Evil Geniuses: The Unmaking of America

by Kurt Andersen

Against a triumphant Republican Party high on right-wing ideology, liberals’ new selling point was their lack of any ideology at all. The faction that was now dominant in the Democratic Party had been pushing for a more centrist economic and social welfare policy since the 1970s, but the Republican Party after 1980 had no comparable moderating faction—which in a two-party system meant that Democrats kept moving toward a center that kept moving to the right.

Affluent college-educated people, Democrats as well as Republicans, began using the phrase socially liberal but fiscally conservative to describe their politics, which meant low taxes in return for tolerance of…whatever, as long it didn’t cost affluent people anything.*

The top income tax rate for the wealthiest was cut from 70 to 50 percent in 1982. It would’ve been prudent to stop there for a while and see how that worked out. But no: in the second Reagan term, the top rate was cut again to 38.5 percent, then once more to 28 percent—along with a large reduction of the income threshold for the highest bracket, which meant that somebody making $1 million or $10 million a year would now be taxed at the same rate that a teacher or plumber was taxed on everything they earned above the equivalent of $40,000.

Unlike me, he never decided that “adolescent libertarianism” was redundant and moved on.

Fiscal responsibility rhetorically pops back to life for Republicans only when they’re out of power in Washington, and only as an argument for achieving their secondary goals of reducing Social Security and Medicare benefits and preventing any major expansion of health or education or other social programs.

Norquist is known for his jokey line about his wish to make the federal government smaller—“to shrink it down to the size where we can drown it in the bathtub.”

The fossil fuel industry freaked out. Global warming was becoming the obverse of a motherhood-and-apple-pie issue—everybody believed in it and hated it. Big business in general had been getting its way for a decade, but on this subject, the oil and gas and coal guys saw that Republicans weren’t standing up for their business at all. Before the summer was over, Exxon’s “manager of science and strategy development” was circulating a confidential memo arguing they must now go to Plan B—that is, to “emphasize the uncertainty in scientific conclusions,” even though there was no uncertainty concerning the problem. The rest of the industry signed on, and the lobbyists and the think-tank scholars and the rest of the right’s counter-Establishment were recruited for a new mission of casting doubt on science.

By the end of the first year of that first Bush presidency, Sununu had almost single-handedly halted the political momentum in Washington, turned climate change into a partisan issue, and put denial of the science on its way toward Republican orthodoxy.*3

As the 1990s began, the right stayed angry and upset and kept growing in size and power thanks to the primitives, the bigots, the Protestant fundamentalists and cowboy commando conspiracy fantasists. But the grown-ups on the right, the economic right, corporate leaders and the rest of the rich, kept their eye on the prize—less taxation, less regulation of business, greed is good—and they maintained control of the party.

The economic right was shrewd enough to understand that the issues they didn’t care much about—abortion, gay rights, creationism—did matter to liberals, and that those culture wars drew off political energy from the left that might otherwise have fueled complaints and demands about the reconstructed political economy.

How the right played the left for suckers becomes especially clear in looking at the 1990s, when after twelve years of Republican presidents, a Democrat was running the federal government. The bad habit that liberals and other Democrats had learned was this: be restrained when it comes to spending to help the less fortunate but simultaneously be reckless when it comes to helping business and the rich.

During the 1980s and early ’90s, under Reagan and the first Bush, the annual federal budget deficit was much larger than it had been at any time since World War II, $350 billion to $550 billion a year in today’s dollars. During Clinton’s first year in office, he and a Congress with large Democratic majorities enacted the biggest deficit-reduction plan in history and stuck to it, achieving a budget surplus four years in a row for the first time since 1930. As soon as the surplus money began pouring in, Republicans immediately proposed to funnel the equivalent of $1 trillion of it to business via tax cuts over the next decade.

In 1998 Brooksley Born, the federal official who was running the agency overseeing financial derivatives, got worried about the accelerating flurry of trading in new sorts of derivatives, in particular one called credit default swaps—which the rest of us would learn about a decade later, during the crash of 2008. But she was only one member of the official presidential task force that oversees the financial markets. By law, the other three are the Federal Reserve chair, a job to which Clinton had just reappointed Alan Greenspan; the treasury secretary, who was Bob Rubin, previously cochairman of Goldman Sachs; and the SEC chair, who’d also spent his pregovernment career working on Wall Street. The head of the SEC said later he’d been warned in advance that Born was “difficult” and “unreasonable.” When she argued at a meeting—in a “strident” way, Rubin recalled—that these new derivatives and the systemic risks they posed needed urgent scrutiny and possible regulations, the three men were appalled, particularly Greenspan, and they told her to calm down.

Right around then a forty-seven-year-old law school professor and bankruptcy expert, until recently a registered Republican who’d been affiliated in the late 1970s with the conservatives’ Law and Economics movement, began to see the light. Elizabeth Warren said in a recent interview that she didn’t vote for Reagan but realized only in the ’90s that starting in the ’80s, the cops were taken off the beat in financial services….I was with the GOP for a while because I really thought that it was a party that was principled in its conservative approach to economics and to markets. And I feel like the GOP party just left that. They moved to a party that said, No, it’s not about a level playing field….And they really stood up for the big financial institutions when the big financial institutions are just hammering middle class American families.

The general default to nostalgia that started in the 1970s helped soften the ground for the right’s project. Fronted by a make-believe cowboy and make-believe war hero from old movies, they built a reproduction-old-days political economy—extremely high regard and low taxation and few constraints for big business and the rich, spectacular selfishness rebranded as healthy American individualism.

The biggest (but not only) reason for national disunity the last dozen years or more is that a quarter or third of Americans and one political party have explicitly given themselves over to malignant nostalgia—nostalgia for a country with much larger and more dominant majorities of white and native-born and Christian people, and for a time when people who weren’t white or male or straight had fewer rights and less stature. That’s a lost cause for them—the United States will never be as white or Christian as it was, nor a country where women and people of color are oppressed like they were when I was young.

What’s new is that unlike the Republican candidates and presidents before him, Trump doesn’t stick to innuendo and codes and dog whistles; his heart is obviously in it, even more so since 2016, which means that all white people voting for him in 2020 will be fully ratifying his racism.

I have a different way of dividing America that amounts to the same thing: Dollar General–Dollar Tree–Family Dollar America versus Starbucks–Target–Whole Foods America. All six of those chains started or exploded in the 1980s as we began making the political economy more unfair and unequal. In 2016 Trump won all 9 states where the density of dollar stores is highest, and 10 of the next 13 on the chart; Clinton won 15 of the 25 states that have the relatively fewest dollar stores. Of course most people in Dollar Store America responded to the candidate who sounded in 2016 like a Democrat of a very old-fashioned kind—rough, tough, promising to spend billions building new roads and bridges and never to cut and possibly to improve Medicare and Social Security, telling them that “big business and major donors are lining up behind the campaign of my opponent because they know she will keep our rigged system in place.”

The memo defined “victory” as making “uncertainties in climate science part of the conventional wisdom for average citizens” and “promoters of curbs on fossil fuel emissions seen as ‘out of touch with reality,’ ” to the point where “ ‘climate change’ becomes a non-issue and”—Dr. Evil had just been invented—“there are no further initiatives to thwart the threat of climate change.” Thus a generation after the big 1980 victory and a decade after John Sununu did his crucial dirty work in Washington, the Establishment right moved definitively beyond legitimate policy argument to a dangerous new bad-faith zone. As Senator Moynihan had started saying at the time about political discourse in general, they decided they were entitled not just to their own opinions about policies for addressing climate change, but to their own facts concerning its existence and causes and possible impacts.

A billionaire member of their political network (and resident of David Koch’s Park Avenue apartment building) was also apoplectic about the president’s mere suggestion that private equity guys like him should pay taxes on their incomes at an income tax rate of 35 percent, as it was then, instead of the capital gains rate of 15 percent. “It’s a war,” Stephen Schwarzman remarked. “It’s like when Hitler invaded Poland in 1939.”

As the Nobel Prize–winning economist Joseph Stiglitz puts it, we’re “converting higher economic inequality into greater political inequality. Political inequality, in its turn, gives rise to more economic inequality.” It’s another cascading vicious cycle, maybe the most disturbing of all.

In their epic world history Why Nations Fail, an MIT economist and a University of Chicago political scientist explore what has distinguished, over aeons, the poor countries that stay poor from the ones that become fully developed. The basic conclusion is that successful countries keep their greedy elites from exercising too much control of their economies and governments. Likewise, in the recent book How Democracy Ends, a political scientist explains that for individual citizens “the appeal of modern democracy is essentially twofold.” There’s the “dignity” of being able to freely vote for one’s leaders, but also the essential “long-term benefits” that democracy needs to provide, the fair “sharing in the material advantages of stability, prosperity and peace.” The former without the latter becomes a pointless charade, as FDR said in 1936.

For Greenspan, however, the problem isn’t extreme inequality per se, or the newly extreme inequality between the great majority and the rich, but rather the envy of the poor for the middle class. And his proposed solution to that, honest to God, was to contrive to pay middle-class workers even less, to bring their incomes down closer to those of the poor. We pay the highest skilled-labor wages in the world. If we would open up our borders to skilled labor far more than we do, we would…suppress the wage levels of the skilled….If we bring in a number of workers to suppress the level of wages [of the skilled] relative to the lesser-skilled, we will reduce the degree of inequality.

Greenspan is gross

As Republicans rewrote the tax code in 2017—cutting the tax rate on all income above half a million dollars significantly, cutting the effective tax rate on corporations by half—they insisted, just as they had all the previous times, that despite appearances, the rewrite was really all about helping ordinary people, creating jobs, and raising the incomes of the majority of Americans who, as even the Republican Speaker of the House admitted then, “live paycheck to paycheck” with “a lot of economic anxiety.” The Trump administration claimed that the new tax law would generate such explosive growth that the average family would soon earn $4,000 or maybe $7,000 more per year. While average people would all get that “pay raise,” “the rich will not be gaining at all,” the president lied. What’s more, the $2 trillion tax cut over this next decade, his treasury secretary promised, would “not only pay for itself, but it will pay down [government] debt” because…supply side, all the extra tax revenue from all the extra income that rich people and businesses will be earning.

In 2018 the United States had the largest percentage reduction in tax revenues of any developed country on Earth. In fact, in the first three full years of the Trump administration—before COVID-19 and the trillions spent to sustain people’s lives and the economy—the federal debt increased by $1.5 trillion more than it had in Obama’s final three years.

I said earlier that financialized America is like the specter of a Communist America they used to warn us about. Our economic rightists also remind me of the Soviet party leaders and propagandists who publicly insisted till the end, despite all the miserable realities of their society, that Communism would presently work out just fine for the masses. And given how the cynical leaders of our own ruling party have felt obliged for several years to make excuses for the former Soviet intelligence officer who now runs Russia, the irony is extreme.

For instance, the experts’ standard measurement of inequality, the Gini index, reduces all the disparities of income or wealth in any country (or city or state) to a number between 0 and 100—in a place rated 100, one resident would have all the money, and in a place rated 0, everyone would have an equal share. Back in 1979, America’s Gini index for income put us around where Canada is today—in the more admirable and highly developed half of nations, although not up with the super-high-equality countries of northern Europe. Our extreme income disparities these days, however, make us the most unequal rich country on Earth, with a Gini number considerably worse than those of western Europe or Canada, down among developing countries. America is slightly more equal than Uruguay and Congo, a little less equal than Haiti and Morocco.

In 1980 income above $700,000 (in today’s dollars) was taxed at 70 percent by the federal government, but today the top rate is 37 percent. And the richest Americans, who back in the day paid an average of 51 percent in federal, state, and local income taxes combined, now pay just 33 percent.

During the 1980s, the amount of corporate income tax paid as a fraction of the whole U.S. economy was cut by more than half, and in the years since, that fraction has been kept at half what it was before 1980.

The unambiguously rich 1 percent—the million and a half households with a net worth of roughly $10 million or more—own 39 percent of all the wealth, almost twice as large a share as they had in 1980. Since the late 1980s, that wealthiest 1 percent have become $21 trillion wealthier, an average increase of about $12 million per household.

Of the wealth owned by the top 1 percent, more than half is owned by just the richest tenth of them. That is, the top 0.1 percent, one in a thousand American families, worth an average of $100 million apiece, own 22 percent of all the wealth—a share more than three times larger than it was in the 1970s.

During the grand decades between World War II and 1980, when U.S. median household income more than doubled, 70 percent of all increases in Americans’ income went to the bottom 90 percent. Since 1980, nobody’s income has doubled except for the richest 1 percent, and the incomes of the entire nonrich 90 percent of Americans have gone up by only one-quarter.

For the four-fifths of all private sector workers who don’t boss anybody, the average wage today is $23.70 an hour. In 1973, it was $24.29.

Forty years ago, a typical high school graduate working full time could earn an income of twice the poverty level, the equivalent of $56,000, enough to support a spouse and two children. Today the four in ten adults who have no more than a high school diploma and work full time earn a median salary of $39,000.

In the 1980s the comfortably middle and upper middle class, the two-fifths of Americans with household incomes that put them below the wealthy top tenth but above the bottom half, earned 37 percent of all the income—almost exactly what their share would be in a perfectly equal society. By 2014, that share had shrunk to 27 percent.

The upper middle class of the 1980s, people who had a nice house and some savings, the 30 percent just below the top 10 percent, owned 29 percent of all the wealth—once again, almost exactly their share in a perfectly equal society. Today that same comfortable 30 percent own only 17 percent of all the wealth.

In 1987 the least-wealthy 60 percent of Americans owned 6 percent of all U.S. wealth. Today that same large majority—people in the middle and the lower-middle and below, households worth less than $175,000—own a third as much, just 2 percent of all the wealth.

The combined wealth ($2.5 trillion) of that same large U.S. majority, the 200 million Americans from just above the middle all the way down to the bottom, is less than that of the 607 U.S. billionaires ($3.1 trillion). Therefore a single average American billionaire owns the same as 400,000 avera...

Although the real costs of most of the most essential things we need to buy—housing, education, healthcare—have increased by 50 to 200 percent, since 1981 we haven’t had high inflation, when the prices of everything go up noticeably from season to season and even month to month. It’s too bad your wages haven’t gone up for forty years, goes one common argument from the right and well-to-do concerning the economic condition of the American majority, and that pensions and unions and millions of good jobs disappeared, but, hey, haven’t we let you eat cake? That is, they say, in all seriousness, that income inequality isn’t as bad as it looks because some things, like milk and eggs, are actually less expensive now, and TVs are gigantic and inexpensive, and all the other stuff at the Walmarts and dollar stores is so cheap, thanks to Chinese imports. As two influential papers by a pair of University of Chicago economists put it in 2009, the “prices of low-quality products” that “poorer consumers buy” such as “ ‘cosmetics,’ ‘toys and sporting goods,’…‘wrapping materials and bags,’ ” and “squid frozen filets,” fell during the 1990s and 2000s.*1

In 1995 about half the profits earned by public companies went to the hundred biggest ones; in 2015 the hundred biggest are much bigger and took in 84 percent of the profits.

Except for Google, Facebook, and Intel, cable TV and high-speed Internet providers, and Monsanto in much of agribusiness—a very large except—few of the resulting corporate giants are literal monopolies, one company absolutely dominating a given sector. Instead, most major American industries have rapidly turned into oligopolies, where two or three or four big companies run their show and tend not to compete fiercely. It’s like how smart mob families peacefully coexist.

Oligopoly is now the American way in mobile and landline phone service, airlines, credit cards, meat and poultry, beer and soft drinks, breakfast cereal, and more. In the 1990s the six biggest banks held only one-sixth of all Americans’ financial assets, but by 2013, five years after the crash, that share had grown to 58 percent—the year the Democratic U.S. attorney general said that while he’d wanted to prosecute big banks for their role in the crash, he didn’t dare because, in addition to their being too big to fail, the legal trouble might have had “a negative impact on the national economy.”

A conservative estimate is that since 1980, government policy changes have caused Americans to spend an extra $130 billion every year for healthcare. For instance, why are prescription drug prices routinely two and three times as expensive in the United States as in other countries? A big reason is that in the 1980s and afterward, Congress and federal antitrust enforcers gave away the store to pharmaceutical companies by letting them control patents longer and set minimum prices.

Study after study has found conclusively that mergers and fewer companies result in higher prices in every business. The average price for U.S. cable TV service, paid in most places to a literal monopoly, rose by half just between 2010 and 2018. “The evidence strongly suggests,” the NYU economist and Federal Reserve Bank adviser Thomas Philippon wrote in 2019, “that increasing concentration in the U.S. is responsible for an excessive increase in prices.” He estimates that “this very new era of oligopoly costs each typical American household more than $5,000 a year.”

Even Richard Posner, the pioneering conservative scholar and senior federal judge who we last saw celebrating the right’s economic victory with some of his fellow masterminds just before the turn of the century, admitted in 2017 that it has all gone too far. During a conference on corporate concentration at the University of Chicago, he was his bracingly candid self. As a member of Congress, he said, “you are a slave to the donors. They own you. That’s [the] real corruption, the ownership of Congress by the rich.” And the Supreme Court’s Citizens United decision in 2010, the conservative majority’s view that “there’s no such thing as spending too much money to support a political candidate, because your money is actually speech—that’s all nonsense,” but as a result, apart from passing a constitutional amendment, “there isn’t anything the government can do [about regulating campaign finance] now.”

But nobody that night five years ago pointed out the key fact: Denmark and Sweden and Norway are all thriving free-market capitalist economies.*1 The citizens of each have saved capitalism from itself by reining in the natural systemic excesses so that it doesn’t run amok and cause extreme inequities—just as they’ve also saved socialism from itself so that it doesn’t run amok and smother individualism and entrepreneurial energy.

Among the fifty countries at the bottom of the two hundred, those with the least economic mobility, are forty-six developing countries and, between Indonesia and Brazil, the United States. American society has half the economic mobility of the countries near the top.

in exceptional America the more real-life-relevant median income—the amount of money going to the person who earns more than the poor half and less than the rich half—has hardly budged for decades. 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 in Europe. Whether this or that country’s economy has grown faster or slower than America’s, they have shared their national prosperity. Boats have risen together.

But just as with healthcare, they spend half as much as we do, and the tuitions they charge are a fraction of the U.S. average or—in a third of the countries, including the Nordics—free. They manage to afford all that; we could afford it, too, especially given our higher GDP per person. The United States spends less on ourselves through government at all levels than do 90 percent of the most developed countries—only Chile, Mexico, and Ireland spend less than we do.

we let our big businesses get too big, let them use their size and power to kill off competition and raise prices excessively. Meanwhile Europe by the turn of this century remade itself economically to be more like the United States used to be, enforcing robust competition to make prices lower and service better. “Because the EU has adopted the US playbook,” including antitrust enforcement, “which the US itself has abandoned,” Philippon writes, the “prices for the same goods and services” have become much lower in Europe. Mobile phone and Internet service, for instance, cost Europeans half as much as they cost Americans.