Evil Geniuses: The Unmaking of America

by Kurt Andersen

as Stephen Colbert joked on the first episode of his old nightly show, America had become increasingly “divided between those who think with their head and those who know with their heart.”

Evil Geniuses chronicles the quite deliberate reengineering of our economy and society since the 1960s by a highly rational confederacy of the rich, the right, and big business.

I remember thinking, This was why my professors in college had used the terms political economics and the political economy as distinct from simply economics and the economy. For one thing, economics has the connotation of pure science, suggesting that organizing production and pay and investment and taxes and all the rest is just…math. Whereas political economics contains the crucial reminder that real-life societies and economies are the result of all kinds of fights and negotiations and feelings and choices about the rules of the game, what’s fair, what’s not, what to maximize, how to optimize for the majority instead of maximizing only for some powerful minority. It’s fine to call it the economy when we’re discussing what’s happening month to month or year to year—the ups and downs in the stock market and rates of employment and inflation and growth. Whereas if we’re talking about the whole megillah, the way we’ve structured our capitalism versus the versions in Canada or Denmark or Russia or China, I think political economy is much better. The economy is weather, the political economy is climate.

The political right rode in on that floodtide of nostalgia, and then, ironically, the old-time every-man-for-himself political economy they reinstalled, less fair and less secure, drove people deeper into their various nostalgic havens for solace.

Americans’ boats stopped rising together; most of the boats stopped rising at all. But along with economic inequality reverting to the levels of a century ago and earlier, so has economic insecurity, as well as the corrupting political power of big business and the rich, oligarchy, while economic immobility is almost certainly worse than it’s ever been.

As it turned out, the 1980s were the ’30s but in reverse: instead of a fast-acting New Deal, a time-release Raw Deal.

The response to the pandemic showed vividly how this unholy alliance operates: for months early in 2020, right-wing media and the president pursued a two-track propaganda effort that made a catastrophe worse. Fantasyland’s magical thinking and conspiracism and mistrust of science fueled the widespread denial of and indifference to the crisis, and fused with the evil geniuses’ immediate, cold-blooded certainty that a rapid restoration of business-as-usual must take precedence over saving economically useless Americans’ lives.

America’s tragic flaw is our systemic racism, and it’s a residue of a terrible decision our founders made to resist the new and perpetuate the old: the enslavement of black people. Slavery had ended in most of Europe by the 1500s, but not in its colonies in the New World and elsewhere. France and Spain and Britain outlawed their slave trades and slavery itself decades before the United States did, and they found it unnecessary to fight civil wars over the issue. Tsarist Russia emancipated its serfs before democratic America emancipated its slaves. On abolition we were not early adopters.

Mark Twain blamed secession and the Civil War on such Southern “love [of] sham chivalries of a brainless and worthless long-vanished society.”

This new way of organizing production, and using technology to replace skilled workers with cheap unskilled workers, was known at the time as the American System.

“Private economic power is held in check by the countervailing power of those who are subject to it,” the supremely lucid economist John Kenneth Galbraith wrote in American Capitalism in 1952.

In 1910 President Theodore Roosevelt, a rich Republican, said that “corporate funds” used “for political purposes” were “one of the principal sources of corruption” and had “tended to create a small class of enormously wealthy and economically powerful men whose chief object is to hold and increase their power.”

From the 1940s through the ’70s—when our richest citizens were paying rates of 70 and 80 and 90 percent on the millionth dollars they earned each year—U.S. productivity and GDP per person and median household income after inflation all doubled.

Economic equality, as a result of all those countervailing forces I talked about, was at its peak in the mid-1970s. It was the same in the United States then as it is in Scandinavian countries today, the share of the nation’s wealth owned by nonwealthy Americans larger than it had been since measurements began. The system was working pretty well, and the national consensus about fairness endured. People took for granted all the progress we’d achieved. It really seemed irreversible.

Nixon proposed a universal health insurance plan not unlike Obama’s Affordable Care Act, which Republicans forty years later would call socialism. Still more remarkably, his administration pushed a grand welfare reform plan that would have provided a guaranteed basic family income equal to around $16,000, thereby tripling the number of Americans receiving public assistance and quadrupling federal social welfare spending altogether.*2

It was written by Milton Friedman, the University of Chicago libertarian economist, and published across five pages of The New York Times Magazine under the headline A FRIEDMAN DOCTRINE—THE SOCIAL RESPONSIBILITY OF BUSINESS IS TO INCREASE ITS PROFITS.

Two ascendant countercultures, the hippies and the economic libertarians, shared a brazen prime directive: If it feels good do it, follow your bliss, find your own truth.

Modern liberals prided ourselves on not being ideologues, on entertaining all sorts of disparate policy ideas for improving the world, whereas the economic right really has one big, simple idea—do everything possible to let the rich stay rich and get richer.

When it was published at the end of 1981, the article got enormous attention because the OMB director, who’d been a Harvard theology grad student before he got into politics, was astoundingly honest. The Reagan administration had managed that summer to convince Congress, including the Democratic House, to make the richest Americans’ top tax rate lower than it had been anytime in the previous half-century. Stockman admitted in the article that that had really been the entire point. Because politically it would’ve been “hard to sell ‘trickle down,’ ” he explained, “the supply-side formula was the only way to get” that. The massive cuts were conceived cynically, he admitted, “a Trojan horse to bring down the top rate” on the wealthy and taxes on business. As for Laffer’s supply-side theory, Greider said Stockman conceded it “was not a new economic theory at all but only new language and argument to conceal a hoary old Republican doctrine.” In fact, Stockman told him, “Laffer sold us a bill of goods….Whenever there are great strains or changes in the economic system, it tends to generate crackpot theories, which then find their way into the legislative channels.”

Stockman’s chief economist at the Office of Management and Budget—who left in 1983 to earn a fortune on Wall Street, then become a cocaine addict and TV pundit—said that Feldstein “has failed at making the transition from academic economist to political economist.” That was thirty-six-year-old Larry Kudlow, defining political economist to mean not an expert on political economics but an economist willing and eager to dissemble and lie to suit his political masters, thirty-five years before he returned to government work as Trump’s director of the National Economic Council.

In 1985 the counter-Establishment got yet another major financial fountainhead in the Midwest, the suddenly megarich Bradley Foundation of Wisconsin, which joined the Amway founders, the DeVoses of Michigan, in the new right-wing campaign to discredit public education.

In the early 1970s, George Mason College had been a nothing University of Virginia satellite campus in the Washington suburbs. By the 1980s, it was a well-funded research university, still funded by the state of Virginia, now with a specialty in libertarian political economics featuring Buchanan, the new Nobelist. Charles Koch funded two libertarian nonprofits, a think tank that became the Mercatus Center and an academic networking outfit called the Institute for Humane Studies, and transplanted them to George Mason. They’ve both been influential, Mercatus particularly aggressive and effective in working to hold back federal environmental regulation.

Rupert Murdoch had started buying U.S. newspapers and magazines in the 1970s, including the New York Post, which he turned overnight from politically liberal to right-wing. Jack Kemp said in 1981 that “Rupert Murdoch used the editorial page, the front page and every other page necessary” in the Post “to elect Ronald Reagan President.” In 1985 Murdoch moved into television, spending the equivalent of $5 billion to buy TV stations in seven of the ten biggest cities. Reagan helped: he fast-tracked Murdoch for U.S. citizenship so that his company could get around the federal law forbidding foreigners from owning stations, then waived the federal rule forbidding anyone from owning a TV station and a newspaper in the same city, as Murdoch suddenly did in New York and Boston.

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 one called “free-market concepts,” founded the Federalist Society. It turned out to be the monumentally important first step in the plan Horowitz’s memo had laid out. The Chicago chapter enlisted a professor at their law school who was also on the payroll of the conservative Washington think tank AEI to be their faculty adviser—Antonin Scalia. The idea behind the society, in addition to hanging with young fellow travelers and organizing campus lectures and symposia, was to create an ongoing national network of like-minded future lawyers and judges, a right-wing but certifiably elite legal fraternity-cum-mafia. At birth the Federalist Society got funding from the new standard roster of right-wing billionaires’ foundations—Scaife, Olin, Bradley, the Kochs.

In 1987 Brett Kavanaugh entered Yale Law School, where he joined its Federalist Society chapter (its president, George Conway, had just graduated), and a year later Neil Gorsuch started at Harvard Law School and became a member.

As movements, originalism in the law and libertarianism in economics were fraternal twins. Both were born of extreme nostalgia, fetishizing and distorting bygone America, so both more easily achieved mass appeal in the everything-old-is-new-again 1970s and ’80s. Both purported to be based on objective principles that transcended mere politics or special interests, even while both were vehicles for big business and the right to recover, fortify, and expand their economic and political power. And both shared key promoters, of whom probably the single most important was Robert Bork.

But apart from that early crusade against civil rights, as a scholar Bork mainly stuck to his actual specialty, antitrust. For almost a century, antitrust laws had been passed and more and more strongly enforced because Americans agreed that when companies became very large, they tended to get too much power, to crush smaller businesses, to scare off entrepreneurial competitors, to charge too much for products, to pay workers too little, to corrupt government. Even regulation-hating right-wingers like Friedman originally made an exception for antitrust laws.

Exactly one year after Bork’s book was published, a pivotal Supreme Court decision quoted its key “consumer welfare” sentence, and since then federal judges have quoted the line in antitrust decisions dozens of times. Just like that, economic efficiency as measured by prices became “the stated goal in antitrust” exclusively. “Antitrust was defined by Robert Bork,” says the University of Arizona law professor and antitrust specialist Barak Orbach. I cannot overstate his influence. Any antitrust person would tell you the same thing….The Court started thinking they should have an economic framework, and they had Chicago’s work as very simple ideas they could use. The thing about this is that they were very simple. You read them, you understand them. Any person can understand them….The world is not that simple.

America is exceptional, in this as in so many ways. Only one other country on Earth, New Zealand, allows prescription drugs to be advertised directly to its citizens.*6 Until the 1990s, we spent around the same per person on prescription drugs as Canadians and western Europeans, but now we spend as much as 200 percent more.

Like Gekko in Wall Street and Blake in Glengarry, Welch was known for being brutally candid. In fact, GE made a doctrine out of brutality, codified it as a system that ensured worker insecurity by constantly identifying a quota of doomed losers. Every year, according to Welch’s new rule, one out of every ten GE employees were fired, no matter what, because nine other employees were judged by their superiors to be superior. It was called the Vitality Curve, and other big companies were soon instituting dread-inducing worker-culling systems with their own euphemistic names—Personal Business Commitments at IBM, Individual Dignity Entitlement at Motorola. At GE, many were never replaced; during Welch’s first five years as CEO, the workforce shrank by a quarter, and he became known as Neutron Jack—ha!—because like a neutron bomb, he evaporated tens of thousands of people without damaging the businesses where they worked. Such corporate “rank-and-yank” systems were just one way that an acute new sense of economic insecurity spiked in the 1980s and then stayed high.

By the way, although American spectators had started doing that “USA! USA!” chant with its cheerfully fuck-you edge at international sporting events during the 1970s, it was in the 1980s that it became a national cultural habit, first at the 1980 Winter Olympics in Lake Placid, when Team USA (a new coinage) beat the unbeatable Soviet hockey team, then spreading into professional wrestling and Reagan reelection campaign rallies and finally to any sort of excited mob of Americans who felt like madly insisting on our awesomeness, to perform feelings of patriotic self-confidence, which used to abide more organically and implicitly.

Risk-taking is a good thing, central to much of America’s success, but not when the risks are involuntary for everyone except the people near the top, required rather than freely chosen, and when those at the top have arranged things so they don’t have much serious downside risk.

The best test of a morally legitimate social contract is a thought experiment that the philosopher John Rawls named the Veil of Ignorance in 1971, just as modern American ultra-individualism exploded. The idea is to imagine you know nothing of your actual personal circumstances—wealth, abilities, education, race, ethnicity, gender, age; all those salient facts are veiled from you. Would you agree to sign your country’s social contract and take your chances for better or worse in the social and political and economic system it governs?

moochers. Libertarians fantasize that they’re action heroes and entirely self-made. They tend to exempt themselves from the truism that there but for the grace of God goes each one of them, because an implicit premise of their ultra-individualism is that anybody in America can make it on their own and that unfair disadvantages either don’t exist or can’t be helped. I have a hunch that the demographic profile of self-identified libertarians—94 percent white, 68 percent male, 62 percent in their forties or younger—has something to do with those beliefs and fantasies.

Like so many of the hundreds of changes instituted in the 1980s, the practice of replacing staff with contract workers was too arcane and tedious for many of the rest of us to care or even know about. But imagine the thousands of companies and cities and schools and cultural institutions all over the country that have delegated so much of this kind of work to contractors, thereby making the treatment of all those eleven-dollar-an-hour workers somebody else’s problem. According to a 2018 study by five major-university economists, a full third of the increase in American income inequality over these last forty years has been the result of just this one new, dehumanizing labor practice.

Of all American workers making less than $40,000 a year, one in eight are bound by noncompete agreements.

From the mid-1950s until 1980, the minimum wage had been the equivalent of $10 or $12 an hour in today’s dollars. As with overtime pay, the minimum wage was never technically reduced, but by 1989 inflation had actually reduced it to just over $7, where it remains today. In other words, it has been the federal government’s unspoken decision to cut the wages of America’s lowest-paid workers by more than a third, a choice first made during the 1980s when it stopped raising the minimum, then ratified again and again by Democratic as well as Republican Congresses.

Only a quarter of people graduating from four-year public colleges and universities in the early 1990s had student loan debt; by 2010, two-thirds did.

“Political equality,” FDR said in 1936, is “meaningless in the face of economic inequality.” In what he pitched as a Second Bill of Rights, he proposed guaranteeing all Americans “the right to earn enough” for “a decent living” and “a decent home” and to have “adequate medical care” paid for with “a tax [on] all unreasonable profits, both individual and corporate.” That was 1944, Peak Leftism for Democrats on economics.

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.* It was a libertarianism lite that kept everything nice and clubbable and, unlike Republican conservatism, at least had the virtue of ideological consistency.

In 1992, when Clinton won the nomination, his only serious competitors were two fellow New Democrats, Brown and Tsongas. Democrats had settled into their role as America’s economically center-right party. There was no organized, viable national economic left in the vicinity of power.

Three years later America’s Talking morphed without Ailes into MSNBC, and Rupert Murdoch hired him to create Fox News. Republican elected officials continued helping their great media pooh-bah. The first Bush administration had suspended the federal antitrust rule forbidding networks from also owning the shows they aired, then New York’s Mayor Rudy Giuliani successfully pressured the local cable operator, owned by Time Warner, to carry Fox News. Soon Murdoch also had conservative media’s high end covered with The Weekly Standard, cofounded by Irving Kristol’s son, Bill. In 2007, Murdoch added The Wall Street Journal to his portfolio and Breitbart News launched, funded by the financial billionaire (and Koch associate) Robert Mercer. The elite would be conscripted (and coopted) at scale on college campuses and in Washington, but now through every medium the rabble would be roused as well, 24/7.

At the same time, the Kochs and their gang spent more time and money on their new political dominion, organizations that run attack TV ads against insufficiently right-wing candidates, operate impressive propaganda sites, and mobilize angry citizens to agitate on behalf of the antigovernment economic agenda—a kind of grassroots politics funded and coordinated from Washington that had just come to be known as Astroturfing. In addition to the funding by right-wing billionaire coordinators, large corporations—oil, pharmaceuticals, insurance, tobacco—also chip in. The groups evolve and split and merge and dissolve and reconfigure, but the two most significant, both Koch creations, have been FreedomWorks (“Lower Taxes, Less Government, More Freedom”) and Americans for Prosperity. Without them—money, planning, talking points, facilities, transportation, almost everything—the Tea Party movement, despite its authentic financial-crash-and-black-president-induced hysteria, might have fizzled out quickly and accomplished little.

Extremely reasonable, extremely center-left Obama horrified the Kochs and their friends, in particular his successful passage of the Affordable Care Act after a year in office. When the Republicans won back Congress—that is, saved America from Obama—Charles told a reporter that while “I’m not saying he’s a Marxist, he’s internalized some Marxist models—that is, that business tends to be successful by exploiting its customers and workers.” In the same article, his brother called Obama “the most radical president we’ve ever had as a nation” who, in less than two years, had “done more damage to the free enterprise system and long-term prosperity than any president we’ve ever had.” 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.”

And the problem isn’t just the spectacle of enormous wealth and the gratuitous economic inequality and insecurity. It’s also the corruption of our system of government, ruining democracy. Beginning in the 1980s, big business 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 political leverage to tilt the system more excessively, further entrenching their wealth and political power. And so on and on. 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 the modern age, no country as economically advanced as ours has regressed to an earlier stage of development, not yet. 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.

Tax rates for the well-to-do and the tax code in general are fundamental to the story of this book: they are the most direct, large-scale way in which economic fairness or unfairness is built into the system. And for the last forty years, the story of the tax code has been the same back and forth and back again, Republicans radically lowering rates on business and the rich, then Democrats nudging them back up, not mainly to expand social programs or redistribute wealth but to reduce budget deficits. And true to form, in 2017, with Republicans once again in control of both the White House and Congress, the average income tax paid by millionaires was radically cut once again—all the way down to 27 percent, the lowest rate since the Reagan 1980s.

The richest 0.01 percent of Americans, the one in ten thousand families worth an average of $500 million, pay an effective federal income tax rate half what 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.

During the last forty years, the median weekly pay for Americans working full time has increased by an average of just one-tenth of one percent a year—and for men has actually gone down 4 percent.