The Real Reason Biden Is Ahead of Trump? He’s a Man

It’s a lot easier to run a cautious, inoffensive campaign when you’re not up against a culture of misogyny.

A narrative has formed around the presidential race: Donald Trump is losing because he’s botched the current crisis. Americans are desperate for competence and compassion. He’s offered narcissism and division — and he’s paying the political price.

For progressives, it’s a satisfying story line, in which Americans finally see Mr. Trump for the inept charlatan he truly is. But it’s at best half-true. The administration’s mismanagement of the coronavirus and the Black Lives Matter protests only partially explain why the president is trailing badly in the polls. There’s another, more disquieting, explanation: He is running against a man.

The evidence that Mr. Trump’s electoral woes stem as much from the gender of his opponent as from his own failures begins with his net approval rating: the percent of Americans who view him favorably minus the percent who view him unfavorably. Right now, that figure stands at -15 points. That makes Mr. Trump less popular than he was this spring. But he’s still more popular than he was throughout the 2016 campaign. Yet he won.

What has changed radically over the past four years isn’t Americans’ perception of Mr. Trump. It’s their perception of his opponent. According to Real Clear Politics’s polling average, Joe Biden’s net approval rating is about -1 point. At this point in the 2016 campaign, Hillary Clinton’s net approval rating was -17 points. For much of the 2016 general election, Mr. Trump faced a Democratic nominee who was also deeply unpopular. Today, he enjoys no such luck.

Why was Mrs. Clinton so much more unpopular than Mr. Biden is now? There’s good reason to believe that gender plays a key role. For starters, Mrs. Clinton wasn’t just far less popular than Mr. Biden. She was far less popular than every male Democratic nominee since at least 1992. Neither Bill Clinton, Al Gore, John Kerry nor Barack Obama faced overwhelming public disapproval throughout their general election campaigns. Hillary Clinton did.

A major driver of the public’s extreme dislike of Mrs. Clinton was its perception of her as duplicitous. In a poll taken just days before the 2016 election, Americans deemed her even less truthful than Mr. Trump. By contrast, in a Pew Research Center poll late last month, Americans rated Mr. Biden as more honest than Mr. Trump by 12 points.

According to fact checkers, these public perceptions are wildly incorrect. PolitiFact, a project of the nonprofit Poynter Institute, rates the veracity of politicians’ assertions. According to its calculations, which are based on hundreds of individual statementsMrs. Clinton isn’t only far more honest than Mr. Trump. She’s also more honest than Mr. Biden.

Why don’t voters see it that way? Research on how gender shapes political perception suggests an answer. For a 2010 study published in the Personality and Social Psychology Bulletin, two Yale researchers, Tyler Okimoto and Victoria Brescoll, asked participants their opinions of two fictional candidates, one male and one female, who were described as possessing “a strong will to power.” Attributing ambition to the male candidate didn’t hurt his appeal. But upon learning that the female candidate was ambitious, many participants responded with “feelings of moral outrage.” This “moral outrage” helps explain why Americans believed Mrs. Clinton was so much more dishonest than she actually was.

Critics might counter that Politifact’s data notwithstanding, what provoked the public’s opprobrium was not Mrs. Clinton’s gender but the scandals that surrounded her long political career. As a former first lady, she was asked to answer for her husband’s indiscretions in a way other female candidates might not have been. She also spent the 2016 campaign on the defensive for having used a private email server for her official business as secretary of state — a controversy that James Comey reignited by revealing new evidence in the F.B.I.’s investigation just days before the election. For all these reasons, observers might claim that Mrs. Clinton is a special case.

But the same “moral outrage” that plagued her four years ago also plagued this year’s most prominent female presidential contender: Elizabeth Warren. If Mrs. Clinton is far less popular than Mr. Biden, her fellow centrist insider, Ms. Warren has proved far less popular than Bernie Sanders, her fellow progressive insurgent. The data is striking. Most polls show that a majority of Americans disapprove of the gentlewoman from Massachusetts. By contrast, most Americanapprove of the gentleman from Vermont, usually by double digits.

Voters also consider Mr. Sanders more honest than Ms. Warren, even though, according to PolitiFact, he’s not. Mr. Trump’s decision to assign both Mrs. Clinton (“crooked”) and Ms. Warren (“Pocahontas”) nicknames that connote deceit reflects his own misogyny. But it also reflects his instinctive understanding that when you call female candidates unscrupulous, the slur is more likely to stick. (In recent days, Trump has begun referring to Biden as “corrupt Joe.” For bulk of the campaign, however, he merely dubbed him “sleepy,” while labelling Sanders “crazy.”)

It’s worth remembering that the next time you hear Mr. Biden praised for running a cautious, inoffensive and largely mistake-free campaign. Given Mr. Trump’s epic blunders, inoffensiveness may be enough to propel the former vice president to the White House. But it’s a lot easier to be inoffensive when you’re a man.

Donald Trump and Harvey Weinstein

The Dire Dangers of Narcissism

Though I’m professionally distant from today’s media luminaries, I have a particular personal interest in the current narcissistic spectacle du jour: I went to college and was friends with Harvey Weinstein nearly a half a century ago.

With an admixture of feelings, I watch the scandal unfold. I’m horrified and angry at what Weinstein is charged with perpetrating. I’m confused and saddened by my former friend’s behavior. Yet, I’m not surprised, given what I remember about Harvey when we were students. That’s not to say I could have predicted this. I don’t identify with interviewees solicited by journalists to tell what they knew of ignominious scoundrels before they committed their heinous acts. Harvey Weinstein—from first impression of him being grandiose, sycophantic, and magnanimously generous to the progression of his unstable and rampant ambitionwas intense, needy, insecure, ingratiating, and over-the-top in his endeavors.

I’m not invested in justifying or scourging Harvey. He’ll get whatever the consequences of his actions bring—spiritually and legally. I feel sorry for him, but ever more sorry for, and indignant about, the victims he is accused of abusing, exploiting, bullying, and oppressing. Such injustice must be vindicated—but that is not up to me. As a psychologist, my goal is to unravel and shed light upon the inner forces that develop into disastrous behavior. Since I consorted with Harvey and knew him well decades ago, I want to lay bare the seminal roots of an accused tyrant before he became one.

As a psychologist, I have something to contribute by explaining the wily dangers of narcissism, thus allowing potential victims to be informed and better protected. As an American citizen, I am alarmed and wary about the course and future of our country, our people and our principles. As a father, husband, and person with strengths and weaknesses who is desirous of healthy relationships, I, too, am vulnerable. Narcissism is an insidious monster, born of a needy and unstable ego that lurks for years, nursing its perceived wounds, until it explodes in aggressive and blind perpetrations. A healthy self-image must be nurtured. It can be achieved by hard work that includes the basis for self-respect and the practice of respect for others. Though the development of narcissism is neither predictable nor clearly delineated, certain factors may contribute to a self-aggrandizing ego and overbearing sense of entitlement:

  • a “silver-spoon” upbringing, where material things and excessively indulgent opportunities became integral elements in the family culture;
  • exposure to a series of traumas and humiliations;
  • use of embarrassment to modify childhood misbehavior;
  • employing self-flagellation to cope with insecurity; or simply
  • relying on an escapist fantasy and the transformative illusion of becoming a legend and hero in one’s mirror.

Though we may recoil from the exaggerated hubris of the narcissist, we should also be respectful and thankful for not traveling along such an isolating and destructive path. As my mother often said: “There, but for the grace of God, go I.” To live a life of worthiness and honor, one must embrace gratitude and humility.

What Happened to You, Harvey Weinstein?
Do you remember me, Harvey? I know you’ve got a lot on your mind these days; but I’ll bet that if you heard my name, you’d say, “Mark… how the hell are you doing?” We go back a long way, Harvey, to some wild days at the University of Buffalo.

Remember the crowd? Janis Siegel (affectionately called Pumpkin), who went on to acclaim as a singer with Manhattan Transfer. And the creative and iconic Jay Beckenstein, jazz saxophonist with Spyrogyra.

Remember those all-nighters, the 4:00 AM greasy burgers at Your Host Restaurant? The anguished, drugged-out rants and discussions about the universe, who we were, and where we were going?

We grew up and went out in the world to different places. You were amazing, Harvey: intense, sycophantic, driven, disturbed, and needy. I identified with you—Jewish kids from New York, arrived in a blue collar city, ready to take over and show how much we knew and how things should be done.

You floundered, and then soared. It wasn’t long before you traded academics for an entrepreneurial path, on your way to becoming a juggernaut. You founded Harvey & Corky Productions, bringing big-name musical talent to downtown Buffalo. You soon rubbed shoulders with the top names and icons of our generation. It must have been intoxicating, far beyond the drugs that most used to reach for peace and imagined self-importance.

Throughout the years, I watched your movies and cheered you on. There goes Harvey Weinstein—I knew him in college; we were friends. I envied your success. From my intimate knowledge of your personality, I suspected that you were not happy or fulfilled. How could you be, never filling the immense void within you with something other than riches and accolades? Not to diminish your sweeping achievements. But you were so needy and insecure. How could anything the world had to offer be enough?

I wrote to you fifteen years ago, hoping to reconnect. But I never got a response.

Apparently, you tried to fill your deep inner void with surreptitious trysts, using your money and influence to sway and dominate young women—impressionable and aspiring beauties you used for your lustful and egotistical purposes. You used your money, power, and influence to lord it over people, to take advantage of them, and to coerce their silence. The chickens have come home to roost; the truth will not be hidden; you are exposed and in trouble.

It’s not for me to judge you Harvey. I just want to tell you something about women and men and power and accountability.

Females are not immune from deceit, hypocrisy, and the fleshly litany of sins. But females are to be protected and respected. They are “weaker” in some sense, but immensely more powerful than men in many respects. Our society inherently imposes on women mixed messages, psychological traumas, economic discrimination, and often the raw end of many deals. Our culture exalts and worships physical appeal, but quickly disregards and discards worthwhile human beings when their outward beauty fades. Ironically, we exalt and worship physical beauty, and yet we exploit it. The fleeting blooms of pulchritude and stardom leave women vulnerable and with undeserved dismissal or ostracism. Too many men strut their machismo, stricken with envy (and with the fantasy) that a woman can have sex any time she wants (whereas many men have to feel they must lure or seduce). Unfortunately, some men act out of this context to take advantage and force or exploit women. When the playing field becomes overly imbalanced, many women either withdraw into resentful passive aggressiveness—avoiding or manipulating intimacy—or act out with hostile projection—rejecting men or typecasting them as insensitive and only interested in exploitative sex. Though there’s plenty of blame to spread around, men bear the burden—historically, we have been at fault by dominating women and isolating them from full and equal participation in society.

With your overarching success, Harvey, you now have trouble (tsouris, in Yiddish) on a grand scale. My heart aches for you, and I pray for you.

I have some advice for you, Harvey, my dear old friend: it’s time for you to make amends, to acknowledge your wrongdoing, to seek forgiveness, and to make restitution—no holds barred. I know you must now resort to posturing for strategic legal reasons, but you are going to sacrifice a lot of money to pay for your mistakes. You can no longer “buy” people (and certainly not their silence). You will feel alone, and will be alone. You will have to give up the pretenses you have long abused to fill the abyss and mollify the gargantuan ego that hides the empty Harvey Weinstein.

Yet, there is someone valuable, tender, sensitive, worthwhile inside the blustering and offensive Harvey. This is an opportunity to find out who you really are, to change the offensiveness, and to develop into an honorable person.

God has used you, Harvey, and he is not done yet. Through these scandals, he is using you writ large to teach others; and he is bringing you to your knees in the hope that you will stay there and begin to acknowledge and worship him.

Truer riches await you, my friend, if you will only repent and ask for divine forgiveness and guidance. You must also seek forgiveness from the people you hurt, so many of them. It’s time to be open, sincere, and humble. You must unequivocally repent.

Years ago, you founded a big company—Miramax—named after your parents, Max and Miriam Weinstein. What would they think of their son now? I never knew Max or Miriam, but I am sure they always loved you. Why, Harvey, has it been so difficult for you to feel love?

The Harvey Weinstein I knew nearly half a century ago could never relax. He always had to prove something, to get more and show more. You were an intense and difficult person. But you were likable, Harvey, and you didn’t have to try so hard.

Narcissism Exposed

The term narcissism is taken from Greek mythology. Narcissus was the son of the river god Cephissus and nymph Liriope. He was proud, in that he disdained those who loved him. He was drawn to a pool, where he saw his own reflection in the water and fell in love with it (himself), not realizing it was merely an image.

Today, narcissism is a psychiatric diagnosis and considered a mental disorder. It is also often used disparagingly in common parlance and description. Narcissism involves extreme selfishness, with a grandiose view of one’s own talents and a craving for admiration, and has come to characterize a personality type. Narcissists think extremely highly of themselves and are often driven to seek validation of their worthiness and inflated self-opinion by soliciting and even demanding the approval of others. They delude themselves that their boorish machinations and manipulations of others testify to their own self-worth. Though they may be capable of compassion and empathy, narcissists are so preoccupied with their own selfish interests and with validating themselves that they typically ignore or do not consider or recognize others’ needs, even the people closest to them.

Narcissists’ classic “me-first” posture often leads them to resort to aggressive acts that allow them to dominate or “win,” regardless of the costs. They love and need to be the center of attention, often usurping the limelight, dominating conversations, and controlling situations and people to serve their own ends.

It is when they are challenged or confronted with reality that the true pathological character of narcissists flagrantly emerges. Narcissists’ fragile self-image and ego structure do not allow them to acknowledge the egregious nature of their self-importance. Thus, is it is rare for them to apologize or admit wrongdoing. Remorse and repentance for their offensive actions almost never occurs (think Trump).

Thus, narcissists often have a problem with reality-testing; that is, they can only perceive events and circumstances from the same perspective as others when such “reality” supports and buttresses themselves in a positive and flattering light. Unfortunately, this infrequently happens. Instead narcissists twist and distort reality to suit their own views, inevitably causing confusion, alienation, and damage to relationships and the integrity and well-being of others. They constantly use people in devious ways, and invariably deny their motives and the unpleasant effects upon others. Narcissists have confounding and appalling obsession to blame others for what they themselves have done. A psychological term for this is projection. This is denial at its craftiest, and it is infuriating (again, think Trump).

When dealing with and referring to people who thought too highly of themselves, a dear friend of mine use to quip. “I’d like to buy you for what you’re really worth, and sell you for what you think you’re worth.

We can shake our heads in disbelief or disgust at narcissism, and we can mock this condition with humor. However, don’t underestimate the dire danger of narcissism as the disorder affects all those who come into contact with the narcissist. Narcissists cannot have good relationships because they view others as opportunities to validate and gratify themselves. In psychoanalytic terms, they have poorly developed object relations. In plain language, this means that they cannot separate and distinguish between themselves and the legitimate perceptions, opinions, values, desires, and needs of others. What others experience (including hurt or neglect perpetrated by the narcissist) is blocked by the arrogant, center-stage prominence of the narcissist’s own needs.

Dealing With Narcissists

Because narcissists live in a bubble of self-absorption and denial, it’s very hard to break through their manipulations and defenses. Normal people (allowing for differences among individuals) have varying abilities to admit mistakes, acknowledge wrongdoing, apologize with sincerity, recognize their flaws and trespasses along with the negative impact upon others, and modify their behaviors to minimize the negative effects of selfishness. Not so with narcissists, as this is the core of their personality disorder.

It may be helpful to review the following guidelines in dealing with people you suspect of narcissism:

Expect self-centeredness and reality distortion

Because narcissists’ self-absorbed attitudes and responses are often provocative, it’s tempting to react with consternation, indignation, umbrage, and the like. However, if you keep your dismay and outrage to yourself, you’ll be in a better position to question the behaviors with a strategy of setting limits. Instead of expressing your emotional reactions to narcissistic self-centeredness, practice the strategies listed below.

Refrain from demonstrative emotional reactions

Tie responses to facts, evidence, and questions

When faced with narcissists’ bold claims, quietly question the bases for such statements. Or, just ignore them. For example, someone may proudly announce, “These people don’t know how to drive. I happen to be one of the best drivers on the road.” You could say, “ I guess so. But there is the issue of your three moving violations and numerous parking tickets.” Or, you could just let it go, and smirk to yourself.

Sometimes, simply questioning the basis for outrageous statements is enough to slow down the narcissist’s bluster. Remember Trump’s tirades about how he “knows more about Isis than any general in the military,” and his defiant complaint that he is “the victim of the greatest witch hunt in history”? There is no shutting down such an ego. However, one might ask, “Where did you acquire your military knowledge, and why were you not consulted and solicited before you became president?”

Please give us some details about the other witch hunts against which you compare your own alleged persecution.”

And don’t expect an intelligent and coherent response to your questions!

Preface accountability and confrontations with acknowledgment and legitimate praise

Narcissists perceive questions, challenges, and alternate opinions—even facts—as threats to and defamation of their integrity. Therefore, it’s helpful to preface and intersperse your messages of accountability with reasonable and relevant praise toward the person whom you’re trying to get to really listen to you. Even appealing to their putative sense of discernment and justice may get you farther along on your attempts to bring reality into the conversation.

When I deal with pie-in-the sky people who live inside dreams inflated by their own sense of self-worth and entitlement, I find it prudent to ask, “I understand that, given your abilities and track record (?!), you expect this to work out as you’ve favorably planned…, but because you are smart, have you formulated an alternative scenario and plan?”

Set boundaries and repeat if-then consequences as they pertain to the narcissist’s behaviors

Inevitably, narcissists repeatedly step on the toes of others. Their transgressions may be verbal and/or they may take vindictive actions (hello again, Mr. Trump). Their self-aggrandizement can make it hard to keep a straight face; or, their attitude of entitlement may carry implicit threats for noncompliance or resistance. (Harvey Weinstein got away with his egregious behavior in large part due to his political and economic influence, much of which he wielded against much less powerful women. When he ultimately confronted a woman who was formidable and courageous, she pulled the plug, and the dirty slimy water that had accumulated in the bathtub over the decades slurped down the drain. Harvey was left sitting naked and shivering in his own filth.)

Granted, it’s not for individuals to take on the President of the United States. But the collective violations and outrage are propelling Trump to his comeuppance. Kudos to the brave people who have spoken the truth and challenged Trump, even at risk to their own reputations and careers! That takes integrity, confidence, and courage!

And Harvey? My old friend, your bullying and predation have ironically transformed the zeitgeist. Your secret life of lust, aggression, and intimidation now exposed has caused trauma and harm—shame on you! However, the notoriety has caused a groundswell of indignation, objection, and cries for justice. You have become the agent of change, long overdue.

The message is clear: If you abuse or intimidate women, it will come to light and you will pay.

Solicit commitments, promises, and contracts in writing

Remember that, as part of their sense of entitlement, narcissists do not hesitate to change the rules—including their agreements, commitments, promises, and respect for others’ needs—when it suits their purposes. Therefore, it’s wise to make a habit of solidifying commitments and promises in writing, with dates and signatures if possible. Though the self-entitled may scoff and sneer at such requests, pretend you are prone to mistaking the details, since your memory might not be as good as theirs (!) and remind them of the pithy saying, Black and white on paper is a lot clearer than the gray matter of the brain.

In other words, play dumb, like a fox. The narcissist may pity you and indulge you.

At the very least, keep your own meticulous records with details of words, actions, and dates. E-mails and texts establish a continual, accessible, and practical audit trail, useful for holding the narcissist accountable, especially when deception and conflict arise.

Be prepared for breaches of trust, intimacy, and fidelity

Precautions and attentiveness notwithstanding, you cannot change the basic flawed character of the narcissist. That’s not to say that people don’t change. Life experience, traumas, pain, and consequences are all great teachers. They even teach to the seemingly robust and impregnable bravado of narcissists (and, at best, it takes awhile). In his own way and with his own timing, God chips away at the lives and consciences of the foolish and hurtful. At his own discretion, he causes miracles to happen.

But the very nature of narcissism attacks trust, empathy, and consideration. Don’t be surprised when the narcissist (repeatedly) violates boundaries, flaunts rules, and sabotages trust, intimacy, and even your own faith. Remain loving, but be cautious and be prepared. Your sensitivity and good intentions are no match for the power of narcissism. Engaging in an argument or a major adversarial battle with a narcissist can be akin to stepping into the ring with a mixed martial arts fighter. No holds are bared. Be prepared for the unexpected. Be on guard. Protect yourself at all times. Expect hyperbole, manipulated facts, concocted falsehoods, inconsistencies, and outrageous lies. It’s all part of the package.

Narcissism’s Dire Consequences

Donald Trump and Harvey Weinstein are but two notorious narcissistic icons—caricatures writ large in a field of opportunism. Their transgressions leave us aghast, wondering how such egregious behavior could have escalated and continued.

Surely, someone like Weinstein, if indicted and convicted of a crime or crimes in a court of law, must be thwarted and punished. Trump is a much more complex matter involving political and constitutional issues that are still in the process of unfolding. However, the important take-home message is that there are many like them—young, old, male, female, prominent, less significant—who foist their attitudes and perpetrations upon the unsuspecting and vulnerable, the psychologically and experientially less sophisticated, and those with fewer defenses and resources.

Narcissists may be overtly offensive, or they may be furtive and wily—sheep in wolves’ clothing. In a culture that has inveterately promoted self-centeredness and a “me-first” value system, narcissists may seem to embody the cultural virtues, to blend in and prevail over the competition. But you will recognize them by their intransigence and lack of compassion for the basic welfare and psychological well-being of others. As legends in their own mirrors (or pools, as with the Greek Narcissus), they deem themselves the only ones who matter.

As a society, we should focus attention on identifying, dissuading, and modifying the development of narcissistic character. Respect for women—pervasive societal, legal, accommodating respect—is surely a good place to start. We are beginning to painfully learn those lessons.

But the battle against misogyny is not enough. Parents must teach their children that the world does not “owe” them. The government should provide more than minimal education and health care—service, schooling, and training that focuses on character development and resources for the ravages of character failure, including disorders of emotional bonding, anxiety, depression, trauma, and the depredations of addiction.

We need to return to God, individually and collectively. Each of us determines our own personal relationship with or abandonment of our Creator. Religion should not be forced. But spiritual living should be foundational and institutionally encouraged. The development of the soul and its conscience and compassion is incompatible with the “me-first” ethos that culturally reinforces narcissism.

When tragedy strikes, we become voracious Monday morning quarterbacks. We scrutinize the history of assassins and predators, looking for clues that should have exposed them earlier. However, social autopsies on misfits will not relieve us of the larger problem, nor will those efforts alone avert the perverse development of unhealthy, megalomaniac egos.

We must become a society, through and through, that values humility and teaches people, rank and file, to put others first. Against such a social norm, the Trumps and Weinsteins will identify themselves early as faulty people who need discipline, correction, and guidance to develop true and healthy self-love.

Narcissism may never be eliminated, for we are a prideful and sinful species. With regard to selfish insensitivity, some are given to robust excess, even to the point of outright cruelty. Recoil as we might from Trump and Weinstein, we should learn that we need to expose them earlier in order to prevent the devastating potential of narcissism from exerting its will.

Farewell to the Harvey I Knew

We can’t live in the past. The Harvey Weinstein I knew nearly a half century ago has gone his own way, as have I.

In college, you looked up to me, Harvey. In your desperate neediness, you couldn’t see through my pretense, my needing to appear hip and avant-garde. If I’d had your talents, Harvey, perhaps I would have gone much farther astray than I did. Money and fame eluded me, but I guess I was luckier than you. And life did not let me get away with what, in my insouciant arrogance and ambition, I secretly wanted to.

If we could have coffee, I’d share with you some of the ordeals that happened in my life, what I’ve learned and about the people who taught me. Despite many setbacks and traumas, I’ve been fortunate. I have loved and been loved. Women have been great teachers to me, some intimate, some maternal, and many have been platonic, wonderful influences. I have learned to respect women and to not take advantage of them. Except for my wife, I regard them as sisters, mothers, and daughters. I treat them with biblically directed protection, respect, and deference. I joke (respectfully) about the differences between men and women. I note with professional acumen the stereotypes that frequently characterize the brains and demeanors of the two sexes. I’ve written a book about this, too, aimed at improving harmony and satisfaction in marriage relationships.

With maturity, I have more confidence and less need to prove myself or be the center of attention. I’m more able to appreciate the difficulties women have in a male-dominated world. I’m grounded enough to speak up and to model for males how to respect, value, protect, and share equally with females.

With God’s help and the stringent sanctions of many people who knocked me off my self-constructed pedestal and put me in a proper place, I’ve tamed most of my narcissistic tendencies.

The Harvey Weinstein I knew has grown and devolved. Farewell naïve and callow college buddy. I still recognize you, Harvey; beneath the atrocities, there is a boy, now a man, desperate for satisfying love. I hope this is God’s way of teaching you how to find it.

— Mark Steinberg, Ph.D.

Trump’s Trade Secret: Exploiting China’s Relative Weakness

Rising debt levels and an unsustainable economic model leave Beijing at Washington’s mercy.

The Chinese Communist Party has always relied on deception to wrong-foot rivals and attain the advantage in negotiations. Deng Xiaoping famously counseled, “Hide your strength, bide your time.” But Xi Jinping prefers to exaggerate China’s economic strengths and conceal its vulnerabilities.

Mr. Xi’s brazen approach conditions other countries to believe that Beijing enjoys a superior hand, that China’s rise and dominance are inevitable. These erroneous beliefs weaken the will of injured parties, including Western nations, to resist predatory Chinese behavior.

President Trump and Mr. Xi confirmed a “phase 1” trade agreement Friday. Both need the deal for domestic political and economic reasons. But in every negotiation, pressure is relative, and the U.S. has more political and economic leverage than China. This insight will help the U.S. during the more difficult second phase of negotiations.

Consider why China engages in predatory, illegal economic behavior. It needs to grow rapidly to maintain fiscal stability, manage its debt and advance its strategic and military ambitions. China can’t become the dominant power in the Indo-Pacific without sustained growth. The only reliable way Beijing has of maintaining adequate growth is to support its companies with cheap credit. The rise in Chinese corporate debt since the 2008-09 financial crisis has been one of the largest and most rapid—in relative and absolute terms—for any 10-year period in peacetime economic history.

China cannot significantly deleverage without drastic changes to its political economy. The model involves offering state-owned enterprises and national champions such as Huawei cheap finance and privileged domestic-market access at the expense of an independent private sector. China showers state businesses with subsidies and stolen intellectual property, and shields them from foreign competition.

The Chinese domestic economy is slowing because of chronic overinvestment. This provides the economic rationale behind plans such as the Belt and Road Initiative and Made in China 2025. The former is a scheme to export excess capacity and lock in new regional markets for Chinese firms, especially in infrastructure. The latter is a new export-oriented approach based on dominating increasingly important advanced and high-technology sectors in global markets. Both attempt to create external commercial opportunities for protected, unreformed Chinese firms without the need to reform the country’s main economic and political institutions.

Mr. Xi believes doubling down on this approach offers the party the best prospect to retain its hold on power and opportunity. As with virtually all major economic developments in China, the party soaks up praise when things go well and wears blame when they don’t. As Chairman of Everything, Mr. Xi faces acute pressure. His success depends on preventing the emergence of a genuinely independent middle class, which is what led to democratic transitions in Japan, South Korea and Taiwan.

That brings us to the question of negotiating leverage.

The current Chinese model is self-defeating. Less-deserving companies continue to receive the bulk of finance and opportunity. The staggering misallocation of capital is worsening, which makes the mushrooming debt even harder to manage. And allocation of opportunity is political. This means that the private sector, and therefore household income, will continue to remain artificially suppressed—putting even more pressure on Beijing to stimulate growth through further credit expansion.

The U.S. has a far more adaptive and diverse economy than China. China’s economy is inefficient, bloated, dysfunctional—plagued by institutions and policies that are not fit for their purposes. If the tariff war resumes, it will continue to prove much more disruptive to China than to the U.S.

Moreover, by calling attention to the seriousness of Chinese trade violations, Mr. Trump is properly recasting China as the main threat to a fair and sustainable global economic system. Multinational companies are gradually assessing the commercial risk that sovereign risk poses to them—the possibility that China will arbitrarily alter laws or regulations or fail to honor government bonds when they mature.

In recent years, Mr. Xi has been openly accused by former senior officials and influential journalists and academics of mismanaging the relationship with America, decisively abandoning any market-based reforms that would make the Chinese economy more resilient and agile, and overreaching with his aggressive promotion of Belt and Road and Made in China 2025. Leaks about the abhorrent treatment of Uighurs in Xinjiang seem designed to undermine him, while continued protests in Hong Kong are a stark rejection of his authoritarianism.

Mr. Xi’s purging of more than 1.5 million officials, including top generals and party members, will come back to bite him. In addition to holding a weaker economic hand, Mr. Xi is far more vulnerable to internal rebellion, and therefore more desperate for economic pain relief, than the American president.

Mr. Trump has threatened to walk away if any agreement—including the final details of the phase 1 deal—is not to his liking. He indicated in “The Art of the Deal” that his style is to aim high and keep pushing and pushing until he gets what he wants. Let’s hope he follows through. The national interest depends on it.

‘This Is Not the Way Everybody Behaves.’ How Adam Neumann’s Over-the-Top Style Built WeWork.

The skills that helped fuel We Co.’s breakneck growth are piling up as potential liabilities as the company prepares to go public

Adam Neumann was flying high. Literally.

His office-rental giant WeWork was months away from being valued at $47 billion. Revenue was doubling annually. And Mr. Neumann was zipping across the Atlantic Ocean in a Gulfstream G650 private jet with friends last summer, smoking marijuana.

After the group landed in Israel and left the plane, the flight crew found a sizable chunk of the drug stuffed in a cereal box for the return flight, according to people familiar with the incident. The jet’s owner, upset and fearing repercussions of trans-border marijuana transport, recalled the plane, leaving Mr. Neumann to find his own way back to New York, these people said.

Since Mr. Neumann co-founded WeWork—recently renamed We Co.—with Miguel McKelvey nine years ago, he has led with unusual exuberance and excess. His combination of entrepreneurial vision, personal charisma and brash risk-taking helped the company surpass $2 billion in annual revenue, and made it the country’s most valuable startup.

Now many of the same qualities that helped fuel his company’s breakneck growth in the private market are piling up as potential liabilities as the company prepares to go public—helmed by a CEO who looks little like a typical public-company chief.

Mr. Neumann muses about the implausible:

  • becoming leader of the world,
  • living forever,
  • amassing more than $1 trillion in wealth.

Partying has long been a feature of his work life, heavy on the tequila.

Public investors are increasingly skeptical of the formula that has worked for Mr. Neumann so far: his pitch that We is far more than a real-estate company. With its rapid growth and use of technology, he argued, the company deserves rich valuations normally reserved for tech companies.

Instead, many potential investors now see a fast-growing office subleasing company with losses of more than $1.6 billion last year.

Since We filed the prospectus for its initial public offering last month, it has been besieged with criticism over its governance, business model and ability to turn a profit. It is now expecting an IPO valuation as low as a third of the $47 billion sticker price it garnered in a January funding round—a drop without recent precedent. This week, We postponed the offering until October at the earliest.

Wall Street and Silicon Valley investors have been dismayed by the number of potential conflicts of interest disclosed in the “S-1” IPO prospectus, including Mr. Neumann leasing properties he owns back to the company and borrowing heavily against his stock. Even some of We’s private investors said they were angered to learn that an entity Mr. Neumann controls sold the rights to the word “We” to the company for almost $6 million—before public pressure led him to unwind the deal.

“This is not the way everybody behaves,” said Dick Costolo, former CEO of Twitter Inc., who led the company through one of the larger tech IPOs of the past decade. “The degree of self-dealing in the S-1 is so egregious, and it comes at a time when you’ve got regulators and politicians and folks across the country looking out at Silicon Valley and wondering if there’s the appropriate level of self-awareness.”

Given the prominence of the IPO, he added, “that is a big problem.”

Mr. Neumann, 40, declined to comment through a spokesman, who cited rules surrounding the planned IPO. Mr. Neumann told We employees Tuesday the process had been humbling and he would learn from it, say people who heard him. We executives have previously said he is strongly devoted to the company, and many of his personal transactions were made with the company’s best interests at heart.

This account is based on interviews with current and former employees, investors and friends who interacted with Mr. Neumann as he built We.

For startup investors, the 6-foot-5 Mr. Neumann has always had the qualities they crave in Silicon Valley founders, despite being based in New York. He is intensely ambitious and a masterful storyteller with a magnetic personality who can inspire and sell.

Raised in Israel on a kibbutz, Mr. Neumann moved to the U.S. when he was 22, where he attended Baruch College and tried to start businesses. One was a collapsible heel on women’s shoes that didn’t get off the ground. Working out of his Tribeca apartment, he started Krawlers, which sought to make baby clothes with knee pads to make crawling more comfortable. The slogan, he has said: “Just because they don’t tell you, doesn’t mean they don’t hurt.” It never gained traction.

He and Mr. McKelvey started a small co-working space on the side during the recession that followed the financial crisis and were amazed by the demand.

By 2010, they had started WeWork, with essentially the same core business model that exists today: They lease an office long-term, renovate it to make it hip and inviting, and sublease smaller desks and offices short-term.

Early on, Mr. Neumann painted a picture of how WeWork was connecting entrepreneurs and others who in the past would have worked from home or in coffee shops; how the company would bring a new way of working to a changing world.

The founders planned for the “We” brand to expand beyond office space into other categories such as housing and finance. Mr. Neumann ramped up its image as a tech company as it grew.

It introduced a mobile app for network members, meant to facilitate a “physical social network.” The company emphasized its data and how it was using artificial intelligence to glean insights about buildings.

Past funders and employees tell stories of how an animated Mr. Neumann convinced them within minutes to believe in the company’s epic future.

“When I met him, after a couple of minutes, I wanted to invest,” said Joey Low, whose Star Farm Ventures put money into the company in 2013 and multiple subsequent funding rounds. “He was hungry for success—that was for sure.”

Even former executives who disliked Mr. Neumann give him credit for an extraordinary ability to motivate employees and push the company.

He forgoes many conventions of the standard, buttoned-up CEO. He pushed for rowdy parties in the early days. He often walks barefoot around the office. In an earlier office, he blared songs by pop-star Rihanna while a trainer held a punching bag for him, and then walked around afterward while still sweaty from the exertion.

Like some high-profile CEOs in tech, he hopes to live forever, according to three people who heard him say this, and has invested in life-extension startup Life Biosciences LLC.

It says its mission is “to create a future where age-related decline is not a fact of life.”

As WeWork grew, Mr. Neumann took on ever more investment, bringing in tens of millions of dollars from venture capitalists, then hundreds of millions from mutual funds T. Rowe Price and Fidelity Investments. Crucially, he secured full control of the company in 2014 when investor demand was high—getting shares with 10 times the votes of others.

Ultimately he found a kindred spirit in Masayoshi Son, CEO of SoftBank Group Corp., who, like Mr. Neumann, is a risk-taker who respects giant bets. Mr. Son, a telecom veteran who raised the world’s largest tech fund in 2017, met Mr. Neumann in India in 2016 and pondered an investment.

SoftBank first committed $3.1 billion in new funding in 2017. Mr. Neumann has told others that Mr. Son appreciated how he was crazy—but thought that he needed to be crazier. A SoftBank spokeswoman declined to comment.

Many former employees said they didn’t always know how seriously to take some of Mr. Neumann’s pronouncements. Early on, he would throw out seemingly random ideas, like adding a pool in the basement of the company’s headquarters or starting an airline.

He told at least one person directly that his ambitions included becoming Israel’s prime minister. More recently, he said that if he ran for anything, it would be president of the world, according to another person who spoke with him.

“The influence and impact that we are going to have on this Earth is going to be so big,” he said last year at a “summer camp” southeast of London, where the company’s staff were all flown for a music festival-like event. One day, he proposed, the company could “solve the problem of children without parents,” and from there go onto other causes such as eradicating world hunger.

Alcohol flowed in great quantities; bartenders handed out free rosé by the bottle. Employees from around the globe posed for photos with the CEO. Some seminars had a spiritual component, including one with holistic health expert Deepak Chopra, who advocates regular meditation and yoga.

Mr. Neumann has told several people over the past two years that a personal goal is to become the world’s first trillionaire.

He relishes trips in private jets. Last year, We bought one for more than $60 million, people familiar with the sale said. Mr. Neumann has borrowed more than $740 million against his stock and has sold multiple hundred million dollars of shares, people familiar with those sales say, eliciting widespread criticism from analysts and Silicon Valley investors. These share sales weren’t disclosed in the IPO prospectus.

In a 2015 investment round, Mr. Neumann sold tens of millions of dollars of shares. Soon after, the company launched a buyback program offering to purchase employees’ shares too. But the company gave employees a different arrangement, giving them a payout per share worth substantially less than what Mr. Neumann was paid, people familiar with the sale said. Mr. Neumann’s sale wasn’t publicized within the company.

We executives have said the buyback price couldn’t be higher for tax reasons. More recent stock sales have been more equitable.

A recent change to the company’s corporate structure puts Mr. Neumann and a group of executives in a position to have a lower tax rate on some of their stock compensation than the rest of the employees in the company. We said the new structure was created in part to make it easier to expand into new businesses beyond co-working, according to IPO filings.

In private, Mr. Neumann often talks about the company’s valuation, according to people involved with the conversations. He has insisted that We’s valuation will eventually be many times what it was earlier this year, when it reached $47 billion, the people said.

For Mr. Neumann and the investors, the premise has always been that the market would look at We as more than real estate. The high valuation—twice that of United Airlines Holdings Inc. —has enabled the company to continue to raise money to fund new desks and offices and keep growing, even as losses persisted.

He has created a distinct culture in his mold. T-shirts and signs sport slogans such as “hustle harder” and “Thank God it’s Monday.” Employees are often big company boosters, creating a work-hard, play-hard office, with a millennial hipster vibe.

Alcohol has been a big part of the culture, particularly in We’s first half-decade. Mr. Neumann has told people he likes how it brings people together, and tequila, his favorite, flows freely. Executive retreats sport numerous cases of Don Julio 1942, with a retail price of more than $110 a bottle, and pours sometimes start in the morning.

A few weeks after Mr. Neumann fired 7% of the staff in 2016, he somberly addressed the issue at an evening all-hands meeting at headquarters, telling attendees the move was tough but necessary to cut costs, and the company would be better because of it.

Then employees carrying trays of plastic shot glasses filled with tequila came into the room, followed by toasts and drinks.

Soon after, Darryl McDaniels of hip-hop group Run-DMC entered the room, embraced Mr. Neumann and played a set for the staff. Workers danced to the 1980s hit “It’s Tricky” as the tequila trays made more rounds; some others, still focused on the firings, say they were stunned and confused.

Mr. Neumann also enjoys marijuana, his friends and former executives say. As with the Israel trip, multiple people who have been on planes with him say he often smokes while airborne.

Much of this culture has been pared back as the company has matured. The summer camp was canceled this year.

Mr. Neumann has mellowed some too, friends say. He sometimes stays away from alcohol for weeks or months at a time, and raucous parties are less frequent. His wife, Rebekah Neumann, has helped pare back the partying, former executives say.

Ms. Neumann, a first cousin of actress and wellness guru Gwyneth Paltrow, has said she and Mr. Neumann clicked when they first met, when Mr. Neumann was broke and struggling to make a business.

“It felt like time stopped,” she told a podcast interviewer last year. “I just knew he was the man that was, hopefully, going to help save the world.

Mr. Neumann and his wife, Rebekah Neumann, in 2018. PHOTO: EVAN AGOSTINI/INVISION/ASSOCIATED PRESS

Former employees who worked with her say she pushes to infuse spiritualism in We—which has a mission statement to “elevate the world’s consciousness”—and enjoys broad autonomy at the company. She is the chief brand officer and head of WeGrow—the private company’s preschool and elementary school that costs up to $42,000 a year and is open to anyone. She is an important counsel for Mr. Neumann, and he has told staff they often make decisions together.

The two split time between some of their many homes—they have at least five—including a 60-acre Tudor-style estate north of New York City. They have told staff they started WeGrow after they were dissatisfied with schooling options for their five children.

The two have committed giving $1 billion to charity over the next decade.

Ms. Neumann had been slated to play a large role in choosing Mr. Neumann’s successor if he were ever incapacitated, but was recently removed from that position amid pushback from investors.

Both Neumanns could be impulsive at times, former executives say. Ms. Neumann has ordered multiple employees fired after meeting them for just minutes, telling staff she didn’t like their energy. She and Mr. Neumann have sent maintenance and IT staff to their homes to fix various items.

When Mr. Neumann announced in July 2018 via video call from Israel that the company was banning meat, executives in New York were caught off guard. With little explanation from Mr. Neumann, a group huddled to determine a rationale—they settled on sustainability—and the mechanics of what would be banned and how.

They determined employees couldn’t expense meals with meat, but they could eat it in company offices, so long as the company didn’t pay. Former employees say they have since seen Mr. Neumann eat meat.

He previously has instructed staff to fire 20% of employees a year, bemoaning the number of “B” players hired amid rapid growth. Managers were unable to hit the target even when they included attrition.

Still, former executives believe his outlandish targets for items such as reducing construction costs have forced better results than more realistic goals—and are a driver of the company’s continued growth.

That growth has remained remarkably consistent, roughly doubling every year for most of We’s history, and remains the main selling point to investors.

“This guy is pushing hard, but he’s all in,” said John Caddedu, managing director at early We investor DAG Ventures. Building something as big as We, he said, “requires extraordinary devotion and focus and will and a lot of the things that throw some people off.”

Mr. Neumann had been expecting the revenue growth rate would also be well received by the public markets. Companies such as Netflix Inc. and Amazon.comInc. were growing at slower rates nearly a decade in, though they were losing far less money.

Instead, after the IPO prospectus was released in mid-August, the company became the butt of jokes in Silicon Valley and among Wall Street crowds. Analysts and competitors critiqued its lack of detail around the economics of its offices. Corporate governance proponents were aghast at the long list of potential conflicts. Some observers noted the irony of personally profiting off the trademark for the word “we.”

Years leading a private company left Mr. Neumann unprepared for the negative reaction, people familiar with the IPO discussions have said. Every time he raised money—often at in-person meetings where check-writers could see Mr. Neumann’s charm—the valuation went up, money rolled in, and the business expanded.

Some investors said when they raised concerns about Mr. Neumann’s self-dealings, he brushed the issues aside. Despite We’s growing size, its losses have been increasing at the same rate as revenue, creating a constant need for fresh investments. That is contrary to earlier projections from Mr. Neumann, who said the company wouldn’t need more money.

Meanwhile, numerous other business lines, including a residential arm, a gym and an office design and management arm, have all been scaled back or failed to deliver the high profit margins once expected, people familiar with the businesses said.

In a videoconference with the whole company Tuesday, Mr. Neumann, dressed uncharacteristically in a gray suit and a white button-down shirt, told the staff it has “played the private market game to perfection,” listeners said.

As for the public markets, he said, the company was still learning the rules of the game.

It’s Time to Break Up Facebook (Chris Hughes)

Mark’s influence is staggering, far beyond that of anyone else in the private sector or in government. He controls three core communications platforms — Facebook, Instagram and WhatsApp — that billions of people use every day. Facebook’s board works more like an advisory committee than an overseer, because Mark controls around 60 percent of voting shares. Mark alone can decide how to configure Facebook’s algorithms to determine what people see in their News Feeds, what privacy settings they can use and even which messages get delivered. He sets the rules for how to distinguish violent and incendiary speech from the merely offensive, and he can choose to shut down a competitor by acquiring, blocking or copying it.

Mark is a good, kind person. But I’m angry that his focus on growth led him to sacrifice security and civility for clicks. I’m disappointed in myself and the early Facebook team for not thinking more about how the News Feed algorithm could change our culture, influence elections and empower nationalist leaders. And I’m worried that Mark has surrounded himself with a team that reinforces his beliefs instead of challenging them.

The government must hold Mark accountable. For too long, lawmakers have marveled at Facebook’s explosive growth and overlooked their responsibility to ensure that Americans are protected and markets are competitive. Any day now, the Federal Trade Commission is expected to impose a $5 billion fine on the company, but that is not enough; nor is Facebook’s offer to appoint some kind of privacy czar. After Mark’s congressional testimony last year, there should have been calls for him to truly reckon with his mistakes. Instead the legislators who questioned him were derided as too old and out of touch to understand how tech works. That’s the impression Mark wanted Americans to have, because it means little will change.

Facebook’s dominance is not an accident of history. The company’s strategy was to beat every competitor in plain view, and regulators and the government tacitly — and at times explicitly — approved. In one of the government’s few attempts to rein in the company, the F.T.C. in 2011 issued a consent decree that Facebook not share any private information beyond what users already agreed to. Facebook largely ignored the decree. Last month, the day after the company predicted in an earnings call that it would need to pay up to $5 billion as a penalty for its negligence — a slap on the wrist — Facebook’s shares surged 7 percent, adding $30 billion to its value, six times the size of the fine.

The F.T.C.’s biggest mistake was to allow Facebook to acquire Instagram and WhatsApp. In 2012, the newer platforms were nipping at Facebook’s heels because they had been built for the smartphone, where Facebook was still struggling to gain traction. Mark responded by buying them, and the F.T.C. approved.

Neither Instagram nor WhatsApp had any meaningful revenue, but both were incredibly popular. The Instagram acquisition guaranteed Facebook would preserve its dominance in photo networking, and WhatsApp gave it a new entry into mobile real-time messaging. Now, the founders of Instagram and WhatsApp have left the company after clashing with Mark over his management of their platforms. But their former properties remain Facebook’s, driving much of its recent growth.

.. When it hasn’t acquired its way to dominance, Facebook has used its monopoly position to shut out competing companies or has copied their technology.

The News Feed algorithm reportedlprioritized videos created through Facebook over videos from competitors, like YouTube and Vimeo. In 2012, Twitter introduced a video network called Vine that featured six-second videos. That same day, Facebook blocked Vine from hosting a tool that let its users search for their Facebook friends while on the new network. The decision hobbled Vine, which shut down four years later.

Snapchat posed a different threat. Snapchat’s Stories and impermanent messaging options made it an attractive alternative to Facebook and Instagram. And unlike Vine, Snapchat wasn’t interfacing with the Facebook ecosystem; there was no obvious way to handicap the company or shut it out. So Facebook simply copied it.

Facebook’s version of Snapchat’s stories and disappearing messages proved wildly successful, at Snapchat’s expense. At an all-hands meeting in 2016, Mark told Facebook employees not to let their pride get in the way of giving users what they want. According to Wired magazine, “Zuckerberg’s message became an informal slogan at Facebook: ‘Don’t be too proud to copy.’”

(There is little regulators can do about this tactic: Snapchat patented its “ephemeral message galleries,” but copyright law does not extend to the abstract concept itself.)

As a result of all this, would-be competitors can’t raise the money to take on Facebook. Investors realize that if a company gets traction, Facebook will copy its innovations, shut it down or acquire it for a relatively modest sum. So despite an extended economic expansion, increasing interest in high-tech start-ups, an explosion of venture capital and growing public distaste for Facebook, no major social networking company has been founded since the fall of 2011.

As markets become more concentrated, the number of new start-up businesses declines. This holds true in other high-tech areas dominated by single companies, like search (controlled by Google) and e-commerce (taken over by Amazon). Meanwhile, there has been plenty of innovation in areas where there is no monopolistic domination, such as in workplace productivity (Slack, Trello, Asana), urban transportation (Lyft, Uber, Lime, Bird) and cryptocurrency exchanges (Ripple, Coinbase, Circle).

I don’t blame Mark for his quest for domination. He has demonstrated nothing more nefarious than the virtuous hustle of a talented entrepreneur. Yet he has created a leviathan that crowds out entrepreneurship and restricts consumer choice. It’s on our government to ensure that we never lose the magic of the invisiblehand. How did we allow this to happen?

Since the 1970s, courts have become increasingly hesitant to break up companies or block mergers unless consumers are paying inflated prices that would be lower in a competitive market. But a narrow reliance on whether or not consumers have experienced price gouging fails to take into account the full cost of market domination. It doesn’t recognize that we also want markets to be competitive to encourage innovation and to hold power in check. And it is out of step with the history of antitrust law. Two of the last major antitrust suits, against AT&T and IBM in the 1980s, were grounded in the argument that they had used their size to stifle innovation and crush competition.

As the Columbia law professor Tim Wu writes, “It is a disservice to the laws and their intent to retain such a laserlike focus on price effects as the measure of all that antitrust was meant to do.

Facebook is the perfect case on which to reverse course, precisely because Facebook makes its money from targeted advertising, meaning users do not pay to use the service. But it is not actually free, and it certainly isn’t harmless.

Facebook’s business model is built on capturing as much of our attention as possible to encourage people to create and share more information about who they are and who they want to be. We pay for Facebook with our data and our attention, and by either measure it doesn’t come cheap.

I was on the original News Feed team (my name is on the patent), and that product now gets billions of hours of attention and pulls in unknowable amounts of data each year. The average Facebook user spends an hour a day on the platform; Instagram users spend 53 minutes a day scrolling through pictures and videos. They create immense amounts of data — not just likes and dislikes, but how many seconds they watch a particular video — that Facebook uses to refine its targeted advertising. Facebook also collects data from partner companies and apps, without most users knowing about it, according to testing by The Wall Street Journal.

Some days, lying on the floor next to my 1-year-old son as he plays with his dinosaurs, I catch myself scrolling through Instagram, waiting to see if the next image will be more beautiful than the last. What am I doing? I know it’s not good for me, or for my son, and yet I do it anyway.

The choice is mine, but it doesn’t feel like a choice. Facebook seeps into every corner of our lives to capture as much of our attention and data as possible and, without any alternative, we make the trade.

The vibrant marketplace that once drove Facebook and other social media companies to compete to come up with better products has virtually disappeared. This means there’s less chance of start-ups developing healthier, less exploitative social media platforms. It also means less accountability on issues like privacy.

Just last month, Facebook seemingly tried to bury news that it had stored tens of millions of user passwords in plain text format, which thousands of Facebook employees could see. Competition alone wouldn’t necessarily spur privacy protection — regulation is required to ensure accountability — but Facebook’s lock on the market guarantees that users can’t protest by moving to alternative platforms.

The most problematic aspect of Facebook’s power is Mark’s unilateral control over speech. There is no precedent for his ability to monitor, organize and even censor the conversations of two billion people.

Facebook engineers write algorithms that select which users’ comments or experiences end up displayed in the News Feeds of friends and family. These rules are proprietary and so complex that many Facebook employees themselves don’t understand them.

In 2014, the rules favored curiosity-inducing “clickbait” headlines. In 2016, they enabled the spread of fringe political views and fake news, which made it easier for Russian actors to manipulate the American electorate. In January 2018, Mark announced that the algorithms would favor non-news content shared by friends and news from “trustworthy” sources, which his engineers interpreted — to the confusion of many — as a boost for anything in the category of “politics, crime, tragedy.”

Facebook has responded to many of the criticisms of how it manages speech by hiring thousands of contractors to enforce the rules that Mark and senior executives develop. After a few weeks of training, these contractors decide which videos count as hate speech or free speech, which images are erotic and which are simply artistic, and which live streams are too violent to be broadcast. (The Verge reported that some of these moderators, working through a vendor in Arizona, were paid $28,800 a year, got limited breaks and faced significant mental health risks.)

As if Facebook’s opaque algorithms weren’t enough, last year we learned that Facebook executives had permanently deleted their own messages from the platform, erasing them from the inboxes of recipients; the justification was corporate security concerns. When I look at my years of Facebook messages with Mark now, it’s just a long stream of my own light-blue comments, clearly written in response to words he had once sent me. (Facebook now offers a limited version of this feature to all users.)

The most extreme example of Facebook manipulating speech happened in Myanmar in late 2017Mark said in a Vox interview that he personally made the decision to delete the private messages of Facebook users who were encouraging genocide there. “I remember, one Saturday morning, I got a phone call,” he said, “and we detected that people were trying to spread sensational messages through — it was Facebook Messenger in this case — to each side of the conflict, basically telling the Muslims, ‘Hey, there’s about to be an uprising of the Buddhists, so make sure that you are armed and go to this place.’ And then the same thing on the other side.”

Mark made a call: “We stop those messages from going through.” Most people would agree with his decision, but it’s deeply troubling that he made it with no accountability to any independent authority or government. Facebook could, in theory, delete en masse the messages of Americans, too, if its leadership decided it didn’t like them.

Mark used to insist that Facebook was just a “social utility,” a neutral platform for people to communicate what they wished. Now he recognizes that Facebook is both a platform and a publisher and that it is inevitably making decisions about values. The company’s own lawyers have argued in court that Facebook is a publisher and thus entitled to First Amendment protection.

No one at Facebook headquarters is choosing what single news story everyone in America wakes up to, of course. But they do decide whether it will be an article from a reputable outlet or a clip from “The Daily Show,” a photo from a friend’s wedding or an incendiary call to kill others.

Mark knows that this is too much power and is pursuing a twofold strategy to mitigate it.

  1. He is pivoting Facebook’s focus toward encouraging more private, encrypted messaging that Facebook’s employees can’t see, let alone control.
  2. Second, he is hoping for friendly oversight from regulators and other industry executives.

Late last year, he proposed an independent commission to handle difficult content moderation decisions by social media platforms. It would afford an independent check, Mark argued, on Facebook’s decisions, and users could appeal to it if they disagreed. But its decisions would not have the force of law, since companies would voluntarily participate.

In an op-ed essay in The Washington Post in March, he wrote, “Lawmakers often tell me we have too much power over speech, and I agree.” And he went even further than before, calling for more government regulation — not just on speech, but also on privacy and interoperability, the ability of consumers to seamlessly leave one network and transfer their profiles, friend connections, photos and other data to another.

I don’t think these proposals were made in bad faith. But I do think they’re an attempt to head off the argument that regulators need to go further and break up the company. Facebook isn’t afraid of a few more rules. It’s afraid of an antitrust case and of the kind of accountability that real government oversight would bring.

We don’t expect calcified rules or voluntary commissions to work to regulate drug companies, health care companies, car manufacturers or credit card providers. Agencies oversee these industries to ensure that the private market works for the public good. In these cases, we all understand that government isn’t an external force meddling in an organic market; it’s what makes a dynamic and fair market possible in the first place. This should be just as true for social networking as it is for air travel or pharmaceuticals.

In the summer of 2006, Yahoo offered us $1 billion for Facebook. I desperately wanted Mark to say yes. Even my small slice of the company would have made me a millionaire several times over. For a 22-year-old scholarship kid from small-town North Carolina, that kind of money was unimaginable. I wasn’t alone — just about every other person at the company wanted the same.

It was taboo to talk about it openly, but I finally asked Mark when we had a moment alone, “How are you feeling about Yahoo?” I got a shrug and a one-line answer: “I just don’t know if I want to work for Terry Semel,” Yahoo’s chief executive.

Outside of a couple of gigs in college, Mark had never had a real boss and seemed entirely uninterested in the prospect. I didn’t like the idea much myself, but I would have traded having a boss for several million dollars any day of the week. Mark’s drive was infinitely stronger. Domination meant domination, and the hustle was just too delicious.

Mark may never have a boss, but he needs to have some check on his power. The American government needs to do two things: break up Facebook’s monopoly and regulate the company to make it more accountable to the American people.

First, Facebook should be separated into multiple companies. The F.T.C., in conjunction with the Justice Department, should enforce antitrust laws by undoing the Instagram and WhatsApp acquisitions and banning future acquisitions for several years. The F.T.C. should have blocked these mergers, but it’s not too late to act. There is precedent for correcting bad decisions — as recently as 2009, Whole Foods settled antitrust complaints by selling off the Wild Oats brand and stores that it had bought a few years earlier.

There is some evidence that we may be headed in this direction. Senator Elizabeth Warren has called for reversing the Facebook mergers, and in February, the F.T.C. announced the creation of a task force to monitor competition among tech companies and review previous mergers.

How would a breakup work? Facebook would have a brief period to spin off the Instagram and WhatsApp businesses, and the three would become distinct companies, most likely publicly traded. Facebook shareholders would initially hold stock in the new companies, although Mark and other executives would probably be required to divest their management shares.

Until recently, WhatsApp and Instagram were administered as independent platforms inside the parent company, so that should make the process easier. But time is of the essence: Facebook is working quickly to integrate the three, which would make it harder for the F.T.C. to split them up.

Some economists are skeptical that breaking up Facebook would spur that much competition, because Facebook, they say, is a “natural” monopoly. Natural monopolies have emerged in areas like water systems and the electrical grid, where the price of entering the business is very high — because you have to lay pipes or electrical lines — but it gets cheaper and cheaper to add each additional customer. In other words, the monopoly arises naturally from the circumstances of the business, rather than a company’s illegal maneuvering. In addition, defenders of natural monopolies often make the case that they benefit consumers because they are able to provide services more cheaply than anyone else.

Facebook is indeed more valuable when there are more people on it: There are more connections for a user to make and more content to be shared. But the cost of entering the social network business is not that high. And unlike with pipes and electricity, there is no good argument that the country benefits from having only one dominant social networking company.

Facebook is indeed more valuable when there are more people on it: There are more connections for a user to make and more content to be shared. But the cost of entering the social network business is not that high. And unlike with pipes and electricity, there is no good argument that the country benefits from having only one dominant social networking company.

Still others worry that the breakup of Facebook or other American tech companies could be a national security problem. Because advancements in artificial intelligence require immense amounts of data and computing power, only large companies like Facebook, Google and Amazon can afford these investments, they say. If American companies become smaller, the Chinese will outpace us.

While serious, these concerns do not justify inaction. Even after a breakup, Facebook would be a hugely profitable business with billions to invest in new technologies — and a more competitive market would only encourage those investments. If the Chinese did pull ahead, our government could invest in research and development and pursue tactical trade policy, just as it is doing today to hold China’s 5G technology at bay.

The cost of breaking up Facebook would be next to zero for the government, and lots of people stand to gain economically. A ban on short-term acquisitions would ensure that competitors, and the investors who take a bet on them, would have the space to flourish. Digital advertisers would suddenly have multiple companies vying for their dollars.

Even Facebook shareholders would probably benefit, as shareholders often do in the years after a company’s split. The value of the companies that made up Standard Oil doubled within a year of its being dismantled and had increased by fivefold a few years later. Ten years after the 1984 breakup of AT&T, the value of its successor companies had tripled.

But the biggest winners would be the American people. Imagine a competitive market in which they could choose among one network that

  • offered higher privacy standards, another that
  • cost a fee to join but had little advertising and another that would allow users to
  • customize and tweak their feeds as they saw fit.

No one knows exactly what Facebook’s competitors would offer to differentiate themselves. That’s exactly the point.

The Justice Department faced similar questions of social costs and benefits with AT&T in the 1950s. AT&T had a monopoly on phone services and telecommunications equipment. The government filed suit under antitrust laws, and the case ended with a consent decree that required AT&T to release its patents and refrain from expanding into the nascent computer industry. This resulted in an explosion of innovation, greatly increasing follow-on patents and leading to the development of the semiconductor and modern computing. We would most likely not have iPhones or laptops without the competitive markets that antitrust action ushered in.

Adam Smith was right: Competition spurs growth and innovation.

Just breaking up Facebook is not enough. We need a new agency, empowered by Congress to regulate tech companies. Its first mandate should be to protect privacy.

The Europeans have made headway on privacy with the General Data Protection Regulation, a law that guarantees users a minimal level of protectionA landmark privacy bill in the United States should specify exactly what control Americans have over their digital information, require clearer disclosure to users and provide enough flexibility to the agency to exercise effective oversight over time. The agency should also be charged with guaranteeing basic interoperability across platforms.

Finally, the agency should create guidelines for acceptable speech on social media. This idea may seem un-American — we would never stand for a government agency censoring speech. But we already have limits on

  • yelling “fire” in a crowded theater,
  • child pornography,
  • speech intended to provoke violence and false statements to manipulate stock prices.

We will have to create similar standards that tech companies can use. These standards should of course be subject to the review of the courts, just as any other limits on speech are. But there is no constitutional right to harass others or live-stream violence.

These are difficult challenges. I worry that government regulators will not be able to keep up with the pace of digital innovation. I worry that more competition in social networking might lead to a conservative Facebook and a liberal one, or that newer social networks might be less secure if government regulation is weak. But sticking with the status quo would be worse: If we don’t have public servants shaping these policies, corporations will.

Some people doubt that an effort to break up Facebook would win in the courts, given the hostility on the federal bench to antitrust action, or that this divided Congress would ever be able to muster enough consensus to create a regulatory agency for social media.

But even if breakup and regulation aren’t immediately successful, simply pushing for them will bring more oversight. The government’s case against Microsoft — that it illegally used its market power in operating systems to force its customers to use its web browser, Internet Explorer — ended in 2001 when George W. Bush’s administration abandoned its effort to break up the company. Yet that prosecution helped rein in Microsoft’s ambitions to dominate the early web.

Similarly, the Justice Department’s 1970s suit accusing IBM of illegally maintaining its monopoly on computer sales ended in a stalemate. But along the way, IBM changed many of its behaviors. It stopped bundling its hardware and software, chose an extremely open design for the operating system in its personal computers and did not exercise undue control over its suppliers. Professor Wu has written that this “policeman at the elbow” led IBM to steer clear “of anything close to anticompetitive conduct, for fear of adding to the case against it.”

We can expect the same from even an unsuccessful suit against Facebook.

Finally, an aggressive case against Facebook would persuade other behemoths like Google and Amazon to think twice about stifling competition in their own sectors, out of fear that they could be next. If the government were to use this moment to resurrect an effective competition standard that takes a broader view of the full cost of “free” products, it could affect a whole host of industries.

The alternative is bleak. If we do not take action, Facebook’s monopoly will become even more entrenched. With much of the world’s personal communications in hand, it can mine that data for patterns and trends, giving it an advantage over competitors for decades to come.

I take responsibility for not sounding the alarm earlier. Don Graham, a former Facebook board member, has accused those who criticize the company now as having “all the courage of the last man leaping on the pile at a football game.” The financial rewards I reaped from working at Facebook radically changed the trajectory of my life, and even after I cashed out, I watched in awe as the company grew. It took the 2016 election fallout and Cambridge Analytica to awaken me to the dangers of Facebook’s monopoly. But anyone suggesting that Facebook is akin to a pinned football player misrepresents its resilience and power.

An era of accountability for Facebook and other monopolies may be beginning. Collective anger is growing, and a new cohort of leaders has begun to emerge. On Capitol Hill, Representative David Cicilline has taken a special interest in checking the power of monopolies, and Senators Amy Klobuchar and Ted Cruz have joined Senator Warren in calling for more oversight. Economists like Jason Furman, a former chairman of the Council of Economic Advisers, are speaking out about monopolies, and a host of legal scholars like Lina Khan, Barry Lynn and Ganesh Sitaraman are plotting a way forward.

This movement of public servants, scholars and activists deserves our support. Mark Zuckerberg cannot fix Facebook, but our government can.

Zuckerberg’s new privacy essay shows why Facebook needs to be broken up

Mark Zuckerberg doesn’t understand what privacy means — he can’t be trusted to define it for the rest of us

Zuckerberg’s new privacy essay shows why Facebook needs to be broken up
Mark Zuckerberg doesn’t understand what privacy means—he can’t be trusted to define it for the rest of us.
by Konstantin Kakaes March 7, 2019

In a letter published when his company went public in 2012, Mark Zuckerberg championed Facebook’s mission of making the world “more open and connected.” Businesses would become more authentic, human relationships stronger, and government more accountable. “A more open world is a better world,” he wrote.

Facebook’s CEO now claims to have had a major change of heart.

In “A Privacy-Focused Vision for Social Networking,” a 3,200-word essay that Zuckerberg posted to Facebook on March 6, he says he wants to “build a simpler platform that’s focused on privacy first.” In apparent surprise, he writes: “People increasingly also want to connect privately in the digital equivalent of the living room.”

Zuckerberg’s essay is a power grab disguised as an act of contrition. Read it carefully, and it’s impossible to escape the conclusion that if privacy is to be protected in any meaningful way, Facebook must be broken up.

Facebook grew so big, so quickly that it defies categorization. It is a newspaper. It is a post office and a telephone exchange. It is a forum for political debate, and it is a sports broadcaster. It’s a birthday-reminder service and a collective photo album. It is all of these things—and many others—combined, and so it is none of them.

Zuckerberg describes Facebook as a town square. It isn’t. Facebook is a company that brought in more than $55 billion in advertising revenue last year, with a 45% profit margin. This makes it one of the most profitable business ventures in human history. It must be understood as such.

Facebook has minted money because it has figured out how to commoditize privacy on a scale never before seen. A diminishment of privacy is its core product. Zuckerberg has made his money by performing a sort of arbitrage between how much privacy Facebook’s 2 billion users think they are giving up and how much he has been able to sell to advertisers. He says nothing of substance in his long essay about how he intends to keep his firm profitable in this supposed new era. That’s one reason to treat his Damascene moment with healthy skepticism.

“Frankly we don’t currently have a strong reputation for building privacy protective services,” Zuckerberg writes. But Facebook’s reputation is not the salient question: its business model is. If Facebook were to implement strong privacy protections across the board, it would have little left to sell to advertisers aside from the sheer size of its audience. Facebook might still make a lot of money, but they’d make a lot less of it.

Zuckerberg’s proposal is a bait-and-switch. What he’s proposing is essentially a beefed-up version of WhatsApp. Some of the improvements might be worthwhile. Stronger encryption can indeed be useful, and a commitment to not building data centers in repressive countries is laudable, as far as it goes. Other principles that Zuckerberg puts forth would concentrate his monopoly power in worrisome ways. The new “platforms for private sharing” are not instead of Facebook’s current offering: they’re in addition to it. “Public social networks will continue to be very important in people’s lives,” he writes, an assertion he never squares with the vague claim that “interacting with your friends and family across the Facebook network will become a fundamentally more private experience.”

By narrowly construing privacy to be almost exclusively about end-to-end encryption that would prevent a would-be eavesdropper from intercepting communications, he manages to avoid having to think about Facebook’s weaknesses and missteps. Privacy is not just about keeping secrets. It’s also about how flows of information shape us as individuals and as a society. What we say to whom and why is a function of context. Social networks change that context, and in so doing they change the nature of privacy, in ways that are both good and bad.

Russian propagandists used Facebook to sway the 2016 American election, perhaps decisively. Myanmarese military leaders used Facebook to incite an anti-Rohingya genocide. These are consequences of the ways in which Facebook has diminished privacy. They are not the result of failures of encryption.

“Privacy,” Zuckerberg writes, “gives people the freedom to be themselves.” This is true, but it is also incomplete. The self evolves over time. Privacy is important not simply because it allows us to be, but because it gives us space to become. As Georgetown University law professor Julie Cohen has written: “Conditions of diminished privacy also impair the capacity to innovate … Innovation requires room to tinker, and therefore thrives most fully in an environment that values and preserves spaces for tinkering.” If Facebook is constantly sending you push notifications, it diminishes the mental space you have available for tinkering and coming up with your own ideas. If Facebook bombards the gullible with misinformation, this too is an invasion of privacy. What has happened to privacy in the last couple of decades, and how to value it properly, are questions that are apparently beyond Zuckerberg’s ken.

He says Facebook is “committed to consulting with experts and discussing the best way forward,” and that it will make decisions “as openly and collaboratively as we can” because “many of these issues affect different parts of society.” But the flaw here is the centralized decision-making process. Even if Zuckerberg gets all the best advice that his billions can buy, the result is still deeply troubling. If his plan succeeds, it would mean that private communication between two individuals will be possible when Mark Zuckerberg decides that it ought to be, and impossible when he decides it ought not to be.

If that sounds alarmist, consider the principles that Zuckerberg laid out for Facebook’s new privacy focus. The most problematic of them is the way he discusses “interoperability.” Zuckerberg allows that people should have a choice between messaging services: some want to use Facebook Messenger, some prefer WhatsApp, and others like Instagram. It’s a hassle to use all of these, he says, so you should be able to send messages from one to the other.

But allowing communications that are outside Facebook’s control, he says, would be dangerous if users were allowed to send messages not subject to surveillance by Facebook’s “safety and security systems.” Which is to say we should be allowed to use any messaging service we like, so long as it’s controlled by Facebook for our protection. Zuckerberg is arguing for tighter and tighter integration of Facebook’s various properties.

Monopoly power is problematic even for companies that just make a lot of money selling widgets: it allows them to exert undue influence on regulators and to rip off consumers. But it’s particularly worrisome for a company like Facebook, whose product is information.

This is why it should be broken up. This wouldn’t answer every difficult question that Facebook’s existence raises. It isn’t easy to figure out how to protect free speech while limiting hate speech and deliberate misinformation campaigns, for example. But breaking up Facebook would provide space to come up with solutions that make sense to society as a whole, rather than to Zuckerberg and Facebook’s other shareholders.

At a minimum, splitting WhatsApp and Instagram from Facebook is a necessary first step. This makes the company smaller, and therefore less powerful when it comes to negotiating with other businesses and with regulators. Monopolies, as Louis Brandeis pointed out a century ago, and as Columbia University law professor Tim Wu, journalist Franklin Foer, and others have underscored more recently, simply accrue too much political and economic power to allow for the democratic process to find a balance in how to tackle issues like privacy.

Tellingly, Zuckerberg’s power has grown so great that he feels no need to hide his ambitions. “We can,” he writes, “create platforms for private sharing that could be even more important to people than the platforms we’ve already built to help people share and connect more openly.”

Only if we let him.

Bad Faith, Pathos and G.O.P. Economics

On professionals who sold their integrity, and got nothing in return.

As 2018 draws to an end, we’re seeing many articles about the state of the economy. What I’d like to do, however, is talk about something different — the state of economics, at least as it relates to the political situation. And that state is not good: The bad faith that dominates conservative politics at every level is infecting right-leaning economists, too.

This is sad, but it’s also pathetic. For even as once-respected economists abase themselves in the face of Trumpism, the G.O.P. is making it ever clearer that their services aren’t wanted, that only hacks need apply.

.. Professional conservative economists are something quite different. They’re people who even center-right professionals consider charlatans and cranks; they make a living by pretending to do actual economics — often incompetently — but are actually just propagandists. And no, there isn’t really a corresponding category on the other side, in part because the billionaires who finance such propaganda are much more likely to be on the right than on the left.

.. Even during the Obama years, it was striking how many well-known Republican-leaning economists followed the party line on economic policy, even when that party line was in conflict with the nonpolitical professional consensus.

Thus, when a Democrat was in the White House, G.O.P. politicians opposed anything that might mitigate the costs of the 2008 financial crisis and its aftermath; so did many economists. Most famously, in 2010 a who’s who of Republican economists denounced the efforts of the Federal Reserve to fight unemployment, warning that they risked “currency debasement and inflation.”

Were these economists arguing in good faith? Even at the time, there were good reasons to suspect otherwise. For one thing, those terrible, irresponsible Fed actions were pretty much exactly what Milton Friedman prescribed for depressed economies. For another, some of those Fed critics engaged in Donald Trump-like conspiracy theorizing, accusing the Fed of printing money, not to help the economy, but to “bail out fiscal policy,” i.e., to help Barack Obama.

It was also telling that none of the economists who warned, wrongly, about looming inflation were willing to admit their error after the fact.

But the real test came after 2016. A complete cynic might have expected economists who denounced budget deficits and easy money under a Democrat to suddenly reverse position under a Republican president.

And that total cynic would have been exactly right. After years of hysteria about the evils of debt, establishment Republican economists enthusiastically endorsed a budget-busting tax cut. After denouncing easy-money policies when unemployment was sky-high, some echoed Trump’s demands for low interest rates with unemployment under 4 percent — and the rest remained conspicuously silent.

What explains this epidemic of bad faith? Some of it is clearly ambition on the part of conservative economists still hoping for high-profile appointments. Some of it, I suspect, may be just the desire to stay on the inside with powerful people.