYorkCitykeptatit,marchinginthestreetsdayafterdayfornearlytwoweeks,“vaultingpolicelinestochasethosewhoraisedtheirfingersinthe‘V’peacesalute.”Themayorhadcondemnedtheinitialriot,whichmadehim—JohnLindsay,handsomeprep-schoolYaleWASP,aliberalRepublicanforwhom“limousineliberal”hadbeencoinedoneyearearlier—anaturaltargetforthemarchingworkers.Theycarried“signs calling the mayor a rat, a commie rat, a faggot, a leftist, an idiot, aneurotic, an anarchist and a traitor,” a news story reported. (The constructionworkers’ union was already in a fight with Lindsay for his executive orderrequiring them to increase black andHispanicmembership.)Watching a final100,000-personantiprotesterprotestmarchinManhattanthathadbeenofficiallyorganizedby theunion,aBrooklyncollegekid tolda reporter, “I’mscared. Ifthisiswhattheclassstruggleisallabout,there’ssomethingwrong.”

Beginning right then, in fact, the suspicion and contempt between less-educatedwhitepeopleandtheliberalwhitebourgeoisiewaswhattheAmericanclassstrugglewasmostvisiblyandconsciouslyabout.Anditwoulddefineourpolitics as the economy was reshaped to do better than ever for yuppies andworseandworsefortheproles,regardlessoftheirideologiesandculturaltastes.

During the 1960s, liberals had started falling out of lovewith unions forreasonsmoredirectlyrelatedtothepoliticaleconomy.Itwasanothersideeffectoftriumphalist liberalcomplacency,howAmericansingeneralweretakingforgrantedtheprogressandprosperitythattheNewDealhadhelpedmakepossible.Sure, back in the day unions had been an essential countervailing force tobusiness, but now—having won forty-hour weeks, good healthcare, goodpensions,autoworkersalariesof$75,000(in2020dollars),OSHA,theEEOC—organized labor was victorious, powerful, the Establishment. “These powerfulinstitutions,”theformermachinistIrvingKristolastutelywroteatthebeginningof1970,justbeforepubliclymovingfullright,were“inexorablybeingdrainedof meaning, and therefore of legitimacy.” As a result, “trade unionism hasbecomethatmostdangerousofsocialphenomena:aboringtopic,”and“noneof

theyoungerreportersisinterestedinspendingsomuchtimeinthecompanyoftradeunionofficials.”

Apartfromorganizedlabor’sapparentlypermanentholdondecisivepoweratthetime,anotherreasonpeoplelikemefoundunionskindofboringwasthataunionized jobwasalmostbydefinitionaboring job.WhenIstartedworkasawriter at Time in 1981, I joined the union, the Newspaper Guild, but IunderstoodthateverythingIcaredaboutinthatjob—goodassignments,decentsalaryincreases, titularhonorifics—wouldbeentirelyatmyeditors’discretion,not a function of union rules.*1 A union? Sure, fine. But I was talent. I wascreative. I was an individual.*2 College graduates tend to want to think ofthemselvesthatway,youngeronesallthemore,youngeronesstartingwithbabyboomersthemost.Andtheintensified,all-encompassingindividualismthatblewupduringthe1960sandthencontinued—Idomything,andyoudoyourthing.Iam not in this world to live up to your expectations—wasn’t a mindset ortemperament that necessarily reinforced feelings of solidarity with fellowworkersorromanticfeelingsaboutunions.

Whathappenedwithorganized labor in journalismduring the1970s is anexcellent illustration of those early days of the deepening, widening fracturebetween upper-middle-class and lower-middle-class (white) Americans. Itencompassesboththeculturalsplit,yuppiesversusyahoos,andtheintroductionoftransformativetechnologyintheworkplace.

Between the publication of the Pentagon Papers in 1971 and the end ofWatergate in 1974, The Washington Post became a celebrated nationalinstitution, sexy liberalism incarnate. Following immediately on those twoheroicachievementswasanothermilestoneepisode,neitherverycelebratednorheroic but likewise emblematic of the moment. In the spring of 1974, thejournalistsofthePostwentoutonstrike—bumblingly.Theydidn’tevenaskthepaper’sblue-collarunionstojointhem,theyrefusedtheirownNewspaperGuildleaders’requesttowalkapicketline,thepapercontinuedpublishing,andaftertwoweekstheygaveupandacceptedmanagement’soffer.

It was a generation before websites and browsers, universal PCs andcellphones, thirty years before print dailies entered their death spiral, buttechnologywasalreadychangingnewspapersinabigway—themanufacturingpart of the operation. Owners were eliminating typographers, who operatedobsolete,elephantineBrazil–meets–WillieWonkaLinotypemachinesthatturnedmolten lead intoblocksof type,and theyalsowanted topayfewerworkers to

operate the printing presses. A large majority of the Post’s two thousandemployees were those blue-collar guys, and a large majority of them weresuddenlyredundant.In1975thetwohundredpressmenwouldn’tcometotermsandwentonstrike,andtheotherblue-collarunionsatthePostwentonstrikeinsolidarity,asunionsaresupposedtodo.Ontheirwayout,someofthepressmensabotaged some of the presses, a major strategic error. Quite a few of thenonunionstrikebreakerswhommanagementhiredtoreplacethe(white)strikerswereblack,abrilliantstrategicdecision.

And absolutely key to how it played out was the behavior of thePost’sjournalists.JustastherecentexposureofthesecretPentagonreportonVietnamand Nixon’s crimes had been game-changing work by journalists with theessential support of management, the crushing of the strike and pressmen’sunion, also game-changing, was the work of management with the essentialsupportofjournalists.

Two-thirdsofthePost’sunionizededitorialemployeesdidn’tstopworkingatall,andamajorityvotedagainandagainagainststrikinginsolidaritywiththepressmen. “What I findominous is that a number ofGuildpeople don’t thinktheyhavecommoncausewithcraftsmen,”aPostjournalisttoldareporteratthetime. “They feel professionally superior to guys with dirt under theirfingernails.”Ataguildmeeting,aPostreporterreferredtothestrikingpressmenas“slack-jawedcretins.”Fourweeksintothefive-monthstrike,aTimesarticlereportedthat“ifaPostGuildmemberisaskedwhyheorsheisnotsupportingthestrike,”many“say theydonotsee themselvesasordinaryworkingpeople.One said, ‘We go to the same parties as management. We know Kissinger,too.’ ”Andwhile probably none of the pressmen knew the secretary of state,their averagepaywas the equivalentof$111,000, about asmuchas reporters,whichistheexcuseoneofthepaper’sreportersgaveforcrossingthepicketlinefrom day one. “If they got slave wages, I’d be out on the line myself,” saidthirty-two-year-old Bob Woodward, co-author of the second-best-sellingnonfictionbookofthepreviousyear.

The strike ended just before the release of the film adaptation ofAll thePresident’sMen, a fictionalization that only intensified the love of Americanliberals and journalists for The Washington Post, even though the Postpressroomwas about to become nonunion andmembership in the journalists’union, theGuild,strictlyoptional.AsaPostcolumnistwrotebackthen inTheNew Republic, “The pressmen’s strike was crushed with methods and with aseveritythatthepressingeneralorthePostinparticularwouldnotbelikelyto

regard as acceptable from the owners of steel mills. Yet because it was anewspapermanagementthatbrokethestrike,noothernewspaperhastoucheditproperly,orevenwhimperedaprotest.”

WhenIarrivedatTimeafewyearslater,Iwentoutofmywaytoproducecopythemodernway—abandoningmyofficeSelectrictouseoneofthespecialcomputer terminalscrammedintoaspecial little room,holedupwitha fewofthe other young writers. That technology presently enabled the company toeliminate the jobs of the people downstairswhowere employed to retype ourstories.AtthetimeIprobablyshrugged,likethenewspaperreporterswhohadn’tcaredmuchabouttheredundantLinotypeoperatorsandpressmen.

IfI’dbeenoneofthoseunionizedcraftworkerswhowereabandonedbymyunionizedjournalistcolleaguesforty-fiveyearsago,Ithinkthatduringtheselastfifteenyears,watching journalists getwashed awayanddrownedby the latestwaveoftechnology-inducedchange,I’dhavefeltsomeschadenfreude.

It’saclose-to-homeexampleof thatspiralofmistrustandresentment thatwasn’t only cultural, hard hats versus hippies, but about earning a living, thechangingpoliticaleconomy.Andwhathappenedatnewspapers(andmagazines)back thenalsohaddisproportionate impacton thiswholehistorybecauseoncejournalistswereactivelyambivalentaboutorganizedlabor,thatdisenchantmentspreadmore contagiously than if it had just been randomyoung professionalsdisrespectingandbad-mouthingunions.Newsstoriesaboutlabornowtendedtobe framed thisway rather than thatwayorwerenotcoveredat all.Thus, likeDemocratic politicians inWashington at the same time,media people becameenablers of the national change in perspective from left to right concerningeconomics.

I’mnotclaimingthatlaborunionsarealwaysvirtuousoraren’tfrequentlyannoying. Parochial, shortsighted, and other kinds of misguided, with a richhistoryofracism,sexism,andcorruption—constructyourowncritique.Iheardeverycriticismgrowingupastheoppositeofared-diaperbaby;myfatherwasalawyerwhosepracticewasnegotiatingwithunionsonbehalfofemployers.

But they or equivalent vehiclesmust exist and have serious power. It’s aquestion of achieving a decent balance, a dynamic tension and equilibriumamongthevariousplayersinthepoliticaleconomy—workersandemployersandcitizens.The balance this countrymanaged from the 1930s through the 1970sworkedandseemedfair.Thenoverthelastfewdecades,asunionsandbeliefinthe premise of organized labor weakened, big business and the wealthy took

predatoryadvantage,andthesystembecamehighlyunbalanced.It’simportanttolook hard at how liberals were variously complacent and complicit as thatunbalancinghappened.

Duringthe1930sand’40sand’50s,therighthadderidedliberalwritersandeditors as Communists’ “useful idiots,” doing soft propaganda work for theextremeleft;itlooksinretrospectasifstartinginthe1970s,alotofthem—ofus—became capitalists’ useful idiots. Indeed, that’s how the former socialistKristol foresaw the huge new cohort of college-educated liberal professionalsbeingco-optedintothesystem.“Agoodpartofthisprocessofassimilation,”headvisedconservativesandcapitalistsinthe1970s,“willbetheeducationofthis‘newclass’intheactualitiesofbusinessandeconomics—nottheirconversionto‘free enterprise’—so that they can exercise power responsibly. It will be animmenseeducational task, inwhichthebusinesscommunitycancertainlyplayanimportantrole.”

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Duringthe1960s,thedecadeofmaximumnewhereinourlandofthenew,theNewDealhadstartedtoseemold,onemorethingover thirtynot to trust.TheinstitutionalizedpoliticalleftthathadgrownoutofthaterawasrenamedtheOldLeft,because theyoungergeneration—insomecasesmoreradical, inallcasesgroovier—wascalledtheNewLeft.AsI’vesaid,at themomenttherevolutionfailed and voters rejected McGovernite ultra-liberalism, Americans of everycasteweregivingthemselvesover toromanticizingthepast inpopcultureandhigh art.The smart setswere reviving and recyclingold forms and styles, notjust returning decoration to architecture but melody to classical music andhumanfigurestofineart—allofwhichfeltcharminglyoldbutalsounfamiliar,fresh,excitingly…new.

In politics and public policy too, the past was being selectivelyrediscovered. Fancy-college-educated liberals, who like artists and culturalgatekeepers still defined themselves by their openness to the new andchallenging, chose not to return to the tired FDR liberalism of the oldergenerationswith whom they’d been fighting an internecinewar for a decade.Rather,theunfamiliarthingstheydustedoffwerepiecesoftheoldconservativecritiqueofNewDealliberalism—whichwasabittransgressive,thereforecool.TheybecametheNewDemocrats,asopposedtotheoldNewDealDemocrats,thenewnewversustheoldnew.

FredDuttonwasaprominentprofessionalDemocratwho’dworked in theKennedy White House, then for Vice President Humphrey, then for BobbyKennedy’spresidentialcampaignin1968.Inthesummerof1971,thismiddle-aged Establishment liberal published a very ahead-of-the-curve book calledChangingSourcesofPower thatpredictedandadvocated foranewspeciesofliberalismgearedtowardwhite-collarworkersandespeciallyyouth.Hepraisedthe baby boomers for providing “a severe psychic jolt for traditional liberals,who long ago came to believe that they had an almost exclusive stewardshipover theAmericanconscience.” In the1970s,hesaid,“thegreatestshift is thecurrent tipping of the balance of political power from the economic to thepsychological,fromthestomachandpocketbooktothepsyche.”Inotherwords,more or less: forget political economics, forget the blue-collar guys, forgetunions,it’sallaboutthecollegekids,we’reenteringtheMeDecade.

Oneafternoonthatsamesummer,1971,atagesixteen,Iwasamong100or150 people in Omaha’s big central park watching Senator GeorgeMcGoverndeliver a speech. He was the most liberal, most antiwar candidate for theDemocratic nomination. I remember nothing of what he said, because I wasfurtively inchingtowardandtryingtooverhear the twomenstandingnearme:thirty-four-year-old Warren Beatty and McGovern’s thirty-four-year-oldcampaign director,GaryHart,who I also recognized because Iwas a politicsgeekandaMcGovernvolunteer.

McGovern had led the Democratic Party commission that had justdemocratized the process of nominating presidential candidates, making it amatter ofwinning citizens’ votes in primaries and public caucuses rather thandelegates’votesatclosedpartyconventions.Whichmeant thatfromthenonitwasmuchharderforlaborunionstoinfluencetheDemocrats’choiceofnominee—which in turn enabledHart tohelpwin the1972nomination for thehippie-loving antiwar women’s lib acid amnesty abortion candidate whom the blue-collarunionmemberstendedtodespise.

Immediately after the 1972wipeout,Hart launched his own first politicalcandidacy,foraU.S.SenateseatinColorado.TheVietnamWaranditsculturalwaves had made leaders and members of unions dislikeMcGovern, but as achildoftheDepressionandformerhistoryprofessor,hehadtotallybeenontheirside concerning thewhole point of unions—maximizingworker power versuscorporatepowerintheeconomy.Hart,ontheotherhand,wasatoddswiththeworking class onboth counts, a cool youngYaliewhobarelypretended to betheireconomically.

“WearenotabunchoflittleHubertHumphreys,”hesaidduringhis1974Senate campaign, referring to his party’s 1968 presidential candidate, whomMcGovernhadbeatenforthenominationin1972.VicePresidentHumphreyhadepitomized the compromised passé liberalism hated by the New Left forsupporting theVietnamWar, soHartwasplaying to that accumulated illwill.But in fact, ideologically,hehad jumpedovernight fromthe leftofHumphreyandcompanytotheirright.

Hart’s1974Senatecampaignstumpspeechwasactuallycalled“TheEndoftheNewDeal.”Hedisparagedliberalswhothoughtthat“if thereisaproblem,[you] create an agency and throwmoney at the problem,” who “clung to theRooseveltmodellongafteritceasedtorelatetoreality”—andtothatheaddedsomesexistshade,callingthem“theEleanorRooseveltwing”oftheparty.“Theballyhooed War on Poverty” of the 1960s, the Democratic programs thatincludedMedicaidandfoodstamps,“succeededonlyinraisingtheexpectations,but not the living conditions, of the poor,” he said inaccurately. “This nationdesperately needs a new breed of thinkers and doers who will question oldpremisesanddisregardoldalliances.”Inthatfirstpost-Watergateelection,Hartbeat theRepublican incumbentbya landslideandbecametheverymodelofamodernmajorDemocrat.

Ifeltanaffinityforthisnew,youthy,college-educatedpoliticalwing—asIfeltatthetimeforpostmodernarchitectureandNewWavemusic.Iwasinmytwenties, so partly it was the sheer hubris of the young, rejecting the oldergeneration because itwas old.Hart’s Senate campaign sloganwas “They hadtheirturn.Nowit’sourturn.”

Butmore than that, Iactually,earnestlyconsideredmyselfanewbreedofthinkerquestioningoldpremisesanddisregardingoldalliances.Iwantedtobecounterintuitive,contrarian,evidence-based,readyto lookateverythingafresh.Likesomanyinmygeneration,IlearnedfromthewarinVietnamandthewaron drugs to mistrust the government, so maybe in other ways it had gottenbloatedandinefficient,maybenitpickyregulationsweremakingittoohardtodobusiness,maybe theantitrust approach invented inmygreat-grandparents’daywas outmoded. Andweren’t labor unions retrograde and lumbering in lots ofways?Why, for instance, couldn’twe imaginenew formsofworker solidarityand security? In the late 1970s, when the government was about to bail outChrysler and a freshman Democratic senator, Paul Tsongas, proposedguaranteeing theworkers$1.1billion in theformofChryslerstockrather than

wageincreases,whydidn’tthatmakesense?Andthusanewbuzzword thatspread likemadduring the1970sand’80s

throughartandculture,postmodernism,acquiredayoungersiblinginAmericanpolitics—neoliberalism.Backinthe1970sand’80s,atleastintheUnitedStates,neoliberalism wasn’t yet what it is in the twenty-first century, leftists’ all-encompassingderogatorytermforanythingtotherightofnationalized-industrysocialism.*3Rather,itwasatermproudlyself-appliedbyacertainkindofwonk.Their wellspring was an intensely reportorial little magazine called TheWashington Monthly founded in 1969 and run by a cofounder of the PeaceCorps,CharliePeters. Ithadacirculationof less than40,000in the1970sandearly ’80swhenIsubscribed,butduring thatpivotalpoliticalperiod, ithadanoutsizeinfluenceinreshapingcenter-leftthoughtandpolicy.*4

All enlightened, open-minded people should “distrust all automaticresponses, liberal or conservative,” Peters said—andwho could disagree?—so“theliberalmovementhastochangeandrejecttheliberalclichésandautomaticresponsesofthepast,”suchas“theiroldhabitsofautomaticallyfavoringunionsand opposing business.” Therewas toomuch loyalty to the ideological hometeam,whichfollowedtherulesof“Don’tsayanythingbadaboutthegoodguys”because “any criticism is only likely to strengthen thehandof their enemies,”and “Don’t say anything good about the bad guys.” Peters’s new tendencyconsistedof“liberalswhodecidedtoretaintheiroldgoalswhileabandoningtheprejudicesthattheyrealizedwereblindingthemtotherealnatureofmanyofthenation’s problems” that had begun “to cripple the nation”—such as decliningproductivity and “decaying plants and infrastructure” and “inefficient andunaccountablepublicagencies.”Thenotion,certainlyamongmanywritersandthinkers if not necessarily the politicians, wasn’t to pursue centrism ormoderation for their own sakes, or cynical political triangulation between leftandright,butintellectualrigorandhonesty.

The new approach propagated rapidly. The young Washington Monthlywriter-editor Michael Kinsley took over the main weekly magazine ofWashingtonliberalism,TheNewRepublic,andtheyoungWashingtonMonthlywriter-editor Jim Fallows became one of President Carter’s speechwriters.“Thereisalegitimatemodestynowaboutinterveningintheeconomy,”saidtheyoung head of antitrust enforcement in the Carter Justice Department. “Thehard-bittenD.A.approachisn’tveryusefulandthepeople inJusticerecognizethat.”*5Soonalmosteveryup-and-comingnationalDemocraticpoliticianwasa

NewDemocrat:Hart,Tsongas,JerryBrown,BillBradley,AlGore,BobKerrey,BillClinton—allfirstelectedsenatororgovernorbetween1974and1984whentheywereintheirthirties,allabouttobecomeseriouspresidentialcandidates.

Fortwogenerations,liberalshadbeenincontrolofthegovernmentandthenewsmediaandtheculture,soitseemedasifthathegemonyaffordedthemtheluxuryof true liberalism—admittingmistakes,cuttingsomeslack for theotherside, trying new approaches. For forty-four of the previous forty-eight yearsDemocratshadcontrolledbothhousesofCongress,and theyhadalsoheld thepresidency for most of that half-century. The Harvard professor DanielMoynihan,forinstance,servedinfourstraightadministrations,twoDemocraticandtwoRepublican,beforebecominganunpredictableDemocraticsenatorfromNewYorkin1977.Allthroughthe1970s,whentheGOPhadonlyaboutathirdofSenateseats,athirdofthoseRepublicanswerebonafideliberals.Ofcoursegood-faithcompromiseandconsensusbetweenleftandrightwerepossible.

At the end of the 1970s, liberal PBS commissioned a ten-episodeFriday-nightseriesstarringMiltonFriedmancalledFreetoChoose.ItsfundersincludedGeneralMotors,GeneralMills, and PepsiCo.The executive producer said theshow,airingonthePublicBroadcastingService,wouldexplaintoviewerslikeyou“howwe’vebecomepuppetsofbiggovernment.”On the show,Friedmanexplainedwhyfederaltaxes,theFoodandDrugAdministration,publicschools,and labor unions, among other bêtes noires, were bad for America. “TheeconomiccontrolsthathaveproliferatedintheUnitedStatesinrecentdecades,”hisaccompanyingbestsellingbookasserted,“havealsoaffectedourfreedomofspeech, of press, and of religion.” Conveniently for the right, the seriespremieredinearlyJanuary1980,justbeforethefirstprimaryelectionsinwhichReaganwasoneofmanymajorRepublicancandidates.

Butdespite the liberalEstablishment’sopennessand the right’snew thinktanks and foundations and zillionaire donors, it seemed in the 1970s that theantigovernmentdiehardsandlibertarianfreaks,theMiltonFriedmanitesandAynRandiansandWallStreetJournalideologues,wouldneverreallybeallowedtorun the show. The American ideological center of gravity was plainlyundergoing a rightward shift, butwouldn’t the 1980s just turn out to be somekindofmodestcoursecorrection,likewhathappenedinthelate1940sand’50s,part of the normal endless back-and-forth pendulum swing from center-left tocenter-right?

Wehadnoidea.Almostnobodyforesawfullytheenormityofthesharpturn

America was about to take. Nobody knew that we’d keep heading in thatdirectionforhalfalifetime,thatinthelate1970sbigbusinessandthewell-to-dowereatthestartofaforty-year-pluswinningstreakattheexpenseofeveryoneelse.

Partly as a result of various kinds of liberal niceness, liberals were ill-prepared to appreciate or copewithwhatwas about to happen.The energizedeconomic rightwas led by corporations and the rich aswell as zealotswho’dbeenshutoutofrealpowerfordecades—whereasliberalsfoundzealotryvulgarand, although they’d been broadly empowered for decades, didn’t have bigmoney ridingon theoutcome.TheNewDemocratsweremore like journalistsand academics than traditional political types,more inclined to be polite thantough.Modernliberalspridedourselvesonnotbeingideologues,onentertainingallsortsofdisparatepolicyideasforimprovingtheworld,whereastheeconomicrightreallyhasonebig,simpleidea—doeverythingpossibletolettherichstayrichandgetricher.

That last difference is the crucial one.MostAmericans, even those to theleft,havebeenreluctanttosubscribefullytoMarx’sbasicbigidea,thatmodernsocietyisshapedbyanendlessstrugglebetweencapitalandlabor,ownersandworkers, the rich and powerful versus everyone else. Our special Americanreluctancetogotherehasseveraldifferentsources.We’veneverbeenaclasslesssociety,ofcourse,butatthestartwewerealotcloserthanmostoftherestoftheworld.In1830therichest1percentofAmericansreceivedlessthan10percentofall the income, justhalf theshare takenbyBritain’s richest1percentat thetime.*6SlaverymadefactoryownerslookgoodcomparedtoSouthernplantationowners,andwefoughtawartoprovethepoint.TheAmericanDream,inwhichapluckyindividualmovedupintheworldandeventurnedfromaworkerintoaboss,actuallycametrueoftenenoughtomakepeoplebelieveitmighthappentothem.Formostofacentury,theSovietUnionandtheothercountriesthatcalledthemselvesMarxistwereterribleadvertisementsforanythingfromthatlineage.For a long time, Americans did a good job using the government and othermeans—persuasion, threats, shame, honor—to level upworkers’ and citizens’sharesofmoneyandpower,andtolimitthesharestakenbybigbusinessandtherich.Asthewealthwasdistributedmoreequally,itgrewfasterthanever,whichalsodisinclinedmostpeopletothinkofAmericaasaplacerunbyaminorityofgreedy,cheatingself-dealersattheexpenseofalargemajority.

Somostliberals,likemostAmericans,preferrednottoregardcapitalistsas

categoricallyrapaciousandamoral,ortoimaginetheU.S.politicaleconomyasanever-endingclasswarinwhicheveryonemustultimatelychoosebetweentwosides. That seemed crude. They didn’t vote for Reagan, but most didn’t hatehim,certainlynotatfirst,becausein theirwaytheysharedhisdreamyfaith inthe1940sFrankCapramovievisionofAmerica. Itwasduring the1970s thatIt’saWonderfulLifewas rediscoveredandmadean icon—by liberals.And tosomedegree,mostsuccumbed,likemostAmericans,toanewformofeconomicnostalgiathatwasbeingrevivedandpopularized—thenotionthatmarketforcesarepracticallynaturalforceswithwhichwedarenottinkerortampertoomuch.Finally,upper-middle-classliberalsdidn’twanttothinkbadlyofalltheirfriendsandneighborsandclassmateswhohappenedtoworkatbanksorinrealestateorthevicinityofC-suites.

Startinginthe1970s,theFriedmanDoctrineanditsextrapolationsfreedandencouragedbusinesspeopleandtherichtogoaheadandconformtotheleft-wingcaricaturesofthem,toberapaciousandamoralwithoutshame.Indeed,theneweconomicrightevenencouragedthemtowageclasswar—explicitlyagainsttheaffluent“NewClass”of (traitorouswhite) liberalprofessionalsand the (black)“underclass,” more discretely against the (white) working class they wereenlistingaspoliticalallies.Meanwhileliberalsclungtotheirstrongpreferencetosee both sides, meet halfway, seem reasonable. Such a colossal irony: aftersocialistsandCommunistsinthe1930sandthentheNewLeftinthe1960shadtried and failed to achieve a radical class-based reordering of the Americanpoliticaleconomy,theeconomicfarrighttookitsshotatdoingthatinthe1970sandsucceededbeyondanyone’swildesthopeorfear.

*1Abumbling,ineffectualstrikebyTimeInc.’sonethousandeditorialemployees,thefirstever,hadtakenplaceafewyearsbeforeIgotthere;itsbigdemandhadbeenthatraisesbeexactlythesameforeveryoneinpercentageterms.Aftereditorsandmanagerssuccessfullyproducedthenextissuesofthemonthliesandthreeissuesoftheweekliesonschedule,thestrikersgaveup.Thebigproblem,accordingtotheheadofTime’sNewspaperGuild,wasthe“largenumberofmembersnewtotheideaofaunion,letaloneastrike.”*2I’vebeenanenthusiasticdues-payingandvotingmemberoftheWritersGuild,theunionforTVandfilmwriters,forthreedecades.*3There’salongetymologyhere.Inthe1930s,whenanti–NewDealeconomiclibertarianswerecalledliberals,astheystillareoutsidetheUnitedStates,somebecameknownas“neoliberals.”Bythe1970sthetermwasoccasionallyusedtodescribetheradicalNewLeft,thenthewonky-moderate-Democratself-definitioncameandwent,supplantedaround2000bytoday’sexpansiveeveryone-from-Milton-Friedman-to-Elizabeth-Warrenmeaning.*4Outsizeinfluencethenandnow:aquorumofitswritersandeditorsfromtheearlydaysremainbig-dealjournalistsandcommentators,includingJonathanAlter,JamesFallows,DavidIgnatius,MickeyKaus,

MichaelKinsley,NicholasLemann,JoeNocera,andWalterShapiro.OtherprominentstafffromlateryearsincludeKatherineBoo,NickConfessore,GreggEasterbrook,SuzannahLessard,JoshMarshall,JonMeacham,TimothyNoah,NicholasThompson,StevenWaldman,andBenjaminWallace-Wells.*5Asithappened,hisantitrustexperiencehadbeenentirelyinprivatepractice,representingcorporations,asanattorneyatthelawfirmofLewisPowellbeforeandafterhewrotethePowellMemoandbecameaSupremeCourtjustice.*6Bytheendofthe1970s,we’dgottenthe1percent’ssharebackdowntothategalitarianearlyAmericanlevel,butsincethenithasmorethandoubled,soU.S.economicunfairnessin2020issimilartoBritisheconomicunfairnessin1830.

B y the time theelectioncamearound in1980—after Iranians tookovertheU.S.embassyinTehranandkeptfifty-twoAmericanshostageforayear,andabriefeconomicrecessionsealedthedeal—itwasn’tabigshockwhenRonaldReagan won. But exactly what was that election’s “mandate” concerning thepoliticaleconomy?

ThecampaignhadrunaTVadwithanexcellentsupply-side-for-dummiesvoice-over.“RonaldReaganbelievesthatwhenyoutaxsomething,yougetlessofit.We’retaxingwork,savings,andinvestmentlikeneverbefore.Asaresultwehavelesswork,lesssavings,andlessinvested.”See,ifyoupaylessintaxes—and only if you pay less in taxes—America’s economic prosperity andstabilitywillbe restored. It’snot selfishness, it’spatriotism. It’snot sleightofhand,orwhatReagan’svicepresidenthadderidedduringhisprimarycampaignagainst him as “voodoo economics.” It’s themiraculous invisible hand of themarket.

Sowhat ifmillionaireswouldstartpayinga little less too?Sowhat ifbigbusinesswasrelievedofsomeofthegovernmentredtapeeverybodyhates?Andas for cutting government programs, people understood that Reaganwas onlygoingtogetridofthethingsthatdidn’tbenefit them—allthewasteandfraud,alltheforeignaid,allthegiveawaysforallthelazybumsandwelfarequeens.

But the 1980 election was not really a popular mandate to reorient thepolitical economy permanently to give big business and the well-to-do morewealthandpower.Infact,in1980fewerthan51percentoftheelectoratevoted

forReagan;atotalof48percentvotedforthemoderateDemocratandtheliberalex-Republicanthird-partycandidateJohnAnderson.

Reagan’sreelectionoverthedullold-fashionedDemocratWalterMondalewas indeed a massive landslide, 59 to 41 percent. But look at Congress, andcomparewhathappenedstartingin1980towhathappenedstartingin1930.TheCongress elected before the Crash of 1929 consisted of large RepublicanmajoritiesinboththeHouseandSenate.Sixyearslater,duringtheDepression,DemocratscontrolledtheSenateby75to17andtheHouseby333to89.Thatwasaholy-smokesmandateonascaleunseensince.Duringtheentire1980s,ontheotherhand, themostRepublicanSenateof allwasunexceptional, 54 seatsout of 100, while the Democrats never got close to losing a majority in theHouse,andtheywonbacktheSenatein1986.

ThatmeanttwothingsforliberalsandDemocratsingeneral.Politicallyandpsychologically, theynever feltutterlyoverwhelmed, thewayRepublicans feltin the 1930s. Yes, in three presidential elections in a row during the 1980s,Democrats lost thirty-eight states. But every time they had nominated anuninspiring tool, losing twice against the exceptional, probably unbeatableRonald Reagan, and then against a moderate Republican incumbent vicepresident,GeorgeH.W.Bush.

Morefundamentally,continuingDemocraticdominanceinCongressduringthe1980smeanttheeconomicrightcouldusethefederalgovernmenttoremakethepoliticaleconomyonlytotheextentthatDemocratslet them.Asthe1980sapproached,evenliberalDemocratswerealreadycooperativelymovingright—-more skepticalofunionsandgovernmentoversightofbusiness,open to lowertaxes on the rich—sowhen the time came,Democrats definitely did let them.Too many confused the singular appeal of Ronald Reagan personally withmassive popular approval of pro-business, pro-rich Reaganism, and theirreactionwastocower,essentiallydisavowingtheirNewDealsocialdemocraticpast.

As Reagan settled into office and became presidential, liberal dreadconcerningdomesticpolicywas reducedby thenatureofhisappointees—whomostly were, like his vice president, moderate Establishment types, normalRepublicans,notcrazies.*1 Inaddition,Democratshad taken theireyesoff theballofthepoliticaleconomyandfocusedmoreoftheirdreadofwhatthisold-schoolanti-Communistpresidentwouldorcoulddoabroad—funddeathsquadsandcounterrevolutioninCentralAmerica,upset theprecariousnuclearbalance

withtheUSSR,triggerWorldWarIII.Reagan was also very lucky very quickly in ways that made him more

popular. The very day he was inaugurated, Iran released their Americanhostages. Two months later he was shot by a movie-mad would-be youngassassin—andsurvived,unlikeanypresidentwho’deverbeenshotbefore.Thenormalhoneymoonperiodintensified.

Reagan also lucked out right awaywith themonth-to-month, year-to-yeareconomy.Assoonashe tookoffice, the tough tight-moneyregimeof thenewFederalReservechairman—who’dbeenappointedbyJimmyCarter in1979—wasfinallycoolinginflationdown.Aprovidentialglobaloilglutsuddenlyandprecipitouslydrovedownthepriceofgasolineandotherenergy.Americansfeltas ifReaganwereworkingmagic.Arecessionkicked in rightaway,ayearofpain that camewith bringing down inflation—but that timingwas also lucky,politicallybesttogetitoverasearlyaspossible.

Whiletheeconomicturmoilofthepreviousdecade—thehighinflation,thequintupling price of oil, themultiple recessions—was seriously unpleasant, asI’ve said, it didn’t come close to Depression-level cataclysm. Throughout the1970s, however, the economic right had pretended otherwise. “The UnitedStates,”JudeWanniski’s1975articleintroducingsupply-sideeconomicsbegan,“hasbeenpassingthroughaneconomicnightmare.”Thenewpresidentstucktothatscriptinthe1980s,tellingAmericansthey’djustbarelygottenofftheroadtodystopia,andthat thebigbadfederalgovernment itselfuntil themomenthewasinauguratedhadbeentoblame.“Inthispresentcrisis,”hesaidinhisfirstinauguralspeech,“governmentisnotthesolutiontoourproblem;governmentistheproblem.”Duringhisfirstcoupleofyears,hesaidonvariousoccasionsthat“whenthisadministrationtookoffice,wefoundAmericaintheworsteconomicmesssincethedaysofFranklinRoosevelt,”withthe“governmentcareeningoutofcontrol,pushingustowardeconomiccollapse,andquiteprobably,theendofourwayoflife,”butthatalready“we’vepulledAmericabackfromthebrinkofdisaster.”Whew.

An exaggerated sense amongAmericans that they’d just barely escaped adeath spiral, along with the actual relief of an improving everyday economy,made it easier forReagan andhis comrades tomove to thenext level in theirprojectofrestructuringthepoliticaleconomyandrewritingitspremises.

—

Most of the big corporate titans had not started the 1970s as Reaganites, andevenattheendofthatfirstdecadeofintensified,systematiccorporatepoliticalactivism, their favorite candidates had been the more familiar Establishmentguys.CharlsWalker,whowasoneofthebest-connectedlobbyistsoftheeraandaformerdeputytreasurysecretary,wroteamemoearlyinthe1980campaigntothe top corporate CEOs granting his imprimatur to Reagan—another history-changingmemo to thecapitalists!A little laterheclaimed thathehad therebyclosedthedealfortheirsupport.

TheBusinessRoundtabledidn’tknowReagan,andtheytendtoidentifyhimwithright-wingpositionsandextremism.Butthepublicitythatmeandthese“moderates”areintheremakesthemfeelalotbetter.Noneofuswhostartedworkingon[thisproject]intheearly1970sthoughttheconsensuswouldcomealongthisfast.

Aspresident,Reagan immediately and totallydelivered for theCEOsandthe rest of the rich. In addition to Reagan himself, the administration officialmost important to executing on that was David Stockman. Stockman wasReagan’s director of the Office of Management and Budget (OMB), anintellectual two-term congressman in a job previously done by technocrats,economists,businessguys.HewasneitheracrazedNewDeal–hatinglibertariannor a cynical corporate lobbyist but an idealistic, old-fashioned youngconservativewhowantedasmaller,cheaperfederalgovernmentandabalancedbudget. He’d gotten into politics in 1970 as a protégé of John Anderson, themoderatewho’djustrunasathird-partycandidateagainstReagan.

Stockman didn’t entirely buy the supply-side notion—wishful fantasy ordisingenuous con?—that giant tax cuts alone would restore golden-ageAmerican prosperity. But he played ball. In the movie version of this story,you’d definitely include scenes of the winter day and night he spent in NewYork City just before he started the big Washington job with the newadministration.FirstheandformerNFLquarterbackJackKemp,afellowHouseRepublicanandtheleadingsupply-siderinCongress,visitedthebiginvestmentbanksformeetingstoreassurethem.EvenafterReaganwaselected,theheadoftheChamberofCommercecalled the firstbigsupply-sideproposal,agigantic30 percent tax cut, “amost dangerous experiment.” That day onWall Street,according toKemp, “we told themweweren’t for scaring themarket.Dave’scredibilityisextremelyimportant.”Afterreassuringthecaptainsoffinancethat

they and Reagan were not in thrall to some cabal of reckless wing nuts,StockmanandKempdroveuptowntocelebratevictoryatthegrandoldprivateclubhouse of the Century Association with the cabal of supply-side ultras—including The Wall Street Journal’s Bartley and Wanniski, Kristol, andGreenspan,whomReaganwouldappointtoruntheFederalReserve.

AsOMBdirector,Stockmanlookedforwaysthegovernmentmightspendless,apartfromreducingforeignaidandhelpforthepoor,toaccommodatethelargest tax cuts in U.S. history. For instance, he suggested saving billions byreducingtaxbreaksforbusinessandforrichpeoplewithmortgageloans,andbyincreasing fees paid by owners of private planes. The president told him no.During that first year, Stockman gave a series of interviews to the journalistWilliamGreider,whoturnedthemintoalongcoverstoryfortheAtlantic.

Whenitwaspublishedattheendof1981,thearticlegotenormousattentionbecausetheOMBdirector,who’dbeenaHarvardtheologygradstudentbeforehe got into politics, was astoundingly honest. The Reagan administration hadmanagedthatsummertoconvinceCongress,includingtheDemocraticHouse,tomaketherichestAmericans’toptaxratelowerthanithadbeenanytimeintheprevioushalf-century.Stockmanadmittedinthearticlethatthathadreallybeenthe entire point. Because politically it would’ve been “hard to sell ‘trickledown,’ ”heexplained,“thesupply-sideformulawas theonlywaytoget” that.The massive cuts were conceived cynically, he admitted, “a Trojan horse tobringdownthetoprate”onthewealthyandtaxesonbusiness.AsforLaffer’ssupply-sidetheory,GreidersaidStockmanconcededit“wasnotaneweconomictheory at all but only new language and argument to conceal a hoary oldRepublican doctrine.” In fact, Stockman told him, “Laffer sold us a bill ofgoods….Whenevertherearegreatstrainsorchangesintheeconomicsystem,ittendstogeneratecrackpottheories,whichthenfindtheirwayintothelegislativechannels.”

GreidersaidthatStockmanwasdispiritedbythe“finalfrenzyoftradingandbargaining”inwhichhe’djustparticipated—the“specialtaxconcessionsforoil-leaseholders and real-estate tax shelters, andgenerous loopholes thatvirtuallyeliminated the corporate income tax.” This was Reagan’s frontline economicmainmantalking,justninemonthsintotheadministration:

Do you realize the greed that came to the forefront? The hogs werereallyfeeding.Thegreedlevel,thelevelofopportunism,justgotoutof

control….The power of [big business and the rich] turned out to bestronger than I realized. [They]knowhow tomake themselvesheard.Theproblemis,unorganizedgroupscan’tplayinthisgame.

Stockman’sreactionmightseemdisingenuous,buttheextentandpoweroforganizedgreedwerenewinthemodernera.Inthespringof1981,threemonthsafter Reagan’s inauguration, for instance, the first sentence of a Times storyaboutlobbyists’salivatingexcitementreferredto“KStreet,wheretheequivalentofanewbranchofgovernmentisthrivingamongtheglassandsteelbuildings.”KStreetwasabouttobecomethestandardmetonymforWashington’ssuddenlyhugeandgrowinglobbyingestablishment.

So in addition to earnest liberals acting ingood faith to compromisewithconservatives,afewearnestconservativessuchasStockmanwerealsotryingtoact ingoodfaithandalsobecominguseful idiotsforbigbusinessandtherich.AnotherofthemwasMartinFeldstein,theconservativeHarvardsuperstarwhobecame the new president’s chief economic adviser—but only nominally,because Reagan ignored him. Feldstein actually hated deficits, as trueconservatives did, and called his supply-side colleagues “extremists.”Stockman’schiefeconomistattheOfficeofManagementandBudget—wholeftin1983toearnafortuneonWallStreet,thenbecomeacocaineaddictandTVpundit—said thatFeldstein “has failed atmaking the transition fromacademiceconomist to political economist.” Thatwas thirty-six-year-oldLarryKudlow,definingpoliticaleconomisttomeannotanexpertonpoliticaleconomicsbutaneconomistwilling and eager to dissemble and lie to suit his politicalmasters,thirty-fiveyearsbeforehereturnedtogovernmentworkasTrump’sdirectoroftheNationalEconomicCouncil.

—

During Reagan’s second year in office, the recession ended, and the stockmarketstartedbooming,beginningits254percentrisebytheendofthedecade—like back in the good 1960s. And inflation kept gliding down towardirrelevance—like it too used to be in the early 1960s, before everythingwentnuts.ThustheluckyReaganiteshadthewherewithaltocreateforthereelectioncampaign one of the great political advertisements of all time. It managed tomake Americans feel something like nostalgia for the present, to believe forsixtysecondsat least that thepresidenthad in threeyears returnedAmerica to

therelaxed,neighborly,wonderfulwayitusedtobe.“It’smorningagain inAmerica,” the soothingbaritonenarratormatter-of-

factly explained at the beginning, because interest rates on borrowing andinflationwerehalfwhat theywere fouryearsearlier, and just look at all thesecontentedAmericans in splendidSonomaCounty—a farmerplowinghis field,men going to work, other men raising American flags, a wedding, a familymoving into a house, a kid on his bike tossing a newspaper onto an old-fashioned porch, everybody happy, just about everybody white, not a singleblack person, so “it’smorning again inAmerica,” the narrator repeated at theend.

The adwas a perfectlymasterful distillation of the story the right told sosuccessfully all through the 1980s. They understood and managed to harnesswhat had happened over the last decade in American culture, the sweepingnostalgification, to theirdepictionof theAmericaneconomyand thereasons itseemedtobehummingagain.Everythingoldwasnewagain,yes,buttoreallywork, the message had to seem simultaneously old and new, like BruceSpringsteen and brand-new-old-fashioned postmodern buildings. Morning inAmericawas the revival of the nice familiar past, but it was happening rightnow, theway supply-side economicswas abracadabra cutting-edge but drawnfromancientwisdomaboutwealthcreation.

ThenarratoroftheMorninginAmericaad,thebonafideSanFranciscoadgenius Hal Riney, was also its author and producer, making the gorgeousfacsimileofsincerityseemsoauthentic,likeasinger-songwriterperforminghisown schmaltzy song. The whole Reagan A-team, such as the inventors andpromotersofthesupply-sidepolicypitch,werealsoperfectlycastforthisshow—the tough financial newspaper opinion editor (Bartley), the fast-and-looseWashingtoncolumnistoutofVegas(Wanniski),theambitiousBeconomistwithD.C. experience and something to prove (Laffer), the New York intellectualgadfly(Kristol),andofcourse,thecharmingoldformerHollywoodstar.

Reagan,who’dclimbedfromthelowermiddleclasstoaspecialcelebrity-super-upper-middle class and positively radiated fantastical Americancheerfulnessandconfidence,wasaperfectsalesmanforthesupply-sidefantasy.It was a cousin of the preexisting American economic fable, that we were asociety where practically everybody was middle class, a fantasy that still feltplausible, just barely. And Americans’ founding attraction to the excitinglyuntruehadbeengrowinglikemadsincethe1960s.Theearly1980swerethusan

idealmomentforsellingthisnewfantasyofpainlessbigchangeinthepoliticaleconomy—thattheexpertshadfinallyfiguredoutawaytohavenolosersatallandnofightsoverdecidingwhogetshowmuch.*2

—

Somuchwasaccomplishedsoquickly!Witharight-wingpresidentelectedandthenreelected,successencouragedthebillionairezealotsandthemorecautiouscorporatefunderswho’dembarkedonthelongmarchintheearly1970stokeepgivinganddoingmoreandmoreforthecause.Thenewcounter-Establishmentwasfull-fledged—thenonprofitthinktanks,lobbyists,institutes,lawfirms,andfoundations all devoted to increasing the profits and wealth and power ofbusiness and the wealthy—and during the 1980s it grew faster and extendedfurther.

RichardMellonScaifeandJoeCoorswerestillhandingouttensofmillionsayear.Althoughtheammo-and-DDTheirJohnOlindiedin1982,managementofhis foundationwas takenoverbyWilliamSimon, a rich summerpalofhisfrom East Hampton, Long Island. Simon had been Ford’s button-downRepublicantreasurysecretary,butinthe1980shelethisMr.Moneybagsfreakflagfly,returningtoWallStreetasanew-stylegreedhoundandbumptiousright-wing propagandist. In 1985 the counter-Establishment got yet another majorfinancial fountainhead in the Midwest, the suddenly megarich BradleyFoundation ofWisconsin,which joined theAmway founders, theDeVoses ofMichigan,inthenewright-wingcampaigntodiscreditpubliceducation.

In ways that would’ve been unimaginable a generation earlier, thelibertarian right continued to be fully mainstreamed. Nobel Prizes kept beingawardedtofree-market,antigovernmenteconomistssuchasJamesBuchanan,aUniversity of Chicago contemporary of Friedman. Another new think tankfunded by usual suspects among the right-wing foundations, the ManhattanInstitute, incubated twowidely read,very influentialbooks.WithOlinmoney,the institute funded an unknown political scientist named Charles Murray towriteLosingGround: American Social Policy, 1950–1980, which argued thatfederalantipovertyprogramsactuallycausedpovertybyencouragingrecipientsto be lazy and irresponsible, and that such programs should be scrapped. Theotherbookwaswrittenbyoneoftheinstitute’sstaff,GeorgeGilder,awell-bornNew York liberal anti-Goldwater Republican in the 1960s who in the 1970sbecameakooky right-winger.HisbookWealthandPoverty, published just as

Reagantookoffice,isastrange,breezyreligious-faith-basedsermonindefenseof U.S. capitalism, including its supposed prehistoric roots in the customs ofindigenous cultures. “The official poor in America have higher incomes andpurchasingpowerthanthemiddleclass”hadinthe1950s,Gilderwrote.Infact,America’s“so-called‘poor’areruinedbytheoverflowofAmericanprosperity,”and instead of more money, “what they need is Christian teaching from thechurches.”Itbecameabigbestsellerandmadetheeconomicright-wingerswhoreadit,inbusinessandotherwise,feelgoodabouttheirbeliefsand,iftheywererich,theirriches.

Asneverbefore,veryconservativepoliticiansandcommentatorsnowhadalarge and rapidly growing body of fresh scholarly argument and research towhichtheycouldpointtojustifyandrationalizepro-big-business,antiregulation,antitax, anti-social-welfare instincts and desires. The staff of AEI, the olderconservativeWashington think tank,havingquintupledduring the1970s,grewby another 50 percent between 1980 and 1986—now with as many full-timescholarsonstaffasacollege.Duringthe1980sthenew,further-rightHeritageFoundationcaughtup insizeand influence.At the firstmeetingofhiscabinetsecretaries, Reagan handed out to each one the Heritage “Mandate forLeadership,”amassiveprogrammaticwishlist,morethanathousandpageslongwith more than a thousand detailed proposals. According to one of the twoHeritagecofounders,775of theproposalswereadoptedby theadministration.Bythebeginningofthesecondterm,severaldozenHeritagepeopleandseveraldozenmorefromAEIandtheHooverInstitutionwereservingunderReagan.

In addition to its freestanding think tanks, the economic right establishedimportant new outposts within existing academic institutions. The dream andprototype were what the right-wing director and funders of the HooverInstitutionhadpulledoffatStanfordoverthepreviousdecade.BythenAEIalsohadhundredsofpaidandunpaidaffiliatedprofessorsoncollegefacultiesaroundthe country. And then there was George Mason. In the early 1970s, GeorgeMasonCollegehadbeenanothingUniversityofVirginiasatellitecampusintheWashingtonsuburbs.Bythe1980s,itwasawell-fundedresearchuniversity,stillfunded by the state of Virginia, now with a specialty in libertarian politicaleconomics featuring Buchanan, the new Nobelist. Charles Koch funded twolibertarian nonprofits, a think tank that became the Mercatus Center and anacademic networking outfit called the Institute for Humane Studies, andtransplanted them to GeorgeMason. They’ve both been influential, Mercatusparticularly aggressive and effective in working to hold back federal

environmentalregulation.ThefounderofMercatuswasalibertarianeconomicsPh.D.studentatNYU

whofirstpitchedhimselftoCharlesKochinthelate1970s.HisactualnameisRichFink.In1980RichFinkwasinstalledontheeconomicsfacultyofGeorgeMason, and for most of the next four decades, he served as Koch’s chiefideological officer, helping to build and oversee his far-flung and constantlyexpanding propaganda and political enterprises, as well as managing KochIndustries’Washingtonlobbyingoperation.

The Kochs and their man Fink also started creating explicitly politicalorganizations, a great variety of themover the years. Somewere pop-ups andsomeendured,somewerelobbyinggroupsandsomeposedascitizenstart-ups.They nimbly evolved and built alliances as necessary. In the 1980s theKochgroups started producing papers and articles and advertisements arguing theKoch line—against labor unions, against expanded Medicare and Medicaid,againstthefindingsofclimatescienceaboutglobalwarming.

Andactuallywritinglaws.TheyhelpedunderwriteandbuildtheAmericanLegislative Exchange Council, a very effective organization that drafts right-wing bills inWashington for right-wing state legislators to introduce and gettheir states to enact. Although ALEC is ostensibly an association of electedofficials, its operations have been funded almost entirely by members of theBusinessRoundtableandotherbigcorporations. It camouflaged itselfwell fordecades—inthe’90sTheNewYorkTimescalledit“abipartisanorganizationofstatelegislators.”

In 1985, the Kochs created Citizens for a Sound Economy. Which wasexactly…what? In the press it was seldom to never identified as an entityfoundedandrunbytheownersofanoilandcoalcompany.WhenvariousNewYorkTimes articles quoted experts from the group during the 1980s and early’90s, it was described as “a public interest group based in Washington,” “apublic-interest lobby”with“250,000members,”“aconservativepublic interestgroup,”and“aWashingtonresearchgroup.”Itsfirstchairmanwastheextremelibertarian Texas congressman Ron Paul, whose ideas were at the time stillconsidered freaky by the Republican mainstream, but Citizens for a SoundEconomywasagainstantitrustenforcementsotheygotMicrosoft,facingseriousantitrust scrutiny in the1990s, to kick in a six-figuredonation.The first greatvictoryofthis“publicinterestlobby”wastocrushaproposedfederalenergytaxthatFinksaid“mayhavedestroyedour[KochIndustries]business.”Thegroup

kepttheSenatefromevenvotingonthebill,despitetheDemocrats’fifty-seven-seatmajority.

Startinginthe1980saswell,theright’sprojectexpandedbeyondtheWallStreet Journal editorial pages to genuinely mass media. The Reaganadministrationdidawaywith the federalFairnessDoctrine,whichhadbeen inplacesincetheearlybroadcasteratopreventradioandTVnewsprogramsfromhavingdistinctideologicalorpartisantilts.Withfairnessandbalancenolongerrequired,RushLimbaughledtheway,makingtalkradiopracticallysynonymouswith right-wing prosleytizing. Rupert Murdoch had started buying U.S.newspapersandmagazinesinthe1970s,includingtheNewYorkPost,whichheturnedovernightfrompoliticallyliberal toright-wing.JackKempsaidin1981that “RupertMurdoch used the editorial page, the front page and every otherpage necessary” in the Post “to elect Ronald Reagan President.” In 1985Murdochmovedintotelevision,spendingtheequivalentof$5billiontobuyTVstations in seven of the ten biggest cities. Reagan helped: he fast-trackedMurdochforU.S.citizenshipso thathiscompanycouldgetaroundthefederallaw forbidding foreigners from owning stations, then waived thefederalruleforbiddinganyonefromowningaTVstationandanewspaperinthesamecity,asMurdochsuddenlydidinNewYorkandBoston.Thefootingswerenow in place to build the important final piece of the right’s counter-Establishment.

*1Theoneright-wingfanaticinReagan’sfirstcabinetwasInteriorSecretaryJamesWatt,aPentecostalChristianwho’drunthenewanti-environmental-regulationlawfirmfundedbyJosephCoors.Wattwasforcedoutaftertwoyearsforwhathesaidaboutafederalcommissionheoversaw,aremarkIdoubtwouldhavecosthimhisjobinacurrentRepublicanadministration:“Wehaveeverykindofmixyoucanhave.Ihaveablack,Ihaveawoman,twoJewsandacripple.”*2Painlessvictorywasalsoanewprincipleingeopolitics:lessthanadecadeafterwe’dslunkandthenrushedoutofVietnamindefeat,theReaganadministrationmanagedarestorationofAmerica’ssenseofmilitarysupremacybyinvadingthetinyCaribbeannationofGrenada(pop.95,985)andbrushingitsCommunistregimeoutofexistenceatthecostofjusteighteenU.S.servicemembers’lives.

W henIfirstbeganthinkingaboutthisbook,beforeIresearchedit,mysense of the story both overemphasized and underemphasized 1980, thedefinitive pivot point of Reagan’s election. The overemphasis was because Ireallyhadn’tknownaboutallthecrucialadvanceworkdonebybigbusinessandthe economic right during the 1970s—the decade of strategizing, funding,propagandizing, mobilizing, lobbying, and institution-building. My initialunderemphasis was due to a different kind of ignorance. Because I’d livedthroughthe1980sanddefinitelynoticedinrealtime,plainasday,therapidandwidespread uptick in deference to business and the rich and profits and themarket,I’dneglectedafterwardtotakeaclose,carefullookatthevariouspiecesof that shift.During the 1980s and ’90s,my focus as awriter and editorwasreallyontheculturaleffectsofthisnewAmericarevealingitself—theprimacyofsellingandcelebrity,themixingoffactandfiction,theshamelessostentation,this ridiculous character Donald Trump. I wasn’t thinking hard about thepoliticaleconomyatthetime.Infact,aftertheColdWarended,itseemedtome,as it did to many people, that what happened in Washington had become asideshowtothemainAmericanactionintheprivatesector.

Somany of the impacts of the economic right’s crusade to stop and rollback the NewDeal and its Great Society extensions showed themselves onlygradually, like steadily compounding interest, becoming formidable over ageneration. Before and after David Stockman, OMB directors were mostlyobscurebecausetheOMBistypicalofthegutsofgovernmentandgovernance

—bureaucratic, abstruse, unexciting. Indeed, that general public obscuritywashowmost of the transformation of the political economyhappened during the1980s and afterward. For all the back-to-the-good-old-days rhetoric andprofessionsof faith in the freemarket—Reagan’sdepartment—somuchof themonumentalshiftwastheresultofcountlessnuts-and-boltschangessodweebyandtedious,andsooftenbipartisan,thattheyappearedinconsequentialandwereuncontroversial. It’s in the nature of tax codes and federal regulations,complicatedandesoteric,topermitbigchangetooccurquietly.

Furthermore,animportantandevenstealthierpartoftherestructuringwereactsofomission,decliningtoupdatecodesandregulationssothatmoremoneyandpowerflowedtobusinessesandthewell-to-dogradually.Intheirexcellent2010 bookWinner-Take-All Politics, the political scientists Jacob Hacker ofYaleandPaulPiersonofUCBerkeleycallthisdrift,the“systematic,prolongedfailures of government to respond to the shifting realities of the dynamiceconomy”that“isahugeandgrowingpartofhowpolicyisactuallymade.”Thisincludes all sorts of essentially invisible but important policies-by-omission,fromthewillfulfailuretogoafterviolationsoflaborandantitrustlawstolettingcorporations pretend that executives’ stock options aren’t actually salary todeclining to regulate (or even understand) esoteric new financial contrivances.Citizensdon’tnoticethiskindofmalignneglect,sotheydon’tgetangryaboutit.

SocialSecuritytaxesareaprimeexampleofthiskindofunnoticeabledrifteffect,awaythattherichesthavemadeoutbetterthaneveryoneelseforthelastfourdecades.People’sincomesoveracertainlevelaren’ttaxedtopayforSocialSecurity at all. But from the beginning of the system,Congress regularly andsignificantly raised that income threshold where that tax-free level begins, sothat as the twentieth century rolled on, more and more affluent people werepaying more Social Security taxes. But then around 1980 Congress stoppedraising it—instead, the tax-free threshold has increased according to anautomatic formula,pegged to increasesnot in thecostof livingbut inaveragewages. As a result, since average wages haven’t increased much since 1980,peoplewithhigherincomeshavejustkeptgettingmoreandmoreoftheirmoneyshieldedfromtaxation.TodayafifthofallincomeearnedbyAmericansisfreefromanySocialSecuritytax,twiceasmuchasintheearly1980s—andthattaxbreak is going only to the richest 6 percent of us, those who earnmore than$138,000. Meanwhile, the revenue stream automatically flowing in to fundSocialSecurityhasshrunk.

—

Afterfinishingmostofmyresearch,asIlookedthroughmythousandsofnotes,apatternshoweditself:thistrendlinetookoffinthe1980s,andthisotheroneplummeted; this norm began crumbling in the 1980s, and that stigma startedevaporating; thisstrikewascrushed,and this financialrulewastweakedin the1980s; and look over there at that huge change in the 1980s that hadn’t evenseemed connected to politics or economics. When I boldfaced all the 1980sdates,itwaslikeaeureka-momentscenefromGoodWillHuntingorABeautifulMind.Thebefore-and-afterchangesweresonumerousandstark,Irealizedthattheparadigmshiftofthe1980sreallywasequivalentinscaleandscopetothoseofthe1960sandthe1930s.Almosteverythingchanged.

Key intellectual foundations of our legal systemwere changed.Our long-standingconsensusaboutacceptableandunacceptableconductbybigbusinesswaschanged. Ideasabout selfishnessand fairnesswerechanged.The financialindustry simultaneously became reckless and more powerful than ever. Theliberalestablishmentbeganhabituallyapologizingforanddistancingitselffrommuch of what had defined liberal progress. What made America great forcenturies,atasteandknackfortheculturallynew,startedtoatrophy.Plusmuchmore.Andallofwhathappenedinthe1980sdefinitelydidn’tstayinthe1980s.

Thedigital revolutionalsostarted in the1980s, including the inventionofPowerPoint,sointhatspiritIpresentthisintroductorydata-pointchronicleasaprefacetothenextseveralchapters.

TheDecadeWhenEverythingChangedandOurPresentWasCreated:57DataPoints

SomeKeyCulturalandTechnologicalChangesinthe1980s

The fractionofwomen in thepaidworkforce rises from47percent in thelate1960sto75percentbytheendofthe1980s.Thefractionoftwo-incomehouseholdsincreasesfromasmallminoritytoalargemajority.Theimmigrantpopulationdoublesfromits twentieth-century lowoffewerthan10millionin1970tonearly20millionin1990.Americansbeginstayingput,movingtonewplaceslessfrequently.CableTVtakesoff,with thenumberofchannelsandofhomeswithcabletripling.Twenty-four-hourTVnewsbegins.Nostalgiabecomesafull-fledgeddivisionofthefantasy-industrialcomplex,furtherenabledbyoldmoviesandshowsnowwatchableonVCRsandcableTV,andbythemassiverereleaseofoldalbumsonthenewCDmedium.ThefederalrulethatTVandradiobroadcastersmustpresentadiversityofviewsisrepealed.Personal computers become a mass-market product, and the mass-marketInternetisinvented.

SomeKeyChangesinthe1980sGoodforBigBusiness

Corporate lobbying in Washington and the number of corporate politicalactioncommitteeswildlyincrease,andthecostsofcongressionalcampaignsbegintheirdoublingandtriplingoverthenextthirtyyears.Corporate taxes as a fraction ofGDP drop bymore than half in just fouryearsfromthelate1970stotheearly’80s.

Federal enforcement of antitrust laws to rein in corporate power suddenlyshrinkstoafractionofwhatithasbeen.Thederegulationofbusinessbygovernmentaccelerates.Large, dominant companies start charging customers historically highermarkupsontheproductstheysell.Therateatwhichentrepreneurscreatenewfirmsdropsbyalmostathird.After years of scholarly spadework and litigation here and there, theconservativelegalandjudicialcounter-Establishmentsuddenlyboomsonitswaytodominance.

SomeKeyChangesinthe1980sGoodfortheFinancialIndustry

Stock prices almost triple (before almost quadrupling again during the1990s).Thelong-standingfederalprohibitiononcompaniesbuyingtheirownstock,meanttopreventsharepricemanipulation,isrepealed.Thenew“shareholdervalue”movement’sredefinitionofcapitalismmakesacompany’s current stock price essentially the only relevant measure ofcorporateperformance.Theshareofallstocksownedbyafewbiginstitutionalinvestorstriples(onitswaytodoublingagaininthe1990s).Increasingly abstract and untried and unregulated financial bets on otherfinancial bets, derivatives, become normalized and start becomingeconomicallysignificant.Leveragedbuyouts, financial firmsusing frequentlyexcessivedebt to takeoverandoftenruincompanies,becomenormalizedandsignificant.Wall Street salaries increase by more than 25 percent (before increasinganother50percentinthe1990s).The financial industry’s (and real estate industry’s) shareof the totalU.S.national income rises from 14 percent to over 35 percent in less than adecade.

SomeKeyChangesinthe1980sGoodforRichPeopleinGeneral

TheratioofCEOs’paytotheiremployees’paydoubles(beforesextuplinginthe1990s).The top income tax rate on the richest is reduced from 70 percent to

28percent.The maximum tax rate on stock profits (capital gains) is reduced from28percentto20percent.Estate taxes on the rich dropmore than ever—for instance, the heirs to a$3millionfortunewouldpay$1millionlessintaxesonit.Theincomeofthemostaffluenttopfifthincreasesby25percentandthatoftherichesttop1percentalmostdoubles.

SomeKeyChangesinthe1980sBadforAmericansinGeneral

The United States experiences the fastest and biggest increase in incomeinequalitybetweenthe1920sand2020.Afteracenturyofwages increasing insyncwith increases inproductivity,thatsynchronizationends.Employees’shareofthenationalincomeabruptlydeclinesfrom62percentto56percentandevenmoresharplyforeveryonebuttherichesttenth.Medianhouseholdincomestagnatesandmedianwagesdecline.Theshareofallwealthownedbythebottom90percentpeaksandbeginstodecline.The withering of labor unions in companies accelerates dramatically, aspublicandpoliticalsentimentandregulationsandlawsturnagainstthem.Jobsinmanufacturingrapidlydisappear—by22percentduringthedecade.Companiesstarteliminatingfixedpensionsforretiringemployees.The fractionofcompaniesprovidingemployeehealth insurancepeaksandstartstodecline.Thedecline in thenumberofmanufacturing jobsand theexpansionof theeconomy’sservicesectorbothaccelerate.Companies begin replacing low-skill, low-wageworkerswith even-lower-wageworkerssuppliedbyoutsidecontractors.Thefederalminimumwageisfrozenfortheentiredecade,longerthanever,which translates toaneffectivepaycutofone-third forAmerica’s lowest-paidworkers.Consumer credit is deregulated excessively, causing consumer debtsuddenlytoincreasebyathirdandinterestpaymentstoballoon.Thenumberofjobsrequiringacollegedegreeincreasessignificantly.

The salary premium for four-year college graduates starts increasingsignificantly.Thecostoffour-yearcollegeandthestudentdebttopayforitsuddenlystartincreasingsignificantly.Thefractionofmenwhograduatefromfour-yearcollegesplateaus.Thepercentageofmenworkingorlookingforworkbeginsdropping.Inequality in incomes amongdifferent regionsof theUnitedStatesbeginsincreasingsignificantly.Homemortgageforeclosuresquadruple.Personal bankruptcies suddenly increase, more than doubling (beforedoublingagaininthe1990s).Theup-and-downyear-to-yearvolatilityoffamilyincomesstartsincreasingsignificantly.Upwardeconomicmobility—earningmore thanone’sparentsdid—beginstobecomemuchmoreunlikely.Thelarge-scalemovementoutofpovertyforblackmenfrom1960to1980stops.Federal spending on housing programs for low-income people is cut by75percent.Incarceration of criminals begins its massive increase, doubling (beforedoubling again in the 1990s), and the first private profit-making prisoncompaniesarefounded.*

U.S. healthcare spending and life expectancy both suddenly diverge fromthe rest of the richworld—heading from about average toward the top inspendingandfromaboutaveragetowardthebottominlifeexpectancy.After the scientific consensus definitively concludes a climate crisis isimminent, thepetroleumindustryandthepoliticalrightbeginaggressivelydownplayinganddenyingit,blockinggovernmentregulationtoreduceCO2emissions.

*In1982IreportedandwroteaTimecoverstorycalled“InmateNation”aboutwhat’snowcalledmassincarceration,becausethenumberofU.S.inmateshadjuststartedtoincreasesharplyand,tomyeditorandme,alarmingly—thatyearby43,000to412,000.Thetotalnumberofinmatestodayis1.5million,ofwhom130,000areinprivatelyrunprisons.

T he99percentofuswhoweren’t lawyersor judgesor legalscholarsorconservativeactivistsinthe1980shadnocluethatthelawitselfhadbecomeanimportantfrontinthewartoremaketheU.S.politicaleconomy.Inademocracy,theeconomicrightandbusinesscouldn’tdependonhavingfriendlypresidents(and state governors) or compliantCongresses (and state legislatures) forever.To make fundamental and permanent change, they also needed to cultivatepowerintheother,largelyunelectedbranchofgovernment,thejudiciary.Theyneededtocolonizethelegalcommunityandreframethelawitselftomakesurethey kept getting their way. Instead of litigation almost entirely being usedagainst them by antitrust enforcers and class-action troublemakers andenvironmentalists and Ralph Naders, they needed to reshape fundamentalAmerican legal understandings—to make it a toolbox they could use toaccumulatemorepowerandwealthforbigbusinessandtherichover the longrun.Peoplethesedaysthrowaroundthephrasefundamentalstructuralchangealot,butwhattherightdidinthelegaldomainwasexactlythat,breathtakinglyso.

You’ll recall the memo that Lewis Powell wrote in 1971 just before hejoined theSupremeCourt, his confidential call to armsandbattleplan for thestruggle tosavebigbusinessandAmericafromtherampagingsocialisthordesandtheiragentsembeddedthroughouttheEstablishment.“Thejudiciaryisavastareaofopportunity,”hewrote,ifonlytherichandpowerfulwould“providethefunds.”In1980cameanotherlawyer’scalltoarmsanddetailedbattleplanforthelegalfront.Itisnotwidelyknown.LikethePowellMemo,readingitnowis

kind of staggering, because we can see how thoroughly and successfully itsvisionwasexecuted.

Like Powell, Michael Horowitz was a lawyer in private practicecommissionedbypoliticizedwealthtoproduceareport—inhiscase,byRichardMellonScaife’sfoundation,whichwasfundingright-wing“publicinterest”lawfirms. Horowitz’s memo runs more than a hundred pages. He had three bigrecommendationsfortheembryonicright-winglegalmovementofwhichhewasamember.Hiscomradeshadtobeginthelongprocessofrecruitingandforminganetworkoftopstudentsandyounggraduatesfromthetoplawschools.Theirambitionshadtoextendwaybeyondanoccasionallawsuithereorthereagainstthisorthatregulationthatconstrainedaparticularbusiness.Instead,theyneededtoadoptandfundastrategy thatsoughtagenuineright-wingrevolutionin thehigh-endlegalprofessionandthe judiciary.Andeventhoughthenot-for-profitconservativelegalmovementwouldinevitablybetheservantofbigbusiness,headvised that ithad to stop looking somuch like that, toappearmore idealisticandphilosophicalandindependent.

Theworld ofmainstream public interest law,Horowitzwrote, consideredthenewright-wingnonprofitlawfirmscreatedinthe1970stobe“pretenders…largelyoriented to anddominatedbybusiness interests, adescriptionwhich isunhappily not wide of the mark for many such firms….All too often,conservativepublic interest lawfirmsserveasmereconduitsbywhichmoniescontributed by businessmen and foundations are given to private law firms toassist it in the prosecution of ‘its’ cases.” That is, instead of directly hiringlitigatorstofightgovernmentenvironmentalprotectionsorvictimsofcorporatemalfeasance, image-conscious companies were really just laundering moneythrough“publicinterest”firmswhothenhiredthenecessarylitigatorstodothedirtywork.This, remember,wasn’t a liberal takebut a conservative’s critiquefundedbyScaife, the right-wingbillionaireheir toanoldbankingandoil andaluminumfortune.

Yes,ofcourse,Horowitzadmitted,“theneedtoprotecttheprofitability…ofthe private business sector” was a “significant premise” of “public interest”firms on the right. Nevertheless their movement would “make no substantialmarkontheAmericanlegalprofessionorAmericanlifeaslongasitisseenasand is in fact the adjunct of [the] business community.” Lawyers in the newright-wingmovement had to start looking likeprincipled crusaders rather thanpoorlydisguisedminionsofthegreedyrich.“It iscritical that theconservativemovementseekoutandfindclientsotherthanlargecorporationsandcorporate

interests”inordertomakeitself“intellectuallyrespectable.”Instead of occasional “episodic tactical victories” in lawsuits, it needed

permanent,large-scalechangesinthelegalacademyandlawandjurisprudence,switchingfromafocusonlyon“courtsandlegislatures to lawschoolsandbarassociations.” The movement as of 1980, he wrote, consisted of “appallinglymediocre” lawyers, the result of “still-prevailing notions of law students andyoung attorneys that their career options are largely restricted to serving thepublic interest (i.e., enhancing governmental power) or ‘selling out’ ” byworking directly for corporations. Horowitz, a Yale Law School classmate ofGaryHart and Jerry Brown, said the right needed to create a bar “comprised[sic]oflawrevieweditors,formerlawclerksand,innosmallpart,ofalumniofnational law schools.” They needed to infiltrate the judiciary and the rest ofgovernment.

Voilà. Just a little over a year later, a handful of law students at Yale,Harvard, and the University of Chicago, sharing an enthusiasm for what onecalled“free-marketconcepts,”foundedtheFederalistSociety.ItturnedouttobethemonumentallyimportantfirststepintheplanHorowitz’smemohadlaidout.TheChicagochapterenlistedaprofessorattheirlawschoolwhowasalsoonthepayrolloftheconservativeWashingtonthinktankAEItobetheirfacultyadviser—Antonin Scalia. The idea behind the society, in addition to hanging withyoung fellow travelers and organizing campus lectures and symposia, was tocreateanongoingnationalnetworkoflike-mindedfuturelawyersandjudges,aright-wingbutcertifiablyelitelegalfraternity-cum-mafia.AtbirththeFederalistSociety got funding from the new standard roster of right-wing billionaires’foundations—Scaife,Olin,Bradley,theKochs.

Michael Horowitz, who promptly joined the Reagan administration asDavidStockman’schieflawyer,alsopracticedwhathe’djustpreached,cruisingFederalist Society meetings to recruit promising true believers for entry-leveladministrationjobs.Withinjustafewyearsofitsfounding,whenScaliabeganhistenureastheexemplaryright-wingSupremeCourtjusticeforthenewlegalage, the Federalist Society had two thousandmembers in seventy law schoolchapters,andscoresofalumniembeddedinkeyvenues—workingfortheJusticeDepartment in Washington and U.S. attorneys’ offices around the country,clerkingforScaliaandotherReaganappointees in the judiciary. In1987BrettKavanaugh entered Yale Law School, where he joined its Federalist Societychapter(itspresident,GeorgeConway,hadjustgraduated),andayearlaterNeilGorsuchstartedatHarvardLawSchoolandbecameamember.

Thespectacularrightwardswerveoflegalthoughtstartinginthe1980shadtwofreshlycast ideologicalpillars,one focusingnarrowlyon theConstitution,theotheronmoregeneralcriteriafordeterminingproper legaloutcomes.Eachwas amovementwith its ownbuilders andpromoters.Aswith the rest of theright-wingmakeoverofthe1970sand’80sthatsoughttotakeAmericabackintime, both legal movements amounted to fundamentalisms, radical right turnspresentedasreassuringreturnstooriginalAmericanfirstprinciples.

The one concerning the Constitution became known in the 1980s asoriginalism. How flexibly or rigidly the Constitution’s provisions should beapplied togovernancewasadebate from theget-go, twocenturies ago. In theearly 1950s, the moderate Republican president Eisenhower appointed themoderateRepublicangovernorofCalifornia,EarlWarren,tobechiefjusticeoftheSupremeCourt.Foragenerationhiscourt issuedworld-changingdecisionsinterpretingtheConstitutiononbehalfofprogress—outlawingracialsegregationand organized prayer in public schools, requiring that criminal defendants beadvised of their basic rights and provided with lawyers, stipulating thatcontraceptives be freely sold. Reactionaries and other right-wingers castigatedthe Warren court and other federal judges for being “judicial activists” andcalledthemselves“strictconstructionists”whoadheredtotheplainoldmeaningsof the Constitution. Accusing white liberals in the 1950s and ’60s of beingconstitutionally sloppy was more effective than calling them atheists andcoddlers and race traitors. Conservatives figured the more they could get theConstitution to be interpreted narrowly and literally, supposedly the wayAmericansback in1789or the1860sunderstood itseternalmeanings, the lessliberals could use it now to justify pieces of modern progress that theconservativesdisliked.

Bythe1980sthatapproachhadbecomearespectablemovement,andbeforelong the legal scholar Jeffrey Rosen, nowadays president of the NationalConstitution Center, wrote that “we are all originalists now.” He meant thateveryone in the legal world acknowledged that the original meanings of theConstitutionanditsamendmentscouldn’tbeignored.Butoriginalismbecameacrudeandself-justifyingmemethattherightused,fromthe1980son,simplytoserve its own interests and prejudices. Originalism’s most important hiddenagendawastokeepcourtsandjudgescompletelyoutofthebusinessofbusiness,as if what worked for the U.S. economy for its first century, before moderncorporations existed, was how things should work today. It was like theFriedman Doctrine, which turned a reasonable capitalist truism (profits are

essential)intoasimple-minded,unhinged,sociallydestructivemonomania(onlyprofitsmatter).

Asmovements,originalisminthelawandlibertarianismineconomicswerefraternal twins.Bothwerebornofextremenostalgia, fetishizinganddistortingbygoneAmerica, sobothmoreeasily achievedmass appeal in the everything-old-is-new-again 1970s and ’80s. Both purported to be based on objectiveprinciples that transcended mere politics or special interests, even while bothwerevehiclesforbigbusinessandtherighttorecover,fortify,andexpandtheireconomic and political power. And both shared key promoters, of whomprobablythesinglemostimportantwasRobertBork.

Borkwasafounderoforiginalisminthe1970s,andin1986hewasintherunningforanopenSupremeCourtseat(ashehadbeenin1981).ButReaganmadethesaferchoicefromamongthenewgenerationofhard-rightideologues—AntoninScalia,whoasaresultcametobethepersonificationoforiginalism.A year later, however, Reagan finally did nominateBork to fill the seat of—perfect—retiring Justice Lewis Powell. In the trivia-game category FailedSupremeCourtNominees,Borkisthemostfamousbyfar.Theascendantrightin 1987 figured hewould be a shoo-in—the Senate had just confirmed Scalia98–0. Bork was a right-wing hard-liner but also, as an influential Yale LawSchool scholar, respected and liked by the liberal legal elite. So they wereshockedanddisappointedandangryatBork’sbipartisanrejectionintheSenate,a last-hurrah victory byWashington’s declining liberal-left political machine.What’s more, six years into the official right-wing takeover, six Republicansenators had voted against him. Afterward, thanks to the new counter-Establishment—AEI fellow, George Mason University professor, FederalistSociety standing ovations—Bork spent the rest of his life working hispostrejectionfame,makingasecondcareeroutofright-wingmartyrdom.

He’d joined theYale faculty at age thirty-five in 1962, and in 1971, thatseminal year for the great right-wing counterrevolution, Professor Borkwrotethelawreviewarticlethatbecamethefoundationaldocumentfororiginalism.Itremainsoneofthemostfrequentlycitedlawreviewarticlesofalltime.

Given that the notion underlying the movement Bork cofounded is theunchanging word-for-word sacredness of the Constitution, it’s very odd thatBork begins that essay by disparaging theBill ofRights as a cynical politicaladd-on stuck there in 1789 just to get the whole thing passed. Madison andHamiltonandtherest“hadnocoherenttheoryoffreespeechandappearnotto

have been overly concerned with the subject”—although to the degree theFounderscaredatall,heclaims,theywereoftenagainstfreespeech,being“menaccustomed to drawing a line, to us often invisible, between freedom andlicentiousness.”*1Because“thelawoffreespeechweknowtodaygrowsoutofthe Supreme Court decisions” from the 1900s, Borkwrote, it is “Court-madelaw” and therefore wrong. He somehow decided that the First Amendmentprotectsonly“explicitlypolitical”speechinanextremelynarrowsense,“speechconcerned with governmental behavior, policy or personnel.” He actuallyinsistedthatapartfromopinionsaboutgovernmentandpoliticians,“thereisnobasis”intheU.S.Constitutionforanycourtorjudge“toprotectanyotherformof expression, be it scientific, literary, or that variety of expression we callobsceneorpornographic.”

Bork’sYalefacultycolleagueandfriendGuidoCalabresi,laterdeanofthelaw school, said the early-1960s Bork was “an aggressive libertarianconservative—thatis,‘KeeptheGovernmentoutofeverything.’ ”Butby1971,whenhewrotehisfamousoriginalismarticle, thetimeshadrevealedthatwhatBorkcalledhis“generallylibertariancommitments”wereashamthatreallyonlyappliedtoeconomics,thefreedomofbusinessestodowhatevertheywished.*2

Except for people in the pornography business. Porn movies were juststarting to be mainstreamed, and they loom curiously large in Bork’s article.Pornography is “aproblemofpollutionof themoral andaesthetic atmospherepreciselyanalogoustosmokepollution”andpossiblyanevengreaterdangertopublic health, so it was okay to outlaw smut. Bork declared elsewhere in thearticle that the quintessentially political act of burning an American flagshouldn’tcountasfreespeecheither,becausetheflagis,youknow,“unique.”Likewise, hewrote that theSupremeCourt decision that individuals’ rights toprivacy included the right to buy contraceptives was “utterly specious” and“unprincipled.”Likewise,Borkruledasafederaljudgethatthenavycouldfireasailorforbeinggaybecausetherewasnoexplicit“constitutionalrighttoengagein homosexual conduct”—although as a professor he’d also just argued forwelcoming employers to Yale who discriminated against gays because Yalesimply shouldn’t “ratify homosexuality.” And likewise, he said that theConstitution’s equalprotectionclause shouldn’tprohibit discriminationagainstwomen—yet also thatamending theConstitution to guarantee equal rights forwomenwouldbeabadidea.Inhislaterbooks—SlouchingTowardsGomorrah:ModernLiberalismandAmericanDecline,andACountryIDoNotRecognize:

The Legal Assault on American Values, he completely dropped the judiciousmasktospewfull-strengthreactionarybile.

In otherwords, asBork spent a career creating and propagating this newdoctrineofworshipingtheold,hisclaimsofprincipledimpartiality—thathewasall about adhering to the Constitution as written when it was written, that“nothinginmyargumentgoestothequestionofwhatlawsshouldbeenacted,”andthatit“hasnothingtosayaboutthespeechwelikeorthespeechwehate”—were not just disingenuous but flatly contradicted again and again by hisargumentsinparticularcases.

Eventhoughhelosthisgreatbattlein1987foraseatontheCourtthathemight havehelduntil his death in 2012, his sidekeptwinning thewar. Just adecadeafterBorkwasdinged,Rosenfoundit“alittlestartlingtoreflectonhowdramatically[Scalia]andthemovementthathepersonifieshavetransformedthetermsofconstitutionaldebate.”LikeBork,thejudicialgeneraloftherightwingwhomhereplaced,Scaliausedthesupposedlyneutralphilosophyoforiginalismasameanstoachieveaparticularsetofright-wingends.Inhis1997bookonthesubject,publishedafteradecadeontheCourt,hemadeclearhewasnotactually“apartisanoftextualismororiginalism,butapartisanoftraditionalism,”Rosenexplainedbackthen,which

looksalotlikethejudge-madelawthatheclaimstoabhor….Hestrivesin his jurisprudence to conserve traditional moral values against…cultural change. He is exercised not by the methodology of recentSupremeCourtdecisions,butbytheresults.Hisobjectiontothecases[amales-onlypubliccollege,anantigaystatelaw]isthattheyunsettlelongstandingtraditionsthathe,asaproudsocialconservative,wantstokeep.

Likealmosteveryoneontherighttoday,Borkwasaveryselective,cherry-picking libertarianof convenience—iffyon civil liberties and executivepowerand even iffier on personal liberty, but unbudging in defense of the rights ofbusiness (apart from publishers, especially pornographers) to operate withoutrestraint. In one of his books from the 1990s, hewas still complaining aboutsmut—“the pornographic videos,” the early Internet erotica site“alt.sex.stories”—and even about people on the right unwilling to outlaw it:“Freemarketeconomistsareparticularlyvulnerabletothelibertarianvirus.”

Free-marketpoliticaleconomicswaswhereBork’sbeliefswereforgedbackin theday, andwhere his specific influence, beginning in the1970s and ’80s,remains vast and enduring. Like so many midcentury American right-wingzealots,Borkhadbeenaleft-wingzealotinhisyouth,ateenagenationalize-it-allsocialist.RightafterWorldWarII,whenanti-Communismsuddenlybecameanational faith, Bork “went to the University of Chicago and came across theChicagoeconomists”suchas“MiltonFriedman…andtheydestroyedmydreamsof socialism right there.” As a graduate student working with Friedman’sbrother-in-law, another influential right-wing Chicago School economist andantitrustspecialist,Borksaidhehadtheequivalentof“areligiousconversion,”immediatelybecoming“anavidfree-markettype.”Hespentmostofthe1950sasalawyerinprivatepracticeinChicagospecializinginantitrustcasesforbigbusinessdefendants,andwhenhejoinedtheYalefaculty,studentsjokedthathetaught“pro-trustlaw.”

But the opinionated and cocksure young Bork didn’t stay in his lane.Economic libertarianismwas also the basis of his argument in 1963 and1964against the proposed Civil Rights Act.*3 At the very moment when MartinLuther King, Jr., was leading the watershed pro-civil-rights March onWashington in August 1963, Bork published an article in TheNew Republicarguingthatanylawrequiringbusinessestoservepeopleofallraceswouldbe“subversive of free institutions” by “self-righteously impos[ing] upon aminority”—that is, upon racist white businessmen—“the morals of themajority.” The Civil Rights Act was based on “a principle of unsurpassedugliness,”Bork explained, thatmight lead to an evenmorenightmarish futurefor businesses—requiring “not merely fair hiring of Negroes in subordinatepositions, but the choices of partners or associates…without regard to race”(emphasesadded).ItwasthesestatementsthatlosthimtheseatontheSupremeCourt.

But apart from that early crusade against civil rights, as a scholar Borkmainlystucktohisactualspecialty,antitrust.Foralmostacentury,antitrustlawshad been passed and more and more strongly enforced because Americansagreed that when companies became very large, they tended to get toomuchpower, tocrushsmallerbusinesses, to scareoffentrepreneurialcompetitors, tochargetoomuchforproducts,topayworkerstoolittle,tocorruptgovernment.Even regulation-hating right-wingers like Friedman originally made anexceptionforantitrustlaws.

According to Richard Posner, the influential conservative University ofChicago economist and law professor (and former federal court of appealsjudge), in the 1950s “business-oriented people and conservative lawyers weretroubled by the antitrust jurisprudence” because it was getting too leftish, tooanti-big-business. “But they didn’t have the vocabulary or conceptual systemwith which to criticize that jurisprudence” until Posner and his conservativeacademiccomradesstartedproducingit.AsantitrustenforcementandNaderiteconsumer activism got more aggressive in what Posner calls “the collectivistmood of the 60s and 70s,” that business-oriented right got acutely nervous.Forced to choose between the principle of maximum competition and theirbottom-line wish for unencumbered big business power, the conservativeintellectuals chose the latter. Bork was among that select group of “freeenterpriseradicals”whomMiltonFriedmangatheredathis1970conference inWashington,andaccordingtoahistorianofantitrustlaw,hebecame“concernedthesocialistswouldtakeoverthecountrythroughantitrust.”

Rather than undertake a doomed quest to repeal those statutes, Borkcontrived a brilliantway to neuter their enforcement by getting legal thinkersandjudgestoreinterpretandredefinethelawsinpro-big-businessfashion.Thatis,thegreat“originalist”opponentofanykindof“judicialactivism”adoptedastrategybasedentirelyonvigorousjudicialactivism.HearguedthatAmerica’sevolving,expansiveintentionswithantitrustlawsasthey’dbeenunderstood,tokeepbigbusinessfromscrewingovertherestofus,madethatbodyoflawandprecedentanimpossiblemuddle.“Antitrustpolicycannotbemaderationaluntilweareable togivea firmanswer toonequestion,”hewrote inhis incrediblyinfluential1978bookonthesubject,TheAntitrustParadox.“Whatisthepointof the law—what are its goals?” His too-simple answer, true to a too-simpleChicago School free-market vision: maximizing economic efficiency in thesystemexclusivelyandbyanymeansnecessary.

Bork had been working on the argument for years, but he published hisbook at just the right moment, when a critical mass of Americans werepersuaded that government was terrible and that regulation was terrible—andwho reallyunderstoodor caredabout this antitrustgobbledygookanyhow?AsJudge Posner says, with characteristic candor, there was now “a respectablebodyofacademicthinking”thatbigbusinessandeconomicright-wingers“coulduse to support their predilections,” “a patina of academic respectability” tojustifytheir“instincts.”

Although the original U.S. antitrust law in 1890 was intended mainly to

keep mighty new corporations from unfairly crushing competitors, andsubsequentantitruststatuteshadotherspecificoriginsandintentions,inhisbookBorkbadlydistorts thathistorybycasting thewhole long,amorphousbodyoflaw strictly as a “consumerwelfare prescription” that “Congress designed” in1890.Asanotherlawprofessorandleadingantitrustexpertwroteinthe1980s,Borkmadethe“brilliantbutdeceptivechoiceoftheterm‘consumerwelfare’ashis talisman, instead of amore honest term like…‘total economic efficiency.’Afterall,whocanbeagainst‘consumerwelfare’?”Furthermore,Borkdeclaredthat the only legitimate measures of undesirable and illegal corporate powerwere improperly high prices. Naderites had just successfully turned consumerintoakindofsynonymforcitizen,andconsumerwelfareintotheall-Americanlodestarconcerningbusiness,sonowBorkflippedit:Whocaredhowbusinessesbehavedorhowlargetheygotaslongastheysoldtheirproductscheaply?

ExactlyoneyearafterBork’sbookwaspublished,apivotalSupremeCourtdecision quoted its key “consumer welfare” sentence, and since then federaljudgeshavequotedthelineinantitrustdecisionsdozensoftimes.Justlikethat,economicefficiencyasmeasuredbypricesbecame“thestatedgoalinantitrust”exclusively. “Antitrust was defined by Robert Bork,” says the University ofArizonalawprofessorandantitrustspecialistBarakOrbach.

Icannotoverstatehisinfluence.Anyantitrustpersonwouldtellyouthesamething….TheCourtstartedthinkingtheyshouldhaveaneconomicframework, and they had Chicago’s work as very simple ideas theycoulduse.Thethingaboutthisisthattheywereverysimple.Youreadthem, you understand them. Any person can understand them….Theworldisnotthatsimple.

Again and again after that, Supreme Court decisions, relying on Bork’sarguments in The Antitrust Paradox, legalized behaviors by corporations—becoming virtualmonopolies, stifling competition, and so on—that until 1978everybody had agreed were violations of federal law and antithetical to fair,healthyfree-marketcapitalism.

What’smore,inthe1970sand’80sawholenewfieldoflawemergedoutof the theories and ideas thatBork andhis fellowChicagoSchool libertarianshad been crafting. Its name is simple and deceptively generic: Law andEconomics. Getting lawyers and especially judges more fluent in economic

analysis is a good thing, of course. But the animating idea behind Law andEconomicswaspolitical—thatamainpointofthelaw,notonlyofantitrust,istomaximize economic efficiency, that the law’s bottom line is the economicbottomline.Soifyouhappentothinkit’sagoodideaforjudicialdecisionstoalso consider fairness or moral justice, or other values or versions of socialhappiness that can’t be reduced to simple metrics of efficiency, Law andEconomicssaysyou’rea fool.Like itsbrilliantlyanodynename, theequationsandothermathinLawandEconomicstextsgiveitanimpartial,scientificsheen.The founders of Law and Economics understood that we do indeed live in apolitical economy, that determiningwho’s entitled towhat is the result of allkindsofpower struggles and societal choices—so theywanted their hard-corefree-marketpoliticsexplicitlyencodedintoAmerica’sunderlyinglegalDNA.

In the mid-1980s, as Law and Economics was taking off, the renownedconstitutional law professor Bruce Ackerman, then at Columbia and now atYale, called it “themost important thing in legal education since the birth ofHarvardLawSchool”in1817.Thespeedandeffectivenessofthemovement’sspreadwasremarkable.Itsfoundershadspentdecadeslayingitsgroundwork,sohowdidthe1980sblitzoflawschoolshappen?ItwasthanksinlargeparttotheOlin Foundation, which gave Harvard Law its biggest donation ever, theequivalent of $44 million, to create the John M. Olin Center for Law,Economics,andBusiness.ItalsocreatedYaleLaw’sOlinCenterforStudiesinLaw,Economics,andPublicPolicy,StanfordLaw’sOlinPrograminLawandEconomics, and the University of Virginia Law’s Olin Program in Law andEconomics, among others. By the end of the 1980s, more than seventyuniversities had startedLaw andEconomics programs.They’d become almostobligatory,andthenubiquitous.Victoryforthelegalrightwasswiftandtotal.

During the 1980s, that public university that theKochs and others on theeconomic right had been taking over in Virginia outside Washington, D.C.,GeorgeMason,hiredoneofthefoundersoftheLawandEconomicsmovementto create a law school from scratch. The conservativeAEI gloated that while“law and economics programs at elite institutions had to adapt to institutionalnorms,” GeorgeMason “was free to launch an Austrian-flavored program”—right-winglibertarianbywayofFriedrichHayek—“freefromsuchconstraints.”

From1980on,LawandEconomicsargumentspoweredboththesubversionofantitrustenforcementandthenewmaniaforderegulation.Italso,forinstance,provided the rationales for legal and regulatory changes thatwere particularlysweet for the telecommunication and financial industries, and for corporate

defensesoffemalepaygapsasbeingjustifiedbyeconomicefficiency.LawandEconomics has shaped other policy as well—it even presumes to reducemarriage and child custody and civil liberties cases to simple questions ofeconomic efficiency—but its primary and profound impact has been to fortifythepowerofbigbusinesstodoasitpleases.

Sothesuccessfulwarlaunchedbytheeconomicrightinthe1970sand’80shad several theaters, one of which was the law, with two main battlefronts,originalismandLawandEconomics.Bothwere long-haul strategiccampaignseffectively camouflaged as impartial philosophical movements. Originalists’deepangerdidn’treallyderivefromlegalanalyticsaboutwhatBorkcalled“theSupreme Court’s unconstitutional rulings” of the last century. Rather, it wasabouttheprogressiveparticularsofwhathecalled“thesustainedradicalismoftheWarren Court,” such as the rulings that guaranteed equal legal rights forblacks andwomen and every such “attempt to remake society.” The commonmissionoftheoriginalistsandofthesubtlerLawandEconomicsconservativeshasbeenpreciselywhattheyostensiblyoppose,ofcourse—toutterlyremakeoursociety and political economy using the legal system, to make both resembletheirvisionoftheAmericangoodolddays,beforethe1960s,beforethe1930s,beforethetwentiethcentury.

*1LOL.Forinstance:AlexanderHamilton,confessedadultererandpayerofblackmailtohismistress’shusband,andThomasJefferson,secretslandererofhispoliticalopponents.*2Morethanthreedecadeslater,inhisbookACountryIDoNotRecognize:TheLegalAssaultonAmericanValues,publishedbytheHooverInstitution,Borkwasstillsteamedaboutthe1960s—evenbytheStudentsforaDemocraticSociety’sgentle1962manifestoadvocatingfora“politicsofmeaning,”afterwhichthe“counterculturegainedtractionandfurtherradicalizedattitudesamongelites,”inturncausingtheSupremeCourttoruinAmericaby“denigratingthesacred,byabolishingtaboos,byannouncingtheprincipleofman’sradicalautonomy.”Healsosaidin1996that“rock’n’rollisasubversivemusicandinthatsensecouldeasilyleadtodrugs.”*3Aroundthattime,Borkalsowroteaseventy-five-pagememoforBarryGoldwater,thePartyofLincoln’snextpresidentialnominee,providingconstitutionalandlegalbackupforhisoppositiontoafederalcivilrightslaw.

O fall the importantsubjectsaboutwhichIknewlittlebefore I startedthis book, government regulation of business was one where my knowledgedidn’tevencountassuperficial.Thedetailsseemedconfusingand tediousandreally best left to lawyers and other experts. I think regulation strikes mostpeoplethatway.

And itwas that ignorance and complacency—leave it to the specialists—thatenabledbigbusinessandtherighttoconvincealargemajorityofAmericansduringthe1970sand’80sthattheywereindifferenttoregulationifnotactivelyopposed.Backthen,asthegreatregulatoryrollbackbegan,notmanyAmericanswere consciously, let alone passionately, dedicated to regulating business ingeneral. For the libertarian right, however, reflexive opposition to any and allregulation was a fundamental principle. And since dealing with regulationusually costs money, big business’s new shamelessness about maximizingprofitsturnedcorporateexecutivesintolibertariansofconvenience.

Thepublic’sturnagainstregulationalsoderivedfromaspecialcaseofourconfused feelings about the past.The rush to deregulate during the 1970s and’80swashelpedalongbytheintertwinedstrainsofAmericansuspiciontowardgovernment: the angry 1960s anti-Establishment fight-the-Man kind, and alsothenostalgickindbasedonfantasiesofasimplerAmericabeforeallthesedangWashingtonbureaucratswere tellinguswhatwe could and couldn’t do.*1Butthevisionof thepast thatAmericansboughtwasamythicalone,consistingofonly the nice parts and none of the bad parts—such as brutal and dishonest

business practices.Moreover, political conservatives and liberalsmore or lesscame toagree in the1970s thatonepartof theAmericanpast, theNewDeal,wasobsolete,unworthyofnostalgia.Thealphabet soupof regulatoryagenciesandcomplicatedregimescreatedinthe1930sand’40sseemedso…antiquated.Aswithsomuchthathappenedtothepoliticaleconomyinthe1970sand’80s,Americansneverhadapropernationaldebateaboutregulation.

The heart of the right’s successful strategy was to turn regulation ofbusinessintoasimple-minded,single-mindedfor-or-againstbinaryquestion.Allpolitics (and most of life) involves simplifying complex issues. But thepoliticians’ and propagandists’ oversimplification of this question has beenparticularlyproblematicbecauseregulatorypoliciesaresocomplex,andbecausethereareseveraldistinctkindsofregulationthatfulfillthebasicmission,servingthepublicgood,inverydifferentways.

First are the regulations that help citizens directly, which consist of twobasic kinds. There are the ones meant to protect or enhance public health—requiring companies not to poison our water or air or land in the process ofmakingthings,andnottomakeorselloroperatethings(foods,drugs,cars,toys,buildings, airliners) that are unnecessarily unhealthy or unsafe.Then there aretheregulationsthattrytomakelifemorefair,likenotlettingfinancialfirmstakeadvantage of investors and borrowers, and not letting corporate insiders abusenonpublic information to buy or sell stock in their own companies, and notletting merchandisers lie in their advertising and packaging, and not lettingairlineskeepyoutrappedonaplaneonarunwayformorethanthreehours.

We’remostlyunconsciousof thevastwebofgovernment regulations andcodesonwhichwedependtomakelifesaferandfairerandotherwisebetterthanitwouldotherwisebe.Assoonasaruleorregulationsolvessomeproblem,wetendtoforgetaboutboththeproblemandthesolution.IfyouweretoreadthepreviousparagraphaloudtopeoplebeforeaskingthemthestandardGalluppollquestion—“Doyouthinkthere’stoomuch,toolittleorabouttherightamountofgovernmentregulationofbusinessandindustry?”—I’mcertainthatmany,manyfewerwouldanswertoomuch.Inthemostrecentsurvey,infact,38percentofpeoplepickedthatchoice,whilealargemajority,58percent,saidtheywantasmuchormoreregulationofbusinessaswehavenow.*2

Theothercategoryofbusinessregulationisatleastasimportant,butharderforpeopletoappreciatebecauseitisn’tasmuchaboutdirectlyimprovingtheirlivesandpreventingdisastersandrequiressomeeconomicunderstanding.These

areall thelawsandregulationsintendedtomakeoureconomicsystemoperateaswellasitcan,torefereethebalancebetweenmakingAmericaneconomiclifebothasfreeandasfairaspossible,optimizingthosetwogoalsintandemratherthansimplymaximizingone.

Themainpartof thisothercategoryofbusiness regulation isantitrust, alltheevolvingrulesspunoutofourantitrustlawsformorethanacentury—and,crucially, the interpretation of those lawsbycourts and judges, interpretationsthatRobertBorkandtheLawandEconomicsmovementsoeffectivelychangedinfavorofbigbusiness.

Thewordantitrustwascoinedbackin1890whenCongresspassedthefirstsuch law. A trust was one of the shockingly large new corporations that hadeffectivelyeliminatedcompetitionbyswallowingupcompetitors(andsuppliers)and thereby controlling whole industries. The important point is that antitrustlaws were never anticapitalist or antibusiness. They are anti-big-business, butonly to the extent that particular companies get so big and dominant in theircapitalistsectorsthattherestofusarecheatedinonewayoranother.

Properly enforced, antitrust laws prevent corporate gangsterism. Giantcompanies, simply by being rich and dominant, shouldn’t be able to kill offcompetitorsbecausetheycanaffordtosetpricesartificiallylowtemporarily,orto bribe competitors, by acquiring them, to throw the fight. In the 1990s, asMicrosoft was extending its quasi-monopoly power over software to the newInternet,thecompany’schieftechnologyofficeractuallyusedatermfromloan-sharking (for extortionate interest) andbookmaking (for takingboth sidesof abet)todescribetheirplans—“thatMicrosoftintendedtogeta‘vig,’orvigorish,oneverytransactionovertheInternetthatusesMicrosoft’stechnology.”*3

Thepoint of antitrust is tokeep capitalismas competitive and sustainableand altogether desirable as possible by making sure prices stay as low andsalariesashighandinnovationasrobustasanoptimallyfreemarketwillbear.Antitrustenforcersarethuspro-capitalistthewayforesterswhocutbacktreestomake room for new growth and gardeners who fight pests and farmerscommittedtoseeddiversityareallpro-agriculture.

ImentionedearlierhowAmericans, inthemiddleofthelastcentury, tookantitrustenforcementmoreandmoreforgranted,assumingthattheoldproblemof one or just a few companies dominating an industry had been solved.Thatwaswhy,forinstance,newspapersinthe1960swerepublishingfewerandfewerarticles that referred to corporate monopolies, and after 1970 references to

monopoly inAmericanbooksdroppedbyhalf.Thatcomplacencyhelpedpavetheway for the swift triumphofBorkand theLawandEconomicsmovementand the rest of the anti-antitrust right. In 1969 the Justice Department hadlaunchedanaggressiveantitrustcaseagainstIBM,whenitwasstilleffectivelytheU.S.(andglobal)computermonopoly.Thecasedraggedonandon,andin1979Borkgloatedthatitwas“theantitrustdivision’sVietnam.”

In the first year of theReagan administration, the head of antitrust at theJusticeDepartmentdecided,ashesaid,that“theonlysensiblethingtodo”wastodrop the IBMcase, in linewithhisnewapproachof“backingoff”antitrustenforcement in general.A fewmonths later, he backed off systematically andofficially. The Justice Department issued much looser new guidelines formergers,basedontheLawandEconomicspremisethatitwasfineforacoupleofcompaniestodominateabusinesssectoraslongasefficiencywasmaximizedand priceswere low, and hey, justdon’tworry about the other economic andpolitical downsides of corporate behemoths. Under Reagan, the antitrust staffwas cut in half, and consequential mergers—such as the two dozen betweenairlinesduringthe1980s—wereconsummatedwithbarelyapeepfromJustice.“WhenIbecameajudgein1981,”theReaganappointeeandconservativeanti-antitrust pioneer Richard Posner later confessed, “I thought I had a lot ofinterestingantitrustcases,andIdid—foraboutthreeyears.Andthentheystartedtodryup,”andbeforelong“therewerevirtuallynoantitrustcasesleft.”

The liberalmediawerealsoonboardforphasingoutantitrust. In the firstweeks of the Reagan administration, one of The New York Times’s mainbusiness reporters wrote an op-ed entitled “Antitrust: Big Business BreathesEasier,”explainingwhyandendorsing thenewlaissez-faireconsensus:“Manyeconomistsandlegalscholarscontendthatwithproductivitysagging,thenationcanno longer afford the costs of antitrust actions,” so “big is no longer bad.”DuringReagan’ssecondterm,theNewsweekbusinessandeconomiccolumnistRobert Samuelsonwent even further, arguing out that antitrust law itself wasobsolete,vestigial.

The antitrust laws reflected the “American fear that concentratedprivate power could undermine democratic government.” When theantitrust lawswereenacted,BigBusinesswasdominant.Governmentcheckswerenarrowandweak.Nowtheopposite is true.Governmentregulationispowerfulandpervasive.

Andsogiven“thetriumphof[antitrust’s]centralpoliticalpremise,”whichwas “the subordination of private business to public purpose,” we were…alldone!Thistakegotremarkablylittlepushbackinthe1980s.

Thefinal,mostinterventionistkindofbusinessregulationisquitedifferentfrom antitrust. These regulators don’t sit and wait to catch a big businessviolating the lawand thensue tostop it. Instead theyoverseeagiven industryclosely, constantly, writing and enforcing detailed rules prescribing how eachbusinessmustconductitself.Foressentialutilitieslikeelectricityandwaterthateveryoneneeds,andwheretheprivateprovidersarenearlyalllocalmonopolies,orrailroads’inherentregionalmonopolies—inotherwords,ineconomicsectorswhere monopolies are “natural” and inevitable—that kind of tight control ofratesandserviceisobviouslynecessary.

Extendedtootherindustries,however,it’sthekindofregulationthatbythe1970s and ’80s had often come to be outmoded. As air travel turned into abusinessinthe1920sand’30s,thefederalgovernmentcametoexercisethissortoftightcontroloverthenewindustry.Ofcourse,thefederalgovernmentneedstosetandenforceaviationsafetyrulesandoperatetheairtrafficcontrolsystem,but for decades a federal agency also decided exactly where each particularairlinecouldandcouldn’tfly,howmanyflightstheycouldrun,andhowmuchthey could charge for tickets. This system of regulation eventually becameproblematicbecauseitcreatedanuncompetitivemarket.Airlineshadtheirowngovernment-protected quasi-monopolies that let them charge high prices thatvirtually guaranteed high profits. The rigmarole required to adjust fares up ordownor change routeswas theoppositeofnimble.Startinganewairlinewasnearly impossible.Sowho finallymadeairlinederegulationhappen in the late1970s?Famousliberals,SenatorTedKennedyandhisaideStephenBreyer,thefuture SupremeCourt justice, in order tomake the carriers really compete onpriceandservice.Airlinefaresdropped,andnew,betterairlinesgotstarted.*4

It was also theDemocratic president and Congress in the late 1970s thatphasedouttheoldgovernment-setpricesfornaturalgasandshippingfreightonrailroads. Electric utility monopolies were required to start buying electricitygeneratedbyothercompanies.FederalantitrustenforcersintheliberalJohnsonadministration began a push that finally led in 1975 to the end of the highgovernment-mandated fees that people had to pay stockbrokers when theyboughtorsoldshares.

Suddenlyeveryoneagreed:deregulationisgreat!TheWashingtonleftwas

tweaking and improving the political economy in good faith, finding commongroundwiththereasonablegood-faithWashingtonright,whichstillexisted.Butthecrazeforderegulationsoonbecameaspectacularexampleforliberalsofnogooddeedgoingunpunished.Thenewbigbusinessrighthadstartedcaricaturingnearlyall federal regulation as heavy-handed, job-killing, nanny-statist,bad.*5Bureaucratbecameamoreandmorecommontermofcontempt.AndassoonasRepublicans won the White House and Senate in 1980, they began apromiscuousderegulationfrenzythat,withDemocrats’help,extendedineverydirectionfordecades.

In case you think promiscuous deregulation frenzy might be hyperbole,here’s the astounding hard fact: in 1977, companies in highly regulatedindustries produced 17 percent ofAmerica’s economic output, but just elevenyearslater,in1988,thatregulatedfractionofoureconomicoutputhadbeencutbynearlytwo-thirdstojust6.6percent.

Togiveasenseofwhatthatmeant,let’slookmorecloselyattwopiecesoftheconsumereconomywithwhicheverybody’sfamiliar—cabletelevision(andnowInternet)serviceandTVcommercials forpharmaceuticals.Only ifyou’remiddle-agedorolder,however,doyourememberthetimebeforeeveryonepaidforTV,whichwasalsobackwhenTVadsforprescriptiondrugsdidn’texist.

In1969 fewer than4millionU.S. householdshad cable,most of them inruralplacesbeyondnormalbroadcastcoverage.EveryoneelsewatchedTVforfree. By 1976, there was HBO and exclusive sporting events, so one in sixhouseholdshadgottencable,whichwasenoughtomakebusinesseslaunchmoreprogrammingchannels.By1984almosthalfofAmericanswerewired-upbasiccablesubscribers.

Becausecablehadinitiallybeenacollectionofwho-really-careslittlelocalbusinessesstealingandstreamingnetworkshows,thefederalgovernmentbarelybothered to regulate it, leaving that to towns and counties,which set the ratesthattheirlocaloperatorscouldcharge.Butthenintheearly1980s,ascableandTVwere about to become synonymous—a utility that almost everyonewouldpayfor,likewaterandelectricity—thebigbusinessesthatweretakingovertheindustrysawanopportunity.TheygotWashington,infullderegulationmania,toradicallyderegulate theirboomingindustry—specifically, tomakeit illegal forlocal authorities to regulate the fees the local cablemonopolists could chargelocalcitizens.TheSenatepassedthebill87–9, theHouseonavoicevote,andReagansigneditintolawaweekbeforehislandslidereelectionin1984.

Right away the cable operators didwhatmonopolists do: in the first fouryears after deregulation took effect, the average cost of the most basic cableservice rose 61 percent. A generation later, the lucky big businesses that hadcome to control cable service started offering fast access to theWeb aswell,makingthemevenluckier—virtuallyunregulatedquasi-monopolistssellingonehighly desirable utility, TV, and a second, genuinely essential utility, theInternet.

At least cable TV and the Internet were actually new technologies thatrequired us to figure out new ways of regulating them—or, as it happened,decliningtoregulatethem.Bycontrast,notechnologicalbreakthroughsoccurredinthe1980sthatobligedthegovernmenttoallowpharmaceuticalcompaniestodeluge American citizens with ads for prescription medicines. Rather, twoindustriesconsistingofverybigbusinesses,pharmaandmedia,tookadvantageoffree-marketmania.

Inthiscase,theytookusbackintimetotheturnofthetwentiethcentury,beforeAmericansdecideditwasn’tagoodideatoletmakersofmedicinesthatwere unnecessary or dangerous advertise them freely, back when half ofnewspapers’ ad income came from bogus and/or addictive patent medicines.From1906to1962,federallawregulatedmedicinesevermoreclosely,tryingtomake sure they were safe and did what they were supposed to do. As newpharmaceuticalsproliferated,afederal lawin1951finallyestablishedthe legalcategoryofprescription-onlydrugs.Intheindustry,theywereknownas“ethicalpharmaceuticals”and“ethicaldrugs.”

Andtheindustryquiteeffectivelyself-regulated,ethically,marketingthosedrugs exclusively to physicians…until the 1980s. There was no federal lawagainstadvertisingprescriptiondrugsdirectly toconsumers innewspapersandmagazinesandonTV, just sensiblenorms,observedallover theworld, that itwas a bad idea. But then in the early 1980s, a couple of pharmaceuticalcompaniesbegan running a fewadsonTV, and theFDAasked them to stop,prettyplease, foramoratorium.Then in1985 it lifted themoratorium.AdsonTV popped up, at firstwithout actually naming the drugs, then naming them,thenpushingtheboundariesmore.Pharmaquicklybecame,sotospeak,addictedto consumer advertising, as did, of course, advertising-supported media,especially TV networks, which had spent the 1980s encouraging the drugcompaniestobeginconsumeradvertisingandtheRepublicanadministrationstogiveitagreenlight.AfteranFDAcommissionertriedtoholdbackthetide,theRepublicanSpeakeroftheHouse,NewtGingrich,calledtheagencyAmerica’s

“numberonejobkiller,”andthefloodgatesopenedwide.Suddenlyinthe1990ssuch ads were all over the place. In 1991 the pharmaceutical industry’s totalconsumeradspendingwas$102millionintoday’sdollars,asmallfractionofitgoingtotelevision;justsevenyearslateritwastwentytimeshigher,morethan$2billion,$1billionofthatonTV.Sincethenpharmaceuticaladspendinghastripledtomorethan$6billionayear.

For the pharmaceutical aswell as themedia business, allowing consumeradsforprescriptiondrugs,aderegulationthatrequirednolawsbeingdebatedorpassedorrepealed,workedsplendidly.In1980theaverageAmericanspentthesame on prescription drugs as she had in 1970. By 1990 that amount haddoubled,thenitdoubledagainbeforetheendofthedecade,andsincethenithasmorethandoubledagain.Sowenowspend ten timesonprescriptiondrugs, inrealdollars,whatwespentin1970—andnotjustbecausedrugsaremuchmoreexpensive, thanks to all the micro-monopolies our big-business-friendlygovernmentcreatesforindividualdrugs.Weseetheads,sowesimplytakelotsmore, surely more than we need and more than is healthy. America isexceptional,inthisasinsomanyways.OnlyoneothercountryonEarth,NewZealand, allows prescription drugs to be advertised directly to its citizens.*6Until the1990s,wespentaroundthesameperpersononprescriptiondrugsasCanadians andwesternEuropeans, but nowwe spend asmuch as 200percentmore.Bytheway,afterthe1980sthetermethicaldrugquicklyfadedfromuse.Thatwasprobablyjustacoincidence.

*1Infact,duringthe1980sAmericadevelopedaweirdlybipolarattitudetowardregulation:justaswestarteddecidinggovernmentshouldbebanishedfromthefreemarketsothatbigbusinesscoulddoasitpleased,andthatparentsdidn’thavetosendtheirkidstoschool,andthatgunownershipcouldn’tberegulated,wealsostartedlicensingeverypossibleoccupationandgothystericalaboutchildrenbeinghurtonplaygroundsorkidnappedorabusedbysataniccults.*2ThefractionwhotellGallupthere’stoomuchregulationofbusinesshasbobbedupanddowninthiscenturyinanintriguingpattern:alowof28percentduringtheBushadministration,upto50percentduringObama,thenbackdownto39percentunderTrump.Inotherwords,wheneverAmericanselectanantiregulationpresident,theydiscovertheyactuallywantregulation.*3Funfact:Inthe1990srightafterthegovernmentbustedMicrosoftformonopolism,inMicrosoft’snewInternetmagazine,Slate,thatexecutive,NathanMyhrvold,reviewedmynovelTurnoftheCentury,amainsubplotofwhichinvolveshackercharacterspostingastock-market-movingfakeInternetnewsstoryaboutBillGates.*4Buttheninthe2000sthemoresurreptitiousandstructurallyprofoundformofcorporatederegulation,theweakeningofantitrust,reducedairlinecompetitionandundidmuchofthegood.Awaveofmergersleftjustfourcompaniescontrolling85percentoftheU.S.market.Inadditiontoprovidinglessservicetosmallercities,NorthAmericancarriersinthelastdecadebecamethreetimesasprofitableascarriersinEurope,whereantitrustrulesaremoreaggressivelyenforced.

*5Iunderstandhowencounterswithdifficultbureaucratsorstupidlywrittenrulesmakepeoplesuspiciousofregulation.Inthe1990stheNewYorkstateauthoritiesinchargeofpreservingforestsinformedmywifeandmethatwe’dhavetopaythesamelargefinancialpenaltywhetherweclear-cuttheplotofruralforestlandwe’djustboughtoronlythecoupleofacresonwhichwethoughtwemightbuildalittlehouse.BrieflyIwasputintouchwithmyinnerRepublican.*6In2015thedoctors’AmericanMedicalAssociationfinallydeclareditselfinfavorofafederalbanonmass-marketprescriptiondrugadvertising.

T he public face of American business, in the middle of the twentiethcentury, was reliable, responsible, deliberately boring. In fiction, Ayn Rand,especially in Atlas Shrugged (1957), depicted big businessmen as fuck-youswashbucklers,buttherealonesdidn’tdarecomeofflikethat.Aslateas1981,when left-wing professor Marshall Berman finished writing All That Is SolidMeltsintoAir,henotedhowreticentcorporateleaderswere,seldomcelebratingthe intrinsic thrills and chills of capitalism.How ironic, hewrote, that in thismodernCEOs,obligedtoappeartobereassuringantiradicals,hadbeenoutdonea century earlier by Karl Marx’s enthusiastic depiction of capitalism’s“revolutionaryenergyandaudacity, itsdynamiccreativity, its adventurousnessandromance, itscapacity tomakemennotmerelymorecomfortablebutmorealive.”AsBermansaidofmodernAmericancorporateexecutives:

Even as they frighten everyone with fantasies of proletarian rapacityand revenge, they themselves, through their inexhaustibledealinganddeveloping,hurtlemassesofmen,materials andmoneyup anddowntheearth,anderodeorexplode thefoundationsofeveryone’s livesastheygo.Their secret—asecret theyhavemanaged tokeepeven fromthemselves—is that behind their facades, they are the most violentlydestructiverulingclassinhistory.

But infact,afterworkingupto it foradecade,America’scapitalistswere

finally,fullyfeelingthedestructivegleeandatthatverymomentcomingoutofthecloset, loudandproud. It’s remarkablehowwell in1987abigHollywoodmovie—amoviedistributedbythestudioRupertMurdochhadrecentlyacquired—dramatized,inrealtime,theunashamednewmoney-money-moneyAmericanzeitgeist that considered capitalism nothing but awesome. It wouldn’t andcouldn’thavebeenmadejustadozenyearsearlier.

ThemainplotpointsofOliverStone’sWallStreetwerespoton:asuperstarfinancialspeculatorengagesinillegalinsidetrading,apredatorytakeoverstripsaprofitablecompanyof itsassets,andunionizedworkersarebamboozled intogoing along with a deal that will leave them without their good jobs andpensions.ThecorporateraiderGordonGekko,playedbyMichaelDouglas,doesget his comeuppance in the end because his stockbroker, the Charlie Sheencharacter who provided him with the tradable inside information about hismechanic father’s airline company, flips on him.ButGekko is the star of theshow,theexcitingsexylate-model1980santihero.

ThemostmemorablescenefromWallStreetisGekko’sspeechtoameetinginabighotelballroominmidtownManhattanofhundredsofshareholdersofapapermanufacturerinwhichhe’sboughtupstocktoexecuteahostiletakeover.Thecompany’sstuffyoldCEOspeaksfirst,explainingtohisinvestorsthatheis“fighting the get-rich-quick, short-term-profit, slot-machine mentality of WallStreet.” In this new approach toAmerican business, “we are undermining ourfoundation. This cancer is called greed. Greed and speculation have replacedlong-term investment. Corporations are being taken apart like Erector Sets,withoutanyconsiderationofthepublicgood.”

Then the smirking, charismatic, sharply dressed Gekko strides onto thepodium. “We’re not here to indulge in fantasy,” he says, “but in political andeconomicreality.”Thenheharksbacknostalgicallytothegoodolddaysofthenineteenthandearly twentiethcenturies,as thereal-lifecapitalist rightactuallydidanddoes—

the days of the free market, when our country was a top industrialpower,therewasaccountabilitytothestockholder.TheCarnegies,theMellons,thementhatbuiltthisgreatindustrialempire,madesureofitbecause itwas theirmoney at stake….You own the company. That’sright—you,thestockholder.Andyouareallbeingroyallyscrewedoverby these, thesebureaucrats….The new law of evolution in corporate

Americaseemstobesurvivaloftheun-fittest….Iamnotadestroyerofcompanies. I am a liberator of them. The point is, ladies andgentlemen, that greed—for lack of a better word—is good. Greed isright. Greed works. Greed clarifies, cuts through, and captures theessenceoftheevolutionaryspirit….Andgreed—youmarkmywords—will not only save Teldar Paper, but that other malfunctioningcorporationcalledtheUSA!

In just fourminutes,Gekko summarized and incarnated theU.S. politicaleconomy’s new doctrine. It was Libertarian Economics for Dummies, theFriedmanDoctrinedramatized,astumpspeechformoneyanditsmanipulationastherootofallglory.

And in the movie, Gekko’s audience responds with wild applause, astanding ovation, the whole crowd ecstatic over his endorsement of single-minded financial marauding. And life imitated art, which was imitating life.AmongthemillionsofAmericanswatchingintheatersandathomeonTVweretensorhundredsofthousandsofactualandwould-beinvestorsandtradersandbankers and bloody-minded players of the system who were electrified andinspired, virtually coked up. I’ve met business guys who can recite Gekko’slines. For them, it was a rousing band-of-brothers speech to the assembledmercenariesinthenewwar.TheGekkocharacter’scommissionoffelonieswasalmost incidental, part of the plot because aHollywoodmovie requires them,althoughthecrimesalsomakehimseemevenmorebadass.

Lots ofWall Street fans also got their ferocious animal spirits ignited bywatchingandmemorizing themostmemorable scene fromacontemporaneouscompanionpiece,DavidMamet’sGlengarryGlenRoss,whereAlecBaldwin’scharacterBlakemysteriouslyarrivestoterrifyanofficeofrealestatesalesmen.“A-B-C—A,always,B,be,C,closing.Alwaysbeclosing,”“Coffee’sforclosersonly,”“DoyouthinkI’mfuckingwithyou?Iamnotfuckingwithyou,”“Niceguy? Idon’tgive a shit.Good father?Fuckyou,gohomeandplaywithyourkids,”and“What’smyname?FuckYou,that’smyname.”*1He’slikeahellishnoncommissioned officer to Gekko’s gleefully demonic general in the U.S.capitalistlegionasitwasthenbeingreconstituted.

In 1987 aswell, someWall Street guys started referring to themselves asMasters of theUniverse, thanks toThe Bonfire of the Vanities, TomWolfe’snovelinspired,ashesaid,by“theambitiousyoungmen(therewerenowomen)

who,startingwiththe1980s,beganrackingupmillionseveryyear—millions!—inperformancebonusesatinvestmentbanks.”

—

Suddenlyinthe1980sthenewsmediawerealsocelebratingandglorifyingreal-lifebigbusinessmenas theyhadn’tsince the1950sandearly’60s—infact,astheyreallyhadn’tsincethe1910sand’20s.Itwasin1982thatForbesrealizeditwasnowacceptable tocreateanannual ranked listof the fourhundred richestpeople, with estimates of their wealth, and in 1984 some A-list journalistslaunched a very glossy, stylish national monthly about businesspeople calledManhattan,inc.

The most celebrated and glorified were the megalomaniacal loudmouthalpha-maleSOBslikeLeeIacoccaandJackWelch,leadersoftwoofthebiggestpubliccompanies,ChryslerandGeneralElectric,whobarkedandswaggeredinwaysthatsuchleadershadn’treallybeenallowedtodointhemodernage.Theywere hiredmanagers performing the roles of lovably tough and cantankerousfounder-owners.Bothcompanieswerebigold-fashionedmanufacturersfromthegoldenage,eachthetenth-largestcompanyinAmericawhenIacoccaandWelchtookthemoverin1979and1981,respectively,justaswebeganrealizingwe’dentered the twilight of big old-fashioned American manufacturing. Each is agoodcasestudyillustratingthebreakneckremakingofourpoliticaleconomy,inresponse to both new technology and globalization, and by decisions that thebossesandfinanciersandpoliticalleaderschosetomake.

In the 1970s the U.S. auto industry had responded slowly to ramped-upforeigncompetitionandhigheroilprices.Chryslerdidworstofall,continuingtomanufacture nothing but hulking, unreliable gas-guzzlers on which it lost theequivalentof$1,000percar.But thecompanywasdeemedtoobig tofail, thefirst, so Iacocca arranged for a nonbankruptcy bankruptcy, getting the federalgovernmenttocosignforbillionsinbankloans.Meanwhile,hemadehimselfthestarofChryslerTVadsandevenflirtedwithapresidentialcandidacyin1988—hiscampaignsloganwastobe“ILikeI.”

Ina1985coverprofileIwroteforTime,Isaidhewas“overbearing,”had“aDaffyDucklisp,”andwent“hardlyahalf-minutewithoutmentioning‘guys’—specificguysorguysintheabstract,guyswhobuildautomobiles(‘carguys’)orsell automobiles or buy them.”But I kind of liked him. In our interviews, heslaggedReagan’seconomicright-wingism.

TheDemocratstodayaremorepragmatic,notsoideological….Wearedeindustrializing the country….I’m not very popular with the peoplearoundtheWhiteHouseanymore.Itoldthem[ontradepolicy],“Let’smake sure we don’t get hosed.” They don’t like that. ThisAdministrationseesyoueitherasaprotectionistora free-trader,withno shades in between. And we’re going to lose, as a country, forit….Where’sDaveStockman?Every timehe tells the truthhegets introuble. He gives them the hard facts….So who’s in charge ofeconomicpolicy?Whoarethesepeople?

Iacoccaconvincedhisunionizedworkerstoagreetobepaidtheequivalentof $20,000 a year less than GM’s and Ford’s workers—and then spent theremainder of the 1980s laying half of them off. After retiring in 1992, hereturneda fewyears lateraspartofaGekko-like raider’sattempted leveragedbuyout of Chrysler, which failed and wound up enabling its takeover by aforeigncompany.*2

GeneralElectric, for itspart,wasn’t in troublewhenWelchbecameCEO.Rather,Welch took advantage of the new rules of the economy to make thecompany’s stock price skyrocket, which had been deemed, even more thanactualprofit,theonlythingthatmatters.LikeGekkoinWallStreetandBlakeinGlengarry, Welch was known for being brutally candid. In fact, GE made adoctrineoutofbrutality,codified itasasystemthatensuredworker insecurityby constantly identifying a quota of doomed losers. Every year, according toWelch’s new rule, one out of every ten GE employees were fired, no matterwhat, because nine other employees were judged by their superiors to besuperior. Itwas called theVitalityCurve, and other big companieswere sooninstituting dread-inducing worker-culling systems with their own euphemisticnames—Personal Business Commitments at IBM, Individual DignityEntitlementatMotorola.AtGE,manywereneverreplaced;duringWelch’sfirstfiveyearsasCEO,theworkforceshrankbyaquarter,andhebecameknownasNeutron Jack—ha!—because like a neutron bomb, he evaporated tens ofthousandsofpeoplewithoutdamagingthebusinesseswheretheyworked.Suchcorporate“rank-and-yank”systemswerejustonewaythatanacutenewsenseofeconomicinsecurityspikedinthe1980sandthenstayedhigh.

WelchalsostartedturningGEfromamanufacturingcompanyintomoreofafinancialservicescompany—justastheabstractandincreasinglyexoticgames

ofpurefinancialbetting,lending,andotherwisemakingmoneybyfiddlingwithmoney and hypothetical money was sucking upmore of America’s resourcesand focus and giving Wall Street ever more influence and control of oureconomy.Inadditiontoeliminatingjobs,theoriginalgreatAmericantechnologycompany drastically cut back its spending on research and development.As aresult, GE’s profits increased (for a while) and its stock price went upphenomenally (for a while), and JackWelch became the superstarriest CEO,worshipfully covered by themedia and emulated by corporate executives. Heand Iacocca and were both perfectly cast for the hypernostalgicUSA! USA!moment—John Waynes in suits and ties, straight-talking manly men fromworking-class families who’d come to the rescue of enervated, simperingcorporate America, taking over iconic companies to remake them for a hard-assednewage.

By the way, although American spectators had started doing that “USA!USA!” chantwith its cheerfully fuck-you edge at international sporting eventsduringthe1970s,itwasinthe1980sthatitbecameanationalculturalhabit,firstatthe1980WinterOlympicsinLakePlacid,whenTeamUSA(anewcoinage)beat the unbeatable Soviet hockey team, then spreading into professionalwrestling and Reagan reelection campaign rallies and finally to any sort ofexcitedmobofAmericanswhofeltlikemadlyinsistingonourawesomeness,toperform feelings of patriotic self-confidence, which used to abide moreorganically and implicitly. In other words, the “USA! USA!” chant was yetanother expression of the nostalgia tic, an old-timey barbaric yawpspontaneouslyinventedandthenrituallyreenacted.

Starting in the 1980s aswell, richAmericanswere given permission—byReaganism,bythemedia,bythemselves—tobehavemorelikerichpeopleintheold days, showing off their wealth. Conspicuous consumption had neverdisappeared,ofcourse,butinthethrivingdecadesthatfollowedtheDepressionandthewar, thebigeconomicwinnerswerereallynotsupposedtoflaunttheirgoodfortune,andculturalnormswereinplacetoenforcediscretion.WhenIwasgrowingupinOmahainthe1960sand’70s,noonetherethoughtitremarkablethatourlocalmultimillionaireWarrenBuffettlivedinanicenormalhouseonasmall lotamongothernicenormalhousesonsmall lots inaneighborhoodthatwasn’t the fanciest in town.What seemed remarkable, rather,was the twenty-thousand-square-foothousethatthefounderofGodfather’sPizzabuiltin1983,bycommonreckoningthefirsttruemansiontogoupinOmahasincethe1920s.Those national quiet-wealth norms were crumbling when a Rolls-Royce

Owners’Clubnewslettermorphedintoasuccessfulglossynationalmagazineforand about thewealthy calledThe Robb Report (1976), and they’d evaporatedentirely when Lifestyles of the Rich and Famous went on the air (1984) topersuade people that the lives of the fictional superrich onDallas (1978) andDynasty (1981) were real—get a load of this Glengarry–meets–Wall StreetIacocca-Welch impersonator Donald Trump!—and that ostentatious personalwealthwasnowtheonlyAmericanDreamthatmattered.

Ourfantasy-industrialcomplexalsoreflectedandnormalized thenewold-fashioned laissez-faire rules bymaking legal gambling ubiquitous, like in theOldWestandinoldEurope.Untilthelate1980s,onlytwoU.S.statesallowedcommercialcasinogambling,butwithinadecade, legalcasinosexisted inhalfthestates.Before the1970s,onlytwostategovernmentsoperatedlotteries,butmost did by the end of the 1980s, a decade states also spent cutting taxes. Inadditiontothebadoddsofwinning,thestate-runnumbersracketsreallyamountto a crypto-tax, maybe the most regressive ever, since lottery players aredisproportionatelypoor.

Idon’tthinkitwascoincidencethatthishappenedsimultaneouslywiththeU.S. political economy metaphorically turning into a winner-take-all casinoeconomy. The gambling hall replaced the factory floor as our governingeconomic symbol, a flashy, totally temporary gathering of magical-thinkingindividualstrangerswhose fortunesdependoverwhelminglyon luck insteadofoncollectivehardworkwithtrustedindustriouscolleaguesdayafterday.Risk-takingisagoodthing,centraltomuchofAmerica’ssuccess,butnotwhentherisksareinvoluntaryforeveryoneexceptthepeoplenearthetop,requiredratherthanfreelychosen,andwhenthoseatthetophavearrangedthingssotheydon’thavemuchseriousdownsiderisk.AsAmericanswereherdedintoliteralcasinos,theyweresimultaneouslybeingherdedenmasseintoournewnationaleconomiccasino,wherethegameswereriggedinfavorofthewell-to-doplayers.

Peopleputupwithit,forthesamereasonthat thegreatmassofpeopleincasinosputupwithplayinggames that thehousealwayswins in the longrun.The spectacle of a few ecstatic individual winners at that poker table or thescreamingslotmachineovertheremakesthelosersenviousbutnotresentfulandencouragesthemtobelievethat,hey,theytoomightgetluckyandwin.

After all, for as long as anyone could remember, Americans sharedproportionatelyinthenationalprosperity,thefractionsgoingtothepeopleatthebottomandthemiddleandthetopallgrowingatthesamerate.Inthe1980sit

wasn’t yet clear tomost people that the political economywasbeing changedfrom amore or lesswin-win game to one that was practically zero-sum, thatoverthenextfewdecades,atleastthree-quartersofthemwouldbetheeconomiccasino’s suckers, that their losses and forgone winnings would all go to theluckiest 20 percent, and that thenceforth in America only the rich would getmuchricher.

That’sbecausethesuccessfulandcomfortablesocialcontractthathadbeenineffectinAmericafromthe1930swasreplacedbyanewone.Socialcontractsareunwrittenbutreal,takenseriouslybutnotliterally,whichistheirbeautyandtheir problem. They consist of all the principles and norms governing howmembers of society are expected to treat one another, the balance betweeneconomic rights and responsibilities, between howmuch freedom is permittedand howmuch fairness is required.All the formal rules specifying behavioralconstraintsandresponsibilities, thestatutesandbureaucraticcodes,aredistinctfromthesocialcontractbutoverlapwithit,becauselotsofthespecificrules—taxrates,minimumwages,environmentalregulations,thecostofeducation—arecodificationsofthesocialcontract.

Contractsarenegotiated,ideallyinawaythatallthesignatoriesfeelfairlytreated. In the evolving American social contract, the balance among thecompetingdemandsoflibertyandequalityandsolidarity(orfraternité)workedprettywellformostofthetwentiethcentury,thearcbendingtowardjustice.Butthencametheultra-individualisticfrenzyofthe1960s,andduringthe1970sand’80s, libertyassumed itspowerfullypoliticized formandeclipsedequalityandsolidarity amongour aspirational values.Greed is goodmeant that selfishnesslostitsstigma.Andthatwaswhenwewereintrouble.

Thebesttestofamorallylegitimatesocialcontractisathoughtexperimentthat the philosopher JohnRawls named theVeil of Ignorance in 1971, just asmodern American ultra-individualism exploded. The idea is to imagine youknow nothing of your actual personal circumstances—wealth, abilities,education,race,ethnicity,gender,age;allthosesalientfactsareveiledfromyou.Wouldyouagree to signyour country’s social contract and takeyour chancesforbetterorworseinthesocialandpoliticalandeconomicsystemitgoverns?

Conservativesandthewell-to-doinparticularshouldsubmittothistest.Acentraltenetofeconomiclibertarianismistheimportanceofliteralcontracts:ifpeoplesignacontractfreelyagreeingtoitsterms,it’stheirbusinessandnobodyelse’swhattheydoforortooneanother.But“socialcontracts”?Fuckyou,you

do-gooders and losers andmoochers. Libertarians fantasize that they’re actionheroesandentirelyself-made.Theytendtoexemptthemselvesfromthetruismthat therebut for thegraceofGodgoeseachoneof them,becausean implicitpremiseof theirultra-individualismis thatanybodyinAmericacanmakeitontheirownand thatunfairdisadvantageseitherdon’t existor can’tbehelped. Ihave a hunch that the demographic profile of self-identified libertarians—94percent white, 68 percent male, 62 percent in their forties or younger—hassomethingtodowiththosebeliefsandfantasies.

*1AnEvilGeniuses–themedfilmfestivalwouldincludeWallStreet(1987),GlengarryGlenRoss(1992),TheAmericanPresident(starringMichaelDouglas,1995),30Rock’sseason4episode14(inwhichNBC’sactualex-overlordJackWelchplayshimselfwithAlecBaldwin’sfictionalNBCexecutive,2010),andBaldwin’sbestseveralSNLperformancesasDonaldTrump(2016–20).*2Intheearlytwenty-firstcentury,asthefantasy-industrialcomplexcontinuedannexingAmericanlifebeyondshowbusiness,Chryslerhiredtheeighty-year-oldformerCEOtobeitsColonelSanders,playinghimselfinTVadswithSnoopDogg.

T heugly,confusingwordfinancializationwasinventedinthelate1960s,the period of Peak New, just before America entered the era of extremefinancialization. But it didn’t really become a common term until we all firstexperiencedoneofitsspectacularlyugly,confusing,anddestructiveresults,themarketcrashandmeltdownof2008.

Simply put, financialization is howWall Street effectively took over theU.S.economyduringthefourthquarterofthetwentiethcentury.Oureconomy’smain players and private stewards went from a focus on actual work andproduction of goods and services to a preoccupation with financial schemingaroundproductiveenterprisesandtheworktheydo.

Itwasanotherparadigmshift.Financializationhappening insyncwith theotherplotlines andbig shifts in thisbookwasnot a coincidence.The changeswere all of a piece and synergistic. Wall Street’s new hegemony was firstenabledbyMiltonFriedman’smainstreamedlibertarianismandthenreinforceditinturn—dittowithfinancializationandderegulation,theLawandEconomicsmovement, theatrophyingof antitrust, the lionizationofguys like JackWelchandGordonGekko,thedigitalrevolution,increasinglyshort-termthinking,onlytherichgettingricher,andtheexplosionofcorporatelobbyinginWashington.*1

The Harvard Business School political scientist Gautam Mukunda has alucidexplainationforhowextremefinancializationhappened.“Realpower,”hewroterecentlyintheHarvardBusinessReview,

comesnotfromforcingpeopletodowhatyouwantbutfromchangingthe way people think, so that theywant to do what you want….Theability of a powerful group to reward those who agree with it andpunish thosewhodon’tdistorts themarketplaceof ideas….The resultcan be an entire society twisted to serve the interests of its mostpowerful group, further increasing that group’s power in a viciouscycle….In the United States…it’s…the financial sector—particularlyWallStreet—thathasdisproportionatepower….Thefinancialsystemisthe economy’s circulatory system. The large banks that have drivenfinance’sincrediblegrowtharetheheartofthefinancialsystem….TheAmericaneconomyissufferingfromanenlargedheart.

Thischapter is the longest in thisbook.That’spartlybecause its story—asetofinterlockingstories,really—issocentraltoAmerica’swrongturn.It’salsolongbecauseofsomepersonalstoriesI’veincluded.Butmainlyit’sbecauseifyouaren’tdeeplyfamiliarwithfinance,asIwasn’t,evenabasicunderstandingofwhathappenedrequiressomecarefulunpacking.

—

Before the 1970s, finance—regular banks, investment banks, stockbrokers,creditcardcompanies—was justanother service industry, theone inchargeoflending and investing and processingmoney. It wasmostly dull, and not justbecauseWASPsmostly ran it. Sobriety and restraint were thewhole point, apoint traumatically reinforced by the Crash of 1929, then codified by newfederallawsandregulationsinthe1930s.Forahalf-centuryafterthatcrash,thefinancial industry’s appetite for risk was low. As the financial journalist andformer investmentbankerWilliamCohanhaswritten,“WallStreet’sability tomanage riskwasoneof its singularsuccesses.”That’swhy in1972adoctoraldissertation I happened across on “Wall Street in the American Novel,” forinstance, casually stipulated that lately, “fewer novels are written which arebased on the marketplace of high finance” because “the excesses andexuberances which made the headlines in an earlier day are now largelypreventedfromoccurring,”and“thewide-openfrontierqualityhasdisappearedandWallStreethassettleddownandbecomesedateandmundane.”

What that Ph.D. candidate and most of us didn’t yet realize was that infinance, according to Cohan, “starting in 1970, prudence gave way to pure

greed.” The culture of Wall Street changed along with the rest of Americancultureduringandafterthe1960s.Forinstance,anexclusivenewkindofmutualfund for rich people was proliferating, with managers who investedpromiscuously,wildly—notjustbuyingpromisingstocksbutmakingbetsthatastock’s price would fall, acquiring real estate, speculating in currencies, andinvestingwith borrowed capital to get returns even higher if you bet right. In1967 theAmerican Stock Exchange issued a sternwarning to itsmembers to“considercarefully”anyinvolvementinthesenewfangled“hedgefunds,”toaskthe exchange’s permission first, and to always obey the existing “prohibitionsagainstexcessivedealing”—agentlemanlycatchalltermforaggressivenessthatwouldbeconsideredbadform.

During the late 1960s in America generally, sobriety and restraint werediscreditedassquarewhilerisk-takingandself-gratificationwerecelebrated.Infinance, starting in the 1970s, fusing if it feels good, do it with the FriedmanDoctrinemeant that the pursuit of maximum profit for oneself as well as forone’scompanytrumpedeveryothervalueormotive,sorecklessnessandcorner-cutting became normalized, even obligatory. The last guyswho’d been in thebusiness at the time of the 1929 crash retired. Until around then, investmentbankswerelegallypartnerships,consistingofpeoplemainlyinvestingtheirownpersonalwealth indeals, and thus theywere strongly inclined tobeprudent—eagertomakemoremoney,ofcourse,butaseagerasanyonenottolosewhattheyhad.But then,Cohanexplains, “oneWallStreetpartnershipafter anotherbecameapubliccorporation.

The partnership culture gave way to a bonus culture, in whichemployees felt free to take huge risks with other people’s money inordertogeneraterevenueandbigbonuses.RiskmanagementonWallStreet [became] a farce, with risk managers being steamrolled bybankers, traders, and executives focused nearly exclusively onmaximizingannualprofits—andthesizeoftheirannualbonuses.

Asinvestmentbanksandbankerstookmorerisks,managingitoftenmeantpersuading—sometimes conning—other people to assume the risks you didn’twant.Thustheinventionofallsortsofnewderivatives.Simplederivativeshadbeenaroundforever,suchasbettingonwhatthepriceofcottonoroilwouldbeat some date in the future. But then starting in the 1980s, based on work byeconomiststrainedattheUniversityofChicago,evermorecomplexandabstract

betsonbetsoninterestratesappeared,andbetsonthosebets.The financial industryactuallycoined theastonishingly shameless termof

artincognitoleverageforinvisiblecorporatedebt,debtkeptoffbalancesheets,hiddenfromthecluelesschumpsamongtheinvestors.The“largebanksstart[ed]acting more like traders” than trustworthy advisers, the journalist NicholasDunbarexplainsinTheDevil’sDerivatives,hishistoryoffinancialinnovation.Theresultwasan“innovationracebetweenwaysoftransferringrisk”—suchasthecreditdefaultswap,aderivativeboughtbyfinancialfirmsthatwasactuallypredicated on unpaid loans and financial disaster, an invention that “GoldmanSachs quicklymoved to exploit andwas richly rewarded for its ambition andruthlessness.”

Itwasn’tjustthemoreadrenalizedloosey-gooseycultureandgoingpublicthatmadeWallStreetgreediertothepointofrecklessness.Fromthemid-1970son, government was also an enabler in various crucial ways. In 1974 a newfederallawregulatingpensionfundsliterallychangedtheoperativedefinitionofthe term prudent to mean that henceforth, pension fund managers choosinginvestmentswere legally required tobeexclusivelydrivenbymaximizingcashvalue now, by whatever means, even if—catch-22—that required makingimprudentinvestments,orinvestmentsthatmightultimatelywrecktheirpensionbeneficiaries’industriesorcommunities.

In1978afederal taxlawgotanewlineofcodecalled401(k),andbeforelongeveryonewasencouragedtosetupa401(k)andfunnelmoneyfromeachpaycheckintostocksandotherinvestmentsforretirement—whichamountedtoan immediate and immense new revenue stream forWall Street. Then duringReagan’sfirstyearinoffice,Congresscutthetaxonprofitsfromstocksales—capital gains—to its lowest rate since the 1920s. And so after a steady driftdownwardsince1965,stockpricesin1982beganrisinglikecrazy.Thevalueofsharesdoubledby1986(anddespiteaone-daycrashof22percentin1987,theydoubledagaintwicemorebytheendofthecentury).

Financewasfunagain,asithadn’tbeensincethemid-1960s.Thewell-to-dowere getting somuch richer so quickly, andwithout any of that ’60s leftybuzzkill tomake them feel bad. The casino excitement encouraged still moreWallStreetfirmstogopublicandinventstillmoreexoticnewinvestments,andit encouraged government to deregulate more and cut taxes more. “You’re awriter,” a finance guy I’d just met actually said to me one night in the mid-1980s.“Ijustrealizedtheotherdaythatrichandriskarealmostthesameword

—thathappenedonpurpose,right,historically?”ItoldhimIdidn’tthinkso,butthatunliketeam,theydobothcontainani,ajokehedidn’tseemtoget.

Fromthemid-1970sthroughthe’80s,thegovernmentbeganexposingallofus to more risk by empowering financial hustlers in another way. It’s a bitcomplicatedandinvolvesasubjectIneverthoughtI’dbewritingaboutandthatyouprobablyneverthoughtyou’dbereadingabout:bonds.Butit’sagoodplacefor us to take a closer lookunder the hoodof financialization.Andbonds areimportant because they were a key part of the systemic undermining thateventuallyledtothefinancialdisasterof2008.

Issuingandsellingbondsarehowbigcorporations(andpublicentitieslikecities)borrowhugesumsofmoney.Bondswerealwayslessriskyforinvestorsthanstocks,becauseifacompany’sstockplummets, that’sjusttoobadforthestockholders,whereasthecompanyissupposedtobeobligedtopaybackinfullthepeoplewhoboughtitsbonds.ThreebigAmericanratingagenciesrateeachbondorothergiantchunkofdebt fromtripleA, thebest,down throughabouttwentygradationsofrisk,moreorlessthewaythebig-threecreditbureausrateyourandmycreditworthiness.

ThedifferenceisthatyouandIhavenorelationshipwiththecreditbureausthatmightinclinethemtopushupourscoresimproperlytopleaseusandthusletusrackupmoredebtthanwecanafford.Bycontrast,thebig-threecorporate-debt-ratingagenciesareallpaidbythebigcorporationsandfinancialfirmsthatareissuingandsellingthetranchesofdebt—andnotbytheinvestorswhowantrisk ratings that are, you know, objective. That businessmodel, “issuer pays”rather than“subscriberpays,”hasbeen standardonly since,yes, the1970s. Inotherwords,whilethefoxdidnotstartguardingthehenhouse,hewasdefinitelynow employing and training the guard dogs.At the same time, in 1975,WallStreet’sfederalregulators,theSEC,maderatingbondsanevensweeterinsiders’business by deputizing the big three as the U.S. economy’s official corporatecredit referees, effectively extensions of the government, thereby locking inthosebusinessesasano-competitiontriopoly.

Not coincidentally, the late 1970s were also when Wall Street startedmaking fresh billions froma newly conjured type of bond, a financial speciescalledmortgage-backed securities that were illegal at the time inmost states.Millions of individual home loans were thrown together, ground up, nicelypackaged, and sold to investors in bite-size pieces as financial sausages—nobodyreallyknewwhatwasinanygivenmortgage-backedsecurity,but they

were hot and tasted good. Their main promoter became vice-chairman ofSalomonBrothers,thebiggestbond-tradingfirmintheworld,whoby1984wasclaimingthatjustthatonesausage-extrudingpartofhisfirm“mademoremoneythan all the rest ofWall Street combined.” No wonder he was giddy: a newfederallawin1984declaredbyfiatthatmortgage-backedsecuritieswerenowassafeasU.S.governmentbonds,theultimatelow-riskguarantee,aslongasoneof those big private rating companies gave the particular sausage its seal ofapproval. In 1986 another federal law created a specific tax benefit thatmademortgage-backed securities even more attractive to investors. For the ratingcompanies, rating all these proliferating debt sausages was fabulous business,eventuallygeneratingasmuchashalftheirrevenue.

At the bottom of this new scheme, of course, were tens of millions ofregular Americans paying off their home mortgages every month. Becauseeveryoneinthefinancial industry—investmentbanks,mortgagelenders,raters,everybody—wasnowprofitinginsomanynewwaysfromthemortgageboom,they kept making it easier for people to borrow money to buy houses andcondos, andgot thegovernment tohelp.During the1980s,prudentNewDealrules concerning mortgage loans were repealed, allowing people to get homeloans with too little money down and interest rates that would “adjust” tounaffordable heights. So during the 1980s, the average price of a house inAmericadoubled.*2

Ever easier borrowing was the fundamental change that allowed thefinancialindustrytotakeovermoreandmoreofpeople’slivesandevermoreoftheeconomy.“Ithinkwehitthejackpot,”PresidentReagankvelledin1982ashesignedoneofthefirstbigfinancialderegulationlaws,whichtheDemocraticHouse had passed by three to one. Because people could easily borrow evermore on their credit cards, they saved less and less, assuming evermore risk,livingeverclosertothefinancialedge.In1970,onlyoneinsixhouseholdshadageneralpurposecreditcardlikeMastercardorVisa;bythelate1980s,amajorityofAmericanshadat leastone.Startingthenandcontinuingthroughtheendofthe century, Americans’ personal debt excluding home loans increasedtwelvefold,after inflation.In1978thecreditcardbusinessbecamemuchmoreattractivethankstoaSupremeCourtdecisionthatallowedbankstochargecreditcardinterestratesashighastheywanted,regardlessoflegalmaximumsinthestatewhereacardholderlived,bysettingupshopinstatesthatwerecool—freemarkets,man—withusury.

That1980swaveoffinancialindustrylaissez-fairehelpedtriggeradisasterimmediately:savingsandloans,theseveralthousandlocalbanklikeentitiesthatspecialized in lending to local folks—like Bailey Building and Loan in It’s aWonderfulLife—promptlywenta littlenuts,making toomany loans thatweretoorisky,especiallytodevelopersofshoppingmallsandofficebuildings.FullyhalfofAmerica’sS&Lscollapsedinlessthanadecade,andthegovernmenthadto provide the equivalent of a quarter-trillion dollars to make good on theirlosses.Yet thatcrackupdidnotpromptWashingtonorWallStreet tosoberupand slow down the loose-money craze in finance. The amount of all creditextendedtoAmericansfrom1980to2007—homemortgages,studentdebt,carloans,creditcards,andtherest—morethandoubled,andthedebtowedbytheaverageAmericanquadrupled.

Moneygoteasyforpeopleinthemiddleandtowardthebottom,forsuckerswithcreditcardandmortgagepayments theycouldbarelyafford—butalso,ofcourse,forpeopleatthetop,thefinancialspeculatorsandmiddlemenwhohadotherinnovatingtodo.

Such as leveraged buyouts of companies, or LBOs. Until the late 1970s,leveraged buyouts were small-time backwater deals, too skeevy for the old-schoolWallStreetfirmsorbanks.InthestandardversionofanLBO,outsiderstakeoverapubliccompanybyteamingupwithitsseniorexecutives,providingasmalldownpayment,andputtingup thecompany’sownassetsascollateral toborrow the necessary zillions to buy up all the stock and eliminate the peskyshareholders—thatis,takingitprivate.Thenforawhiletheyusethecompany’sprofits topaythemselvesandmakepaymentsonthedebt theyusedtobuythecompany. And then they resell the company ASAP to new shareholders bytaking itpublicagain. It soundsslightlydodgybutunremarkable.Looka littlecloser, however, and you see why LBOs so often are, in several ways,caricaturesofcapitalistrapacity.

Companiesaresupposedtoborrowmoneyinordertogrowtheirbusinesses—tohiremorepeopleandbuymoreequipmentand leasemorespace tomakeandsellmoreandbetterwidgets.ThewholepointofamodernLBO,however,isquiteoftennot thebusinessas abusinessat all,makingacompanybetter andbiggerandprofitableforthelonghaul.Rather,thepointisthefinancing,quicklyenriching the financiers and top management by means of a scheme with aridiculous taxdodgeat itscenter.Thebusiness,whatever it is, is justapretextforthatfast-in-and-outscheme.

The federal tax provision that makes LBOs work is shockingly simple:incomeistaxable,butinterestpaymentsaredeductibleontaxreturns,sowhenyou start using almost all of the LBO’d company’s income to make interestpayments,yougettostoppayingcorporatetaxes.Ofcourse,that’saperversionofthetaxcode,giventhatCongressmakesinterestdeductiblesothatbusinessescan more easily expand and hire and prosper, not so that financiers (and topexecutives) can enrich themselves. In fact, what often happens with LBO’dcompanies is the opposite: in order to afford their huge interest payments ontheir huge new loans, they lay off employees, sell whatever they can, cutresearchanddevelopment,andotherwisehunkerdown.

That tax-deductibility trick was nothing new, but a couple of new 1980sfactorsenabledthemainstreamingoftheLBO.BothdependedonWallStreet’snew postprudence shamelessness. One was the up-front fees that investmentbankers and the rest of the financial elite were skimming off of LBOs, oftenseveral percent of a company’s purchase price just for…wheedling, advising,pushing paper, attaching their corporate names to the deal—even though theydidn’tactuallycareaboutthe“long-termsuccessofthenewenterprise,”astheRepublican treasury secretary admitted at a Senate hearing in the 1980s, acarelessness that he admittedmightmakeLBOsa “financial snipehuntwherethenewlong-terminvestors,flashlightinhand,areleftholdingthebag.”Funny,thecabinetmemberoverseeingU.S.financesaid,it’sacongame!

ButmostimportanttomakingtheformerlydisreputableLBOtakeoffwasanewwaytofinancethetakeovers—bymeansoftheformerlydisreputablejunkbond. Junk bonds had been what happened to good bonds when the issuingcorporations got into trouble, causing the big rating firms to downgrade thebonds,whichmeant the corporationshad topayhigher interest topeoplewhobought their bonds. But then in the late 1970s, the young Los AngelesinvestmentbankerMikeMilkenstartedcreatingandissuingriskybondsasjunkbonds, from scratch, thereby creating awhite-hot new financial subindustry.*3Duringjustthefirsthalfofthe1980s,themarketforjunkbondsgrewsixfold,tothe equivalent of $94 billion a year, andmore than a thousand different junkbondswereissued—halfofwhichwoundupdefaulting,failingtopaythemoneyduewhenitwasduetothebondowners.Junkbondsarelikecarmanufacturersdecidingtostartmakingandmarketinglinesofbrand-newdesignatedlemons—cheaperparts,shoddilymanufactured,muchmoreliabletobreakdownorcrash,butsoinexpensive.

Fundedwithjunkbondsornot,atypicalLBOwasaconceptuallynewsortof acquisition, more brazen and shameless in its selfishness and greed—indifferentoutsidersofferingtomakeafewexecutivecollaboratorsveryrichaslongas theywereup for abandoning their fellowemployees and the companyitself if necessary. Most people agree that short-term thinking has become achronic problem for business, for the economy, for society—yet unabashedshort-termismisthepointofanLBO,thefinanciers’optimaloutcomebeingtotakeover,makeafortune,anddisappearasquicklyastheycan.

Oneof thegodfathersof this fast-and-loosenewgamewasHenryKravis,whoseManhattanfirmKohlbergKravisRobertsgotthecrazegoingin1979byinvestingacashdownpaymentequivalentto$4milliontouse$1billioninjunkbondsandotherdebttotakeoveranobscureFortune500company.Oneofthemost spectacular early LBOs was undertaken by former treasury secretaryWilliamSimon after he left government to propagandize for the right and therich, and to get very rich. (By his account, he was still in public service—because,ashe’dtestifiedtoaSenatecommittee,“Ifyoureallywanttohelpthepoor,helptherich.”)In1982heboughtagreetingcardcompanybyborrowingthe equivalent of $140million andputting up less than$1million of his ownmoney.Ayearlater,rightafterpayinghimselfaspecialdividendof$1millionfromthecompany’scash,hetookthecompanypublicagain,sellingthesharesofstockfor$800million,outofwhichhepersonallygottheequivalentofabout$177million,andbadefarewelltothegreetingcardindustry.

The rush was really on. The respectable banks and insurance companieswere now eagerly in the game. A respectable-sounding new term of art wasadopted,privateequity.*4Injustfiveyears,1984through1988,theequivalentofalmost$400billionworthofLBOschemeswerepulledoff,tentimesthevalueofthedealsoftheprevioussixyears.In1989KKRtookoverthecigaretteandsnackcompanyRJRNabiscofor theequivalentofmore than$50billion—stillthebiggestLBOever,byfar.Thatdealwasthesubjectofthebook(andtheTVmovie)BarbariansattheGate.EveryoneagreedafterwardthatKravisandKKRpaidwaytoomuch.Ontheotherhand,whocareswhenthecashyou’reputtingup is only a few tens of millions, less than one-tenth of one percent of thepurchaseprice?Butwait,that’snotall:justforhelpingtomakethedealhappenandadvisingothers snuffling andgulpingat the trough,KKRalso received infees,upfront,theequivalentofmorethan$800million.Whichwasstandard,thenewnormal.

—

Veryfulldisclosure:IknowHenryKravis.Thatis,forseveralyearsIridiculedhimpublicly,andforacoupleofyearsrightafterthat,Iinsubordinatelyworkedforhim.Letmeexplain.

Spy,thesatiricalmagazinethatIcofoundedandeditedduringthelate1980sand early ’90s, focused much of our journalism and ridicule on the rich andpowerful and celebrated, especially in New York. As it happened, Spy neverpublishedafeaturestoryaboutKravisorKKR,buthewasarecurringsecondarycharacter. We referred to him variously as “dwarfish takeover maniac HarryKravis,”“overleveragedbuyouthustlerHenryKravis,”“tinyeightiesrelicHenryKravis,”and,afterheboughtNabisco,“groceriescommissarHenryKravis”and“Shredded Wheat king Henry Kravis,” who was willing to “pay billions ofdollarsfornothingmorethanafewbrandnamesandsomejunkfood.”Hewasalsoamongthefifty-eightrichpeoplewhoreceived$1.11“refund”checksfromSpy’s fake National Refund Clearinghouse, and each time they cashed one,receivedanother,smallercheckwithanewfakeexplanation;Kraviswasoneofthe thirteen semifinalistswho cashed a $0.64 check, but in the final round hefailedtocasha$0.13check.*5

Anyhow, shortlyafter leavingSpy, Ibecameeditor-in-chiefof theweeklyNew York magazine—which Henry Kravis and KKR had recently acquired(fromRupertMurdoch)fortheirnewmediacompany,K-IIICommunications.Iassume that if publication archives had been digitally searchable back then, Iwouldn’thavebeenhired.

It’scalledNewYork,foundedtofocusonNewYorkCity,sonaturallywecoveredWallStreet.Twoyearsintomytenure,wepublishedagreatcoverstoryontheinternalbattlesatoneoftheeliteinvestmentbanks.Itreflectedbadlyonitsstarexecutive,who’dtalkedtothewriterquitecandidlyandwaspushedoutofhisfirmnotlongafterward.Whenthearticleappeared,KravisinvitedmetobreakfastathisenormousParkAvenueapartment.Thestoryhadmadehimveryuncomfortable,hesaid,sonowhewantedNewYorktostopcoveringWallStreetentirely.Iexplainedwhythatwouldbeunwiseandpolitelydeclinedhisrequest.WhenItoldmyactualbossesatthepublishingcompanyaboutit,theytoldmeto“ignore Henry.” Which I did. A few months later, we ran a story about theimminent1996presidential election featuringa coverphotoof theRepublicannomineewithhiseyesclosedand theheadlineBOBDOLE,WAKEUP!Kraviswashis campaign’s deputy finance chairman, had hosted a birthday fundraiser for

him, and had recently donated $250,000 to theGOP, so hewas included in aFAT-CATCATALOGUEsidebar.AweeklaterIwasfired.

—

ThesubtitleofBarbariansattheGateisTheFallofRJRNabisco:thecompanywasn’timprovedbythetakeover,itfell,gotbrokenuptonoparticularpoint,andintheend,apartfromthoseremarkableup-frontfees—unlockedvalueisoneofthe financiers’ terms of art that emerged in the 1980s, like when a safe isunlockedinanamazingheist—thedealdidn’tdowell forKravisandKKR.Aproblem with leveraged buyouts and other private equity takeovers, and withfinancialization in general, is that so often the main point isn’t to createenterprises of lasting value, enabling particular businesses (or AmericancapitalismorAmericancitizens)toprosperforthelongterm.Itistoobtainthosefees,thevigorish,andtoscorebymakingthisdeal,andthenanotherdeal,andanother, because greed is good, kill themall, and let the invisible hand sort itout.

As I was beginning this book in 2017, I noticed that big, familiar retailchainswere all going under—Toys “R”Us, Payless, TheLimited,Gymboree,and many more. Then I noticed that each of them had been subjected to aleveragedbuyout,finallychokedandsmotheredbydebtpiledonbytemporaryprivate equity owners. The list of solid, profitable American companiesunnecessarilywreckedthiswaysincethenisextremelylong.

Thestoryofonefamiliarcompany,notyetgone,isillustrativeasacapsulehistory of the evolution of American capitalism from ingenuity and grit andsocialbenefittopassionless,pointless,wasteful,endlessfinancialwhoredominLBOhell. In the late 1800s a tinkerer inWisconsin named Simmons found awaytomass-producespringmattresses,thencutcostsandpricesby90percent.His son took over and introduced the Beautyrest brand, then the grandsonmanagedtokeepthecompanygoingthroughtheDepression,whenthestocklost99.9percentofitsvalue—andthenSimmonsthrivedagainfordecades.Duringthe1970s,alongwithsomuchofU.S.manufacturing,thingsstartedgoingabitsouthforSimmonsBedding, thegreat-grandsonwaspurged, thecompanywassoldtotheconglomerateGulf+Western,andthenin1985itwastakenoverinanLBOby…WilliamSimon,freshlyretiredfromthegreetingcardracket.

Overthenexttwodecades,Simmonswassoldandresoldahalf-dozenmoretimes, goingprivate andpublic again and again, accumulatingmore andmore

debt, from the equivalent of $300million in 1991 to the $1.6 billion it owedwhenitfinallyenteredbankruptcyduringtheGreatRecession.Inthecourseofthe2009bankruptcytoreorganizethecompany,aquarteroftheworkforcewascut loose, more than a thousand employees, and people who’d bought thecompany’s bondswere out hundreds ofmillions. Then in 2012 Simmonswasacquired out of bankruptcy by another financial firm, which owned SertaMattress, and two years after that, yet another financial firm took over thecombinedcompany.Itdidn’tquiteconstituteamonopoly,becausetherewasstillone other big mattress company, Sealy, controlled at the time by…KKR.Between its first leveraged buyout and its (first) bankruptcy, Simmons’ssuccession of short-term financial-firm owners sucked $1 billion out of thecompanyinfeesandprofits.

There are plenty of LBO storiesworse than this one. Reading the detailsmademerealizethatthetermvampirecapitalismisfairenough.

—

“Aftera longdryspell,” thefirst lineofabreathlessNewYorkTimesbusinessstoryannounced in1980,“venturecapital isboomingagain.”The reporter feltobligedtoexplainwhatventurecapitalistswere,thewayarticlesbackthenalsohad to explain what Silicon Valley was. “ The last six months has been thehottestwe’veeverseen,”aVCinSanFranciscotoldthereporter.Allatoncethethree hot species of swinging financial firms—revitalized VCs, legitimizedhedge funds, overleveraged takeover artists rationalized as private equityinvestors—were flooded with investment capital from big commercial banks,investment banks, insurance companies, pension funds, and university andfoundation endowments. At the samemoment that alternative rock became agenre, so did these alternative investments and alternative asset managers.Meanwhile,moneyfrommerelywell-to-doandsolventindividualswasgushinginto conventional mass-market mutual funds, turning them into far, far morepowerfuleconomicinstitutionsthanthey’deverbeenbefore.

Lookingbacknow,thescaleandspeedofthegrowthoftheU.S.financialsectorfromaround1980throughtheturnofthecenturyisfreakish.Itsuddenlybegangrowingtwiceasfastasithadduringthe1950sand’60sand’70s.Backin1980,thebitoftheAmericaneconomyinthehandsofthe“alternativealpha”guys—venturecapital,privateequityandhedgefunds, thefor-rich-people-onlyinvestmentfirms—wasinsignificant.Alltheinvestedventurecapitalandprivate

equitycapital combinedwasaround$22billion in today’sdollars.Andall themoneyinU.S.hedgefundscombinedwasnomorethanafewtensofbillions.By2007,justbeforethecrash,thosesumshadgrowntotheequivalentsof$1.4trillion and $1.8 trillion. The bigger, more familiar business of Wall Street,brokeringandadvisingandbeingthemiddlemenbetweenthemassofinvestorsand theplainold stockandbondmarkets,quintupledasa fractionof theU.S.economyfrom1980totheearly2000s.Thegrowthofmutualfundsspecificallywas even more phenomenal: in 1980 they held the present-day equivalent ofabout$400billionininvestments,butby2007itwas$16trillion,fortytimesasmuch.

Thathasworkedoutextremelywellforpeopleinthemoney-manipulatingprofessions.OnlythepeoplenearthetopinAmericahavegottenricher,butthewell-paidpeopleinfinancehaveledtheway.Duringthatonegeneration,allthefeesreceivedbyallmutualfundmanagersincreasedtenfold,tomorethan$100billionayear.Asrecentlyas1990allthefeesthatwenttoallthepeoplerunninghedge funds and private equity and venture capital firms rounded down tonothing,“near-zero,”accordingtoanexhaustiveHarvardBusinessSchoolstudyoftheindustry.Bytheearly2000s,thatsmallishgroupwasrakinginmorethan$100billionayearaswell.

I’vementionedsomeof thepoliticalchoicesandgovernmentactions (andinactions) starting in the late1970sand ’80s that allowed for these sums—thelooser rules about who may borrow and lend, 401(k)s, the rules encouragingdebt, the much lower taxes on investment profits. Here’s another: thegovernment agrees to pretend that those billions paid each year to peoplerunningprivateequityfirmsandhedgefundsaren’thugesalariesbutareinsteadprofits on investments—even though those managers don’t actually own theinvestments.Thatisthe“pass-throughincome”loopholethatcurrentlyletsthempaytaxesof20percentinsteadofthenormaltopincometaxrateof37percent.

Withinfinance,therichpeopleinchargedoletsomeoftheirgushertrickledown to their little people.Back in the old days, the early 1900s, the averageemployeeofbanksandinvestmentfirmsearnedalotmorethandidpeopleofthesameeducationlevelwhoworkedinotherbusinesses.Butthenduringthehalf-centuryfollowingtheDepressionandNewDeal,thatpaypremiumforpeopleinfinance evaporated. Then in 1980 it suddenly reappeared, reverting towhat ithadbeen in the 1920s. In 1978 the average employee in financewaspaid thesameastheaverageemployeeineveryotherfield—$53,000intoday’sdollars.By2000,thataveragefinancepersonwaspaid$92,000andeverybodyelsejust

$59,000.Thenewpost-1980spremiumforexecutives infinance,however,wasconsiderably larger—they started being paid three and four times what theequivalentexecutivesinotherfieldsgot.

As financializationwas starting, theYale economist JamesTobin, havingjustwon theNobel Prize, delivered a lecture called “On theEfficiency of theFinancialSystem.”It’sremarkablehowclearlyhesawin1984thatthefinancialtailwassuddenly,crazilywaggingoureconomicdog.Tobinsaidthatalthoughasaneconomisthewassupposedtobeunsentimentalaboutsuchthings,hefelt“uneasy”aboutthechange.“Wearethrowingmoreandmoreofourresources,including the cream of our youth, into financial activities remote from theproduction of goods and services.” Before the rest of us were talking aboutAmerica’srefashionedcasinoeconomy,Tobinexpressedhisdismayatthenew“casinoaspectofourfinancialmarkets,”becauseWallStreetwasnolongerjustthe house that alwayswins, it had startedwinningmore offmore suckers byrigging it as “a negative-sum game for the general public.” Tobin also sawclearly how the digital revolution, barely begun, would enable the financialindustry’sbookkeepinggimmicksandspeculativebetstogrowexponentially.

Isuspectthattheimmensepowerofthecomputerisbeingharnessedtothispapereconomy,nottodothesametransactionsmoreeconomicallybut to balloon the quantity and variety of financial exchanges…facilitating nth-degree speculation which is short-sighted andinefficient.

Ilovehisphrasenth-degreespeculation.Itcoveredtherangeofobsessive-compulsive financial speculation thatwould be enabled by computers and theInternet, from themania for derivatives in the late twentieth century to high-speed trading in the twenty-first.Withmore andmore people suddenly in thebusiness of buying and selling stocks for a living, digital technology enabledmoreandmorestocktobeboughtandsold,anorderofmagnitude increase inthe scale of that churn between the 1970s and 2000. “What is clear,” Tobinconcluded in 1984, “is that very little of the work done by the securitiesindustry”thesedays“hastodowiththefinancingofrealinvestmentinanyverydirectway.”

—

A decade or so later people had just begun referring excitedly to digitalbusinessescollectivelyas theNewEconomy,althoughtherewasnoGoogleorFacebookyet.TheNewEconomywasnew.Inearly1998Iwroteasomewhatskeptical essay in The New Yorker called “The Digital Bubble.” Among myargumentswasthatbecausePCsandtheInternetwerealreadyessentialtoolsinjournalismandfinance,early-adoptingjournalistsandfinancepeoplemighthavegottenoverexcitedabouttheirpotential.

In 1999, however, I found myself eager to dive into this New Economymyself, to help make something cool and have fun before it was too late. Icofounded an ambitious online (and eventually print) publication called Insidethatcoveredmediaandentertainmentwithaspecialfocusonthedawningdigitalage for both. That experience gaveme a spectacular and revelatory first-handglimpseofthefinancialindustryattheturnofthecentury.

VCsandWallStreetbanks—Chase,GoldmanSachs,andLehmanBrothers,amongothers—requiredhardlyanyconvincingtoinvest.Onedayinearly2000,an investment banker from Bear Stearns knocked on our door. Were wefinanced? Did we need capital? Incredibly, she was going up and down thegrungy halls of the industrial building where we had our office, making coldcalls.This,wehalf-joked,mustbeasignof thetopof themarket.Inall,WallStreet and others invested the equivalent of $50million in our dot-com. Thatsum, flabbergasting then and evenmore so now,was only one-twentieth of 1percentofthecapitalfunneledthroughthe4,503VCdealsinthatpeakyearofdot-commadness.Wefinished raisingmostof thatmoneypractically theverydaythatwhatI’dcalledabubbletwoyearsearlierbegantopop.

We didn’t pay ourselves much, and the journalists of Inside did someexcellentwork, but it lasted only two or threemore years. In the end, it wasacquired by an established media company, an acquisition that earned menothingandafterwhichIpromptlyresigned.TheacquirerwascalledPrimedia,thenewnameforK-III,themediacompanyownedbyHenryKravis’sKKR.*6

—

Despite Inside’s evanescence, the millions poured into the venture were,contrarytoTobin’swarning,thefinancingofrealinvestment.Indeed,asaresultoftheextremegrowthofthefinancialindustryfrom1980onward,itsworldviewandinterestssoonhadeverythingtodowithrealinvestment,therealeconomy,

andthereallivesofAmericansinverydirectways.Howdidthathappen?Theshortanswer:asWallStreet’sfinancialapproach

becamemorecasino-like,thatshort-term,jackpot-ASAPfocusalsobecametheoverriding focus of big business executives, which helped lock in as neverbeforeWallStreet’sdominanceofAmericanbusinessandAmericanlife.

Andnowforthelongeranswer.Likesomuchofthisstory,itswellspringisMilton Friedman’s 1970 announcement of the new American gospel thatmaximizing profit was the one and only responsibility of people running anybusiness. In the early 1970s at theUniversity of Rochester, whose right-wingeconomicsprogramwasAvisorBudgettotheUniversityofChicago’sHertz,alibertarianprofessorspecificallycommissionedtwobusinessschoolcolleagues,bothUniversityofChicago–trained,towriteapaperelaboratingontheFriedmanDoctrine.*7Thatbecame,whenitwasfinallypublishedin1976,“TheoryoftheFirm,”whichmade thenewcallousness seemscientificandwhichbecame thefirst or second most cited business and economics paper ever. “The modernunderstanding” of how corporate managers should run companies, a HarvardBusiness School professor and Harvard Business Review editor declared in2012,“hasbeendefinedtoalargeextent”bythatpaper.Itsauthorstookatwo-hundred-year-oldobservationofAdamSmith’s—thattheinsufficiently“anxiousvigilance” of hired company directors could result in management“negligence”—andextended it to357pageswith impressive-lookingequationsandlanguageofthe“manager’sindifferencecurveistangenttoalinewithslopeequalto–u”kind.

The argument was that if corporate executives were mere salary-earners,their interests inevitably diverged too far from the interests of the company’sowners. Instead of doing their jobswith absolute financial single-mindedness,executivesmight start being too fair and decent, so theywould overspend on“charitablecontributions,”getlaxon“employeediscipline,”concernthemselvestoomuchabout“personalrelations(‘love,’‘respect,’etc.)withemployees”and“theattractivenessofthesecretarialstaff.”

The authors’ 1983 follow-up to the paper was a much shorter, moreaccessible one in which they dumped themath and any pretense of scholarlyneutrality. “The right of managers to use corporate assets in the interest ofstockholders has gradually been eroded away,” they wrote, so that “specialinterest groups thereby transfer wealth from [shareholders] to themselves.”Because they provided no examples of “erosion” or plundering by “special

interests,” it’s unclear if they meant safety or environmental regulations orcorporate taxesorwhat. “Bigbusinesshasbeen cast in the roleof villain”by“the intellectually unwashed,” the “anti-war protesters, consumer advocates,environmentalists, and the like,” who “wish to use the power of the state topervert”thecorporatestatusquoandtospread“theclichéthatcorporationshave‘toomuch’power.”That“attackon thecorporation” starting in the1960s, thetwo professors asserted without evidence, was the reason for “the poorperformanceofthestockmarket”duringthedecadeortwosince.

Mostconsequentially,theypositedasakindofscientificfactthatapubliccompany’s stock price right now was the only meaningful measure of acompany’s value.*8 Friedman had said maximizing profits was everything.Profits,atleast,areareal,objectivemeasureofacompany’ssuccess.However,thisnew,supposedlyabsolutegaugeandguidingstar,astockprice, is just themomentaryaverageofallthehunchesandbiasesofahigh-strungmobofbuyersandsellers,mostofwhomhaveaverysuperficialunderstandingofthecompany.Yetitseemsobjective,andinanycaseissoirresistiblysimple.Plus:democracy!Givingthehigh-strungill-informedmobabsolutepower,lettingthemvoteeveryday—everyhour,everyminute—wasmaximumdemocracy.

Bythe1980s thisapproachhad turned intoamovementwithanewnameand mantra: shareholder value. Unlike Friedman’s contemptuous bah-humbuggery or Gekko’s Greed is good, it sounded neutral, uncontroversial,practically self-evident—likeLawandEconomics.Victory for thenewdogmawas fast and total. Back in 1981, the official scripture of the BusinessRoundtable, the big business politburo, still held that “corporations have aresponsibility, first of all, to make available to the public quality goods andservicesatfairprices”andto“providejobs,andbuildtheeconomy.”Thetermshareholder value’s first apparent use in The New York Times came thefollowing year. Boom: according to an economist who specializes in U.S.business history, “no onewas talking about ‘shareholder value’ ” in 1984, butthenboom,by1986,“everyonewastalkingaboutit.”Inthe1990stheBusinessRoundtabledoctrinewasamendedaccordingly,professingthenewfaiththatthepoint of a business enterprise “is to generate economic returns to its owners,”period, by being “focused on shareholder value.”By then amore pointed andaccuratetermhadbeencoinedforthenewstock-pricemonomania:shareholdersupremacy.

Themostobviouswaytomakecorporateexecutivesobsessmoreovertheir

stockpricewastostartpayingtheminsharesofcompanystockinsteadofcash.Until the late 1960s only about one in five senior executives at big U.S.corporationswere beingpaid partly, and fairlyminimally, in stockoptions. Inthe1970sanewstandardaccountingruleallowedcorporatefinancialstatementstopretendthatstock-optionpaydidn’treallycountasacorporateexpense—freemoney!—whichnaturallyencouragedthepractice.Bythe1980sathirdofseniorexecutives’paycamefromstockandstockoptions.TheIRScodewastweakedin 1993 to encourage it some more—from then on, any cash salary over $1million was no longer tax-deductible at all for companies, but stock optionsremained fully deductible. Soby the endof the 1990s, fewer thanone in fiveseniorexecutivesweren’tgettingstockoptions,andstockconstitutedhalf theircompensation.Recentlyoptionsandotherstockawardsamountedtotwo-thirdsofseniorexecutivepay,andforthehighest-paidonesevenmore.

Making executivepaymore stock-based at least had aplausible rationale,likeputtingashockcollaronadogtomake itbehavebutmainlyrewarding itwith extra delicious treats when it’s a good boy, good girl. But what’s sorevealingaboutthischangeduringandafterthe1980swasthesuddengrowthinAmericaof theamountsof thatexecutivepay.Forfortyyears, fromthe1940sthrough the ’70s, the compensation of the top three executives of the largestcompanies had increased modestly, less than 1 percent a year, from theequivalent of $1.4million on average to $1.8million. Then it suddenly wentcrazy,particularlyduringthe1990s,sothatbytheearly2000s,thoseexecutiveswere receiving an average of $13 million a year. In the 2010s the averagecompensationof the fivehundredhighest-paidexecutivesofpublic companieswas$30million.WhydidCEOsandothertopexecutivessuddenlystartgettingpaid ten and twenty times asmuch as they’d been paid before, and lotsmorethantheirpeersintherestoftherichworld?Ithinktheansweristhreefold.

First andmost simply, greed and shamelessness and shameless greed hadbeen normalized. In American capitalism’s upper precincts, a kind of self-justifyingorgiastichysteria tookhold,particularlyinfinance.It’saspectacularillustrationofthetacitacross-the-boarddecisionthenthateconomicboatswouldnolongerrisetogether,thatit’dbefinetoincreaseinequalitytostaggeringnewlevels.

JustasCEOs’compensation rosesteadilybutmodestly forahalf-century,the premiums they got compared to their employees were also more or lesssteady,reflectingtheall-boats-risenormsoftheAmericansocialcontract.Fromthe 1930s through the ’80s, the top three executives at the fifty largest U.S.

corporationswerepaidbetweenthirtyandsixtytimesasmuchastheiraverageemployee.

Buttheninjustadozenyears,thatratioquadrupled,sothatby2003thosethree top bosses on averagewere earning 219 times asmuch as their averageemployee.TheratiobetweenthepayoftheaverageworkerandthatoftheCEOclimbedevenhigherandremainsclosetothreehundred.SomeU.S.CEOs—atStarbucksandDisney,forinstance—arepaidonethousandtimesmorethantheirmedianemployee.

PaulVolcker,theformerchairoftheFederalReserveandofaWallStreetinvestmentbank,saidnotlongbeforehediedrecentlythat“akindofcontagion[was]atwork,” theprofligacysymptomaticofamasshysteriaemanatingfromWallStreet.

DotheCEOsoftoday’stopbanks(orotherfinancialinstitutions)reallycontribute five to ten times as much (in price-adjusted terms) to thesuccess of their institution, or the economy, as their predecessors didfortyorsoyearsago?Ihavemydoubts.Atleast,itdoesn’tshowupinthe economic growth rate, certainly not in the pay of the averageworker,or,morespecifically,inanabsenceoffinancialcrises.

The second factor driving the madness was perverse but more quasi-rational: if the goal of shareholder supremacy was for hired managers toresembleownerspsychologically,didn’tmakingexecutivesrichenoughto livelike ScroogeMcDucks have a certain sick logic? Furthermore, in the Fortune500boardroomswherepaypackagesareapproved,whowasgoingtoarguethatsmart,hardworkingpeoplelikethemselvesdidn’tfinallydeservetobepaidthesevast sums?Besides, theycould say and sincerelybelieve starting in the1980sthat “deserve” is totally subjective, that pay is determined and ratified by themarket, and that market judgments are final…even though, as some of themadmit privately, with a shrug and a smile, the top-executive job market isn’treally a free market but more of a clubby, crony-capitalist cartel practicallyimmunetotruemarketforces.

Thirdandfinally,theextrabillionsincompensationfunneledbyWallStreettomanagementsofallthemajorcorporationsstartingthreedecadesagoamountto a de facto gargantuan bribe to obey Wall Street, thus extending andconsolidatingWallStreet’spowerovertheentireeconomy.

Thatlastpointisnotaconspiracytheory.I’mnotsuggestingthatthe1990spayincreasesof500percentor1,000percentweredesignedwiththatinmind,aspartofagrandmasterplanbythefinancialsectorforworlddomination.Butitdid work out like that, one more powerful new tether making America morebeholden toWallStreet, financialized.Norwasprivate equity inventedby thefinancial sector inorder togive themselvesmoredirect,hands-oncontrolovermoreandmoreof theeconomy,but thatwaswhathappened.Until the1980s,when private equity firms arose, Wall Street bankers were just bankers,middlemenprovidingcapitaltocompaniesbutnotactuallypresumingtorunthecompanies,letaloneremakeordismantleorlootthem.Nowtherearemorethantwo thousand private equity firms inAmerica owning and running businesseswortharound$2trillion.

But finance came to dominate the rest of the corporate economy mostprofoundly by changing the job of the top executives at America’s severalthousand public companies. The number one responsibility became notproducingbetterproductsorsatisfyingcustomersorplanningfiveyearsahead,butmakingthestockpricegethighertodayandstayhigh.

Myclosestpersonalencounterwiththiscrazednewcorporaterealitycamein1993.AtthetimemywifewasanexecutiveatthecablechannelNickelodeon,thenin itsextremelyprofitableheyday,andshe’djustclosedanimportant$30millionhomevideodeal for thecompanywithSony.Lateon theday thedealbecamepublic,SumnerRedstone,chairmanofNickelodeon’s$11billionparentcompanyViacom,phonedherforthefirsttime—nottooffercongratulationsbuttoberateandscreamather, irrationally,becausetheannouncementofherdealhadn’t made the Viacom stock price move up. Just then he was particularlydesperateforahigherstockpriceinordertoacquiretheParamountmoviestudiomoreeasilywith stock.But she says thatdespitehighearnings, thatobsessionwith getting Viacom’s share price higher definitely made her and herNickelodeoncolleaguesreducequalityandinnovation.

That’s just one company run by one old guy. But evidence for this newdominanceofbusinessbyWallStreetsincethe1980sisvastandinarguable.Forinstance, in a survey in the 2000s of four hundred financial officers of publiccompanies,asmanyas78percentofthemactuallyadmittedtheywouldcancelprojects and forgo investment that theyknewwouldhave important long-termeconomic benefits for their companies rather than risk disappointing WallStreet’severy-ninety-daysearningsexpectations.Anothergiantirony:preciselythatkindofperverse,enterprise-damagingmanagementbehaviorwaswhat the

professor-godfathersofshareholdersupremacy in1976hadwarned thatpurelysalaried managers were doing. According to “Theory of the Firm,” when anexecutive’s pay isn’t a function of the stock price, “his incentive to devotesignificant effort to creative activities such as searching out new profitableventuresfalls.Hemayinfactavoidsuchventuressimplybecauseitrequirestoomuch trouble or effort” to understand new technologies and use them toinnovate. Forty years later, the research provides no consensus that payingexecutivesinstocksolvestheproblemsofexecutiveinattentionorlaziness.

Indeed, now that the overriding goal of the managers of every publiccompany was to get the stock price up, the focus of corporate “innovation”becamedoingthat,financiallyinnovatingbyanymeansnecessary.IrememberwhenIfirstreadin the1980saboutcompaniesbuyingupmassesof theirownshares on the stockmarket as a strategy for jacking up the price—by havingfewersharesincirculation,theirearningspersharemagicallyrose—itstruckmeas…not a con, maybe, but not exactly kosher. As with almost all the arcanechanges going on in the political economy at the time, however,my responsewastoforgetaboutitandmoveon.ButI’venowlearnedthatmynaturalciviliansuspicion of the practice had been encoded in federal securities law since theNew Deal: buying back shares of your own stock was tantamount to illegalmarketmanipulation,insidertradinginthespiritifnottheletterofthelaw,andithadbeenessentiallyoutlawed.

But then in 1982, without any real debate and without almost anybodyoutsidefinancenoticing,theSECdidawaywiththatban.

Atfirstmanagementswerehesitanttogoforit,continuingtospendastheyalwayshad,tryingtousetheirprofitstopaydividendstoshareholdersandgrowtheir companies rather than concentrating on hacking the stockmarket. So in1984apairofbig-timeWallStreetexecutiveswroteaNewYorkTimesarticleexhorting companies to take advantage of this fantastic new zone of financiallawlessness.Reagan’sgiveawaystobigbusiness,taxratecutsof40percent,and“tax credits and other benefits for corporations,” they wrote, had providedcompanies“unprecedented”amountsofcash,“oneofthebiggestcashbuildupsin corporate history.” In this “stunning and strange” newworld, conventionalcapitalist logic had been overthrown. To use company money in the old-fashioned slow-payoff ways, to “reinvest” it in “new capacity,” to build forfuturegrowth in theactualbusiness,wasnowachump’sgame.Since thebullmarket for stocks that had started in 1982 had ended and prices were nowdropping,thesetwoWallStreetgeniusesaskedandansweredaquestion:“Who

will support stock prices? It could and should be the companies themselves.”Theyalsopushed thenewAmerican truism thatperception is reality, thatasadisplayofcorporateself-esteembuyingyourownstockisfabulousPR.

Theyear thatmanifestowaspublishedcompaniesboughtbackonlya fewbilliondollars’worthoftheirstock,butasthedecadeendedfiveyearslater,theannual average was tens of billions. That’s when Jack Welch (Jack Welch!)announced thatGE(GE!)wasgoing tobuyback theequivalentof$21billionworth of its own stock because that was somuch easier than “going out andtakingawildswing”atdevelopingnewtechnologiesornewbusinesses.Itwasthebiggestsinglebuybackyet.WelchwasactingevenmorelikeaWallStreetguy,andWallStreetredoubleditsloveforhim.Unquestionablyanewpartyhadstarted.

The largestU.S. companieswent from spending4 percent of their annualprofitsbuyingbackstockintheearly1980sto30percentinthelate1980s,thenin the ’90s around half. During just the five years leading up to the crash of2008, the number of buybacks by the biggest companies quadrupled. In 2007,the four hundred biggest companies spent 89 percent of their profits to buysharesoftheirownstocks,andmostcorporateearningsarestillspentthatway.During the last decade, U.S. airlines, for instance, spent 96 percent of theiravailablecashbuyingbackstocktojackuptheirshareprices—sharesofwhichtheexecutivesofthoseairlinespersonallysoldfor$1.6billionduringthatsameperiod.Buybackseffectivelybecameobligatory incorporateAmerica,doneby85or 90percent of bigpublic companies.The cost latelyhasbeen around$1trillionayear,threetimeswhatbusinessesspendonresearchanddevelopment.

Eveninashort-termfinancialsenseforinvestors,itmightbeawaste.Onestudy published in 2011 for chief financial officers concluded that stockbuybacks“maynotyieldasmuchvalueasinvestinginacompany’sbusiness.”Companyexecutives tendtobuybacktheirshareswhentheprice isexcitinglyhigh, and for three-quarters of the companies, the return on investment wassubpar.Duringtheperiodof thestudy, thestockmarketwasdown19percent,but theshareprices for the29companies (outof461) thatdidn’tdobuybackswentuponaverageby40percent.

Howmuchdocompaniesusebuybackstofoolshareholdersandthemarketsabout the actual health and prospects of their companies? How much doexecutives, each being paid with stock and options worth millions andsometimeshundredsofmillions,usebuybackssimplytoenrichthemselves?The

new SEC rule in 1982 didn’t define what might constitute unacceptabledeceptionorfraudwhenitcametobuybacks,sointhethirty-eightyearssince,no company has been prosecuted for abusing the practice. In 2018 an SECcommissionerwhohappenstobeanNYUlawprofessorspecializinginthisareadid a study of this problem, and he makes a compelling case for systematicabuse. Right after a buyback becomes public, the average executive sells fivetimesasmanyofhisorhersharesasusual.“Whenexecutivesunloadsignificantamountsofstockuponannouncingabuyback,theyoftenbenefitfromshort-termprice pops at the expense of long-term investors.” That is, he found, threemonthsafterabuybackisannounced,“firmswith insidercashouts,”as they’recalled,“underperformtheotherfirms…bymorethan8percent.”

Thisbizarrenewnormalisavividdisplayandpowerfulunderpinningofthede facto enslavement of the economy to Wall Street and to shareholdersupremacy dogma. And speaking of dogma, if the stockmarket at large isn’tcorrectlyvaluingacompany, thusrequiringitsCEOtostepinandcorrect thatmistakebyspendingbillionsonstockpurchases,doesn’tthatcastdoubtonourabsolutefaithintheefficientfreemarket?Inthisway,massivestockbuybacksarelikethecapitalistversionofChristianswhoshakeandscreamtoprovethattheholyspiritisrealandinhabitingthem.Butifyousincerelythinkthemarketis undervaluing your stock because investors just don’t get your amazingcompany,thenwhynotbuyallofyoursharesbackandgoprivate?

Essentially every CEO now does buybacks because everyone else doesthem.Theirstock-price-basedperformanceswillbejudgedthisquarterandthisyearagainstallthoseotherCEOs,soit’samadrecursiveloop.Howistheresultnot a stock market bubble—an extremely long-lasting bubble but a bubblenevertheless? It’s unsustainable: you can take 10 percent of your company’ssharesoutofcirculation,then20percent, then30percentoreven(asIBMhasdone over the last two decades) 60 percent, but you can’t keep doing thatforever.

Foradecade,sincebeforeshewasintheSenate,ElizabethWarrenhasbeensayingthatstockbuybacksprovideonlya“sugarhighforcompaniesintheshortterm.”Thatmetaphorseemstoobenign.It’smorelikethehigh—andaddiction—producedbycocaine,anothercrazethatsweptAmericainthe1970sand’80s,andthatmakesaddictsneglecttheirimportantbutmundanedutiesandlong-termhealthinfavorofthenextjoltofartificialself-confidence.*9

Considerthisremarkablefact:from2010through2019,mostofthemoney

investedinU.S.stockscamenotfromtrueinvestorsbutfromcompaniesbuyingback their own stocks. If it “makes sense” for corporations to devote such astupendous fractionofour economic resources to stockbuybacks, it’s becausetherulesofourpoliticaleconomywerewritten—thatis,rewritten—fortyyearsagotomakeitso.*10

—

Whenshareholdervaluebecameanewcapitalistarticleoffaithinthe1980s,theword shareholder was being imbuedwith a kind of sacred democratic sheen,likecitizen.Iownstocks,youprobablyownstocks,halfofusareshareholders.Butweshouldallkeepinmindthatthe90percentofAmericansworthlessthan$10millionownonly12percentofallshares.Inotherwords,itprobablymadepersonal financial sense for most rich people to support the shareholdersupremacymovement.However,formostAmericanshareholders(letalonethehalfofAmericanswhodon’townstocksatall),maximizingcorporateprofitsattheexpenseofallothereconomicandsocialgoalsandvaluesnowlookslikeabadtrade-off.What’smore,beingashareholderisreallynotlikebeingacitizen.It’s temporary. Indeed, as shareholder supremacywas turned into an inviolateAmericanprinciple,theaverageshareholderwaslessandlesslikeatrueownerandmore likea short-term renter. In the1970sagiven shareholder inagivencompany owned shares for more than five years on average. By 2000 thataverageownershipperiodwasonlyayear,andinthefulldigitalage,withlotsofpeople holding shares for days or hours or fractions of a second, the averageperiodofownershiphasshortenedtoafewmonths.

Thefinalpieceoffinancializationcomesfromtheenormousgrowthoftheso-called institutional investors, in particularmutual funds.Owning a share ofstock isn’t the same as being a citizen of a corporate domain, but stockownershipused tobemuchmoredirectlydemocratic,and the finance industrydidn’t run the show. In the 1950s individual Americans directly ownedmorethan 90 percent of shares.My parents kept their paper certificates of the fewstockstheyownedinafilingcabinetinourhouse.Evenby1980,onlyaquarterofAmericans’stockholdingsweremanagedbypeoplepaidtodothat,andthebiggest mutual funds held only 4 percent of all shares. But then everythingchanged. By the 2000s, most stock shares were being bought and sold byprofessional asset managers. The several biggest mutual funds are now themajorityshareholdersof90percentofthefourhundredbiggestcompanies,and

suchinstitutionalinvestorscontrol80percentofallthestockinallU.S.publiccompanies.

It’sahugeconcentrationofeconomicpower.Ialwaysimaginedthemarketasavastdemocratichivemindproducingtheself-correctingwisdomofcrowds.But for practical purposes, the financial market has been reduced to a smallgroupofpeople,inthelowthousands,whoshareamindset.

That’s financialization. So in addition to the new power of stock-priceobsession over corporate executives, and VCs often effectively runningcompanies they fund,andprivateequityguysactually runningcompanies theytake over, the bigmutual funds also now closelymeddle in the operations ofmostbigcompanies,rangingfrombeingbackseatdriverstoco-pilotssittingonboards.Ineffect,themanagersofthebigfundshavemadethemselvescorporateAmerica’snationalshadowmanagement,akindofupperhouseofthecongressofthecapitalistpartyoftheU.S.A.

Mutual fund companies are reincarnated equivalents of the excessivelypowerful trusts thatmadeusenactantitrust laws in the firstplace.Economistsandothersacross the ideological spectrumnowworryabout theeffectsof thisnew stratum of command and control. Becausemutual funds have controllinginterestsinthebigdominantcompetitorsinalmosteverymajorbusiness—food,drugs, airlines, telecommunications, banking, seeds, whatever—they aren’tnaturally inclined tomake those rival companies compete aggressively againstone another. As the top dogs in a small, not-very-competitive oligopoly, whywouldn’t Fidelity and Vanguard and the others see their comfortably lesscompetitivearrangementsastheoptimalmodelforthecompaniestheycontrol?Until 1980 the stockmarket generally valued smaller companiesmore highlythanbigcompanies.Butthenasmutualfundsgobbledupmoreandmorestockand effectively became themarket, they overthrew that conventionalwisdom.With their new power, institutional investors decided for the rest of us thatcompaniesshouldbeasbigaspossible,regardlessofanydamagethatcausedtooureconomyandsociety.Becauseifthestockpriceiseverything,whatevergotcompanies to that end—less competition and thus less innovation and lowersalaries,draconiancost-cutting—wasjustified.

—

At the end of their exhaustive 2013 paper called “The Growth of Finance,”consistingalmostentirelyofquantitativeresearch,twoHarvardBusinessSchool

professors pose the right question: “Has society benefitted from the recentgrowthofthefinancialsector?”Financializationwasokayinacoupleofways,they conclude—ubiquitous credit cards allowed people to smooth out the upsand downs of their personal cash flows, people who own stocks sensiblydiversified,andnewercompaniesgotmucheasieraccesstoinvestmentcapital.Butotherwise,notsomuch.Thehystericallyexpandingcreditindustry“madeiteasier formanyhouseholds tooverinvest inhousingandconsumeinexcessofsustainable levels.” The enormous increase in the number of professionalfinancialpeopleneithermadestockpricesmorerationalnorimprovedcorporatemanagement.And they conclude it’s also bad, “costly to society,” that all theeasymoneygoingtothefinanceindustry“lure[s]talentedindividualsawayfrompotentiallymore productive sectors” such as science and engineering. In 1965only11percentofnewHarvardMBAswent into finance; in1985,41percentdid. In theearly1970s,6percentofnewHarvardCollegegraduateswent intofinance;bythe2000s,28percentdid,andthatfractionhascontinuedgrowing.

When the Nobel economist James Tobin gave that lecture in 1984, hedescribed financial professionals’ suddenly ballooning pay as “high privaterewardsdisproportionatetosocialproductivity.”Oneofthewaystheallianceofthe rightand the richand financewas just thenmanaging tochange thesocialcontract and transform our political economy was to disallow such moraljudgments concerning money—to convince enough of the correct people thatthere can be no such thing as disproportionate private rewards in a marketeconomy.Theyconvincedpeople that themarketandonly themarketmustbethesupremeauthority, thatonly itcandeterminewhat’s fairorunfair, rightorwrong.ThusbeganAmerica’s radical increase ineconomic inequality—fullyaquarterofwhich,researchshows,mightbeattributabletojusttheincreasedpayandwealththathasgonesincethe1980stothepeopleworkinginfinance.

What’smore,allthosesmartfinancialprofessionals’adviceandjudgmentsaboutwhat stocks and bonds to buy and sell, so-called “activemanagement,”apparentlydon’t evenmakeclientsmoremoney. Inotherwords,muchof thisfinancial priesthood is superfluous, unnecessary. The evidence in study afterstudyis thatactivemanagementoffinancialportfoliosbyprofessionals“isnotdirectlybeneficial toinvestorsonaverage…especiallyaftertakingintoaccountfees.” In 2016, for instance, two-thirds of the professional portfoliomanagersbuyingandsellingshares in thefourhundredbiggestcompaniesdidworsefortheir investors than if the clients had simply bought shares in all those fourhundred companies. And of the pros managing investments in smaller

companies,85percent didworse than the untouched-by-human-hands averageofthosestocks’prices.Ofcourse,that’sjusttheirperformanceinoneyear;overlonger periods of time, they do even worse.*11 Even hedge funds, assetmanagementforwhichthericharesoeagertopaysuchpremiums,mainlymakeinvestorsfeelspecial,whichallluxuryproductsdo:sincethemid-1990s,hedgefundsonaveragehavebasicallydoneaboutthesameasthestockmarket.

It’s ironic that a realm presenting itself as relentlessly quantitative andrationalindulgesinsuchmagicalthinking.

It’s ironic that just as we entered an economic era all about eliminatinginessential middlemen and corporate bloat, one bloated sector filled withinessentialmiddlemen,finance,hasflourishedasneverbefore.

It’s ironic thatoneof therationalesforAmerica’s1980smakeoverwas torevive theheroicAmerican traditionof risk-taking—given that somuchof thestoryhas turnedout tobeabout reckless financiers insulating themselves fromriskbyshiftingittocustomersand,throughthegovernment,totaxpayers.

It’s ironic that finance, a service industrycreated tohelpbusinessand therestofus,sobubblyandboomingonandontheselastfourdecades,hasmainlyhelpeditself.“Thereisnoclearevidence,”thechieffinancialindustryregulatorof the U.K. and former vice-chairman ofMerrill Lynch Europe concluded in2010,“thatthegrowthinthescaleandcomplexityofthefinancialsystemintherichdevelopedworldoverthelast20to30yearshasdrivenincreasedgrowthorstability.”

Afinaldisturbingeffectoffinancializationcan’tbeprovenwithstatisticsorexperts’ quotes. It’s the damage to the human spirit that comes frommakingeverything everyone is or does literally and strictly reducible to dollars andcents, and how such a cynical system makes everyone in it more cynical. Afinance-obsessed society makes us each a little less human, a lot more of anabstraction.AnemployeeofanLBO’dcompanyisonlyacostthatneedstobekeptdownoreliminated.Ashopper isacredit rating.Somebodywithahomemortgage is an anonymous revenue stream—and barely that after she’stransmogrified into one infinitesimal bit of amortgage-backed security. In allthis,financializationhasdonewhatpeoplebackinthe1950sand’60sand’70sworriedandwarnedthattheCommunistswoulddoiftheytookover:centralizecontrol of the economy, turn Americans into interchangeable cogs serving aninhumane system, and allowonly awell-connected elite to livewell.ExtremecapitalismresemblesCommunism:yetanotherwhoppingirony.

WhenJohnKennethGalbraithwroteAmericanCapitalisminthe1950s,theidea thatAmericancapitalismwas in any sense runbya financial cabal,WallStreet, seemed like an obsolete cartoon. “As the banker, as a symbol ofeconomicpower,passed into the shadows,”hewrote, “hisplacewas takenbythegiantindustrialcorporation,”which

wasmuchmore plausible. The association of power with the bankerhad always depended on the somewhat tenuous belief in a “moneytrust”—in the notion that the means for financing the initiation andexpansion of business enterpriseswas concentrated in the hands of afewmen.Theancestryof this ideawas inMarx’sdoctrineof financecapital; it was not susceptible to statistical or other empiricalverificationatleastintheUnitedStates.

Butwhatstruckthisleftisheconomistinthebright,new,modernAmerican1950sasaridiculous,antiquecaricatureofoursystemcametruestartinginthe1980s,afterthelaissez-fairedogmaoftheolddayswasrevived.Itwasakindofsystemictimetravel:wereturnedtoalevelofeconomicinequalityasextremeasit had been in the 1920s and earlier, entered our secondGildedAge, and oursecond era of unregulated, swashbuckling robber barons creating cartels andmonopolies. We’ve gone back to a political economy closer to the one thatexisted in the 1870s and ’80s,whenMarx (with Engels)was finishing up hisvisionofhowindustrialcapitalismwouldevolveintoanewfinancialcapitalismdominatedbytradinginthe“fictitiouscapital”ofstocksandcredit.

In Capital, Marx reviled various kinds of capitalist middlemen as“parasites” (as well as “vampires”), and near the end of the final volume,published in the 1890s, he discussed “a new kind of parasite in the guise ofcompanypromoters,speculators,andmerelynominaldirectors;anentiresystemofswindlingandcheatingwithrespecttothepromotionofcompanies,issueofsharesandsharedealings.”BlameMarx for thehorrorsofCommunism ifyouwant,buttheguyhadsomeprescientinsightsaboutthecapitalistfuture.

Until 1980, a more reasonable metaphor than Marx’s parasite for ourfinancial industrywas the remora.Thoseare the fish that attach themselves tosharksandwhalesforthebitsofleftoverfoodandtheessentialoxygenthatthefreerideprovides.Remorasapparentlyprovidebenefitstothebigseacreaturesby eating thosehosts’…parasites.Apurelyparasitic relationship, on theother

hand,“isoneinwhichoneorganism,theparasite,livesoffofanotherorganism,thehost,harming itandpossiblycausingdeath.”A lotof the financialplayerssincethe1970shaveindeedevolvedintoparasites,liketapeworms.Tapewormsliveinthegut,towhichtheyattachthemselvesby“hooks”and“suckers,”then“get food by eating the host’s partly digested food, depriving the host ofnutrients.”Theycangrowhideouslylarge,manyfeetlong,andliveinsidehostsfordecades.Thinkingabout thefutureofourpoliticaleconomy, though,Iwasheartened when I read that “hosts also develop ways of getting rid of orprotectingthemselvesfromparasites.”

I know thatmany people in finance think authors and critics and second-guessers like me are parasites. Undoubtedly even more of them considerindividualAmericansdependentondirectgovernmentassistancetobeparasites.AsWilliamSimonmadehismidlifecareerswitch in the late1970sfromWallStreetdroneandU.S. treasurysecretarytoright-wingfoundationpresidentandleveraged buyoutwizard, hewas frank on exactly this topic. “The ‘ethics’ ofegalitarianismmust be repudiated,” hewrote, because “achieversmust not bepenalizedorparasitesrewarded.”

*1ThefinancialindustryspendsabouthalfabillionayearonWashingtonlobbying,aboutamilliondollarspermemberofCongress.Onlythehealthcareindustryspendsmore.*2Itallstartedgoingbadfortaxpayersandmanyhomeownerswhen,asof2007,oneofthebigthree,Moody’s,beganrevisingitsratingsdownwardon83percentoftheapproximately$1trillionworthofmortgagesecuritiestowhichithadgivenitsverytopratingjusttheyearbefore.*3Milken’sbank,DrexelBurnhamLambert,paidhimtheequivalentof$2.3billionbetween1984and1987alone.Whenhepleadedguiltytosecuritiesfraudin1990,hechokedupandsaidhiscrimeswere“notareflectionontheunderlyingsoundnessandintegrity”ofjunkbonds.Afterhesnitched,histen-yearprisonsentencewasreducedtotwo,andaccordingtoForbes,he’sstillworth$3.7billion.WhenPresidentTrumpgrantedhimanofficialpardonin2020,theWhiteHouseissuedastatementpraising“hisinnovativework”that“democratizedcorporatefinance.”*4Sharesofstockthataresoldtothepublic(thusthetermpubliccompany)arealsocalledequities.Privateequitydealmakers,inadditiontobuyingupallofapubliccompany’ssharesontheopenmarket(turningthatcompany“private”)inordertohavetheirwaywithitbeforesellingstocktonewpublicshareholders,alsoinvestinprivatelyownedcompaniesthattheyeventuallyselltoindividualshareholdersorallatoncetoanothercompany.*5Thetwowinnerswhocashedthefinal$0.13checkswereAdnanKhashoggi,ashadySaudiwheeler-dealerwhosewealthwasatthatmomentshrinkingfromafewbilliontoafewmilliondollars,andDonaldTrump,whosefirstcasinobankruptcyoccurredayearlater.*6Insteadofusingexcessivedebttobuy,dismember,andquicklyresellasingleexistingcompany,inthisinstanceKKRusedexcessivedebttoacquirepublications(andthenInternetstart-ups)andkeepthem.BeforebuyingInside,forinstance,PrimediaboughtthesiteAbout.comfortheequivalentof$1billion—buttwoyearsafterwardallofPrimediawasworthonlyathirdofthat.WhenKKRfinallyditchedthewholebusinessin2011aftertwodecades,itwasoneofitsbiggestdisasters.

*7In1986acertainright-wingleveraged-buyoutpillagerdonatedenoughmillionstopersuadetheuniversitytorenameitsMBAprogramtheWilliamE.SimonGraduateSchoolofBusiness.*8Theco-authorswereMichaelJensenandWilliamMeckling.JensenmovedontoHarvardBusinessSchoolinthe1980s,whereheremains.Weirdlyandfittingly,sincethe2000shehasco-writtentwodozenscholarlypapersaboutleadershipwithWernerErhard,thefounderofest,thecreepytherapeuticandmotivationaltrainingbusinessofthe1970sand’80sthattraineddevoteestoberighteouslyselfishandrude.Erhard’sbiographer,anestdevotee,wasanotherinfluentialright-wingAmericaneconomist—andco-wroteF.A.Hayek’sfinalbook,TheFatalConceit:TheErrorsofSocialism,inthe1980s.*9Stockbuybacksaren’tperformance-enhancingdrugs,becausethoseactuallymakeathletesrunfasterandhitbaseballsfarther.*10Anotherepicirony:althoughCharlesKochisresponsibleforhorrificdamage—bypromotingright-wingpoliticaleconomicsandclimatechangedenial,andbycorruptinggovernmentwithprofitsfromhisfossilfuelcompany—KochIndustriesisamodelofresponsibleold-fashionedcorporategovernance:asaprivatecompany,notbeholdentoWallStreetorinvestorhysteria,ithasnopublicsharestobuyback,soitreinvestsalmostallitsprofitsinthecompanyandholdsontothecompaniesitacquires.*11Americanshavestartedtorealizethefakery,shiftingmoreandmoreoftheirinvestmentsintofundsthatsimplybuythewholemarket,buthalfofstockmutualfundsarestillunder“active”management.

N ot every way in which our political economy has gotten worse formost Americans during the last forty years was entirely the result of swinishpolicychoicesonbehalfof financeandbigbusinessand thewell-to-do.Somechangeswereglobalandmoreorlessunstoppable,inparticularconcerninghowandwherejobscouldbedone—thatis,workersinpoorcountriesandmachinesin this country were doing more and more of the work which for a centuryAmericanshadbeenwellpaidtodo.

After theamazinglyprosperous three-decade run followingWorldWar II,by1980theeconomiesofalmosteverydevelopedcountryweregrowingmoreslowly.Duringthe1950sand’60s,theU.S.economyhadgrownbyasmuchas3 percent per year per person. Then during the 1970s, ’80s, and ’90s, growthshifted into a slower gear, averaging only 2 percent per person per year.Oneway of thinking about that change is that after the three postwar decades ofexceptional expansion, the rate of growth inAmerica and the rest of the richworldreturnedtonormal,aboutwhere ithadbeenformorethanacentury.Atthatmoreordinaryspeed,theU.S.economytooktwenty-threeyearstodoubleinsizeinsteadofjustseventeen—unfortunatebutnotnecessarilydisastrous.

Governmentselsewhereintherichworldfiguredouthowtoadapt,adjust,and share the pain of slower growth in their own globalizing, automatingeconomies. InAmerica, however, as a result of thenew right-wing, favor-the-rich,big-business-rulescharter,onlythewell-educatedandwell-to-docontinuedtogetbiggerpiecesofourmoreslowlygrowingeconomicpie.Andnotonlydid

thesizeofthepiecesofpieservedtotheunluckyAmericanmajoritystopgettingbigger, the quality of those relatively skimpy pieces got worse: jobs andhealthcareandretirementsbecamemoreinsecure,citiesandregionswerelefttowither, college education became much less affordable, and upward mobilitywasalongershotthanever.

I’ve relied on themetaphor of anAmerican economic pie to convey howonlytheluckiestfewkeptgettingservedgood,largerpiecesasitgrew.Butthatmay be another metaphor that’s too benign for how the economy changedstartinginthe1970sand’80s.It’smorelikethis:aftersurvivingtheDepressionandwinningthewar,Americanscruisedalongtogetherforalmostfourdecadesinglorioussunnyweatherthatseemedlikeitwouldgoonforever—thenwehitroughseas,andsuddenlythefirst-classpassengers,sayingtheyhopedeveryoneelsecouldjointhemlater,grabbedallthelifeboatsforthemselvesandspedofftotheirownprivateluxuryshipanchoredinasafeharbor.

—

JosephSchumpeterwasabrillianteconomistatHarvard in thefirsthalfof thetwentieth century who approved of entrepreneurs but also thought capitalismwould eventually be replaced by some kind of democratic socialism—notthroughworkers’ uprisings but bymeans of a subtle, nonviolent process. The“perennialgaleofcreativedestruction”woulddrivethisevolutionofadvancedeconomicsystems,hewrote(withoutitalics)in1942,rightaftertheDepression,“thesameprocessofindustrialmutation—ifImayusethatbiologicalterm—thatincessantly revolutionizes the economic structure from within, incessantlydestroyingtheoldone,incessantlycreatinganewone.ThisprocessofCreativeDestructionistheessentialfactaboutcapitalism.”

IfeelsorryforSchumpeter,whodiedin1950,becausethreedecadesafterhisdeath,withtheriseofnew-fangledold-fashionedfree-marketmania,hegotfamouswhenthatphrasewasrevivedandreducedtoameme,repeatedendlesslytoexplainandjustifythesuddenobsolescenceofblue-collarproductionworkers(and then the lesser white-collar workers). “Creative destruction” waspopularizedinawaySchumpeterhadn’tmeantit,asacelebratorysorry-suckerscatchphrase for the way rootin’-tootin’ Wild West American capitalismpermanentlyis,wheretherichandtoughandluckywinandloserslosehard.Inthe1980sthetermanditsdistortedmeaningwereenthusiasticallyembracedbythe right and accepted with a shrug by college-educated liberals whose

livelihoods didn’t look likely to be creatively destroyed anytime soon bycompetitionfromcomputersorforeigners.

WeliberalshadheardofSchumpeter,andweknewabitabouttheindustrialrevolutionsattheturnsoftheprevioustwocenturies.Myprofessorinthe1970s,DanielBell,hadpredictedthisdifficultturnmorethantwodecadesearlierinabookcalledWorkandItsDiscontents:TheCultofEfficiencyinAmerica.Thanksto automation, he said, “many workers, particularly older ones, may find itdifficulteveragaintofindsuitablejobs.ItisalsolikelythatsmallgeographicalpocketsoftheUnitedStatesmayfindthemselvesbecoming‘depressedareas’asoldindustriesfadeoraremovedaway.”Wecollege-educatedswereinstructedtotake it asa truism thatpainful transitions like thesewere justhowhistoryandeconomicprogress inevitablyunfolded,andthatafteradifficultpatch—for theactual, you know, workers, in what we started calling the Rust Belt—thingswouldeventuallysortthemselvesout.

That long view, however, tended to omit the history that had made theprevious industrial revolutions come out okay inAmerica—the countervailingforces that tookacentury tobuild,all the lawsandrulesandunionsandotherorganizations created to protect citizens and workers and keep the systemreasonably fair and balanced. Itwas exactly thatweb of countervailing forcesthat,atexactlythatmoment,wasbeingsystematicallyweakened.

ThefractionofallAmericanworkersemployedinmanufacturingpeakedinthe1950s,buttheactualnumberofthosejobshadheldsteadythroughthe1960sand’70s.In1980manufacturingworkers’salariesandbenefitsstillprovidedthelivings fora thirdofallAmericans.But thencame this latestwaveofcreativedestruction, and that was that. The collapse of the steel industry came rightaround1980—spectacularly,becausemostofushadn’tseenitcoming,andsteelplantsweresogigantic,andgeographicallyconcentrated,eachonetheeconomicfoundationofatownorcityorwholeregion.Thosewerewell-paidunionjobsthat had seemed secure. In and around Pittsburgh during the 1980s,unemploymentratesattheirlingeringheight—15percent,20percent,27percent—were the same as the rates all over America during the Depression of the1930s(andonceagainin2020).

Itwasn’tjustthesteelindustrythatwasundone,ofcourse.Almost3millionU.S.manufacturingjobsdisappearedinjustthreeyears.In1980oneofthehugetextile company Parkdale Mills’s plants in South Carolina employed 2,000people—butbythe1990s,thankstomoreefficientmachinery,thatfactorywas

producing just as much fabric with only 140 employees, 93 percent fewerworkers.That’sanextremecasebutamicrocosmofwhatwasstartingtohappenthroughout manufacturing. By the end of the century, U.S. factories wereproducingtwo-thirdsmorethingsthantheyhadin1980,buttheyweredoingsowithathirdfewerworkers.

Andwhennewmachinescouldn’tdo theworkmorecheaply thanpeople,thenpeopleinpoorcountriescouldbecomeourslavishmachineequivalentsasneverbefore.Startinginthelate1980sandespeciallythe1990s,moreandmoreofourmanufacturingworkwasdoneinChinaandotherpoorcountries.Between1990andtheearly2000s,theannualvalueofthingsmadeinChinaandboughtby Americans increased twelvefold.Manymillions of U.S. factory jobs were“offshored” during the 1990s and early 2000s,many of them to China. From1980untilnow, thefractionofAmericansworking infactoriesshrankby two-thirds,frommorethanoneinfourworkerstofewerthanoneintwelve.

Thenewjobstowhichlaid-offworkersmoved,duringandafterthe1980s,tended to be much worse than the ones they’d had. A massive study byeconomists of “high-tenure workers laid off then from distressed firms” inPennsylvania—including steelworkers—found that years after they lost thosejobs, their incomes remained much lower. For instance, the averagePennsylvaniaworkerwhosejobdisappearedinearly1982hadbeenearningtheequivalent of $53,000 a year, but six years later he or she was earning only$34,000intoday’sdollars.That$19,000-per-yearreductioninaverageearningswas as if they’d all been involuntarily transported back in time to the 1940s,thosethreedecadesofaccumulatedAmericanprosperityinstantlyerased.

As I explained earlier, for centuries new technologies had keptmaking itpossible for each worker to produce more stuff, and it was that, improvingproductivity,thatallowedeconomiestogrow,andmorepeopletolivewell.Forthe last century and a half, from the late 1800s on, productivity in Americaincreasedmost years by 2 percent ormore.Therewere ups and downs in thetrend line, of course—dramatically down during the Great Depression,exceptionallyupforsomeyearsrightafterWorldWarII.Along theway,newtechnologiesmadesomejobsuneconomicandunnecessary.Butbecauseofthegrand economic bargain we had in America to bring everyone along throughthose ups and downs and changes, to share the increasing wealth, everyone’sstandardoflivingincreasedovertime,slowersomeyears,fasterotheryears,butalways in sync. During the three postwar decades, U.S. productivity doubled,andthesizeoftheU.S.economydoubled,andtheaverageAmerican’sshareof

the economy doubled. Then, from the late 1970s through the ’80s, weexperiencedasubparslough,a fifteen-yearperiodwhenproductivity increasedbyjust1to2percentayearinsteadof2to3percent.*1

As so many switches flipped, nobody would see the full effects untildecadeslater.Theproductivityofworkersandeconomicgrowthbothcontinuedgoingup,albeitmoreslowly,almostdoublingsincethe1970s.Butforthefirsttime,mostAmericans’ incomes essentially flatlined for forty years. Instead ofeveryone, rich and middle and poor, all becoming more prosperoussimultaneously,onlytheincomesofaluckytopfifthkeptrisingastheyhadinthepast.Around1980,theGreatUncouplingoftherichfromtherestbegan.

It wasn’t just that serious salary increases started going only to a smallgroup of fortunate workers. The share of money that went to all employees,ratherthantocorporateshareholdersandbusinessowners,alsobecamesmaller.Until1980,America’snationalsplitof“grossdomesticincome”wasaround60–40infavorofworkers,butthenitbegandroppingandisnowapproaching50–50. That change amounts to almost $1 trillion a year, an annual average ofaround $5,000 that each person with a job isn’t being paid. Instead, everyhouseholdinthetop1percentofearnershasbeengetting$700,000extraeveryyear. It undoubtedly has been the largest and fastest upward redistribution ofwealthinhistory.

This historic Great Uncoupling, in which America’s economy grows butmostAmericansdon’tgetfairsharesofthegrowth,wastheresultofthepublicand private policy choices described in this book and hundredsmore. I don’tthinkmostofthepeoplewhoengineeredandbenefitedfromtheremakingofthepolitical economy consciously intended for most of their fellow citizens’incomes to stagnate forever.Drivenvariouslyby ideologyand selfishness, bigbusinessandtherichwantedmorewealthandpowerforthemselves,butsurelymostwouldn’thaveobjected if everyone’sboatshadkept rising together after1980, if themiddle-of-the-pack family earning $50,000 thenwas now earning$100,000insteadof$55,000.

But there’s the disingenuous rub. It’s as if I’d abandoned my wife andchildren and thereafter gave them as little money as I could get away withlegally,butsaidsincerelythatIhadn’t intended tomaketheir livessodifficultbut, you know, sorry. Because the major drivers of America’s economictransformation after 1980—from low taxes to the laissez-faire unleashing ofbusiness to reflexive opposition to new social programs to the crushing of

organized labor—guaranteed themassivelyunfairoutcome.Andwhileperhapsthe CEOs at the Business Roundtable in the 1970s didn’t explicitly say theirmission was to make their employees much more insecure and thus morecompliant and cowering—by laying off thousands at a time, phasing outpensions,moving factories overseas, and eliminating competitors—that’swhathappened.

TheshockingcataclysminAmerica’sbig,iconicheavyindustries,steelandcars,alongwiththelonger-termslowingofeconomicgrowthgenerally,createda chronic widespread dread and anxiety about the economic future. Theeconomicrightandbigbusinessusedthatconfusionandfeartogetfreereintoachievetheirlargergoals.Timesaretough!Governmentcan’tsaveyou!Adaptordie!Butthenwhentheacutecrisespassedandtheeconomystabilizedinthelate 1980s and ’90s, and productivity and economic growth returned to theirlong-termhistoricalnorms,thenormsoffairnesswerenotrestored.Thesystemthathadbeenreengineeredtobetterservebigbusinessandtherichremainedinplace.

—

BecauseI’manAmericanwhograduatedcollegeandasanadulthaven’tbeenpaidtodophysicallabor,I’veneverthoughtofmyselfasaworker.It’stoobad,I think, because since the 1960s that linguistic distinction has reinforced thedividebetweenpeoplewhodowhite-collarandblue-collarwork.We’renearlyall workers, rather than people who live off investments. Looking back now,probablythesinglemostsignificantcauseandeffectofthebig1980schangeinourpoliticaleconomywasthedisempowermentofworkersvis-à-visemployers.

A fewyears agowhen I first read the bookPostcapitalism by theBritishbusinessjournalistPaulMason,Icameacrossaparagraphthatstoppedmeshortbecause it seemed so hyperbolic and reductive. But now it seems tome verymuchclosertotruethanuntrue.Inthe1970sand’80s,Masonsays,thepoliticalleadersfromtheeconomicright

drew a conclusion that has shaped our age: that a modern economycannot coexist with an organized working class….The destruction oflabour’s bargaining power…was the essence of the entire[conservative] project: itwas ameans to all the other ends…not freemarkets, not fiscal discipline, not soundmoney, not privatization and

offshoring—notevenglobalization.Allthesethingswerebyproductsorweapons of its main endeavor: to remove organized labor from theequation.

Asthemoderncorporationemergedandgrewandmultipliedstartinginthelate 1800s, so did unions. In the 1880s fewer than 5 percent of Americanworkersbelongedtoaunion,andin1930itwasstillonlyaround10percent.ButaftertheDepressionandNewDealandWorldWarII,morethanathirdoftheU.S. private workforce was unionized, and in 1950 a large majority of blue-collar workers in the North belonged to unions. In the late 1950s state lawsstarted changing so that teachers and other public employees could also joinunions, and eventuallymore than a third of thembecame unionized.As laborunions grew larger andmore powerful, negotiating higher salaries, America’swealthwasmoreandmoreequallyshared.

AsI’vesaid,bythe1960sand’70s,Americansweretakingforgrantedthebenefits and prosperity that organized labor had been crucial in achieving forworkers in general, andmanywerebecomingdisenchantedwithunions.Afterthe unionization of workers at corporations peaked in the 1950s, that overallpercentageslidtoaquarterbytheearly1970s—justwhenbigbusinessandtherightstartedpowerfullyorganizingcapitaltoreallyfightagainstorganizedlabor.

In 1979moviegoers, especially liberalmoviegoers,made a hit out of themovieNormaRae.SallyFieldwonanAcademyAwardforplayingthetitlerole.ItwasbasedonthetruestoryofaJ.P.StevenstextilefactoryworkerinNorthCarolinawhoorganizedaunionanda successful strike—which ledquickly tothe unionization of three thousand textile workers at other plants in the sametown. The real events had happened only a few years earlier, so the movieencouragedviewers to imagine, incorrectly, thatU.S. laborpowerwasn’thalf-dead—yetitsimultaneouslyplayedaswistfulnostalgia.

Thepoliticalwindshaddefinitelyshifted.Alsoin1979publicTVproducersatWGBHinBostonweredevelopingaten-episodedramaticseriescalledMadein USA about the history of the labor movement. They’d planned on havingunionsputupaquarterofthebudget—butinearly1980,thepresidentofPBSinWashington stepped in to forbid that, because unions had a political agenda.After it was pointed out that Milton Friedman’s PBS series Free to Choose,airingrightthen(includingtheantiunionepisode“WhoProtectstheWorker?”),was funded by corporations and rich people with a political agenda, PBS

relented, but after the controversy and then Reagan’s election in the fall, thatprojectdied.

Considerwhathappenedtopoliticalactioncommittees,thetremendousnewsources of campaign donations. From1976on, another twoor three business-funded PACs were created every week on average, compared to one union-funded PAC every few months. In the early 1970s, union PACs were stilldonatingmostofthePACmoneygoingtoU.S.SenateandHousecandidates;by1980 theywere donating not justmuch less than the business groups but lessthanaquarterofthetotalgivenbyallPACs.

In 1977 President Carter declined to work hard for a bill that would’vegiven constructionworkers greater power to strike, and itwas defeated in theHouse, where Democrats had a two-to-one majority. The next year the sameCongresswasconsideringalaborlawchangethatwould’vemadeiteasierforallworkerstounionize.TheCEOsoffullyunionizedGMandGEweredisinclinedto oppose the bill, but their fellowBusinessRoundtablememberwho ran thebarely unionized Sears persuaded them to lobby against it—and capitalistsolidarity carried the day. It too was defeated. Carter and most Democratsshrugged.

ThatwasafinalstrawforthepresidentoftheUnitedAutomobileWorkers(and Lee Iacocca’s good pal), Douglas Fraser. At the time, theWhite Houseregularly convened a semiofficial Labor-Management Group that broughttogether CEOs, many of them members of the new Roundtable, with unionleaders. “I know that some of the business representatives…argued inside theBusiness Roundtable for neutrality” on the bill, Fraser wrote in his letterresigningfromtheWhiteHousegroupin1978,“buthavinglost,theyhelpedtobankroll (through the Roundtable and other organizations) the dishonest andugly multimillion-dollar [publicity and lobbying] campaign against labor lawreform”that“standsasthemostvicious,unfairattackuponthelabormovementinmorethan30years.Corporateleadersknewitwasnotthe‘powergrabbyBigLabor’thattheyportrayedittobe.”Hewentontodeliveranimpassionedreal-timecritiqueoftheaxiomaticshiftjustbeginning:

The leaders of industry, commerce and finance in the United Stateshave broken and discarded the fragile, unwritten compact previouslyexisting during a past period of growth and progress….At virtuallyeverylevel,Idiscernademandbybusinessfordocilegovernmentand

unrestrainedcorporateindividualism.Whereindustryonceyearnedforsubservientunions,itnowwantsnounionsatall.

Ifdestroyinglabor’sbargainingpowerwastheessenceoftheprojectoftheeconomic right, its essential act was performed single-handedly by RonaldReagansixmonthsintohispresidency.

The typical air traffic controller was an archetypal Reagan Democrat—awhitemanfromaworking-classbackgroundwithoutacollegedegreebuthighlyskilledandwellpaid.Inthelate1960s,thecontrollersinNewYorkhadstartedaunion, the Professional Air Traffic Controllers Organization (PATCO), whichbeforelongalmostallcontrollersintheUnitedStatesjoined.Twoweeksbeforethe1980election,itwasoneoftheveryfewunionstoendorseReaganagainstthepreachy,unreliableDemocratintheWhiteHouse.“Yousupportsthemthatsupportsyou,”oneofthetopPATCOleadersexplained,“andyoudon’tsupportthem that don’t support you.”That is,whenyou can’t count onDemocratsorRepublicanstosupportyouonyoureconomicissues,youmightaswellsupporttheoneswhoagreewithyouabouthippiesandprofessorsandwelfarerecipients.

Two weeks after Reagan became president, his administration begannegotiating a new contract with the controllers, who were federal employees.Theultimate leverage anyunionhas, obviously, is the threat that itsmemberswillstopworkingiftheyandtheiremployerscan’tcometoterms.Thesamebitof theU.S.criminalcode thatprohibitsany federalemployee fromadvocatingthe overthrow of the government, enacted in 1955 during the anti-Communistfrenzy,alsomakes itacrime foranyof them togooutonstrike.Acoupleoftimesayearduringthe1960sand’70s,groupsoffederalemployeeshadstoppedworking to get what they wanted, including a weeklong wildcat strike by aminority of postalworkers in 1970, but no federalworkers had ever officiallythreatened to cut off essential services to get a better labor contract. Pushhadneverreallycometoshove.

PATCO was thus in a singularly powerful and precarious position. Nocivilian federal employees had more strike-threat leverage than air trafficcontrollers:allofU.S.aviationand thus theU.S.economydependedon them.Right before their contract expired in the spring of 1981, the brand-newpresident had survived his assassination attempt, which increased Americans’approval of him to 68 percent. The controllers were already earning theequivalent of $100,000 a year on average and now asked for a 40 percent

increaseinpay,afour-dayworkweek,andretirementaftertwentyyears.Unionleadersagreedtoalesserdeal,butthenthemembersrejectedit.

Liberalswere not in solidaritywith PATCO.ANewYorkTimes editorialheadlined BRING THE CONTROLLERS DOWN TO EARTH said that “the ReaganAdministration is making a more than reasonable offer” in response to “theunion’s exorbitant terms,” and a later editorial said that if “President Reaganwere now to sweeten the deal…he would only be inviting other Governmentemployees in key positions to exploit their leverage.” In The WashingtonMonthly,twenty-three-year-oldJonathanAlter,justoutofHarvardandnotyetacelebratedliberaljournalistandauthor,wrotethattheepisode“proved”Reaganand the right correct, that the federal government was bloated, “as badlyfeatherbeddedaswe’vefeared.”

The lead-up to the strike was a big national story for months, then thebiggest for some weeks. First thing in the morning on the first Monday inAugust 1981, when the Times ran another anti-PATCO editorial (HOLDING UPAMERICA), the thirteen thousandcontrollers stoppedworking.Reagan said theyhadtwodaystocomeback,andonWednesdaythe90percentwhodidn’twerefired—and prohibited from holding any federal job ever again.*2 Twomonthslaterthefiredstrikers’replacementstookavotetogetridoftheunion,andthatwasthat.

Thestrike-dayTimeseditorialsaidthatitwas“hardtofeelmuchsympathyfor the controllers.” Sure. In retrospect, however, it’s hard not to feel somesympathyforthem,andevenmore,it’shardnottofeeldeepregretthatsomanyleft-of-center Americans had abandoned the fundamental commitment to theideaofunions.Theair trafficcontrollers’strikeand the right-wingpresident’sinstant, unchallenged destruction of their union was the turning point. Losingthatbattle,Americanorganizedlaboreffectivelylostthewar.

As part of the New Deal, a fundamental federal law had been passedguaranteeing employees of businesses the right to organize unions and go onstrike. Three years later, in 1938, the Supreme Court ruled that the MackayRadio & Telegraph Company had broken that law after a strike by refusingspecifically to rehire its organizers—but the court’s decision also said, inpassing, thatnotonlywerecompanies free tohire replacementworkersduringstrikesbutthatafterastrikeended,companieswerefreetokeepemployingthestrikebreakers.Thestrikers’onlyrightwastoberehiredforanyadditionaljobsthatmightopenupsoon.ThelogicofthatMackayDoctrine,thatstrikersaren’t

technically fired if they’re replaced by scabs, is absurd. Despite that 1938decision, the American norm that emerged out of the NewDeal was that forcompanies to replace striking workers was unacceptably unfair—a norm thatremainedinforceuntil itsspectaculardefactorepealbyReaganduringtheairtrafficcontrollers’strike.

Intheyearsrightafterthe1981strike,companiesalloverthecountrymadeand remade the point again and again—big strike, strikebreakers brought in,national press attention, strike continued and disastrously failed, unionsdissolvedorrenderedimpotent.AndtheoldMackayDoctrine,whichhadsatonabackshelfforhalfacentury,letthem.

One of the bigAmericanmining companies realized that themoment forgood-old-days antiunion ferocity had returned: a year after a strike began inArizona and the company replaced striking copperminerswith strikebreakers,itsworkersallovertheSouthwestwerepersuadedtodoawaywiththeirunions.

A year after that the meat company Hormel demanded that itsslaughterhouseworkers takeaone-quartercut inwages thathadn’tgoneup inalmost a decade.Workers at aMinnesota plant went on strike, strikebreakerswerehired,andmostofthestrikersnevergottheirjobsback.

International Paper had tripled its profits from 1985 to 1987—but as arecently public company, its 10 percent rate of profit wasn’t good enoughanymore to satisfy the demands of shareholder supremacy, so its executivesdecidedtoendthecompany’slonghistoryofworker-friendliness.InatowninMainewhere the International Papermillwas everything, and typicalworkersearnedtheequivalentof$87,000ayear,theunionmadeanopeningbidtorenewtheircontractwithnowageincreaseatall.Thecompanyrespondedwithaplantolayoff15percentofthemand,forthoseremaining,doawaywithextrapayon weekends and holidays. The workers went on strike, the company hiredreplacementsfromoutof town,ayear later thestrikerssurrendered,andsorry,nojobopenings,bye.

Hiringstrikebreakers, fordecadesa rarity incorporateAmericabecause ithad been considered old-fashioned and brutish, was back, old-fashioned andtough:duringthelate1980s,morethanathirdofthecompanieswhereworkerswentonstrikethreatenedtoreplacethestrikers,andhalfofthosedid.

The deterrent effect was extreme. Strikes very quickly became almostobsolete, likevinylLPsandrotary-dial telephones.BetweenWorldWarIIand1980,ourgreateraofprosperityandincreasingequality,almosteveryyearthere

had been at least two hundred strikes involving at least a thousand workers.Some years thereweremore than four hundred big strikes. Since 1981, therehaven’t been a hundredbig strikes in anyyear, and in this century there haveneverbeenmorethantwenty-twoinayear.Asrecentlyastheearly1970s,2.5millionAmericanworkerswouldgoonstrikeinagivenyear,but1979wasthelasttimethatmorethanamillionwentout.Itdoesn’tseemlikecoincidencethatthe rise and fall of strikes during the twentieth century correlates very closelywiththeriseandsuddenstagnationofU.S.wages.

After the don’t-make-scabs-permanent normwas abandoned in the 1980s,Democratstriedtogettheiracttogether,kindof,earlyinthenextdecade.TheHousepassedabilltooutlawwhatwasnowhappening—companieseffectivelyfiring strikers for striking.Remember howback in the 1970sTheWashingtonPost had hired permanent replacements for its striking pressmen, thus bustingthatunion?Twentyyearslater,whenthebillprohibitingthatgottotheSenate,the Post editorialized against it as “a sop to organized labor” and “badlegislation”—because sometimes“strikersby theirbehavior forfeit the rightofreturn and companies ought to hire permanent replacements. This newspaperfacedsuchabreachindealingwithoneofitsunionsinthe1970s.”Dayslater,despite a large Democratic majority in the Senate, the prospective law wasfilibusteredtodeathbytheRepublicanminority.

Labor lawisn’tonlyafederalmatter.During theNewDeal,unionsbegansigningcontractswithcompanymanagementsthatrequiredworkerstojointheirunions or at least to pay union dues so there would be no free riders. Soonbusinesses and the political right started lobbying state legislatures to outlawsuchcontracts,shrewdlycallingtheproposedstatutes“right-to-work”laws.Andthen in 1947, during one of just four years between 1933 and 1995 whenRepublicans controlled both theHouse and theSenate,Congress amended theNationalLaborRelationsAct togivestatespermission toenactsuchantiunionlaws.By1955,seventeenstateshaddoneso,mostlyintheSouth.Butthentheright-to-workmovementstalled,andforalmostaquarter-centuryitseemeddead—until the late1970sand’80s.Todaymoststateshaveright-to-worklaws,allbuttwoofthemstatesthatvotedRepublicaninthe2016presidentialelection.

Studying America’s organized labor history, I noticed a symmetry thatseems to show a tipping point: the moment when the fraction of all workersbelongingtounionshits25percent.DuringtheNewDeal,thatfractionzoomedfromlessthan10percentpast25percentinadecade.Itwasstill25percentinthemid-1970s,butthenastheright’sRawDealforcedwhathadgoneuptokeep

comingdown,thepercentageplummetedto10percentbythe1990sforworkersintheprivatesector,anditkeptonshrinking,downto6percenttoday—alevelofunionizationbacktowhatitwasintheveryearly1900s.Mostofthedeclinein unionization during the last half-century happened just during the 1980s.*3Once again, it’s remarkable how much the American 1980s amounted to the1930sinreverse.

Employers in the ’80s also started using as never before a clever, quieterway of paying low-wage workers even less and neutering their unions:contracting with private firms to do blue-collar service work. This techniqueprovedespeciallypopularamongpublicandnonprofitentitieslikecollegesandcities, forwhom the optics and politics of directly nickel-and-diming laborersandsecurityguardscouldbeawkward.

Harvard, for instance, employed a couple of thousand people as guards,janitors, parking attendants, and cooks, most of them unionized. Then in the1980sand’90s,theuniversitystartedoutsourcingmuchofthatworktoprivatecontractors—contractors that paid lower wages and used nonunion workers.AfterthatthethreatofoutsourcingstillmorejobsloomedoverallofHarvard’snegotiationswith its own unionizedworkers,which persuaded them to acceptlowerwages:between1980and1996,theirpayactuallyfellfromtheequivalentof$600or$700aweekto$500or$600.*4OrconsiderthepeoplepaidtoschlepbaggageontoandoffofplanesatU.S.airports.In2002,75percentofthemwereemployeddirectlybyairlines;by2012,84percentof themworkedforoutsidecontractors,and theiraveragehourlywagehadbeencutalmost inhalf, to lessthantwelvedollars.

Until I started researching this book, I’d never thought about this newwrinkleintheeconomy,letaloneunderstooditsscaleorimpact.Likesomanyofthehundredsofchangesinstitutedinthe1980s,thepracticeofreplacingstaffwithcontractworkerswastooarcaneandtediousformanyof therestofus tocareorevenknowabout.Butimaginethethousandsofcompaniesandcitiesandschoolsandculturalinstitutionsalloverthecountrythathavedelegatedsomuchof this kind ofwork to contractors, therebymaking the treatment of all thoseeleven-dollar-an-hourworkers somebody else’s problem.According to a 2018study by five major-university economists, a full third of the increase inAmericanincomeinequalityovertheselastfortyyearshasbeentheresultofjustthisonenew,dehumanizinglaborpractice.

Anothercunningwaybigbusinessesbegansqueezingworkersinthe1980s

was to become extremely big. “The basic idea,” explains an economistspecializing inmarkets for labor, “is that if employers don’t have to competewith one another for workers, they can pay less, and workers will be stuckwithouttheoutsidejoboffersthatwouldenablethemtoclaimhigherwages.”

As antitrust enforcement was discredited and enfeebled starting in the1970s,bigcorporationswereabletogetsobiganddominantintheirbusinessorregionsthattheyhadeverfewercompaniesdirectlycompetingwiththemtohireworkers.More andmoreof thembecame theonlygames in town.Oneof thescholarswhohashelpedexpose thisparticularbitof riggingand itsunfairnessover the last several decades is the influential, idiosyncratic University ofChicago lawprofessorEricPosner.*5Ashe andhis economist co-authorGlenWeylexplain,antitrustlawswereenactedtomakesurethatbusinessescompeteineveryway—notjustassellerssettingthepricestheychargeforproductsandservices,butalsoasbuyersoflaborsettingthesalariestheypay.Theappealofantitrustforcitizenswastomakesurecompetitionkeptpriceslowerandsalarieshigher.Enforcementofourantitrust laws,however,hascometofocusentirelyonconsumerprices,particularlysincethedefinitiveBorkingof thefield in thelate 1970s. The antitrust enforcers at the Department of Justice and FederalTradeCommission,because they rely“on the traditionalassumption that labormarkets are competitive,” and that it wasn’t their jobs to protect workersanyhow,“haveneverblockedamergerbecauseofitseffectonlabor,”andtheydon’t even employ experts who could calculate those effects. If two rivalcompanies made a secret agreement to cap workers’ salaries, they could getsued, but since “mergers that dramatically increase [companies’] labormarketpowerareallowedwithlittleobjection,”thecompaniescancombineandtherebycreateasalary-squeezingemploymentmonopoly.*6

Companies don’t even need to merge in order to pay workers less thanthey’d have to pay in a truly free labor market. I’d assumed only high-endemployeeswereeverrequiredtosignnoncompetecontracts—anHBOexecutiveprohibited fromgoing toworkatNetflix,acoderatLyftwhocan’t takea jobcodingforUber.Butno:shockingly,noncompeteshavecometobeusedjustasmuchtopreventa$10-an-hourfrycookatLosPollosHermanosfromquittingtoworkfor$10.75atPopeyes.OfallAmericanworkersmakinglessthan$40,000ayear, one in eight are boundbynoncompete agreements.As anotherway toreduce workers’ leverage, three-quarters of fast-food franchise chains havecontractually prohibited their restaurant operators from hiring workers away

fromfellowfranchisees.Starting in the 1980s, the federal government also instituted big, covert

structural tilts in favor of business—examples of the sneaky, stealthy “drift”effectImentionedearlier.Inflationwasanimportanttoolfortheeconomicrighttogetitsway—firstpoliticallyin1980,whenrapidlyrisingpriceshelpedthemget power, and thereafter by letting normal inflation move money fromemployeestoemployersbymeansofakindofmacroeconomicmagician’strick.Instead of actually repealing two important New Deal laws that had helpedworkers for four decades, an essentially invisible ad hoc regime of gradual,automaticpaycutswasputinplace.Oneinvolvedovertimepay,timeandahalfforeachhouranemployeeworksoverfortyaweek—whichlegallygoesonlytopeoplewithsalariesbelowacertainlevel.Thenewploywastostopraisingthatsalarythresholdinthelate1970s,orthe’80s,orthe’90s—thuslettinginflationconstantly lower it, thereby continually reducing the number of people whoqualified for overtime pay. In 1975,when the thresholdwas the equivalent of$56,000ayear,alargemajorityofU.S.workerswereeligible;in2019,afterjustasingleincreasesince1975,theovertimelinewasunder$24,000,whichmeantthatfewerthan7percentofAmericanworkersqualified.

A similar surreptitious screwing-by-inaction is how the federal minimumwagewasdramatically reducedover time.Fromthemid-1950suntil1980, theminimumwagehadbeentheequivalentof$10or$12anhourintoday’sdollars.Aswithovertimepay,theminimumwagewasnevertechnicallyreduced,butby1989inflationhadactuallyreducedittojustover$7,whereitremainstoday.Inotherwords, ithasbeenthefederalgovernment’sunspokendecisiontocut thewages of America’s lowest-paid workers by more than a third, a choice firstmadeduringthe1980swhenitstoppedraisingtheminimum,thenratifiedagainand again by Democratic as well as Republican Congresses. In addition tokeepingcostslowfortheemployersofKrogercashiersandBurgerKingcooksandHoliday Innmaids, the lowernational floor forpayhas the invisible-handeffect of pulling down the low wages of people earning more than the legalminimum.

Economic right-wingers have publicly reveled in their squashing ofworkers’ power in so many different ways. Federal Reserve chair AlanGreenspansaid inaspeechin the2000s thatspectacularlyfiringandreplacingall the striking air traffic controllers in 1981 had been “perhaps the mostimportantdomestic”accomplishmentoftheReaganpresidency.

[It]gaveweighttothelegalrightofprivateemployers,previouslynotfullyexercised, touse theirowndiscretion tobothhireanddischargeworkers.Therewasgreatconsternationamongthosewhofearedthatanincreased ability to lay off workers would amplify the sense of jobinsecurity. Whether the average level of job insecurity has risen isdifficulttojudge.

Infact, itbeganacascadingincrease in jobinsecurity throughout theU.S.economythatwasn’tatalldifficulttoseeandfeelandmeasure.

*1WeenteredasimilarproductivitysloughaftertheGreatRecession,whichseemedtobeendingjustbeforethe2020recession.*2Afteradozenyears,theClintonadministrationliftedthatbanonfederalemployment.*3Becausetheunionizationofgovernmentworkersonlyhappenedinthe1960sand’70s,justbeforetherightstarteditsfull-borecampaigntoturnbacktimeanddiminishworkers’power,morethanathirdofpublic-sectoremployeeswereinunionsby1980,andtheystillare.*4BecauseitwasHarvard,protestsandambientliberalismandanendowmentof$18billionin2002persuadeditspresident—LarrySummers,who’djustservedasClinton’ssecretaryofthetreasury—tostartpayingthoseserviceworkersgoodwagesafteragenerationofstiffingthem.*5He’sthesonoftheinfluential,idiosyncraticallyconservativeUniversityofChicagolawprofessor,antitrustexpert,andformerfederaljudgeRichardPosner,whohelpedtransformantitrustandothereconomiclawtohelpbusiness.*6Economists’termformarketswherethere’sjustoneoverwhelminglydominantbuyeroflabor(oranythingelse)isamonopsony.

W hen Iwas a little kid,wheneverwe had to playmusical chairs inschool or at birthday parties, I never enjoyed it. I hated the tense seconds ofwaiting for each drop of the needle onto the record.Musical chairsmademeanxiousandmadeeveryonemanicanddeliveredanastysetof lessons—life isanacceleratingcompetitionofoneagainstallfordiminishingresources,survivalis justamatterof luckandatouchofbruteforce,andsuccessisamomentaryfeelingofsuperioritytotheloserswholosebeforeyoulose,withjustoneoutofthetenortwentyofusawinner.

Workingonthisbook,I’vethoughtagainandagainofthatgame,howtherules of our economywere rewritten as a high-stakes game ofmusical chairs,withmore anxiety anddread and frenzy. In fact, our economy since1980hasbeenaparticularlysadisticversionofthegame,wheresomeplayersaredisabledordon’tknowtherules,and inaddition towinning,only thewinnersgetcakeandicecreamandrideshome.

The crippling of organized labor since 1980—and the increase inautomationand relocatingworkabroad—helpedmakemostAmericanworkersmoreanxiousanduncertainand lessprosperous.But thereareotherways thatincreasing insecurity and increasing inequality got built into the politicaleconomyandbecamefeaturesofthesystemmorethanbugs.

TheFriedmanDoctrinein1970begattheshareholdersupremacymovementinthe1980s,whichbegatanunravelingofalltheoldnormsconcerningloyaltyand decency of businesses toward employees. Loyalty implies treating

employees better than the law requires, which was at odds with the newmandates of shareholder supremacy. Replacing strikers was a shock-and-aweswerve,outsourcingworktolow-wagecontractorsalessdramaticformofcold-bloodedness.Bothwere highly effectivemeans of scaringworkers in order toreducetheirpowerandkeeptheirpaylower.

Butoncethenormschangedandahigherstockpricebecameeverypubliccompany’s practically exclusive goal, companies thatweren’t facing strikes orfinancialproblemsalsoembracedthenewruthlessness.InadditiontoGEanditsrank-and-yankcorporatecopycatscontinually,automaticallyfiringafixedquotaof employees, profitable corporations began firing workers in bulk simply topleasethefinanceprofessionalswhoconstitutethestockmarket.“Inthe1980s,”says Adam Cobb, a University of Pennsylvania Wharton School businessprofessorwhostudiesthissuddenchangeinnorms,“youstartedtoseehealthyfirms laying off workers, mainly for shareholder value.” IBM, for instance,abandoned its proud de facto promise of permanent employment—starting in1990, it got rid of 41 percent of its workers in five years, at first softly,pensioning off people fifty-five and over, then after that using straight massfirings. Throughout U.S. corporate culture, it was as if a decent civilizationabruptlyrevertedtoprimitivism,thepowers-that-beinsuitsandtiespropitiatingthegodswithhumansacrifice—which inaddition to increasingprofitshad thebenefitofmakingthesurvivorscowerbeforetherulingelite.

OthercorporatenormsthatprevailedfromtheNewDealuntilthe1980s,inparticular thoseprovidingnonunionemployeeswithfixed-benefitpensionsandgoodhealthcare,hadbeenenforcedindirectlybythepoweroforganizedlabor.Because “companies were very worried about unions and the possibility ofstrikes,”anotherWhartonexpertonlaborrelationsexplains,“theytreatedtheiremployeeswell so theywouldn’t join a union.But that is no longer the case.Unions are on the decline. It’s easy to quash them if they try to organize. Sosomemanagersmightnotcareasmuchaboutemployeeloyaltyastheyusedto.”

JacobHacker,theYalepoliticalscientist,callsthistheGreatRiskShift,theways that startingaround1980,business, inorder to reducecurrentand futurecosts,dumpedmoreandmorerisk“backontoworkersandtheirfamilies.”Asaresult,“problemsonceconfined to theworkingpoor—lackofhealth insuranceandaccess toguaranteedpensions, jobinsecurityandstaggeringpersonaldebt,bankruptcyandhomeforeclosure—havecreptuptheincomeladder tobecomeanincreasinglynormalpartofmiddle-classlife.”

Health insurance became a standard part ofAmerican jobs starting in the1940sand’50s,andearlyonthepioneering,not-for-profit,cover-everyoneBlueCross and Blue Shield associations provided most of that coverage. Ascommercialinsurancecompaniesgotintothegame,havingBlueCrossandBlueShield as their public interest competitors helped keep the for-profit insurershonest,notunlikehowtheexistenceofstrongunionstendedtomakebusinessestreatnonunionemployeesbetter. In1980 the three-quartersofAmericanswhohad job-based health coverage paid very little in premiums or deductibles orcopayments.But it’s been all downhill from there, thanks tomoremercilesslyprofit-obsessed employers and insurance companies and healthcare providers.More andmore of the healthcare industry consisted of for-profit corporationsthatweremoreandmoresubjecttostockpricemonomania.Sincethe1990sinmanystates,BlueCrossandBlueShieldhavebecome totallycommercial for-profit insurance companies that (deceptively) continue to use the venerablenonprofit brand name. Moreover, barely half of Americans these days arecovered by insurance provided by a breadwinner’s employer. The averageamount eachAmerican paid formedical expenses out of pocket increased byhalf during the 1980s alone. In 1980 the average family of four spent theequivalentofabout$2,700ayearonmedicalexpenses;todayanaveragefamilyof four—$50,000 income, insurance through the job—spends about $7,500 ayearoutofpocket.

The other existentially important benefit that American businesses beganroutinely offering in the 1950s was a fixed pension, a guaranteed monthlyincomeforaslongasyoulivedafteryoustoppedworking,whichwouldbepaidinadditiontoSocialSecurity.Companiesfundedthepensions,andtheybecamestandard,likecover-almost-everythingcompany-providedhealthinsurance.

But then came the 1980s. I mentioned earlier how the tax code tweak401(k),whichwentintoeffectin1980,handedacaptiveaudienceofmillionsofnew customers and a revenue bonanza to the financial industry. But thisinnovation also provided a cost-cutting financial bonanza to employers. TheynowhadanothercleverwaytoexecuteonthenewScroogespirit:replacingthepensions they’d funded for decadeswith individual-worker-funded investmentplans—self-reliance! freedom!—cost them less right away and cost themnothingonceemployeenumber49732leftthebuildingforgood.

In a recent study, Adam Cobb of theWharton School found that just asCEOsstartedsatisfyingtheirnewWallStreetüber-headquartersandshareholdersupremacydogmabylayingoffworkers,theystartedgettingridofpensionsfor

thesamereason.AtthirteenhundredofthebiggestU.S.corporationsfrom1982on, the more a company’s shares were held by big financial institutions likemutual fundsandbanks—arm’s-lengthoverlordswhodefinitely feltno loyaltyto anyparticular company’s employees—themore likely that companywas toget rid of pension plans that had guaranteed benefits. On the other hand,companies that employed any unionized workers were likelier to continuepayingpensionstotheirnonunionworkersaswell.

“Thegreatlieisthatthe401(k)wascapableofreplacingtheoldsystemofpensions,”saystheregretfulmanwhowaspresidentoftheAmericanSocietyofPension Actuaries at the time and who had given his strong endorsement to401(k)s.Withoutanynationalconversationormeaningfulprotestbyemployees—withoutaunionoraCongressthatwaspreparedtostepin,howdidyoupushback?—this crucial clause in the modern American social contract wasunilaterally eliminated. In 1980 eight out of ten large and medium-sizecompanies paid a guaranteed monthly sum to retirees for life, and mostAmericanworkersretiredwithafixedpensionontopofSocialSecurity,whichthepensionoftenequaled.Todayonlyoneineightprivatesectoremployeesarein line to get such a pension, andmost Americanworkers don’t even have a401(k) or an IRA or any other retirement account. It’s yet another route bywhichtheU.S.politicaleconomymadearoundtripfrom1940to1980andthenbackagain.

Imentioned the libertarianFedchairAlanGreenspan’s remark that itwas“difficult to judge” if the “increased ability to lay offworkers” starting in the1980s had had structurally, permanently increased Americans’ “sense of jobinsecurity.”

I am frequently concerned about being laid off. From 1979 through the2000s, that statement was posed in a regular survey of employees of fourhundredbigU.S.corporations,eachpersonaskediftheyagreedordisagreed.In1982,earlyinournewnationalmusicalchairsgame,duringabadrecessionwithhighunemployment,only14percentof this largesampleofworkerssaid theyfeltanxiousaboutlosingtheirjobs.Thenumbercreptupwardduringthe1980s,andtheninthe’90speoplefinallyregisteredthat,uh-oh,oursocialcontracthadbeencompletelyrevamped.By1995,eventhoughtheeconomicmomentlookedrosy—strong growth, the stock market rocketing upward—nearly half ofAmericansemployedbybigbusinesssaidtheyworriedalotaboutbeinglaidoff.

In fact, in 1997, a strange new condition kicked in—pay continued to

stagnate formostAmericansdespite lowanddroppingunemployment rates.Afundamentalprincipleoffreemarketswasbeingrepudiated:thesupplyoflaborcould barely keep up with demand, but the price of labor, wages, wasn’tincreasing.AlanGreenspan,ashepresentedhissemiannualeconomicreporttotheSenateBankingCommittee,mentionedthosesurveyresultsandtestifiedthatthesurprising“softnessincompensationgrowth”was“mainlytheconsequenceof greater worker insecurity” that had arisen since the early 1980s, insecuritythat was also responsible, he said, for the continuing “low level of workstoppages”byunionizedworkers.

Inotherwords,employeesofthebiggestcorporations,whosejobseveryonehad considered the most secure, were now too frightened of being jettisonedfromthosejobstopushhardformorepayorbetterworkingconditions.

Those data and their implicationsmust’ve slippedGreenspan’smind laterwhen he found it “difficult to judge” the effects of insecurity on workers’leverage and pay. And he nevermentioned, of course, that it was he and hisconfederatesontherightwho’dspentthelastdecadesrestructuringourpoliticaleconomy to reduce thepowerofworkers and increase their job insecurity.Hedidsayhethoughtthecuriousdisconnectinthelate1990s—lowunemploymentbutnopayincreases—wasablip,that“thereturntomorenormalpatternsmaybeinprocess”already.Buttwodecadeslateritremainedthenot-so-newnormal.Thelong-standingbalanceofpowerbetweenemployersandtheemployedwascompletelychanged.

Theimpactofsuddenlyhigherinsecuritywasacascadeofmoreinsecurity.Startinginthelate1980s,assoonasGreenspan’sbelovednew“abilitytolayoffworkers”tookeffect,thefractionofAmericanswhoactuallylosttheirjobseachyear increased by a third and stayed there. At the same time, individualhousehold incomes started roller-coastering down and up and down as theyhadn’tbefore.SoonthehouseholdincomesofoneineightAmericans,poorandaffluentand inbetween,weredroppingbyhalformore inanygiven two-yearperiod. Between 1979 and 1991, personal bankruptcies tripled (and thendoubled),andthemortgageforeclosureratequadrupled(andthendoubled).

—

At the same time that economic insecurity grew, new sources of economicinequality were built into our system that made insecurity more chronic andextreme.Scoresofpublicandprivatechoicesandchangesincreasedinequality,

all shaped by the new governing economic gospel: everybody for themselves,everything’sforsale,greedisgood,therichgetricher,buyerbeware,unfairnesscan’tbehelped,nothingbutthoughtsandprayersforthelosers.

Whathappenedwithhighereducationisaprimeexample.Collegehadbeenthe greatAmerican portal to upward economic and socialmobility, especiallypublic universities, which give out two-thirds of all four-year undergraduatedegrees. But in the 1980s, that portal started becoming much harder to getthrough financially and much more financially vital. Meanwhile the rapidlyrising cost of college provided a new business opportunity for the ravenousfinancial industry, which beset graduates (and people who failed to graduate)with debt that made the chronic new economic insecurity even worse. Ifomnipotentsadistshadsetouttotakeanextremelygood,well-functioningpieceof our political economy and social structure and make it undemocratic andoppressive,thisiswhattheirschemewould’velookedlike.

WhenIgraduatedhighschoolinthe1970s,Icould’vegonewithapluralityofmyfriendstotheUniversityofNebraska,forwhichmyparentswould’vepaidresident tuition, room, and board equivalent to $10,000 a year. But I got intoHarvard, so Iwent there,which cost the equivalent of $22,000 a year, all in.Thosepriceswere typicalat the time.Theywerealso thesameas they’dbeenforpublicandhigh-endprivatecollegesadecadeearlier.

But then around 1980, under the camouflage of high inflation, privatecolleges started increasing their prices every year a bit faster than inflation.Public colleges soon followed suit, state legislatures started cutting universityfunding, and that vicious cycle picked up speed. In the 1990s the price of acollegeeducationballoonedeven faster—especially atpublic institutions—andneverstopped.

Since1981stateshavecuttheirfundingofpubliccollegesanduniversitiesby half. The real, inflation-adjusted cost of attending a four-year college hasalmosttripled.ThatundergraduateyearattheUniversityofNebraskahasgonefromtheequivalentof$10,000inthe1970sto$25,000now.The$22,000thatHarvardchargedinthe1970s,whichmyparentscouldjustscratchtogether,nowruns$72,000ayear,allin.

Only a quarter of people graduating from four-year public colleges anduniversities in the early 1990s had student loan debt; by 2010, two-thirds did.Credithadbeenderegulatedinthe1980sjustintimeforthebusinessofstudentloanstoexplodeinthe’90s.WhenIgraduatedcollegein1976,thetotalamount

of money lent to students to pay for higher education each year was theequivalentof$8billion—butbythefirstschoolyearofthe1980s,ithadjumpedto$22billion, and in2005 it reached$100billion. Inotherwords,over thosethreedecades,whilethenumberofstudentsgrewbyhalf,theamountofmoneytheyborrowedeachyearincreasedtwelvefold.Forthefinancialindustry,asmallrevenuestreamturnedintoagreatroaringriver.Forthe45millionmostlyyoungand youngish Americans who today carry an average of $35,000 apiece instudent debt, it’s yet another source of economic insecurity that did not existbeforeeverythingchangedinthe1980s.

FromthedecademyparentsattendedcollegethroughthedecadeIattendedcollege, the percentage of all Americans with four-year degrees more thantripled. But then college became terribly expensive, and that constant, rapidincrease in people attending and graduating, hard evidence of the AmericanDreamworking,slowedwaydown,especiallyformen.

I’mfairlysurethatanAmericancollegeeducationtodayisn’ttwoorthreetimes as good as it was when I went, even though it’s two or three times asexpensive. Rather, in the 1980s everything in America became more of acommodityvaluedonlybyitsmarketprice,andacollegedegreewasturnedintoakindofluxurygood,thewayithadbeenbackinmygrandparents’day.Butitwasn’t just status anxiety that drove up the price of college in the 1980s, thedecade in which Hermès started selling a certain leather handbag for tenthousanddollarsapiecejustbecauseitcould.Afour-yeardegreesimultaneouslybecameanexpensiveluxurygoodandpracticallyessentialtoamiddle-classlife,becausetheeconomicvalueofadegreealsowildlyincreasedduringthe1980sand’90s.

Collegegraduateshadalwaysbeenpaidmoreonaveragethanpeoplewithless education. But that college premium had actually shrunk during thetwentieth century before 1950, and even after that didn’t grow much—until1980,whenitexploded.Intheearly1980scollegegraduatesofallagesearnedathirdmorethanpeoplewho’donlygraduatedhighschool.Justadecadelater,in1992, they earned two-thirdsmore, as they still do.What’sworse, for peoplewhodon’thavecollegedegrees,averagerealpayhasgonedownsincethenby10or20percent.Inotherwords,acollegedegreebecameamoreessentialbutalsomuchlessaffordabletickettotheincreasingprosperitythat,until1980,allAmericanshadenjoyed.

Yetinthiscentury,there’sabait-and-switchlose-lose-losepunchlinetothe

story. Since 2000,with two generations of college graduates having burdenedthemselveswithunprecedenteddebt topayfor theunprecedentednewcostsofcollege, the college-grad incomepremiumbasically stopped increasing.Todayfour out of ten recent American college graduates are employed in jobs thatdon’t even require a college degree. And while college graduates used toaccumulatemorewealthatyoungeragesthanpeoplewithoutdegrees,accordingtoa2018FederalReservestudy, thecostsofcollegeandofstudentdebthavenowerasedthatwealthpremiumforyoungercollege-educatedAmericans.

IftheAmericanDreamhadonesimpledefinition,itwasthathardworkledtoabetterlife,materiallyandotherwise,ifnotforoneselfthenforone’schildrenandgrandchildren.Inthelate1800s,whenHoratioAlgerpublishedRaggedDickand his other fictional chronicles of upward economic mobility, America’sexceptionalism wasn’t just a self-flattering myth. Back then a lot moreAmericansthanpeopleelsewherereallydidmoveuptheladderfromgenerationtogeneration.OuredgeoverBritainandtherestofEuropewasdiminishingbythe 1950s, but economicmobility remained a real thing in the United States,onwardandupward—until1980.

That change is particularly clear in a recent study conducted by Stanfordand Harvard economists. In 1970, they found, almost all thirty-year-oldAmericans,92percent,wereearningmorethantheirparentshadatthatageandolder.AmongAmericansintheirearlythirtiesin2012,however,onlyhalfwereearningmore than their parents had—and for sons compared to fathers, evenfewer.Thatenormousdifferenceovertwogenerationswasmainlycausednotbyslowereconomicgrowth,theeconomistsfound,butbyhowAmericaneconomicgrowthwas shared after 1980. Ifwe’d continued slicing the pie aswe’d donefrom1940until1980,then80percentofthoseGen-XerswouldbeearningmoremoneythantheirSilentGenerationparents,insteadofonly50percent.

Thesedays, ifyougrowuppoor inAmerica,youhaveless thanaone-in-fourshotofbecomingevensolidlymiddleclass—onein three ifyou’rewhite,one in ten if you’re black. If you grow up right in the economicmiddle, thechancesareyouwon’tmoveupatall.Ontheotherhand,ifyoucomefromanupper-middle-class or rich household, the odds are strong you’ll remain uppermiddleclassorrichasanadult.

When inequality started increasing in the 1980s, separating the fortunatefewandtheunfortunatemajority,itshowedupgeographicallyaswell:notonlywere only the rich getting richer, but neighborhoods and cities and regions

segregated accordingly. The economist Enrico Moretti calls this the GreatDivergence.Before the1980s, thedecade inwhichgatedcommunitiesbecamecommon,Americanstendedto livemoredemocratically.Americanswithmoremoneyandlessmoneywerelikeliertolivealongsideoneanother.

In 1970 only one in seven Americans lived in a neighborhood that wasdistinctlyricherorpoorer thantheirmetropolitanareaoverall,but thatfractionbegangrowing in the1980s,andby the2000s itwasup toa third.Before the1980s, two-thirds ofAmericans lived inmiddle-incomeneighborhoods; nowaminorityofusdo,afact thatmakes the termsthrownaroundabout themiddleclass—disappeared,hollowedout—seemlessmetaphorical.*

AstheAmericanmiddleclassquicklygrewfromthe1940stothe’70s,sodid economic equality—that is, the income gap between richer and poorersteadilyshrank.Interestingly,thatsamelevelingalsohappenedatthesametimeamongcities,withwagesbackthengrowingfasterinpoorerplacesthantheydidin more affluent ones, allowing people in the laggard cities to catch up. Butaround1980thatstoppedtoo.Sincethentheaveragesalarypremiumsforjobsinandaroundeconomicallyrobustcitieshavegrowntobeseveraltimesaslargeasthey’dbeeninthe1970s,tensofthousandsofdollarsayearmoreperemployeeinstead of merely thousands. After 1980 college graduates with skills startedgetting paid less if they lived in and around Cleveland rather than thrivingOmaha,orinStocktonratherthanthrivingSanJose,sotheymoved.

This Great Divergence is yet another way in which growing economicinequality gets built into the system and becomes self-perpetuating, withresidents of richer cities and regions getting even richer while their fellowcitizensinunfortunateplacesfallfurtherbehind.

NotonlydopeoplewholiveinBostonorRaleighorAustingettochoosefrombetter jobs, theirwealthalso increasesmorebecauseofrealestateprices,whichhave risenmore than twice as fast in cities in general as in rural areas.Superhigh prices for apartments and houses, in turn,mean that it’s harder forpeople from left-behind places to afford to migrate to booming urban areas,whichisbadforthemandprobablyforU.S.economicgrowthtoo.Andpeoplein the booming cities who aren’t Internet workers or their masseuses have amuchhardertimeaffordingtostay.InSeattleinthe1960s,forinstance,atypicaljanitorandatypicallawyerbothspent10or15percentoftheirincomestolivein an apartment or house they owned or rented; today the Seattle lawyer stillpays15percentforhousing,buttheSeattlejanitorhastopayaround40percent.

OneofmypremisesinthisbookisthatarealandmainlygoodexpressionofAmericanexceptionalismhadbeenourwillingnessandeagernesstotakeonthenew.Thatoftenmeantpullingupstakesandhittingtheroadinsearchofnewworkoranewlife.TobeAmericanwastobeventuresome.Intheheydayoftheso-calledAmericanCentury,inthe1940s,peopleweredoingthatinabigway.Thepercentageofpeoplewholivedinastateotherthantheonetheywereborninrosesteeply,anditkeptrisingasthecountryboomedandbecamemoreequal—and then it stopped rising around, yes, 1980. Since then the rate at whichpeoplemovetoanewstateorcityforanewjobhasfallenbyhalf,anditisnowat the lowest it’s been since thegovernment began tracking it. Peoplewithoutcollegeeducationsarelesslikelytorelocate,andinjustthelastdecadepeopleintheirearlytwentieshavesuddenlybecomestationary,athirdunlikeliertomovethaninthe2000s.Isthisnewgeographicimmobilitymoreacauseoraneffectofour new economic insecurity and inequality and immobility? Like so manyspiralingviciouscycles,it’ssurelyalloftheabove.

As the disappearance of factory jobsmade cities likeDetroit andBuffalolosers in the Great Divergence, automation and the digital revolution andglobalizationmade certain cities big winners. Cities with tech companies andlots of college graduates were positioned to grow even faster in thispostindustrial age.Unlikemost of the other economic changes I’ve discussed,likeshareholdersupremacyandendingantitrustanddefeatingorganized labor,thiswasn’t part of the original strategy of big business and the right. But forthem it isn’t exactly collateral damage either, because it has been a politicalboon. So far they’ve brilliantly managed to redirect the anger of most of the(white) left-behinds to keep them voting Republican, by reminding them thatthey should resent the spoiled college-educated liberal children andgrandchildrenoftheacidamnestyabortionliberalelitewhoturnedonthemandtheirparentsandgrandparentsinthe1970s.

*Thegoodnewsisthatwhileneighborhoodshavegottenmoreeconomicallyhomogeneous,they’vealsobecomemoreraciallyandethnicallydiverse.In1980theresidentsofatleastaquarterofallU.S.censustracts,eachaneighborhoodofafewthousandpeople,wereessentiallyallwhiteandnon-Hispanic.Nowadaysonly5percentofwhiteAmericansliveinsuchneighborhoods,mostoftheminruralareas.

B ack in the 1930s and ’40s, there had been very left-wing Democratswith serious national prominence and significant political bases. FranklinRoosevelt’s own vice presidentHenryWallacewas one, asmost notablywasSenatorHueyLongofLouisiana,who introducedbills in the1930s toenact a100 percent income tax on earnings over the equivalent of $20million and awealth tax of 100 percent on everything over $1 billion. Which made thepresidentseemmoderatewhenhis1935“SoaktheRichAct”raisedthe taxonincomeover$2millionto55percent.“Politicalequality,”FDRsaidin1936,is“meaningless in the face of economic inequality.” In what he pitched as aSecondBillofRights,heproposedguaranteeingallAmericans“therighttoearnenough” for “a decent living” and “a decent home” and to have “adequatemedicalcare”paidforwith“atax[on]allunreasonableprofits,bothindividualandcorporate.”Thatwas1944,PeakLeftismforDemocratsoneconomics.

Afterthewar,theAmericaneconomicleftexistedinameaningfulwayonlywithin organized labor. And by the 1980s, unions were reduced to desperateparochialstrugglestosavejobsindecliningheavyindustriesand,asmistrustofgovernmentgrew,tounionizingmoregovernmentemployees.Moreover,theleftofferednoinspiring,politicallyplausiblenationaleconomicvisionofafuture.Inresponse to economic Reaganism, the national liberals were committed topreservingthesocialwelfarestatusquoforoldpeopleandthe(deserving)poor,andtoconvincingAmericathatDemocratswerenowmodernandpragmatic,notwasteful bleeding-heart suckers or childish protesters or comsymp fools.Very

fewbelievedanymorethatunreasonableprofitscouldevenbeathing.Against a triumphant Republican Party high on right-wing ideology,

liberals’newsellingpointwastheirlackofanyideologyatall.ThefactionthatwasnowdominantintheDemocraticPartyhadbeenpushingforamorecentristeconomic and socialwelfare policy since the 1970s, but theRepublican Partyafter1980hadnocomparablemoderatingfaction—whichinatwo-partysystemmeantthatDemocratskeptmovingtowardacenterthatkeptmovingtotheright.

The traumatic Republican landslide in the presidential election of 1972persuaded generations ofDemocrats that theymust tack toward the center nomatter what. The don’t go left lesson was only reinforced during the 1980s,when three quite center-left presidential candidates in a row lost. In the 1984Democraticprimary,GaryHartwasstilltheneoliberalapostate,runningagainstthesupposedmustinessoftheNewDealandtheGreatSocietyandgovernmentand the Establishment. “The fault line of the party,” he said then, “is nowbetweenthosewhohavebeeninofficefor20or25yearsandthosewhohavecomeintoofficeinthelast10years,andwhoarelesstiedtothearrangementsdating to[Franklin]Roosevelt.”Thatwasbecause“thesolutionsof the thirtieswillnotsolvetheproblemsoftheeighties.”

Infact,asthepoliticaljournalistandauthorRichardReeveswrotein1984of “Democratic liberalism’s traumatic breakwith organized labor,” the party’sneoliberal cuttingedgeconsideredunionsnot just “the solutionof the1930’s”but “the problem of the 80’s,” an obsolete obstacle in theway of “a sociallyliberal, high-technology, high-growthAmerica….We’re not going to go downwiththecrew.Sorry,guys!”

Inotherwords,theNewDemocratavatarHartwastellingreceptivetwenty-somethingliberalyuppieslikemethatitwaspassétofretaboutbigbusinessesgetting too big orWall Street speculating too wildly or unions and unionismbeingdefinitivelydefeated,andthatitwasfollytothinkofSocialSecurityandMedicare asmodels for any kind of expanded social democracy.And hewaseffectively persuading everyone, particularly people who had blue-collar jobsandwhoused to voteDemocraticbecause of all those arrangements dating toRoosevelt,thatthetwopartiesdidnotreallydisagreeabouteconomics.

Rather than offering a distinct programmatic vision for the politicaleconomyapartfromtheadjectivenew,Hartwassellingsaucinessandsmartnessandcool,cleverlyexploitingthegenerationgapagenerationafterithadbecomeathing,justastheyoungestboomerscouldvoteandtheoldestoneswereabout

toentermiddleage.Hehimselfwasapproachingfifty,onlyeightyearsyoungerthan his primary opponent, former vice president Walter Mondale, whom henevertheless caricatured as an old fogey.Of the youth of 1984,Hart said in aperfectsoft-pedalpander,“You’redealingherewithverysophisticatedpeople.They don’t want a messiah. They don’t want me to personalize an entiregeneration’s yearnings—just to be the vehicle of its expression. I see thiscampaign as a liberating vehicle.” In his campaign stump speech, he wouldrepeatthephrase“newgeneration”adozentimes.

Itnearlyworked.IwaspleasedwhenheranaclosesecondinIowa,finishedfirst inNewHampshireaweek later,andafter thatwonamajorityofstates. IrememberbeinginaDesMoineshotelroomcoveringtheDemocraticcaucusesforTime, feeling so state-of-the-art to be filing a story aboutHart, a so-calledAtariDemocrat,throughatwenty-eight-poundportablecomputerconnectedtoashoebox-size dial-up modem to which we’d docked a curly-corded desktoptelephonehandset.

Just a few weeks earlier, in January 1984, Apple had introduced theMacintosh. Its famous Super Bowl ad, based on George Orwell’s NineteenEighty-four, featured a heroine smashing the tyrants’ huge telescreen, a lonenonconformistunderdog spectacularlydefying theoppressiveEstablishment. Itsuitedthemomentanddigitalearlyadopterswhowerepoliticallyawarebutnotactually, specifically political, in a stylish little allegory with which everyonefromAynRandfanstoHartfanstoDeadheadsmightidentify.

Steve Jobs, not yet thirty, had just become the sort of emblematicgenerationalavatarthatGaryHartpretendedhewasn’tdesperatetobe.Ina1984interview,Jobsbraggedabouthisvastwealth—“at23,Ihadanetworthofoveramillion…andat25,itwasover$100million”—andabouthisindifferencetoit:“I’mtheonlypersonIknowthat’slostaquarterofabilliondollarsinoneyear.”Jobs didn’tmind coming across as a jerk, just not a standard business jerk—becausehewas“well-groundedinthe…sociologicaltraditionsofthe’60s,”likeotherSiliconValleybabyboomers.

“There’s something going on here,” he said, “there’s something that ischangingtheworldandthisistheepicenter.It’sprobablyclosesttoWashingtonduringtheKennedyeraorsomethinglikethat.NowIstartsoundinglikeGaryHart.”

“Youdon’tlikehim?”theinterviewerasked.“Hart?Idon’tdislikehim.Imethimaboutayearagoandmyimpression

wasthattherewasnotagreatdealofsubstancethere.”“Sowhodoyouwanttosee—”“I’venevervotedforapresidentialcandidate.I’venevervotedinmywhole

life.”Meaninghe’dchosennottovoteagainstRonaldReaganin1980.Jobs was extreme—in devotion to his work, in arrogance and self-

satisfaction,inwealth,inlackofinterestinelectoralpoliticsorsympathyfortheunfortunate—buthewasalsoarchetypal.Foradecade,politicsandsocialpolicyhad been the passionate and unavoidable topic A in America because of thestrugglesoverracialjusticeandtheVietnamWar,butoncethoseproblemswereaddressedandsolved,respectively,onlypoliticsgeeksremainedfullyengaged.Fortheremainderofthecentury,theissuesthatarousedliberalandleftpassionsinamajorway—nuclearweapons,civilwarsinCentralAmericancountries,theAIDS epidemic—were intermittent and never directly concerned the U.S.politicaleconomy.

PeoplelikeSteveJobs,oratleastpeoplelikeme,whodidvote,alwaysforDemocrats,weren’tantiunionorantiwelfareorantigovernment.TheprobabilitythatelectedDemocratswouldtendtoincreasemytaxeswasn’tareasonIvotedfor them, but my indifference to the financial hit—like Steve Jobs!—feltvirtuous,low-endnoblesseoblige.However,evenaftertherightgotitswayonthepoliticaleconomy,manypeoplelikemeweren’tviscerally,activelyskepticalofbusinessorWallStreeteither.Bigbusiness—inmycase,variousmediaandentertainment companies—paid me well and treated me fine, which probablydidn’t sharpen my skepticism toward a political economy that was beingreordered to help big business (and people like me). When it came to themillions of losers, I felt…grateful that my work couldn’t be automated oroffshoredoroutsourced,andIfigured,Creativedestruction,invisiblehand,it’llwork itself out, and voted for liberal politicians who said we should retrainsteelworkerstobecomecomputerprogrammers.InSpy,wedidn’tavoidpolitics—wepublishedWashington-themedissuesandaninvestigativepieceaboutPaulManafortandRogerStonecalled“PublicistsoftheDamned”andacoverstorycalled “1,000 Reasons Not to Vote for George Bush”—but it wasn’t themagazine’smainfocus.

Very few people I knew voted for Reagan, but given that he didn’t doanythingcrazyandstartedmakingpeacewiththeSovietUnion,affluentcollege-educatedpeople, liberals andotherwise,didn’tdisagreevery ferociouslyaboutpoliticsinthe1980sand’90s,andcertainlynotabouteconomics.Inretrospect,

that rough consensus looks like the beginning of an unspoken class solidarityamongthebourgeoisie—nearlyeveryonesuspiciousofeconomicpopulism,butsome among us, the Republicans, more suspicious than the rest. Affluentcollege-educated people, Democrats as well as Republicans, began using thephrasesociallyliberalbutfiscallyconservative todescribetheirpolitics,whichmeant low taxes in return for tolerance of…whatever, as long it didn’t costaffluentpeopleanything.* Itwasa libertarianism lite thatkept everythingniceand clubbable and, unlike Republican conservatism, at least had the virtue ofideologicalconsistency.

Totheirgreatcredit,theNewDemocratstooktheleadearlytostartmakingpeople aware ofCO2-induced globalwarming. In 1980, Senator PaulTsongasconducted the first congressional hearing on the subject, andCongressmanAlGoreconvenedthenextin1981.Itwasawonkynewproblemthatrequirednewsolutions.Ofcourse,backthen,briefly,italsohadtheNewDemocratappealofnot seeming anticapitalist. And if the Democrats’ union allies warned thatpolicies to reduce CO2 might be bad for industrial jobs, theywere just beingtheirshortsighteduneducated-palookaselves.

WhenHart ran a second time for president in1988, oneof his taxpolicyadviserswasArthurLaffer, theinventorofsupply-sideeconomics.WhenJerryBrownranforthe1992Democraticnomination,healsosoughtLaffer’shelptodevise some kind of tax scheme “that was clear and easy to articulate,” andLafferhimselfsayshevotedforBillClinton.

Clinton was one of the founders in 1985 of the Democratic LeadershipCouncil.Itwasanattemptbyanendangeredspecies,whiteSouthernDemocraticpoliticians,toremainrelevanttwentyyearsaftertheirdie-offhadbegun.Italsobecame a think-tankish anchor for Democrats who didn’t disagree withRepublicans that theonlyacceptablenewsolutions toanysocialproblemweremarket-based.

For the remainder of the century, no candidate from the Democratic leftbecame a plausible finalist for the nomination. In the 1988 primary, JesseJackson ran as a full-on leftist, calling for single-payer healthcare, freecommunitycollege,abigfederaljobsprogram,andthecancellationofReagan’staxcutsfortherich—andbysweepingtheblackSouthandwinningeverywhereamongvotersunder thirty,hebeat JoeBidenandGoreandcame insecond toDukakis, but…hewasnevergoing tobenominated.AVermontmayorwho’dendorsedhim,BernieSanders,waselectedto theHousein1990asasocialist,

cute,butreally,sowhat?Hewasaquirkyretrofigure,someBen&Jerry’sguywhodidn’t realize the 1960swere over andwas channelingEugeneDebs andNorman Thomas from the ’20s and ’30s. In 1992, when Clinton won thenomination, his only serious competitors were two fellow New Democrats,Brown and Tsongas. Democrats had settled into their role as America’seconomically center-right party. There was no organized, viable nationaleconomicleftinthevicinityofpower.

*Theearliestuseofthephrasesociallyliberalbutfiscallyconservativeinall5millionbooksandotherpublicationsdigitizedbyGooglewasin1978,inCharlesKoch’smagazineInquiry:ALibertarianReview,torefertothenewideologicalterritorythatMassachusettsgovernorMichaelDukakisandPresidentCarterwerebothtryingtoclaim.

A s the rightmarched on victoriously through the end of the 1980s andinto the 1990s, even what appeared to be occasional reversals weren’t reallysetbacksfortheeconomicright.Forinstance,justafterrejectingBork,thesameDemocratic-majority Senate promptly and unanimously confirmed Reagan’schoice of Anthony Kennedy for that Supreme Court seat. Justice Kennedy isknown today as a moderate because of his liberal votes on abortion and gayrights, but on economic questions—concerning unions, campaign spending,regulation—hewasforthirtyyearsanabsolutelyreliablehard-linesupporterofbigbusiness.

AndeventhoughtheDemocratscontrolledtheHousewithhugemajoritiesthroughoutthe1980sandearly’90sandwontheSenatebackforsixyears,thefederalgovernmentconsistentlytreatedbusinessandtherichspectacularlywell.Thetopincometaxrateforthewealthiestwascutfrom70to50percentin1982.Itwould’vebeenprudenttostopthereforawhileandseehowthatworkedout.Butno: in thesecondReagan term, the topratewascutagain to38.5percent,then once more to 28 percent—along with a large reduction of the incomethresholdforthehighestbracket,whichmeantthatsomebodymaking$1millionor $10million a year would now be taxed at the same rate that a teacher orplumberwastaxedoneverythingtheyearnedabovetheequivalentof$40,000.The cut in the top tax rate on profits from selling stockswas also cut in halfbetween1976and1982,anotherenormousboontotherich,sincethree-quartersof those gains go to the wealthiest 5 percent of Americans. As it started its

second decade of existence, the Business Roundtable successfully lobbied tomakesurecorporatetaxesweresignificantlycutaswell.

But the strategists on the right understood the downside of success, thedangers of complacency and backsliding. For their long war, the counter-Establishmentneededtoexpandtofightspecializedcampaignsandtoretainitsferocityevenas itbecame theEstablishment.Manyessential subcommandantsmadetheright’spermanentrevolution,butthreeinparticularareworthacloserlook.Eachconcentratedonadifferentconstituencyandareaoffocus,andeachhadadifferenttemperament,butallwereunwaveringzealots.

—

Iftaxratescouldbecutaseasilyasthey’dbeeninthe1980s,therichrightandbigbusinessknew,thoseratescouldjustaseasilyberaisedbacktowherethey’dbeen for the preceding half-century.The surge of popular antitax anger in the1970s that led to Reagan’s election mainly concerned local taxes and coulddissipate unless it was somehow specifically institutionalized, with its owncampaignand fighters in the longwar.Apreference for relatively lower taxesand smaller government budgets had been aRepublican tenet for generations,alongwithawishforasomewhatlighterregulatoryhand,butonlyinthe1980sand ’90s did taxes—REGULATION BAD, TAXES WORSE—turn into the primedoctrinalphobiaandbondfortheAmericanright.Itdidn’thappenbyaccident.

Morethananyothersingleperson,GroverNorquististoblame.Likeme,hewasanupper-middle-classsuburbanitewhobecameaNixoncampaignvolunteeraround the time he hit puberty and attended Harvard College in the 1970s.Unlikeme,heneverdecidedthat“adolescentlibertarianism”wasredundantandmoved on.Moreover, he settled on taxation as his lifelong libertarian single-issueobsessionatjusttherightmomentandstuckwithitforever.AftercollegeheranaconservativeWashingtonantitaxgroup,andinthe1980shecreatedhisownmoreextremeversion,AmericansforTaxReform(ATR),fundedovertheyearsbythefamiliar(Koch,Olin,Scaife)right-wingfoundations.

Norquist’s stroke of evil genius was to dream up at age twenty-nine theTaxpayer Protection Pledge, which in 1986 made the Republicans’ antitaxfixation official. It’s a document that obliges legislators (and governors) whosignitto“opposenettaxincreases,”“anyandall”ofthem,foraslongasthey’rein office. Because it’s, you know, a solemnoath, itmust be cosigned by twowitnesses, and the group’s FAQ answer (in 2020) to the question, “Can the

language of the Pledge be altered to allow exceptions?” is “No. There are noexceptions to the Pledge.” Fortunately for Ronald Reagan, the pledge didn’texistduringhisfirstfiveyearsinoffice,whenhesignedintolawsixmajortaxincreasesamounting to theequivalentof$300billion.Soonswearing fealty toNorquist’s demandwas practically required of congressionalRepublicans, andthreedecades later85percentof theRepublicans in theHouseandSenatestillfeelobligedtosignit.

Thesimplicityandabsolutismofthepledgearebothitsgeniusanditsevil.Inaddition,Norquistremainedsingle-mindedaboutpromotingandenforcingitandavoidingmissioncreep.Itmadehimamongthemostinfluential leadersofthe right, libertarian economics division. He was a close adviser to NewtGingrichbeforeGingrichbecameSpeakeroftheHousein1995.Formorethanaquartercentury,hehaspresidedattheso-calledWednesdayMeeting,aweeklygatheringofWashingtonright-wingersathisoffices.ATRhasbeenaseffectiveas the NRA (on whose board Norquist served for eighteen years) as anideologicalenforcerofhard-rightorthodoxyamongRepublicansinWashington,possibly as responsible for unnecessary U.S. government dysfunction as theNRAisforunnecessaryAmericangundeaths.

Sincethepledgebegan,thetopfederalincometaxratehasneveragaincrepthigherthanitwasbefore1932.YetbyNorquist’sownmeasure—thefractionoftheeconomyfunneled throughthefederalgovernment—heandhisgrouphavefailed. For the thirty-odd years beforeAmericans for Tax Reform began, thatgovernment percentage-of-GDP floated up and down between 13 and 19percent,andforthethirty-oddyearssinceithasfloatedupanddownbetween14and20percent.In1985itwasbetween16and17percent,exactlywhereitwasatthebeginningof2020.Instead,what’schangedenormouslyduetotheright’santitax phobia is the size of the federal debt as a percentage of GDP. Afterbottoming out in the 1970s, when Democrats controlled Congress and thepresidency, that total debt number increased by half during the Reaganadministrationalone.

This history illustrates the true relative importance of the right’s goalsconcerningfiscalpolicyandthepoliticaleconomy.Theiroverridingmission,atwhichthey’vesucceededsmashingly,istomakesuretherichgetricher(andbigbusinessbigger),andthemostdirect,unambiguous,universalwayofdoingthatisbykeeping their taxes low,nomatter thecosts.TheoldRepublicangoalofbudgetary prudence, trying to balance federal revenues and spending, becamevestigial.FiscalresponsibilityrhetoricallypopsbacktolifeforRepublicansonly

when they’re out of power in Washington, and only as an argument forachieving their secondary goals of reducing Social Security and Medicarebenefits and preventing any major expansion of health or education or othersocialprograms.

Norquist is known for his jokey line about his wish to make the federalgovernmentsmaller—“toshrinkitdowntothesizewherewecandrownitinthebathtub.” But he and the Washington right are really not joking about theirdreamof repealinga centuryofprogress enacted inWashington.Norquisthassaidinallseriousnessthatheenvisionsagovernmentthesizeof“wherewewereat the turnof the [twentieth]century,”“upuntilTeddyRoosevelt”—Rooseveltbecamepresidentin1901—“whenthesocialiststookover,”before“theincometax,thedeathtax,regulation,allthat.”Gettingmorespecific,hedefinitelywantsafederalbudgetnolargerthanitwaseightyyearsago—inotherwords,athirdofwhatitistoday.IftheRepublicansweretopursuethatgoalopenly,inearnest,inCongress, itwouldbepoliticalsuicide,ofcourse,so theydon’t,andinsteadtheytakesolaceinhavingmaximizedthewealthofthewell-to-doandthepowerofbigbusinessattheexpenseofeveryoneelse.Beyondshovelingmoremoneyto theiralliesandbenefactorsandmakingbignewsocialprogramsdifficult toenact, the blunt tool of the right’s zero-tolerance antitax obsession has hadancillaryeffectsthatalsoserveparticularinterests,suchasmakingitevenhardertotaxcarboninordertoreducecarbondioxideemissions.Whichmightexplain,forinstance,whythemainoilindustrylobbyingorganizationisamajorfunderofAmericansforTaxReform.

—

Theeconomic righthadwon. Impossibledreamsof the early1970shadcometrue in the ’80s and ’90s. Taxes on the rich and on business were low.Businessmenwereheroesagain.Deregulationofbigbusinessand indifferenceto excessively big businesses had become a bipartisan fad. During the 1980s,federal antitrust enforcement budgets and caseswere cut back to the levels ofthirty and fifty years earlier. A true libertarian OG who wanted to privatizeSocial Security, Greenspan became Federal Reserve chairman in 1987 (andstayed in the job into the new century). Democratic presidents now governedlike liberal Republicans, instructing Americans that “all the legislation in theworld can’t fixwhat’swrongwithAmerica” (Carter) and that “the era of biggovernment is over” (Clinton). What’s more, the genuine menaces that

Republicans had demagogued so successfully for generations—the SovietUnion, inflation, rising crime—rather miraculously ceased to be problems aswell,andduringthe1990stheeconomygrewbymorethan4percentayearforfourstraightyears.

Happierdayswerehereagain,again.Butnot,atleastpublicly,accordingtothe right,who turnedout tobe,as the terrific libertarian journalist JackShaferputitbackthen,“thesorestwinnerseverrecordedinhistory.”Asthetwentiethcenturyended,hewrote,theideologicalcommissarsatTheWallStreetJournaleditorial page “continued to posture as ifwelfare-statistDemocrats…were theultimatesourceofpoliticalevil,”indulgingthe“ongoingdelusion”thatpro-rich-people,pro-businessright-wingerswere“adowntroddenminorityevenaftertheconservativevictories.”

In part, the right had been so totally on the outs for so long, and theirvictorieshadbeensothoroughandswift,theyworrieditmightallbereversedifthey let theirguarddown.Andsomeright-wingerswere temperamentallysuchfanatics andoutsiders that they found it hardor impossible to adapt tohavingreal governing power. From the 1970s, liberals had been cruising toward theideological center and beyond, eager to compromise, reasonableness andintellectualflexibilitycentraltotheirself-identities—whichmadepeopleontheright who were wingers by temperament feel obliged to keep moving furtherright.

Paul Weyrich, the cofounder of the Heritage Foundation who lovedidentifyingasaradical,wasthatkindofdiehard,oneofthesorestwinners.LikeNorquist,hewasanimportantideologicalwarlord.LikeNorquist,heteamedupearly with Gingrich, in the 1980s making himself the center of a right-wingWashington politburo he assembled for lunches everyweek—onWednesdays,beforeNorquistcopiedeventhatfromhisplaybook.UnlikeNorquist,Weyrichwasnotjollyorsnarky,andhewasn’tnarrowlyfocusedonservingtheinterestsofbusinessandtherichbutinsteadspreadhiszealotryacrossthewholearrayofnewright-wingobsessions,especiallythoseofhisfellowChristianextremists.

Inthe1990s,withRepublicanscontrollingCongressforthefirsttimesincethe early ’50s and inClinton amoderateDemocratic presidentwho’d just cuttaxes and public assistance for the poorest, Weyrich was neverthelessdissatisfied and distraught. He thought the conservative Republican leaders inCongresswerecapitulators,compromisers,hereticswhoshouldbepurged.“Thisis a bitter turn for me,” he said then. “I have spent thirty years of my life

workinginWashington,workingonthepremisethatifwesimplygotourpeopleinto leadership that it would make a difference….And yet we are getting thesame policies from them that we got from their [liberal] Republicanpredecessors.”

Weyrich’s prominence and personal power-brokering diminished over therest of his life, even as the revolution he’d helped launch endured throughanothertwo-termRepublicanpresidencyandbeyond.“Mostofthesuccessesoftheconservativemovementsincethe1970s,”NorquistsaidofWeyrichwhenhedied in2008, “flowed fromstructures,organizations, andcoalitionshe started,created or nurtured.” But beyond being a founder and über-bureaucrat of theright-wingcounter-EstablishmentthateventuallyswallowedandreplacedtheoldGOP, Weyrich was the very personification of the new right-wing massesdecadesbeforetheTeaPartyandMAGA.Hewasatruebelieverwhoneededtokeepfeelingtherage,forwhompoliticsaswellasreligionwasafundamentalistcrusadewherecompromisewasanabomination,anarchetypalFoxNewsviewerbeforeFoxNewsexisted.*1Hewasn’toneofthecynicsandoperators.Norwasheaconsistent libertarian likeNorquist,oneof theovergrownboyswhohatedtaxesasmuchastheylovedBurningManandthemselves.Rather,Weyrichwasthe ultimate late-stage Republican because he madly dreamed of returningAmericatothepastinallways,boththepoliticaleconomyandtheculture.Hesincerely wanted business unregulated and the rich untaxed and governmentminimized,andhesincerelypinedforanexplicitlyChristiancultureborderingontheocracywherewomendidn’thaveequalrightsandracialsegregationwasconsideredokay.*2

—

ThesurnameSununuis familiar todaymainlybecauseofapairof recentNewHampshire politicians, a governor and aU.S. senator, but themost significantSununu was their father, John H. Sununu, himself a former New HampshiregovernorandthefirstPresidentBush’sfirstchiefofstaff. Inseveral importantways, he was another prototypical Republican for the new age: an assholepersonally, a conservative hard-liner, and a critical figure in turning the partyaway from reason and science and common sense toward full-bore denial ofclimatechange.

In1980,concerningthegreenhouseeffect,asitwasthencalled,the“mainscientific questions were settled beyond debate,” Nathaniel Richwrites in his

book Losing Earth: A Recent History. “As the 1980s began, attention turnedfromdiagnosisof theproblemtorefinementof thepredictedconsequences” tosolutions,howtoreducecarbonemissions.In1981astudybyNASAscientistsconfirmingthisconsensuswasfront-pagenews,recommendingthat theUnitedStates continue burning oil and gas and coal only “as necessary.” At asymposiumthefollowingyearorganizedbyJamesHansen,theNASAscientistwho’d led the study,Exxon’s president of researchdeclared that “capitalism’sblind faith in thewisdomof the freemarketwas ‘less thansatisfying’when itcame to the greenhouse effect.” In a speech to energy executives, Reagan’senvironmentczarsaid“therecanbenomoreimportantorconservativeconcernthantheprotectionoftheglobeitself.”

Two things happened in 1983 that started us toward the disastrouswrongturnonclimatechangebytheendofthedecade.Onewaswhathappenedwhenanotherbigfederalstudywaspublished,thisonecalled“ChangingClimate”andconducted by a presidential commission under the auspices of the NationalAcademyofSciences.Itsfindingsconfirmedthedirescientificconsensusaboutthenatureof theproblem—carbondioxide levelsweredoubling,warmingwascontinuing,polaricewasmelting,andsealevelswererisingdisastrously.

But that’s not how it was spun by the Reagan administration, or by thepoliticalallywhomthepresidenthadappointedtooverseethecommission.Inafront-page Times story (HASTE OF GLOBAL WARMING TREND OPPOSED), thatReaganite physicist-turned-oceanographer told everyone to calm down, thatclimatechangewasnobigdeal,andthat“wehave20yearstoexamineoptionsbeforewehavetomakedrasticplans.”Exxonquietlydecidedthatcapitalism’sblind faith in the freemarketwas good by them and therewere indeedmoreimportant concerns than researching how to protect the planet from carbonemissions, and theAmerican Petroleum Institute ended its research into CO2-inducedclimatechange.

The other critical 1983 event was the election of a nobody libertariancollege teacher as governor of New Hampshire, turning him into a nationalRepublican figure. John Sununu was an engineering professor son of anengineering professor who radiated the conviction that he was the smartestperson in every room, certainly when the subject was science—and nowconcerningthenewscienceofclimatechange.

But during the 1980s, Sununu’s pooh-poohing remained a fringe positionevenamongRepublicans.In1988alone,dozensofbipartisanbillstodealwith

globalwarmingwereintroducedinCongress,andforty-twosenators,almostasmanyRepublicansasDemocrats,formallyaskedReagantostartworkingtowardsome kind of international climate treaty—which he agreed to do. Early thatsummerHansen, theNASAscientist, testifiedatabigSenatehearing,and theissuegotmorepublicattentionthanever—GLOBALWARMINGHASBEGUN,EXPERTTELLSSENATEwastheTimes’spage-oneheadline.

The fossil fuel industry freaked out. Global warming was becoming theobverse of a motherhood-and-apple-pie issue—everybody believed in it andhated it.Bigbusiness ingeneralhadbeengetting itsway foradecade,butonthissubject,theoilandgasandcoalguyssawthatRepublicansweren’tstandingupfortheirbusinessatall.Beforethesummerwasover,Exxon’s“managerofscienceandstrategydevelopment”wascirculatingaconfidentialmemoarguingtheymustnowgotoPlanB—thatis,to“emphasizetheuncertaintyinscientificconclusions,”eventhoughtherewasnouncertaintyconcerningtheproblem.Therestoftheindustrysignedon,andthelobbyistsandthethink-tankscholarsandtherestoftheright’scounter-Establishmentwererecruitedforanewmissionofcastingdoubtonscience.

Still,atthatverymomentin1988,thedangersofthegreenhouseeffect,andthedecisiveuseofgovernmenttostopit,wasoneofGeorgeH.W.Bush’sbigpresidential campaign talking points. Ten days after his inauguration, hissecretaryof state, JamesBaker—a smooth formerHoustonoil andgas lawyerwhohadalsobeenhiscampaignmanager—gaveaspeechaboutglobalwarming.Baker apparently hadn’t gotten the memo, because he argued for urgentlyreducingCO2emissions,reforestation,theworks.“Wecanprobablynotaffordtowait”toact,hesaid,“untilalloftheuncertaintiesaboutglobalclimatechangehavebeenresolved.”

TheWhiteHousechiefofstaffpromptlywenttoseethesecretaryofstate.“Leave the science to the scientists,” Sununu told Baker, according to Rich’sLosingEarth. “Stayclearof thisgreenhouse-effectnonsense.Youdon’tknowwhatyou’retalkingabout.”

Bakerdidashewastold,andSununukeptridinghishobbyhorse.DuringameetingwiththeheadoftheEPAandanEnergyDepartmentbureaucrat,astaffmember made the mistake of referring to a climate change initiative todiscouragetheuseoffossilfuels.“Whyintheworldwouldyouneedtoreducefossil-fuel use?” Sununu snapped at her. “I don’t want anyone in thisadministrationwithoutascientificbackgroundusing‘climatechange’or‘global

warming’everagain.”BytheendofthefirstyearofthatfirstBushpresidency,Sununu had almost single-handedly halted the political momentum inWashington, turned climate change into apartisan issue, andput denial of thescienceonitswaytowardRepublicanorthodoxy.*3

—

Asthe1990sbegan, therightstayedangryandupsetandkeptgrowinginsizeand power thanks to the primitives, the bigots, the Protestant fundamentalistsand cowboy commando conspiracy fantasists.But thegrown-ups on the right,theeconomicright,corporateleadersandtherestof therich,kept theireyeonthe prize—less taxation, less regulation of business, greed is good—and theymaintainedcontroloftheparty.Therabble’scandidates(PatBuchananandPatRobertson in the1990s,RonPaulandMikeHuckabee in the2000s)nevergotmorethanaquarteroftheprimaryvote,andevenasthepartykeptmovingright,itkeptnominatingcountry-clubbyMr.Respectablesforpresident,fromthefirstBushthroughMittRomney.

Whentheeconomicrightandthepopulistrabblefirstformedtheircoalitioninthe1970s,theysharedenoughcommonground—whiteness,resentmentofthesmartset—tomakeitwork,butitwasalwaysanallianceofconvenience.Lotsof the right’s sophisticates and true libertariansweren’t enthusiastic about theculturalagendasoftheirpartners.(Inherseventiesinthe1990s,forinstance,mymother in Nebraska, who’d always called herself a conservative Republican,startedvotingonlyforDemocrats.)ButtononredneckRepublicans,thatwastheprice of making markets free and the rich richer.*4 The economic right wasshrewd enough to understand that the issues they didn’t care much about—abortion,gay rights, creationism—didmatter to liberals, and that thoseculturewars drew off political energy from the left thatmight otherwise have fueledcomplaints and demands about the reconstructed political economy. AndEstablishment Republicans could keep reassuring themselves that when pushcame to shove, their culture-warriorpolitical partnersdidn’t ever actuallywin,thatabortionwas still legal,gayand lesbian rightsexpanded,creationismkeptoutofpublicschoolcurricula.

The Official Preppy Handbook president who followed Reagan wasprobablysincere,inhisKennebunkportway,whenhesaidhewantedtobuild“akinderandgentlernation.”ButSununuwashischiefofstaff,andinthe1990sthetriumphaleconomicrightdidn’tkickbackorloosenup.Theun-Bushiannew

counter-Establishment remained vigilant and hard-line, hair-trigger happy tobully heretics and to push for more power, more wealth, less regulation, lesssocial spending.Meanwhile,Democrats continued to showupat thegunfightswith knives, and blades that weren’t very sharp. And they came without aneconomic vision apart from continuing to rebrand themselves as chastened,business-friendlymoderates.

*1Infact,threeyearsbeforeFoxNewslaunched,he’dstartedaright-wingcablechannelcalledNationalEmpowermentTelevisionthathadananti-immigrationshow,anNRAshow,aCatoInstituteshow,anantigayshowcalledStraightTalk,andashowcalledTheProgressReportstarringGingrich.*2WeyrichdiedthemonthafterObamawaselectedpresident;themonthafterthe2016election,hisHeritageFoundationcofounderEdwinFeulnerwasputinchargeoffindingpeopletorundomesticpolicyfortheTrumpadministration.*3RightafterSununulosthisjobforbeingajerk(andforusingmilitaryjetsandgovernmentlimosforpersonaltravel),butbeforehephysicallylefttheWhiteHouse,aSpywriterphonedhimthere,posingasacorporateheadhunterlookingtofillanoilcompanyCEOposition.Sununutalkedandtalked.“MostofwhatI’vebeenputtingtogetheraspackages,”hetoldourwriter,“startatthreeandahalfmillion.”Asitturnedout,noneofthosehypothetical$3.5millionjobscametofruition.*4It’sanalogoustothecynicalbargainthatliberalDemocratsmadewiththeSouthernsegregationistsintheircoalitionfromthe1930sthroughthe’60s—essentiallythesamerabble,infact,thattheRepublicansbroughtintotheircoalitionrightafterward.ExceptthattotheDemocrats’creditbackthen,theymadetheirdevil’sbargaininordertohelpthe(white)workingandmiddle-classmajority,nottherich.

W henBill Clintonwas running for president in 1992, he seemed tohavetherightidea,atleastrhetorically.InthenationalcampaignheadquartersinanoldbuildingindowntownLittleRock,hisstrategistJamesCarvilletapedtoawallhissignwiththeirmessagereducedtothreepoints.

CHANGEVS.MOREOFTHESAME

THEECONOMY,STUPID

DON’TFORGETHEALTHCARE

BIG GOVERNMENT DOES NOT HAVE ALL THE ANSWERS and THE ERA OF BIGGOVERNMENT IS OVER were not numbers four and five. Yet once he becamepresident,agenerationafterJimmyCartersangthatsamesong,ClintonstillfeltobligedtocontinuedisavowingbeliefingovernmentasavehicleforimprovingAmericanlife,topledgefealtytotheneweconomiccode,andtograntmostofthe wishes of big business. “We know big government does not have all theanswers,” he said in a State of theUnion speech in his first term. “We knowthere’snotaprogramforeveryproblem….Theeraofbiggovernmentisover.”

AsthecompensationofCEOsatbigcompaniesincreasedcrazilyduringthe1990s, the president initially thought the governmentmight discourage itwithstiffpenalties,buttheBusinessRoundtabletalkedsenseintohim.Andsoon.AsNixonhadadmitted,thirty-oddyearsaftertheNewDeal,We’reallKeynesiansnow,thirty-oddyearsafterthat,whenClintontookoffice,hewassaying,None

ofusareNewDealersanymore.It’s worth comparing the NewDemocrat positioning to that of one older

Washington Democrat, whose take was ridiculed as old-fashioned and out oftouch. In the 1960s and ’70s, Daniel Moynihan had been pigeonholed as amoderateoraconservative,butasaU.S.senatorduringthe1990s,whentherestof his partywentRepublicanesqueon the political economy,Moynihanwas akindofheroiclastleft-wingerstanding.*1

Atthestartofhispresidency,ClintontriedtolegislateanexpansionoftheprivateU.S.healthinsurancesystemtomakeitcovermorepeople.“Mr.Clintonandhisallies,”aTimesanalysisexplainedin1994,“weretryinghardtoredefinethe Democratic Party away from traditionally liberal approaches to domesticpolicy;theywerealmostinevitablydrawntotheideasofmanagedcompetition.Though still largely theoretical, the concept relies on market forces, notgovernment,toholddowncostsandexpandaccesstohealthinsurance.”Thatis,Clinton tried and failed to pass a version of Obamacare sixteen years beforeObamasucceeded.

OneofthemanycongressionalcommitteesthatheldhearingsontheClintonhealthcareplanwasSenateFinance,chairedbyMoynihan.HischiefofstaffwasLawrenceO’Donnell,wholaterbecameanMSNBCanchor.“AttheendofthelastoftwodozenhearingsontheindescribablycomplexClintonhealthcarebill,”O’Donnell toldme, “I’m sitting behind ChairmanMoynihan, and he puts hishandoverhismicrophoneandturnsoverhisshoulderandwhisperstome,‘Whydon’twejustdeletethewords‘age65’fromtheMedicarestatute?’ ”

So a quarter-century ago the respected sixty-seven-year-old chair of theSenateFinanceCommitteeoffhandedlysuggestedaradicaloverhaulthatwouldhavemade healthcare a universal entitlement,whatwe now callMedicare forAll.WasMoynihanserious?

“Totally serious,”O’Donnell says. “It took twenty-four hearings studyingeverydetailofhealthcarepolicyforhimtoarrive there.Hewasaverycarefuljurorwhowaiteduntilheheardeverywordoftestimony.Itwasliterallywhilethelastwitnesswasfinishingthathegavemehisverdict.Hehatedunnecessarygovernment complexity,” and the Clinton plan, O’Donnell says, was complexandhard toexplain (asObamacarewouldbeaswell).Also,Moynihan“couldsee the ‘reform’ policies” proposed by Clinton would “not perform aspromised.”

Asthesehearingsandnegotiationswentonforthefirsteighteenmonthsof

the Clinton administration, Democrats had largemajorities in both the SenateandHouse. Themain labor union federation, theAFL-CIO, had broached theideaofasingle-payerhealthcaresystem.ButtheClintonplanwastheplan,anditdied.

InClinton’s speech accepting theDemocratic nomination in1992, hehadpromised to “end welfare as we know it.” Welfare really meant one rathermodestprogramthathadbeeninexistencesincetheNewDealasanadd-ontothelawcreatingSocialSecurity.Itprovidedamonthlycashfloortothepoorestfamilieswithyoungchildren. In the1990s fewer than5percentofAmericansweregettingthosebenefits,whichsincethebeginningoftherightturnin1976hadbeencutbyaquartertoaround$100or$150perfamilyperweekintoday’sdollars, andwhich in the 1990s cost the federal government the equivalent of$18billionayear,afractionofonepercentofthebudget.

Theright-wing-billionaire-fundedacademicCharlesMurray,who’dbecomeastarinthe1980s,wasstillmakingthecasethatwe’dbedoingpoorpeopleafavorifthegovernmentstoppedprovidingthemwithaid.InClinton’sfirstyearaspresident,hereadanarticlebyMurrayinTheWallStreetJournalproposingthatanyunmarriedmotheronwelfarewhogavebirthtoanotherchildshouldbepunishedbybeingcutofffromnearlyallfederalassistance,notjustthemonthlycashbutalsofoodstampsandhousingsubsidies.InaninterviewonNBCNightlyNewsbetweenThanksgivingandChristmas1993,thepresidentsaidMurrayhaddone“thecountryagreatservice….Ithinkhisanalysisisessentiallyright.Now,whether [Murray’s] prescription is right, I question.” You could argue themorality, he said, but “there’s noquestion that thatwouldwork….There is noquestion.”

Inotherwords,Clintonacceptedandpromotedasfactthebasicpremisethatpoormothersweremoocherswhochosetoluxuriateonahundreddollarsaweekratherthantakeadvantageofallthegoodjobsandchildcareservicesavailabletothem.Beforelong,thatbeliefwasthebasisforoneoftheright’smainlegislativeproposals—a bill that SenatorMoynihan called a “brutal act of social policy”and a “disgrace” that was “not a negotiable item” and “not my idea oflegislating.”But itwascalledwelfarereform.Andin1996,withaDemocraticpresident’ssupportandthevotesofhalftheDemocratsinCongress,thatsixty-one-year-oldNewDealentitlementwasscrapped.

I’m not suggesting this particular program should’ve been immune fromrevision. The changes in the law did indeed push some mothers into the

workforce—although research suggests thatmaybe half of that effect was theresultofspendingmuchmoreonadifferentfederalfinancialcushion,expandingincome tax credits that helped lower-middle-class people as well as the poor.Most of themanymillions of very poor children and theirmotherswhoweredeniedthosefewextradollarsadayafter1996didmanagetogetby.However,it’s another illustration of how thoroughly the right’s ideas became thegoverningconsensus,andofhowliberalsfelldownonthejobbyaccepting—oratleastnotforthrightlyrejecting—theinstincttoblamethelosers,inourextremefree-marketsociety,forbeinglosers,andbydisclaimingsocialresponsibilityforproperlyhelpingthem.

Lookingbacknow,it’shardnottoconcludethattheanxiousnominalpartyof the economic left, Democrats, wasmagnificently played by the committedandconfident economic right,Republicans, for fortyyears. I’mnot saying theshift in popular sentiment wasn’t partly organic. But Democrats, after theRepublican presidential landslides of 1972 and 1984, remained too dazed andconfusedandscaredfor too long.Foradecadeor twobefore theriseof right-wingradioandFoxNews,Democratsbeganbelievingandbehavingasiftherewere amandate foreverything that theentire rightwanted, the elite economicrightaswellasthereactionaryrabble—forgivingmoreandmoreadvantagestobigbusinessand thewell-to-do inourpoliticaleconomyat theexpenseofnotjust thepoorbut everyone else, for tossingout a social contract that had triedhard to balance the demands of economic liberty and economic equality.Sometimeinthe1980s,liberalspassedthroughthestagesofpoliticaldenialandangeranddepression, andduring the ’90s, they settled intomodestbargainingandacceptanceforthelonghaul.

How the right played the left for suckers becomes especially clear inlooking at the 1990s, when after twelve years of Republican presidents, aDemocratwas running the federalgovernment.Thebadhabit that liberalsandotherDemocratshadlearnedwasthis:berestrainedwhenitcomestospendingto help the less fortunate but simultaneously be reckless when it comes tohelpingbusinessandtherich.

During the 1980s and early ’90s, under Reagan and the first Bush, theannualfederalbudgetdeficitwasmuchlargerthanithadbeenatanytimesinceWorldWar II, $350 billion to $550 billion a year in today’s dollars. DuringClinton’sfirstyearinoffice,heandaCongresswithlargeDemocraticmajoritiesenactedthebiggestdeficit-reductionplaninhistoryandstucktoit,achievingabudgetsurplusfouryearsinarowforthefirsttimesince1930.Assoonasthe

surplusmoney began pouring in,Republicans immediately proposed to funneltheequivalentof$1trillionofittobusinessviataxcutsoverthenextdecade.

After his reelection, Clinton wanted to demonstrate even more heroic,historic restraint by reducing Social Security benefits over the long term. Hesecretlynegotiatedadeal todo thatwith theright-wingSpeakerof theHouse,Gingrich,butwasapparentlypreventedfromannouncingitonlybytheexposureofhisextramaritalOvalOfficesexual liaison.At thebeginningof thescandal,Hillary Clinton complained of the “vast right-wing conspiracy that has beenconspiringagainstmyhusbandsincethedayheannouncedforpresident.”Fairenough, I suppose, but it is ironic how nicely he’d playedwith the economicsector of that conspiracy.Which didn’t stop thewelfare-ending, capital-gains-tax-cutting, budget-balancing Democratic president from being impeached byGingrichandthebad-faith,bloody-mindedRepublicans.

As soon as Clinton left office, the new Republican president andCongresses,thankstotheirantitaxfixation(andthewarinIraqtwoyearslater),promptly tookus fromabudget surplusequivalent to$365billion toabudgetdeficitof$534billion,arecklessandunnecessarytrillion-dollarswinginthreeyears.

IrvingKristol, thatmastermindandkeypromoterofremakingthepoliticaleconomy, had candidly announced this new strategy of the right—right-wingfiscal recklessness, forcing the left into defensive restraint—in aWall StreetJournal column back in 1980,months before Reagan’s election. In the 1930sand the1960s,Kristolwrote,“when inoffice the liberals (orsocial-democrats,as they should more properly be called) spen[t] generously, regardless ofbudgetary considerations, until the public permit[ted] the conservatives aninterregnuminwhichtocleanupthemess”inthelate1940sand’50sand’70s,

but with the liberals retaining their status as the activist party….Theneo-conservatives have decided that two can play at this game—andmust since it is the only game in town….What if the traditionalist-conservativesarerightanda[huge]taxcut,withoutcorrespondingcutsin expenditures, also leaves us with a fiscal problem? The neo-conservative is willing to leave those problems to be coped with byliberalinterregnums.Hewantstoshapethefuture,andwillleaveituptohisopponentstotidyupafterwards.

From thenon the rightwouldbe activists, and theirgenerousgovernmentgiveawayswouldgotobusinessandtherich,andtheliberals—asitturnedout,Clinton in the 1990s—wouldobligingly tidyup themess.The economic righthaddoneitsparadigm-shiftingworksowellduringthe1970sand’80sthatthisnew generation of ruling Democrats were no longer really their opponentsconcerning the political economy. The Clintonians rewrote the old rules andwrote new rules that built in excess and recklessness on behalf of themoniedclass.

In 1998BrooksleyBorn, the federal officialwhowas running the agencyoverseeing financial derivatives, got worried about the accelerating flurry oftradinginnewsortsofderivatives,inparticularonecalledcreditdefaultswaps—which the rest of us would learn about a decade later, during the crash of2008.But shewasonlyonememberof theofficialpresidential task force thatoversees thefinancialmarkets.Bylaw, theother threeare theFederalReservechair,ajobtowhichClintonhadjustreappointedAlanGreenspan;thetreasurysecretary,whowasBobRubin,previouslycochairmanofGoldmanSachs;andthe SEC chair, who’d also spent his pregovernment career working on WallStreet.Theheadof theSECsaid laterhe’dbeenwarned inadvance thatBornwas “difficult” and “unreasonable.” When she argued at a meeting—in a“strident” way, Rubin recalled—that these new derivatives and the systemicriskstheyposedneededurgentscrutinyandpossibleregulations,thethreemenwereappalled,particularlyGreenspan,andtheytoldhertocalmdown.

Restrain Wall Street? Bah. Regulation? This was the great new age ofderegulation, freer and freer markets, big business and finance unbound! ButBornpersisted,publiclyannouncinganinquiryintoderivativesandtheirrisks—promptingher fellowtaskforcemembers toputouta jointstatement that theyhad “grave concerns” about her rogue regulatory inquiry. Rubin’s deputyLawrence Summers, soon to replace him as secretary of the treasury, warnedCongress that by suggesting official skepticism of this latest financialinnovation,Bornhadcast“ashadowofregulatoryuncertaintyoveranotherwisethrivingmarket.”

She lost and resigned. The guys won and joined with the RepublicansrunningCongresstowritetwobignewlaws,akindoffinalgrandspasmofthederegulationmania that allowed the financial industry to get evenwilder andcrazier.ThefirstofthoseModernizationActseliminatedtherule,institutedafterthe1929Crash,thatprohibitedregularbanksfrominvestingcitizens’moneyintheriskierwaysthatWallStreetfirmsdid.Foryears,thefinancialindustryhad

lobbiedforthatchange,andtheformerFedchairPaulVolckerhadfoughtit,butin 1999 only seven of forty-fiveDemocratic senators and a singleRepublicanvoted against it. The other Modernization Act explicitly outlawed properregulationofderivativessuchascreditdefaultswaps.TheHousein2000passedthatone377to4,andtheSenatedidn’tevenbothertotakearollcallvote.

In other words, Clinton’s Wall Street–bred economic brain trust helpedencodeintothesystemtheincreasedrecklessnessthatWallStreetdemandedandthatwouldkeepfeedinginequalityandinsecurityandsoonleadtothefinancialmeltdownandWallStreetbailoutandGreatRecession.Congratulations,modernbipartisanDemocrats!

—

Tobefairbeginsthisnextsection,inevitably.Tobe fair,whenMicrosoft executives said theywere looking to get their

vigfromeveryinteractionontheInternet, theClintonJusticeDepartmentfiledan antitrust suit against the company for trying to rig and dominate the newInternet business. Antitrust enforcement did briefly spring back to life underClinton:thenumberofactionstripled,criminalfinesincreasedfrom$27millionto $1.1 billion in three years, many big mergers were blocked, and someexecutivesevenwenttoprisonforprice-fixing.

And to be fair, the 1990swere in somanyways a decade of blithe goodtimes that it was easy for people on the reasonable, rational, responsible,respectable,realisticcenter-lefttoconsenttotherichandtherightcontinuingtoredesignand ravish thepolitical economy.Starting in the1980sbut especiallythe ’90s, Americans used and internalized the phrase Laissez les bons tempsrouler, with which they could justify almost any sort of indiscipline andselfishness.Afteraquickrecessionatthestart,America’sgeneralprosperityfeltpretty good through the 1990s, especially but not only to the prosperous.Americans’median household income,more or less flat during the 1970s and’80s,reallypoppedbetween1993and1999,finallyrisingfromtheequivalentof$55,000to$63,000.Cellphonesappearedandproliferated,andthemasseswereinvitedonto the Internet,whichwas still an entirely thrilling anduseful thing,not yet an omnipresent, inescapable, often sinister big-business-controlledleviathan.Thespectacleofyoungtechnologistsstartingstart-upsandgettingrichovernightbybeingcreativehad theeffectof further ratifying thevirtueof thefree market among affluent liberals and cosmopolitans. A generation after

creative destruction became the aren’t-we-awesome catchphrase of theeconomically and professionally comfortable, it got its digital updating: aHarvardBusinessSchoolprofessor’s1995articleaboutthetechindustrycoinedthephrasedisruptivetechnologiesandtherebymadethedigitaldisruptionofanyandeveryindustrythesupposedgoalofeverycapitalisthotshot.

TomoreandmoreAmericansinthe1990sasinthe’80s,whatwasgoingoninSiliconValley—andinSeattleandBoston,inLosAngelesandNewYork,for better or worse in action-packed business—seemed more interesting andimportant than anything that might happen in Washington, D.C., particularlyaftertheColdWarended.ThecollapseoftheSovietUnionandCommunismatthe beginning of the decade was very good news, but it had the unfortunateeffectofmakingalmostanyleftcritiqueofAmerica’snewhypercapitalismseemnotjustquixoticbutkindofcorny.

Sudden victory in the apparently unwinnable and endless ColdWar afterforty-four years—USA! USA!—unfortunately pushed America’s reborn self-congratulatory instinctdeeper into complacencyandhubris. Itwasnothard inthe 1990s to believe that the United States and its allies were not just thechampions of theworld in this latest round, but that thiswas the final round,game over, we won. As the millennium approached, invented-in-Americapoliticalandeconomicfreedomwastriumphinggloballyandforgood,because—inthewordsofanunknownReaganStateDepartmentdweebin1989—we’darrived at “the end point of mankind’s ideological evolution and theuniversalization of Western liberal democracy as the final form of humangovernment.” Francis Fukuyama turned his essay into a bestselling andenormouslyinfluentialbook,TheEndofHistory,in1992.

Itwasamomentofsupremeself-satisfactionforAmerica’seducateduppermiddleclassinparticular.Oneoftheirown,aRhodesScholarwho’dgraduatedfrom Yale Law School, was about to be elected president. As the Harvardpoliticalphilosophyprofessor(andbabyboomRhodesScholar)MichaelSandelputsit,“Meritocracies…producemorallyunattractiveattitudesamongthosewhomakeittothetop.Themorewebelievethatoursuccessisourowndoing,theless likely we are to feel indebted to, and therefore obligated to, our fellowcitizens.”

Thezeitgeistwasthezeitgeist,butnoteverybodyinthechatteringclassinthe1990swassanguineabouttheemergingfuture,orasobliviousasIstillwasto the unfairness that had been built into the economy since 1980, or as

complacent as I was about themillions ofAmericans losing out in the go-goglobalizingdigitizingfrenzy.

One was the late Michael Elliott, an extremely smart journalist who’dexpatriated from Britain to America in the 1980s as a correspondent for TheEconomist. In The Day Before Yesterday in 1996, he argued that theextraordinarythirtyyearsafterWorldWarIIhadbeenananomaly,andinsteadofmoping nostalgically,we needed to accept that itwas over and carry on. IreadMike’sbookjustadecadeago,athissuggestion,afterI’ddescribedsomeofmyembryonicnotions for thisbook. Iwasstruckbyhisahead-of-the-curveclarity,aquarter-centuryago,aboutwhatwashappeningtoAmerica.

Between1973and1993medianfamilyincomesawvirtuallynogrowthat all. Moreover, such gains as were made after 1970 were skewedtowardtherich.Theworkingclassstartedtogetleftbehind.Thosewhowere left in declining industries and declining areas would startblaming anyone in sight.Playingoff blacks, foreign competition, andimmigrants, a degree of class and racial resentmentwould eventuallydevelopinthewhiteworkingclass.Afterthe1994election,itbecamebrieflyfashionable tonote therageandalienationof the“angrywhitemale.”

Brieflyfashionable.Aroundthatsametimein1996,aleadeditorialinTheNew York Times, not a bastion of economic leftism, warned that Republicanpresidentialcandidatesneededtounderstandthat

America isbedeviledbygrowingeconomic inequality in themidstofplenty. The efficient, post-industrial economy is brutal in the way itseparateswinners from losers.The bulk of the population,which hasless than a college education, is falling further and furtherbehind….Whenpeopleareworriedaboutbeinglaidofffromtheirjobs,losingtheirhealthcareornotbeingabletogivetheirchildrenabetterfuture,everystatistic thatshows theeconomydoingwellmakes themfeelworse.

Even earlier in the1990s, the conservativeCharlesMurray, of all people,publishedanessayintheconservativeNationalReview,ofallplaces,aboutthe

specter of inequality hauntingAmerica. It was clear-eyed and prescient. “Thenumbersoftherichwillgrowmorerapidlyinthecomingyears,”Murraywrote.

Realwagesforlow-skilledjobswillincreasemoreslowly,ifatall….Ifearthepotentialforproducingsomethinglikeacastesociety,withtheimplication of utter social separation….All the forces which I candiscernwill pushAmerican conservatism toward the Latin Americanmodel….TheLefthasbeencomplainingforyearsthattherichhavetoomuchpower.Theyain’tseennothingyet.

Right around then a forty-seven-year-old law school professor andbankruptcyexpert,until recentlya registeredRepublicanwho’dbeenaffiliatedinthelate1970swiththeconservatives’LawandEconomicsmovement,begantoseethelight.ElizabethWarrensaidinarecentinterviewthatshedidn’tvoteforReaganbutrealizedonlyinthe’90sthat

starting in the ’80s, the cops were taken off the beat in financialservices….IwaswiththeGOPforawhilebecauseIreallythoughtthatit was a party that was principled in its conservative approach toeconomicsandtomarkets.AndIfeelliketheGOPpartyjustleftthat.They moved to a party that said,No, it’s not about a level playingfield….AndtheyreallystoodupforthebigfinancialinstitutionswhenthebigfinancialinstitutionsarejusthammeringmiddleclassAmericanfamilies.

One reason I like Warren is because I identify with her middle-agedillumination concerning the political economy, and with her shift leftwardaround the turnof thecentury. I find it tellingandamusing thatas recentlyas2004, in her book The Two-Income Trap: Why Middle-Class Mothers andFathersAreGoingBroke, shescrupled topointout thatshewasn’tsuggestinganythingveryleft-wing,like“thattheUnitedStatesshouldbuildaquasi-socialistsafetynettorivaltheEuropeanmodel.”

I’mbetting thatat theendof1999,Warrendidn’t feelcompletesolidaritywiththethousandsofdemonstratorsinSeattleoutsidethebiannualWorldTradeOrganization meeting. Their grievances were various—from AFL-CIO folkspissedoffaboutU.S.companiesmanufacturingmoreandmorethingsoverseas

toanarchistssmashingstorewindowsandotherwiseactingout theirhatredforThe System. A few days before the anti-WTO rioting, I’d published anunconnected Times op-ed envisioning the new century in which I said thatcomplacentAmericanswerenow“bask[ing]happilyandstupidlyintheglowofourabsolutecapitalist triumph,”butIwasalsoprobablyrollingmyeyesat theGen-Xkids inSeattle chaining themselves togetherandgettingoffon the teargas;at their lackofa feasibleagendaornuanceorevencoherence;andat thebelief of so many of them in a shadowy, multitentacled conspiracy of theomnipotentelitetotyrannizethelittlepeopleandsubvertdemocracy.

Yetaroundthesametime,aprivatemeetingwasheldinChicagothatlooksin retrospect an awful lot like a prime node of the conspiracy of the eliteeconomicrightcommittedtosubvertingdemocracy.Exceptitwasnotshadowy,becauseatranscriptoftheirconversationwassoonpublishedinTheUniversityofChicagoLawReview.ThegroupconsistedofsomeoftheprincipalfoundersofLawandEconomics,themovementthatwasbusyencodingthepreferencesoftheeconomic right into the legaland judicial system. (NotpresentwasRobertBork’sYaleLawSchoolpalGuidoCalabresi,anotherfounderofthemovementwho’d just become a federal appeals court judge appointed by…PresidentClinton.*2) This supremely august group of conservative legal scholars hadassembledinaroomatthelawschoolforaconversationaboutallthattheirlittlegrouphadaccomplishedduringthepreviouscoupleofdecades,andaboutwhatremainedtobedoneinthefuture.Thegatheringhadadistinctlycelebratoryair.

Oneof the five, theNobelPrize–winningeconomistGaryBecker—whosementorMiltonFriedmanconsideredhim“thegreatestsocialscientist”ofthelatetwentieth century, andwhowas in turn amentor to the junkbond felonMikeMilken—fretted thatvictorywasnotyet total. Inparticular,hewaspeevedbysomenewfederalrulesthatmadeitabiteasierforemployeeswho’dbeenfiredorforcedtoquittoclaimdiscrimination.

ButhisfellowpioneerRichardPosner,ajudgeonthefederalappealscourtbased in Chicago, told his comrade to relax. With the indiscriminatederegulationofbigbusiness,they’dhelpedenable“thenearcollapseofthelabormovement,”and“theeffectofthesedevelopmentshasbeentomakethisafreercountry than itwas in the 60s. These [new] labor laws are in the category ofannoyances.”

At this, according to the transcript, theeminentoldmenactually laughed,just as sinister suit-and-tie conspirators gathered in awood-paneled room in a

moviewoulddo.Thedigital revolutionnotwithstanding, as2000approached, theAmerican

political economywas lookingmore andmore like that of theprevious findesiècle,thegoodolddaysofthe1890s.Anylast-ditchDemocraticeffortsnowtoreempower workers, Judge Posner told his compatriots, would be merely“irritantsthatgoodlawyersreducetowherethereisonlyaveryminorimpact.”

*1Inadditiontobeingatruesocialdemocratonhealthcareandhelpingthepoor,Moynihansharedorganizedlabor’sskepticismofClinton’sgung-hofreetradepolicies.Hewasalsooneofonlyfourteensenatorswhovotedagainstthe1996billthatprohibitednationalrecognitionoflegalsame-sexmarriage,whichClintonsignedintolaw.*2HisnephewStevenCalabresi,bytheway,wasacofounderoftheFederalistSocietyandclerkedforbothJudgeBorkandJusticeScalia.In2019heco-wroteanarticlecalled“WhyRobertMueller’sAppointmentasSpecialCounselWasUnlawful.”

W ow, it’s actually happening, the year 2000, a new century!A newmillennium!Computers,videophones!Thefuture!

Butonsecondthought?Let’stryashardaswecantomakesureeverythingelse,thecultureandtheeconomy,doesn’tchangeatall.

TheearliestworkofAmericanfictionthat’sstillfamous,publishedexactlytwohundredyearsago, isa storyofhowquicklyand radicallyeverythingcanchange inAmerica. InWashington Irving’s“RipvanWinkle,” theeponymousheroiskindofahippie—“asimple,good-naturedfellow”withan“insuperableaversiontoallkindsofprofitablelabor”—wholivesinupstateNewYorknearWoodstock in the early 1770s. FantasticalHobbitish creatures hemeets in thewoodsgivehimamagicaldruggydrinkthatputshimtosleepfortwentyyears,untilthe1790s.HewakesuptofindthattheBritishcoloniesarenowtheUnitedStatesofAmericaandthat“theverycharacterofthepeopleseemedchanged”—morepoliticallypolarized,workingtoohard,noisier,abitmanic.

AsI’vewrittenthisbook,I’vekeptthinkingofthatstory.AndIimaginedamodern reboot about a descendant of Rip van Winkle’s who slips into arecreational-drug-induced coma in the early 1970s and awakes from her two-decade sleep in the1990s, confused and amazed by the transfiguredAmerica.Exceptinthemodernversion,whilethisRipisstruckbyallthenewgadgetry—cellphones,PCs,theInternet—she’sevenmorefreakedoutbyhowAmericahadalsosomehowgonebackintime.Itislifeintheearly1900sredux—organizedlaborimpotent,bigbusinessandWallStreetidolized,wealthflaunted,taxeson

therichlow,Washingtoncorruptionrampantandshamelessagain.(Plusthereisa new venereal disease more fatal than any had been before penicillin, ourimmigrant population is growing again to early 1900s levels, and primitiveChristianityisasloudandangryandevenbiggerthatitwasbackthen.)

Neo-Ripinthe1990sislikewiseastonishedtodiscoverthattheyesteryearschticks that emerged just before she passed out—the Beatles’ Olde Englandoutfits and lyrics, theOldWest evocationsof theBandand theDead,ShaNaNa’s nostalgia act at Woodstock—have turned out to be the prototypes andharbingers for thewhole cultural future, that everymedium and genre is nowfilled with reiterations and permutations of the familiar past. And RonaldReagan from Death Valley Days was elected and reelected president of theUnitedStates?

In1988inSpy,wepublishedalove-hatecoverstorymock-celebratingthebygone 1970s, subtitled “AReturn to theDecade ofMoodRings,Ultrasuede,SideburnsandDiscoSex-MachineTonyOrlando.”Oneofitscomedicpremiseswasthat thenewcompulsivenostalgiahadgottensooutofcontrol thatpeoplemightstartfeelingnostalgicforadecadethathadendedonlyahundredmonthsbefore. In the 1989 Spy essay I mentioned earlier, we wrote about the newphenomenon of our curated, air-quoting, stylishly nostalgia-centric lives. WeimaginedacouplenamedBobandBettywho liveda1980severything-old-is-new-againlifestyle,thefirsthipsters,adecadebeforeanyoneusedthatwordthewayit’susednow:

Bob is wearing a hibiscus-y Hawaiian shirt that he purchased at a“vintage”clothingboutiqueforapproximatelysix times thegarment’soriginal1952price.Healsocarrieshislunchinatackleboxandwearsa Gumby wristwatch, Converse high-tops and baggy khakis. Bobdescribeshislookas“HarryTrumanmixedwithearlyJerryMathers.”BobassumesweknowthatMathersplayedthetitleroleonLeaveIttoBeaver. Betty wears Capri pants, ballet flats and a man’s oversizedwhiteshirt,alongwithamulti-zipperedblackleathermotorcyclejacketimprintedwithCyrillicletters.Sheis“AudreyHepburnbywayofPattyDukeasJamesDean’sgirlfriendwaitingonthedragstrip.”

BettyandBobhaveachild,atwo-year-oldwhotheycall“Kitten.”ThechildisprobablytooyoungtocatchthereferencetoFatherKnowsBest, even though she sitswith her parentswhen theywatchNick at

Nite,the[new]cableTVservicedevotedalmostentirelytotheisn’t-it-ironicrecapitulationsofshowsfromtheearly1960s.TheinvitationstoBetty andBob’sweddingwere printedwith sketches of jitterbuggingcouples; for their honeymoon they rented a stationwagon and drovesouth,visitingGraceland,CypressGardens,andtheTexasSchoolBookDepository.Betty andBob buy souvenirs from the 1964Worlds Fairand “atomic” furniture from the 50s—“real Jetsons stuff.” Bob hastaughtthefamilymutt,Spot,todotheTwist.Bobworksinadvertising,“likeDarrenonBewitched.”

In other words, by the 1990s, a generation after the first widespreadoutbreaks,nostalgiaandculturalrecyclingwerefullyindustrialized.Hollywoodnever used to remakeoldTV shows, let aloneproduce feature filmsbasedonthem.MostBroadwaymusicalswouldnowberevivalsorakindofreproductionpseudo-revival that stitched together old songs—jukebox musicals, even thename was from an obsolete old-timey machine. The one genuinely new popcultural genre, hip-hop, made an explicit, unapologetic point of quoting oldsongs.Sciencefiction, theculturalgenre that isallabout imagining the future,gotanewsubgenre in the1990s thatwasconsideredsupercoolbecause itwasset in the past—steampunk. And commercialized futurism also became oddlyfamiliar and nostalgic. Apple devices of the twenty-first century and glassy,supersleekApplestoresfeel“contemporary”inthesensethatthey’relikepropsand back-on-Earth sets from 2001: A SpaceOdyssey, the 2000s as theywereenvisionedinthe’60s,themomentbeforenostalgiatookovereverything.

The nostalgia division of the fantasy-industrial complex beganmerchandisinginprecinctsbeyondentertainment,fromfake-oldcarslikeMiatasandPTCruisers toretailchains likeRestorationHardwaresellingstylishfake-oldthings.“Lurkinginourcollectiveunconscious,amongimagesofIke,DonnaReed, and George Bailey,” the promotional video for Restoration Hardware’sinitialpublicofferingofstockin1998explainedtoinvestors,“istheveryclearsensethatthingswereoncebettermade,thattheymatteredalittlemore.”

Americanswerefinallysoimmersedinnostalgia,theystoppedregisteringitas nostalgia.The frequency of thewordnostalgia inAmerican books steadilyincreasedduringthetwentiethcentury,spikedinthelate1980s,thenpeakedandbeganasteepdeclinein1999.Acenturyagoenginesmadehorseseconomicallyuseless in the United States and reduced their number by 90 percent. Butnostalgia(andwealth)havecausedtheirremarkablecomeback:sincethe1990s,

America’s horse population has doubled to 10 million, growing faster thananywhereelseonEarth.

TheBobandBettyhipsterswhobroughtbackvinyl recordsat the turnofthiscenturyconsideritanactofauthenticityandaudiophilia,notnostalgia,Godforbid. From 1980 to the early 2000s, annual vinyl album sales decreased by99.7percent to justa fewhundred thousand.But thesedays they’re selling20million a year, a sixth of all albums sold—two per American horse. It’s anostalgicmediumfornostalgicmusic:in2018nineofthetop-tenvinylalbumsconsistedofpopsongs from ten, thirty,or fiftyyearsearlier.The termreboot,borrowed fromdigital technology, replacedremake andrevival todisguise thefact that stylish young people were now indulging in what used to be theexclusivepastimeofuncoololdpeople.

Toward the end of the 1990s, I had my very first inkling that we wereentering thecuriousnextphaseof cultural time-warping.After thebig shift tofeastingonthereassuringlyfamiliarpast,theartsandentertainmentanddesignnowseemedtobeshuttingdownproductionofalmostanythingthatwastruly,startlinglynew, thatmightusefullynudgeus intosomeuncharted,unknowablefuture.Stasishadbegun.

In an article inTheNew Yorker about a show of the lateKeithHaring’swork,Iwrotethattheexhibitmightseemtobeheralding“aneightiesrevival”—becauseanartistwhotypifiedthepreviousdecadewasgettingaretrospectiveat“theWhitneyMuseum,anur-eightiesculturalinstitution.”However,Iconcludedbysuggestingthat infact,weweren’texperiencing“aneighties‘revival,’ ”butrather that the supposedly quieter, compassionate “early nineties were just ahiatus”andthatinfact,“theeightiesneverended.”

I was half-joking, but from then on I occasionally noticed signs that the1980s,unlikepreviousdecades,werejust…continuing.I’dlivedthroughseveralAmericandecades—the1950s, ’60s, ’70s, and ’80s—andeachof thoseearlierones, liketheonesbeforeIwasalive,haditshighlydistinctculturalcharacter,identifiable as a stereotype even before it was finished. In that New Yorkerarticle in 1997, I’d defined the character of the American 1980s as “manic,moneyed, celebrity-obsessed, shameless.” None of that really changed in the1990sorinthe2000sorinthe2010s.

Yes, of course, the September 11, 2001, attacks and the financial andeconomicmeltdownof2008were traumatizing,and rightaftereach, I thoughtobviously thiswill finally change everything, and that I’d finally have to stop

pointingouttofamilyandfriendseverynewbitofevidencethatthe1980sneverended.Instead,immediatelyafter9/11,thepresidentinstructedusalltoshopandtohavefunasifnothinghadhappened,getoverit,whichwequicklydid;apartfromairportsecurityandadisastrouswarandanewfocusforbigotry,themainlasting resultwas to amplify theovercompensating“USA!USA!” belligerencethat had swelled up in the 1980s. In 2009 I imagined that the near-deatheconomicexperienceofthecrashandrecessionmightscareusstraight,promptustoreformtherecklesslaissez-fairecasinoeconomy,asourforebearsdidaftertheRoaring’20s.Ievenpublishedahopeful littlemanifesto to thateffect.Butno,insteadwewerelikeanationofWileE.Coyotes:havingspedoffacliffintomidair after the 1980s, looking down for a reality check, and plummeting toEarth in 2008, we then returned to crazed business as usual on Wall Street,whichcontinuedtodominatetheeconomy.Notmuchreallychanged.

Sure, technologywaschangingeverydaylifearoundtheedges,at leastforthe first decade of the new century—the Internet scaled, and new world-changing devices (iPod, iPhone, Kindle) and platforms (Netflix, iTunes,Facebook, YouTube, Spotify, Twitter, Grindr) appeared. But the digitalrevolution had very clearly started in the 1980s,when every yuppie bought apersonalcomputer,andmanyofus,bymeansofCompuServeortheWELL,gotontheInternet,andsomeearlyadoptersevenhadmobilephones.WhenPixar’sshortLuxo Jr. appeared in 1986, I realized Iwas seeing the future ofmovies.Andbythemid-1990s,whenwe’dallseenToyStoryandhadcellphonesandabrowsable, searchableWeb, onwhichwewere buying books onAmazon andcoololdthingsoneBay,thedigitalrevolutionwasadonedeal.

Around the time I first read one of my novels as an e-book and lookedforward to buying my first iPhone, I had that wrinkle-in-time epiphany Imentionedintheintroduction—howafterthreedecadesmarinatinginnostalgia,something even weirder had happened to Americans and American culture.Reading the Times one morning in 2007, I came across the revelatoryphotographinanarticleaboutIanSchragerandSteveRubell,thesupremeNewYorkdiscothequeimpresarioswhothenbecameinventorsoftheboutiquehotel.Thepicturewas from twenty-twoyears earlier, 1985,when they’dposedwithsome of the young staff atMorgans, their cool old-fashioned-but-cutting-edgeManhattanprototype.

Schrager’scollarlessdressshirtlookedsomewhatretro,butIwasotherwisestruckbythefactthatnoneofthedozenpeopleinthisveryoldpictureappearedobviously, amusingly dated, not their clothes, not their hairstyles, not the

women’smakeup.Ifanyofthemhadwalkedbymeonthestreetthatafternoon,Iwouldn’thavegivenhimorher a second look.Theycould’ve all passed forcontemporary people. Which as I thought about it seemed very weird,particularlygiven that theywereallprofessionally required toappearcoolandaucourant—andweren’tshortshelflivesintrinsictofashionandstyle?

I kept thinking about it. I imagined the stylistic changes thatwould haveappeared over any comparable chunk of historical time. Suppose in 1997 I’dlooked at a similar photo taken in 1975, or watched a 1970s movie or TVshow…thejanglymusic, theluxuriantsideburnsandhair, thebell-bottomsandleisure suits, the cigarettes and avocado-colored refrigerators and AMCMatadors and Gremlins—everything and everyone would have looked sodifferent,sodated.Orifbackin1975I’dlookedatimagesorshowsormoviesfromtwenty-twoyearsbeforethen,1953,beforerockandrollandVietnamandthePill,whenbothsexesworehats,andonlywomenhadlonghair,andnoadultwore jeans or sneakers in public, and cars were massive and bulbous; again,unmistakably different. Rewind back another generation, from 1953 to 1931,absolutelydistinct looksandstyle…andagain,1931versus1909,ditto.Amanor woman on the street dressed and groomed in the characteristic manner ofsomebody from twenty-two years earlierwould look very odd.A twenty-two-year-oldcaralwayslookedold.

No more. Now people drove new Nissans and Infinitis that lookedpracticallyidenticaltotheNissansandInfinitisfromagenerationearlier.Theysat in new Aeron chairs exactly like the new Aeron chairs people had sat intwentyyearsearlier.

Iconductedtastetestsamongpeoplemyageandintheirfortiesandthirtiesand twenties. I played them new pop songs that weren’t big hits and showedthem clips of unfamiliar newmovies and photos of recent buildings and cars,asking when they thought each had been created. Almost nobody coulddefinitivelysaythatthingsfrom2007weren’tfrom1997or1987.Weren’tLadyGaga and Adele and Josh Ritter, all new phenoms at the time, more or lessMadonnaandMariahCareyandBobDylanredux?Hip-hophadbrokenthroughtothemainstreaminthelate1980sandearly’90s,butinthe2000sitwasjust…continuingtobemainstream,nolongerexcitinglynew.

Istartedcullingthrougholdimagesandrecordings,hundredsofthemfromthetwentiethcenturyandbackinthenineteenthcentury,comparingeratoera,decade todecade, thedifferences inclothesandhairstylesandcars,musicand

moviesandadvertising,architectureandproductdesignandgraphics,allofit.In thepast, over the courseof anyandevery two-decadeperiod, the look

andsoundoflifechangeddramatically.NewYork’sfamousnewarchitectureofthe1930s(theChryslerBuilding,theEmpireStateBuilding)looksnothinglikethe famous new architecture that appeared twenty years earlier (the FlatironBuilding, Grand Central Terminal, the Woolworth Building) or twenty yearslater (theSeagramBuilding, theUNHeadquarters, theGuggenheimMuseum).Anyonecaninstantlyidentifya1950smovie(OntheWaterfront,TheBridgeontheRiverKwai)versusonefromtwentyyearsbefore(GrandHotel,ItHappenedOne Night) or twenty years after (Klute, A Clockwork Orange) and tell thedifferencebetweenhitsongsfrom1992(SirMix-a-Lot)and1972(NeilYoung)and1952(PattiPage)and1932(DukeEllington).

Thatunmistakableceaselessstylisticchangewasthenatureoflifeformostof the history of the United States. But after the 1980s, cultural time sloweddown and in many ways stopped. The 1990s looked and sounded extremelydifferent than the 1970s, but by comparison, the 2010s were almostindistinguishablefromthe1990s,as2020isalmostindistinguishablefrom2000.

Inanyyearduringthetwentiethcentury,ifsomebodyonanAmericancitystreet were dressed and groomed in the manner of someone from twenty ortwenty-five years earlier, they would’ve looked like an actor in costume or atimetraveler.Whereasifeverysecondpedestrianyoupassedtodayactuallywasatimetravelerfreshfrom2000,you’dreallyhavenoclue,evenifoneofthemwerespeakingonher(coolvintage)cellphone.

JeansandT-shirtsandsneakersremaintodayastandardAmericanuniformfor all ages, as theywere in 2000, 1990, and the 1980s. There are nowmoreyogapantsandother“athleisurewear,”whichisreallyjusttighter,thinnersweatclothes.

Popmusicwasatrulymodernculturalformbecausebyitsnatureitchangedso quickly, its stylistic evolutionary speed resulting from a century of newtechnologies, first recordings and radio, then TV and cable TV. This makesmusicworth a slightly deeper case study, because that process of abandoningrealnoveltyasaguidingprincipleissoapparent.Alongwiththerestofpopandhigh culture, music plunged into self-conscious nostalgia in the 1970s, whichlistenersatfirstheardnostalgically—suchasBorntoRun—andthenproceededintoautomatic recyclingandstasis,with listenersmoreandmoreunaware thatmore and more of ostensibly “new” music was being recycled from musical

history.IstartednailingdownthisphenomenoninanessayinVanityFairadecade

ago, around the time Simon Reynolds publishedRetromania, his great book-length history of the decline and fall of the new in popmusic, showing howstartlinglynewsoundshaddisappearedinfavorof“revivals,reissues,remakes,reenactments” and “rampant recycling.” I was delighted to have my theoryvalidated in themusical sphere by somebodywith far greater knowledge.The1960s had “set the bar impossibly high” for breaking new ground, writesReynolds,whowasonlysixattheendofthe’60s,andthenas

the eighties rolled into the nineties, increasingly music began to betalkedaboutonlyintermsofothermusic;creativitybecamereducedtotastegames.Whatchangedfromthemid-80sonwardswasthelevelofacclaimthatblatantlyderivativegroupsbegan to receive.Retro-styledgroups had generally been a niche market, for people unhealthilyobsessed with a bygone past. But now these heavily indebted bands[such as] The Stone Roses, Oasis, [and] The White Stripes, couldbecome “central.” In the 2000s the pop present became ever morecrowdedoutbythepast, [with]bygonegenresrevivedandrenovated,vintage sonic material reprocessed and recombined. There has neverbeenasocietyinhumanhistorysoobsessedwiththeculturalartifactsofitsownimmediatepast.

Reynolds documents how the new pop musical stars of the twenty-firstcentury, even the best artists among them, continue doing cover versions, defactowhennotliterally,ofsoulandrockfromthe1960s,punkandrapandsynthpopfromthe’70sand’80s.“Isnostalgiastoppingourculture’sabilitytosurgeforward,”heasks,“orarewenostalgicpreciselybecauseourculturehasstoppedmoving forward and so we inevitably look back to more momentous anddynamic times?” I’m pretty sure it’s both, as it tends to be with big, diffusecausesandeffects.

Thirty years have passed since the last two genuinely new pop genres ofsignificancehadtheirgoldenages—rapandhip-hop,andtechnoandhouseandrave.In1990theformerwasabouttobemainstreamedandstillendures,whilethelatter,withitsself-consciouslyfuturisticnewnessfromtheearlydigitalage,now seems…quaint. I askedReynolds if anynewmusical formshad emerged

during the 2010s that inclined him to modify his theory of the case. Hementioned the “digital maximalism” of “electronic producers whose music isveryprocessedsoundingandsmearedintermsofbothitstexturesanditspitch.”Right.Inotherwords,notreally.“Youcouldsaywithmuchofthisstuff,it’sanextension of what was going on in the nineties, just with even more fiddlyproductionandtinysoniceventsperbar.”

Infact,itisironichowdigitaltechnology—newnessincarnate,theessenceof thepresent and future—has reinforcedour fixedbackward stare andhelpedmesmerizeusintoculturalstasis.Startinginthe1990s,Internetsearch(aswellas cable TV) provided access to old pictures and sounds thatwe’d never hadbefore, and then all at once, from 2005 to 2007, comprehensive new digitalarchivesoftheoldopenedupandtransfixedus—firsttheastoundingYouTube,then the endless streams of Pandora, Spotify, and online Netflix. When thefuturearrived,itletussinkfurtherandfurtherintouncannydreamsofthepast.

AsReynoldswrites,“We’vebecomesousedto thisconvenientaccess” tooldmusicandimages“thatitisastruggletorecallthatlifewasn’talwayslikethis,thatrelativelyrecentlyonelivedmostofthetimeinaculturalpresenttense,with the past confined to specific zones, trapped in particular objects andlocations.”Ifyou’reyoung,andhavegrownuponlysincetheInternethasbeendissolvingthedistinctionsbetweenpastandpresentandoldandnew,thesci-fiwriter and futuristWilliamGibson says, “I suspect that you inhabit a sort ofendlessdigitalNow,astateofatemporalityenabledbyourincreasinglyefficientcommunal prosthetic memory.” What’s more, I think digital technology hasmade it so easy for anybody to create and distribute songs and pictures andvideos and stories, and for everyone to consume them, that the resultingdemocratic flood of stuff—each of the 100 million cover versions andimpersonationsandfanfictionsthatarenominallybrandnew—canfoolusintothinkingthecultureismorefertileandvibrantthanitis.

Aslightlydifferentexpressionofthestasisthatdescendedinthe1990swasthe disappearance ofmusical diversity among themost popular pop songs. A2018study,bytwoyoungdatajournalists,of thesummerhitseveryyearfrom1970 to 2015 algorithmically derived each song’s “fingerprint” not from itsgenre or style but from its underlying sonic components—valence, loudness,energy,andsoon.Bythosemeasures,fromthe1970sthroughthe’80sandintothe ’90s, thehitswereextremelydifferent fromoneanother, suchas the1988songs the researchers deconstructed byCheapTrick, INXS, andDefLeppard.But then suddenly, in the late 1990s, they discovered, the hitswere no longer

diverse, and they haven’t been since. Now even when hit songs seem fairlydifferent—suchasthosebyKatyPerry,Eminem,andLadyGagainthesummerof2010—theirdeepersonictraits(valence,loudness,energy)areactuallyquitesimilar.Soitisn’tthatthemostpopularnewsongsnowallsoundlikeoldsongs,butthattheyallfundamentallysoundthesame,likeoneanother,thussatisfyingthedeeperneeddrivingnostalgia—forreassuringfamiliarity,nothingtoostrangeorchallenging.

Genrebygenreandmediumbymedium,wecoulddebatewhether thisorthatshoworsongordesignorworkofartcountsasatrulynewculturalspecies.Obviously the last twenty years have been an exceptional time for televisiondrama—few to no series as great as The Sopranos, TheWire, Breaking Bad,BlackMirror,Atlanta,Fleabag,orSuccessionexistedonAmericanTVduringits first fifty years. However, this golden age mainly resulted not from deepchanges incultureandsensibilitybutratherfromchanges in the technologyofdistribution and the business models of entertainment: cable and Internetbroadbandallowedforagreatmigrationofcreativetalentandambitionandrisk-takingand rule-breaking fromonedistributionchannel toanother, frommovietheaterstoTVsetsandcomputerscreens.It’slikehowAmazonhasn’tchangedthethingswebuy,justhowwecanbuythemandhowthey’redeliveredtous.

Plus ça change, plus c’est lamême chose alwaysmeant that the constantnovelty and flux of modern life is superficial, that the underlying essencesendureunchanged.But that sayingnowhas an alternative andnearlyoppositemeaning: themore that underlying structures change for real (technology, thepoliticaleconomy),themorethesurfaces(style,entertainment)remainthesame.

In the early 1990s, Francis Fukuyama published his argument that allsocieties were inexorably arriving at the same evolutionary end point—theglorious finale of political economic history. Such folly. Yet in the arts andentertainmentandstyle,whathappenedthen,atthemomentwhenbothTheEndof History and the filmGroundhog Day came out, does feel like an end ofculturalhistory.Oratleast,andI’mstillhoping,anextremelylongpause.

Sotorecap:thenationalnostalgiareflexwastriggeredinthefirstplaceinthe1970sbyfatiguefromallthewarp-driveculturalchangesofthe’60s.It’sasif thewholeculture, finally toostoned tostandupand lift thestylusonanLPthatwasskipping,justletitgoonplayingthesametrackoverandoverandover.That was indulged and encouraged by impresarios and marketers and, in thedigital age, by new archival technology.We entered aBeenThereDoneThat

MashupAge, inwhichourculture’sprimaryMOcame toconsistofendlesslyrecyclingandrevivingoldforms,orinanycasesteeringclearoftheunfamiliar.AftertwoorthreedecadesofcompulsivelypressingSEARCHandREWINDontheculture machine, which was now equipped with the practically infiniteAlexandrian library of YouTube, we’d found a STOP NEW OUTPUT button andpressedthattoo.

Butwhy?Whydidweallowatasteforoldorotherwisefamiliarformsandstylestospreadandcongealintoageneralculturalstasis?

Because, I think, the economic changes of the 1980s, while not asimmediatelyorspectacularlyobviousasthoseofthe’60s,wereintheirwaysatleastasprofound.The1960shadtriggeredthatfirstnostalgiawaveasasoothingcounterreaction. A generation later the unpleasant economic changes of the1980sand’90smadeusretreatevendeeperintoourhavensoftherecycledandreassuringlyoldasakindofnationalculturalself-medication.Theunavoidablenewnessdisorientedmanypeople—thebrutalwinners-take-alleconomyandPCsevolving to supercomputers in every pocket all connected to one another, theeasilygraspableColdWarreplacedbytheconfusingriseofChinaandmilitantIslamism,theinfluxofimmigrants—takeyourpick.

JustasAmericanswhocameofagefromthe1960sandaftertendedtobePeterPans,fearingorresistingadulthoodlikenopreviousgenerations,tryingtostay forever young,we also started fearing the future and resisting the new ingeneral. Again, the writer J. G. Ballard delivered a kind of early-warningprophecy.“Theyear2000willcome,”hewroteintheearly1990s,“butIhaveafeelingthatsometimeoverthenext10or20years,thereisgoingtobeamajorbreakofhumancontinuity.Oneof the reasonswe’ve turnedourbacksagainstthe future at present is that people may well perceive unconsciously that thefutureisgoingtobeaverydangerousplace.”

Since the 1990s, people able to make good livings in technology havereveledininnovationanddisruptionandremaindevotedtothequestforthenewin some ways, but many more Americans have been clinging ever moredesperately to the triedand trueand familiar,whereverandhowever theycan,comfortedbyaworldthatatleaststilllooksandsoundsmoreorlessthewayitlookedandsoundedlastyear,orlastcentury.

Therearenowalsopocketsofwistfulness for the time justbeforeculturalstagnationtookfulleffect.In2019ItalkedwithLizPhair,thesinger-songwriterwhose first albummade her famous in 1993, and asked her about all the new

young singer-songwriters emulating her musical style from a quarter-centuryago.Itderivesfromaspecificnostalgia,shethinks,for“thelasttimebeforetheInternet.”

It’s the last time that we weren’t all isolated and connected in thisisolatedway,connectedbutnotreallyconnecting.Itwasthe last timethatpeoplehadtowalktotherecordstoreandpickupsomethingorgototheshowandstandthereandmeetpeopleandmakefriendsthatway.Itwasthelastperiodbeforewebecamehookeduptothewires.Ithinkthat’swhatitis.

Research by academic psychologists has confirmed that disconcertingchangesdoindeedmakepeopleseektheoldandfamiliarforreassurance.Asoneofthosescholarsrecentlysummarizedthecorpusofstudiesandexperiments,themorethatchange“makespeopleanxiousabouttheworldandtheirplaceinit”andcauses “majordisruptions anduncertainties in their lives,” then“themorethey longed nostalgically…for the comparative safety and security of aperceivedpast.”

—

The general default to nostalgia that started in the 1970s helped soften theground for the right’s project. Fronted by a make-believe cowboy andmake-believewar hero fromoldmovies, they built a reproduction-old-days politicaleconomy—extremelyhigh regardand low taxationand fewconstraints forbigbusiness and the rich, spectacular selfishness rebranded as healthy Americanindividualism.

ButIthinktheculturalstagnationthatfollowedhasalsoservedtheinterestsoftherightandtherich.Progress,creatingandadaptingtothenew—thesehadbeendefiningAmericanideals.Thedeliberatepoliticalandeconomicandsocialchanges from 1900 to 1970—Progressivism, the NewDeal, greater economicequality,greater legalequality—coincidedbothwithaccelerating technologicalchange andwith accelerating changes in cultural styles, how the surfaces andsoundsoflifewereremadeeverydecadeortwo,allreachingmaximumvelocityat the end of the 1960s. Those brief stylistic shelf lives trained us to registerartifactsevenfromtherecentpastasold-fashioned,andtokeepmovingforward.America’s pursuit of the new and improved, political and economic over here

andcultureoverthere,operatedinsync.Butthatendedattheendofthetwentiethcentury,andwelockedourselves

in a vicious cycle of mutually reinforcing status quos—culturally, politically,andeconomically.Asthechangesinmusicanddesignandfashionandtherestslowed or stopped, I think that served to reinforce people’s fatalism andresignation,thesensethatmajorchangesinthepoliticaleconomyalsowouldn’tor couldn’t happen anymore. Since the stage set and soundtrack of life hadremained weirdly the same for a quarter-century and counting, it made somekind of dreadful sense that salaries also remained weirdly stagnant, and thatmore Americans stay put in the states and the economic classes where theyhappened to be born. With each passing year of stagnation, every kind ofstagnation seemed less strange,more natural. It iswhat it is, everyone startedsaying in the1990s.Aculturaldietof rebootsandrevivalsonanendless loophabituatespeopletoexpectandputupwiththesameoldsameoldforeverandtolosetheirappetiteforthenew,forchange,forprogress.

Onceagain, just tobeclear,I’mnotsuggestingthat theevilgeniuseswhopulledofftheremarkablepoliticalandeconomictransformationfromthe1970sthrough the ’90s also planned or executed our culturalU-turn. In this respect,they were mainly just shrewd and lucky. Rather, it’s like when two differentchronic illnesses tend to appear in the same people at the same time—likearthritis and heart disease, or depressive disorders and anxiety disorders, orCOVID-19 and type 2 diabetes. The medical term of art is comorbidity. Theoutbreak of mass nostalgia in the 1970s that then developed into a generalcultural listlessness, in other words, is comorbid with what happened to ourpolitical economy.One illness didn’t exactly cause the other illness, but eachmadetheothermoreserious,andhardertocure.

T he economics professor (and author and blogger and podcaster) TylerCowenhaswrittenintelligentlyaboutournationalstagnationand“thegrowingnumber of people in our society who accept, welcome, or even enforce aresistancetothingsnew,different,orchallenging.”Healsothinkswereachedatippingpointon thisscore in the1990s.“Americansare in factworkingmuchharder than before to postpone change,” he wrote in his 2017 book TheComplacentClass,

or to avoid it altogether, and this is truewhetherwe’re talking aboutcorporatecompetition,changingresidencesorjobs,orbuildingthings.Inanagewhenitiseasierthaneverbeforetodigin,thepsychologicalresistancetochangehasbecomeprogressivelystronger.Ontopofthat,informationtechnology,forallthedisruptionithaswrought,allowsustoorganizemoreeffectivelytoconfrontthingsthatarenewordifferent,inamanageableandcomfortableway,andsometimestokeepthematbayaltogether.

He predicts that “eventually stasis will prove insufficient,” given the“ongoing collapse of the middle class” and because our political economic“structures are not ultimately sustainable for the broader majority of thepopulation”toimprovetheirlives,so“bigchangeswillhavetocome,whetherwelikeitornot.”Cowenshakeshisheadat“people’swillingnesstojustputup

withthings”and“settleforthestatusquo”and“notreallyagitateforveryurgentchange.”

However, he doesn’t say that the resistance to change and enervation andpolitical complacencymainly serve the interests of the right and the rich.Nordoesheacknowledgethattheincreaseineconomicinsecurityandinequalityandimmobility that began around1980was caused or exacerbated by our historicrightturnjustthen.That’sprobablybecauseCowenisaproductandpromoterofthatturn—incubatedasastudentatGeorgeMasonUniversityintheearly1980sjust as the libertarian right turned it into a headquarters. He is now aGeorgeMasonprofessoranddirectorof itsMercatusCenter, the think tankcreatedbyCharlesKoch,withwhomhehasamutualadmirationsociety.*1

CowencorrectlypointstomanysymptomsofthediseasehecallstheGreatStagnation,buthe’sevidentlytooideologicallyblinderedtospecifyallitscausesandcomorbiditiesortorecommendemergencytreatment.Hisfree-marketfaithobligeshimtoconcludethattheonlyrealproblemistheslowerrateofeconomicgrowth for most of the last half-century. Furthermore, he thinks the longAmericaneconomicheydayfromthe late1800s through the1970scame to itsnatural conclusion because we’d picked and eaten all “the low-hanging fruit”that produced easy growth—cheap land, fossil fuels, new technologies, masseducation.ThusitwasonlyfromWorldWarIIthroughthe1970s,inCowen’sview,thatAmericacouldaffordtobesogenerous—thatis,tomakethepoliticaleconomyfairforall itscitizens—becausetheGDPperpersonwasgrowingbyalmost3percentperyear,asopposedto2percentorlessafterward.

The end of that marvelous century-long boom time was nobody’s fault,couldn’t really be helped, he thinks. So likewise now:while it’s too bad thatsince 1980 only the prosperous have continued getting more prosperous andfeelingsecure,thepeoplerefusingtoputupwiththatstatusquoandagitatingtochange it politically are indulging in misguided…nostalgia. Cowen says it’s“nostalgiaforaspectsoftheeconomicworldofthe1950s”thatleadseconomistsonthelefttopushfor“someveryparticularfeaturesofthe1950s:highmarginaltax rates, high ratesofunionization, and a relatively egalitariandistributionofincomeandwealth.”*2

LOLandtouché,clevercontemporaryconservative,forusingnostalgiaasapoliticalpejorative, theway liberalshavealwaysdone, thewaya lotofusgotintothebadhabitofdoinginthe1970sand’80saboutFDRandorganizedlaborandantitrustand therebybecameuseful idiots foryouand theevilgeniusesof

theright.Yetwhyshouldn’tAmericansfeelnostalgicforthetimebefore1980when

we had a more equal distribution of income and wealth and all boats rosetogether?If“MakeAmericaGreatAgain”hadn’talreadybeentaken,itcould’veworkedextremelywellasa2020Democraticpresidentialcampaignslogan.

Nostalgiaisnotalwayswrongorallbad.Almostallofusarenostalgicforsomething,ifonlyforourchildhoods.Almosteveryonelikesnewthingsaswellasoldandfamiliarthings,eachofuschoosingdifferentcombinationsfromthemenu. For instance, a lot of habitués of those supermodern Apple stores,shopping for an iPhone 12 or AirPods and adoring their regular visits to thehigh-production-valuefuturepromisedinthepast,gohometomake-believe-old-fashioned lives—a new gingerbread cottage or an apartment in a renovatedformer factory, beer gardens, greenmarkets, local agriculture, flea markets,tattoos, lace-up boots, suspenders, beards, mustaches, artisanal everything, alltheneo-nineteenth-centurysignifiersofstate-of-the-artAmericancool.

Beyondthecharmingsurfacesandstylesofthepast,it’sessentialaswelltolook at history carefully for deeper lessons and models, inspirations andcautionary tales for thepresentand future.Nostalgia startsgettingproblematiconly when it becomes reflexive and total, congealing into an automaticantagonismtotheneworunfamiliar.Nostalgiaisproblematicwhenitbecomesthefuelforapoliticsbasedonfantasticalorirrecoverableorunsupportablepartsof the past. And that current American political movement, consisting ofpathological nostalgias centered on race and ethnicity and religion and genderand sexuality, Trumpism, has as its avatar a quintessentially 1980s creature,livingproofofmy’90stheorythatthedecadeneverdidend.

Misguidedresistancetothenewisn’tlimitedtotheright.Leftistreactionaryisnotanoxymoron.Forinstance,IthinkofliberalsIknowwhowanttooutlawGMOs and charter schools and allow kindergarteners to go unvaccinated, tomake it harder to build affordable housing and easier to prevent disagreeablepublic speech.Conversely, some people on the left reflexively dismiss almostany fondness for the past because somuch about the pastwasbad. During arecentpaneldiscussionaboutthehistoryandfutureofthenewsmedia,Imadethepointthatbeforethe1980sand’90s,editorsandproducersdidabetterjobofkeeping outright falsehoods and delusions from circulating widely—and thepanelists,friendsofmine,immediatelypouncedbecauseitseemedtothemIwasimplicitly excusing the paucity of women and nonwhite people in journalism

backthen.But of course, opposing the new has also always been and remains a

defining traitofconservatism,andnostalgia-based reactionarypoliticsare thusmuchmorecommonontheright.Apartfrompurelytechnologicalprogress,theimportantchangesofthelastcenturythatmaketheAmericanpresentpreferableto theAmericanpast—universalpensions andguaranteedmedical care foroldpeople, more freedom and fairness for women and black people and queerpeople,cleanerairandwater foreveryone—wereopposedby theright.So it’sno surprise that today’s most explicitly nostalgia-driven politics, all aboutfearingandloathingthenew,areontheconservativeside.

One astonishing and unambiguously great new American condition sincethe early 1990s is howmurder and other violent crime rates have dropped byhalf,andinmanyplacesbymuchmore—bymorethan80percentinNewYorkCity, for instance.Like all good news, itwas soon forgotten and ignored, butpoliticians on the right go even further, actually denying that this remarkablesocial improvement happened, because it doesn’t fit well into their racist ornativistorotherwisefear-mongeringpoliticalnarrative.DonaldTrumpbeganhispresidencybysaying“themurderrateinourcountryisthehighestit’sbeeninforty-seven years,” which is the very opposite of the truth. Of course, he’dlaunchedhis campaign inTrumpTowerbyportrayingMexican immigrants asrapistsanddrugdealers,eventhoughimmigrantsarelesslikelythannative-bornAmericanstocommitcrimes.

In addition to these dangerous falsehoods portraying the present asworsethanthepast,mostoftheimportantnewsocialfactsonwhichAmericanpoliticshave hinged lately are no longer actually new. We just haven’t managed toaddressthemhonestlyorseriouslyoreffectivelyasanation.Economicgrowthslowed forty years ago, when the downsides of automation and globalizationstarted becomingobvious—andwhen experts also agreed that globalwarmingwasbecomingacrisis.Aquarter-centuryago thedigital revolutionwas in fullswing,andpeoplepayingattentionsawthateconomicinequalityandinsecuritywererapidlyincreasing.ThenumberofimmigrantstotheUnitedStatesstartedsoaringback in the late1960s,and the increase inour foreign-bornpopulationwas already leveling off by 2000, and a dozen years ago the undocumentedpopulationstarteddecreasing.*3Somuchofthe“new”isold.

Moreandmoreofourpoliticshasdevolvedintobattlesamongnostalgias,fights over which parts of the past should or shouldn’t and can or can’t be

recycled or restored.Each of the particular nostalgias tends to bemore red ormoreblue,buttheyallfallonaspectrumfromreasonabletounderstandabletofoolishtomalignant.

Byreasonable,Imeanbothdesirableandfeasible.It’sreasonabletoseektoreturn somehow to something like the economic fairness and opportunity andsecurity we enjoyed before 1980. It’s reasonable to want to recover theskepticismourparentsandgrandparentsandgreat-grandparentshadabouthugecorporations exercising unfair economic and political power, especiallycompanies that provide essential goods and services such as energy orinformation.It’sreasonabletobenostalgicforfastereconomicgrowth,althoughourabilitytoachievethatbygovernmentactionislimited.

It’s understandable nostalgia, but verging on foolish, to think that the oldnorms of reality-based discourse or bipartisan Washington cooperation willreturnanytimesoon.It’sfoolishvergingonmalignantforleaderstopromoteaU.S. economic future in which coal mining and steel milling are centralfeatures.*4

And then there’s nostalgia for a strong and widespread sense of nationalsolidarity.Ahistoricallyimportantsourceofthatfeeling—actualsolidarity,notrueful pining to feel it again—was the shared experience ofWorldWar II.Arelatedsocialbenefitofthewar,andtheNewDealbeforeit,wastheuniversalunderstandingthatastrongfederalgovernmentwascrucialaswellasbasicallycompetent. The American bond from having survived the war (and theDepressionbefore it) lastedacoupleofdecades—untilaround1965,when thesense of national solidarity began its long decay, accelerated by a disastrousimperialwarinwhichmostAmericanshadnopersonalstake.By1998,theyearTom Brokaw’s book The Greatest Generation and Steven Spielberg’s filmSavingPrivateRyancameout,theiffyus-against-thembondingprovidedbytheColdWarwasover,andWorldWarIIwaspracticallyfossilizednostalgia.

As recently as the2000s, it seemedquite reasonable to strive fornationalsolidarity.The9/11attacksproducedajoltofit,andthreeyearslateritbecamethepremisefortheinstantriseofanIllinoisstatesenator(“The‘BlueStates’…the‘RedStates’…Weareonepeople”)tosuperstardom.Asaformofnostalgia,thewish for greater national solidarity is understandable, but it lately has feltimpossibletoachieveandthereforesomewhatfoolish.

Thebiggest(butnotonly)reasonfornationaldisunitythelastdozenyearsor more is that a quarter or third of Americans and one political party have

explicitlygiventhemselvesovertomalignantnostalgia—nostalgiaforacountrywithmuch larger andmore dominantmajorities ofwhite and native-born andChristian people, and for a time when people who weren’t white or male orstraight had fewer rights and less stature. That’s a lost cause for them—theUnitedStateswillneverbeaswhiteorChristianasitwas,noracountrywherewomenandpeopleofcolorareoppressedliketheywerewhenIwasyoung.

ThatnostalgiaisalsoarevivaloftheLostCausefromacenturyandahalfago—post–CivilWarwhiteSoutherners’self-pitying,self-flatteringnostalgiaforthewonderfulOldSouth(whichhappenedto include theenslavementofblackpeople)andtheCivilWartheystartedandfoughttopreserveit.

Ourtwenty-first-centurypoliticalfightoverimmigrationisacaseofduelingnostalgias over the same subject. It’s Build the wall nostalgia for the mid-twentieth century, when our foreign-born population shrank to less than 5percent, versus Ken Burnsian nostalgia for a half-century or century earlier,huddledmassessailingintobreathefree,becomenewAmericans,andcontinuethe building of a new nation. Back in 1855, when young Walt Whitmandescribedusas“notmerelyanationbutateemingnationofnations,”America’sforeign-bornpopulationhadexplodedsincehewasaboyfrom2percenttomorethan 13 percent,where it remained through the 1920s. Sincewe reopened thegates in the late 1960s, our immigrant fraction has tripled, reaching nearly 15percent, back towhat itwaswhen theStatue ofLiberty andEllis Islandwerenew.

Therewasalwaysplentyofbigotryagainstimmigrants—forbeingCatholic,Jewish, poor, foreign, swarthy—but historically a negligible fraction ofimmigrantswerenotwhite.Indeed,inthelatenineteenthcentury,98percentofAmericansoutsidetheSouthwerewhite.ForallofAmerica’sdefiningembraceand embodiment of the new, for more than two centuries our society wasunchanging in its basic racial makeup—overwhelmingly white and veryconsistently so. From the first census in 1790 through the one in 1970, thenational population was 85 percent white and non-Hispanic, give or take acoupleofpercentagepointsfromdecadetodecade,anditwasstillat80percentin1980.Butasa resultof the latest immigrant influxfromLatinAmericaandAsia,todaybarely60percentofusarenon-Hispanicwhitepeople.

It is an unprecedented American metamorphosis. As a white persondelighted to live in a thriving city with low crime rates where white peoplebecame a minority just after I arrived forty years ago and the foreign-born

populationhassincedoubled,Isay:Goodjob,UnitedStates!Obviouslynotallmy fellow white Americans agree, especially not my fellow white men, andmoreespeciallymyfellowoldwhitemen,manyofwhomalsofeeldiminishedbythesimultaneousriseofwomen.ThosetransformationsofAmericansocietyhavereducedsomeoftheirprivileges.

Tome,themoststrikingmetricoffemaleempowermentconcernswomen’shigher education: in the early 1970s, almost twice asmanymen aswomen inAmerica had graduated from college, but today more women than men haveB.A.s,andtheyearnmostoftheadvanceddegreesaswell.

The large social and political consequences of lots more people havingcollegedegreesextendbeyondequalityforwomen.In1970,whenthehardhatsandotherangryblue-collarpatriotswerehatingandbeatingonuppitycollege-kid protesters, only a small minority of American adults, 11 percent, werecollege graduates. Back then, 88 percent of Americans were white and 95percent were not Hispanic and 89 percent lacked a college degree—in otherwords,non-Hispanicwhitepeoplewhohadnomorethanahighschooldiplomamadeupthree-quartersofAmericans.(Andiftheirkidswantedtogotocollege,itcostafractionofwhatitcostsnow.)Thatmajority,naturally,feltasifineverywaytheyruled.

Since the 1970s the giant U.S. supermajority of white people withoutcollegedegreeshasshrunkbymorethanhalf,downtoabout35percent.Theyconstituteashrinkingfractionthat’snowthesamesizeasthefractionofcollegegraduatesandthefractionofpeopleofcolor,bothofwhicharegrowing.Thusalotofless-educatedwhitepeople,especiallyolderones,feelnostalgicfortheolddays. Yet while it’s understandable that such nostalgia zeroes in on race andethnicity,it’sinexcusablewhenit’spoliticized—andbymymoralcalculus,evenmoresoforaffluentwhitepeoplewithnoscrewed-by-a-rigged-systemeconomicexcuseforresentmentandracism.*5

Since the2016presidential election, scholars and journalistshavedebatedwhichtypeofunhappinessmoreimportantlydroveamajorityofwhitepeopletosupport Donald Trump. Was it all about America’s new racial and ethniccharacter, or was it all about America’s new economic character? Was itnostalgia forawhiter,moresexistsocietyor formorefairlysharedprosperity,security,andeconomicmobilityorforthetimebeforeAmericawasawashinthemeritocratic hubris of the liberal socialwinners?Of course itwas all of thosedifferent versions of nostalgia for the past and of resistance to the new. It’s

another clear case of social and political and economic comorbidity: differentchronicconditionswithintertwinedcausesandsymptomsthatmakebothmoredebilitatingandhardertotreat.

But in fact,mostwhite people have voted for theRepublican presidentialcandidate ever since 1968—that is, ever since the first election after the newfederal civil rights laws came fully into force and after several consecutivesummers of large black urban riots-cum-uprisings. And in the last eightpresidential elections, the overall white vote has been quite consistent: anaverageof56percentvotedfortheRepublicancandidates(exceptwhenquasi-RepublicanRossPerotraninthe1990s),andanaverageof41percentvotedforthe Democratic candidates. In 2016 Trump actually did worse among whitevoters than the average modern Republican candidate. Even among whiteswithoutcollegedegrees,TrumpdidonlyabitbetterthanatypicalGOPnominee—62.5percent,versusMittRomney’s61percentfouryearsearlier.Astudyofthousands of election precincts in six big swing states found that in white-majorityneighborhoodsthathadhadinfluxesofHispanicsandimmigrants,thesamefractionsofwhitepeoplevotedforTrumpin2016ashadvotedforeachofthe three previousRepublican nominees—in otherwords, all the new foreign-bornandnonwhiteneighborsdidn’tmake themmoreTrumpist.Andinpoorerwhite neighborhoods that had Hispanic influxes, Trump did worse than hisRepublicanpredecessors.*6

SotothedegreethatwhitepeoplebeganvotingforRepublicansandagainstDemocratsoutof racialanimusor fearorsolidarity, thatstartedahalf-centuryago and apparently hasn’t changedmuch since.What’s new is that unlike theRepublican candidates and presidents before him, Trump doesn’t stick toinnuendoandcodesanddogwhistles;hisheartisobviouslyinit,evenmoresosince2016,whichmeans that allwhite people voting for him in 2020will befullyratifyinghisracism.

Butthescholarsandotherswhoemphasizebigotryastheonlymeaningfulfactor tendtodefine theeconomics—that is,voters’“economicanxiety”—waytoonarrowlyasacutedistress rather thanasstructuralmalaise.Becausevotingfor Trump didn’t correlate in surveyswith a “drop in income in the previousyear”orconcernabout losing jobsormaking the rentorpayingforhealthcareright now, researchers conclude that Trumpism is entirely about feeling racialhatred or defensiveness. Some analysts also argue that support for Trump byprosperous people discredits the importance of economics to his appeal, but

prosperous Republican voters reflexively support Republican candidates as asafebetonlower taxes—evenTrump,especiallyafterhisfouryearsofstrictlyadheringtotheRepublicanlineonbusinessandtherich.

How better to nail down the kind of chronic economic unhappiness andanxiety I’m talking about? Measuring the actual conditions of wholecommunitiesovertimeseemslikeagoodidea.Theauthorsofonestudydividedall 3,138U.S. counties into twogroups,Opportunity-Falling andOpportunity-RisingAmerica, depending onwhether each county lost or gained businessesbetween 2005 and 2015. In the two-thirds of counties that wereOpportunity-Fallingduring thatdecadebefore the2016election,Trumpwon the two-partyvoteby53to47percent,whileintheOpportunity-Risingcountieshelostby55to45percent.

IhaveadifferentwayofdividingAmericathatamountstothesamething:Dollar General–Dollar Tree–Family Dollar America versus Starbucks–Target–WholeFoodsAmerica.Allsixofthosechainsstartedorexplodedinthe1980saswe beganmaking the political economymore unfair and unequal. In 2016Trumpwonall9stateswhere thedensityofdollarstores ishighest,and10ofthenext13onthechart;Clintonwon15ofthe25statesthathavetherelativelyfewestdollarstores.OfcoursemostpeopleinDollarStoreAmericarespondedtothecandidatewhosoundedin2016likeaDemocratofaveryold-fashionedkind—rough,tough,promisingtospendbillionsbuildingnewroadsandbridgesandnever tocutandpossiblyto improveMedicareandSocialSecurity, tellingthemthat“bigbusinessandmajordonorsareliningupbehindthecampaignofmyopponentbecausetheyknowshewillkeepourriggedsysteminplace.”

Then there are those fascinating, problematic 8 or 10million peoplewhovotedforObama,thenTrump.Peopleareconfused—andsooftenencouragedtobe confused by political actors—about which kinds of new they should orshouldn’t want or have no choice but to accept. After the 2016 presidentialelection,expertscouldn’treckonwiththelargefractionofthereactionarywhiteracistcandidate’svoters,asmanyasoneinsix,whohadalsovotedforthecoolliberal black ex-professor. But it made sense to me as a kind of desperateindependentgrassrootspoliticalyearning forsomekindofnew.ThoseObama-Trump voters may be ideologically inconsistent—like most people—but theywere clearly desperate for new and different, 8 or 10 million people whorepeatedlychosethemostunlikelyandunconventionalcandidateontheballot.

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Americahasbecomenew.Raciallyandsocially,itisnotatallwhatitwasfortyorfiftyyearsago,and

itwon’tbeeveragain,thewholeUnitedStatesaswhiteasOregonorWyoming.I hope and think we’re reaching peak nostalgia for the old superwhite (andsuperstraight)Americanmonoculture.Aswhitepeoplewhogrewupbackthendieoff,wecanhopethatparticularnostalgiawillproceedtobeextinguishedasapowerfulpoliticalforce.

America is no longer what it was economically, either, and it won’t beagain.Nostalgiaforamanufacturing-basedeconomyisabsurd,andthetakeoverof more and more human work by computers is going to proceed apace andprobably accelerate. Yet in fundamental ways, we actually can restore ourpolitical economy to something like what it was, with fairness a goal asimportantasgrowth,allboatsrisingtogether.

WeAmericanswillkeepscreamingbackandforthaboutwhichaspectsofAmerica’spastshouldorshouldn’tbemissedorcelebratedorrestored.Today’sunhingedright,however,evenwhenitisn’texplicitlyfetishizingthepast,isalsooverrun by a de facto nostalgia for the scientific ignorance of the old days.Resistance tonewsocialnormsordemographicsalwaysdefinedconservatism,but now it also includes resistance to newly discovered facts that aren’t evennew. For instance, creationist rejection of evolutionary biology, which hasbecome Republican orthodoxy, amounts to nostalgia for life before 1859, theyearDarwinpublishedOntheOriginofSpecies.

Andbymeansof thedenialof science,we return to themainsubject, theexcessivepowergrantedtobigbusinessstartinginthe1970s.Sincethen,atthebehestofthefossilfuelindustry,therighthasdevelopedadefactonostalgiaforthe blissfully ignorant time when almost nobody outside climate science wasawareoftheCO2crisisanditspotentiallycatastrophiceffects.Climatechangeisanabsolutelynewchallengeforwhichthepastprovidesnomodelstocope.Willwe finally summon the will to stop this willful self-destruction? With ourgovernment in the corruptinggripof bigbusiness and the rich as itwasmorethan a century ago, America—the land of the new, past master at meetingunprecedentedchallenges—wouldprefernotto.

*1Cowendedicatedhisshort2011bookTheGreatStagnationtoPeterThiel,whohecalls“oneofthegreatestandmostimportantpublicintellectualsofourentiretime.Throughoutthecourseofhistory,hewillberecognizedassuch.”ThielisthelibertarianbillionairecofounderofPayPalwhodonated$1.25

milliontothe2016Trumpcampaign.*2Tohiscredit,inhis2018bookStubbornAttachments,Cowengrantsthathislibertarianismisnondoctrinaireenoughtoallowthatafewproblems,suchastheclimatecrisis,dorequiremassivegovernmentaction.*3Likewise,Roev.Wadeinvalidatedlawsagainstabortionalmosthalfacenturyago—andbytheway,therateofU.S.abortionsisnowhalfwhatitwasatitspeakin1981,andlessthanitwasbeforeRoev.Wade.*4“WeonTeamTrump,”PeterNavarro,thepresident’sdirectorofmanufacturingpolicy,saidin2018,“areastonishedbytheargumentthatAmerica’sfutureisintheservicessector,and[that]Americansdon’twant‘dirty’jobsinsteelfurnaces.”*5Inthe1960s,justafewstateshadwhitepopulationsoflessthan70percent:Mississippi,SouthCarolina,Louisiana,andAlabama.TodaythesizeofthewhitemajorityinthewholeUnitedStatesisdowntowhatitwasonlyintheDeepSouthbackthen—whichIthinkhelpsexplainwhysomanywhiteAmericansoutsidetheSouthturnedintocrypto-Southernersduringthelastfiftyyears.Astheircommunitiesgotmoreraciallyandethnicallydiverse,theygotmoreconsciouslywhiteanddefensiveandracist.*6AdifferentstudybypoliticalscientistsfoundthatTrump’santi-immigrantravingsactuallyinspiredmorewhitepeopletovoteagainsthimthanitdidwhiteMAGAstovoteforhim.

I f not for what happened in the 1980s, whenwe liberated business to doalmostanything itwishednomatterwhat, there’sagoodchancewe’dnowbewellonourwaytoendingtheclimatecrisis.Instead,asIdescribedearlier,ournew laissez-faire economic model permitted a couple of well-placed right-wingers—thepresidential commission chairman and theWhiteHouse chief ofstaff—toturntheuncontroversialscientificconsensusaboutglobalwarmingintoafake-controversialpartisanissue.

RememberthePowellMemoof1971prescribingthecomebackstrategybigbusiness and the superrich right would follow, how it reads like a fictionaldocumentinanovelthat’sabittooonthenose?In1998anevenmoreblatantlysinister memo laid out a plan to protect the fossil fuel industry from climatechange regulation. It was drafted and circulated by the American PetroleumInstitute, the oil and gas trade association, along with the CEOs’ BusinessRoundtable, Grover Norquist’s powerful antitax group, and a think tankcofounded by that global warming commission chairman under Reagan whospunthefindingstodenyitwasaloomingcrisis.

“Environmental groups essentially have had the field to themselves,” thememo complained, and—based on an overwhelming scientific consensus—“have conducted an effective public relations program to convince theAmericanpublic that the climate is changing,wehumans are at fault, andwemustdosomethingaboutitbeforecalamitystrikes.”

Legitimate arguments against regulation (or pandemic lockdowns) usually

focus on economic costs, that some rule or law is too expensive given itsbenefits. But opposing emission limits “solely on economic grounds” isn’tenough, the memo explained, because that “makes it too easy for others toportray theUnitedStatesasputtingpreservationof itsown lifestyleabove thegreaterconcernsofmankind.”

Rather, the fossil fuel business and its political allies needed to makecivilians believe therewas serious “scientific uncertainty” in order “to build acaseagainstprecipitousactiononclimatechange.”Thisitwoulddobymeansofa“nationalmedia relationsprogram”promoting the supposed“uncertainties inclimate science” aswell as “adirect outreachprogram to educatemembersofCongressandschoolteachers/studentsaboutuncertaintiesinclimatescience.”

The memo defined “victory” as making “uncertainties in climate sciencepartof theconventionalwisdomforaveragecitizens”and“promotersofcurbsonfossilfuelemissionsseenas‘outoftouchwithreality,’ ”tothepointwhere“ ‘climatechange’becomesanon-issueand”—Dr.Evilhad justbeen invented—“therearenofurtherinitiativestothwartthethreatofclimatechange.”

Thusagenerationafterthebig1980victoryandadecadeafterJohnSununudid his crucial dirty work in Washington, the Establishment right moveddefinitively beyond legitimate policy argument to a dangerous new bad-faithzone. As Senator Moynihan had started saying at the time about politicaldiscourse in general, they decided they were entitled not just to their ownopinions about policies for addressing climate change, but to their own factsconcerningitsexistenceandcausesandpossibleimpacts.

Four years later, in 2002, yet another influential memo about denyingclimate science circulated among Republicans, this one by the prominentstrategistandpollsterFrankLuntz.Headvisedthemthatsofartheirdecadeofclimate-change-denial propaganda had been effective, but they needed toredoubleit.“Votersbelievethereisnoconsensusaboutglobalwarmingwithinthescientificcommunity,”hewrote.“Shouldthepubliccometobelievethatthescientific issues are settled, their views about global warming will changeaccordingly. Therefore, you need to continue to make the lack of scientificcertainty a primary issue,” and continue to “challenge the science.” Luntzrecommended aswell thatRepublican politicians use the term climate changerather than global warming, because “global warming has catastrophiccommunicationsattached to it,”whereas“climatechangesounds [like]amorecontrollableandlessemotionalchallenge.”

AlGore’s documentaryAn InconvenientTruth cameout in 2006,won anOscar,andbroughttheissuetothefullattentionofmillionsofpeople,includingme. Which is probably a reason why, at the same time, the oil and coalbillionairesCharlesandDavidKoch,togetherwithExxonMobilandmorethanahundred right-wing foundations,were funnelinghundredsofmillionsayear toorganizations working against themitigation of global warming. Before long,full-on climate change denialism was Republican orthodoxy. As recently as2008,theirnationalpartyplatformhadrespectfullymentioned“climatechange”thirteen times, stipulating that it was indeed caused by “human economicactivity”andcommittingRepublicansto“decreasingthelongtermdemandforoil.”Atthenextconvention,theplatformmentioned“climatechange”justonce,inscarequotes,onlytodisparageconcernaboutit.

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Beyond their successful work to prevent “initiatives to thwart the threat ofclimatechange,”intheearly2000stheKochsandbigbusinesskeptexpandingwhatthey’dbeguninthe1970sand’80s,givingmoremoneytothethinktanksand nonprofits and Washington lobbyists promoting their other politicaleconomic interests.TheKochs started holding biannualmeetings of their newconfederacyof right-wingbillionairepoliticaldonors, theactivecoreofwhomhadmade their fortunes in fossil fuels and finance.Anewnational right-wingfinancialorganizationcalledDonorsTrustenableddonorstoremainanonymousand keep their fingerprints off their $1.1 billion in contributions (so far) tohundredsofgroupsdedicatedto“advancingliberty.”

The most recent annual ranking of think tanks’ influence (by policyspecialistsandjournalistsfor theUniversityofPennsylvania) lists theHeritageFoundationastheeighthmostinfluentialonEarth,andtheCatoInstituteasthefifteenth.AmongthethousandorsoU.S. thinktankswithaprincipalfocusonpoliticaleconomicsandotherdomesticissues,Heritageisatnumbertwo,Catoatnumber five.Other think tanks that the right created in the1970s and ’80s,suchasCharlesKoch’sMercatusCenterandtheManhattanInstitute,arenotfarbehind.

CharlesKoch remainedclosely involved inGeorgeMasonUniversity andhis quasi-independent institutes there as a major funder, board member, andideological overseer of faculty for the economics and law programs. GeorgeMason’s custom-fabricated right-wing law school was renamed the Antonin

ScaliaLawSchool,thankstoananonymous$20milliondonationforwhichtheFederalistSocietywastheintermediary.Buthavingbuiltthatpermanentfiefdominside an established institution, which is now Virginia’s largest publicuniversity, the Koch operation leveled up and went national. It endows andotherwise subsidizes libertarian economic and legal programs and classes andone-offconferencesandathousandprofessorsatmorethanthreehundredpublicandprivatecollegesanduniversities,includingeverymemberoftheIvyLeagueand MIT, NYU, Wesleyan, Amherst, Wellesley, Georgetown, Northwestern,Stanford,andmostoftheUniversityofCaliforniasystem.Intheearly2000s,theKochs’spendingonU.S.academiaincreasedtoaround$30millionayear,andsince2017ithasbeen$100millionayear.

Mostoftheright-wingcounter-Establishmentthatwasdreamedupandbuiltinthe1970sand’80sisnowsimplytheEstablishment,noneofitspiecesmoreremarkablyor importantly so than those in the law.Back in1985, threeyearsafter theFederalistSocietywasfounded, theyoungdirectorof itsWashington,D.C., branch modestly told a reporter that “the society hopes to continuegrowing quite a bit.” Such a long game: thirty-five years later, that guy ispresident of the Federalist Society, which has chapters at almost every lawschoolaswellas inahundredcitiesfor lawyersandjudgesandotherassortedrightists,seventythousandmembersinall.

Back at that same mid-1980s moment, the Federalist Society’s godfatherMichaelHorowitz,whowrotetheseminalmemotellingright-winglawhowandwhyitneededtostepupitsgame,wasmoreconfident,likeBabeRuthpointingtothefencebeforehehithisWorldSerieshomerun.“Twentyyearsfromnow,”Horowitzpromisedareporter,“wewillseeourfederaljusticescomingfromtheFederalistSociety”—andpreciselytwentyyearslatertwomembersofthatfirstgeneration, Brett Kavanaugh and Neil Gorsuch, became federal appeals courtjudges.

In fact, a large fraction of all federal judges today are or have beenFederalistSocietymembers,includingtheentireSupremeCourtmajority.AttheleveljustbelowtheSupremeCourt,the179federalappealscourtjudgesalloverthecountry,almost30percenthavebeenappointedsince2017,andmore than80percentofthoseTrumpappointeesareFederalistalumniormembers.ThesenewestappellatejudgesarealmosttwiceaslikelytohaveFederalisttiesasthoseappointedbyBushinthe2000s,andtheyaremuchmorelikelytohavepoliticalrather than strictly legal backgrounds. Before he was even nominated forpresidentin2016,TrumpaskedtheFederalistSocietytogivehimshortlistsof

approvedcandidates for theSupremeCourt fromwhichheagreed tomakeallhisnominations;thatisonepromisehehasabsolutelykept.

Certainly for big business, this part of the long war has paid off. OnemeasureofthatishowtheSupremeCourthasdecidedcasesinwhichtheU.S.ChamberofCommercetakesaside.Intheearly1980s,decisionsinthosecaseswenttheirwayfourtimesoutoften,butsince2006it’sbeensevenoften.

Themoneyspentbytheeconomicrightonuniversitiesandthinktanksandthe legal profession goes to propagate ideology and change public policy andjudicialunderstandingsoverthelongterm.ThemoneytheyspendonlobbyistsistogetCongressandadministrationstoenactorstopspecificlawsandpoliciesnow.Injustadecade,from1999to2008,expendituresonWashingtonlobbyingmorethandoubledtoover$3billion.Ofthe100groupsthatspendthemost,95mainlyrepresentbusinessinterests,andofthe20biggestspendersofall,19arecorporationsorbusinessgroups,dominatedbyfinanceandhealthcare.Noneareunions.Theugly,corruptingfrenzythattheReaganadministrationunleashedin1981andthatostensiblystunneditsbudgetdirector—“Doyourealizethegreedthatcametotheforefront?Thehogswerereallyfeeding.Thegreedleveljustgotoutofcontrol”—neverstopped.

In addition to vastly expanding the scale of their inside work in theintellectualandlobbyingworlds,aroundtheturnofthecenturytherichright’sproject expanded in scope as well to a whole new realm. Instead of fundingmainly behind-the-scenes players, the wheedlers and geeks, the strategy nowencompassed far more public operations. In 1980, David Koch ran for vicepresidenttoReagan’srightontheLibertarianplatformthatthenseemedcrazilyextreme—abolish the EPA and OSHA, privatize Social Security, repealcampaign finance laws—and his brotherCharlesworried about the reaction ifthe general public were to learn of their “radically different” views. But agenerationlaterinthemid-1990s,whathadoncebeenbeyondthefringewasthemass-marketable conservative mainstream. The Kochian economic right hadbecome a tight-knit shadow national political party affiliated with anddominatingthenominallyindependentGOP.

Itwas perfect synchrony that theKochs and some of their rich comradesbegan their direct involvement in electoral and protest politics just as the firstright-wingmassmediaplatformswerebeinglaunched.

In 1993, just as right-wing talk radio had become huge, Roger AilespartneredupwithRushLimbaughtoexecutive-produceandco-ownhisyear-old

daily half-hour syndicated TV show. Ailes had also just become the head ofNBC’stwocablenewschannels,CNBCandanothercalledAmerica’sTalking.

That fall I was working on a cover story for Time that was partly aboutLimbaugh.OutoftheblueonedayIgotaphonecallatthemagazine’sofficesfromAiles, withwhom I’d never had any communication. Assuming ImighttrashhisboyRushinTime,hewasphoningnottobeinterviewedbutsimplytosnarlandblusterandtrytointimidatemepreemptively.

Thesecondtimehereferredtomeas“asocialist,”Ichuckled.Therewasapause.“Howwouldyoulikeit,”hesaidthen,“ifIsentacameracrewtoyourkids’ school?” At the time my daughters were three and five, and NBC wasownedbyGE.“Wow,”Ireplied.“I’llbetJackWelchwouldlovetofindoutthathisnewnewsexecutivewasthreateningtousehisemployeestostalktoddlers.”ThatpissedAilesoff.“Areyou,”heasked,“threateningme?”

Ifiguredhewasspeakingfromahundredyardsaway,30RockefellerPlaza,just across Sixth Avenue from the Time-Life Building. “If the millions ofAmericans fanatically devoted to Rush Limbaugh have one major commonhypothesisaboutthewaytheworldworks,”IwroteinmyTimestory,imagininghowNewYorkCity itselfmust stokeAiles’s nonstop right-wing anger, “it isthat a rich and powerful elite, congregated in Manhattan, sits in posh salonssippingcocktailsandsmuglydenigratingthemandtheirunorthodoxheroes.Andthey’reright.”

Threeyears laterAmerica’sTalkingmorphedwithoutAiles intoMSNBC,andRupertMurdochhiredhimtocreateFoxNews.Republicanelectedofficialscontinuedhelpingtheirgreatmediapooh-bah.ThefirstBushadministrationhadsuspended the federal antitrust rule forbidding networks from also owning theshowstheyaired,thenNewYork’sMayorRudyGiulianisuccessfullypressuredthe local cable operator, owned by Time Warner, to carry Fox News. SoonMurdoch also had conservative media’s high end covered with The WeeklyStandard,cofoundedbyIrvingKristol’sson,Bill.In2007,MurdochaddedTheWallStreetJournaltohisportfolioandBreitbartNewslaunched,fundedbythefinancial billionaire (and Koch associate) Robert Mercer. The elite would beconscripted(andcoopted)atscaleoncollegecampusesandinWashington,butnowthrougheverymediumtherabblewouldberousedaswell,24/7.

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Around 1980, donations by business PACs to candidates for Congress startedexceeding thosemadebyunions,butneverbymore thanhalfuntil2000,afterwhich thecorporatesumswere twice thoseoforganized labor, thenmore thantriple.TheClubforGrowth,agroupoftheextremeeconomicrightfoundedin1999toopposeregulationandtaxes,promptlybecameoneofthelargestsourcesof campaign money for Republican congressional candidates. After MittRomney,asacandidateinthepresidentialprimariesin2011,madethemistakeofsaying,“IbelievebasedonwhatIreadthattheworldisgettingwarmer,andIbelieve that humans contribute to that,” the club led the right-wing attacks on“hissupportof‘globalwarming’policies.”

Atthesametime,theKochsandtheirgangspentmoretimeandmoneyontheir new political dominion, organizations that run attack TV ads againstinsufficiently right-wing candidates, operate impressive propaganda sites, andmobilize angry citizens to agitate on behalf of the antigovernment economicagenda—akindofgrassrootspoliticsfundedandcoordinatedfromWashingtonthat had just come to be knownasAstroturfing. In addition to the fundingbyright-wing billionaire coordinators, large corporations—oil, pharmaceuticals,insurance, tobacco—also chip in. The groups evolve and split andmerge anddissolveandreconfigure,butthetwomostsignificant,bothKochcreations,havebeen FreedomWorks (“Lower Taxes, Less Government,More Freedom”) andAmericans for Prosperity. Without them—money, planning, talking points,facilities, transportation, almost everything—the Tea Party movement, despiteits authentic financial-crash-and-black-president-induced hysteria, might havefizzledoutquicklyandaccomplishedlittle.

Instead, the aroused and properly coordinated Tea Party was crucial tohobbling the Obama presidency. A year after the movement arose, theAffordableCareActwas passed—but barely, thanks to full-borework by theeconomic right’s hydra-headed political operation. Even though the new lawwouldn’t go into effect for four years—and would enable 20 million moreAmericans to have health coverage, nearly half of them as new customers ofprivate insurance companies—the political operation nevertheless convincedmillionsofAmericanstobefrightenedoftheprospect,tohateObamacare.Thatproject was helped, as if providentially, by a signature success of the right’sjudicial longgame: at thebeginningof theyear, theSupremeCourt issued itsCitizensUnitedv.FederalElectionCommissiondecision,effectivelyprohibitingseriouselectionfinancelawsandgivingbigbusiness(andunions,asif)freereinto spendmoneyoncampaigns.*And in that fallof2010,Democrats lost their

largemajoritiesinboththeSenateandHouse.Extremelyreasonable,extremelycenter-leftObamahorrifiedtheKochsand

theirfriends,inparticularhissuccessfulpassageoftheAffordableCareActaftera year in office. When the Republicans won back Congress—that is, savedAmericafromObama—Charlestoldareporterthatwhile“I’mnotsayinghe’saMarxist,he’s internalizedsomeMarxistmodels—that is, thatbusiness tends tobesuccessfulbyexploitingitscustomersandworkers.”Inthesamearticle,hisbrother calledObama “themost radical presidentwe’ve ever had as a nation”who, in less than two years, had “done more damage to the free enterprisesystem and long-term prosperity than any president we’ve ever had.” Abillionairememberoftheirpoliticalnetwork(andresidentofDavidKoch’sParkAvenue apartment building) was also apoplectic about the president’s meresuggestionthatprivateequityguyslikehimshouldpaytaxesontheirincomesatanincometaxrateof35percent,asitwasthen,insteadofthecapitalgainsrateof 15 percent. “It’s a war,” Stephen Schwarzman remarked. “It’s like whenHitlerinvadedPolandin1939.”

David Koch died in 2019, but Charles remains overseer of theinterconnected political operations, which are spending $100 million to$200 million a year, mainly on election campaigns. From his personalfoundation’sassetsofnearly$1billion,hespendsanadditional$100millionayearpromotingthepoliticalinterestsoftherichandbigbusiness.

Morethanthatofmostrichright-wingers,CharlesKoch’sideologicalzealseems genuine, as if he’d probably be a screw-the-unfortunate, screw-the-environmentlibertarianevenifhedidn’townoilrefineries,ifhehadanetworthof$43,000insteadof$43billion.But ideologicallysincereversusmonstrouslygreedy is a distinction without a difference here. As Koch and his associatesreengineered the American system and ways of thinking over the last half-century, his own fortune doubled in the 1980s, then tripled in the ’90s and2000s,thentripledagainduringthelastdecade.Inotherwords,hiswealthafterinflation is twenty timesgreater than itwas fortyyears ago.Thewealthof allaffluentAmericans, the topfifth,hasmorethandoubledsincetheearly1980s.Meanwhile themedianwealth of allAmericans is just about exactly the sametodayasitwasbackbeforethewrongturn.

And the problem isn’t just the spectacle of enormous wealth and thegratuitous economic inequality and insecurity. It’s also the corruption of oursystemofgovernment,ruiningdemocracy.Beginninginthe1980s,bigbusiness

and the rich achieved the political power to tilt our system—legislatures,executive branches, judiciaries, media, academia—much more in their favor.Thus they become even richer, which permitted them to buy more politicalleveragetotiltthesystemmoreexcessively,furtherentrenchingtheirwealthandpolitical power. And so on and on. As the Nobel Prize–winning economistJosephStiglitzputsit,we’re“convertinghighereconomicinequalityintogreaterpoliticalinequality.Politicalinequality,initsturn,givesrisetomoreeconomicinequality.” It’sanothercascadingviciouscycle,maybe themostdisturbingofall.

It’salsoanotherremarkablehistoricalrhymewithAmericaof100and150yearsago,anotherwaywe’vegonebackintime.Ouroriginalmegacapitalists—JohnD.Rockefeller inoil,AndrewCarnegie insteel, J.P.Morgan inbanking(andsteelandrailroadsandelectricity),andRichardMellonScaife’sgreat-uncleAndrew Mellon in almost everything—had been a small, coherent, effectivegroupwhousuallygotwhat theyneededoutofWashington, thankyou. In theearly1900s,whenMorganfoundoutthatthenewprogressivegovernmentofhisfellowManhattanpatricianTheodoreRooseveltwasplanningtofilesuitagainstamonopolizingrailroadhecontrolled,hewenttotheWhiteHouse.“Ifwehavedoneanythingwrong,”hetoldTeddy,“sendyourmantomyman,andtheycanfix it up.” The president’s man was the U.S. attorney general, there at themeetingwiththem.

In the modern age, no country as economically advanced as ours hasregressedtoanearlierstageofdevelopment,notyet.IntheirepicworldhistoryWhy Nations Fail, an MIT economist and a University of Chicago politicalscientistexplorewhathasdistinguished,overaeons,thepoorcountriesthatstaypoor from the ones that become fully developed. The basic conclusion is thatsuccessfulcountrieskeeptheirgreedyelitesfromexercisingtoomuchcontroloftheireconomiesandgovernments.Likewise,intherecentbookHowDemocracyEnds, a political scientist explains that for individual citizens “the appeal ofmoderndemocracyisessentiallytwofold.”There’sthe“dignity”ofbeingabletofreely vote for one’s leaders, but also the essential “long-term benefits” thatdemocracy needs to provide, the fair “sharing in the material advantages ofstability, prosperity and peace.” The former without the latter becomes apointlesscharade,asFDRsaidin1936.

AlanGreenspan has concerns about extreme economic inequality for thatsamereason,butinasomewhatdifferentspirit.Inthe2000shewasaskedabouttheproblem.“Inequality is increasing,”hesaid.“Youcannothave thebenefits

ofcapitalistmarketgrowthwithout the supportof a significantproportionandindeed virtually all the people, and if you have an increasing sense that therewardsofcapitalismarebeingdistributedunjustly,thesystemwillnotstand.”

ForGreenspan,however,theproblemisn’textremeinequalityperse,orthenewlyextremeinequalitybetweenthegreatmajorityandtherich,butrathertheenvyofthepoorforthemiddleclass.Andhisproposedsolutiontothat,honesttoGod, was to contrive to paymiddle-class workers even less, to bring theirincomesdownclosertothoseofthepoor.

Wepaythehighestskilled-laborwagesintheworld.Ifwewouldopenup our borders to skilled labor far more than we do, we would…suppress thewage levels of the skilled….Ifwe bring in a number ofworkers to suppress the level ofwages [of the skilled] relative to thelesser-skilled,wewillreducethedegreeofinequality.

—

AfterDemocratsshiftedthepoliticalandeconomicparadigminthe1930s,theymoved left in many ways over the next forty years, but never really oneconomics.Theultra-liberalGeorgeMcGovernwasnottotheleftofFDR.Ontheotherhand,after theright’s triumphalparadigmshift in the1980s, itneverstoppedmovingfurtherrightandtryingtobringthecountrywithit,neversettledintoapermanentpostureofcompromiseoneconomics.AndtheDemocratsforforty years never stopped trying to reach a middle ground with Republicans,even as the old middle was continuously redefined as too far left and theformerly too-far-right as plenty moderate. In 2005 George W. Bush, thecompassionateconservative,triedtoturnSocialSecurityintoatitanic401(k),tomakepeople’sbenefits dependenton the stockmarket’s performance. In2010theObamacareprovisionmosteffectivelydemonizedbytheright,theverysmallannual taxpenalty thatuninsuredpeoplewouldhave to startpaying,hadbeendesigned twenty years earlier as a central mechanism in the big healthcarereformproposalof…theHeritageFoundation.

As a candidate running for the Democratic nomination in 2008, ObamadeliveredanexcellentspeechinNewYorkCityaboutthepoliticaleconomythatgotcompletelyeclipsedbyhisexcellentspeechinPhiladelphiaaroundthesametime.“Afreemarketwasnevermeanttobeafreelicensetotakewhateveryoucan get, however you can get it,” he said in the same hall where Abraham

Lincolnhadgivenaspeechwhenhewasabouttorunforpresident.

That’swhywe’veputinplacerulesoftheroad…EachAmericandoesbetterwhenallAmericansdobetter….We’velostsomeofthatsenseofshared prosperity. Now, this loss has not happened by accident. It’sbecause of decisions made in boardrooms, on trading floors and inWashington….Instead of establishing a 21st century regulatoryframework, we simply dismantled the old one, aided by a legal butcorruptbargain inwhichcampaignmoneyall toooftenshapedpolicyandwatereddownoversight.Indoingsoweencouragedawinnertakeall, anything goes environment….The future cannot be shaped by thebest-connected lobbyists with the best record of raising money forcampaigns.

That fall, as Wall Street crashed and the financial system teetered andObamawaselectedpresidentpartlyasaresult,hehiredtheHouseleaderRahmEmanuel as his chief of staff, who immediately made his most famouspronouncement,concerningthecrash,

Youneverwantaseriouscrisistogotowaste….Thiscrisisprovides…the opportunity to do things that you could not do before. The goodnews,Isuppose,ifyouwanttoseeasilverlining,istheproblemsarebigenoughthattheylendthemselvestoideasfrombothpartiesforthesolution.

He said that at an annual conference of CEOs staged byTheWall StreetJournal.Alas,thatcrisismostlywenttowaste.

The Obama administration immediately fell into the modern Democraticroleofbeingtherestrainedtidiers-upafter“conservative”recklessness—inthiscase, thedisastrous$2trillionwar inIraqaswellas thedisastrousWallStreetcrash.Thebrand-newadministrationwasconsumedforawhilewiththeworkofpreventingacollapseofthefinancialsystemandtheonsetofadepression.

TheoppositionpartyinWashingtonanditsAstroturfedTeaPartiersaroundthe country could focus strictly on assigning blame for the disaster. At thedirectionofthefieldmarshalsoftherichrightinWashington,theTeaPartywasangryaboutthefederalbailoutofthebanksratherthanatthebanksthemselves.

Unfortunately,theObamaadministration—restraint!—didn’tblamethebanksorbankerseither. Insteadofquotinghimself fromtheyearbeforeand takingrealpoliticaladvantage—Wemustendthiswinner-take-allenvironment,reversethedecisions made in boardrooms and on trading floors, the corrupt bargain inwhichcampaignmoneyandthebest-connectedlobbyistsshapepolicy—Obamarescued the financial industryand thenneither reallycastigatednorprosecutedanyofitsobviousvillains.

Itwastoobad,politicallyandsubstantively,thatObama’seconomicteam,official and unofficial,was overstuffedwith peoplewho had a distinctlyWallStreetviewof theeconomyandlife.Moreover, it’sprobablytoobadthatboththe financial industry and so much of the Democratic Establishment areclustered together in and aroundNewYork City. The cozy intertribalmixingcan’t help but be a bit corruptingwhen it comes towriting and enforcing theeconomic and financial rules of the road.During the decade leadingup to the2008crisis, thefivemembersofCongresswhoraised themostfrompeople inthe financial sector were Chuck Schumer, Hillary Clinton, Chris Dodd, JoeLieberman,andJohnKerry—fivesenatorsrepresentingNewYorkandtwoofitsrich-banker-ladenneighboringstates,allofwhombutthefutureSenateminorityleaderwererunningforpresident.Onedoubts,forinstance,thatSchumerwouldhavebeensuchanimportant,full-throateddefenderoftheinexcusablesuper-low“pass-through”taxrateonprivateequityandhedgefundmanagers’incomesifhedidn’tliterallyrepresentWallStreet.

GiventhepowerbalanceinWashingtonduringObama’sfirsttwoyears,it’shardnot to feel that his andotherDemocrats’ habitual restraint,manners, andeconomiccentrismgotthebestofthem.Inadditiontoapresidentwhohadbeenelected with a mandate for CHANGE (as well as HOPE and bipartisanship), theDemocratshadhistoricallyhugemajoritiesofseatsinbothhousesofCongress.TheHousemajoritywas theDemocrats’ largest inyears—and larger than anytheRepublicanshaveheldsince1931.IntheSenate,Democratshad59of100seats(andforsixmonthsafilibuster-proof60),morethanthey’dheldsince1979—andlargerthananyRepublicanmajoritysince1923.

But they really didn’t act like it. Take healthcare reform. TheAffordableCare Act was a difficult and important achievement. However, theadministrationandtheDemocraticcongressionalleadershipseemtohavepuntedwhenitcametopushingforalawthatincludeda“publicoption,”someformofMedicare-for-anybody coverage that people could buy as an alternative toprivateinsurance.Forhisfirstfewmonthsinoffice,Obamaseemedtobeallfor

it, as did all the Democratic chairs of all the congressional committees thatwould create the reform law. But the insurance industry and the physicians’trade group, the American Medical Association, were against it. The mostconservative Democrats in the House, the Blue Dog Coalition, were iffy, butonlyadozenof thosefiftywouldberequired topassabill.Over thesummer,however,Obamagotpubliclywobblyon thepublicoption—asPaulKrugmanwrote at the time, “weirdly unable to show passion on the issue, weirdlydiffident even about the blatant lies from the right”—and by Labor Day, theDemocratssurrendered.

That samesummerof2009,Democrats alsogave in tobigbusiness inanimportantshowdownwithorganizedlabor.AbillwasmovingthroughCongressthathadaprovision tomakeunionizationeasier—insteadofwinninga secret-ballotreferenduminaworkplace,labororganizerswouldjusthavetoconvinceamajority of the workers face-to-face to sign up. The Business Roundtablelobbiedhardagainstit.AfewmoderateDemocraticsenatorswerepersuaded—andwithouttheirvotesthefortySenateRepublicanscouldkillthewholebillbysticking together and filibustering it, so despite the (theoretically) filibuster-proofmajority, it gotdropped.Ayear laterbigbusinesswas stillmaking surethat themeasurestayeddead:onBusinessRoundtable letterhead, theCEOsofVerizonandCaterpillarwarnedObama’sbudgetdirector thatanysuchchangeremained “foremost among our companies’ labor concerns” because it wouldhave “a devastating impact on business” and “significantly and negativelyimpact global competitiveness, job creation and economic recovery.” As ithappened, six weeks after he got that letter, the OMB director left theadministrationandsoonwenttoworkforamemberoftheBusinessRoundtable,the CEO of Citigroup, as his vice-chairman of corporate and investmentbanking.

It was very expensive for the government to save Wall Street and theeconomy after the crash and during the Great Recession, requiring a trilliondollars more per year in extra federal debt for a few years. So of courseRepublicansandcorporatefiguresandmanyDemocratsframedthathystericallyas the new crisis, which queered any hopes of creating any large newgovernmentprograms.Tolowerthosedeficits,superresponsibleObamaandthesuperresponsiblecongressionalDemocratsdidmanagetoenactaseriousspikeinthe average tax paid by millionaires—up to 34 percent, as it had been underClintoninthe1990s.

Taxratesforthewell-to-doandthetaxcodeingeneralarefundamentalto

the story of this book: they are the most direct, large-scale way in whicheconomic fairnessorunfairness is built into the system.And for the last fortyyears,thestoryofthetaxcodehasbeenthesamebackandforthandbackagain,Republicans radically lowering ratesonbusiness and the rich, thenDemocratsnudging them back up, not mainly to expand social programs or redistributewealth but to reduce budget deficits. And true to form, in 2017, withRepublicansonce again in controlofboth theWhiteHouse andCongress, theaverage income tax paid bymillionaireswas radically cut once again—all thewaydownto27percent,thelowestratesincetheReagan1980s.

SomeDemocrats’movesoneconomicsinthelate2010swereoftensaidtoamounttoa“lurch”totheleft.Itstrikesmeratherasalong-overdueideologicalcorrection,people finally standingup, afterdecades inadefensivecrouch thatmadethemresemblethelastlivingliberalRepublicans.

*ThefounderofCitizensUnited,aright-wingpoliticalgroup,becameTrump’sdeputycampaignmanagerin2016andhasbeencrediblyaccusedofoperatingascamtoripoffMAGAdonors.Aright-winglegalgroupthatforadecadelaidimportantgroundworkfortheCitizensUnitedcasewastheJamesMadisonCenter,foundedin1997bySenatorMitchMcConnellwithfundsprovidedbyBetsyDeVos.

A majority ofAmericanswere persuaded to agree to amakeover of ourpolitical economy in the 1970s and ’80s, to turn it into a brand-new old-fashioned version of itself. By radically reducing taxes on the rich, regardingmarketsasinfallibleandgovernmentasirrelevantorworse,indulgingbusinessatevery turn,and lettingcreativedestruction runwild,everybodywouldmakeoutgreat.

Ithasn’tworkedoutthatway.Theoriginalsupply-sideideaofthe1970sand’80swasthatlowtaxrates

would make people work more and earn lots more and thus generate just asmuchtaxrevenueforthegovernment.TheotherhalfoftheReaganpromisewasthat all the billions and trillions in tax savings going to the investor class andbusinesswouldmakeAmerica boom again as it had in the 1950s and ’60s—tricklingdowntoregularpeople—byprovidingeverybodywithgoodjobsandafairshareoftheneweconomicbounty.

A supply-side premise—that tax rates at some very high level tend topersuade people to work less—is true. “Of course,” a pair of prominent lefteconomists from UC Berkeley and MIT wrote recently, “increasing upperincome tax ratescandiscourageeconomicactivity…andpotentially reduce taxcollections.”Yet asKrugman says, “the optimal tax rate on peoplewith veryhighincomesis therate thatraises themaximumpossiblerevenue.”Economicresearch shows convincingly that the self-defeating level of taxation ismuchhigherthanourhighestfederalincometaxratehasbeenforthelastfortyyears—

apparently the disincentive effect doesn’t kick in until you get up to a topmarginal rate of at least 48 percent andmaybe not until 76 percent or higher.Meanwhile,inreallifesince1980,thesupply-sidelow-taxpay-for-itselfmagichas repeatedly failed to do the trick: the federal government is negligiblysmaller,butthefederaldebthasmorethantripledinrealterms.*

Nor has our post-1980 rich-right tax regime produced the job-creating orother sustained economic good news that it has always promised. Plenty ofcomparablecountrieswithmuchhigher taxesandmuch larger social spendinghave grown as much as we have, and according to The Wall Street Journal,“thereisnoclearcorrelationbetweeneconomicgrowthsincethe1970sandtoptax-rate cuts” in the world’s twenty-five most developed countries. Focusingonly on our American experience, when you compare what happened afterfederaltaxesonthewell-to-dowereraised(byClintonandObamaintheirfirstterms)orcut(byGeorgeW.Bush), theresultseemstohavebeentheopposite—more overall growth and jobs after taxes went up, no trickle-down benefitsaftertheywentdown.

We’venowhadfourdecadestojudgethefailureoflaissez-fairesupply-sidetrickle-down economics for most Americans, yet the right sticks to its story,unrevised.AsRepublicansrewrotethetaxcodein2017—cuttingthetaxrateonallincomeabovehalfamilliondollarssignificantly,cuttingtheeffectivetaxrateoncorporationsbyhalf—they insisted, just as theyhadall theprevious times,that despite appearances, the rewrite was really all about helping ordinarypeople,creatingjobs,andraisingtheincomesofthemajorityofAmericanswho,aseven theRepublicanSpeakerof theHouseadmitted then,“livepaycheck topaycheck”with“alotofeconomicanxiety.”TheTrumpadministrationclaimedthat the new tax law would generate such explosive growth that the averagefamilywouldsoonearn$4,000ormaybe$7,000moreperyear.Whileaveragepeoplewouldall get that “pay raise,” “the richwill notbegainingat all,” thepresident lied.What’s more, the $2 trillion tax cut over this next decade, histreasurysecretarypromised,would“notonlypayforitself,butitwillpaydown[government]debt”because…supplyside,alltheextrataxrevenuefromalltheextraincomethatrichpeopleandbusinesseswillbeearning.

Thatreallywasn’thappeningin2018and2019.Infact,untilthespringof2020,U.S.economicgrowthhadbeensteadyas shegoes for thedecadesincetheGreatRecession,not amazing,not terrible, averagingcloser to2percent ayearthan3percent—andactuallyabitslowerin2019thanintheyearsbefore.

Whatclearlyand immediatelydidchangeafter the2017taxcut,however,was theflowofmoney to thewell-to-doandbigbusiness.Theyreceived two-thirdsofthebenefitthroughearly2020,andunderthelaw,thatfractionwastocontinueincreasingfortherestofthedecade.Andthegifttobigbusinesswasaneven worse bait-and-switch scam than it looked like originally. In return forslashingthecorporatetaxratefrom35to21percent,thelawincludedprovisionsthat were supposed to force companies to pay hundreds of billions in taxes,finally, on the trillions in profits they pretend or contrive to earn outside theUnitedStates.Butthatwasjustforshow.

Instead, starting in 2018 the familiar Business Roundtable members(includingGE,United Technologies, Bank ofAmerica, IBM,ConocoPhillips)and lobbyists fromothercompanies (suchasAIG, thegiant financial firm thatU.S.taxpayersbailedoutin2008)descendedontheTrumptreasurybureaucratswriting the nuts-and-bolts rules, who cooperatively, promptlymade company-by-companycarve-outsthatguttedthelaw’suntaxed-foreign-hoardprovisions.

One of the designers of those tax cutswasStephenMoore, a poorman’sArthur Laffer who’d joined up early with candidate Trump.Moore is a purecreature of the right-wing counter-Establishment—M.A. (but no Ph.D.) fromGeorgeMason, cofounder and former president of theClub forGrowth, CatoInstitute,WallStreetJournaleditorialboard,HeritageFoundation.“Capitalism,”he said a decade ago, “is a lotmore important than democracy.”A year afterTrump’s2017taxcutwasenactedhepublishedaJournalpieceheadlined“TheCorporateTaxCutIsPayingforItself,”butthatsimplywasn’ttrue.In2018theUnited States had the largest percentage reduction in tax revenues of anydeveloped country onEarth. In fact, in the first three full years of theTrumpadministration—before COVID-19 and the trillions spent to sustain people’slivesandtheeconomy—thefederaldebtincreasedby$1.5trillionmorethanithadinObama’sfinalthreeyears.

It’shardformetobelieveanyoneknowledgeableamongtherightandtherich still believes their rationales when they argue that a robust Americaneconomyabsolutelyrequires low taxesonmillionairesandbillionaires.Surelytheyknowthat the latestnewfederal innovations tohelpbusiness—exemptingmillions more workers from overtime, minimum wage, and other labor laws,leaving it to employers to report their own violations of those laws, reducingworkplace safety inspections, and so on—only help business andoverwhelminglyhurtworkers.

IsaidearlierthatfinancializedAmericaislikethespecterofaCommunistAmericatheyusedtowarnusabout.Oureconomicrightistsalsoremindmeofthe Soviet party leaders and propagandists who publicly insisted till the end,despite all the miserable realities of their society, that Communism wouldpresentlyworkoutjustfineforthemasses.AndgivenhowthecynicalleadersofourownrulingpartyhavefeltobligedforseveralyearstomakeexcusesfortheformerSovietintelligenceofficerwhonowrunsRussia,theironyisextreme.

—

ItwasduringtheRussianRevolutionacenturyago,infact,thatAmericansfirstbecame familiarwith the termclasswar.Usage in this countrypeakedduringthe Depression, then declined after the New Deal was enacted and the huge,thrivingeconomicmiddlegrewandgrew.Bythelate1970s,classwarseemedlikeanoverwroughtantiqueword,obsoleteandunattractive,unwelcomeforuseinpolitesocietyexceptindescriptionsofthepastorofforeigncountriesorasakindofjokeyfigureofspeech.

So in 1978,when thatUAWpresident’s cri de coeur letter of resignationfrom President Carter’s unions-and-corporations working group included thephrase,peoplenoticed.“Ibelieveleadersof thebusinesscommunity,withfewexceptions,havechosentowageaone-sidedclasswartodayinthiscountry—awaragainstworkingpeople,”DouglasFraserwrote,“andeven[against]manyinthemiddleclassofoursociety.”PeopleontheNewYorkTimeseditorialboardwerevexed,alarmed that“oneof thenation’smostenlightened labor figures”who thank goodnesswasn’t a “man ofwild temperament…talks now about a‘classwar’allegedlydirectedagainst thebigunionsbybigbusiness.”And thefollowingyear, in itsprofileof thepresidentialheirapparentof theAFL-CIO,the Times was so struck by his use of the term in a speech to businessmen—“Now,[it]seemsclasswarfarehasbeenlaunchedbythemostprivilegedandpowerful inour society”—that they ledwith it.News ismanbitesdog—or inthiscase, amentionofclasswarfarebya“low-key” labor leaderwho“hardlyseems the sort to man the barricades of a class war” given his “taste forcontemporaryart.”

In fact, for the next three decades, Americans generally used the phraseclasswaranditsassociatedtropesonlytodismissasstupidlyold-fashionedordangerouslyun-Americanalmostanyseriouscomplaintabouttheunfairnessofour economic system or the greed of rich people. For instance, right after the

crash of 2008, when we agreed to put up $200 billion to bail out AIG, AIGannounceditwaspayingahalf-billiondollarsinbonusestoitsemployeeswhoweremostdirectlyresponsiblefor thedisaster thatwreckedtheircompanyandnearly wrecked our financial system. The very rich new CEO the Obamaadministration hired to run the company complained that the resulting publicbrouhaha over the bonuses had been “intended to stir public anger, to geteverybodyouttherewiththeirpitchforksandtheirhangmannooses,andallthat—sortoflikewhatwedidintheDeepSouth,andIthinkitwasjustasbadandjustaswrong.”HeandhisrichWallStreetexecutiveswerebeinglynched!Classwar!

Sonaturally,attentionwasalsopaidinthe2000s,whentheworld’ssecond-richestmanandmostbelovedAmericanbillionaire—belovedbecausehe’sbothlow-key and plainspoken—admitted that those labor leaders in the late 1970shadbeen right, that theprivilegedandpowerfulhad launchedaone-sidedwaragainstworkingpeopleandthemiddleclass.

“There’s classwarfare, all right,”WarrenBuffett said, and “it’smy class,therichclass,that’smakingwar,andwe’rewinning”—andwe“shouldn’tbe.”

Forbes had published its very first list of the richest people in 1982,estimating Buffett’s wealth then to be the equivalent today of almost $700million.Twodecades later,whenhe talkedabout therichwagingandwinningclasswar,hisfortunehadgrownto$58billion.Hisfortuneisnow$85billion,130timeswhatitwasatthebeginningofAmerica’s—hisphrase—classwar.

As in actual wars, not all the impacts can be quantified—the winners’gloriousvictoriesandsenseoftheirownbrilliancevalidated,thelosers’chronicinsecurities, diminished hopes, sense of having been mistreated or plundered.Butrelevantstatisticsarestillnecessaryandilluminating.

For instance, the experts’ standard measurement of inequality, the Giniindex,reducesallthedisparitiesofincomeorwealthinanycountry(orcityorstate)toanumberbetween0and100—inaplacerated100,oneresidentwouldhaveallthemoney,andinaplacerated0,everyonewouldhaveanequalshare.Backin1979,America’sGiniindexforincomeputusaroundwhereCanadaistoday—inthemoreadmirableandhighlydevelopedhalfofnations,althoughnotup with the super-high-equality countries of northern Europe. Our extremeincomedisparitiesthesedays,however,makeusthemostunequalrichcountryonEarth,withaGininumberconsiderablyworsethanthoseofwesternEuropeorCanada, down amongdeveloping countries.America is slightlymore equal

thanUruguayandCongo,alittlelessequalthanHaitiandMorocco.But that’sstillabitofabloodlessabstractionforconveying theeffectsof

the forty-yearwar.And alongwith how it has affected theaverage amongusversustheaverageDaneorJapanese,weneedtolookathowitworkedoutforthesmallfractionofAmericanwinnerscomparedtoourlargemajorityoflosers.

So it’s time for another synopsis and highlight reel of information I’veculled, thisonedepicting fromseveralangleshow the slicingof theeconomicpiehaschanged.Isuggestyoureadslowly,inordertosavoreachone.

*WhenIrefertothesmallerfederalbudgetandthetripledfederaldebtsince1980,Imeanaspercentagesofourwholeeconomy,theGDP.Incidentally,byfarthelargestincreasesinthedebttookplaceunderthetwotwo-termRepublicanpresidents,ReaganandGeorgeW.Bush.

NobodybuttheRich(andNearlyRich)GotRicher:27WaysthePieIsCutDifferentlyNow

TaxBonanzasforRichPeople

In1980incomeabove$700,000(intoday’sdollars)wastaxedat70percentby the federal government, but today the top rate is 37 percent. And therichestAmericans,who back in the day paid an average of 51 percent infederal,state,andlocalincometaxescombined,nowpayjust33percent.The richest 0.01 percent of Americans, the one in ten thousand familiesworthanaverageof$500million,payaneffectivefederal incometaxratehalfwhatitwasinthe1970s.Profits from selling stocks (almost all of which go to rich people) aregenerallytaxedat20percent,abouthalftheratetheyweretaxedinthelate1970s.Stockdividends(halfofwhichgototherichest1percent)usedtobetaxedlike salary income, but in 2003 theybegangetting special treatment—andtoday the taxondividend incomefor the rich is22percent, insteadof thenormalincometaxrateof37percent.In 1976 one in twelve American heirs—basically anyone inheriting theequivalent of $1 million or more—paid federal estate taxes, and themaximumrateonthelargestofthoseestateswas77percent.Heirstodaygetthe first$11million tax-free, and the tax on everything above that is just40 percent. In 1976 taxeswere paid on the estates of the 139,000 richestAmericans who died; these days fewer than 2,000 estates each year gettaxedatall.

BonanzasforBigBusiness

Duringthe1980s,theamountofcorporateincometaxpaidasafractionofthewholeU.S.economywascutbymorethanhalf,andintheyearssince,

thatfractionhasbeenkeptathalfwhatitwasbefore1980.Since2000,corporateprofitsasafractionoftheeconomyhavebeen50or100percenthigherthanthey’dbeenforthepreviousfivedecades.

TheRichAreDifferent:Income

Before 1980, all Americans’ incomes grew at the same basic rate as theoverall economy. Since 1980, the only people whose incomes haveincreasedatthatratearepeoplewithhouseholdincomesintherangetodayof $180,000 to $450,000. People with incomes higher than that, the top1percent,havegottenincreasesmuchbiggerthanoveralleconomicgrowth.(Meanwhile 90 percent ofAmericans have doneworse than the economyoverall.)Since2000,thesalariesoftheextremelywell-paid($150,000ormore)haveincreased twice as fast as the salaries of the well-paid ($100,000 to$150,000).Since1980,theincomeofthewealthiest1percentofAmericanshasalmosttripled.During the 1990s and 2000s, most of the increase in Americans’ incomewent to the richest 1 percent—and in the years just before and after theGreatRecession,theygot95percentoftheincomeincreases.Theshareofallincomegoingtotheultra-rich—familiesmaking$9millionormoreperyear—isnow5percentofthetotal,tentimeswhatitwasinthe1970s.During the2010s, themajorityofallpersonal income inAmericawent tojust the top 10 percent, people with household incomes higher than$180,000.

TheRichAreDifferent:Wealth

Ofallthestocksandbondsandmutualfundsandhousesandcarsandboatsand art and everything else that counts as wealth, the richest fifth ofAmericans,peoplewithanetworthofabout$500,000ormore,nowownabout four-fifths of it, a much larger share than they owned before the1980s.Theunambiguouslyrich1percent—themillionandahalfhouseholdswithanetworthofroughly$10millionormore—own39percentofallthewealth,almosttwiceaslargeashareastheyhadin1980.Sincethelate1980s,that

wealthiest1percenthavebecome$21trillionwealthier,anaverageincreaseofabout$12millionperhousehold.That top 1 percent own an even larger share of all the stock owned byAmericans—56percent,aquartermoreofthetotalthantheyhadinthelate1980s.Ofthewealthownedbythetop1percent,morethanhalfisownedbyjustthe richest tenth of them. That is, the top 0.1 percent, one in a thousandAmericanfamilies,worthanaverageof$100millionapiece,own22percentof all thewealth—a sharemore than three times larger than itwas in the1970s.

SurvivorsandLosers:Income

During the grand decades between World War II and 1980, when U.S.medianhouseholdincomemorethandoubled,70percentofallincreasesinAmericans’ incomewent to the bottom 90 percent. Since 1980, nobody’sincomehasdoubledexceptfortherichest1percent,andtheincomesoftheentirenonrich90percentofAmericanshavegoneupbyonlyone-quarter.The averagemonthly Social Security retirement benefitmore than tripledfrom1950to1980,adjustedforinflation,butithasincreasedbyjusthalfinthefourdecadessince.Duringthelastfortyyears, themedianweeklypayforAmericansworkingfulltimehasincreasedbyanaverageofjustone-tenthofonepercentayear—andformenhasactuallygonedown4percent.Forthefour-fifthsofallprivatesectorworkerswhodon’tbossanybody,theaveragewagetodayis$23.70anhour.In1973,itwas$24.29.Fortyyearsago,atypicalhighschoolgraduateworkingfulltimecouldearnanincomeoftwicethepovertylevel,theequivalentof$56,000,enoughtosupportaspouseandtwochildren.Todaythefourintenadultswhohavenomorethanahighschooldiplomaandworkfulltimeearnamediansalaryof$39,000.In 1980, 20 percent of all income went to the less prosperous half ofAmericans;by2012,thatsharehadshrunkto12percent.Inthe1980sthecomfortablymiddleanduppermiddleclass,thetwo-fifthsofAmericanswithhouseholdincomesthatputthembelowthewealthytoptenth but above the bottom half, earned 37 percent of all the income—almost exactlywhat their sharewould be in a perfectly equal society.By

2014,thatsharehadshrunkto27percent.

SurvivorsandLosers:Wealth

Theuppermiddleclassofthe1980s,peoplewhohadanicehouseandsomesavings,the30percentjustbelowthetop10percent,owned29percentofall thewealth—once again, almost exactly their share in a perfectly equalsociety.Todaythatsamecomfortable30percentownonly17percentofallthewealth.In1987 the least-wealthy60percentofAmericansowned6percentofallU.S.wealth.Todaythatsamelargemajority—peopleinthemiddleandthelower-middleandbelow,householdsworthlessthan$175,000—ownathirdasmuch,just2percentofallthewealth.The combinedwealth ($2.5 trillion) of that same largeU.S.majority, the200millionAmericansfromjustabovethemiddleallthewaydowntothebottom,islessthanthatofthe607U.S.billionaires($3.1trillion).Thereforea single average American billionaire owns the same as 400,000 averagemembers of the un-wealthy majority, an entire big city’s worth ofAmericans.

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Not all the conditions of the U.S. economy are uglier and harder for mostAmericans today than theywere before the 1980s.Although the real costs ofmost of the most essential things we need to buy—housing, education,healthcare—have increased by 50 to 200 percent, since 1981 we haven’t hadhigh inflation,when the prices of everything go up noticeably from season toseasonandevenmonthtomonth.It’s toobadyourwageshaven’tgoneupforforty years, goes one common argument from the right and well-to-doconcerningtheeconomicconditionoftheAmericanmajority,andthatpensionsandunionsandmillionsofgoodjobsdisappeared,but,hey,haven’tweletyoueatcake?Thatis,theysay,inallseriousness,thatincomeinequalityisn’tasbadasitlooksbecausesomethings,likemilkandeggs,areactuallylessexpensivenow, and TVs are gigantic and inexpensive, and all the other stuff at theWalmarts and dollar stores is so cheap, thanks to Chinese imports. As twoinfluentialpapersbyapairofUniversityofChicagoeconomistsputitin2009,the “prices of low-quality products” that “poorer consumers buy” such as“ ‘cosmetics,’‘toysandsportinggoods,’…‘wrappingmaterialsandbags,’ ”and

“squidfrozenfilets,”fellduringthe1990sand2000s.*1

Yeteventhatbooby-prizerationaleforthepost-1980ssocialcontract—mostpay won’t go up, but some costs won’t either!—is no longer operative. ThepricesAmericansnowpayforvariousbasicgoodsandespeciallyserviceshavegoneway up thanks to one big change in the political economymade by therightandbigbusiness.

I’vetalkedaboutthelegalright’sstrugglefromthe1960sthroughthe’80s—RobertBork, theLawandEconomicsmovement—tonarrowandundermineantitrust, how they weakened the underpinnings and enforcement of the lawsagainst excessive corporate economic power. They also helped transform theconventionalwisdomaboutantitrust,tomakepeoplethinksettingandenforcinglimitsonsuchpowerwasoutmoded,toocumbersomefortheageofGoogleandFacebook, and even to recast monopolistic domination of an industry as theunabashedcorporategoal,thedream,ameasureofultimatesuccess.Since2000that very long anti-antitrust game by the economic right has been paying offfantastically forbigbusiness inAmerica. It’s adifferent, subtler theaterof theclasswar.

Theoverall trend line in thenumberof JusticeDepartment antitrust caseshas sloped downward since the 1980s, and in 2018 the lawyers there initiatedonlyasmallfractionofwhattheyhadbeendoingevenasrecentlyastheearly2000s, the fewest since 1972. Thanks to this permissive approach, it becameeasierandeasierforlargecompaniestogrowextremelylarge,makingformanyfewer andmuch larger corporations. In 1995 about half the profits earned bypubliccompanieswenttothehundredbiggestones;in2015thehundredbiggestaremuchbiggerandtookin84percentoftheprofits.

Except forGoogle,Facebook,andIntel,cableTVandhigh-speedInternetproviders,andMonsantoinmuchofagribusiness—averylargeexcept—fewofthe resulting corporate giants are literal monopolies, one company absolutelydominatingagivensector.Instead,mostmajorAmericanindustrieshaverapidlyturnedintooligopolies,wheretwoorthreeorfourbigcompaniesruntheirshowand tend not to compete fiercely. It’s like how smartmob families peacefullycoexist.

During the 1990s and 2000s, three-quarters of all U.S. industries becamemoreconcentrated,andtheiraveragelevelofconcentrationdoubled.OligopolyisnowtheAmericanwayinmobileandlandlinephoneservice,airlines,creditcards,meatandpoultry,beerandsoftdrinks,breakfastcereal,andmore.Inthe

1990s the six biggest banks held only one-sixth of all Americans’ financialassets,butby2013,fiveyearsafterthecrash,thatsharehadgrownto58percent—theyeartheDemocraticU.S.attorneygeneralsaidthatwhilehe’dwantedtoprosecutebigbanksfortheirroleinthecrash,hedidn’tdarebecause,inadditiontotheirbeingtoobigtofail,thelegaltroublemighthavehad“anegativeimpactonthenationaleconomy.”

Andsoeven ifwe’re still able tobuy low-quality cosmetics and toysandfrozensquidcheaply,we’renowdefinitelypayingmorethanweshouldformoreessentialthings.Asaresultoflooser,lavishlybig-business-friendlygovernmentpolicies,everypieceoftheU.S.medical-industrialcomplexbecamemuchmoreconcentrated during the 1990s and 2000s—hospitals, health insurancecompanies, large physicians’ groups—and prices increased as a result of thegreatermarket power.A conservative estimate is that since 1980, governmentpolicychangeshavecausedAmericanstospendanextra$130billioneveryyearforhealthcare.Forinstance,whyareprescriptiondrugpricesroutinelytwoandthreetimesasexpensiveintheUnitedStatesasinothercountries?Abigreasonisthatinthe1980sandafterward,Congressandfederalantitrustenforcersgaveaway the store to pharmaceutical companies by letting them control patentslongerandsetminimumprices.

Studyafterstudyhasfoundconclusivelythatmergersandfewercompaniesresult in higher prices in everybusiness.The averageprice forU.S. cableTVservice,paidinmostplacestoaliteralmonopoly,rosebyhalfjustbetween2010and 2018. “The evidence strongly suggests,” theNYU economist and FederalReserve Bank adviser Thomas Philippon wrote in 2019, “that increasingconcentrationintheU.S.isresponsibleforanexcessiveincreaseinprices.”Heestimates that “this very new era of oligopoly costs each typical Americanhouseholdmorethan$5,000ayear.”

It’s really pretty simple: effectively extinguishing antitrust allowedcompanies to become excessively large and powerful,which relieved them ofpressuretocompeteonprice,whichhasinturnmadethemmoreprofitablethanever. The public justification for merger mania, of course, is efficiency,economies of scale—that because bigger companies can negotiate better dealsfromtheirvendors,andbecauseaftermergerstheycangetridoftheiremployeesdoing redundant jobs, corporate earnings increase. But the scholarly researchsuggeststhat’smainlybullshit.

During the 1990s, as U.S. banksmerged and acquired, their numberwas

reducedbyalmostathird—yetaccordingtoPhilippon,there’s“littleevidenceofcost efficiency improvement.”A recent study by economists at Princeton andUniversityCollegeLondontracesthisriggingdirectlybacktothe1980s.From1950 until 1980, they found, American companies’ ability to set prices, theirmarket power,was steady—in1980, theyweremarking up sales prices by anaverageof18percentover theircosts.But thencamethe1980s,andso today,amazingly,theaveragemarkupbyU.S.companiesisasweet67percent.

Another recent paper by three finance professors found that when aU.S.industry becomes lots more concentrated, the fewer, bigger remainingcompanies’efficiencydoesincreaseby6percent.Buttheirprofitmarginsgoupby142percent,mainlyasaresultofcharginghigherpricesbecause,withoutsomuch competition…they can. In addition, oligopoly breeds oligopoly becauseinvestorsapproveofit.Money’sallgreen,andhigherprofitsbasedonunfairly(or illegally) higher prices make stock prices rise even more in moreconcentratedindustries.

Simplyput,thoseunnecessarythousandsofdollarsyounowpayeachyearto companies with unfair market power are making the shareholders of thosecompanies,mostlyrichpeople,richer.Whichishowthispostmodernclasswarhasworked.

—

AfterWarren Buffett first called it a class war fifteen years ago, he was notimmediately joinedbya throngof fellowfamousbillionairesand thousandsofthe superrich in a great public display of blunt candor and contrition abouthavingbeenonthewinningsideofAmerica’snewRawDeal.

ButinthisFantasylandage,withitsacceleratingdenialofundeniablefactsby peoplewith power, Iwelcome on this subject any honesty and clarity andwisps of apology from the rich and from people who were, it could be said,American capitalism’s leading apparatchiks and propagandists in the earlydecades of the classwar. “I don’t see a relationship between the extremes ofincomenowandtheperformanceof theeconomy,”saidPaulVolckerin2007,forinstance,afteradecadeservingaschairmanofaWallStreetinvestmentbankandforadecadebeforethatasFedchair.Inhismemoirtheyearbeforehedied,Volckerwrotethatinthe1980sand’90sheandhisfellowlordsofthepoliticaleconomy“failedtorecognizethecostsofopenmarketsandrapidinnovationtosizablefractionsofourowncitizenry.Wecametothinkthatinventivefinancial

marketscoulddisciplinethemselves.”Asonofoneoftheoriginalevilgeniuseswhowent into the family business,BillKristol is still a conservative, but hasturned on his lifelong associates of the elite right who’ve stuck with Trumpsimply out of greed because they’re permitted to continue maximizing theirwealthandpower.Itisthey,Kristolsays,“businessleaders,bigdonors,andtheWallStreetJournaleditorialpage,”whoshouldhaveand“mighthaverebelled”iftheyhadn’tbeenkeptonboardbyakeyevilgenius,MitchMcConnell.

EvenRichardPosner,thepioneeringconservativescholarandseniorfederaljudgewhowelastsawcelebratingtheright’seconomicvictorywithsomeofhisfellowmastermindsjustbeforetheturnofthecentury,admittedin2017thatithas all gone too far. During a conference on corporate concentration at theUniversity of Chicago, he was his bracingly candid self. As a member ofCongress,he said, “youarea slave to thedonors.Theyownyou.That’s [the]real corruption, the ownership of Congress by the rich.” And the SupremeCourt’sCitizensUniteddecisionin2010, theconservativemajority’sviewthat“there’s no such thing as spending too much money to support a politicalcandidate,becauseyourmoneyisactuallyspeech—that’sallnonsense,”butasaresult,apartfrompassingaconstitutionalamendment,“thereisn’tanythingthegovernmentcando[aboutregulatingcampaignfinance]now.”

Then there’s the remarkable apostasy of the neoconservative politicaleconomist and Reagan administration official Francis Fukuyama. The End ofHistory and its celebration of the permanent global triumph of U.S.-stylecapitalism in the 1990s got him an endowed public policy professorship atGeorge Mason University, the Koch academic headquarters, and although hemovedontoStanford,heremainsconservativeinsomeways.Butwhenhewasasked recently what he thought of the apparent new U.S. vogue for socialdemocracy, even socialism, he said, “It all depends on what you mean bysocialism,”andthenhewentoff.

If you mean redistributive programs that try to redress this bigimbalance in both incomes and wealth that has emerged then, yes, Ithink itought tocomeback.Thisextendedperiod,whichstartedwithReagan,inwhichacertainsetofideasaboutthebenefitsofunregulatedmarketstookhold,inmanywaysit’shadadisastrouseffect.It’sledtoa weakening of labor unions, of the bargaining power of ordinaryworkers, theriseofanoligarchicclassthatthenexertsunduepoliticalpower. In termsof the role of finance, if there’s anythingwe learned

fromthefinancialcrisis it’s thatyou’vegot toregulate thesector likehellbecausethey’llmakeeveryoneelsepay.ItseemstomethatcertainthingsKarlMarxsaidareturningouttobetrue…thatworkerswouldbeimpoverished.

—

EarlierinthischapterIreferredacoupleoftimestoa“perfectlyequalsociety,”an imaginary United States with a Gini index of zero, in which every adultcitizenhadexactly thesameincomeand/orexactly thesamewealth.That’sanimpossibledream.I’mnotevensureit’sadesirabledream.ButIwonderedhowthathypotheticalAmericawouldlook.

The absolutelymiddleAmerican economically, somebodywithmore thanthepoorerhalfofAmericansandlessthanthericherhalf, livesinahouseholdwheretheearnersearn$64,000ayearandhaveanetworthof$100,000.

InaU.S.societyofperfecteconomicequality,allthemoneywouldinsteadbe divided equally among Americans—the total income of $19 trillion(accordingtotheBureauofEconomicAnalysis)andtheU.S.personalwealthofabout$100trillion(accordingtotheFederalReserve),allparceledoutequallytoeachofthe129millionU.S.households.

InthisimaginaryAmerica2,everyhouseholdhasanetworthof$800,000andanannualincomefromallsourcesof$140,000.

Those numbers shocked me. They shocked me so much I had a longcorrespondencewithaHarvardeconomicsprofessoraboutthemtomakesureIwasn’tmisunderstandingsomething.*2

Inthisleveled-outAmerica2notonlywouldnobodybepoor(orrich),buteveryonewouldbeuppermiddleclass.Everyonewouldhaveanincomeandnetworth that would put them, in today’s actual America, well within the mostaffluenttopfifthofthepopulation.ItwouldalmostbeasiftheAmericanDreamtagline of the fictional town inA Prairie HomeCompanion, “all the childrenaboveaverage,”cametrueforthewholecountryeconomically.

I’ve referred toAmerica’s evolving social contracts—theversionswehaduntil the early 1900s, the new, improved version we had until 1980, and thecurrent Raw Deal version. And I mentioned the Veil of Ignorance ethicalstandard—the idea that any social contract of any society is legitimate only ifpeoplewouldagreetoitknowingnothingof theirpersonalattributesorfamily

situation, that regardless of their possible handicaps or advantages under thatcontract,they’dbewillingtotaketheluckofthedrawasarandomresident.

Soimaginethatthoughtexperimentappliedhere.Veiledinignorance,youhave the option of signing either of two social contracts. You can accept therevamped version, America 2, with the clause guaranteeing your household asix-figureincomeandnearlyamilliondollarsinwealth.

Oryoucansignouractualcurrentcirca-1980socialcontract,obligingyoutobearandomAmericanwithaone-in-fivechanceofmakingoutfinanciallyaswellorbetterasyouwouldinAmerica2butwithafour-in-fivechanceofdoingworse,includingaseriouspossibilityofbeingimpoverishedforever—butinrealAmericayouwouldgettokeepyourlotteryticketthatgivesyoua1-in-100,000shotatbecomingabillionaireoramemberofhisfamily.

Choose,andbehonest.

*1Shortlyafterpublishingthosepapers,oneoftheeconomistsleftacademiaforfinance,wherehespecializesinmanaginghedgefundinvestments.*2Weirdly,whenitcomestocalculatingAmericans’totalincome,thegovernmentusesverydifferentsetsofbookskeptbytwodifferentdivisionsoftheCommerceDepartment.Backin1980,thetwofigureswereclose,butnowonepeggeditatabout$11trillionin2019andtheotheratabout$19trillion.Whenyoudivideupthesmallernumberintoequalshares,theaveragehouseholdgets$90,000insteadof$140,000.Amongotherthings,thelargernumberincludesthevalueofemployees’fringebenefits,privatepensions,Medicare,Medicaid,andothergovernmentpaymentsandtaxcredits,aswellasanestimateforhundredsofbillionsofoff-the-booksincome.Forthisexercise,Iusedthelargerfigure,becauseitseemstoreflectrealitybetter.Ofcourse,inanyreal-lifeversionofthisfantasy,paymentswouldbeadjustedupanddowndependingonthesizeofthehouseholdandhowmanyadultsandchildreneachonehad,andsoon.It’sanillustrationofhowrichthecountryis,notaplan.

D uringaDemocraticprimarydebate in2015,withHillaryClintonandBernieSanderstheonlyDemocratswhohadachance,Sanderswasaskedbythemoderatorifcallinghimselfasocialistwaspoliticallywise.Well,hereplied,hethoughttheUnitedStates“shouldlooktocountrieslikeDenmark,likeSwedenand Norway, and learn from what they have accomplished” with theireconomies.

In response, Clinton made the excellent point that “what we have to doevery so often in America is save capitalism from itself” and “rein in theexcessesofcapitalismsothatitdoesn’trunamokanddoesn’tcausethekindofinequitieswe’reseeinginoureconomicsystem.”Unfortunatelyshealsotookacheapandeffectiverhetoricalshotthatbecamethenight’smemorableline:“WearenotDenmark.IloveDenmark.WearetheUnitedStatesofAmerica.”

Ithinkpoliticalargumentsconcerningthedefinitionofsocialismaremostlyawasteoftime.Andgivenboththeconfusionoverthewordanditsbaggage—theUSSRwastheUnionofSovietSocialistRepublics,VenezuelaisrunbyitsUnitedSocialistParty—IdothinkitisunwiseforaU.S.presidentialcandidatetocallhimselfasocialist.

Butnobodythatnightfiveyearsagopointedoutthekeyfact:DenmarkandSweden and Norway are all thriving free-market capitalist economies.*1 Thecitizens of each have saved capitalism from itself by reining in the naturalsystemicexcessessothatitdoesn’trunamokandcauseextremeinequities—justas they’ve also saved socialism from itself so that it doesn’t run amok and

smotherindividualismandentrepreneurialenergy.Of course the United States differs from the Nordic countries, it’s vastly

more populous and ethnically diverse, but that doesn’tmean their versions ofcapitalismdon’toffer excellentmodels.WearenotDenmark—butnorareweTurkey,Mexico,CostaRica,Chile,orSouthAfrica,theonlymoreeconomicallyunequal societies than theUnitedStates in theOECD, the organization of theworld’s three dozen most developed countries.We’re also not Canada or theother countries of western Europe that practice capitalisms that are plainlysuperiortoourcurrentmodel.

SofarI’veexplainedhowwescrewedupoursystembybadlyrejiggeringthe decent one we had, giving much bigger shares of America’s wealth andpowertotherichandbigbusiness.Buttocompletethecase,Ineedtoprovidesomeglimpsesofreal-worldpathsnottaken.AmericanexceptionalismisanideausuallyusedbyAmericanstocongratulateourselvesforahistorythatmakesusspecial,betterthananyone.Butthetransformationofourpoliticaleconomythelastfewdecadesmakesusdifferentlyexceptional,acityuponahill inBizarroWorld.

Fromthe1970sthroughthe’90s,alldevelopedcountriesfacedbasicallythesame big new economic conditions—slower economic growth, productsmanufactured much more cheaply by workers in poorer countries, especiallyChina, and things produced more efficiently using much better, smartermachines. The age-old historical pattern of wages rising right along withproductivity got out of sync in other countries as well as the United States.Inequalitygotworseallovertherichworld—butattheendofthedayonlyabitworse everywhere except America. Because in most other rich countries, thepeople used politics to soften the blows, share the pain, adapt together. Theygovernedthemselvesresponsibly.

AstheNobeleconomistJosephStiglitzsays,although“sincethemid-1970sthe rules of the economic game have been rewritten” all over the world to“advantagetherichanddisadvantagetherest,”theruleswentmuch“furtherinthis perverse direction in the U.S. than in other developed countries—eventhoughtherulesintheU.S.werealreadylessfavorabletoworkers.”

Inthelate1970sand’80s,therestofthedevelopedworldpulledintoarightlane,butmostlykeptheading in the samebasicdirectionon the samemodernhighwaywe’dallbeentravelingtogethersincetheGreatDepressionandWorldWar II, course-correcting as they proceeded. America, however, badly

oversteered,beginninginthe1980s,andtookaverysharprightturn.Asaresult,we’vebeenforcedtobumpalongacrappyanddangerousoldroad,ruiningourcarandinjuringmostofthepassengersandveeringofffartherandfartherfromthemainhighway.

From 1980 to 2015 inwestern Europe, the share of national income thatwent to the half of people below themedian dipped from 24 to 22 percent—whileinAmericathesharegoingtothenonrichhalfhasplummetedfrom20to12percent.MeanwhiletheincomesharegoingtotherichestwesternEuropeans,the top 1 percent, has crept up from 10 to 12 percent—while in America itdoubledtoaround20percent.InarecentcoverstorybythereasonableBritishconservatives at The Economist questioning the extent of the global rise ininequality, theystipulated that theyweregivingapassonly toEuropeand theU.K.,nottheUnitedStates—thatinexceptionalAmerica,workershaveindeedbeenscrewedandwealthinequalityhasindeedbecomeextreme.

Idescribedhow it’sbecomeharder than it everused tobe forAmericanswhogrowuponthelowereconomicrungstoclimbupward.It’salsonowlotsharder in the United States than it is in other rich countries—and also evenunlikelierforchildrenbornintowealthinAmericatoslidedownwardasadults.Astudyfrom2010ofsocialmobility,usingasametricsons’incomescomparedto their fathers’ in eight western European countries and Australia and NorthAmerica, found that Denmark, Norway, Finland, and Canada are the mostmobile by a lot; theUnited Stateswas third from the bottom.A 2018WorldBank study ranked each of the world’s countries by its fraction of youngercitizens who are Ragged Dicks—that is, Horatio Alger types born into theeconomiclowerhalfwhomadeittothetopquarterbeforethey’reold.Amongthe fifty countries at the bottom of the two hundred, those with the leasteconomicmobility, are forty-six developing countries and, between IndonesiaandBrazil,theUnitedStates.Americansocietyhashalftheeconomicmobilityofthecountriesnearthetop.

TheU.S.economysince1980hasgrownasmuchasormorethanthoseofmost of our rich-country peers, although not all—Sweden, for instance, hascontinuouslygrownfaster thanAmerica for the last thirtyyears.Butwhile theaverage U.S. income andGDP per capita have risen as fast as or faster thanincomes in Europe’s economies, in exceptional America the more real-life-relevantmedian income—theamountofmoneygoing to thepersonwhoearnsmore than the poor half and less than the rich half—has hardly budged fordecades. Meanwhile, since 2000 in Canada and the U.K., for instance, the

median income has gone up 20 percent or more, and by similar amounts inEurope.Whetherthisorthatcountry’seconomyhasgrownfasterorslowerthanAmerica’s,theyhavesharedtheirnationalprosperity.Boatshaverisentogether.

InDenmarktheshareofallhouseholdincomethatgoestothetopquintileofcitizens,theupper-middleclassandtherich,isabout60percentofwhattheirAmerican counterparts get, while the share going to the poorest fifth is 60percent more than the poorest Americans get. The poverty rate in the UnitedStates ishalfagainashighas inCanadaand theU.K., twiceashighas in theNetherlandsandFrance,andthreetimesashighasinFinland,Iceland,andthe-country-we-are-not,Denmark.

Then, of course, there’s healthcare. In this area, we are absolutelyexceptional.Theotherhighlydevelopedcountrieshaveawidemixofsystems—privatelyand/orpubliclyemployeddoctorsandhospitals,publicand/orprivateinsurance—butinallthoseothercountries,everyonegetscovered,coverageisn’tlinkedtoparticularjobs,mostofthecostsarepaidbygovernment,andthetotalcosts are considerably lower. Until the 1980s, healthcare spending in thosecountriesand in theUnitedStateswere in thesameballpark,butnowmostofthem spend only half or even a third asmuch per person aswe do. In everyinternational ranking of healthcare quality, the United States is low, fromtwenty-eighth to thirty-seventhplace.Until the1980s too, lifeexpectanciesforpeopleinall therichcountrieswereincreasingrightinline,butnowpeopleintheothercountrieslivethreetofiveyearslongeronaveragethanAmericans.*2According to thehealth-efficiency indexcompiledbyBloombergNews,whichcombines longevity and healthcare spending into a single metric for almostevery country, the United States is second from the bottom, better only thanBulgaria.

Unlike with healthcare, public colleges and universities in the other richcountries probably don’t provide better educations than those in the UnitedStates.But just aswithhealthcare, they spendhalf asmuchaswedo, and thetuitions they charge are a fraction of the U.S. average or—in a third of thecountries,includingtheNordics—free.

Theymanagetoaffordallthat;wecouldaffordit,too,especiallygivenourhigher GDP per person. The United States spends less on ourselves throughgovernmentatall levels thando90percentof themostdevelopedcountries—onlyChile,Mexico, and Ireland spend less thanwedo.Andamainway theymanagethisisbydoingsomethingelsethattheUnitedStatesdoesn’tdo:taxing

thesaleofallgoodsandservices—notjustasalestaxpaidbyconsumersatthecheckout counter, but a tax collected at each step along the way, from thebauxiteminetothealuminumsmeltertotheFoxconniPhonefactorytoAppletoyou, as each buyer adds value to the product-in-progress and sells it. Everydevelopedcountry except theUnitedStates collects suchavalue-added tax. Ifwewere to imposeaVATevenat the lowSwiss rate,which isonlyhalforathirdof the rates chargedelsewhere inEurope, itwouldgeneratearound$500billionayearforustospendhoweverwewanted.

Butit’snotjustthattheseothercountriestaxandspendquiteabitmoretoincrease fairness and enable their citizens to live better, longer lives. They’vealsostucktovariousnormsandprinciplesconcerningbusinessthatwebegantoabandon fortyyears ago. In the1980sand ’90s, following theU.S. lead,mostrich countries liberalized their economies, selling off government-ownedrailroads,airlines,energy,andtelephonecompaniestoprivateowners.However,they also kept a reasonable balance between fair and laissez-faire in thewaysthatAmericaabandoned.

TheU.S.-spawneddogmaofshareholdersupremacy,requiringexecutivestoobsess over stock prices to the exclusion of almost everything else, is lessextremeinEurope.TheratiosofCEOpaytothepayofaverageworkersinothercountriesaremorereasonable—inCanadaandGermany,for instance, theyarehalfwhattheyareintheUnitedStates.Moreover,thebalanceofpowerbetweenworkersandemployerselsewhere ismuchmore like itwas inAmericabeforethe1980s.Forstarters,becausepeople inothercountriesdon’tget theirhealthinsurancethroughtheiremployers,theemployershavelessleverageoverthem.Every developed country but one also requires employers to give newparentspaid leave that ranges from a few months to a year or more, an essentialadaptationtothemoderneraofworkingwomenthatAmericahasn’tmade.

Andinotherdevelopedcountries,organizedlaborhasnotbeencrushed.InCanadaalmostathirdofworkersarerepresentedbytradeunions,thesameasinalldevelopedcountriesonaverage—fewer than in the1970sbutequalnow tothefractioninAmericabackthen,beforethecrushing,andthreetimestheU.S.unionizationlevelnow.ThisisanotherwaywearenotDenmarkorSwedenorFinland,wheretwo-thirdsofworkersarerepresentedbyunions.TheflipsideofDenmark’s very comfortable socialwelfare cushion, however, is its very lightgovernmentregulationoffiringsandlayoffs.TheNordicsocialcontractsmoreor less guarantee jobs but noparticular job. For an averageDanish family offourwith a single breadwinnerwho loses their job, the household income six

months later is 90 percent back to what it was before the job loss. TheirAmericancounterpartssixmonthslaterhaveanincomeonly30percentofwhatithadbeen.

Thenthere’santitrust.Inhis2019bookTheReversal:HowAmericaGaveUponFreeMarkets,theNYUeconomistThomasPhilippon,whoemigratedtotheUnitedStatesfromFrancein1999,tellsaremarkableFreakyFridaystoryoftransatlanticpoliticaleconomicssincethen.AsIdescribedinthelastchapter,weletourbigbusinessesget toobig, let themuse their sizeandpower tokilloffcompetitionandraisepricesexcessively.MeanwhileEuropebytheturnofthiscenturyremadeitselfeconomicallytobemoreliketheUnitedStatesusedtobe,enforcingrobustcompetitiontomakepriceslowerandservicebetter.“BecausetheEUhasadoptedtheUSplaybook,”includingantitrustenforcement,“whichtheUSitselfhasabandoned,”Philipponwrites, the“pricesfor thesamegoodsand services”havebecomemuch lower inEurope.Mobile phone and Internetservice,forinstance,costEuropeanshalfasmuchastheycostAmericans.

Infact, thereversalbetweenEuropeandtheUnitedStatesextendsbeyondantitrustenforcementandwhatcompaniesgetawaywithchargingpeopletousethe Internet.And so, inevitably,wemust consult Tocqueville.Decades beforebig modern corporations were invented, prompting American democrats toinventantitrustlawtorestrainthem,backatatimewhenincomewasdivviedupmuch more equally in the United States than in Europe, he noted that while“therearerichmen,”inAmerica,“theclassofrichmendoesnotexist;fortheserich individuals have no feelings or purposes in common.” In the 1830s therewere “members, but no body” of the American wealthy, and furthermore“moneydoesnotleadthosewhopossessittopoliticalpower.”Acenturyandahalf later, of course, we have the Business Roundtable and Charles Koch’snetwork of power-seeking billionaires and a Congress that our capitalist classlavishlyunderwrites.

In the same chapter, near the end ofDemocracy in America, Tocquevilleworriedthat“themanufacturingaristocracywhichisgrowingupunderoureyesisoneoftheharshestwhicheverexistedintheworld,”andthatAmerica’snewcapitalist apparatus“impoverishesanddebases themenwhoserve it, and thenabandonsthem.”Heissuedawarning:

Thefriendsofdemocracyshouldkeeptheireyesanxiouslyfixedinthisdirection; for if ever a permanent inequality of conditions and

aristocracyagainpenetrateintotheworld,itmaybepredictedthatthisisthechannelbywhichtheywillenter.

*1Infact,alltheNordicgovernmentsarecertifiednon-socialist-oppressors.AccordingtotheannualrankingofcountriesbytheconservativePropertyRightsAlliance,aspinoffofGroverNorquist’sAmericansforTaxReform,Finlandranksfirst,Swedenseventh,Norwayeighth,theUnitedStatestwelfth,andDenmarkthirteenth.AndontheHeritageFoundation’sIndexofEconomicFreedom,alltheNordicsandtheUnitedStatesareclusteredbetweeneleventhandtwentieth.*2Bytheway,evencontrollingforotherexceptionalU.S.factslikeobesityandguns,peopleinotherrichcountriesarelivinglongerthanAmericans,andlifeexpectancyfornonwhiteAmericanshasbeenincreasingfasterthanforwhites.

ThisbookissubtitledARecentHistory.SofarI’vefocusedmainlyonthelastfifty years, and on how we let a powerful clique and its enablers turn aquintessentiallymodernandreasonablyfairpoliticaleconomythatledtheworldintoafreakishlyold-fashionedandunfairone.

Butwhatnow?WhathappensnexttotherulesofhowAmericansworkandearn a living and help (or ignore) one another, during the next few years andover thenext fewdecades?Howshould theUnitedStatesbe fixed?Will itbefixed?Canitbefixed?

This final section looks forward, anxiously and hopefully.The continuingtransformationofwork(andlife)byartificialintelligenceandautomationisanabsolute given, for better or worse—potentially much better or much worse,dependingonwhetherwechoosetousetechnologyforthebenefitofmostofusoronlyafewofus.Technologicalprogressandsocialprogressaretwodifferentthings.Asalways,howoriftheformerleadstothelatterwillbeforpoliticsto

determine.WhenIstartedthisbook,Iworriedthatmystrongsensethatwe’darrivedat

a historic crossroads equivalent to the 1770s or 1860s or 1930s, America’sFourthTesting,mightseemlikeastretch.Bytheend,Iwasnolongerconcernedabout overstatement, particularly after the pandemic arrived—a new virusrequiring new behaviors and policies, work and life suddenlymore than everdependentontheInternet,governmentfailurebyleadersideologicallydedicatedto undermining government, maximizing corporate profit at all costs, and anAmerican hyperindividualism whipped up by the right that makes a hugecommonproblemhardertosolve.

Soherewe are, abruptly shoved into a newage, no longermerelyon thethresholdofastrangefuturebutaltogetherinit.Theyear2020willbecomeoneof those dates ripe with significance, like 1945 or 1914.We don’t yet knowexactly what era is ending and what is beginning. I think we could preventAmericafromturningintoapermanentdystopianhorrorshow.Wemightevenmanagetomakeitbetterthanitwasbeforetheevilgeniusesdestroyedsomuch.Eitherway,we’reneverreturningtonormal,lifejustthewayiteverwas.Andthefutureisgoingtobeoutlandish.

S cholars and journalists and politicians debate whether, after 1980,automation or overseas manufacturing was more responsible for eliminatingU.S. jobs and keeping wages lower. It’s certainly easier psychologically andpolitically to blame foreignworkers (and immigrants) and foreign trade dealsthan to blame computers and othermachines.But the question is nowmostlyacademic.

Startinginthe1990s,technologyandglobalizationworkedasakindofjob-killing tag team.When cheaper foreign goods came flooding into the UnitedStates, one way U.S. manufacturers lowered their costs to compete was byautomating,buttheInternetalsomadeforeigntradeandoverseasmanufacturingmucheasier.Inanycase, thelarge-scalereplacementofU.S.workersandjobswithcheaperworkersabroadessentiallyfinishedadecadeago,whenthefractionofAmericansworking in factoriesdroppedbelow10percent and forpracticalpurposestherewerehardlyanymorejobstooffshore.Likewise,startinginthe1990s,white-collarworkwasmovedoverseas(suchascustomerservicejobsincallcenters)butalsoincreasinglyrenderedobsoletebydigitaltechnology,asthecareers for Americans in music and newspapers and travel booking and taxpreparation and video rental and other retail businesses came to dead ends.Economic efficiencywins, bywhatevermeans. In the first decade of the newcentury,another5millionU.S.manufacturingjobswentpffffteventhoughmorestuff was actually being manufactured in the United States. Unlike the waythings were set up before the 1980s, all that increasing efficiency and

productivitybenefitedinvestorsandhigh-endprofessionals,notmostworkers.In theearly1980s,when theoutsourcingandoffshoringofAmerican jobs

had barely started and those terms were just being coined, one esteemedeconomistsuggestedthatthiseconomicdislocationwouldbeatemporaryphase.But he didn’tmean in a goodway. Back then, Chinese factoryworkerswerepaid the equivalent of two dollars a day. As China and other developingcountries developed and started paying higher wages, he predicted, theautomationofmanufacturingwouldaccelerate,meaningthatworkwould“tendto move back to the advanced industrialized countries.” And so it is severaldecades later, now that the average Chinese manufacturing worker makes$11,000 a year, approaching theU.S.minimumwage. For now, there are stillcheaper workers in poorer countries. But as the cost of overseas labor keepscatchingupwith(stagnant)U.S.wages,thelogicofefficiencydictatesthenextphase:justasAmericanworkerswerereplacedbyforeignworkerswhocouldbepaidlessandtreatedworse,nowforeignworkerswillbereplacedbyunfeeling,uncomplainingmachines.

Wassily Leontief was stunningly prescient in that 1983 paper about thefutureoftechnologyandwork,whichhewrotetenyearsafterhewontheNobelPrizeforeconomics.*1Backin1949,themiddle-agedLeontiefhadstartedusingone of the earliest computers for his research at Harvard. While early“computerizationandautomation”hadhelpedincreasewagesand“labor’stotalshare in thenational income,”hewrote in1983,hepredicted thatbefore longthose same forces “are likely to begin to operate in the opposite direction”—whichwasexactlywhatproceededtohappen.

Backintheearly1980s,theshareoftheU.S.economydevotedtoprovidingservicesratherthanmaking(orminingorgrowing)physicalthingswasstilljusta bit more than half, but “after 60, 70, or even 90 percent of total output isprovidedbyserviceindustries”—it’snowhitting80percent—Leontiefpredictedthat “continued computerization and automation will ultimately prevail” andpushdownwagesforserviceworkersaswellasmanufacturingworkers.Andsoit has. What’s more, because “any worker who now performs his task byfollowingspecificinstructionscan,inprinciple,bereplacedbyamachine,”thatwas bound to happen and accelerate, so “labor will become less and lessimportant.Idonotseethatthenewindustriescanemployeverybodywhowantsajob.”

For a few years, Leontief had refrained from publicly sharing his dark

analogyabouttheinevitableprocessheforesaw,butwiththemasscomputeragearriving—10 percent of Americans owned a PC and 1 percent were on theInternet in1983—hedecidedoncandor.Whathappened tohorses inAmericaduringhislifetime,hewrote,whenwewentfromowning26millionin1915toowning3million in1960,wouldhappen tohumanworkers asweentered thetwenty-firstcentury.“Areductionofoatsrationsallocatedtohorsescoulddelaytheirreplacementbytractors,”hesaidofhorsesintheolddays.“Butinthecaseofhumanrations,orwages,”thatwouldwork“onlyintheshortrun”because

inthelongrun,technologywillalwaysbeintroduced,whetherquicklyor slowly….Had horses had an opportunity to vote and join theRepublican or Democratic Party, that solution would’ve been verydifferent from what it actually was. Had we for instance wished tomaintainthe20millionunemployedhorsesbyputtingthemtopasturewecertainlycould’vedoneso.

Thepropositionthat theworkerwholoseshis jobinoneindustrywillnecessarilybeabletofindemployment,possiblyafterappropriateretraining, in some other industry, is as invalid as would be theassertion that horses who lost their jobs in transportation andagriculture could necessarily have been put to another economicallyproductiveuse.

In the thirty-sevenyearssinceLeontiefwrote that,ofcourse,Americahasindeed put increasingly uneconomic workers on short rations. And althoughthere’s still a lot of optimistic, hand-waving conventional wisdom about thefutureofjobsinthenewAIera,anationalconversationaboutputtingworkersouttopasturewithuniversalbasicincomeshasbegun.

Automation and computers replace human workers in all kinds of ways,some more obvious and visible than others, but the process of actual robotstakingoverthejobsofAmericansisstillinitsearlydays.MaybeamillionU.S.workers—machinistsandweldersand the like—havealreadybeenreplacedbyrobots. But beyond those direct replacements of skilled workers, two MITeconomists recently found thatduring the firstwaveof industrial robots in the1990sand2000s,eachrobot installed led to the lossofahalf-dozen jobs.Thecostof robots is dropping, and thenumber installed inAmerican factorieshasbeendoublingeveryfewyearsandhaspassedaquarter-million.Butour“robot

density”isstilllessthanathirdofSouthKorea’sandisalsomuchlessthanthatofJapanand theadvancedEuropeancountries.At theendof2019, therewerestill millions of U.S. manufacturing jobs waiting to be automated out ofexistencebyrobotsandothermachines.

Theeasy summaryofwhat’safflictedourpolitical economy the last fortyyearsiseconomicinequalityandinsecurity,fortunatepeopleatandnearthetopgettingpaidmoreandmoreandremaininghighlyemployable,butnosuchluckfor almost everyone else. Underlying the growing differences in income andwealthandsecurityaremorecomplicatedchangesinhowAmericansareabletoearnlivings.

The central problem is that since the 1980s, jobs with good salaries andbenefits in the great big middle, both blue-collar and white-collar—machineoperators, mechanics, clerks, assistants, bookkeepers, salespeople—havedisappearedeverfaster.And90percentofthosejobs,accordingtoanewstudy,disappeared right after recessions, each recession the prod or pretext forbusinessesnotonly toget ridof somecurrentemployeesbutalso toeliminatethosepositionspermanently.(Watchforthattohappenagainin2021and2022.)Thatsloughingofroutinejobshasbeenacceleratedbycomputers.Theimpactofautomationsofarhasn’tmuchreducedtheoverallnumberofAmericanjobs,butithasforcedredundantmillions intoworse jobs—jobs that requirefewerskillsand pay less, like a person I knowwho went from being a skilled printer toworking as a shopping cart wrangler. According to a 2018 study by theMITtechnologyandlaboreconomistDavidAutor,“overthelast40years,jobshavefallen in every single industry that introduced technologies to enhanceproductivity,”and“automationpushesworkerstothelessproductivepartsoftheeconomy.” That is, they’re pushed out of well-paid factory and officeoccupationsintoworkthatcan’t(yet)easilybeautomated,jobssuchassecurityguardsandhospitalorderlies,waitersatOutbackandcartguysatHomeDepot.

Meanwhile, however, at each end of the economic ladder, the six-figuremarketingexecutivesandengineersandseven-figurebankersandtheirfull-timeandpart-timeservantsandattendants,stillhaveworkaplentyandgetincreasesinpay.This iswhatpeoplemeanwhen they talk about the jobmarket havingbeen“hollowedout.”

Inparticular theautomators, the college-educatedworkforce employedbydigital companies that didn’t exist until recently, are doing fabulously. AtFacebook,Google,Netflix,andthirtyorthirty-fiveothercompaniesamongthe

largest five hundred corporations, themedian pay is now over $150,000. Theproblemforeveryoneelsewhoneedsajobisthatmostdigitalcompaniesaresophenomenallyefficienttheydon’trequiremanyworkers.

IwasamazedwhenIcomparedtherevenuesandworkforcesoftwoofthebiggest companieswith those of two of their goliath predecessors back in theday,GeneralMotorsandAT&T.In1962,whenGMmademostofthecarssoldinAmerica andAT&Tmanufactured and operated all the telephones, the twotogether employed more than a million people, one out of sixty Americanworkers, each of whom generated revenues for the companies equivalent to$170,000.TodayAppleandGooglehaverevenuesandprofitmarginstwiceashighasGMandAT&Thadin1962,buttogetheremployonlyaquarter-millionpeople, just one out of six hundred American workers. Thus those newercompanies, in constant dollars, collect twelve times as much revenue peremployee,andtheyearntwentytimesasmuchprofitinall.ThemarketvalueofApple,Google,Facebook,andMicrosoft combined isnearly10percentof thevalueofallpubliccompanies,yetthosefouremployonlyasmallfractionofonepercentoftheU.S.workforce.

Some commentators and scholars have ventured a glass-half-full take onthese new small butwell-paid digitalworkforces—that the affluent employeeseffectively create lots of jobs by living so lifestylishly. According to oneestimate,eachjobatatechcompanyresultsinfiveadditionaljobselsewhere—twofinancialadvisersorarchitectsortherapistsandthelike,plusthreenanniesandhousekeepers andgardeners anddogwalkers.There are nowmore than4millionoftheseso-called“wealthworkers”intheUnitedStates,whichdoesn’teven include the additionalmillions of drivers orwaiters and bartenderswho,exceptduringpandemics,alsoservicethewell-to-do.

It’sanotherwayourpoliticaleconomyandsocietyhavebeendraggedbackin time.Notonlyhavewe let economic inequality and insecurity revert to thelevelsofacenturyago,we’vealsoshrunkthemiddleclassdownto thesize itwas in theolddaysand reconstitutedavestigialcaste tomake lifeeveneasierforthewell-to-do.AcenturyafteritbegandisappearinginAmerica,theservantclassisback.

—

Speaking ofGoogle, as a result of Europe’s successful adoption of good old-fashioned mid-twentieth-century-U.S.-style scrutiny of big companies, the

antitrustenforcersoftheE.U.inthreeseparateactionsfrom2017to2019finedGoogle $9 billion for anticompetitive practices. If Google finally loses itsappealsandpaysallthosefines,itwouldbeaserioushitforthecompany,aboutatenthofitsannualprofitsforthosethreeyears.

In America, meanwhile, we’ve only just begun imagining howwemightmakeGoogleandtheothernewdigitalmammothsservetheU.S.publicinterest.Google and Facebook are exactly the kinds of monopolistic enterprises forwhich America began enacting antitrust laws at the end of the nineteenthcentury.

But as I’ve said, over the last half-century, antitrust violations wereredefinedtomeanonlycorporateactionsspecificallyintendedtoraisepricesforconsumers.MostofGoogle’sbillionsofuserspaynothingdirectlytoGoogleforits services (although likeme,millions have surrendered to themonopoly andrecently started paying twenty-five dollars a year for extra email storage). SoGoogle’s economic power is a new, befuddling kind—everyone is a user, buttheir real paying customers are all other businesses. According to the legalscholar Eric Posner and the economist Glen Weyl, both free-marketsuperenthusiasts, “antitrust authorities are accustomed to worrying aboutcompetition [only] within existing, well-defined, and easily measurablemarkets”—that is,notwithinthenewmarketofdigitaladvertising,whichnowconstitutesmostadvertising.Backinthepre-Internet,pre-cableday,theclosestequivalentswerethethree(highlyregulated)TVnetworks,whichtogethertookinmaybe12percentofallU.S.adspending.GoogleandFacebookgetalmosttwo-thirdsofalldigitaladrevenue,whichiswhythosetwocompaniesaloneareworth$1.5trillion.

Ourantitrustauthoritieshavegottenoutofthehabitofbeingaggressive.Asithappens,thelastepicantitrustcasewasonebroughttwenty-twoyearsagotostop the newest computer monopolist at the time from crushing smallercompetitorsinitsquesttodominatethesuddenlycommercializingInternet.

In the months right after the government filed that antitrust case,UnitedStatesv.Microsoft,MicrosoftandthetinyMenloParkstart-upGooglehadbothlaunchedsearchengines,Amazonannounceditwouldstartsellingthingsotherthanbooks—andCharlesKoch’s libertarianCatoInstituteheldaconferenceinSan Jose called “Washington, D.C., vs. Silicon Valley.” Eighty-six-year-oldMiltonFriedmanwasafeaturedspeaker.

“WhenIstartedinthisbusiness,”Friedmantoldtheattendees,“asabeliever

in competition, I was a great supporter of antitrust laws. I thought enforcingthem was one of the few desirable things that the government could do topromotemore competition.” But Friedman said his “views about the antitrustlawshavechangedgreatlyovertime”because,heclaimed,thegovernmenthadnever enforced them aggressively enough. So disingenuous, and so typical oflibertarianswhoreallydon’tbelieveincompetitionasmuchasindisapprovingofgovernmentandlettingbigbusinesshaveitsway.“Ihavegraduallycometotheconclusionthatantitrustlawsdofarmoreharmthangoodandthatwewouldbebetteroffifwedidn’thavethematall,ifwecouldgetridofthem.”

Then Friedman turned to the pending federal case whose outcomemeanteverythingtotheventurecapitalistsandentrepreneursinthataudiencein1998.MostandpossiblyallofthemwererootingforMicrosofttolose.

Isitreallyintheself-interestofSiliconValleytosetthegovernmentonMicrosoft?Yourindustry,thecomputerindustry,movessomuchmorerapidly than the legal process, that by the time this suit is over,whoknowswhattheshapeoftheindustrywillbe.Hereagainisacasethatseems to me to illustrate the suicidal impulse of the businesscommunity.

ThreedecadesafterhisFriedmanDoctrinecondemneddecentexecutivesforindulginga“suicidal impulse”bypledging theircompanieswould try to servethe public good, he was still at it: businesspeople who were on the side offairness, whether voluntary or required by government, were by definitionenemiesofcapitalism.Infact,thatMicrosoftcasedidnotdragontoolong—in2001thenewRepublicanadministrationsettledit.Thecompanygottokeepitshuge existing software monopolies (operating systems, word processing,spreadsheets), but it was required to refrain from killing off rival Internetbrowsersandotheronlinecompetitors.

Thanks to that timely government intervention at the turn of this century,Internet start-ups flourished freely.MSNSearch and its successorBing didn’tcrushitssuperiorrivalGoogle,andMicrosoft’spartnerMySpacedidn’tcrushitssuperiorrivalFacebook.Andyetthankstothegovernment’spermissive,hands-off attitude after that and ever since, Google and Facebook have becomeanticompetitivemonopolies farmore ubiquitous,momentous, unorthodox, andproblematicthanMicrosoftevergottobe.

The thing is, while the premise of capitalism is that fresh competitionalwaysdrivesinnovationwhichdrivesendlesscreativedestruction,thelastthinga successful entrenched capitalist wants is innovative competition that mightmakehisbusiness thenextonecreativelydestroyed. Inorder tomaintain theirmonopolies and absolute market power, Google and Facebook buy up theircompetitors and potential competitors, the earlier the better. Google acquiredYouTubewhenitwasonlyayearold,andsince2010ithasboughtsomeothercompany every month, on average. Consider Google’s history with onecompetitoroverthelastdecade:AtfirstitpaidYelptofeatureitsreviews,thentried but failed to acquire the company. Then it swipedYelp’s content for itsownlistingsuntilitagreedwithfederalregulatorstostop—butthen,accordingto Yelp, it resumed its systematic thievery. The government gave a pass toFacebooktobuyInstagramandWhatsAppinthe2010s,whichwasasifthey’dletCBSbuyNBCandABC in the1940s.The severalFacebook socialmediabrandshavefivetimesasmanyAmericanusersasthebiggestplatformitdoesn’town,Twitter.Googledoesmore than90percentofall Internet searches, fortytimes as many as its closest competitor. As far as venture capitalists areconcerned, digital start-ups looking to compete with the Internet colossi, nomatterhowamazingtheirnewtechnologyorserviceorvision,ultimatelyhavetwoalternatives: tobeacquiredbyGoogleorFacebook,or tobedestroyedbyGoogleorFacebook.Ifthelatterseemslikelier—beinginthe“killzone,”intheValleytermofart—theVCstendnottoinvestinthefirstplace.

So now Google and Facebook occupy a dreamy capitalist nirvana,previouslyunimaginable,goodfor thembutnotultimatelyfor therestofusorfor capitalism. They are utilities, but unlike their forerunners—naturalmonopolieslikewater,gas,andelectriccompanies—they’recompletelyprivateas well as almost entirely unregulated, and the markets they monopolize arenational(andglobal).Stillmoreremarkably,GoogleandFacebookarealsoad-supportedmediacompanies thatarevastly largerandmoreprofitable thananymedia company ever. Like broadcasters in the last century and most mediacompanies today, they provide things to viewers and listeners and readers forfree—but unlike other such companies, they’re allowed to disclaim allresponsibilityforwhat theypublishandactuallygetmostofwhat theypublishforfreethemselves.*2

—

Thatis,for“free,”becausesomebodyisalwayspaying.“On the one hand,” the great countercultural and early-computer-world

figure Stewart Brand said on a stage in 1984 at a Marin County computerconferencehe’dorganized,

informationwants tobeexpensive,because it’ssovaluable.Therightinformationintherightplacejustchangesyourlife.Ontheotherhand,informationwantstobefree,becausethecostofgettingitoutisgettinglower and lower all the time. So you have these two fighting againsteachother.

Itwasabrilliantinsight,atatimewhenalmostnobodyexceptafewgeeksevenknewoftheInternet.ButtheenduringtakeawayfromBrand’stalkwasjustthefive-wordmeme,Informationwantstobefree.Itwasswiftlyturnedfromalovelyphilosophical idea intoautopiandemand,and then,as thewholeworldwentonline,auniversal literalexpectation thatnobodyshouldhave topay forinformation,ortoreadorwatchorlistentoanythingonacomputerscreen.

Information does indeed want to be free, thanks to computers and theInternet and software.But informationstartedwanting tobe free fivehundredyears ago, when an early machine, the printing press, made cheap bookspossible, then made newspapers possible. Three hundred years later, steam-powered printing presses made much cheaper books and cheaper newspaperspossible, and two hundred years after that, with digital technology, the costapproachedzero,defactofree.

Sothelargertruthhereisthatmachineswantinformationtobefree.But of course, it wasn’t just printing and information. The industrial

revolutionwas about poweredmachines enabling people to producemore andmore thingsmore quickly and cheaply, over the last two centuries enabling aremarkable, continual increase in prosperity (and,with luck and politicalwill,socialprogress).

So if information wants to be free, that’s just a particular digital-ageinstance ofmachines want everything to be free—including the cost of everykindofwork.Machineswanttodoallthejobs.

Inthiscentury,ascomputersandAIbecomeevermorepowerfulandevercheaper, we’re seeing machines get ever closer to their goal, so to speak, ofdoingallthejobs.We’vealreadymovedfromtheexurbstotheoutskirtsofthat

science fiction destination. So the 64-quadrillion-dollar question now is, whathappens after the machines’ mission is accomplished, and most of us areeconomicallyredundant?Whatisthemachines’ultimategoal?Dotheywanttoenrich all of us, or to immiseratemost of us? To be our willing slaves or toenslaveus?Ofcourse,itisn’tactuallyuptothemachines.It’suptous.

*1Throughouthislife,Leontiefwasaheadofhistime,notjustintellectually.HeemigratedfromtheUSSRtoGermanyrightbeforeStalintookover,andfromGermanytotheUnitedStatesrightbeforeHitlertookover.In1975,atsixty-nine,hebecameso“disenchanted”withtheHarvardeconomicsdepartment’spaucityoffemaleandnonwhiteandleftistfaculty—althoughhewasnoneofthose—thathequitandmovedtoNewYorkUniversity.*2AlthoughAmazonisInternet-basedandverypowerful,itisnotanewcorporatespecieslikeGoogleandFacebook.Antitrustenforcersoftheoldschool—andmaybethoseofanewschoolopeningsoon—wouldhavekeptcompanieslikeAmazon(andAppleandNetflix)frommakingproductsthatcompeteddirectlywiththeonesmadebyothercompaniesthattheyonlydistributed.ButAmazonreallyjustdoeswhatSearsstarteddoinginthe1890s(andWalmartinthe1960s),exceptwithanelectronicmail-ordercatalog.Fornow,onlineremainsasmallfractionofallretail,andevenAmazon’sshareofonlineretail,around40percent,isafractionofGoogle’sandFacebook’smarketsharesinsearchandsocialmediaanddigitaladvertising.

“F orgenerationsthey’vebeenbuiltuptoworshipcompetitionandthemarket, productivity and economic usefulness, and the envy of their fellowmen,”acharacterinthesuperautomatedfuturesaysabouthisfellowAmericansinKurtVonnegut’s1952novelPlayerPiano. “Andboom! It’s all yankedoutfromunderthem.Theycan’tparticipate,can’tbeusefulanymore.Theirwholeculture’sbeenshottohell.”

AI-poweredtechnologieswillsurelycontinuetoreducethenumberofjobsit makes economic sense for Americans to do; the question is how fast thathappens. Predicting the impacts of technology on work and prosperity andgeneralcontentmentisn’tastrictlytechnologicalquestion.It’saninterlacedsetof technological and economic and political and cultural questions—becauseyes, our economy, like every economy, is a political economy, continuallyshaped both by the available technologies and by the changing political andculturalclimate.

Duringthelast twentyyears,forinstance,newtechnologyenabledbutdidnot require a global digital-information duopoly consisting of Google andFacebook.As consumers and citizens, we and our governments let it happen.Over the next twenty years, wewill, for instance, choose at what rate and towhatextentdriverlessvehicleseliminate the jobsof themillionsofAmericanswho drive trucks and cars and other vehicles for a living.How technology isused and whose well-being it improves and wealth it increases doesn’t justhappen, like acts of God. Societies choose. Might the experiences of 2020

transform Americans’ understanding of what government is for, as the GreatDepression and New Deal did?Won’t social distancing and fear of the nextnovelvirusacceleratetheautomationandgeneraldigitalizationofwork?

Inanyevent,whatweknowisthatgoingforward,“thechoiceisn’tbetweenautomation and non-automation,” says Erik Brynjolfsson, one of the MITeconomistsfocusedondigitaltechnologyandwork.“It’sbetweenwhetheryouusethetechnologyinawaythatcreatessharedprosperity,ormoreconcentrationofwealth.”Wewillpresumablyhaveaneconomythatkeepsgrowingoverall—thatcouldstartgrowingfaster,maybemuchfaster—withpeopledoinglessandless of the necessary work. If and when “machines make human laborsuperfluous,wewouldhavevastaggregatewealth,” theMITeconomistDavidAutorhaswritten,“butaseriouschallengeindeterminingwhoownsitandhowtoshareit.Ourchiefeconomicproblemwillbeoneofdistribution,notscarcity.”

SojustwhereAmericansocietywindsuponthespectrumbetweendystopiaand utopia is on us, on howwe adapt politically and culturally starting now.We’lleitherallowthefundamentalchoicestobemadeprivately,byandforbigbusiness and the rich, or else we’ll struggle our way through to progress,adaptingoureconomicsystemtooptimizethebounty—thingsandservicesandfreetime—forallAmericans.

Here’sthebasicmenu,withfiveoptionsrangingfromworsttobadtobettertobest.

POSSIBLEAMERICANFUTURESwinnerstakeall sharethewealth

familiartechnology&currentgrowth BAD BETTERliketheNordicsnoworWORSElikeVenezuelanow

AI-boostedprosperity WORSE BEST

After recovering from the Pandemic Recession (or Depression), if theUnitedStatesdriftsalongasithadbeen,sometimesgrowing2percentormoreayear,nogame-changingnewindustrialtechnologies,nofundamentalchangesinthepoliticaleconomy,wewillgetthefutureofthetop-leftquadrant—familiar,grim, bad, like Minority Report, or Pottersville with Ernie the cab driver

replacedbyaself-drivingUber.The option on the uppermost right is the necessary—but immensely

challenging—optionforamuchbetterfuture.Wecontinuewiththesameslow-to-moderateeconomicgrowththatwe(andtherestofthedevelopedworld)havehadfordecades,butwere-reengineeroureconomytomakeitmore like thoseelsewhere in the developed world—that is, restoring or improving upon thefairer sharing of national wealth we had in America before 1980, emulatingCanadaandtheNordics.

Butthenthere’stheother,probablyequallyplausible,butterribleoptioninthat same corner: if we fail to reform our government and economy alongsensibledemocraticlines,wemightwellexperiencealarge-scalepopulistspasminvolvingpitchforksandhangmannooses,asthatAIGCEOputit,Americathefirstlargemodernsocietytogofromfullydevelopedtofailing.

Another possible awfulAmerican future is the lower-left quadrant,wherequantum computing and robots and miraculous nanotech molecular assemblyare doing andmaking nearly everything, but inequality of income andwealthandpowerbecomeevenmoreextremethan theyarenow—asmall rulingelitepresiding over what the historian and futurist Yuval Noah Harari calls the“uselessclass,”what theSiliconValleyentrepreneurand investorMartinFordcalls“digitalfeudalism,”Elysiumwithoutthatmovie’shappyending.

And finally, there’s the best of all plausible worlds—amazing machines,more than enough stuff that our new, optimal social democracydivides fairly,moreorlessEarthasonStarTrekorintheredemptivefinaleofWALL-E.

In1930—justafterthewordrobotwasinvented,justasAldousHuxleywasimagining the dystopia of Brave New World and just before H. G. WellsdepictedtheutopiaofTheShapeofThingstoCome—theirfriendJohnMaynardKeynessawtheeconomicfuture.*1“Wearebeingafflictedwithanewdisease,”he wrote in a speculative essay called “Economic Possibilities for OurGrandchildren,”adiseaseofwhich“readerswillhearagreatdealintheyearstocome—namely,technologicalunemployment.Thismeansunemploymentduetoourdiscoveryofmeansofeconomizingtheuseoflaboroutrunningthepaceatwhichwe can find newuses for labor.” Itwould become a bigger and biggerproblem,thefounderofmacroeconomicswarned,andinaboutacentury—thatis, around2030—itwould finally require amajor rethink of howweorganizeeconomies.

AsI’vesaid,plentyofintelligentpeopletodayhavetakenitonfaiththatas

the postindustrial age keeps rolling, the problem of disappearing jobs willsomehow sort itself out. They point out that good new jobs replaced the onesrenderedeconomicallymootbysteaminthe1800s,andgoodnewjobsreplacedtheones rendered economicallymoot formuchof the1900s, andnowhistorywill repeat,because freemarkets, the invisiblehand,well-payingnew jobswecan’tevenimagine,blahblahblahblahblah.It’sprettytothinkso,butitseemsunlikely. I’venotseenasingleplausiblesame-as-it-ever-wasscenariowith theparticularsofhow thatmighthappen this time, absent fundamental changes inour political economy. Nor do Americans buy it: a 2017 Pew survey askedpeople if, in a near futurewhere “robots and computers performmany of thejobs currently done by humans,” they thought that “the economy will createmanynew,better-payinghuman jobs,”andby75 to25percent they said theydidnot.

The expert consensus is striking.Among the severalMIT professorswholeadthefieldstudyingtheeffectsofautomationonworkisDaronAcemoglu,aneconomist and political historian. “In the standard economic canon,” he saidrecently, “theproposition thatyoucan increaseproductivity andharm labor isbunkum.” But “this time is different,” he says, because “unlike previoustransformationsoftheeconomy,thedemandforlaborisnotrisingfastenough.”

“Exponential progress is nowpushingus toward the endgame”of the lasttwocenturies,writesMartinFordinTheRiseoftheRobots:TechnologyandtheThreatofaJoblessFuture.“Emerging industrieswill rarely, ifever,behighlylabor-intensive.Inotherwords,theeconomyislikelyonapathtowardatippingpointwherejobcreationwillbegintofallconsistentlyshortofwhatisrequiredtofullyemploytheworkforce.”

Even Larry Summers—supermainstream economist, enthusiastic WallStreetderegulatorinthe1990s,formertreasurysecretary,ultimateneoliberal—has thought for awhile thatwe’ve entered awhole new zone, not the end ofeconomic history but definitely the beginning of an unprecedented economicfuture.When he delivered the annualMartin Feldstein Lecture atHarvard foreconomists in 2013, he called his talk “Economic Possibilities for OurChildren,”playingoffKeynes’s1930essay.“WhenIwasanMITundergraduateintheearly1970s,”hesaid,every

economicsstudentwasexposedtothedebateaboutautomation.Therewere two factions in those debates….The stupid people thought that

automationwasgoing tomake all the jobsgo away and therewasn’tgoingtobeanyworktodo.Andthesmartpeopleunderstoodthatwhenmorewas produced, therewould bemore income and therefore therewouldbemoredemand. Itwasn’t possible that all the jobswouldgoaway, so automation was a blessing….I’m not so completely certainnow.

ToSummers,“theprodigiouschange”inthepoliticaleconomywroughtbycomputers and the way we use them looks “qualitatively different from pasttechnological change.”Fromhereonout, “theeconomicchallengewillnotbeproducing enough. Itwill be providing enough good jobs.”And soon “itmaywell be that some categories of labor will not be able to earn a subsistenceincome.”

One of his key facts referred to the fraction of American men betweentwenty-fiveandfifty-four,primeworkingage,whoweren’tdoingpaidworkandweren’t looking forwork—a percentage at the beginning of 2020 about threetimes as large as itwaswhen those fifty-four-year-oldswere born.Before thetroubles of 2020, the fraction of men without college degrees who weren’tworking or looking forwork had doubled just since the 1990s, to 20 percent.Half said they had some disabling condition, one of themost common being“difficultyconcentrating,remembering,ormakingdecisions.”

In2019about7millionprime-ageAmericanmenhadoptedoutofthelaborforce. Only a third of them were among the nearly 9 million young andnonelderly former workers getting monthly disability payments from thegovernment. The number ofworkers on disability tripled in just two decades,fromtheearly1990stotheearly2010s,especiallyamongthemiddle-aged,notas a resultof looser eligibility rulesbut simply, it seems,because there are sofewjobsforpeoplewhohaveneitheryouthnoreducationnoranyotherwaytomakeendsmeetuntil theyhitsixty-sixandcancollectregularSocialSecurity.Sodisabledor“disabled,”theyreceive$15,000ayearonaverage,theequivalentofafull-timeminimum-wagejob.OfalltheAmericansintheirfiftieswhohaveonly a high school degree or not even that, between 10 and 20 percent nowreceivethesenonuniversalbasicincomes.Thegovernmentofficiallycallsthemdisability“awards.”*2Notcoincidentally,thisisthesameAmericancohortwho,overthesameperiodoftime,startedkillingthemselvesmorethaneverbefore,deliberately and otherwise, with liquor, drugs, guns. Among white people in

their forties and fifties without college degrees, such “deaths of despair”increasedby150percentfrom2000to2017.

Lately, the people running big corporations have been admitting, almostaccidentally, that the shape of things to come includes next to noworkers. “Ithinkthelonger-termsolutiontoaddressingalotoftheselaborcosts,”thechieffinancialofficerofNikesaidin2013,justbeforeheretiredandjoinedtheboardof theSanFrancisco techcompanyDropbox,“has reallybeenengineering thelabor out of the product, and that really is with technology and innovation”(emphasisadded).

A few years ago the founder and operator of the annual weeklongconvocationofmastersoftheuniverseknownastheWorldEconomicForuminDavos,Switzerland,startedusing“theFourthIndustrialRevolution”todescribewhat’shappening.Itstuck,andin2019atDavositwasamaintopicforthethreethousand CEOs and bankers (and government officials and consultants andacademicsand journalists), a thirdof themAmerican.The technology reporterKevinRoosewrote a bracingly honest account inTheNewYork Times called“The Hidden Automation Agenda of the Davos Elite.” In the public paneldiscussionsandon-the-recordinterviews,hewrote,

executives wring their hands over the negative consequences thatartificial intelligenceandautomationcouldhave forworkers….But inprivatesettings…theseexecutivestelladifferentstory:Theyareracingto automate their ownwork forces to stay ahead of the competition,withlittleregardfortheimpactonworkers….Theycravethefatprofitmarginsautomationcandeliver,andtheyseeA.I.asagoldentickettosavings,perhapsbylettingthemwhittledepartmentswiththousandsofworkersdowntojustafewdozen.

The president of Infosys, a big global technology services and consultingcompany, told Roose at Davos that their corporate clients used to have“incremental,5to10percentgoalsinreducingtheirworkforce,”inotherwordsshrinking them by half or more over the next decade. “Now they’re saying”abouttheirnearfutures,“ ‘Whycan’twedoitwith1percentofthepeoplewehave?’ ”

There’s a whole new subdiscipline of technologists and economistspredictinganddebatingwhatworkcanorcan’tbeautomatedpartlyorentirely

and, depending on the cost,what jobswill orwon’t be donemainly by smartmachinesbywhatyearinthetwenty-firstcentury.

Evendiscounting fordigitalenthusiasts’habitualoveroptimism, the recentrateofprogressinAIandroboticshasbeenastounding.Theexponentialgrowthof digital data and cheapening of computer power reached a point in the lastdecade that allowed so-called deep learning on so-called neural networks—extremely smart machines—to achieve remarkable technical feat afterremarkabletechnicalfeat.AcommontaskincreatingAIsoftware,forinstance,is trainingasystemto recognizeandclassifymillionsof images. In the fallof2017thattasktypicallytookengineersthreehourstodo,butbythesummerof2019ittookonlyeighty-eightsecondsandthuscost99percentless.AIcannowdo decent translations, carry on complicated conversations, beat anyone atGoand themostchallengingvideogames, recognizefacesasaccuratelyaspeoplecan, and diagnose some cancers better than doctors. To me one of the mostinteresting recent accomplishments is anAI that designed newAI software aswellasorbetterthanengineerscoulddesignit.AllofthatiswhythefundingofAIstart-upsquadrupledjustbetween2015and2018,to$40billion,andwhythetotalinvestmentputintoinAIbusinessesin2019reached$70billion.

Thedebateamongtechnologists tends tofocusonwhenthey’llmanage tocreate artificial general intelligence,machines able to figure out any problemand carry out any cognitive task that a person can. People at Facebook andGoogle and Stanford and elsewhere say they’ll do it by the mid-2020s, thatthey’llthenhavemachines“betterthanhumanlevelatalloftheprimaryhumansenses”and“generalcognition”(Zuckerberg),true“human-levelA.I.”(theheadofGoogle’sDeepMind).Thestateoftheartrightnowis“narrowAI”or“weakAI,”softwarethatcanmerelybeathumanchampionsatJeopardyorpredicttheshapesofcellularproteinsordrivecars.Butmost jobsarefairly“narrow”anddon’t require a lot of high-level creative problem-solving. I used to hirefreelancetranscribersandtranslators,butinthelastfewyearsI’vereplacedthemwith software that does thework a little roughlybutwell enough to servemyneeds. The first industrial revolution took off around 1800 when steamtechnology improved from impractical to okay after JamesWatt designed anenginethatcaptured3percentoftheenergyofthecoalitburnedinsteadofhisforerunners’ 1 percent. (Two centuries later the giant steam engines that stillgeneratemostofourelectricitystilloperateat less than40percentefficiency.)Thegoodenoughbeatstheperfect.

Asforwhenandhowmanyparticularjobswillbetakenoverbymachines,

eitherdisembodiedAIor robots, theestimates rangewidely,butpre-pandemicmost predicted that between 15 and 30 percent of current jobs in the UnitedStatesandtherestofthedevelopedworldwillbeeliminatedduringthenexttentotwentyyears,withmanymore“atrisk.”

AsurveyconductedofDavoscelebrantsoftheFourthIndustrialRevolutiongivesamorefocusedsenseoftheremarkablespeedoftheriseofthemachinesintheimmediatefuture.TheDavosresearchersaskedtherelevantexecutivesatthreehundredbigcorporationsemploying15millionpeopleabouttheimpactofautomation on their companies’ work and workers. In 2018, machines weredoing29percentofalltheworkatallthosecompaniescombined,the“totaltaskhours”; just four years later, in 2022, the executives collectively forecast, itwouldbeupto42percent.Theyexpectedthateventhepartsofjobs“thathavethus far remained overwhelmingly human,” such as “communicating andinteracting,” “managing and advising,” and “reasoning and decisionmaking,”wouldgofromanaverageof20percentautomatedto29percentautomatedby2022. No wonder the executives at half those companies also said they wereplanningtoshrinktheirfull-timeworkforcesduringthosesamefouryears.TheDavos report euphemistically admitted that the survivors’ jobs would keepgetting iffier because, on top of accelerating automation, the companies weremaking a “significant shift in the quality, location, format and permanency ofnew roles”andwould“expand theiruseofcontractors”and“workers inmoreflexiblearrangements.”

The hopeful spin by some experts, even some scholars, has been that themachines will be our helpmates, not our replacements. Mostly. For the timebeing.ButMartinFord, theSiliconValley investor,saysbewareofassurancesthat the “jobs of the future will involve collaborating with the machines,”because “if you findyourselfworkingwith, or under the directionof, a smartsoftware system, it’s probably a pretty good bet that you are also training thesoftwaretoultimatelyreplaceyou.”TheauthorsofWhattoDoWhenMachinesDoEverything—threeexecutivesatthehugedigitalservicesandconsultingfirmCognizant,whosewholebusinessisaboutenablingcorporationstoshrinktheirworkforces—absurdlypromisethatwhilesomejobswill“be‘automatedaway’inthecomingyears…forthevastmajorityofprofessions,thenewmachinewillactuallyenhanceandprotectemployment.”

Walmart,whichemploysmoreAmericansbyfar thananyothercompany,leanshardonthatenhance-and-protectline.“Everyheroneedsasidekick,”saiditscute2019pressreleaseheadlined#SquadGoals,“andsomeofthebesthave

beenautomated.ThinkR2D2,OptimusPrimeandRobotfromLostinSpace.”Inabout half of its several thousand American supercenters Walmart had justinstalledthreethousandactualautonomousrobotworkers—onebreedcalledtheFASTUnloader takesmerchandise off trucks and sorts it, another perpetuallyroamsthestoreneateningshelvesandnotifyingtheFASTUnloaderwhichitemsaremissing, and a third cleans the floors. “Just likeWill Robinson and LukeSkywalker,havingtherightkindofsupporthelpsourassociatessucceedattheirjobs.”Ofcourse,theneweraofviraldiseasemighteliminatelotsofassociates’jobsmorequickly,becauserobotsdon’tgetsick,orsickencustomerseasily.

Walmart’s main competitor, Amazon, has been introducing machines toreplace its tens of thousands ofwarehouseworkerswho pack orders.Humanscanpack twoor three aminute, but the current robots can do ten or twelve aminute. Like Walmart, Amazon accentuates the positive: because the job iscrappy,turnoverishigh,soinsteadoflayingoffpackerstobringinmorerobots,thebossesweresaying,pre-pandemic,they’lljust“onedayrefrainfromrefillingpacking roles.” Similarly, a smallMassachusettsmanufacturer ofmedical andaerospace parts,Micron Products, suggests it did a favor for the employees itrecently replaced with robots. Yes, buying the robots made economic sense,because they cost only what the twenty-dollar-an-hour assembly-line workerswere paid every seven months, but—win-win—the head of businessdevelopment says “this was the worst job in the plant. They”—the peoplereplaced—“hadtoworkatafuriouspace.”

Fast-foodrestaurantsemployabout4millionAmericans,almosthalfagainasmanyastheydidadecadeago.Asleek,groovynewhamburgerplacecalledCreator,inSanFrancisco’sSoManeighborhood,hasvery,veryfewemployees,although Creator’s messaging is all hospitably first-person-plural. “Food iscommunal,” the website says. “We love hanging out at the store, creatingburgers.Ourspaceisyourspace;wewantyoutofeelathomeeatingherewithpeople you care about.” The six-dollar hamburgers, quite good, are madeentirelybyaroboticsystemthathasbeenindevelopmentforyears.Infact,therestaurant is actually just the public showroom of a Google Ventures–fundedtechnology company whose founder and CEO forthrightly admits that itsmission is not “to make employees more efficient” at the fast-food chains towhich they want to sell their technology, but rather “to completely obviatethem.”

Among those fast-food workers are some of the 3.4 million Americancashiers,who are officially distinct from the 4.1millionAmerican retail sales

workers—andobviouslythegreatmajorityofallofthemarereplaceablesoonerratherthanlaterbye-commerceandimprovedself-checkoutmachines,knowninthe industry as “semi-attended customer-activated terminals.” Starting now,retailchainswillhaveapublichealthargumentforreplacingworkersbehindthecounterswithmachines. Themost commonAmerican job, however, has beendriver—the 4 or 5million FedEx andUPS and tractor-trailer and bus drivers,and themaybe 2million taxi andUber and Lyft drivers. During this decade,autonomous vehicles will begin making the 6 or 7 million (potentiallyinfectious)peopledoingthosejobsredundantaswell.

That debate over whether to blame automation or cheap labor foreliminating U.S. jobs and suppressing wages is continuing to become moot,because robots are replacing foreign workers as well, both here and abroad.Starting in the 1990s, for instance,American customer service operatorswerereplacedbycheaperonesinIndiaandthePhilippinesandelsewhere—andnowthehumansabroadandin theUnitedStatesarebeingreplacedbyAIchatbots.The Taiwan-based company Foxconn is by far the largest manufacturer ofconsumerelectronicsonEarth—TVs,gamingconsoles,iPhones,iPads,Kindles—infactoriesalloverthedevelopingworld.AnditschairmansaidatDavosin2019 that Foxconn intended to replace 80 percent of its 1 million employeeswithrobotsduringthe2020s.

Backduring theperiodwhenAmericamassivelyoffshoredmanufacturingandotherjobstoFoxconnandotherforeigncompanies,wewerealsomassivelyonshoring workers from foreign countries to the United States by means ofimmigration.Wemorethandoubledtheforeign-bornfractionofourworkforcebetween1980and2007,whenitstoppedincreasing.

Takeagriculture.Three-quartersofthemillion-pluspeoplepaidtoworkonU.S.farmswereborninMexicoandcountriestoitssouth.Nowthattheinfluxof new immigrants hasmostly stopped and seems highly unlikely to increaseanytimesoon,there’supwardpressureonfarmworkers’wages,whichmeanstheeconomicsarguemorestronglyforreplacingfarmworkerswithmachines.AttheCaliforniacompanyTaylorFarms, the largest supplierof cutvegetables in theUnited States (and the world), robots already harvest most of the lettuce,cabbage,andcelery,becausetheycandoittwiceasfastaspeople.Soonrobotswillbepickingfruit,amoredelicateoperation.Forinstance,arobotmadebyacompany in Florida that can harvest eight acres of strawberries in a day, thework of thirty people, is just about good to go. And if farmers and growersbuying robotsmake themselves feel better because they’re relieving people of

tedious,backbreakinglabor,they’vegotapoint.

—

Machines want to do all our work.We’re letting them.We will keep lettingthem. And the right turn we made forty years ago has made our politicaleconomy and government particularly ill-equipped to deal with thetransformation.

Mostjobsprobablywon’tbecomesuperfluousforacoupleofdecades,butthat’s not the distant future unless you consider the 1990s or early 2000s thedistantpast.Ofhiscoinageuselessclassfortheeventualmajorityofhumankind,allthosewhomAIwillmakeeconomicallyobsolete,Hararisayshe

chosethisveryupsettingterm…tohighlightthefactthatwearetalkingaboutuselessfromtheviewpointoftheeconomicandpoliticalsystem,not fromamoralviewpoint….I’maware that thesekindsof forecastshave been around…from the beginning of the [first] industrialrevolutionandtheynevercametruesofar. It’sbasically theboywhocriedwolf.But in theoriginalstoryof theboywhocriedwolf, in theend,thewolfactuallycomes,andIthinkthatistruethistime.

Itwillbeaterrificallydifficulttransitiontonavigate,andessentialtoavoidturningpeoplewhoseeconomicboatshavealreadystoppedrising,themajorityof Americans, into a pathetic or contemptible useless class. Not only are thechanges requiredeconomicandpoliticalandcultural,butsomeareurgentandsomearen’t.Twobasicgoalswill seemcontradictory:wewant everyonewithtalentorpassionfortheirworktokeepworking,andallemployeestobetreatedwithfairnessandrespectnow,butforthelongtermweneedtostartmakingself-respectandusefulnessmoreindependentofemployment,toeducateandenableand encourage Americans to be and feel engaged and useful and respectedregardlessofhowtheyreceivetheirfairshareofthenationalwealth.

One of themain challengeswill be changingwhatHarari calls themoralviewpoint.Weneedtothinkofhisscarywolf,AIandrobots,notnecessarilyasa terrifying predator. Instead, they can be like the graywolves thatwe tamedthousands of years ago and turned into humans’ best friend—dogs.Technological unemployment and its approaching endgame are indeed an

existential threat, but they’re also a potentially grand existential opportunity.AndtakingadvantagewillfirstrequireashiftbytheUnitedStatestosomekindofeconomicdemocracy,takingthepowerawayfrombigbusinessandtherichtowritealltherulesonlytoservethemselves.

Therewill bepolitical and cultural problems at every stepof theway, noquestion,butweneedtokeepoureyeontheprize:it’sallaboutsolvingtheoneoverriding problem—what economists call the economic problem, how peopledecidehowtousetheavailableresourcestosurviveand,beyondmeresurvival,toenjoylife.

In that 1930 essay about the future, as the Great Depression was justdescending,Keynesaskedhisreaderstoimagine“thatahundredyearshenceweareallofus,ontheaverage,eighttimesbetteroffintheeconomicsensethanwearetoday.”America’sGDPperpersonatthattimewas$8,221intoday’sdollars,and at the end of 2019 it was $62,853—exactly 7.6 times better off in theeconomicsense,rightontracktomeetKeynes’seight-times-better-offdeadline,withadecadelefttogo.Soaround2030,hespeculated,“theeconomicproblemmay be solved, or be at least within sight of solution.” But once that ancientproblem is solved, and people canwork less and less to live comfortably, thenextproblemarises.

We have been expressly evolved…for the purpose of solving theeconomicproblem.Iftheeconomicproblemissolved,mankindwillbedeprived of its traditional purpose….Thus for the first time since hiscreation,manwillbefacedwithhisreal,hispermanentproblem—howtouse his freedom frompressing economic cares, how to occupy theleisure, to livewiselyandagreeablyandwell….[T]here isnocountryandnopeople,Ithink,whocanlookforwardtotheageofleisureandof abundancewithout a dread. Forwe have been trained too long tostriveandnottoenjoy.Itisafearfulproblemfortheordinaryperson…tooccupyhimself.

ButKeynes thoughtwe’dmanage it.*3Learning to livewell after solvingthe economic problem is literally the ultimate First World Problem. There’sobviouslynofixedfinancialmarker forwhen theeconomicproblemissolved.During the last two centuries, especially the last one, we’ve built a politicaleconomy and an accompanying culture that really do encourage us to be

insatiable, to keep alwayswantingmore, specifically tobuymore. Rememberthat inhypotheticalAmerica2, ifourpresentnationalincomeandwealthweredivided equally, every household would earn $140,000 or so and have a networthapproaching$1million.Goingforward,ifoureconomygrowsonlyasfastasithasforthemehlastquarter-century,thenaquarter-centuryfromnow,it’llstillbe50percentbigger—whichshouldboostthoseannualincomesinAmerica2toward$200,000perhousehold.Won’twehavesolvedtheeconomicproblemthen?Ofcourse,aswegetclosetosolvingtheeconomicproblem,politicsaside,it becomes primarily a cultural and psychological problem that people mustdecideissolvedanddeclarevictory.

“The Puritan work ethic,” Leontief wrote in the 1980s about machinestaking on more and more of the work, “will have to yield gradually to asomewhat different attitude toward life. Those who ask what the averageworking man and woman could do with so much free time forget that inVictorianEnglandthe‘upperclasses’didnotseemtohavebeendemoralizedbytheir idleness.” Back in Victorian England, the very productive upper-classwriterOscarWildecreatedaRussianprincecharacterwhosaidthat“inagooddemocracy,everymanshouldbeanaristocrat.” Itwasa joke in1880,but it’sless of a joke now that the average U.S. household income is by the mostconservativereckoningnearlysixfigures,andnonrichAmericansspendendlesshours on passionate amateur pursuits—noble, delightful, eccentric, stupid—inthewaythatonlyaristocratsusedtobeabletodo.

Collegedegreesmakeitmucheasierforpeopletoearnenoughmoney,buthighereducationisalsosupposedtomakeiteasierforpeopletokeepeducatingandamusingandoccupyingthemselves,likearistocrats,andtohelpothers,likearistocrats with a sense of noblesse oblige. Again, as the future first BaronKeynespredicted in1930about2030:“Weshalldomore things forourselvesthanisusualwiththerichtoday,onlytoogladtohavesmalldutiesandtasksandroutines.”

Beyond aristocrats and thewell-to-do, there are other relevantmodels forAmericansfindingasenseofself-worthwithoutthestructureofajobtofillhalftheirwakinghours.Acenturyago,afterworkinganaverageofsixtyorseventyhoursaweek,Americanworkersquicklyadapted tofortyhoursandeven less.Todaywhenoneluckypersoninacoupleearnsenoughfromajobtosupportthehousehold comfortably, a partnerwhodecides against taking apaying job canusuallyfigureouthowtobeusefulandleadasatisfyinglife.Iknowcontentedformer firefightersandmilitaryveteranswho left those jobsafter twentyyears

with pensions that equal or exceed the average annual U.S. salary. In myBrooklyn neighborhood, a large number ofmiddle-aged and now elderlymenhave been leading relaxed boulevardier lives ever since I arrived thirty yearsago: they’dbeen longshoremenon thenearbyEastRiverdocksuntilcontainerships and automation changed everything—and in the 1970s,when theywereyoung, their powerful union got thempensioned off comfortably.As of 2019,almost10percentofAmericansleavetheirpayingjobsbyagefifty,aquarterbyfifty-five, andmost—thanks to the wealth accumulated by the lucky few butmainly to long-lasting marriages and the socialism of Social Security andMedicare—retirenolaterthantheirearlysixties.

But the economic problemwon’t be solved if the abundance is not fairlyshared,whichexplainswhymostAmericansarenotsanguineabouttheirabilityto enjoy a futurewhere intelligentmachines are doingmore andmore of thework.Accordingtoa2017Pewsurvey,theybelievebythreetoonethatanAI-dominatedAmerica is going tomake “inequality between rich andpoormuchworsethantoday,”whichissurelycorrectifourpoliticaleconomyremainsasitisnow.That’swhybythreetooneAmericansalsosaythey’re“worried”abouta“futurewhere robots and computers can domany jobs.”*4 They’re soworriedthatinsupposedlyantiregulationfree-marketAmerica,58percentsupportlegallimitsonhowmanyjobsabusinessmayautomate,majoritiesofRepublicansaswell asDemocrats. The big difference of opinion on this question is betweenthosemoreand those less likely tobe replacedbymachines:peoplewithonlyhigh school educations are strongly in favor (70 percent) of legally reservingjobs for humans, and people with college degrees are strongly against (59percent).

Andthenontheotherhandthereare,onceagain,the27millionpeopleofthe Nordic countries. They’ve built their successful free-market socialdemocracies,theyactontheknowledgethatworkisn’teverything,andbothofthose thingsmake them optimistic about a future inwhichmachines domoreandmoreof thework.When theEuropeanUnionconducteda survey in2017aboutattitudestowardrobotsandAI,specificallyaskingifthey’re“agoodthingforsociety”becausethey“help”withjobs,thepeopleofFinland,Sweden,andespeciallyDenmarkwereconsistentlyamongtheseveralmostenthusiasticofalltwenty-eight countries, between 71 and 86 percent welcoming their robot-overlordliberators.

According to the same survey, one in seven Danes have already worked

alongsiderobots,remarkably,andtheFinns(oneineleven)aretiedforsecondplace. Sweden’s powerful unions cooperate with companies as they automateeverythingfromjournalism(okayingsoftware thatwriteshundredsofstoriesaweekaboutsportseventsthatweren’tpreviouslycoveredatall)tozincmining.“In Sweden,” the left-wingminister of employment says, “if you ask a unionleader,‘Areyouafraidofnewtechnology?’theywillanswer,‘No,I’mafraidofoldtechnology.’Thejobsdisappear,andthenwetrainpeoplefornewjobs.Wewon’tprotectjobs.Butwewillprotectworkers.”

TheaverageNordicpersongenerateslesseconomicoutputthantheaverageAmerican,15percent less inDenmarkandSweden—but theygetmoreof thewealth they generate, on average. Moreover, Paul Krugman says analysis ofthosedifferencesbetweenoureconomyandtheirsshowsthat“muchofthegaprepresentsachoice”and“inthecaseofDenmark,allofit.”Thatis,theyworkalittlelessonpurpose.*5Betweenlawsrequiringemployerstogiveeveryonefiveweeksforvacationandayearofpaidleavetonewparents,aswellasthegeneralculturalsanityconcerningwork,theaverageNordicspends20percentlesstimeonthe job than theaverageAmerican,giving themthree tofourhundredextrahours each year to dowhatever they please. Since they don’t rack up collegedebtorpayonerousamountsforhealthcare,they’realsoabletoputmoreaway:theDanessavemoneyataratemorethanthreetimesthatofAmericans.Theysystematically chill and systematically share, embracing the inevitable newontheroadtothefuture.Alas,wearenotDenmark.Yet.

*1SuchacozyEnglishintellectualeliteitwas:WellsturnedKeynesintoanoffstagecharacterinanovelin1926,thendidthesamewithHuxleyin1937inTheShapeofThingstoCome.*2Thefederalstandardforwhatqualifiesasan“impairment”thatrendersyou“unabletoperformsubstantialgainfulactivity”isvagueandcanincludebackpainoranxiety,forinstance,dependingonhowalocaldoctorhereoralocaljudgetherefeelsaboutitoryou.Ofthe2millionAmericanswhoapplyfordisabilityinsuranceeachyearandhaveworkedenoughyearstoqualify,abouthalfmakethecutandwinanaward.*3“Theloveofmoneyasapossession,”Keyneswroteinthatwittyessay,“willberecognizedforwhatitis,asomewhatdisgustingmorbidity,oneofthosesemi-criminal,semi-pathologicalpropensitieswhichonehandsoverwithashuddertothespecialistsinmentaldisease.Allkindsofsocialcustomsandeconomicpractices…whichwenowmaintainatallcosts,howeverdistastefulandunjusttheymaybeinthemselves,becausetheyaretremendouslyusefulinpromotingtheaccumulationofcapital,weshallthenbefree,atlast,todiscard.”*4Thesurveyrespondentswhosaidthey’d“heardalot”abouttheAI-robotfuturewerejustaslikelytobe“worried,”butmostofthemalsosaidtheywere“enthusiastic”aboutit.Tome,thatambivalenceseemsreasonable.*5Ontheotherhand,comparedtoAmericans,manyfewerDanesdecideforwhateverreasonnottoworkat

all.Infact,ofthethreedozenmostdevelopedcountries,asof2016theUnitedStateshadalowerpercentageofprime-agemeninthelaborforcethananycountrybutItaly.

F orty years ago the script flipped. The rational right, as opposed to itsreligious and other non-reality-based allies, sold the country a vision of apolitical economy that theypromisedwouldmake lifemore like itused tobe.Used tobe in1962orused tobe in1948was thevision,abouncyneighborlyprosperity without government mucking things up, America as NormanRockwellandFrankCaprahaddepictedit.

Whatwegotinsteadisareturntothegrimnessofthemucholderdays,asthingswere in1919or1883—fashion-madparty-heartyprosperity(andstatureand power) for the few, hardscrabble insecurity for the rest, everybody forthemselveswithouteventheconsolingexpectation,reasonableintheactualolddays,ofabettertomorrow.AsAmericansinthe1970sandafterwardslidintoapleasant warm bath of cultural nostalgia that then grew into a weird stagnantlake,theylearnedtoequatenewwithprobablyworseacrosstheboard—thenewdowngraded social contract (withnewlyunderpaid and impotentworkers, newself-fundedpensions, newly exorbitant college costs), new socially-liberal-but-fiscally-conservativeDemocratswhodidn’tseemsodifferentfromRepublicans,newlycorruptedpolitics,newtechnologiesandanewworldorderthatwipedoutjobsandlocalshops.

America was created and built to pursue and embody the new, whichaccountsforalotofthecountry’sexceptionalsuccess.Buttoomanyofushavelost our appetite for the new. And that’s very bad timing, because right nowwe’reobligedtocometotermswithallkindsofdauntingnewconditions—the

pandemicanditsaftermathforawhile,buttwoothersentirelynew,existential,man-madeandongoing: theglobalclimatewe’reself-destructivelyheatingup,andaneconomywe’vemadeself-destructivelyunfairandprimitive justas theintelligent-machinefuturearrives.Wemayormaynotbeuptosummoningtheold-fashioned grit and gumption necessary to persevere and thrive in thisnewnewworld.

Some of the large new challenges aren’t exclusively within Americans’power tomanage or overcome,most pressingly the climate crisis. The slowereconomicgrowthofthelastfewdecadesintheUnitedStatesandtherestoftherichworldmayjustbeapermanentreturntothehistoricalaveragefollowingafewdecadesofexceptionally fastgrowth—andwecan’tknowforsure thenetresultofamassiveefforttodealwiththeclimate,whetheritwouldslowgrowthfurtherorspeeditupforadecades-longnewboom.Thecreativedestructionoflarge chunks of our economy by globalization since 1980 is probably prettymuchfinished,thosejobsgone:itwasinthe1980sand’90sthatwedoubledtheforeignfractionsofcarsandclotheswebuy,andin the1990sandearly2000sthatourimportsfromChinawentfromtinytomassive.Buttotalglobaltrade,asapercentageoftheworld’sGDP,peakedmorethanadecadeago.

TheotherstrikinglynewAmericanconditionduetoglobalizationduringthelate twentieth century is the influx of people as well as goods from foreignplaces—thegenuinelynewpartbeingthatforthefirsttimeinU.S.history,mostof the immigrants are people of color. The resulting outbursts of nativist andracist sentimentwon’tendquickly.Aswehaveseen,badpolitical leaderscanalwaysexacerbatefearandloathingofthenewevenafterit’snolongernewandwhen it’s pointless to resist, but good political leaders can’t easily make thatresistanceend.

However,unliketheotherbigchallenges,Ithinkthisonewilltendtosolveitselfwith thepassageof time.Aswith theoffshoringof jobs, thebig changefrombeforetoafterisalreadydone,andit’snowslowingwaydown.ThereareaquarterfewerunauthorizedMexicanimmigrantsintheUnitedStatesthantherewere just a decade ago. Over the last half-century the immigrant fraction ofAmericansshotupfromlessthan5percentto14percent,butoverthenexthalf-century it’s projected to inch up only to 18 percent. Notwithstanding aferociouslyanti-immigrantpresident,overallantagonismtowardimmigrantsandimmigration has significantly decreased over the last decade. In its annualquestions about the issue, the Gallup poll in 2019 found that 76 percent ofpeople think“immigration isagood thing for thiscountry today”andonly19

percent “a bad thing.” Ten years ago half of the Americans surveyedwantedimmigrationlevelsdecreased,butnowjustathirddo.Aftertheyoungestboomerfinally turns sixty-five at the end of the 2020s, the percentage of olds inAmerica,andtheirpoliticalpower,willfinallyleveloff.Alreadyinallbutfourof America’s biggest metropolitan areas (Seattle, Phoenix, Boston, and PalmBeach)non-Hispanicwhitepeopleareminorities.Ihopeandbelievebythetimethe whole country gets there in the 2040s, the significant outbreaks of whiteracialpanicwillhavesubsided.*1

But the other big problem—the decisive power grab by the right and bigbusiness and the rich, the redrafted social contract of the RawDeal for mostpeople, the unmaking of modern America—will absolutely not just sort itselfout.Fixing that requiresgovernment,politics,andacollectivewill tobend themoral arc hard toward justice. And the new part of that challenge, the digitaltransformation ofwork and the economy still in its early stages, adds a high-stakesdouble-or-nothingdimension toAmerica’snear future asmachines takeovermoreandmoreofthework—verypossiblyworseorpossibly,ifdemocracywins,muchbetter.

EarlierIreferredtotherichconservativebigbusinessmanJackWelch,thearchetypal American CEO of the 1980s and ’90s, as a megalomaniacalloudmouth alpha-male SOB. But hewas also very smart and, I think, had anexcellentunderstandingofoneofmysubjectshere—stagnationversuschange,thewaysculturesclingtothefamiliarorleapforthenew.AtGEhisoperatingmotto wasChange or die, and in his last annual report as CEO, in 2000, hereturnedtothatidea.

Whentherateofchangeinsideaninstitutionbecomesslowerthantherateofchangeoutside, theendis insight.Theonlyquestioniswhen.Learning to love change is an unnatural act in any century-oldinstitution.

Businessesareentirelydifferentspeciesfromdemocraticsocieties,buthereweare,withour almost two-and-a-half-century-old country, variously terrifiedofchangeanddesperateforit.Theotherreigningphilosopher-kingofcorporatechangeinWelch’stimewasAndyGrove—immigrant,engineer,Intelcofounder,cocreator of the personal computer industry.*2 In the 1990s, he famously tookinflectionpoint,themathematicaltermforwhenacurveturnsdefinitivelyupor

down,andpopularizeditasametaphorforpivotalmomentsinthehistoryofanybusinessororganizationorindustry.

But it really applies to all trajectories, those of individuals or of wholesocieties.Unlikeparadigmshift, therelated termthat I’veused todescribe thechanges in our political economy in the 1970s and ’80s, it means not just aprofoundchange inbasic thinkingbutalsodramaticallychangedandchangingfacts,andinparticularthechoicespeoplemakeandactionstheytakeinresponsetonewfacts.“Astrategicinflectionpoint,”Grovewroteinhis1996bookOnlytheParanoidSurvive,iswhen

fundamentals are about to change….Strategic inflectionpoints can becaused by technological change but they aremore than technologicalchange….Theyarefull-scalechanges….Theybuildupsoinsidiouslysoyoumayhaveahardtimeevenputtingafingeronwhathaschanged,but you know that something has….The change can mean anopportunity torise tonewheights.But itmayjustas likelysignal thebeginningoftheend.

Our last national inflection point came as a result of the epochal socialchangesofthe1960sandtheglobaleconomicchangesofthe’70s.Bigbusinessand the self-righteous rich used the opportunity to put theUnited States on acourse that served themselves—almost exclusively themselves, even if thatwasn’ttheoriginalandentireintention.We’renowatanotherstrategicinflectionpoint.Thepandemic and its consequenceshave simplymade itmoreobvious.The axioms adopted around 1980—market value is the only value, keepdemocracy out of economics, government is useless or worse, nothing butthoughts and prayers for the victims—can and must be undone, the politicaleconomy renovated, new technologies properly embraced in order to startsolving the economic problem for everybody. But this will require a patientpolitical long game on behalf of the economic majority—like the class warlaunchedinthe1970sandbrilliantlywagedeversincebyandfortheeconomicelite.

It could mean an opportunity to rise to new heights, or it could be thebeginningoftheend.AcenturyagoArgentinawasthetenth-richestcountryonEarth,moreprosperous thanCanadaorAustralia.When the inflectionpointoftheGreatDepressioncame,Argentinesbeganmakingbadpoliticalchoicesand

neverstopped,andnowtheirGDPperpersonisdownsomewherearoundthatofMauritius andGabon.Koreaarrivedat its inflectionpoint afterWorldWar II,thecountrywassplit inhalf,andnowthepercapitaeconomicoutputofSouthKoreaismorethantwentytimesNorthKorea’s.

Inmylifetime,themostremarkablestrategicinflectionpointontheupsidehas beenChina’s,which it reached exactlywhenwe reached ours, in the late1970s, and proceeded to rise to extraordinary new heights—a per capitaGDPtodaytenorfifteentimeshigherthanitwasthen.Indeed,Ithinkwhat’srequiredoftheUnitedStatesnowisatransformativepivotalmostasradicalforusastheoneChinamadebackthenwasforthem.

China achieved its phenomenal growth by sticking with its undemocraticpolitical system but swapping dysfunctional, decadent command-and-controleconomics for a state-guided market economy—“socialism with Chinesecharacteristics.”HereandnowinAmerica,weneedtostickwith(andseriouslyreform) our political system, but to swap our dysfunctional, decadent out-of-whackcapitalismforamuchmoredemocraticandsustainableone—capitalismwithAmericansocialdemocraticcharacteristics.Thatmayseemlikealongshot,butwhattheU.S.rightachievedinthe1980scertainlyseemedasimprobableadecadebeforeithappened.Theepicturnwemanagedahalf-centurybeforethatwiththeNewDealdidn’tseemlikelyinthe1920s.

Attheright’smomentofvictoryin1982,MiltonFriedmanpublishedaneweditionofCapitalismandFreedom,hisbookthathadtakenthemovementintobeta(onitswaytolaunch)in1962,withanewpreface.Thedefaultconditioninanysociety is“a tyrannyof thestatusquo,”hewrote.“Onlyacrisis—actual,”like in the 1930s, “or perceived,” like in the 1970s—“produces real change.”Notethetell:aperceivedcrisiswilldo.“Whenthatcrisisoccurs,theactionsthatare takendependon the ideas thatare lyingaround,” soyouhave“todevelopalternatives to existing policies, to keep them alive and available until thepoliticallyimpossiblebecomesthepoliticallyinevitable.”

In the 1990s one of Friedman’s adherents expanded on this in a pitch toprospectivedonorsforthenewlibertarianthinktankwhereheworked.Radicalideas properly framed and promoted by intellectuals, young Joseph Overtonexplained, thereby get traction and eventually move from beyond the paletoward the center and change the world. Not long afterward, he died a veryAmerican-individualist death (his one-man ultralight aircraft crashed), but theOverton Window is now shorthand for that process of normalizing the

ideologicallywild-and-crazy.AcenturybeforeOvertonorFriedman,however,Anthony Trollope nailed it in Phineas Finn, his novel about British politics.After losing a vote in Parliament to givemore rights to Irish sharecroppers, aleftistMPcharacterexplains tohisyoungprotégéhowthey’llget theirway inthelongrun:

Manywhobeforeregardedlegislationonthesubjectaschimericalwillnowfancythatitisonlydangerous,orperhapsnotmorethandifficult.And so in time it will come to be looked on as among the thingspossible, then among the things probable; and so at last it will berangedinthelistofthosefewmeasureswhichthecountryrequiresasbeing absolutely needed. That is the way in which public opinion ismade.

By the way,Phineas Finn was published in 1868. Three years earlier inAmerica,theU.S.governmentendedslaveryonceandforalleventhough,justadecadebefore, emancipation and abolitionwere ideason theAmerican fringe,politicalpipedreams.ButtheTrollope-Friedman-OvertonWindowopened.

WhathasbeenhappeningwiththeeconomicleftinAmericalatelycouldbeahistoricalrhymewithwhathappenedwiththerightinthe1970safteritsfortyyears in the wilderness. It had had its celebrated lodestars for decades—popularizerslikeWilliamF.BuckleyandBarryGoldwaterandRonaldReaganinthe1950sand’60s, increasinglywell-knowneconomistsforthecognoscenti(theAustrianFriedrichHayek)andthemasses(MiltonFriedman)whobothgotNobels in themid-1970s as credible right-wing think tanks appeared. Then in1980theempirestruckback,andvictorywastheirs.

Theeconomic left, during itsdecades in thewilderness,produced itsownnew think tanks (such as the Economic Policy Institute in the 1980s and theAmericanAntitrust Institute in the ’90s)and itscelebratedpromoters:Buckleyequivalents(ThomasFrank,NaomiKlein)aswellastheFriedmanesquepopulareconomistsJosephStiglitzandPaulKrugman,withtheirNobelsinthe2000s.Intheverysameweekatthebeginningof2011,thecentristDemocraticLeadershipCouncildisbandedand theOccupyWallStreetprotestwasannounced.At thatmomentaswell,thestareconomistThomasPiketty,FrenchratherthanAustrian,was starting to focus people’s attention on the very rich—“transforming theeconomic discourse,” Krugman has said, especially after his remarkable 2014

bestsellerCapitalintheTwenty-firstCentury.Inthe1970stherightcoined(andstill repeatsendlessly) thegenius termunelectedbureaucrats to focuspopulistantigovernment blame. The economic left did something similar with the 1percent(andunelectedbillionaires)inthe2010s.In2016BernieSanderscameclose to winning the Democratic nomination, and in 2019 the CEOs of theBusinessRoundtablefeltobligedtoissueanew“StatementonthePurposeofaCorporation,”moreorlessdisavowingtheiradoptionoftheFriedmanDoctrinedecades before. The force awakened.And now? Perhaps the pandemic and/orthe resulting recession and/or the protests against racist policing will becometriggeringcrises.We’llseeifsomeoneeventuallybecomestheleft’sReaganinthishistoricalrhymescheme.Itisalonggame.

*1TheCensusBureaupredictsthat2045istheyeartheU.S.non-Hispanicwhitepopulationwilldipbelow50percentandceasebeingthemajority.IfI’mstillaround,Ilookforwardtoattendingthecelebrations.However,inthemostrecentcensus,morethanhalfofAmericanswhosaidtheywereHispanicalsosaidtheywerewhite—soifthatremainsthecaseatmidcentury,theUnitedStateswillinfactstillbemorethan60percentwhite.*2Whenhewasabusinessjournalist,myfriendStratShermancametoknowGroveandWelchquitewell.Heintroducedthemtoeachotherinthemid-1990smomentsbeforeheconductedajointinterviewataFortuneconferenceofCEOs.“Theydislikedeachotheratfirstsight,”hesays.“Onceourpublicconversationbegan,itbecameobviousthateachregardedhimselfasthepremierleaderofchange.”Theywere“hissinglikecats,assertingsupremacyandputtingeachotherdown.”

I wrotethisbooktofigureouthowoureconomyandsocietygotsomessedup,whyAmericatooksuchawrongturnaround1980,andwhyweAmericansthen found ourselves confused and frightened and feeling trapped, unable tomove forward.We’ve reached a crossroads. It’s up to our politics and actualpolicyexpertstodetermineexactlyhow(andif)wefixourselves.ButIhaveafewthoughts.

Can enough Americans be persuaded that large changes, in some casesscarychanges,arenecessarytorestoreafairerbalanceofpoliticalandeconomicpower?Will they understand that somekind of organized labor renaissance isoneoftheessentialchanges?Canpeoplebeconvincedtotrustthegovernmenttodomuchofwhatneedsdoing?WillDemocratsstopcowering?Areuniversalbasicincomesnutsorinevitable?Andsoon.

Here are six short chapters-within-a-chapter that could be useful, a fewoverridingthoughtsandunderlyingprinciplesconcerningpoliticsandpolicyaswetrytogetAmericabackontrack,headedtowardadecentfuture.

1.Mistrustofthefederalgovernmentisaneffectofconservativepoliticsasmuchasitscause.

During the 1960s and early ’70s, Americans enmasse developed a bipartisanoutbreak of mistrust of the government—Vietnam, Watergate, inflation,overreachby lawenforcement and intelligence agencies, incompetence, left orrightor countercultural, pickyour reason. In1964more than three-quartersof

Americans said they trusted the federal governmentmost of the time. By thetimeReaganwaselectedpresidentsixteenyearslater,onlyone-quarterfeltthattrust.

“Ourfederalgovernmentisovergrownandoverweight,”Reaganhadsaidasacandidate,andtheninhisfirstmomentsaspresidenthesaidthat“governmentis the problem,” reinforcing a new conventional wisdom. From then on, hispoliticalsidehasmadehatingthefederalgovernmentaprimedirective.

However,thatthegovernmentbecameovergrownandoverweightisamyth,becauseithassimplygrownalongwiththeeconomy.Duringthethreedecadesbefore Reagan was elected and in the four decades since, federal taxes andspendinghavebeenconstantaspercentagesofGDP.Alotofpoliticiansstillcallthemselves small-government conservatives, but at this point that’s a purelyritualgenuflection,becausegovernmenthasn’tshrunk,andthat’sluckyforthembecauseitmeansthey’venothadtopayanypoliticalprice.

Obviously,risingantigovernmentsentimentfromthelate1960sthroughthe’70seased thewayfor theeconomicright’smainproject—lettingbigbusinessand the rich become much richer and much more powerful. But the neatgimmick has been that by stopping any possible grand and costlynew federalprojects and programs (successors to beloved Social Security, the GI Bill,interstatehighways,thespaceprogram,Medicare),theevilgeniusessince1980have also kept citizens skeptical that Washington can improve their livesbecausewhathasitdoneforthemlately?Outofthatviciouscyclecamemuchof the enormous difference between Americans’ confidence in our nationalgovernment and citizens of other developed counties’ confidence in theirs:accordingtoa2018GallupWorldpoll,it’s30percentintheUnitedStates,nearthebottom, andbetween50and70percent inCanada, theNordics,Germany,andtheNetherlands.

Ourchronic, festeringantigovernmentfeelingsof the last fourdecadesareliketheunhappinessinabadmarriage—amarriagewheredivorceisimpossible,yetonepartytothemarriage,inthiscasetheRepublicans,hasbecomeinvestedinkeepingitunhappy.FixingAmericarequiresremindingAmericanshowmuchtheydependongovernmentalreadyandconvincingthemtogiveitachancetoreturn to itsglorydays, toprove it’s theonlypossibleproviderof solutions tosome problems, especially themessed-up political economy and climate. Askwhat you can do for your country, John Kennedy famously said at hisinauguration, and these days the first thing to do for your country is ask and

knowandtellotherpeoplewhatyourcountrycandoforyouanddoesalready.Back in the 1930s, before Social Security was enacted, and in the ’60s,

before Medicare was enacted, conservatives called both proposals socialism.When we took our economic right turn in 1980, Americans had been gettingMedicareforonlyfourteenyearsandcollectingdecentSocialSecuritybenefitsforonlytwenty-fiveorso.Butnowthosetwosocialistpillarsof theAmericanWayhavebeen inplace formostofacentury,pleasing severalgenerationsofcitizenrecipients.The88percentofAmericanswhogetrunningwaterandthe30percentwhoget(mostlycheaper)electricityfrompubliclyownedutilitiesdonot,I’mprettysure,begrudgethoseformsofsocialism,either.Norhavemanyof the people and businesses receiving their shares of the trillions in financialassistance in 2020 complained about the socialist federal government handingoutfreestuff.

Every time people on the right say that centrists like Barack Obama aresocialists,orthat“ourpubliceducationsystemisasocialistinstitution”(MiltonFriedman, 1999), or that “the state university system is as close to a socialistprogram as we have” (a National Review conservative in 2018), it actuallyreducesthestigmaofthewordandhelpsredefinesocialdemocracyasfamiliarand desirable.We can arguewhether and how some proposed big new socialprogram is or isn’t affordable orwise, but the instantly demonizing power ofcalling it socialism is weaker than it has been in nearly all our lifetimes,especiallyamongpeoplewhodidn’tgrowupwhenthetwohugecountriesthatcalledthemselvessocialistweredysfunctionalnuclear-armedtyrannies.

Mostpeopledon’trealize,forinstance,thatformorethanahalf-century,theU.S. government and its funding have been the indispensable investor in newU.S. technology, essential to thedevelopment of everything from solar-energytechnologies to Tesla, and from computer touch screens to most of the mostinnovativepharmaceuticals. Instead,as theeconomistand innovationspecialistMariana Mazzucato explains, “the dominant view, which originated in thebacklash against government in the 1980s, fundamentally affects how ourgovernment sees itself: hesitant, cautious, careful not to overstep in case itshouldbeaccusedofcrowdingoutinnovation,oraccusedoffavoritism,‘pickingwinners.’ ”Moreover,thegovernment-fundedprivatewinnersgetalmostallthepublic credit and the profits, while the government takes financial losses andgets the political blame for the inevitable losers—in other words, Mazzucatowrites, “risks in the innovation economy are socialized,while the rewards areprivatized.”

Americans seem tobecomingbackaround tobelieving that theycanandmust use government tomakeAmerica a better place to live. Since 1995, theWallStreet Journal/NBCNewspollhas repeatedlyaskedpeoplewhether theybelieved “government is doing too many things better left to businesses andindividuals”or,instead,that“governmentshoulddomoretosolveproblemsandhelpmeettheneedsofpeople.”Thefirsttimeitaskedthisquestion,twenty-fiveyearsago,peoplesaid,by62to32percent,thatgovernmentwasdoingtoomuchalready.Butwhen itasked thequestion in2018, thenumbershad flipped—58percentnowwant thegovernment todomore tohelppeople,a largermajoritythaneverbeforeinthispoll,andonly38percentwanttoleavethebig-problem-solvingtobusinessesandindividuals.Amongpeopleunderforty,two-thirdsormore think we should, through government, be doing more to solve our bigproblems.

2.Oneconomics,Americanshavebeenleaningprettyleft.

“America today is not a center-right country,” the Princeton sociologist PaulStarrwrotein2018,butrather“acountrywithacenter-righteconomicelite”thathasdominatedbothpoliticalpartiesforalongtime,“andapolarizedelectoratetornbetweenpartiesonthefarrightandcenterleft.”Ithinkthat’scorrect.Morespecifically, I think the leftist UC Berkeley economist Emmanuel Saez wascorrectwhenhesaid ina2016 lecture that“inAmerica,peopledonothaveastrongviewagainstinequalityperse,aslongasinequalityisfair,”meaningthat“individual income and wealth reflect the value of what people produce orotherwise contribute to the economic system.”On that basic question of howmucheconomicinequalityAmericansconsiderfair,peoplereallyarefurther totheleftthaneitherconventionalwisdomortheythemselvesrealize.Infact,mostofthemaresocialists,bythestandardRepublicanreckoning.

Oneofthemanywaysweknowthisisaningeniousandelaboratesurveyofa randomized sample of 5,522Americans conducted by theDuke psychologyprofessor Dan Ariely and the Harvard Business School professor MichaelNorton—in2005,beforeeconomicinequalitybecameaprimenationalissue.Forstarters, they found that Americans were unaware of the extent of U.S.inequality.Theyaskedtherespondents,howmuchofourwealthisownedbytherichestfifth?Theaverageestimatewas59percent;thecorrectanswerthenwas84percent. (In a survey around the same timeconductedby theUniversityofConnecticut, the respondents’median estimate of the income of a “CEO of a

large national corporation” was $500,000, when in fact it was about $12million.)Ariely andNorton thenaskedeachmemberof their sample to createtheir own ideal distribution for theUnited States, to decide howmuch of thetotalwealtheachfifthofthecitizenryoughttoown.Onaverage,peoplegavealargersharetothoseinthebottomhalfandasmallersharetothetopfifththaneither actually has, and Republicans were nearly as egalitarian as Democrats.Then everybody was shown pie charts of the distributions of money in twohypothetical countries—which were actually the United States and Sweden—and were asked in which country they’d prefer to live. “In considering thisquestion,” the veil-of-ignorance instruction stipulated, “imagine that if youjoinedthisnationyouwouldberandomlyassignedtoaplaceinthedistribution,soyoucouldendupanywhere in thisdistribution, fromtheveryrichest to theverypoorest.”Unsurprisingly,92percentofAmericanschosetobecomecitizensoftheunnamedSweden.

More conventional surveys have studied Americans’ changing attitudesabout the political economyover the years. Several ask, are poor people poorbecause they’re “not doing enough to help themselves” or because of“circumstancesbeyondtheircontrol”?In1995,Americansbytwotoonesaiditwasmostlypoorpeople’sfault.Intheearly2000s,twodifferentpollsfoundthatrespondents were almost split evenly, and in 2018, in a survey by theconservativeAmericanEnterpriseInstitute,asolidmajority,55percent,saidthat“circumstances beyond their control cause people to be poor.”A 2018Galluppollaskedpeopleif“thefactthatsomepeopleintheUnitedStatesarerichandothersarepoorneedstobefixedorisacceptable,”andasimilarsolidmajority,57percent,saidweneedtoreduceinequality.

Polls in 2019 found that by hugemargins, three to one, Americans wantmoregovernmentregulationofWallStreetbanksandbelievethatcorporationspaytoolittleintaxes.Andthreedifferentpollsin2019,byTheNewYorkTimesandPolitico,askedpeoplewhattheythoughtofproposalstoimposeawealthtaxon the extremely rich—a tax of 2 percent a year on all wealth between $50millionand$1billion,3percentayearoneverythingover$1billion.Allthreepollsfoundthatnearlytwo-thirdsofAmericansareinfavorofsuchwealthtaxes—includinglargemajoritiesofRepublicans.

IfmoreAmericansweretolearnofthelargebodyofresearchshowingthathigher inequality in rich countries isn’t just unfair but actually slows downeconomicgrowth—byafifthsincethe1980s,accordingtoa2014studybytheOECD—the remarkably strong support for Robin Hoodism might get even

stronger.

3.Resettingthebalanceofpowerinabigwayinfavorofthemajority—citizensandemployeesversusbigbusinessandtherich—mustbethe

overridinggoal.

InabookaboutAmericaonthesocialandpoliticalbrink,ayoungjournalist,nota leftist at all, frets about organized labor’s powerlessness. With unionizedworkers making up only “about one-tenth” of the workforce, he writes,“unionismhasagiganticproblem.Thereseemstobenolimittothemethodsbywhich[labor]organizationisthwarted.Youthinkofthepowerfulorganizationsreadytocombateverysignofunionism,ofthecongestionofimmigrantsinthelabormarket,ofthehostility”ofthemediaandconservativecourts.

Theoddsseemtobeoverwhelming….Theyhavenotyetwonalivingwage, theyhavenotyetwonanything like securityof employment…[or] the right to be consulted as to the conditions under which theywork….Until labor is powerful enough to compel [respect], it cannottrust…thebenevolenceofitsmasters….Idon’tpretendforonemomentthat labor unions are far-seeing, intelligent, or wise in their tactics…[but]theirfailurewillbeatragedy.

That’saquotefrom1914,DriftandMastery:AnAttempt toDiagnose theCurrentUnrest,thefirstbookbytwenty-four-year-oldWalterLippmann,beforehebecamethemostcelebratedpoliticalcolumnistofthetwentiethcentury.Andhere we are again. The question is whether and how American workers andcitizenscanfindwaystoreorganizeandregainpowertonegotiateandenforceafairer social contract, like the one drafted and adopted during Lippmann’slifetime.

TheU.S. economy inwhich unions flourished andwielded real power isobviouslydifferentfromtoday’sU.S.economy.Butover the last fewdecades,as other rich countries have changed in the same ways—less manufacturing,more automation and international competition—they’ve maintained theirmassively and powerfully unionized labor forces. The withering of workers’powerin theUnitedStatessincethe1970swasmainlytheresultof theright’sbrilliant,relentlesscrusadetominimizeandwherepossibleeliminateit.

There are no silver bullets, and I have no detailed master plan, just two

strong convictions: that without effective counterweights to the power of bigbusiness and the rich, the United States will continue morphing into asuperautomated plutocracy, and that how people work and get paid needs tobecome a primary subject of our politics. As the 2018 manifesto of a newWashingtonthinktankputit,

You don’t need a theory of the perfect shoe to feelwhere your shoepinches, and you don’t need a theory of perfect justice to grasp theinjusticeofthebootonyourneck.Wecanmakerealheadwaytowardabettersocietybyspottingandrectifyingthemostobviousandegregiousinjustices. We don’t need to know what awaits on the mountain’ssummitaslongaswecantellthedifferencebetween“down”and“up.”

Barely a sixth of the economy still consists of livings earned bymanufacturing or mining or growing things, rather than by coding, selling,researching, managing, cleaning, designing, fixing, administering, driving,explaining,sorting,performing,caregiving(orwriting).Asthatsecondcategoryofworkersgrewfromaminority to theoverwhelmingmajorityduring the lasthalfofthelastcentury,relativelyfewofthemremainedorbecamesuccessfullyunionized—that was left mainly to employees of state and local government,hospitals,hotels,casinos,andshowbusiness.Asworkplacesbecamesmallerandemployeesmore dispersed—or transformed into pseudo-nonemployees, like atUberandLyft—theworkoforganizingworkersgotharder.

Butalongwiththepublic’srevivingwishforbiggovernmenttotacklebigproblems and projects, the organized labor tide may be turning as well.Answering Gallup’s regular binary question in 2019 about approval ordisapprovalofunions,peoplewerepro-laborbytwotoone;onlyadecadeago,the split was about even. And to another annual question about levels ofconfidenceinorganizedlabor,thefractionofAmericanswith“agreatdeal”or“quitea lot” ishigher today than it’sbeen inallbutoneyearsince the1980s.Businessandtherightarestilllobbyingandcampaigninghardstatebystatetopass right-to-work laws to make life harder for unions—West Virginia andKentuckywerethelatesttoenactthemin2016and2017.Butthenin2018inaMissouri referendum, voters by two to one overruled the Republican statelegislatureandgovernortorepealthenewright-to-worklawthere.

The basic case for unionization ought to be pretty compelling to people.

Since the riseof laborunionsseventy-fiveyearsagoandstill today,organizedworkers are consistently paid one-quarter more than comparable nonunionworkers, anaveragepremiumof$200perweekormore.NearlyallunionizedworkersinAmericagethealthcarethroughtheirjobs.Amongworkersatprivatecompanies,two-thirdsofunionizedemployeesarestillcoveredbyold-fashionedpensions with fixed retirement payments, a benefit that only 13 percent ofnonunionemployeesget.

Latelytoo,Americanworkershavebeenfeelingconfidentenoughtogoonstrikeastheyhaven’tforyears.Nearlyahalf-millionwentoutinboth2018and2019,moreineachofthoseyearsthanintheprevioussixcombined,morethanany time since 1986. The biggest 2019 strike shut down dozens of GeneralMotors factories for weeks, costing the company $4 billion, and a separatesimultaneousstrikebyworkersatMackTruckfactorieswastheirfirstsincethe1980s.

And then thereare journalists,whomostlyabandoned theirobsoleteblue-collarcolleaguesandunionismitselfbackinthefat-and-happyday.IdatePeakMediaSmugnessinthisregardtothefirstWednesdayinMay2000.NewYorkmagazine and the briefly, astoundingly successful Industry Standard, anewsweekly covering the new digital industry, staged a fancy conference, theMediaSummit,attheMuseumofModernArtinmidtownManhattan.The(first)Internet financial bubble had in just the previous few weeks begun to burst,althoughnobodyknewthatyet.BecauseIwaspartoftheteamabouttolaunchthenewssiteInside, I’dagreed toappearonapanelwith thepublisherofTheNewYorkTimesandtheeditor-in-chiefofTimeInc.todiscusswhattheInternetportendedforjournalism.*1

Asit turnedout thatday,however, themuseum’sunionizedworkerswereonstrikeandpicketing; thusIdecidednot toattend.“Someof thebest-knownliberals in New York crossed picket lines at the Museum of Modern Artyesterday,”just“breezedpaststrikingworkers,”Murdoch’sNewYorkPostwasdelighted to report.The summit cohost andpanelmoderatorMichaelWolff, awriter forNewYork at the time,was pissed and explainedmy absence to thecrowd mockingly: “While Henry Louis Gates was able to come” to theconference despite the picketing strikers, he said of the Harvard AfricanAmerican studies professor, “that great working man Kurt Andersen couldn’tbringhimselftocrossthepicketline.”

I think such an episodewould play out quite differently these days, fifty

yearsafterIrvingKristolannouncedwithasmilethat“unionismhasbecome…aboring topic” in which “none of the younger reporters is interested” and ageneration after digital technology enabled the creative destruction ofnewspapersandmagazines.Digital-indigenousmediahaveinthelastfewyearsunionizedlikecrazy,includingBuzzFeed,Quartz,GuardianUS,Vox,HuffPost,Slate,Salon,andTheIntercept,aswellasGimletpodcastsandViceMedia.Inaddition,forthefirsttimeintheirhistories,theLosAngelesTimes,theChicagoTribune,TheNewRepublic,NewYork,andTheNewYorkeraresuddenlyunionshops. With only a few thousand workers in all, the economic impact isnegligible.Butthenewsmedia’snewgenerationdecidingenmassetoformandjoinunions,individualaspirationstobecomebrandsandstarsnotwithstanding,is a leading zeitgeist indicator and will surely have an outsize impact oncoverageandpublicattitudes,asthemediado.

In addition to the long slog of union organizing, there are other politicalmeans toempowerworkers.Aminimumwageandovertimepayand standardforty-hourworkweeks,forinstance,allcameintobeingbypassingfederallawseightyyears ago.Over the last fiveor sixyears, as a result of popularprotest(“Fight for $15”) and lobbying, most states have increased their minimumwages, most have set them higher than federal law—several now reachingfifteendollars anhour—andmany cities have set legalminimumshigher thantheirstatesrequire.*2In2018thatshiftinpublicopinion,aswellasemployeesmurmuring about organizing a union, persuaded Amazon to adopt a fifteen-dollar-an-hourminimumfor itshundredsof thousandsofworkers. It remindedme ofHenry Ford,who in 1914 doubled his factoryworkers’ pay and got anavalanche of positive publicity—andwho also, only after theNewDeal gaveunionsmorepowertwodecadeslater,wasfinallyforcedtosignacontractwiththeautoworkers’union.

4.Left-of-centerAmericansletthemselvesgetplayedfortoolongbytheeconomicright.

Permit me to repeat: forty years ago in a Wall Street Journal column, thepioneeringmodernright-wingintellectualannouncedamainpartofthatcynicalplan,presenting itasadefining fuck-you-chumps featureof theconservatives’newapproach: if tax cuts for the rich andbigbusiness “leaveuswith a fiscalproblem,”IrvingKristolwrote,againwithasmile,mammothgovernmentdebtisfine,becausefromnowon“theneoconservative”wouldforce“hisopponents

totidyupafterwards.”Eversince,theliberals’politicalroleoneconomicsanddeficitshasbeento

disprove the circa-1960s tax-and-spend caricature, to prove that they areresponsible grown-ups, sensible Goldilocks moderates, conservative the wayconservativesusedtobe.Ascollege-educatedprofessionalsbecameamoreandmoreimportantDemocraticconstituency,thegeneralreluctanceonthelefttotryanythingtoocrazyalsogrew.Inthe1970sand’80sthatwasunderstandable,buttheleftlearnedthelessontoowell,andbythe’90sitbecameaverybadhabit,especially unattractive as a default posture among the liberal well-to-do—restrainthelpingouttheless-luckymajoritybutrecklessonbigbusinessandtherichgettingtheirway.

In the spring of 2020 we urgently increased the total federal debt by13percent.Watch: ifDemocratsgetmorepowerinWashingtonanytimesoon,therewillbeanewRepublicanoutbreakofmockfiscalpanicandinsistenceonrestraint—hysterical in both senses, overwrought aswell as darkly funny. It’spast time to resist that trap, to dial back the excessive liberal aversion to risk,where habitual fear of political counterreaction to transformative new policiesandprogramsprevents themfromevenhavingachanceatgettingpopularandenacted. Knee-jerk centrism, splitting the difference from the get-go betweenthemselvesandtheofficialright,withthegoalofupsettingnobodyverymuch,hasbeenaterribleDemocraticreflexoneconomics.Forawhilegoingforward,our forty-year-long tyranny of the status quo may make doing some of whatneedsdoingfeelabitradical.Andmistakeswillbemade.AsanERphysicianfriendoncetoldme,partofherjobistominimizescarring,butyoucan’tletthatstopyoufromdoingthemainjob,savingthepatient.

5.Ontheotherhand,benonbinary.

Most people who call themselves progressive properly insist that we movebeyondrigidbinarycategoriesconcerninggenderandsexuality.Theprogressiveconsensus in psychology and psychiatry also now considers the mind andconsciousnessitselftobefundamentallynonbinary,andindividualpeopletobeneither absolutely rational nor delusional but on continuums somewhere inbetween the poles, most of us clustered on the sane side. But why limit thatsensible acceptance of fluidity and nuance to sexuality andmental states? It’sunfortunatethatsomanyonthelefttendtobeasferociouslybinaryaspeopleontherightwhenitcomestopoliticsandpolicy.

Being ideologicallynonbinarycansometimesmakepolitical sense (biggertent, more allies), but that’s not mainly why I’m for it. It isn’t my groovysynonymforcentristorbipartisan.Thepolicypositiononanygivensubjectthatappearstobeatthe“center,”equallydistantfromthepositionsoftheorganizedright and left, is sometimes quite wrong.What’s more, old-fashioned defaultbipartisanshipisimpossiblewhenoneofthetwopartiesiscuckoooroperatingin bad faith or both.Rather, being nonbinary on economicsmeans sticking togoalsthatcanseemradical—lotsmorepowerforworkersandaveragecitizens,optimizing the economy for all Americans rather than maximizing it for richonesandcorporations—butthenbeingnondoctrinaireabouthowweachievethegoals.It’slike“hybridvigor”ingenetics,wherestrongeroffspringareproducedby outbreeding rather than by inbreeding. It’s the virtue of every kind ofdiversity in organizations and on teams, in addition to justice and kumbaya,becauseseriouslydivergentpointsofviewcanincreasetheoddsoffindingandpursuingthebestideas,tactics,andstrategies.

In a famous SupremeCourt opinion during theDepression, Justice LouisBrandeiswrotethat“oneofthehappyincidents”ofAmerica’sfederalsystemisthat Washington can treat smaller governments and jurisdictions as policyprovinggrounds,because“asinglecourageousstatemayserveasa laboratoryand try novel social and economic experimentswithout risk to the rest of thecountry.”Surelywecanexpandourlaboratories-of-democracypurviewbeyondU.S.statestoincludethevirtualWorld’sFairofsuccessfulsocialandeconomicpoliciesondisplayfromwhichwecanpickandchoose.

Running a society well and fairly requires optimizing more thanmaximizing, going for the greatest happiness of the greatest number and thesmallest possible number being screwed. Single-minded maximization of anyone thing turns into crazed binary thinking—maximum profits are everything,regulationsareallbadorallgood(as italsotendstodofor individuals:neverapologize, constantly apologize, practice celibacy, practice promiscuity, eat asmuchaspossible,starveyourself,andsoon).Before the1970sand’80s,backwhencorporateCEOswere still supposed toworry about their employees andcommunities and the public good aswell as the price of their stock, thatwasoptimization.

But then by focusing exclusively on one or two numbers, corporateexecutivesbecomewillfullysimpleminded,likeprimitivecalculators,artificiallyunintelligent.*3Thebusinessschoolauthorsof“TheoryoftheFirm,”that1976

paperthatbecamethescriptureforignoringsuch“stakeholders,”actuallyarguedin a subsequent paper that optimization for a whole society or diversecommunityor complicated individual simplyDoes.Not.Compute: “Since it islogically impossible to maximize in more than one dimension, purposefulbehaviorrequiresasinglevaluedobjectivefunction.”

Among the great examples of nonbinary thinking are the efforts of bothpresidentsRoosevelt: theygot the federalgovernment to intervene in the free-marketsystemintheearly1900sasitneverhadbeforeinordertosavethefree-marketsystem,tokeepout-of-controlcapitalistsfromwreckingcapitalism.Theyearupper-classFDRsaidof the forcesof “business and financialmonopoly”and“organizedmoney”thathe“welcome[d]theirhatred”wasthesameyearF.Scott Fitzgeraldwrote that “the test of a first-rate intelligence is the ability toholdtwoopposedideasinthemindatthesametime.”

The newWashington think tank that Imentioned a few pages ago is theNiskanenCenter,andthethinkerstherewouldremodeloureconomyalongthelines of the Nordic social democracies. So…socialist? Not exactly—it wascreated by apostate defectors from Charles Koch’s libertarian Cato Institute.“Markets are not just thenatural and spontaneous consequenceof governmentinaction,” its2018manifestoexplained.Remember: theeconomic right’sgreatconfidence trick in the 1980swas to redesign and reengineer the economy toprivilegetherichandbusiness—andthentoinsistthatamarketeconomyislikeapreciousunchangeablepieceofnature,neitherdesignednorengineered.

Markets areproductsofdesign—forgoodor ill….For instance,whenwe designmarkets that do not price the costs that a firm imposes onothers—for example through pollution, or in finance…—thenwe getfar more of things that we don’t want (like global warming andfinancial catastrophes). Environmental or financial regulation of thissort is not “anti-market”; on the contrary, it is essential to a properlyconstitutedmarketwhere firms can’tmake excess profits by pushingoffcostsontoothers.

“Countries like Canada, Denmark and Sweden,” says Will Wilkinson,Niskanen’sheadofpolicy,“havebecomemorerobustlycapitalistoverthepastseveraldecades.Theyneeded tobebettercapitalists toafford theirsocialism.”What he calls “free-market ‘socialism’ ”—note that he puts socialism in

quotationmarks—mayseemlikeanoxymoron,butinfactit’sacknowledgmentoftherangeofvigorousreal-worldnonbinaryhybrids.

The headlines on a few recentU.S. opinion surveyswere basicallyTheseCrazy Kids Love Socialism, but my takeaway from the data is that youngerpeopletendtobemoreideologicallynonbinary.AsurveyofpeopleunderthirtybyHarvard’s Kennedy School of Government found that majorities said they“don’tsupport”capitalismor socialism,withsmall fractionswho“identifyas”either socialist (16 percent) or capitalist (19 percent). In a 2019 SurveyMonkey/Harrispollofadultsofallages, sixoutof tenof thoseunder twenty-five“haveapositivereactiontothewordsocialism”—butsixoutoftenofthemalso haveapositive reaction to thewordcapitalism,moreor less the sameasamongpeopleover twenty-five.Basically, theyoungeryouare, thecloseryoucome to thinking that—given no particulars spelled out—capitalism andsocialismareequallyokay.

Buthowdoesnonbinarythinkingshapeparticularpolicies?Our healthcare system is a grotesque jerry-built Rube Goldberg machine

that’sexpensive,wasteful,ineffective,unfair,anxiety-provoking,andconfusing.Itwelds togetherprivateandpubliccomponents in someof theworstpossibleways—suchasthefederallawprohibitingMedicarefromnegotiatingpriceswithpharmaceuticalcompanies,whichmaycostusanunnecessary$50billionayear,7 percent of the entireMedicare budget.*4 The system should get a completeoverhaul. That is a binary starting point, but deciding what that means reallyisn’tbinaryatall,becausetherangeofvastlysuperiorversionsfromrelativelyless (Switzerland) to more (Canada) to totally (the U.K.) government-run iswide.Theirreducibleandcorrectideologicalbinaryinthepoliticsofhealthcareis fair andeffectiveversusunfairand ineffective.Butanonbinaryapproach isalso enthusiastic about the genuinely virtuous free-market effects ofgovernment-guaranteed healthcare—everyone unshackled to switch jobs oroccupations at will, to freelance or have multiple part-time jobs, to raisechildren,tobecomeanartist,ortostartabusiness.

Notallregulationisgood,andnotallderegulationisbad.Idescribedearlierhow the sensible deregulation of some industries, such as the overregulatedairlinesin1978,wasundertakeningoodfaithbypeopleontheleft—toincreasecompetition tomake prices lower and service better, antitrust by othermeans.But then conservatives turned suspicion of regulation into a true phobia andinsistenceonderegulationofeverykind intodogma.That’sbecause regulation

thatbenefitsAmericansingeneralbymakinglifesaferorfairerorhealthieralsooftenpreventsbusinessesfromabsolutelymaximizingprofits,whichistaboo.

Or was: concerning antitrust regulation of the giant tech companies, theregulation-badbinaryhasstartedtocrackevenontheright.Allsortsofantitrustexperts and enforcers—federal and state, right and left—have been suddenlylooking hard atGoogle and Facebook (andAmazon andApple), as if it’s thetwentiethcenturyagain.

It is nonbinary to support the careful deregulation of urban real estatedevelopment as one necessary way to create more apartments and houses inprosperous cities that would be affordable for more people. Excessiveregulationsandapprovalprocesses reallycandrive rents and real estatepricesunnecessarily higher, and the policy choice shouldn’t be binary—laissez-faireHoustonversusrestrictiveSanFrancisco.Aswithantitrustsuddenlybeingtakenseriously again, there are hopeful new models for smart, democratic re-regulation intended tomake urban housing cheaper and citiesmore dense andenvironmentally sound—such as the fairly radical and fairly uncontroversialzoningcodeMinneapolisjustadopted.

6.Orelsewecouldheadstraightforcommunism.

That’sajoke.ButwhenAndrewYangwasaninfant—decadesbeforetheideaofauniversalbasicincomebeganitsnationalemergenceinPhineasFinnfashion,from chimerical past dangerous to merely difficult on its way—possibly,eventually—to absolutely needed—a modest version went into effect inAmerica. In fact, this shockingly successful socialist experiment began at thevery moment when the rest of the country made its historic right turn in the1970sandearly’80s—andinAlaska,theself-consciouslyultra-libertarianstatethat only one Republican presidential nominee has ever lost. It’s a fantasticnonbinaryAmericanlaboratory-of-democracytale.

In my telling, the central character is Arlon Tussing. He grew up inOregon’s ruralRogueValley andBerkeley,California, in the 1930s and ’40s,attended the University of Chicago when Milton Friedman had just startedteaching there, andgraduated fromcollegeat seventeen.Hewenton togetaneconomicsPh.D.—andduringthe1950sandearly’60s,hebecomealeaderofandwriterfortheSocialistPartyofAmerica.In1965hemoveduptoFairbankstoteachattheUniversityofAlaska,andwhileaprofessorthere,healsoservedastheU.S.SenateEnergyCommittee’schiefeconomist.

ShortlyafterTussingbecameanAlaskan,NorthAmerica’s largestdepositof oilwasdiscoveredon theNorthSlope, andoil companies paid the state ofAlaska theequivalentof$6.5billionupfront tostartdrilling,withroyalties tofollow. The good-looking young Alaska professor, when asked by a reporterhow the oilmoney should be used, said, “The onlyway to guarantee that themoneydoes anygood tomostofus is tohand it out to thepeople.”ThenewRepublican governor agreed, and after personally getting Milton Friedman’sokay,hemadeithismainpoliticalprojecttoamendthestateconstitutiontoputaquarterofthestate’soilrevenuesintoadedicatedfund,theAlaskaPermanentFund, then send a dividend check every year to every resident of Alaska,includingchildren.Freemoneyforeveryone,nostringsattached!Justasthenewplanwasbeingfinalized,thegovernorvisitedChinaandmetwithPremierZhouEnlai, who was just beginning the struggle to move his country’s economicsystemawayfromdead-endCommunism.“YouAlaskans,”Zhoutoldhim,“aremoresocialisticthanweare!”

TheannualAlaskadividendvarieseachyear,dependingonhowthefund’s$66billionworthofinvestmentsperform—itwas$1,600perpersonin2019and2018,or$6,400eachyear fora familyof four,but ithasoccasionallyreachedtheequivalentofnearly$3,000perpersonand rarelydippedbelow$1,000. In2007anotherRepublicangovernorgotthelegislaturetopassanevenhighertaxon the oil companies’ profits, an astoundingly progressive tax with rates thatincreased as the market price of oil increased. As a result, a year later eachAlaskan got the equivalent of nearly $4,000, including the governor and herhusband and five children, whose $28,000 universal basic income checksprobably arrived just days before she failed to be elected theRepublican vicepresidentoftheUnitedStates.*5ProfessorTussingdiedafewyearsagoinanoldtown in another archetypal western place, Silicon Valley. His two finalFacebookpostsarefabulous.Oneconcernedanewsstoryfloatingthepossibilitythat Texas governor and future energy secretary Rick Perry might becomepresident(“hell.No!”)andtheotherwasabouthimself:“I.AmhappyonpublicdemandtoexplainwhyandhowIhavelongbeenLibertarianANDaSocialist.”

It hasworked out fine forAlaskans.According to the academic research,theirmodestuniversalno-stringscashentitlementhasn’tmadethemworkless,although it has made more people who hadn’t worked take part-time jobs,especiallywomen,apparentlybecausethedividendhelpsthemaffordchildcare.Italsoseemstomakeforbetternutrition,withfewerunderweightnewbornsandfewer obese toddlers, especially among the poor, and it has lifted a third of

Alaska’sofficiallypoorruralNativecitizensabovethepovertyline.Theeffectonoverall inequality is unclear, but in the early 1980sAlaskahad thehighestincomeinequalityofanystateinAmerica,andnowithasaboutthelowest.

NorthtotheFuture isAlaska’sofficialmotto.TheU.S.futurewillalmostcertainly need something like a Permanent Fund and a popular understanding,acceptance,andextensionofitsunderlyingideaofsocialwealth.Socialwealthisreallynotanextremeorunfamiliarnotion.Alaska’sphenomenaloilstrikewasa one-off, but the new part was the direct sharing, giving some of thegovernment’stakefromthewindfalltoeverybodyindividuallyandequally.AllAmericanscollectivelyown,throughthegovernment,28percentofthelandintheUnitedStates,aswellasthecoastalseabed.Asmallbitofthatisleased—todrillingandminingcompanies,solarandwindandgeothermalfirms,ranchers—for $12 billion a year.*6 The money is ours, it just doesn’t go to any of usindividuallyunlesswe’reamongtheNativeswhoselandthefedsadministerandleaseoutforthem.

Before the oil age, starting in the 1860s, a large piece of America’scollective wealth, one-tenth of all federally owned land, was given by thegovernmenttomillionsofindividualAmericans,toliveonandfarmandownashomesteaders.Atthatsametime,thegovernmentgrantedanother100millionofour collectively owned acres to individual states—to sell and then use thoseproceedstocreatethehundredpubliccollegesanduniversitiesthatbecamethefoundationoftheU.S.highereducationsystem.

WhatelsedoallAmericansownincommonthatcouldgenerateincomeanddirectly improveeverybody’s lives, liketheoilunder theNorthSlopedidonlyforAlaskans?TheairoverthewholeUnitedStates.Insteadofjustgivingawaythe right to dump5 billion tons of carbon dioxide into our air every year,weshouldstartchargingafeefor it,bymeansof taxesonoilandotherfossilizedcarbon we burn. Those tax revenues could cover an annual dividend paid toevery citizen, even oil-enriched Alaskans. A group of sane conservativeéminences grises, including three former Republican treasury secretaries,recentlyproposedexactlythat.

ThesameschemewasproposedafewyearsearlierbytheleftactivistPeterBarnesinhisbookWithLibertyandDividendsforAll:HowtoSaveOurMiddleClassWhenJobsDon’tPayEnough.AsHillaryClintonwasabouttolaunchher2016presidentialcampaign,shereadit.Whathappenednextisasadandperfectepitome of the last few decades of Democratic political economics. “I was

fascinatedbythisidea,”shewroteinhermemoir,

aswasmyhusband,andwespentweeksworkingwithourpolicyteamto see if it could be viable enough to include in my campaign. Wewould call it “Alaska forAmerica.”Unfortunately,wecouldn’tmakethenumberswork….Wedecided itwasexcitingbutnot realistic, andleft it on the shelf. Thatwas the responsible decision. Iwonder nowwhether we should have thrown caution to the wind and embraced“Alaska forAmerica” as a long-termgoal and figured out the detailslater.

Iwonderifshethoughtaboutputtingscarequotesaround“responsible.”Another rich territory of social wealth isn’t a natural resource, but it is

ubiquitous and collectively created. It’s the Internet.U.S. government fundingwas directly responsible for developing the semiconductor industry (and otherfundamentalpiecesofcomputers)and for inventing the Internet, andafter thatforGoogle,Siri,andGPS,amongotherplatformsandtechnologies.

Ifwebehaved like the seed investors andventure capitalistswewere andare, we’d now be collecting many billions a year from companies using ourpubliclyfundedInternet.Butsofar,wearenot.It’sasifwebuilttheinterstatehighwaysystembutthen,becausefreemarkets,letsomedudessetuptollboothsalongits49,000milesandkeepallthemoneytheycollectedforthemselves.Butit’s even more ridiculous than that. Now without all our ongoing billions ofindividualhoursofdailykeystrokesandclicksandpicturesandvideos,all thedataand“content”thatwedonatetoGoogleandFacebookandtherestofthem,they’dhavenothingtosell toadvertisers—andsellingadsis theirbusiness.Soon the glorious new public digital superhighwaywe built, we’re also now allworking as volunteer staff for the insanely profitable tollbooth-and-billboardbusinessesthattheprivatecompaniesinstalled.

Infact,MarkTwaininventedthisbusinessmodelin1876asajoke—TomSawyer’s fence-painting grift, persuading a crowd of fun-loving young peoplewith timeon their hands that the tediousworkhe neededdoingwas fun, theneven charging the eager fools to do it for him. Since 2013, when the digitalpioneerandMicrosoftphilosopher-prince JaronLanierwroteabookabout thebasic unfairness of the Internet economy and proposed requiring the techcompanies to somehow pay for our data, that notion has also moved from

chimericaltowardpossible.Dittowith universal basic income.AndrewYang’s presidential candidacy

wasquixoticbutalsosuccessful—itgavethefirstextended,respectfulnationalspotlight to the two important truths underlying his campaign: the inexorableautomationof jobs,andourneed to radically readjust thepoliticaleconomytocope.

Whoknowshoworwhenorifauniversalbasicincomecouldberolledout,orwhatitsprecisefundingmechanismsandruleswouldbe?Butit’sfeasible.*7TheYangcampaignversionwas$1,000amonthfromageeighteenon,fundedby a value-added tax and a carbon tax. In a Pew Research survey aboutautomation and economics in 2017, pre-Yang, 61 percent of people were infavorofthegovernmentgiving“allAmericansaguaranteedincomethatwouldmeettheirbasicneeds”asawayofdealingwith“robotsandcomputers[that]arecapableofdoingmanyhumanjobs.”Twosurveysin2019askedaboutUBIsinabadly inaccurate way—about hypothetical government incomes paid only topeople “whose jobs are threatened by automation” or “who lose their jobsbecause of advances in artificial intelligence”—that is, not a no-strings, no-stigmapaymentthateveryonewouldget.Butevenaskedthatway,halfornearlyhalf of respondentswere still in favor, including asmany as three-quarters ofyoungerpeople.

Replacingourpatchworkofexistingsocialwelfareprogramswithaunified,universalsystemofcashpaymentsisabasicideathatconservativesfromHayekto Friedman have supported. Charles Murray proposed a full-on UBI fifteenyearsagoinabookpublishedbytheAmericanEnterpriseInstitute,andnowthat“wearegoingtobecarvingoutmillionsofwhite-collarjobs,becauseartificialintelligence, after years of being overhyped, has finally come of age,” herecentlystartedpushingithardonceagain.“Yes,”hewroteinTheWallStreetJournal in 2016, “some peoplewill idle away their lives undermyUBI plan.Thequestionisn’twhetheraUBIwilldiscouragework,butwhetheritwillmaketheexistingproblemsignificantlyworse.”Theapprovalofpeopleon theright,and of tech billionaires likeMarkZuckerberg andElonMusk, does notmakeuniversalbasicincomeabetteridea,justasomewhatmorepoliticallyplausibleone.

*1Duringthepaneldiscussion,NormPearlstineofTimeInc.—whonowrunsthefreshlyunionizedLosAngelesTimes—saidhewasn’ttooworriedbytheInternet:“Idon’tthinklong-formjournalismismuchthreatened,”hesaid.

*2Stateswithoutanylegalminimumwage,orwithonebelowthefederalminimum,areAlabama,Georgia,Louisiana,Mississippi,SouthCarolina,Tennessee,andWyoming.*3“Becauseofthewaythemachinesarechangingtheworld,”acharacterinVonnegut’sPlayerPianosays,“moreandmoreof[people’s]oldvaluesdon’tapplyanymore.Peoplehavenochoicebuttobecomesecond-ratemachinesthemselves.”*4Thesinglesenatorgettingthemostcampaigncontributionsfromthepharmaceuticalindustry,bytheway,hasbeenMajorityLeaderMitchMcConnell,whohelpfullycallsproposalstoregulateprescriptiondrugcosts“socialistpricecontrols.”*5Oh,Alaska!Itdeniesitscriminalstheirannualdividendchecksonlyifthey’resentencedforafelonyorincarceratedforanycrimeduringthatparticularyear,butassoonasthey’reoutofjailorprison,they’regoodagain.Soforinstance,formergovernorSarahPalin’seldestchild,Track,whoin2019finishedservingtimeforoneofhisassaults,shouldhavehisdividendresumedstartingin2021ifhe’snotsentencedorincarceratedagaininthemeantime.*6“Infreegovernmentsthepeopleownthelandandtheresources,”thesuperlibertarianactivistAmmonBundysaidrecently.Socialwealth!Excepthe’sgotitbackward,asifindividualswereentitledtouseforfreeanythingthesocietyownscollectively.Heandhisfather,ClivenBundy,whograzescattleonpubliclandinNevadabutrefusestopaytherestofusfortheprivilege,organizedthefamousarmedstandoffwithfederalagentsin2014togettheirway.*7InadditiontotheAlaskansuccess,insmall-scaletrialsaroundtheworld,UBIshaven’tmadepeopleworkless.IntheUnitedStatestherewouldobviouslyneedtobeaseriousdiscussionaboutoptimalpaymentlevels,becausesomepeoplewilltakesucharoadpavedwithgoodintentionstohell.ButaffluentpeoplewhosaytheyopposeUBIonprinciple—becauseitmightencouragelazinessorirresponsibility—shouldalsosupporta100percentestatetax,inordertopreventlazy,irresponsibleheirs.

W hentheoriginalbandofintellectualsandCEOsandpoliticiansandtheveryrichbeganpursuingtheirdreamofhijackingtheU.S.politicaleconomyanddragging it back in time to the days before theNewDeal, surely noneofthem imagined they’d wind up here. By which I mean either the scale anddurabilityoftheirvictory,orwithsuchafrontman—soderangedandunpleasantandidiotic,sobrazenlyracistandxenophobicandmisogynistic,abusinessmanyetsocompletely incompetentasanexecutive.Today’sevilgeniusesfindhimembarrassing and tiresome.All they and their predecessors ever reallywantedwas a system permanently guaranteeing them inordinate fortunes and power,witha clubbableBushorRomneyat thehelm.Over thedecades,however, asthey decided again and again that their ends (money, supremacy) alwaysjustified any and all means (stoking racism and other hatreds, spreadingfalsehoods, rousing their rabblewhilealso rigging the systemagainst them), itwas bound to end somewhere in this horrid vicinity. In 2016, as the currentgenerationofFaustsmadetheirdarkestbargainyet,surelysomeofthemsmelleda whiff of sulfur or heard a demonic cackle as they signed away whateverremainedoftheirsouls.

Theobeisance of the rich right and their consiglieri toTrump for the lastfouryearshasexposedmorenakedlythanevertheircompact—everythingaboutmoney, anything formoney—and the events of 2020 pushed that along to aneven more shameless, grotesque crescendo. In early spring, when COVID-19hadkilledonlydozensofAmericans,StuartStevens,astrategistforfourofthe

fivepreviousGOPpresidentialnomineesbutnowa fierceapostate,wrote that“thoseofusintheRepublicanPartybuiltthismoment,”because“thefailuresofthe government’s response to the coronavirus crisis can be traced directly tosomeof the toxic fantasiesnowdear to theRepublicanParty….Government isbad. Establishment experts are overrated or just plain wrong. Science issuspect.”

HecouldhavealsolistedBelieveinourperfectmythicalyesteryear,Allhailbig business, Short-term profits are everything, Inequality’s not so bad,Universalhealthcareistyranny,Libertyequalsselfishness,Co-optliberals,andEntitledtoourownfactsasoperatingprinciplesoftheRepublicanPartyandtheright.Duringthefirstsixmonthsof2020,allthosemaximsdrovetheresponses(andthenonresponsiveness)oftheTrumpadministrationanditsextendedfamilyofpropagandistsandalliesandflyingmonkeys.

Stevensreferredtothegovernment’s“failures,”andobjectivelyitdidfail—torespondpromptlyandaggressively,todeveloporexecuteaneffectiveorevencoherent strategy, tominimize thewholesale lossofAmerican lives.Butapartfrom this administration’s special incompetence andOrwellian denial of facts,while its handling of the pandemicmaywind up as apolitical failure, almosteverypieceofthecrises’exacerbationbythemwasinevitablebecauseeachonecamedirectlyoutoftheright’splaybookofthelastseveraldecades.

Government is bad. A Republican administration uniquely unsuited andunready and really unwilling to dealwith such a national crisis?Decadesbefore our latest show-business president defamed his entire executivebranch as a subversive Deep State, the cocreator of late Republicanismannounced in1981, a fewminutes after becomingour first show-businesspresident, that“in thispresentcrisis,government isnot thesolution toourproblem, government is the problem,” thenmade a shtick out ofwarningAmericans to consider any offers of help from the government“terrifying.”*1

Believe inourperfectmythicalyesteryear.Theright twistedandexploitednostalgiainthe1970sand’80stogetitsway,sellingpeopleonarestorationofold-timeAmericawithstorybookdepictions thatomittedall the terriblepartsofthepast—includingtheepidemicswehadbeforewebuiltapublichealthsystemandbeforegovernmentsrequiredcitizenstogetgovernment-funded vaccines; the economic panics and collapses we had before

government intervened to help unemployed workers; the phony miraclecuresthatcharlatanshowmenmarketedtousbeforegovernmentputastoptothem.Establishmentexpertsarewrong,scienceissuspect.Sincethe1980s,theoiland gas and coal industries have conspired with the right to encourageAmericans to disbelieve the scientific consensus on global warming,because that science created pressure to mitigate a global crisis withgovernmentinterventionsthatcouldreducethosebusinesses’profits.Fromthe start in 2020, the reckless right, with the president in the lead,encouragedAmericans todisbelievevirologists,epidemiologists,andotherscientific experts, because trusting them would be bad for business andstockprices.Entitled to our own facts. That systematic spread of coronavirusmisinformation byTrump and the right through the first pandemicwintercouldn’t have happened without the creation in the late 1980s (RushLimbaugh)and’90s(FoxNews)ofbig-timeright-wingmassmedia.Theircontinuous erasure of distinctions between fact and opinion has alwaysserved the propaganda purposes of the political party most devoted toservingtheinterestsofbigbusinessandinvestors,andduringtheCOVID-19crises—Reopennow—theyattemptedtoservethoseinterestsdirectly.Short-term profits are everything. For years, reckless financial operatorsdraggedhealthy enterprises into leveragedbuyouts andpiledon excessivedebt,makingbillionspersonallybutthecompaniesweakandbarelyabletosurvive in normal times. Then when things got bad in 2020, the LBO’dcompanies (such as J. Crew and NeimanMarcus) started dying off evenfaster than others: excessive debt turned out to be a main underlyingconditioncomorbidwiththeeconomiceffectsofthepandemic.Liberty equals selfishness. The right spent decades turning brat into asynonymforultra-conservative,forgingatantrum-basedpoliticsfocusedonhatingsensible rules that reduceunnecessarydeathsandsickness—noguncontrol!nomandatoryvaccinations!nouniversalhealthinsurance!Sointhespringof2020,ofcoursemobsofchildishadultswereexcitedtothrowself-righteous tantrums on TV about being grounded by themean grown-ups.Whilealsoplayingsoldierbycarryingsemiautomaticriflesinpublic.Inequality’s not so bad. The glaring new light of the pandemic vividlyshowed the results of the system we’ve built. The health risks and the

economicburdensarebornedisproportionatelybypeoplenearthefinancialedge, black and brown people, peoplewith low-paying jobs that can’t bedonefromhome.Andontheotherhand,weseemoreclearlythaneverhowthe lucky top tenth, the peoplewho ownmore than 80 percent of all thestocksandotherfinancialwealth,inhabitanalternateeconomicuniverse.Universal healthcare is tyranny. A healthcare system already fractured,unfair,inefficient,confusing,andanxiety-provokingasaresultofitscapturebyafor-profitmedical-industrialcomplex?Check.Andasystemuniqueinthe world for making its exceptionally expensive care a fringe benefit of(some)particularjobs—atamomentwhentensofmillionsofjobssuddenlydisappeared?Check.

Speakingofplaceswithbettersocialcontracts,wheregovernmentsaremoretrusted and permitted to be effective: as the pandemic spread, most of thecountries I singled out for praise in Chapter 24, “American Exceptionalism,”quickly put strict national protocols in place, and had COVID-19 death ratesrunninghalf,athird,aquarterofAmerica’s.Thenthere’sSouthKorea,amongthemostpopulousdevelopedcountries:inlateMarch,100peoplehaddiedthereand100intheUnitedStates—buttwomonthslater,only267SouthKoreanshaddied,makingtheirdeathrate,adjustedforpopulation,one-sixtiethofours.Otherdevelopedcountriesalsomorestraightforwardlyandimmediatelyaddressedthemassive economic consequences, without political rancor, because providinggood social safety nets to try to protect everyone from economic disaster issimplywhatgovernmentsdo.

ASix-WeekCaseStudy:EvilGeniuses,Minions,Enablers

U.S. presidents (and governors andmayors) have nomore important job thanpreventing their citizens from dying. In 2020 ours failed to save tens ofthousands.ButasI’vealsoarguedinthisbook,runningacountry(oracompanyor one’s own life) is a matter of making difficult trade-offs and balances,optimizing amongdifferentneeds rather thanpursuingone to the exclusionofeverythingelse.Howmuchisonelifeordeathworth?Howmuchareahundredthousandoramillionlivesanddeathsworth?Exactlyhowandhowquicklydoyoureopencommerceandlife?Theinstantpoliticizationofthepandemicbytherightwasacasestudyofthefollyofbinarythinking.Itwasacharacter-testingepisodeforpeopleandinstitutions.Prioritieswerestarklyrevealed.

In lateFebruary2020, because stockprices begandropping, the presidentbeganpayingattentiontotheepidemic—andinsistingpubliclythattherewasnocause foralarm.Abig reason themarketwentdown,hesaidonFebruary25,was that a Democratic presidential debate the night before had spookedinvestors,butnoworries,because“afterIwintheelection,”“thestockmarketisgoingtoboomlikeit’sneverboomedbefore.”

Thesameday theSpeakerof theHousesaidofTrump’sstatementsaboutthe virus, “You don’t know what you’re talking about.” Entitled to our ownfacts. That evening at his first virus-task-force press briefing, asked about aCenters for Disease Control official’s latest expert judgment that “it’s not aquestionofifbutrather…whenandhowmanypeopleinthiscountrywillhavesevere illness,”Trump said, “I don’t think it’s inevitable.”Asked if he agreedwithLimbaughandothersontherightthatexpertswere“exaggeratingthethreatofcoronavirustohurtyoupolitically,”hesaid,“Yeah,Iagreewiththat,Ido,Ithinktheyare.”Amere“fifteenpeople”inAmericahadbeeninfected,anuntruefigure he repeated a dozen times during the briefing, and “within a couple ofdays,”hepromised,it’s“goingtobedowntoclosetozero,that’saprettygoodjobwe’vedone.”Thefollowingdayhemadehismagicalthinkingmoreexplicit—“It’sgoingtodisappear,onedayit’s likeamiracle, itwilldisappear”—andtwenty-four hours after that, he held one of his big rallies, in SouthCarolina,wherehesaidwarningsofaviralepidemicspreading toAmericaamounted totheDemocrats’“newhoax”tomakehimlookbad.

Co-opt liberals. On that same day, alas, a college classmate ofmine, thesuperrationalHarvard lawprofessor and formerObamaofficialCassSunstein,madehimselfausefulidiotforthepresidentandtheright.“Onethingisclear,”SunsteinwroteinhisBloombergNewscolumnjustasAmericanshaddefinitelystarted dying from COVID-19, “people are more scared than they have anyreasontobe,”because“mostpeopleinNorthAmericaandEuropedonotneedtoworrymuchabouttheriskofcontractingthedisease.”Andtherealproblemwasthatallthatneedlessfearwasgoingtoresultin“plummetingstockprices.”

Tendayslater,inearlyMarch,aHousesubcommitteeheldaregularhearingon theCDC’s annual budget,which the administrationwas trying to cut, as ithadtriedtodoeveryyear—largecutsthattheKochorganizationAmericansforProsperityhadrecommendedbecause,asitcomplainedin2018,“CDCfundinghas already grown significantly over the last fifteen years.” Trump’s CDCdirector, Robert Redfield, a conservative, testified. A right-wing Republicancongressman,wholikeRedfieldisaphysician,usedhisquestiontimetoexplain

why dealing with “these kind of new viruses” requires the government tocontinue guaranteeing high profits to the pharmaceutical industry. “On thevaccinefront,”hesaid,prospectivelawslikethebilltheHousehadjustpassedto let the government negotiateMedicare drug prices downward “will destroyAmericaninnovation”inmedicine.HeinstructedRedfieldtoagreewithhimthatonly“theprivatesector”canproperlydealwithCOVID-19and“thesekindsofpublichealththreats.”

But then Redfield shared with the congressman his surprise anddisappointmentthatthetwobigU.S.medicaltestingcompanieshadnot,ontheirown,“gearedupsooner,”startinginmid-January,tohandlemasstestingforthecoronavirus. “I anticipated that the private sector would have engaged andhelpeddevelopit”and“befullyengagedeightweeksago”todealproperlywiththis newdisease, said thenational directorof disease control. “Herewere twomen wondering aloud,” the journalist Alex Pareene wrote at the time, “whyrealityhadfailed toconformto their ideology.Howodd that thesecompanies,whoseonlyresponsibilityistotheirshareholders,hadfailedtomakeupfortheincompetenceofthisadministration.”

ConfirmedCOVID-19casesanddeathsintheUnitedStateshadjustbegunincreasing exponentially, cases quintupling and deaths tripling in a week.However, as a rule, getting America’s full attention requires show businessand/or financial spectacle: starting the day after that House hearing, in onetwenty-four-hourperiod,theNBAsuspendeditsseason,TomHanksannouncedhewassick,thepresidentreadaspeechonTV,andstockpricesfell10percent,atthattimethefourthlargestone-dayU.S.marketdeclineinhistory.

All hail big business. The next day Trump held a coronavirus pressconference in theRoseGarden to promisehe absolutelyhad everythingundercontrol. The main event was a weird parade of ten retail and health industryCEOs he emceed, “celebrities in their own right,” naming each one—“greatjob…incredible work…tremendous help…tremendously talented…a greatcompany”—like finalists in a Miss USA pageant. Mr. Walmart promised to“makeportionsofourparking lot available in select locations…so thatpeoplecanexperiencethedrive-thru[COVID-19testing]experience.”TheDowJonesstockaverageendedtheday,aFriday,1,985pointshigher,9percentup.

ThefollowingMondaythepresidentfinally,grudginglyannouncedaplan,recommending that COVID-positive and sick and particularly vulnerableAmericansstayhome—butjustforalittlewhile,acoupleofweeks,untiltheend

of March, calling it “15 Days to Slow the Spread.” By then governors andmayors began instituting the measures actually necessary to control theepidemic,mandatory closings and stay-at-homeorders that drastically reducedcommerce.With stock prices having fallen for threeweeks, the investor classwasalreadyunhappyandanxious,butnowtheyandtheeconomicrightfreaked.Corporaterevenueswouldtakegianthits;keepingpeoplesolventwouldrequirestupendous government spending; some big businesses could be temporarilynationalized; and stock prices would decline more—which they immediatelyproceeded to do, dropping that day alone by 13 percent on their way to a20percentdeclineinaweekandahalf.

Those next eleven days in March were a remarkable time to watchAmerica’sevilgeniussquadronsscramblethejets.

On that sameMonday, March 16, when the shutdown really started, theconservative Hoover Institution published a piece called “CoronavirusPerspective”recommendingagainstanyrestrictionsontheeconomybecausethepandemicjustwasn’tgoingtobeamajorpublichealthproblem.“IntheUnitedStates, thecurrent67deathsshouldreachabout500” inall, theStanford thinktank article projected, and in a quick follow-up article called “CoronavirusOverreaction,” the same writer completely showed his ideological cards.“Progressivesthinktheycanruneveryone’slivesthroughcentralplanning,”hewarned, sodon’t let themdo it to fight the spreadof this no-big-deal disease.Thewriterwas neither amedical professional nor an economist, but a lawyernamedRichardEpstein,ablue-chipeconomicright-wingerfromthe1970sand’80s—influentialUniversityofChicago lawprofessor, earlyFederalistSocietyVIP,CatoInstitutescholar,editoroftheLawandEconomicsmovement’smainjournal. Right away, “conservatives close to Trump and numerousadministration officials [were] circulating” Epstein’s inexpertpronouncements,TheWashingtonPostreported.*2

Right around then, according to “a Trump confidant who speaks to thepresident frequently” and spoke to a Financial Times reporter about thoseconversations,JaredKushnerwastellinghisfather-in-law“thattestingtoomanypeople, or ordering toomany ventilators,would spook themarkets and sowejustshouldn’tdoit….Thatadviceworkedfarmorepowerfullyonhimthanwhatthescientistsweresaying.”

On Friday,March 20, Americans for Prosperity issued a hysterical pressrelease over “the recent moves by some states to shut down all non-essential

businesses,”because—ignoring thenon-essential caveat thatpermittedgrocerystoresandpharmacieseverywhere tostayopen—“ifbusinessesareshutdown,where will people who aremost in need get the things they need to care forthemselvesandothers?”But then theygot right to theirotherbig fear: federalspending tohelp individualAmericanswith“wasteful…provisions thathadnoplaceinanemergencyreliefpackage.”

Thatsamenightatanonline“AFPactivisttownhall,”thegroup’spresidentwarnedthattheimminentfederalrecoverylegislationtodealwiththeeconomicconsequences is“gonnahave lasting ramifications forourcountry.”Whenoneof the AFP activists asked “how we can show others the negative effects ofgovernment-controlledsocializedmedicineinlightofthecurrentsituation,”thesecond main presenter, a Mississippi lawyer and vice president of Koch’sumbrella political organization, simply said that “America really does have areally good healthcare system because historically we’ve believed in freeenterprise,” so everybody should just be “reminding people of howwe got towherewearewithafreeenterprisesystem.”Plus,theAFPpresidentpracticallygasped—“Icannot imaginehowwewouldbe responding” to thepandemic“iftheentirenation,everycitizeninthisnation,wastrappedinasingle-payerall-ingovernment-run system.” The men agreed that the federal public healthbureaucracies hadn’t done a good job on COVID-19, of course, but that thepresidentwasnowcrackingthewhip.Asforfinancialassistancetocitizens,thelesser Koch minion said that if the federal government had “exercised fiscaldisciplinebeforenow,we’dbeinapositiontohelppeoplemore”inwaysthat“mightincludespendingsomemoney.”

Theeconomiclibertarians’defactopandemicczarforawhilewasStephenMoore,theright-wingZeligandearlyTrumpistsosecond-ratethatin2019eventhe Republican Senate wouldn’t consent to put him on the Federal ReserveBoard. On the pandemic, his inside-outside role was, like the president’s,Republicanism ad absurdum: he was responsible simultaneously for creatinggovernmentpolicyandforhelpingtodiscreditandobstructgovernmentpolicies.For the former, he directly advised Trump, as a member of the EconomicRecovery Task Force along with his pals Larry Kudlow and Arthur Laffer.Trumpheldregularconferencecallswiththosethree,knownintheWhiteHouseas “Laffer’s guys”—according to TheWashington Post, “Trump takes themseriouslybecauseheseestheGOPtaxlawtheypushed,”the2017giveawaytobigbusinessandtherich,“asoneofhissignatureagendaitems.”

For the outside antigovernment work, Moore collaborated with, among

others, the Koch-created entity FreedomWorks; a cofounder of the Tea PartyPatriots;andtheheadofALEC,theinfluentialbig-business-fundedorganizationofright-wingstatelegislatorsonwhose“privateenterpriseadvisorycouncil”hesitswithaprincipalKochCompanieslobbyist.

For instance, Moore appeared on the YouTube talk show of theIndependenceInstitute,alibertarianthinktankfoundedinthe1980s.Aggressivegovernmentresponsestothepandemicwere,hesuggested,intended todamagethe economy in order to damage Trump politically, and keeping nonessentialworkers at home was “so unnecessary,” because “the only ‘nonessentialworkers’arepeoplewhoworkforthegovernment.”Thisisall“gonnagodowninhistory…asoneofthegreatabusesofgovernmentalpower,”because“here’swhat’s scary—our government spending this year” will be so large. When aviewerasked if reopeningcommerce tooquicklymight lead toanewwaveofdisease,he said, “Let’spray…thatwedon’thavea recurrence,” althoughwhoknew,“it’snotmyareaofexpertise.”ButinaninterviewthesameMarchdaywithTheWashingtonPost,Mooresaidhe’dbeenpromotinghis“zipcodeidea”inside the administration—that is, an idiotically impractical regimen in which“you find the…zipcodes thatdon’thave thedisease,andyouget those thingsopened up….This isn’t rocket science.They should probably have never beenshutdown.”

—

ThefirstSundaytheshutdownwasnational,March22,isparticularlyinterestingtolookatclosely.

ThatdayMooremetwithadozenCEOsandeconomiststoplottheirpushtoendrestrictionsoncommercerightaway,andhisformeremployer,TheWallStreetJournal,reportedthat“thegroupsuggestedEasterSundayasadateforan‘economicresurrection,’ ”justthreeweeksaway.

ThatsamedayanotherintelligentwriterwithwhomI’mfriendlyalsomadehimself,I’mafraid,aneoliberalusefulidiotfortherightbyarguingblithelyandprematurely for ending a public health war that had barely begun. TomFriedman’sNewYorkTimes columnwasbasedmainlyonan interviewwithacelebrity physician who specializes in nutrition, not infectious disease orepidemiology, and it was all about economics—“making sure that…we don’tdestroy our economy, and as a result of that, even more lives.” Only 340Americanshaddied,andwehadnocluehowmanywereinfected,orthenature

ofCOVID-19 immunities.But thedoctorandFriedmanagreed thateverybodyshould“basicallystayhomefortwoweeks,”untilearlyApril,andthenanyonewho wasn’t symptomatic or elderly or otherwise obviously vulnerable, theuntested lotofus,“shouldbeallowed toreturn toworkorschool.”Presto,weshould“ ‘reboot’our society in twoorperhapsmoreweeks,”Friedmanwrote.“Therejuvenatingeffectonspirits,and theeconomy,”hequoted thephysicianpredicting,“wouldbehardtooverstate.”

At that evening’s White House task force TV briefing, the president’seconomiclieutenantPeterNavarroexplainedwhytheyweren’tgoingtousetheDefense ProductionAct tomake companiesmanufacture scarcemedical gear.“We’re seeing the greatest mobilization in the industrial base since WorldWarII,”heclaimed,but“onapurelyvoluntarybasis—basedontheleadershipof this administration—we’re getting what we need without—without puttingtheheavyhandofgovernmentdown.”Allhailbigbusiness.

That same Sunday, a couple of hours later, the next character to pop upconsequentiallywasSteveHilton,aFoxNewsanchor.He’dbeenayoungevilgenius of the U.K. right, an Oxford-educated branding expert who workedcloselywithprimeministerDavidCameronbeforemovingtotheUnitedStatesin 2012 to teach for a year at the Hoover Institution.*3 Like Trump, he’s awealthy, cunning, well-connected showman and opportunist who presentshimselfasapopulistfightingfor“massiverevolutionarychange.”“I’mrich,butI understand the frustration” of the “victims of elitist agenda,” he says, andclaimsthathe“probablywouldhavesupported”SandersversusTrumpin2016.Instead,he’stotallyMAGA.

Thatnightonhisweeklyshow,TheNextRevolution,beforehebroughtonKudlow, the director of the National Economic Council (“Larry, I’ve alwaysloved your energy and optimism”), Hilton raved on about the urgency ofAmericagettingback tobusinessasusual immediatelybutwithhisownfake-angry,incoherent,disingenuousTrumpyspin.Themultitrillion-dollareconomicrecoveryprogramswouldn’tactuallyhelpthecommonman,hesaid,butwouldamount toa“totalgovernment takeoverof theeconomy.”Hiltonsaidhelovedbusiness,andhebraggedaboutbusinesseshe’dstarted,buthealsosaidit’s“ourruling class and their TV mouthpieces whipping up fear over this virus,[because] they can afford an indefinite shutdown.” And finally came thedemagogic Fox News version of the message Tom Friedman delivered thatmorning toTimes readers: “Youknow that famousphrase, ‘Thecure isworse

thanthedisease’?Youthinkitisjustthecoronavirusthatkillspeople?Thistotaleconomicshutdownwillkillpeople.”

Forty-eight minutes later Goldman Sachs’s senior chairman and formerCEO Lloyd Blankfein, having last tweeted more than a week earlier (aboutletting private industry “fix the govt’s mismanaged virus testing program”),soundedexactlythesamealarm—that“crushingtheeconomy,jobsandmoraleisalsoahealthissue-andbeyond.Withinaveryfewweeksletthosewithalowerrisktothediseasereturntowork.”

And then, just before midnight, came a tweet from devoted Fox NewsviewerDonaldTrump: “WECANNOTLETTHECUREBEWORSETHANTHEPROBLEMITSELF,”hedeclared.Thecountrywasbarelysevendaysintohis government’s “15 Days to Slow the Spread” plan, but the president hadalreadylostpatience.

The nextmorning he retweeted himself, including his stagewink toWallStreet that he’d be ending this shutdown nonsense soon—“ATTHEENDOFTHE 15 DAY PERIOD, WE WILL MAKE A DECISION AS TO WHICHWAYWEWANTTOGO!”—andsaidoutloudtoreporters,“Wecan’thavethecurebeworsethantheproblem.”But thestockmarketneverthelessendedthatdayanother3percentdown.

The followingmorning,March 24,Trump issued an evenmore desperateversion of hisHiltonian tweet—“THECURECANNOTBEWORSE (by far)THAN THE PROBLEM!”—and held a conference call with a group of bigfinancial players, “alternative asset” multibillionaire investors who operatehedgefundsandprivateequityfirms.AmongthemwereStephenSchwarzman,thecofounderandCEOoftheBlackstoneGroup,theworld’slargestalternativeasset firm. (He’s the Koch associate who’d complained that a proposal forfinanciers to pay income taxes at the rate paid by other affluent people wasequivalent to Hitler’s invasion of Poland.) In the weeks just before thatconference call about the pandemic with Trump, Schwarzman had given$10milliontothesuperPACdevotedtoensuringthatRepublicansmaintainedcontrolof theSenate,and$2.5million to theGOPHousesuperPAC.AlsoonthecallwastheheadofthecompanythatownstheNewYorkStockExchange—who, with his wife, Republican U.S. senator Kelly Loeffler, had just soldmillions of dollars’ worth of stocks in two dozen sales starting the day sheattendedaprivateSenatebriefingon thepandemicamonthbefore themarketstartedcrashing.*4(Afewweekslaterhedonated$1milliontothemainTrump

reelection super PAC.) This finance industry plenum on the conference call,accordingtoTheWallStreetJournal,stressed“theneedto…focusonadate”foropeningupandgeneratingmorebusinessrevenueASAP.TherestofWallStreethad apparently gotten the memo and, reassured, bid up the market 5 percentwhenitopenedthatmorning.

Atnoonthepresidentbeganhisspecialtelevisedlive“townhall”—thatis,talkingtoaFoxNewsinterviewerontheWhiteHouselawn.Trumpstucktotheplan hatched in the previous forty-eight hours, focusing on a date for thebusiness resurrection. “I would love to have the country opened up and justraringtogo”innineteendays,heannounced,“byEaster.”

—

Thestockmarketkeptrisingtherestofthatweek,butthezealotsoftheright,theScroogesandMr.Pottersaswellasthecelebrityknow-nothings,weren’tabouttostopusingthepandemictopickfights.AsthenumberofnewlyunemployedAmericans reached 10 million on its way toward 30 million, a group ofprominent Republican senators threatened to keep the first big economicrecovery bill from passing quickly because making those millions of citizensfinanciallywhole fora fewmonthsmightgive the lazy“doctors [and]nurses”among them a “strong incentive…to [try to] be laid off instead of going towork.”Bythen,withalmost100,000AmericansCOVID-19-positiveandnearly2,000dead,TrumpandhisFoxNewsclaquewerenolongertotallydenyingtherealityofthehealththreat.*5ButRushLimbaughinlateMarchwasstilltellinghis15million listeners todoubt theDeepStatedoctorsandscientistsadvisingTrump.“Wedidn’telectapresidenttodefertoabunchofhealthexpertsthatwedon’tknow,”thePresidentialMedalofFreedomwinnersaid.“Andhowdoweknowthey’reevenhealthexperts?Well, theywearwhitelabcoatsandthey’vebeenonthejobforawhileandthey’reattheCDCandthey’reattheNIH….ButtheseareallkindsofthingsthatI’vebeenquestioning.”

During the previous big economic crisis in 2009, the Kochs used theirorganizationsFreedomWorksinWashington,andAmericansforProsperityjustacrossthePotomac,toharnessandamplifygrassrootsanxietyandconfusionintheprovinces.Fromthoseheadquartersthey’dexecutive-producedthepoliticallyuseful shows of performative anger by Tea Party protesters against theDemocratic-led federal government. In 2020 the pandemic provided a rebootopportunity—this time for protests against state and local governments,

especiallythoserunbyDemocrats,thatweren’tfollowingthemaximalistlineoninstantly reopening business. They mobilized their militias—old Tea Partiers,gun nuts, antivaxxers, random Trumpists—for demonstrations around thecountrythatbeganonEasterMonday.

“There’samassivemovementon therightnow,”StephenMooreclaimed,“growing exponentially. People are at the boiling point. They are protestingagainst injustice and a loss of liberties.” He insisted, The Washington Postreported, that “the protests have been spontaneous and organized at the locallevel,”althoughheadmittedthat“hisgrouphasbeenofferingthemadviceandlegalsupport.”“I’mworkingwithagroupinWisconsin,”hetoldhislibertarianaudienceonYouTube,“toshutdownthecapitol”withtraffic,and“wehaveonebigdonor inWisconsin,hesaid ‘Steve, Ipromise Iwillpay thebailand legalfees of anyone who gets arrested.’ The more civil disobedience the better,however you want to do it.” So why, according to polls, were two-thirds ofAmericans in favorof thenationalquasi-quarantine?Because, thispresidentialadviserandwould-beFedgovernorsaid,“theAmericanpeoplearesheep.”

The two Koch-created enterprises and Moore were joined by a newerorganizationalsodevotedtopromotingright-wingeconomics,theConventionofStates,fundedbyRobertMercer—hedgefundbillionaire,earlyBreitbartNewsinvestor,Trump’sbiggest2016donor—andoverseenbyacofounderoftheTeaParty Patriots and (such a long game) a strategist for David Koch’s 1980Libertarianvice-presidentialcampaign.InMichigan,theprotestswereorganizedand promoted by existingRepublican groups, one connected to the right-wingbillionaireDeVosfamily,andinIdahobyagroupfundedbyanewCoors, thesonofthecounter-EstablishmentfounderJoseph.*6

Themissionofthosedemonstrations,asTheWashingtonPostreported,was“making opposition to stay-at-home orders—which had been in place inmoststates for only a couple of weeks or less—appear more widespread than issuggestedbypolling.”The shorthandAstroturf for thesekindsof protests is amisnomer. Rather, they’re more like sod: real grass but more expensive,centrallyproducedandharvested,thenrolledoutbyprofessionalsoncommandto look instantly picturesque. It seemed clear, from the social media posts ofnominally local groups all over the country, that talking points and specificlanguage were being issued from headquarters. FreedomWorks’ protest brandReopen America became the name for local protests all over the country—Reopen Wisconsin, Reopen Oregon, Reopen Nevada, Reopen Delaware, and

manymore.Theironlinenationalprotestcalendarstipulatedthat“thesearenotFreedomWorks events, but…if you’re interested in planning your own event,clickhere forourplanningguide.”Theprofessional right-wingersonKStreetprovidedphoto-opprotest tradecraft instructions to theprovincials—makesureto“include…nurses,healthcareworkers,etc.asmuchaspossible,”andto“keep[signs]homemade.”AmericansforProsperityheldanonlinetrainingsessionforwould-be agitators on how to spreadmemes that they actually called “Best atGoingViral.”

BecausethepresidenthadbeenunabletoholdanyofhisMAGAralliesforweeks,thenmonths,thedemonstrationsalsoservedasadhocreelectionevents,keeping thesuperenthusiastsexcitedandactingout their love for thepresidentonTV,wherehecouldseeit.AttheendofthefirstweekofprotestsinApril,the countrywas still in themiddle of his government’s “30Days toSlow theSpread,”asthesecondphasewascalled,butthepresidentsaidfuckthat—infourminutes onemorning, he posted tweets to rev up the cultists in three swingystates: “LIBERATE MINNESOTA!” and “LIBERATE MICHIGAN!” and“LIBERATE VIRGINIA, and save your great 2nd Amendment. It is undersiege!”

Inadditiontothatworklowandoutsideorganizingproteststomakeitscaseappearmorepopularanddemocratic,andthevariousoperationshighandinsideshapingtheconversationtogivecorporationsandinvestorsanimmediatebreak,the economic right also startedusing the crisis in serviceof its longgame.Atthat AFP online meeting for activists in March, the lesser Koch subordinatewarned that “history shows us that what Congress does is they exploit thesituation”duringcrises,evenashis seniorcolleague repeatedlyexplainedhowthey,theKochnetwork,intendedtoexploitthiscrisisthemselves—forinstance,bygettingfederalandstategovernments topermanently liftvarious regulatory“barriers” that had been waived temporarily for the medical industry. TheHeritage Foundation, acting as if itwere the government, created a “NationalCoronavirus Recovery Commission” whose “commissioners” immediatelyissued recommendations. Ten days after Trump took office, the evil geniuseshadhadhimsignanexecutiveorderthatcleverlysabotagesfederaloversightofbusiness—it requires that two existing regulations be repealed for everyproposednewone.However,theindependentagenciesthatoverseeWallStreetand energy have been exempt from the new rule, permitted to keep addingregulationsasnecessary;accordingtotheNationalCommission,recoveryfromthepandemicabsolutelydependsonthefinanceandoilandgasindustriesalso

beingfreedfromthatregulatoryyoke.Inaddition,Heritagesays,theemergencyrequires a new “mechanism that allows for the unilateral…suspension” by thepresident of any “costly regulations” he chooses. People at theWhite Housewerealsoapparentlykeenonaproposalbytworight-wingeconomists—oneatAEI, the other at Hoover—for the government to give needy citizens moremoneyrightaway,butonlyiftheyagreedtotakelessinSocialSecuritybenefitswhentheyretire.

I’ve talked earlier about howGovernment is bad becomes self-fulfilling,that an unimpressive and underdelivering federal government has served thelong-termpoliticalinterestsoftheright.Trump’sincompetenceonthepandemicwill be a test of that dynamic. In May, at the end of “30 Days to Slow theSpread,”thepresidentwasstillthinkingmagically,adefactonostalgistforthedays before modern medicine. Believe in our perfect mythical yesteryear.“Testing[people]issomewhatoverrated,”hesaid,and“thisisgoingtogoawaywithout a vaccine.” In otherwords, a reporter asked the president,Americansjust had to accept that reopening without enough testing and contact-tracingwouldcauselotsmoredeaths?

Yes.“Icallthesepeoplewarriors,andI’mactuallycallingnow…thenation,warriors.Youhavetobewarriors,”bywhichhemeant,ofcourse,bewillingtobekilledbyCOVID-19,fallensoldiersforAmericancapitalism.

But apart from that, everything would soon be fantastic. “I think you’regoing to have a tremendous transition….I think next year is going to be anincredible year economically….You see it with the stock market, where thestock market’s at 24,000….We’re going to have a great economy very soon,much sooner than people think, much sooner.” By June, he and a senioreconomicadviserwerefocusedonanexcitingnewpandemicrecoverymeasure—“acapitalgainsholiday”tocutrichpeople’staxesonstockprofitstozero.

—

Before these freshhells,as I’vespent thebookarguing,ourpoliticaleconomyand society were already at a historic crossroads, Americans stuckuncomfortably on the cusp between searching for lost times and imagining abetter future.Wehavenowarrivedatascarierplace, the inflectionpointevenmoreobvious.Butit’snotexactlyunprecedented.We’vebeenherebefore.

We were in a place like this when my grandparents were young in the

1910s.Therewastheglobalinfluenzaepidemic,ofcourse,whichkilledonein150

peopleintheUnitedStates, theequivalentof2millionAmericansnow.Butinmany other ways as well, the early 1900s looked remarkably like the early2000s.

At the endof thenineteenth century, corporatemergers and consolidationhadaccelerated, andpolitical corruptionby the richandpowerfulhadbecomeextreme. A Wall Street crash occurred in 1907. Americans experiencedextraordinary technological change—electrification, telephones, movies,airplanesandcars,allatonce.Theforeign-bornpopulationoftheUnitedStateshadtripled.Theinfluxofnon-ProtestantforeignersandthemassmigrationintoU.S.citiesofblackpeople,accompaniedbyskillfulracistfictions inarivetingnewmedium(TheBirthofaNation),promptedarevivaloftheKuKluxKlan.Political engagement was high: the turnout in the midterm elections of 1914wasn’texceededforacentury…until2018.

The 1914Walter Lippmann book I quoted earlier,Drift andMastery: AnAttempt toDiagnose theCurrentUnrest, is a staggeringexhibitof the rhymesbetween thenandnow.Lippmannconsidered theconsequencesof feminism,aword not even twenty years old, and the imminent electoral power ofenfranchisedwomen; thehomogenizingofU.S. cities; and the “overwhelmingdemanduponthepressfor…personaldetailsopen to thevastpublic.Gossip isorganized;andwedobytelegraphwhatwasdoneinthevillagestore.”

Should the size and power of corporations be limited?What happened toold-fashionedloyaltybetweenemployersandemployees?Issocialismpractical?A progressive movement flourished. In the previous dozen years, Lippmannwrote,“peoplehadbegun toseemuchgreaterpossibilities in thegovernment”and “looked to it as a protector from economic tyranny.” As a result, “bigbusinessmenwhoare at all intelligent…are talkingmore andmore about their‘responsibilities,’ their ‘stewardship’ ”—exactly as the Business Roundtablenervouslydidattheendof2019.“Todayifyougoabouttheworld,”hewrotein1914, “you find that countries like…Denmark are the ones that have comenearestthehighlevelofsocialprosperity.”

In America, anarchism was bubbling up on the right as well as the left,alongwithageneral“senseofconspiracyandsecretscheming”thatsupposedlyserved“labyrinthineevil.”HenotedtheriseofnostalgicantimodernangeranditspoliticalembodimentbythepopulistWilliamJenningsBryan,who’djustlost

thepresidencyforthethirdtime.“HeisthetrueDonQuixoteofourpolitics,forhe moves in a world that has ceased to exist,” but like his enemies—the“propertiedbigot,”thewell-situated“defendersofwhatAmericahasbecome”—helacked“anyvisionofwhatAmericaistobe.”

Twenty years after that, in the 1930s, when my parents were young, wewere also in a place like we are today. The Great Depression revealed theprecariousnessandexcessiveunfairnessofoureconomy,thenpromptedagreatphilosophical shift and the creation by the left of fundamental changes thatrestoredAmericancapitalismbymakingitnewandimproved.

Andwewere in aplacekindof like thiswhen Iwasyoung in the1970s.Following hard on the whiffs of revolution around 1970, crazy inflation andvariousdisconcertinglargeevents—theoilpricecrisis,Watergate,theVietnamsurrender, the collapseof iconicU.S.manufacturers—combined to createhighanxietyandfear,ofwhichtheeconomicrighttookbrilliantpoliticaladvantage.*7

Only a crisis—actual or perceived—produces real change, because onlythen does the politically impossible become the politically inevitable, you’llrecallMiltonFriedman,thenewpresident’seconomichero,explainingin1982.You neverwant a serious crisis to go towaste, tomiss the opportunity to dothingsthatyoucouldnotdobefore,you’llrecalltheincomingpresident’sWhiteHousechiefofstaff,RahmEmanuel,sayinginlate2008asthefinancialsystemwasmeltingdown.

Today’s evil geniuses (and obedient dimwits) of the economic rightwereinstantlydeterminedtoexploitthepandemiccrisestomaintainandincreasetheirpoliticalandeconomicpowerandthustheshareofAmericanwealththatflowstobigbusinessandtherich.Somusttheleftuseanditsalliesuseallavailablecrises to increase their political power and thereby begin to restore thedemocratic sharing of economic power and wealth we once had and evenimproveonit.

That’s why the third-ranking member of the House Democrats, JamesClyburnofSouthCarolina,toldsomefellowmembers,onaprivateconferencecall in the spring, that thepandemic criseswere “a tremendousopportunity torestructurethingstoourvision.”Hilariously,therightprofessedtobeappalledby that, thenwas further “outraged,” according toTheNewYorkTimes,whenthemajority’s proposedmultitrillion-dollar recovery bill “included an array ofprogressivepolicieswellbeyondthescopeofemergencyaid.”Theliberalsweredaringto“usethecrisistoadvancealiberalagenda.”

The leaders of the economic right in 2020 weren’t as terrified by theprospectsofmassdeathorthehugenewtrancheoffederaldebtastheywerebythe stunning, irresistible power of such a crisis to change political rules andideologicalconventionsovernight.

Inthelastchapter,Idescribedthepollssincethe1990sshowingthatmoreand more Americans were in favor of the federal government solving bigproblems.Inasurveyinthespringof2020bySuffolkUniversityforUSATodayabout how the federal government had dealt with the health and economicconsequencesofthepandemic,fullyhalfofAmericanssaidithaddonetoolittleandonly10or11percentthoughtithaddonetoomuch.

Imaginetheeliteright’sshockwhenitsawtheFinancialTimesoneFridayin April 2020. The FT is a moderately conservative million-circulation dailypublishedinLondon(“Since1888,thisnewspaperhasarguedforfreemarkets”),atleastasinfluentialgloballyasTheWallStreetJournal.Twoorthreemonthsearliertheheadlineonthatday’smaineditorialcouldhavebeenagagonapropnewspaperinafantasyfilm:

VIRUSLAYSBARETHEFRAILTYOFTHESOCIALCONTRACT

RADICALREFORMSAREREQUIREDTOFORGEASOCIETYTHATWILLWORKFORALL

These ultimate Establishment conservatives had had a conversionexperience.

AswesternleaderslearntintheGreatDepression,andafterthesecondworld war, to demand collective sacrifice you must offer a socialcontract that benefits everyone. Today’s crisis is laying bare how farmanyrichsocietiesfallshortofthisideal….Wearenotreallyallinthistogether….Betterpaidknowledgeworkersoftenfaceonlythenuisanceof working from home….Radical reforms—reversing the prevailingpolicy direction of the last four decades—will need to be put on thetable….Redistribution will again be on the agenda….Policies untilrecently considered eccentric, such as basic income andwealth taxes,willhavetobeinthemix.

IfI’velosttheFinancialTimes,somestrategistontherichsideintheclass

warmusthavethought,I’velosteliteopinion.TodaysuddenlyeveryonedeemeditessentialforCongresstoshovelouttrillionstoaverageAmericancitizensbymeans of new debt and for the Federal Reserve to conjure trillions more byesotericmonetarymagic!Tomorrowitcouldbewealthtaxesonthesuperrichortrue universal healthcare or carbon taxes on (cheap) oil or God knows whatsocialistmadness!

As theTimes columnist Jamelle Bouie wrote, “If something like a socialdemocraticstate isfeasibleunder theseconditions,” thenpeoplemightbecomeconvinced that it was “absolutely possible when growth is high andunemployment is low,” particularly after Bernie Sanders’s and ElizabethWarren’scampaigns“pushedprogressiveideasintothemainstreamofAmericanpolitics.” Joe Biden echoed this wish. “I think people are realizing,” he said,“ ‘MyLord,lookatwhatispossible,’lookingattheinstitutionalchangeswecanmake,withoutusbecominga‘socialistcountry’oranyofthatmalarkey.”

My case that Americans need to rediscover the defining but atrophiednationalknackfortakingupthechallengesofthenewinnewwaysissuddenlyundeniable and urgent.As theColumbiaUniversity economic historianAdamTooze said early in 2020, we’ve entered “a period of radical uncertainty, anorderofmagnitudegreaterthananythingwe’reusedto.”

We’vealreadyseenhowthepandemicchangedtheeconomyandthecultureand daily life temporarily—and we will continue adapting and adjusting. Butwhat permanent changes will happen? For one thing, I’m betting that theautomated jobless future I laid out in the last few chapters will arrive evensooner.Manyofushavebecomehabituatedalreadytoworkingonlyfromhomeand communicating only with little talking pictures of human colleagues andclients. That’s why ten weeks after the pandemic started driving stock pricesdown,495ofthe500biggestcorporationshaddropped13percent,butthesharepricesoftheotherfivecompanies,thefivelargest—Facebook,Amazon,Apple,Microsoft,andGoogle—were10percentup.

But we really don’t knowwhere the experience of the pandemic and theprotests of 2020 will lead us—the overnight upendings, the long traumas,judginghowindividualsandinstitutionsandideologiesandsystemsworkedorfailed. People in 1918 and 1929 and 1970 (and 1347) had no clue what wascomingnext,either.WillmyhypotheticalgrandchildrengrowupasignorantoftheseeventsasIwasoftheglobalviralpandemicthatmygrandparentssurvivedand of the 1919 “race riots” that included the lynching of a blackman inmy

hometown? For Americans now, will surviving a year (or more) of radicaluncertainty help persuade a majority to make radical changes in our politicaleconomytoreducetheirchroniceconomicuncertaintyandinsecurity?Willwesummonthenecessarywilltoachieveracialfairness?LikeEuropesixhundredyears ago after the plague, will we see a flowering of radically new creativeworks and the emergence of a radically new economic system? Or willAmericansremainhunkeredforever,asconfusedandanxiousandparalyzedaswewere before 2020, descend into digital feudalism, forgo a renaissance, andretreat into cocoons of comfortable cultural stasis providing the illusion thatnothingmuchischangingorevercanchange?

TheUnitedStatesusedtobecalledtheNewWorld.It’sanewworldagain,maybe theway itwas struggling to becomenew in the 1910s.Lippmannwaspragmatic, inmanyways conservative, in no way a utopian, but back at thatchaotic,pivotalmoment,hequotedOscarWilde’slinethat“amapoftheworldthat does not include Utopia is not worth even glancing at,” because socialprogress comesonly bynavigating towardhopeful visions of perfection. “Ourbusiness is not to lay aside the dream,” Lippmann explained, “but tomake itplausible.Drag dreams out into the light of day, show their sources, comparethemwith fact, transform them to possibilities…adream…with a sense of thepossible.”Healsowrote that theurgentnational inflectionpointacenturyagocamedowntochoosing“betweenthosewhoarewillingtoenteruponaneffortforwhich there is no precedent, and thosewho aren’t. In a real sense it is anadventure.”

Solet’sgoalready.

*1TheantisocialistRonaldReaganmostfamouslymadehisnine-most-terrifying-wordscrack(I’mfromthegovernmentandI’mheretohelp)in1986inIllinois.Itwasinaspeechjustbeforebraggingthathe’dgivenmorefederalbillionstofarmers“thisyearalonethananypreviousadministrationspentduringitsentiretenure.”HisantisocialistsuccessorDonaldTrumprevivedthetradition,repeatedlybraggingsince2019aboutthetensofbillionshisadministrationhasgiventofarmers.*2FivemonthsearlierHooverhadpublishedanEpsteinarticleconcludingthat“thereistodaynocompellingevidenceofanimpendingclimateemergency.”InaninterviewinlateMarchwithTheNewYorkerafterhepublishedhisCOVID-19articles,Epsteinsaidhispredictionof500totalCOVID-19deathshadbeenanerror,thathe’dactuallymeanttosay5,000Americansinallwoulddie.Afterthereporterchallengedotherfactualassertions,Epsteinfinallyreplied,“You’regoingtosaythatI’macrackpot….That’swhatyou’resaying,isn’tit?That’swhatyou’resaying?…Admittoit.You’resayingI’macrackpot.”Threeweekslater,nearly5,000AmericansofficiallydiedofCOVID-19inasingleday,andsixweeksafterthat,100,000Americanshaddied,200timesEpstein’soriginalestimateofthetotaldeaths,20timeshisadjustedestimateand,ofcourse,stillclimbing.*3Hiswife,RachelWhetstone,isanotherperfectminorcharacter:theupper-classEnglishdaughterand

granddaughterofrichprofessionallibertarians—hergrandfatheraprotégéofFriedrichA.HayekandcofounderoftheManhattanInstitute—WhetstonehasforthelastdecadebeenthechiefPRexecutivefor,consecutively,Google,Uber,Facebook’sWhatsApp,andNetflix.*4Loeffler,appointedin2019tofillanemptyseatinGeorgia,hadbeenasenatorforonlyeighteendayswhensheattendedthatpandemicbriefinginJanuary.She’dworkedforyearsforherhusband’scompany,beforeandaftermarryinghim,mainlyashisheadofPRbutrecentlyrunningitsnewcryptocurrenciesdivisionfor$3.5millionayear.*5Right-wingfantasiesandmisinformationaboutCOVID-19onFoxNewsapparentlycausedunnecessarydeaths.“[Sean]HannityoriginallydismissedtherisksassociatedwiththevirusbeforegraduallyadjustinghispositionstartinglateFebruary,”accordingtotheresearchbyeconomistsintheirpaper“MisinformationDuringaPandemic,”but“[Tucker]CarlsonwarnedviewersaboutthethreatposedbythecoronavirusfromearlyFebruary….GreaterviewershipofHannityrelativetoTuckerCarlsonTonightisstronglyassociatedwithagreaternumberofCOVID-19casesanddeathsintheearlystagesofthepandemic.”Onefinalmagnificentirony:thatstudywasconductedandpublishedundertheauspicesoftheUniversityofChicago’sinstitutenamedafterMiltonFriedmanandhislibertarianprotégéGaryBecker.*6Aprominentfigureinthe2020protestsinIdahowasAmmonBundy,theforty-four-year-oldmemberofthecelebritylibertarianmilitantfamilywhoappearedinafootnoteinthepreviouschapteraswell.“Iwantthevirusnow,”hesaid.*7EvenmyancestorsinEuropeexperiencedapreludetothisinthelate1300s,whentheBlackDeathchangedeverythingeconomically.Withthesupplyofworkerssuddenlycutbyathirdorhalf,theeconomicpowerandincomesofthesurvivingmassesshotup,landlordslostfortunes,peasantsrebelled,capitalismstartedreplacingfeudalism,andtheDarkAgesgavewaytotheRenaissance.

ForAnneandKateandLucy

ACKNOWLEDGMENTS

My old friends Bruce Birenboim and Bill Cohan and Bonnie Siegler wereinvaluablereadersandadvisers.AndmynewacquaintancesGabrielChodorow-ReichandSimonReynoldswerealsogenerouswiththeirdeepknowledge.

I’m indebtedaswell toDavidAndersen,KristiAndersen,KateAndersen,LucyAndersen,EveBromberg,StephenChao,StephenDubner,NickGoldberg,BenGoldberger, JocelynGonzales, JoeHagan, JimKelly, JayKriegel, RobinMargolis,JohnMassengale,LawrenceO’Donnell,LizPhair,PaulRudnick,andJacobWeisbergfortheirhelp.

Of thegreatmagazineeditors I’veworkedwithover theyears,amongthebesthavebeenGraydonCarteratSpy,JaredHohltatNewYork,ArielKaminerat The New York TimesMagazine, and CullenMurphy atVanity Fair, all ofwhom improved essays that became inspirations and underpinnings for thisbook.

Suzanne Gluck is the perfect literary agent, and Andrea Blatt the perfectagent’sdeputy.

It’s thanks toGina Centrello that I wroteFantasyland, and it’s thanks toFantasylandthatIwrotethisbook.Infact,it’sthanksinlargeparttoherandtoAndy Ward, the editor of Fantasyland and indispensable über-editor of EvilGeniuses—because of their unfailing kindness, intelligence, respect, andenthusiasm—that after twenty-four years, Random House remains my homesweetpublishinghome.

And now thanks also to the kind, intelligent, respectful, and enthusiasticMarkWarren.Hisworkeditingthisbookwasheroic.Hewasanexceptionallyknowledgeable collaborator who provided hundreds of essential ideas andchallengesandnudgesthathelpedmakealmosteverypageclearerandbetter.

I’mgrateful aswell to thewhole impeccablyprofessionalRandomHouseteam, in particular Janet Biehl, Benjamin Dreyer, Ayelet Gruenspecht, Greg

Kubie, Matthew Martin, Steve Messina, Tom Perry, Robbin Schiff, ErinRichards, Chayenne Skeete, Susan Turner, and Dan Zitt. And Pete Garceaudesignedasplendidcover.

TheCivitellaRanieriFoundationprovidedmeseveralproductiveweeksofcoddlingintheirUmbrianutopia.

AndtoAnneKreamer—mind-meldeddailycollaborator,belovedenablerofitall—thankyouoncemoreandmorethanever.

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KURTANDERSENistheNewYorkTimesbestsellingauthorofthenovelsTurnofthe Century, Heyday, True Believers, and (with Alec Baldwin) You Can’t SpellAmericaWithoutMe, aswell as the nonfiction titlesThe Real Thing, Reset, andFantasyland.Hehasalsowrittenforfilm,television,andthestageandcontributesregularlytoTheNewYorkTimes.HelivesinBrooklyn.

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