The Paranoid Style in American Politics

It had been around a long time before the Radical Right discovered it—and its targets have ranged from “the international bankers” to Masons, Jesuits, and munitions makers.

American politics has often been an arena for angry minds. In recent years we have seen angry minds at work mainly among extreme right-wingers, who have now demonstrated in the Goldwater movement how much political leverage can be got out of the animosities and passions of a small minority. But behind this I believe there is a style of stylemind that is far from new and that is not necessarily right-wing. I call it the paranoid style simply because no other word adequately evokes the sense of heated exaggeration, suspiciousness, and conspiratorial fantasy that I have in mind. In using the expression “paranoid style” I am not speaking in a clinical sense, but borrowing a clinical term for other purposes. I have neither the competence nor the desire to classify any figures of the past or present as certifiable lunatics. In fact, the idea of the paranoid style as a force in politics would have little contemporary relevance or historical value if it were applied only to men with profoundly disturbed minds. It is the use of paranoid modes of expression by more or less normal people that makes the phenomenon significant.

Of course this term is pejorative, and it is meant to be; the paranoid style has a greater affinity for bad causes than good. But nothing really prevents a sound program or demand from being advocated in the paranoid style. Style has more to do with the way in which ideas are believed than with the truth or falsity of their content. I am interested here in getting at our political psychology through our political rhetoric. The paranoid style is an old and recurrent phenomenon in our public life which has been frequently linked with movements of suspicious discontent.

Here is Senator McCarthy, speaking in June 1951 about the parlous situation of the United States:

How can we account for our present situation unless we believe that men high in this government are concerting to deliver us to disaster? This must be the product of a great conspiracy on a scale so immense as to dwarf any previous such venture in the history of man. A conspiracy of infamy so black that, which it is finally exposed, its principals shall be forever deserving of the maledictions of all honest men. . . . What can be made of this unbroken series of decisions and acts contributing to the strategy of defeat? They cannot be attributed to incompetence. . . . The laws of probability would dictate that part of . . . [the] decisions would serve the country’s interest.

Now turn back fifty years to a manifesto signed in 1895 by a number of leaders of the Populist party:

As early as 1865–66 a conspiracy was entered into between the gold gamblers of Europe and America. . . . For nearly thirty years these conspirators have kept the people quarreling over less important matters while they have pursued with unrelenting zeal their one central purpose. . . . Every device of treachery, every resource of statecraft, and every artifice known to the secret cabals of the international gold ring are being used to deal a blow to the prosperity of the people and the financial and commercial independence of the country.

Next, a Texas newspaper article of 1855:

 . . . It is a notorious fact that the Monarchs of Europe and the Pope of Rome are at this very moment plotting our destruction and threatening the extinction of our political, civil, and religious institutions. We have the best reasons for believing that corruption has found its way into our Executive Chamber, and that our Executive head is tainted with the infectious venom of Catholicism. . . . The Pope has recently sent his ambassador of state to this country on a secret commission, the effect of which is an extraordinary boldness of the Catholic church throughout the United States. . . . These minions of the Pope are boldly insulting our Senators; reprimanding our Statesmen; propagating the adulterous union of Church and State; abusing with foul calumny all governments but Catholic, and spewing out the bitterest execrations on all Protestantism. The Catholics in the United States receive from abroad more than $200,000 annually for the propagation of their creed. Add to this the vast revenues collected here. . . .

These quotations give the keynote of the style. In the history of the United States one find it, for example, in the anti-Masonic movement, the nativist and anti-Catholic movement, in certain spokesmen of abolitionism who regarded the United States as being in the grip of a slaveholders’ conspiracy, in many alarmists about the Mormons, in some Greenback and Populist writers who constructed a great conspiracy of international bankers, in the exposure of a munitions makers’ conspiracy of World War I, in the popular left-wing press, in the contemporary American right wing, and on both sides of the race controversy today, among White Citizens’ Councils and Black Muslims. I do not propose to try to trace the variations of the paranoid style that can be found in all these movements, but will confine myself to a few leading episodes in our past history in which the style emerged in full and archetypal splendor.

Illuminism and Masonry

I begin with a particularly revealing episode—the panic that broke out in some quarters at the end of the eighteenth century over the allegedly subversive activities of the Bavarian Illuminati. This panic was a part of the general reaction to the French Revolution. In the United States it was heightened by the response of certain men, mostly in New England and among the established clergy, to the rise of Jeffersonian democracy. Illuminism had been started in 1776 by Adam Weishaupt, a professor of law at the University of Ingolstadt. Its teachings today seem to be no more than another version of Enlightenment rationalism, spiced with the anticlerical atmosphere of eighteenth-century Bavaria. It was a somewhat naïve and utopian movement which aspired ultimately to bring the human race under the rules of reason. Its humanitarian rationalism appears to have acquired a fairly wide influence in Masonic lodges.

Americans first learned of Illuminism in 1797, from a volume published in Edinburgh (later reprinted in New York) under the title, Proofs of a Conspiracy Against All the Religions and Governments of Europe, Carried on in the Secret Meetings of Free Masons, Illuminati, and Reading Societies. Its author was a well-known Scottish scientist, John Robison, who had himself been a somewhat casual adherent of Masonry in Britain, but whose imagination had been inflamed by what he considered to be the far less innocent Masonic movement on the Continent. Robison seems to have made his work as factual as he could, but when he came to estimating the moral character and the political influence of Illuminism, he made the characteristic paranoid leap into fantasy. The association, he thought, was formed “for the express purpose of rooting out all religious establishments, and overturning all the existing governments of Europe.” It had become “one great and wicked project fermenting and working all over Europe.” And to it he attributed a central role in bringing about the French Revolution. He saw it as a libertine, anti-Christian movement, given to the corruption of women, the cultivation of sensual pleasures, and the violation of property rights. Its members had plans for making a tea that caused abortion—a secret substance that “blinds or kills when spurted in the face,” and a device that sounds like a stench bomb—a “method for filling a bedchamber with pestilential vapours.”

These notions were quick to make themselves felt in America. In May 1798, a minister of the Massachusetts Congregational establishment in Boston, Jedidiah Morse, delivered a timely sermon to the young country, which was then sharply divided between Jeffersonians and Federalists, Francophiles and Anglomen. Having read Robison, Morse was convinced of a Jacobinical plot touched off by Illuminism, and that the country should be rallied to defend itself. His warnings were heeded throughout New England wherever Federalists brooded about the rising tide of religious infidelity or Jeffersonian democracy. Timothy Dwight, the president of Yale, followed Morse’s sermon with a Fourth-of-July discourse on The Duty of Americans in the Present Crisis, in which he held forth against the Antichrist in his own glowing rhetoric. Soon the pulpits of New England were ringing with denunciations of the Illuminati, as though the country were swarming with them.

The anti-Masonic movement of the late 1820s and the 1830s took up and extended the obsession with conspiracy. At first, this movement may seem to be no more than an extension or repetition of the anti-Masonic theme sounded in the outcry against the Bavarian Illuminati. But whereas the panic of the 1790s was confined mainly to New England and linked to an ultraconservative point of view, the later anti-Masonic movement affected many parts of the northern United States, and was intimately linked with popular democracy and rural egalitarianism. Although anti-Masonry happened to be anti-Jacksonian (Jackson was a Mason), it manifested the same animus against the closure of opportunity for the common man and against aristocratic institutions that one finds in the Jacksonian crusade against the Bank of the United States.

The anti-Masonic movement was a product not merely of natural enthusiasm but also of the vicissitudes of party politics. It was joined and used by a great many men who did not fully share its original anti-Masonic feelings. It attracted the support of several reputable statemen who had only mild sympathy with its fundamental bias, but who as politicians could not afford to ignore it. Still, it was a folk movement of considerable power, and the rural enthusiasts who provided its real impetus believed in it wholeheartedly.

The Paranoid Style in ActionThe John Birch Society is attempting to suppress a television series about the United Nations by means of a mass letter-writing campaign to the sponsor, . . . The Xerox Corporation. The corporation, however, intends to go ahead with the programs. . . .

The July issue of the John Birch Society Bulletin . . . said an “avalanche of mail ought to convince them of the unwisdom of their proposed action—just as United Air Lines was persuaded to back down and take the U.N. insignia off their planes.” (A United Air Lines spokesman confirmed that the U.N. emblem was removed from its planes, following “considerable public reaction against it.”)

Birch official John Rousselot said, “We hate to see a corporation of this country promote the U.N. when we know that it is an instrument of the Soviet Communist conspiracy.”

—San Francisco Chronicle, July 31, 1964

As a secret society, Masonry was considered to be a standing conspiracy against republican government. It was held to be particularly liable to treason—for example, Aaron Burr’s famous conspiracy was alleged to have been conducted by Masons. Masonry was accused of constituting a separate system of loyalty, a separate imperium within the framework of federal and state governments, which was inconsistent with loyalty to them. Quite plausibly it was argued that the Masons had set up a jurisdiction of their own, with their own obligations and punishments, liable to enforcement even by the penalty of death. So basic was the conflict felt to be between secrecy and democracy that other, more innocent societies such as Phi Beta Kappa came under attack.

Since Masons were pledged to come to each other’s aid under circumstances of distress, and to extend fraternal indulgence at all times, it was held that the order nullified the enforcement of regular law. Masonic constables, sheriffs, juries, and judges must all be in league with Masonic criminals and fugitives. The press was believed to have been so “muzzled” by Masonic editors and proprietors that news of Masonic malfeasance could be suppressed. At a moment when almost every alleged citadel of privilege in America was under democratic assault, Masonry was attacked as a fraternity of the privileged, closing business opportunities and nearly monopolizing political offices.

Certain elements of truth and reality there may have been in these views of Masonry. What must be emphasized here, however, is the apocalyptic and absolutistic framework in which this hostility was commonly expressed. Anti-Masons were not content simply to say that secret societies were rather a bad idea. The author of the standard exposition of anti-Masonry declared that Freemasonry was “not only the most abominable but also the most dangerous institution that ever was imposed on man. . . . It may truly be said to be Hell’s master piece.”

The Jesuit Threat

Fear of a Masonic plot had hardly been quieted when the rumors arose of a Catholic plot against American values. One meets here again the same frame of mind, but a different villain. The anti-Catholic movement converged with a growing nativism, and while they were not identical, together they cut such a wide swath in American life that they were bound to embrace many moderates to whom the paranoid style, in its full glory, did not appeal. Moreover, we need not dismiss out of hand as totally parochial or mean-spirited the desire of Yankee Americans to maintain an ethnically and religiously homogeneous society nor the particular Protestant commitments to individualism and freedom that were brought into play. But the movement had a large paranoid infusion, and the most influential anti-Catholic militants certainly had a strong affinity for the paranoid style.

Two books which appeared in 1835 described the new danger to the American way of life and may be taken as expressions of the anti-Catholic mentality. One, Foreign Conspiracies against the Liberties of the United States, was from the hand of the celebrated painter and inventor of the telegraph, S.F.B. Morse.A conspiracy exists,” Morse proclaimed , and “its plans are already in operation . . . we are attacked in a vulnerable quarter which cannot be defended by our ships, our forts, or our armies.” The main source of the conspiracy Morse found in Metternich’s government: “Austria is now acting in this country. She has devised a grand scheme. She has organized a great plan for doing something here. . . . She has her Jesuit missionaries traveling through the land; she has supplied them with money, and has furnished a fountain for a regular supply.” Were the plot successful, Morse said, some scion of the House of Hapsburg would soon be installed as Emperor of the United States.

“It is an ascertained fact,” wrote another Protestant militant,

that Jesuits are prowling about all parts of the United States in every possible disguise, expressly to ascertain the advantageous situations and modes to disseminate Popery. A minister of the Gospel from Ohio has informed us that he discovered one carrying on his devices in his congregation; and he says that the western country swarms with them under the name of puppet show men, dancing masters, music teachers, peddlers of images and ornaments, barrel organ players, and similar practitioners.

Lyman Beecher, the elder of a famous family and the father of Harriet Beecher Stowe, wrote in the same year his Plea for the West, in which he considered the possibility that the Christian millennium might come in the American states. Everything depended, in his judgment, upon what influences dominated the great West, where the future of the country lay. There Protestantism was engaged in a life-or-death struggle with Catholicism. “Whatever we do, it must be done quickly. . . . ” A great tide of immigration, hostile to free institutions, was sweeping in upon the country, subsidized and sent by “the potentates of Europe,” multiplying tumult and violence, filling jails, crowding poorhouses, quadrupling taxation, and sending increasing thousands of voters to “lay their inexperienced hand upon the helm of our power.”

[1] Many anti-Masons had been fascinated by the penalties involved if Masons failed to live up to their obligations. My own favorite is the oath attributed to a royal archmason who invited “having my skull smote off and my brains exposed to the scorching rays of the sun.”

Anti-Catholicism has always been the pornography of the Puritan. Whereas the anti-Masons had envisaged drinking bouts and had entertained themselves with sado-masochistic fantasies about the actual enforcement of grisly Masonic oaths,[1] the anti-Catholics invented an immense lore about libertine priests, the confessional as an opportunity for seduction, licentious convents and monasteries. Probably the most widely read contemporary book in the United States before Uncle Tom’s Cabin was a work supposedly written by one Maria Monk, entitled Awful Disclosures, which appeared in 1836. The author, who purported to have escaped from the Hotel Dieu nunnery in Montreal after five years there as novice and nun, reported her convent life in elaborate and circumstantial detail. She reported having been told by the Mother Superior that she must “obey the priests in all things”; to her “utter astonishment and horror,” she soon found what the nature of such obedience was. Infants born of convent liaisons were baptized and then killed, she said, so that they might ascend at once to heaven. Her book, hotly attacked and defended , continued to be read and believed even after her mother gave testimony that Maria had been somewhat addled ever since childhood after she had rammed a pencil into her head. Maria died in prison in 1849, after having been arrested in a brothel as a pickpocket.

Anti-Catholicism, like anti-Masonry, mixed its fortunes with American party politics, and it became an enduring factor in American politics. The American Protective Association of the 1890s revived it with ideological variations more suitable to the times—the depression of 1893, for example, was alleged to be an international creation of the Catholics who began it by starting a run on the banks. Some spokesmen of the movement circulated a bogus encyclical attributed to Leo XIII instructing American Catholics on a certain date in 1893 to exterminate all heretics, and a great many anti-Catholics daily expected a nationwide uprising. The myth of an impending Catholic war of mutilation and extermination of heretics persisted into the twentieth century.

Why They Feel Dispossessed

If, after our historically discontinuous examples of the paranoid style, we now take the long jump to the contemporary right wing, we find some rather important differences from the nineteenth-century movements. The spokesmen of those earlier movements felt that they stood for causes and personal types that were still in possession of their country—that they were fending off threats to a still established way of life. But the modern right wing, as Daniel Bell has put it, feels dispossessed: America has been largely taken away from them and their kind, though they are determined to try to repossess it and to prevent the final destructive act of subversion. The old American virtues have already been eaten away by cosmopolitans and intellectuals; the old competitive capitalism has been gradually undermined by socialistic and communistic schemers; the old national security and independence have been destroyed by treasonous plots, having as their most powerful agents not merely outsiders and foreigners as of old but major statesmen who are at the very centers of American power. Their predecessors had discovered conspiracies; the modern radical right finds conspiracy to be betrayal from on high.

Important changes may also be traced to the effects of the mass media. The villains of the modern right are much more vivid than those of their paranoid predecessors, much better known to the public; the literature of the paranoid style is by the same token richer and more circumstantial in personal description and personal invective. For the vaguely delineated villains of the anti-Masons, for the obscure and disguised Jesuit agents, the little-known papal delegates of the anti-Catholics, for the shadowy international bankers of the monetary conspiracies, we may now substitute eminent public figures like Presidents Roosevelt, Truman, and Eisenhower, secretaries of State like Marshall, Acheson, and Dulles, Justices of the Supreme Court like Frankfurter and Warren, and the whole battery of lesser but still famous and vivid alleged conspirators headed by Alger Hiss.

Events since 1939 have given the contemporary right-wing paranoid a vast theatre for his imagination, full of rich and proliferating detail, replete with realistic cues and undeniable proofs of the validity of his suspicions. The theatre of action is now the entire world, and he can draw not only on the events of World War II, but also on those of the Korean War and the Cold War. Any historian of warfare knows it is in good part a comedy of errors and a museum of incompetence; but if for every error and every act of incompetence one can substitute an act of treason, many points of fascinating interpretation are open to the paranoid imagination. In the end, the real mystery, for one who reads the primary works of paranoid scholarship, is not how the United States has been brought to its present dangerous position but how it has managed to survive at all.

The basic elements of contemporary right-wing thought can be reduced to three: First, there has been the now-familiar sustained conspiracy, running over more than a generation, and reaching its climax in Roosevelt’s New Deal, to undermine free capitalism, to bring the economy under the direction of the federal government, and to pave the way for socialism or communism. A great many right-wingers would agree with Frank Chodorov, the author of The Income Tax: The Root of All Evil, that this campaign began with the passage of the income-tax amendment to the Constitution in 1913.

The second contention is that top government officialdom has been so infiltrated by Communists that American policy, at least since the days leading up to Pearl Harbor, has been dominated by men who were shrewdly and consistently selling out American national interests.

Finally, the country is infused with a network of Communist agents, just as in the old days it was infiltrated by Jesuit agents, so that the whole apparatus of education, religion, the press, and the mass media is engaged in a common effort to paralyze the resistance of loyal Americans.

Perhaps the most representative document of the McCarthyist phase was a long indictment of Secretary of State George C. Marshall, delivered in 1951 in the Senate by senator McCarthy, and later published in a somewhat different form. McCarthy pictured Marshall as the focal figure in a betrayal of American interests stretching in time from the strategic plans for World War II to the formulation of the Marshall Plan. Marshal was associated with practically every American failure or defeat, McCarthy insisted, and none of this was either accident or incompetence. There was a “baffling pattern” of Marshall’s interventions in the war, which always conduced to the well-being of the Kremlin. The sharp decline in America’s relative strength from 1945 to 1951 did not “just happen”; it was “brought about, step by step, by will and intention,” the consequence not of mistakes but of a treasonous conspiracy, “a conspiracy on a scale so immense as to dwarf any previous such venture in the history of man.”

Today, the mantle of McCarthy has fallen on a retired candy manufacturer, Robert H. Welch, Jr., who is less strategically placed and has a much smaller but better organized following than the Senator. A few years ago Welch proclaimed that “Communist influences are now in almost complete control of our government”—note the care and scrupulousness of that “almost.” He has offered a full scale interpretation of our recent history in which Communists figure at every turn: They started a run on American banks in 1933 that forced their closure; they contrived the recognition of the Soviet Union by the United States in the same year, just in time to save the Soviets from economic collapse; they have stirred up the fuss over segregation in the South; they have taken over the Supreme Court and made it “one of the most important agencies of Communism.”

Close attention to history wins for Mr. Welch an insight into affairs that is given to few of us. “For many reasons and after a lot of study,” he wrote some years ago, “I personally believe [John Foster] Dulles to be a Communist agent.” The job of Professor Arthur F. Burns as head of Eisenhower’s Council of Economic Advisors was “merely a cover-up for Burns’s liaison work between Eisenhower and some of his Communist bosses.” Eisenhower’s brother Milton was “actually [his] superior and boss within the Communist party.” As for Eisenhower himself, Welch characterized him, in words that have made the candy manufacturer famous, as “a dedicated, conscious agent of the Communist conspiracy”—a conclusion, he added, “based on an accumulation of detailed evidence so extensive and so palpable that it seems to put this conviction beyond any reasonable doubt.”

Emulating the Enemy

The paranoid spokesman sees the fate of conspiracy in apocalyptic terms—he traffics in the birth and death of whole worlds, whole political orders, whole systems of human values. He is always manning the barricades of civilization. He constantly lives at a turning point. Like religious millennialists he expresses the anxiety of those who are living through the last days and he is sometimes disposed to set a date fort the apocalypse. (“Time is running out,” said Welch in 1951. “Evidence is piling up on many sides and from many sources that October 1952 is the fatal month when Stalin will attack.”)

As a member of the avant-garde who is capable of perceiving the conspiracy before it is fully obvious to an as yet unaroused public, the paranoid is a militant leader. He does not see social conflict as something to be mediated and compromised, in the manner of the working politician. Since what is at stake is always a conflict between absolute good and absolute evil, what is necessary is not compromise but the will to fight things out to a finish. Since the enemy is thought of as being totally evil and totally unappeasable, he must be totally eliminated—if not from the world, at least from the theatre of operations to which the paranoid directs his attention. This demand for total triumph leads to the formulation of hopelessly unrealistic goals, and since these goals are not even remotely attainable, failure constantly heightens the paranoid’s sense of frustration. Even partial success leaves him with the same feeling of powerlessness with which he began, and this in turn only strengthens his awareness of the vast and terrifying quality of the enemy he opposes.

The enemy is clearly delineated: he is a perfect model of malice, a kind of amoral supermansinister, ubiquitous, powerful, cruel, sensual, luxury-loving. Unlike the rest of us, the enemy is not caught in the toils of the vast mechanism of history, himself a victim of his past, his desires, his limitations. He wills, indeed he manufactures, the mechanism of history, or tries to deflect the normal course of history in an evil way. He makes crises, starts runs on banks, causes depressions, manufactures disasters, and then enjoys and profits from the misery he has produced. The paranoid’s interpretation of history is distinctly personal: decisive events are not taken as part of the stream of history, but as the consequences of someone’s will. Very often the enemy is held to possess some especially effective source of power: he controls the press; he has unlimited funds; he has a new secret for influencing the mind (brainwashing); he has a special technique for seduction (the Catholic confessional).

It is hard to resist the conclusion that this enemy is on many counts the projection of the self; both the ideal and the unacceptable aspects of the self are attributed to him. The enemy may be the cosmopolitan intellectual, but the paranoid will outdo him in the apparatus of scholarship, even of pedantry. Secret organizations set up to combat secret organizations give the same flattery. The Ku Klux Klan imitated Catholicism to the point of donning priestly vestments, developing an elaborate ritual and an equally elaborate hierarchy. The John Birch Society emulates Communist cells and quasi-secret operation through “front” groups, and preaches a ruthless prosecution of the ideological war along lines very similar to those it finds in the Communist enemy.[2] Spokesmen of the various fundamentalist anti-Communist “crusades” openly express their admiration for the dedication and discipline the Communist cause calls forth.

[2]

 In his recent book, How to Win an Election, Stephen C. Shadegg cites a statement attributed to Mao Tse-tung: “Give me just two or three men in a village and I will take the village.” Shadegg comments: “ In the Goldwater campaigns of 1952 and 1958 and in all other campaigns where I have served as consultant I have followed the advice of Mao Tse-tung.” “I would suggest,” writes senator Goldwater in Why Not Victory? “that we analyze and copy the strategy of the enemy; theirs has worked and ours has not.

On the other hand, the sexual freedom often attributed to the enemy, his lack of moral inhibition, his possession of especially effective techniques for fulfilling his desires, give exponents of the paranoid style an opportunity to project and express unacknowledgeable aspects of their own psychological concerns. Catholics and Mormons—later, Negroes and Jews—have lent themselves to a preoccupation with illicit sex. Very often the fantasies of true believers reveal strong sadomasochistic outlets, vividly expressed, for example, in the delight of anti-Masons with the cruelty of Masonic punishments.

Renegades and Pedants

A special significance attaches to the figure of the renegade from the enemy cause. The anti-Masonic movement seemed at times to be the creation of ex-Masons; certainly the highest significance was attributed to their revelations, and every word they said was believed. Anti-Catholicism used the runaway nun and the apostate priest; the place of ex-Communists in the avant-garde anti-Communist movements of our time is well known. In some part, the special authority accorded the renegade derives from the obsession with secrecy so characteristics of such movements: the renegade is the man or woman who has been in the Arcanum, and brings forth with him or her the final verification of suspicions which might otherwise have been doubted by a skeptical world. But I think there is a deeper eschatological significance that attaches to the person of the renegade: in the spiritual wrestling match between good and evil which is the paranoid’s archetypal model of the world, the renegade is living proof that all the conversions are not made by the wrong side. He brings with him the promise of redemption and victory.

A final characteristic of the paranoid style is related to the quality of its pedantry. One of the impressive things about paranoid literature is the contrast between its fantasied conclusions and the almost touching concern with factuality it invariably shows. It produces heroic strivings for evidence to prove that the unbelievable is the only thing that can be believed. Of course, there are highbrow, lowbrow, and middlebrow paranoids, as there are likely to be in any political tendency. But respectable paranoid literature not only starts from certain moral commitments that can indeed be justified but also carefully and all but obsessively accumulates “evidence.” The difference between this “evidence” and that commonly employed by others is that it seems less a means of entering into normal political controversy than a means of warding off the profane intrusion of the secular political world. The paranoid seems to have little expectation of actually convincing a hostile world, but he can accumulate evidence in order to protect his cherished convictions from it.

Paranoid writing begins with certain broad defensible judgments. There was something to be said for the anti-Masons. After all, a secret society composed of influential men bound by special obligations could conceivable pose some kind of threat to the civil order in which they were suspended. There was also something to be said for the Protestant principles of individuality and freedom, as well as for the nativist desire to develop in North America a homogeneous civilization. Again, in our time an actual laxity in security allowed some Communists to find a place in governmental circles, and innumerable decisions of World War II and the Cold War could be faulted.

The higher paranoid scholarship is nothing if not coherent—in fact the paranoid mind is far more coherent than the real world. It is nothing if not scholarly in technique. McCarthy’s 96-page pamphlet, McCarthyism, contains no less than 313 footnote references, and Mr. Welch’s incredible assault on Eisenhower, The Politician, has one hundred pages of bibliography and notes. The entire right-wing movement of our time is a parade of experts, study groups, monographs, footnotes, and bibliographies. Sometimes the right-wing striving for scholarly depth and an inclusive world view has startling consequences: Mr. Welch, for example, has charged that the popularity of Arnold Toynbee’s historical work is the consequence of a plot on the part of Fabians, “Labour party bosses in England,” and various members of the Anglo-American “liberal establishment” to overshadow the much more truthful and illuminating work of Oswald Spengler.

The Double Sufferer

The paranoid style is not confined to our own country and time; it is an international phenomenon. Studying the millennial sects of Europe from the eleventh to the sixteenth century, Norman Cohn believed he found a persistent psychic complex that corresponds broadly with what I have been considering—a style made up of certain preoccupations and fantasies:

  • “the megalomaniac view of oneself as the Elect,
  • wholly good, abominably persecuted, yet
  • assured of ultimate triumph; the
  • attribution of gigantic and demonic powers to the adversary;
  • the refusal to accept the ineluctable limitations and imperfections of human existence, such as transience, dissention, conflict, fallibility whether intellectual or moral;
  • the obsession with inerrable prophecies . . . systematized misinterpretations, always gross and often grotesque.”

This glimpse across a long span of time emboldens me to make the conjecture—it is no more than that—that a mentality disposed to see the world in this way may be a persistent psychic phenomenon, more or less constantly affecting a modest minority of the population. But certain religious traditions, certain social structures and national inheritances, certain historical catastrophes or frustrations may be conducive to the release of such psychic energies, and to situations in which they can more readily be built into mass movements or political parties. In American experience ethnic and religious conflict have plainly been a major focus for militant and suspicious minds of this sort, but class conflicts also can mobilize such energies. Perhaps the central situation conducive to the diffusion of the paranoid tendency is a confrontation of opposed interests which are (or are felt to be) totally irreconcilable, and thus by nature not susceptible to the normal political processes of bargain and compromise. The situation becomes worse when the representatives of a particular social interest—perhaps because of the very unrealistic and unrealizable nature of its demands—are shut out of the political process. Having no access to political bargaining or the making of decisions, they find their original conception that the world of power is sinister and malicious fully confirmed. They see only the consequences of power—and this through distorting lenses—and have no chance to observe its actual machinery. A distinguished historian has said that one of the most valuable things about history is that it teaches us how things do not happen. It is precisely this kind of awareness that the paranoid fails to develop. He has a special resistance of his own, of course, to developing such awareness, but circumstances often deprive him of exposure to events that might enlighten him—and in any case he resists enlightenment.

We are all sufferers from history, but the paranoid is a double sufferer, since he is afflicted not only by the real world, with the rest of us, but by his fantasies as well.

was DeWitt Clinton Professor of American History at Columbia University. His book “Anti-intellectualism in American Life” was awarded the Pulitzer Prize for General Nonfiction in 1964. This essay was adapted from the Herbert Spencer Lecture, delivered at Oxford University in November 1963.

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Transcript

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for a market the real thing
00:31
the real thing it was a real thing when
00:33
we did it I told we were talking
00:35
off-camera about you know Tomas has to
00:37
wait like everyone else to go up and I
00:38
said you can put me on the waiting list
00:40
can I be like ten millionth person you
00:43
said go before I’ll take you I want to
00:47
see it film it when you go send it to
00:50
IMAX and I’m gonna go in and experience
00:52
it like right over here at the New
00:53
Jersey Science Center it’s close enough
00:56
for me US equity futures at this hour I
00:58
guess I’m going up 77 points back up we
01:01
were just unchanged her down again been
01:04
all over the map this morning
01:06
the SP indicated up about 12 Nasdaq
01:09
rebounding a little bit this morning of
01:12
32 maybe the most important thing to
01:15
watch is that 10-year and earlier we
01:17
were down under 135 and now our 137 as
01:20
that goes up it’s kind of a fear gauge
01:23
of for Believe It or Not for the
01:26
pandemic and the coronavirus there the
01:28
more the yield goes down to all-time
01:29
lows the more you worry about global
01:33
growth slowing because of a possible
01:35
pandemic okay let’s show you how we got
01:37
here right now markets began the day
01:40
yesterday in the green socks are
01:42
positive out of the gate if you recall
01:44
at 9:30 with the dow up nearly 200
01:47
points at one time then fortunes changed
01:49
and indexes fell throughout the day with
01:51
investors nervous about the coronavirus
01:52
cases in new countries and then the cdc
01:55
came in and coming out and saying the
01:56
global spread of the illness suggesting
01:58
a pandemic was likely and that everybody
02:00
should get prepared the taliban ended
02:02
down 879 points add that to monday’s
02:06
thousand point to call it a rout now and
02:09
we’ve now seen the Dow’s biggest two-day
02:12
point drop ever with one
02:13
point seven trillion dollars in market
02:15
cap just wiped straight off the sp500
02:18
that index down now more than six
02:20
percent for the week the only two thirds
02:22
of stocks in the S&P are now in
02:24
correction territory the tech sector now
02:26
in correction territory is well down
02:27
more than ten percent in just the last
02:29
week and of course bond yields as Joe
02:31
was mentioning continuing their own
02:33
slide the 10-year note hitting an
02:35
all-time low of just one point three
02:37
percent the 30-year bond hitting an
02:39
all-time low under 1.8 percent that’s
02:41
more than a full percentage point lower
02:43
than last Friday’s close and we are
02:46
looking up at the moment but we’ll see
02:49
where things are the four Chema the most
02:53
yeah the most recent stuff is the Virgin
02:55
Galactic the the report don’t on
02:58
earnings in and where things are headed
03:00
but we’ve got to just we all have
03:03
feelings about coronavirus and you’ve
03:05
got a lot of investments all over the
03:07
world all over the world in a lot of
03:09
different areas so I got to ask you
03:10
about our guest OSes Tomas probably –
03:11
Tia founder and CEO of social capital
03:13
also chairman of Virgin Galactic but a
03:16
social capital has tentacles in a lot of
03:19
different yeah places and and this is on
03:21
everyone’s mind obviously when the
03:23
market goes down almost 2000 points in
03:25
two days yeah what do you make of it you
03:28
know I think that we are at a really
03:30
important inflection point the thing
03:32
that we don’t know quite honestly is
03:34
what is the real denominator in China
03:35
like this is the very complicated thing
03:37
that nobody knows we’ve been told it’s
03:40
in the tens of thousands but the reality
03:42
is this number could be in the hundreds
03:44
of thousands and it could be in the
03:45
millions and then you have to account
03:47
for all the people that are latent ly
03:49
carrying coronavirus not just within
03:50
China but all over the world so if you
03:53
ask me the deaths are hard to hide so
03:55
there’s been several thousand of those
03:57
but but the denominator probably tells
03:59
me that if if it’s in the hundreds of
04:01
thousands or Millions
04:02
then what we’re really dealing with is
04:03
something that’s akin to a flu right now
04:05
that’s much more of a tractable thing
04:08
because we know how to deal with flus
04:10
although what if it’s two to five times
04:12
the mortality rate as we’ve had some
04:15
people to die this is why I think it’s
04:18
really important to understand what the
04:19
denominator is hardly the denominator is
04:21
high enough it’s the flu if the
04:23
denominator is as low as it is but then
04:26
the viral spread and
04:27
viral coefficient is as fast as we’re
04:29
being told this is a really serious
04:30
problem too late right and it’s it’s
04:33
it’s not a question of too late but I
04:34
mean it’s going to it’s gonna shut down
04:36
not just how you know countries work
04:39
cities work but borders and it’s going
04:42
to be something that we haven’t really
04:43
seen in a very long time and that’s
04:45
going to be the only thing that a
04:46
responsible government should do to
04:48
react so is a responsible investor what
04:50
do you do well it’s a really complicated
04:52
question so you know the problem is I
04:54
have billions of dollars a private
04:55
company equity I can’t do anything about
04:58
it you know just kind of holding you
05:00
know billions of dollars of no wonder
05:02
you dress like that you’re you you of
05:05
billions of dollars of equity there’s
05:10
nothing I can do about that so how do I
05:11
hedge how do you hedge
05:13
how would you head you have some public
05:15
marketing I have I have a fair amount of
05:16
concentrated public market exposure and
05:19
increasingly I’m trying to find
05:20
opportunities where I can just short
05:22
broad base indices and just get some
05:25
hopefully relief and then the rest of it
05:28
is I come back and I ask myself as long
05:31
as I can re underwrite the things that I
05:33
own just remember that I’m not owning
05:35
stocks you know kind of the Buffett
05:37
thing I own companies and as long as I
05:39
can maintain some semblance of normalcy
05:41
this will take eight to nine months I
05:44
think to roll its way through the
05:46
markets and for the markets to rewrite
05:48
and probably at the tail end of this a
05:51
net buyer and right now if I can just
05:53
you know manage my own psychology for
05:57
the next five or six months by not
05:59
losing as much as I think I’m going to
06:00
lose I think it’ll feel like a it means
don’t be leveraged right

I’ve never wrong I mean this is the
thing by the way can I just say
something I I’ve been meeting a lot of
great folks the last three days here
every time I come to New York I meet
some of the best hedge funds and one of
the things that really struck out to me
this time around is how levered
everybody is I mean folks are running
five six seven eight nine turns
if
they’re actually running something
that’s more liquid like a you know
typical macro strategy they’re running
12 13 14 15 times levered
that song I
have never run an iota of leverage and
I’ve always felt like I’ve been on the
when I see people printing these
enormous gains and I thought to myself
why am I being so conservative but in
moments like this I feel really really
cost math you’re the first person that’s
kind of said that on this set that there
are a lot of hedge funds that are super
levered up out there
and that caught you
off guard that to me sounds like a
potential problem when you see activity
like we’ve seen the last couple of days
I mean you know that this is a much
bigger problem because I think just the
hedge fund industry has a completely you
know misaligned upside down business
model so they try to have very very
small exposures but then they lever the
whole thing up to make the whole thing
work they’re not necessarily hedged to
begin with there’s a ton of correlation
and when things like this happen and
everything rewrites and you’re you know
07:21
running five six seven eight times then
07:23
the selling gets exacerbated so the
07:25
thing that we haven’t seen is what if
07:28
that happens because I think it’s fair
07:30
to say that you can oh you’ll go risk
07:32
off and people will take money out of
07:34
the market that’ll represent you know
07:37
the first maybe eight hundred points in
07:39
the Dow or the first thousand points in
07:41
the Dow but then if this thing moves
another two or three thousand points
it’s just forced sellers
okay let’s I
want talk space because it’s so exciting
by the way I see space we Eddie news the
07:51
President Trump is going to hold a news
07:52
conference about about coronavirus at
07:55
6:00 p.m. this evening I did ask him
07:57
about that great for it was a so glimmer
08:00
in our eyes in Davos and that was my
08:02
first question that’s a man I know I’ve
08:04
been worried and he said Larry coming
08:06
about to say he’s not worried obviously
08:07
the CDC has a very different view of
08:09
that but well a lot of people get
08:11
focused on what the president has to say
08:13
so choo-choo moth you’ve taken companies
08:17
from you know again a glimmer in
08:21
someone’s eyes all the way to where
08:22
they’re their major companies so you
08:24
know about how things get valued is
08:26
space ahead of it as is verging ahead of
08:29
itself if you’ve been surprised at
08:30
what’s happened based on the
08:31
fundamentals and where the market cap is
08:33
right now is it a story stock in your
08:35
view well can I take a step back and
08:37
actually just give you the set up so and
08:39
I think this set up not it doesn’t just
08:41
apply to virgin but it also applies to
08:43
Tesla and those two things are actually
08:46
the most similar stories and the set up
08:48
goes along the following lines first
08:50
let’s look at the fixed income markets
08:51
for the last ten years
everything that is look like a nail has
been dealt with the following hammer
which is print money cut rates you know
the Patriots when the Superbowl print
money cut rates Trump tweets print money
cut rates coronavirus print money cut
rates and while that’s happened rates
have gone to zero and there’s trillions
of excess capacity just sloshing around
in the fixed income side then on the
equity side the number of companies you
can invest in has shrank by 1/3
there’s really no growth outside of
multiple expansion and there’s no growth
outside of buybacks
so everybody crowds into the 5
technology companies right the fang
stocks which represent 20% of the market
cap of the S&P so when you put those two
things together there’s a set up where
there’s no real growth there’s no unique
stories and there’s nothing that can
give you long term outlook so then when
a company comes along that has a unique
narrative and is trying to do something
that is differentiated high margin and
could theoretically grow for 10 years
where there’s an enormous amount of
consumer demand these things get
09:58
repriced in ways that are
10:00
non-traditional sounds to me like you’re
10:02
saying yes it’s a story stock but that
10:04
doesn’t mean that it’s not gonna turn
10:05
into something huge I I really believe
10:08
in virgin I mean I didn’t invest the
10:09
amount of money that I did or put myself
10:11
on the line to do this deal because I
10:13
did the ones that first like of it’s not
10:15
gonna be June anymore right well the the
10:17
goal is to fly Richard on a commercial
10:19
flight this year this year
10:21
yeah we’re no longer do yeah I think the
10:23
point is that you know setting an
10:24
arbitrary date for something like
10:26
spaceflight is not the right thing to do
10:27
I think you want to move forward in a
10:29
plan not move backwards from a date and
10:31
give that team who are you know the best
10:34
scientists from NASA JPL gives them the
10:37
chance and the opportunity to just build
10:38
an exceptionally beautiful experience
10:40
the thing for you and you just said it
10:42
is we want you to not say you want to be
10:44
the millionth customer that you want to
10:45
be the ten thousandth customer or the
10:47
thousandth customer did you say Sorkin
10:48
what you said ten thousands of customers
10:50
I said a multiple of lata no over 8,000
10:54
because you said we think that we said
10:55
yeah okay so you’re the hey by the way
10:57
guys like and what George suggested is
10:59
they’re making amazing progress like you
11:01
know working through the FAA working
11:03
through the technical capabilities
11:05
flying the machines back down to
11:07
New Mexico and then on top of that all
11:10
this demand keeps piling up 124 percent
11:13
increase in the number of people that
11:14
want to buy tickets we’ve now started to
11:17
accept pre reservations or if those
11:19
8,000 people just those 8,000 people
11:22
doesn’t seem like a lot but when you
11:24
think that the price could be around 300
11:26
grand
11:26
that’s 2.4 billion of pipeline a real
11:30
quick question is there an insurance
11:31
program ya know for individuals I
11:33
believe there will be yeah so if
11:35
something tragic were to happen do you
11:38
know what the payout would be relative
11:39
to a regular airliner and I just curious
11:42
because I think that’s actually I mean I
11:44
don’t know what people think about it
11:46
like that I don’t know but I do know
11:47
that there will be a really robust
11:49
insurance very quickly Mike Santoli
11:50
brings up a good question to just point
11:52
out that when you bought the into the
11:54
SPAC it was at half the valuation of
11:56
like one and a half billion now it’s a
11:58
lot harder did you take Richard Branson
12:01
to the cleaners or is this current
12:04
valuation overdone or did things just
12:06
change that drastically no neither I
12:08
think that I think Richard and I found a
12:10
way for us to do a deal we give to
12:11
remember like you know we put 800
12:14
million dollars into the business I mean
12:16
between secondary and primary so you
12:19
know there aren’t a lot of people that
12:20
can are walking around with 800 million
12:23
dollars burning a hole in their pocket
12:24
so we found a fair valuation for him and
12:26
for me I think the the other thing
12:28
though Becky that happened is when you
12:30
take these things that I just talked
12:31
about you know the dearth of
12:33
opportunities and the fact that there’s
12:34
so much money on the sidelines and then
12:36
apply it to a unique story I think what
12:38
happened in the fall was people finally
12:40
woke up to Tesla and then people started
12:42
to say what else
12:44
Kim looks very similar to this I mean
12:45
you have to remember you people missed
12:47
out on a 75 X on Tesla over the last
12:50
decade I didn’t I was a proponent of the
12:53
Tesla converts I’ve been shredded on
12:54
Twitter for years and years being a
12:57
supporter of Elon in that company we
12:59
turned out to be right the shorts turned
13:00
out to be wrong and I feel just as
emotionally invested and intellectually
invested in virgin Leon what do you say
to like the 50 million plus people that
believe that if you read the policies
and take the label of socialism aside he
really looks more like a social democrat
that’s akin to a politician in the noir
country’s than he does to you know Fidel
Castro 2.0 I don’t know that’s not how
Bernie Sanders sounds to me my main
hang-up has been all along the the
constant attacking of wealthy people
the villainizing of the billionaire
class now I luckily got into the
billionaire class but I’m one of these
guys I’m gonna give it all the way I
don’t care much about money okay I don’t
I don’t get it you know I look at a Mike
Bloomberg the way he’s treated in these
debates whether he’s attacked Mike
Bloomberg new unemployment he was lost
out in a power struggle with linguas his
mid-30s he had this vision of building a
machine he built a ubiquitous machine
that you need if you’re in the
investment business he’s built the 60
billion dollar at worth he gave away
nine billion dollars to charity on his
own well before he became a PO you know
and involved in a big political way he
did a fabulous job as mayor of New York
okay in the biggest city in the world
and they’re attacking him and he had a
great line in the last night last night
where he said I’m the only guy in this
platform that built the business and he
oh they all looked at each other
blank Bernie more Bernie Sanders is not
worth his life EE and I just think at
the end of the day look i-i’ve been
equally blessed as you so I’m in the
same fortunate position urine but at the
end of the day if the worst thing that
happens is people name call us a little
bit and call us billionaires and detach
that’s not such a it’s not the worst
thing in the world if it allows us to
wake up to the reality that a lot of
people haven’t been able to participate
in what has really been you know an
equity market expansion where you know
14:59
folks like you and I who can be you know
15:01
long equities in a massive way levered
15:03
up you know access to certain products
15:05
can do well to a degree that everybody
15:08
else can it’s so it’s got people let’s
15:11
just acknowledge that that’s happened
15:12
and you know it’s it’s it’s it’s not an
15:14
easy it goes beyond it goes beyond that
15:18
it goes beyond that I believe in the
15:21
progressive income tax structure I
15:22
believe rich people should pay more okay
15:25
what we have to do as a nation is agree
15:27
upon what to the maximum marginal tax
15:29
rate be on wealthy people that will
15:31
define the revenue yield to the
15:32
government and we have to saw
15:33
the government to that revenue the yield
15:34
now I’m prepared to work six months a
15:37
year for the government the six months
15:38
of myself that’s a fifty percent
15:40
marginal tax rate unfortunately
15:42
depending on what state you live in you
15:43
already passed there between state and
15:44
federal income taxes and as it gets to
15:47
be confessor Kotori there’s a great
15:49
comment that I read recently by Thomas
Sowell he said since this is an era when
many people are concerned about fairness
and social justice
what is your fair share of what someone
else has worked for okay I’m willing to
give pay a 50% mark okay I have no
problem with that
16:06
okay I just think that the dialogue is
16:09
destructive it’s not inclusive so I give
16:12
you a perfect example I spoke at the
16:14
delivering alpha conferences number of
16:16
months ago nothing whatsoever was said
16:18
about politics the moderator Scott
16:20
Wapner the question after I gave my
16:22
formal presentation he said what do I
16:24
think the marker would do if the
16:26
Elizabeth Warren was elected president
16:27
and I said who go down 25% I think you
16:30
had a different view I’ve heard you were
16:32
previously okay and the next day she
16:36
tweets Leon I’m only looking for 2% give
16:39
others a chance of the American dream
16:40
she has no clue about anything about me
16:42
okay I’ve given away 700 million dollars
16:45
in less three years to charity that’s
16:47
why Rick it let me finish please if I
16:49
may I yeah I said firing kids to college
16:51
in Newark New Jersey I pay their their
16:54
tuition okay
16:55
and basically I decide to take the high
16:58
road okay Michelle Obama said when they
17:01
go low we go high I said they’re rather
17:03
well written letter very respectful very
17:06
conciliatory with a closing paragraph
17:08
that always has to work together deal
17:10
with the issues but there are issues I
17:11
don’t deny that there are issues my
17:14
approach to resolving the issues is to
17:16
education and hopefully faster economic
17:18
growth what does she do she puts out a
17:21
you know excuse me common
17:24
insider trader and own stock in navien
17:26
very constructive The Wall Street
17:28
Journal wrote an editorial page coming
17:30
that day she said that said mr. Koopman
17:32
won the case what is Sheik accusing them
17:34
them but it was nothing constructive she
17:37
was a politician in the worst sense of
17:38
the word
17:39
okay and that we need people that see
17:42
the issues I like the fact that certain
17:46
Mike Bloomberg was a Republican and
17:47
certain respects as a Democrat these
17:49
voting issues okay we have to avoid the
17:53
labels we have to work together in a
17:55
cooperative manner and all this income
17:57
differentiation it’s been really the
17:59
result of monetary policy response but I
18:03
want to add one other piece to it and
18:04
I’ll speak not for you but but I’ll add
18:07
another element to this which is
18:09
assuming that a Bernie Sanders or an
18:12
Elizabeth Warren were put into office
18:14
and and and I know that you’re you’re
18:17
okay with maybe some of the the
18:20
criticism that the vocal criticism that
18:23
they have about built the billionaire
18:25
class but the question is from a policy
18:27
perspective are you okay or encouraging
18:30
of that policy and to the extent that
18:33
you can appoint the head of the
18:36
Department of Justice and and say you
18:39
know please go look at these individuals
18:40
if you could say you know if you can
18:42
appoint the head of the SEC who is going
18:44
to maybe look into various companies in
18:47
a more aggressive way I’m not saying
18:49
they shouldn’t I’m just I’m just raising
18:50
the issues even if you have a completely
18:52
divided Congress how you see this
18:55
playing itself out if it doesn’t matter who gets elected
in my opinion it does I I have sort of
generally lost faith in the power and
the impact of the presidency in domestic
policy for years it is generally been
the case that the President of the
United States is given one hall pass to
do one meaningful piece of legislation
in the first two years of their term at
which point the American population
either flips the house or flips the
Senate and create stasis and it has
happened relatively predictably now and
I think that it will continue to happen
and so the question is what do we think
is the most likely thing to happen when
Trump came into office the only thing
that they were able to get done in which
Republicans were able to corral the
wagons was tax cuts and tax change but
everything else basically just came to a
grinding halt Obama was the same thing I
don’t agree with that I think that the
wouldn’t Trump I’m not a Trump fan okay
but I believe the man deserves
a certain amount of credit for what was
going on you know I don’t like his style
and so at the end of the day you have to
decide you vote your values you vote
your pocketbook I’m gonna stage in my
life where I want to vote my values my
values tell me that it is wrong to call
Mitt Romney a jackass it is wrong to
tell reptillus and he’s dumb as a rock
it’s wrong to denigrate John McCain who
was a true war hero it’s wrong basically
to say John Dingell is looking up and
not down even though I had totally
different political views to him okay
but the president deserves credit okay
when he came in it was like they took
the foot off to throw the economy the
economy and the stock market is at
record high unemployment for the
minorities is a record low overall
employment economy is at record high
we’ve opened up a long overdue
constructive dialogue and trade with
20:50
China we focus attention or illegal
20:53
immigration all this is good stuff the
20:55
problem with it is his deportment and I
20:58
analogize him to Ronald Reagan Ronald
21:01
Reagan was very beloved president okay
21:03
when Ronald Reagan ran for office he
21:04
said I had a three-prong program prong
21:07
one get the government off the backs of
21:08
people and I do that reducing taxes and
21:10
regulations you know for Trump you said
21:13
I’m going to restore the lost prestige
21:14
United States after the Carter years and
21:16
I do that by rebuilding our defense
21:18
ditto for Trump the crux of the matter
21:22
is even if you Softsoap Bernie Sanders
21:25
policies and say it’s a Nordic style
21:27
democratic socialism it would still
21:30
reverse a lot of these positive things
21:33
that has happened it’s that simple 60
21:35
trillion degree New Deal or 50 trillion
21:38
dollars on Medicare for all is not just
21:41
having a conversation about non that has
21:43
not dissipated a lot of young people
21:49
talking about we don’t need about a
21:54
gridlock in government we don’t
understand economics anymore to not
understand the capitalism got us where
we are so you can have these great
high-minded Nordic social democratic
conversations but it’s a dangerous place
you’re trying to take
you say we can’t get there so just have
the conversation but why not acknowledge
that it’s capitalism and it’s free more
time somebody taught us where we are
exact we’re a lot to have a diversity of
22:19
opinions okay that’s an entire cohort of
22:22
young people you’ve got Bernie Sanders
22:24
leading the pack in the Democratic field
22:26
and that is a problem for Democrats my
22:28
my that’s okay that he’s going to get
22:31
the nomination that’s fine I think you
22:33
dig Doug Doug or I take a lot of energy
22:37
in learning about what’s happening I
22:40
take a lot of energy reframe is stuck
22:42
with Bernie versus Trump that could be
22:45
the end result of all this happen let me
22:47
do this we weren’t gonna talk about it
22:51
basically when Bob first got the job
22:57
people thought of him dare I say as a
22:59
suit they did not think of him as some
23:01
kind of creative genius they thought of
23:03
him as a business person so to some
23:05
degree che Peck has that same kind of
23:07
reputation how important do you think it
23:09
is for a CEO of a media company or media
23:13
entertainment company in this day and
23:15
age to be both a the the numbers
23:18
business guy if you will and also a sort
23:21
of left-brain right-brain situation
23:25
well what’s particularly interesting in
23:27
this transition is Bob Iger saying he’s
23:30
going to spend the next year and a half
23:31
or however long it is being an executive
23:34
chairman ‘those focused mainly on
23:37
creative because as you say he came in
23:40
as not as the creative person he came in
23:44
as a business suit so to speak in the in
23:47
the Hollywood jargon I think Bob Meyer
23:51
has great taste he has great great
23:53
fingertip feel you know for both
23:56
television and stars but he’s not one of
23:59
these Hollywood people who is known as
24:02
let me be the creative product person so
24:06
it’ll be interesting to see that he
24:07
decided to cast himself in that role for
24:10
the next year and a half all right
24:12
samatha you’re making faces what are you
24:15
thinking I mean Bezos has this term
24:18
called narrative fallacy which is after
24:20
something works you look backwards and
24:21
you kind of
24:22
invent whatever you want to say to make
24:24
yourself seem amazing you know that’s a
24:27
business that I think frankly more than
24:29
anything else has proved the value of
24:31
really good M&A by using the highly
24:33
levered security that’s what they’ve
24:36
done because when you look at Pixar
24:37
Pixar was moderately successful
24:40
the stock was just kind of flat for
24:42
three years once they tagged Marvel then
24:44
it was a game changer and so that single
24:47
acquisition was I think the
24:49
transformational event and so in my mind
24:51
what it proves was the value of M&A and
24:53
so if you have a balance sheet like
24:55
Disney I would kind of think why not put
24:58
somebody who has an eye more towards a
25:00
transactional impetus than an
25:03
operational focus and so you have to get
25:05
you give him credit for for I mean you
25:07
got people set us way too much to pay
25:09
for Pixar I mean you have to give Agri
25:11
credit for doing the M&A deals it’s an
25:16
incredibly successful in the M&A guy and
25:18
now wants everyone bows to but even
25:22
Spielberg and I think Britain betrays
25:24
what he’s really good at but that’s
25:25
brilliant but if the new guy is an
25:27
Operations guy you’ve built up this huge
25:28
company now you need somebody who knows
25:30
how to run it well well I don’t say next
25:32
step or you think it’s no I think Disney
25:34
isn’t he is it’s such an excellent
25:36
exceptional example of what an old-line
25:39
industry company needs to do which is
25:42
you need to find where the puck is going
25:44
and then aggressively acquire it not do
25:47
it organically
25:47
you can’t do it organically it’s not
25:49
possible even Facebook can’t do it
25:51
organically they need to acquire so
25:53
facebook can’t do it if Google can’t do
25:55
it and their requirement why do you and
25:57
if you listen to the words of Bob Iger
25:59
yesterday he said look we have now all
26:01
of our assets in place in fact I thought
26:03
the suggestion that he was making was
26:05
definitely though a difficulty the
26:07
domore M&A know the difficulty is now
26:10
what they’re finding and this was
26:11
Netflix that’s going to do this is
26:13
Netflix has transformed the court
26:15
cutting streaming business into a
26:17
consumer surplus business it’s going to
26:19
basically take margins to zero and as
26:21
they do that and as they fight for
26:23
subscribers the only way to survive for
26:25
somebody like Disney is to acquire and
26:27
to bolt on acquisitions over and over
26:29
and over again so I think you probably
26:32
need someone who has the wherewithal the
26:34
risk tolerance and the vision to take
26:36
that risk
26:37
this our tamale Hypatia Virgin Galactic
26:40
chairman and social capital CEO got a
26:42
couple quick questions for you one this
26:45
was a SPAC that you did do you believe
26:47
and we talked about this used to talk
26:49
about this as being the IPO 22.0 yeah do
26:51
you think this is actually changing the
26:53
game in terms of how a company to grow
26:55
publicly yeah completely I think that
26:57
what we showed was that there’s a lot of
26:59
high-growth companies in Silicon Valley
27:00
and increasingly as well in Europe and
27:03
in China where this is actually a much
27:05
better way to go public it’s better than
27:06
the traditional IPO and it’s better than
27:08
a direct listing even though it looks
27:10
like mr. Branson may have given you a
27:11
lot for this I think that what you’re
27:14
gonna see is like back to you the price
27:15
action right has been nothing but
27:17
positive like what you don’t want to
27:19
have happen is a complete miss pricing
27:20
on the front end where people are locked
27:23
up volatility moves and the people that
27:25
make the money are the people that
27:27
entered in at the point of the IPO
27:30
because of relationship with ranks and
27:31
otherwise we unlocked
27:33
everybody from day one and we allowed
27:35
everybody to participate up to you know
27:37
42 bucks a share wherever it went to um
27:40
let me ask a couple other questions we
27:41
you’ve talked about Tesla briefly but
27:43
not really which is how high do you
27:45
think you can go since I know you’re
27:47
long yeah I mean I you know I bought
27:49
these converts a long time ago I was it
27:51
was kind of like my big picot zone you
27:53
know three years ago
27:55
I really believe in this business
27:56
because what they’re now moving into is
27:59
beyond cars and transportation but
28:02
sustainability and I think that you know
28:04
strip away whether you believe in
28:06
climate change or not it doesn’t matter
28:08
what they offer is a set of products
28:11
that I think will be increasingly in
28:12
demand how much are your convertibles
28:14
worth what’s the stake you have right
28:16
now good it’s a large number are you
28:19
surprised to see the stock run so
28:21
quickly
28:21
so fast this year yeah you know that’s
28:24
why I actually started to put together a
28:26
framework of like what is actually
28:27
happening and this is what I said before
28:29
with rates at zero with trillions of
28:31
dollars of printed money with no
28:32
investable equities companies that are
28:35
unique in and of one Tesla Virgin
28:36
Galactic are going to have a bid and
28:38
then if you do something that really
28:40
captures consumer imagination retail is
28:42
now going to be a huge part of it ESG
28:45
rila marketing it’s a complete fraud
28:47
complete fraud it’s so ridiculous
28:49
governance has been a
28:50
that’s useful but you know this idea
28:52
that you’re gonna get a stamp that says
28:54
oh listen like you know my supplier you
28:56
know I’ve offset their carbon credits
28:57
and now I understand my AM it’s a joke
29:00
it’s jargon and I think what people are
29:02
doing right now is using it as a way to
29:05
you know for example like if you can
29:08
paint yourself as ESG in Europe you can
29:10
essentially borrow money from the ECB at
29:12
negative rates I’m gonna come over but
29:20
but I I personally believe in climate
29:23
change I know we need to do something
29:24
and so the problem with the SG is it’s
29:27
gonna take years for this over this
29:29
alone you hear JP Morgan yesterday says
29:31
no they’re not gonna finance fossil
29:33
fuels or you hear at Bastion at Delta
29:35
say he’s gonna spend 100 million dollars
29:36
of real money by the way effectively
29:38
buying carbon offsets and investing in
29:39
new biofuels every year you say two
29:42
things
29:43
JP Morgan by saying what they said will
29:46
be able to borrow billions of dollars
29:48
from the ECB at negative rates you think
29:50
that’s what that is
29:51
it’s obviously what it is it doesn’t
29:53
have to work they don’t need to do
29:55
anything they are now getting free money
29:56
from Europe and basically being able to
29:58
say this and you don’t think they would
29:59
get that money otherwise no cuz Europe
30:01
basically has this condition where you
30:02
can issue green bonds and you have all
30:04
of this you know
30:05
checks and balances at the– so that’s
30:07
one thing okay it’s going to be very
30:09
important for you to really be able to
30:11
diligence the supply chain all the way
30:13
down to the supplier and the supplier
30:15
supply Microsoft is very large in for
30:17
example these are these are useful
30:20
statements it’s great marketing but
30:23
again it’s a lot of sizzle no steak I
30:25
think that what we need to do is invest
30:28
in actual companies that can go and
30:30
count right and can go and you know
30:34
legitimize the actual impact that
30:38
companies have so that you can do the
30:39
right amount of carbon offsets and then
30:42
you have to have a legitimate exchange
30:43
where you can actually trade them you
30:44
really believe in climate change you got
30:46
to do some hard work now by the way
30:48
Virgin Galactic is gonna be throwing up
30:50
a lot of carbon do you buy offsets
30:51
collective yeah we have a plan to sort
30:55
of get to what you do why if it’s
30:57
important he believe he just said he
31:00
believes it the other stuff was great
31:02
I’d need a cigarette in fact
31:04
after that it was so good for me but God
31:06
tell me how crypto does that ever become
31:10
a an actual means of transacting yeah it
31:14
does still everything I said crypto am I
31:18
allowed to say crypto I hope I’m allowed
to say crypto can I bring it up I would
really like Bloomberg to take this
article that I wrote for them into 2013
out of their pay wall but basically you
know my view at the time which I’ve held
since today haven’t changed is that
everybody should problem have 1% of
their assets in Bitcoin specifically I
still believe that today and I think it
is just a fantastic hedge so if you go
ack to the conversation this morning
when you see the amount of leverage the
financial industry is running and you
think about all these dislocations and
all these exhaustion as things that are
happening that you can’t predict there’s
a lot of risk to the downside and it
would be great that an an average
individual citizen of any country in the
world has an uncorrelated hedge and I’ve
said this repeatedly at nauseam on the
show every financial instrument is
correlated but money but except bit but
Jomon uncorrelated hedge it that Warren
Buffett says has zero value 0 in here
III unless someone pays more I think
he’s an exceptional person I’ve learned
an enormous amount both from afar and
the few interactions I’ve had with him
he is completely wrong and operated on
student the prices have gone up during
this career most a few issued Haven went
down like gold if it was really digital
gold I think that you have to look more
at volumes these are not necessarily
event-driven
strategies meaning you don’t you don’t
want all the digital gold no you didn’t
say that
no he didn’t that’s that’s that’s the
people say I don’t think you buy I don’t
think when you know you wake up and you
see a coronavirus care in the Dow down
mm you should not be going in and buying
Bitcoin that is an idiotic strategy I
think a reasonable strategy is to say
one percent of my net worth should be in
something that is completely
uncorrelated to the world and how the
world works you quietly and quick you
know over some number at a time
accumulate a position and then you just
never look at it again and hope that
that insurance under the mattress never
has to come due right but if it does it
will protect you because then that thing
will be hundreds of thousands or million
dollars a coin okay and when we get we
got to go but Fang stocks do you like
them or hate them
I’m a net seller you’re a net seller of
tech companies other than Amazon because
33:39
I think Facebook gets regulated I think
33:43
Google will have to go through a bunch
33:44
of divestitures to avoid regulation I
33:46
think Netflix has turned into a consumer
33:48
surplus business and their their
33:50
viability to cash flow is de minimis and
33:53
Amazon just keeps growing by 25% every
33:56
year like clockwork it’s an incredible
33:58
incredible business okay
34:00
Thank You Tomas appreciate that thanks
34:01
guys
34:03
you
34:11
you

 

Seniors disrespecting the younger generation

Trump calls for unity, stands firm on wall, leaves Socialist Dems on defensive at State of Union

An economic miracle is taking place in the United States — and the only thing that can stop it are foolish wars, politics or ridiculous partisan investigations,” Trump said, in an apparent reference to Democratic congressional probes of his administration and possibly to Special Counsel Robert Mueller’s Russia investigation. “If there is going to be peace and legislation, there cannot be war and investigation. It just doesn’t work that way.”

At the same time, the president did not back down from his insistence that Congress fund a border wall, which was at the center of a 35-day government shutdown that ended only a few weeks ago and could fuel another shutdown on Feb. 15. Tolerance for illegal immigration, Trump said, is “not compassionate,” but “cruel.” “Simply put, walls work and walls save lives,” Trump said. “So let’s work together, compromise and reach a deal that will truly make America safe.” However, top Democrats signaled that Trump’s State of the Union address did little to convince them that a legislative compromise to construct his proposed border wall is possible.

Read: Trump’s State of the Union speech

TRUMP AND AOC FEELING ‘SOCIAL’: President Trump vowed during his State of the Union address on Tuesday that “America will never be a socialist country,” in an apparent rebuke to self-described Democratic socialist Rep. Alexandria Ocasio-Cortez and Sen. Bernie Sanders that drew loud cheers and a standing ovation from Republicans in the House chamber — as well as supportive applause from House Speaker Nancy Pelosi … In response, after the speech, Ocasio-Cortez told Fox News: “I thought it was great. I think he’s scared.”

The progressive firebrand pointedly did not applaud as Trump condemned human trafficking and illegal immigration in his address. In an interview later Tuesday night, Ocasio-Cortez said she was asking herself, “Is this a campaign stop or is this a State of the Union?” She is set to unveil a massive “Green New Deal” with Massachusetts Democratic Sen. Ed Markey next week.

Peggy Noonan: AOC had ‘rare bad night’ – and the rookie lawmaker responds