Radical Imagination: Imagining How the World of Finance Really Works

Yves here. Get a cup of coffee. Another meaty chat with Michael Hudson, who focuses here on the role of finance in rent extraction.

An important theme here that Hudson has stressed before is the mistaken perception of home “ownership”.  Only about 1/3 of homes in America are owned free and clear. For the rest, the banks, or mortgage trusts, hold a senior position as mortgage lenders. And over the decades, they have become far less accommodating when homeowners are late even on a single payment. Even worse, insiders have reported that mortgage servicers will even hold payments to assure that they are late, which typically leads to compounding charges that virtually assure a foreclosure. Borrowers also face Kafkaesque obstacles to clearing up errors when they unquestionably paid on time.

To put it another way, as Josh Rosner put it in the early 2000s. “A home with no equity is a rental with debt.” That can be generalized to homes with little equity.

Radical Imagination host Jim Vrettos interviews Professor Michael Hudson, Economist, Wall St. Analyst, Political Consultant, Commentator and Journalist; who offers his views in the way finance works

Welcome, welcome once again to the Radical imagination. I’m your host, Jim Vrettos. I’m a sociologist who’s talked at John Jay College of Criminal justice and Yeshiva University here in New York. Our guest today, on the Radical Imagination, is one of only eight economists named by the Financial Times who foresaw the credit crisis and ensuing great recession erupting in 2008. It was conventional wisdom at the time to say that no one saw the gravity of the crisis coming, including almost every leading economist and financier in the world.

In fact, many had seen it coming. It was seen by everyone except economists from Wall Street; as our guest put it. They were ignored by an establishment according to then, the Federal Reserve chairman Alan Greenspan that watched with innocent quote-unquote shock disbelief as its whole intellectual edifice collapsed in the summer of 2007.

Official models missed the crisis not because the conditions were so shockingly unusual, they missed it by design because the world they lived in was not a world of how finance really works. They missed it because their mathematical models made it impossible to warn against a debt-deflation recession.

Their innocent model worlds were worlds where debt simply did not exist. It’s a world that most of our economic policymakers still live in, and it’s no wonder that everyday people see most economists far removed from their practical economic concerns and interests their everyday concrete reality. Our guest today is an internationally renowned economist who’s followed a much different path of interest and concern.

Michael Hudson is a distinguished research professor of economics at the University of Missouri, Kansas City, a researcher at the Levy Economics Institute at Bard College, a former Wall Street analyst; political consultant to governments on finance and tax policy, a popular commentator sought after speaker and journalist.

He identifies himself as a Marxist economist. But his interpretation of Karl Marx that differs in most other major Marxists. He believes parasitical forms of finance have warped the political economy of modern capitalism. History has regressed back to a neo- feudal system. He’s also a contributor to the Hudson report, a weekly economic and financial news podcast produced by Left Out.

His many books include Killing the HostJ is for Junk Economics,The Bubble and BeyondSuper Imperialism, and “… and Forgive Them Their Debts.” Michael has devoted his entire scientific career to the study of debt —both domestic and foreign, loans and mortgages, and interest payments.

In 2006 he argued that debt deflation would shrink the real economy, drive down real wages and push our debt-ridden economy into a Japan-style stagnation or worse. And just for reference, the typical American household now carries an average debt of over $137,000 up from $50,000 or so in 2000. The average American has about $38,000 in personal debt, excluding home mortgages.

The average credit card debt per U.S. household is $8,500, and outstanding student loans are at an all-time high, in 2019, of $1.41 trillion, a 33 percent spike since 2014, and a 6 percent increase from 2018. Only 23 percent of the population say they carry no debt. As Hudson presciently puts it, debts grow and grow, and the more they grow, the more they shrink the economy.

When you shrink the economy, you shrink the ability to pay the debts. So, it’s an illusion that the system can be saved. The question is, how long are people going to be willing to live in this illusion? Every day people have to face reality. Our economic policymakers urgently need to get it too.

So welcome Michael to The Radical Imagination. Thank you very, very much for coming here and being with us. Your work is so interesting; it’s so new and different. You’re a Marxist economist and yet…

[Michael] I’m a classical economist…

[Jim] You are classical, ok.

[Michael] Marx was the last great classical economist. Classical economics basically runs from the French Physiocrats through Adam Smith via John Stuart Mill to Marx.

[Jim] Along with Ricardo.

[Michael] Yes, they were all talking about the rentiers. In their time the landed aristocracy were the main rent recipients. But Adam Smith also talked about monopoly rent. And finance was the major monopoly. And today, the role of the landlords played in the 19th century of stifling industrial capitalism is being played by the banks and the rest of the financial sector. Right now the collectors of land rent, which was the main focus of the labor theory of value to isolate what was unnecessary, is being paid to the banks as mortgage interest.

[Jim] Right

[Michael] So, we no longer have a small privileged private landlord class when you have 80 percent of the European population and two thirds of the American population being homeowners. However, they have to pay the equivalent of the rental value of their housing to the bank, in the form of mortgage interest.

[Jim] To the banks, right!

[Michael] My analysis follows from classical economics, as did Marx’s analysis. So Marx is simply the last great classical economist. They were all talking about how industrial capitalism sought to free itself from unnecessary costs of production, and hence how its political fight was against the landlord class and other rent extractors. Where Marx went beyond his predecessors was in looking at the laws of motion of industrial capitalism. He saw these as leading toward socialism. Later, Rosa Luxemburg said that if it’s not towards socialism, it will be toward barbarism.

[Jim] So capitalism would evolve into the possibility of socialism.

[Michael] Yes.

[Jim] Did he foresee the sort of predatory financial system that you worked out?

[Michael] No one described it better in his time than Marx, in Volume III of Capital.

[Jim] Volume III. Ok!

[Michael] Marx analyzed the “real” economy’s circular flow between employers and wage labor buying the products they produced. But then, in Volume III, he said that rentier debt claims by the financial sector was a separate dynamic, independent from the economy of production and consumption. This industrial capitalist economy is wrapped in a financial sector composed of debt and property claims. These are external to the economy. They slow it and ultimately cause a crash. Marx was one of the first to talk about business cycles of about 11 years and the internal contradictions that led to a market collapse. He pointed out that the financial sector had different mathematics of growth – the mathematics of compound interest. These are exponential and inherently unsustainable. In Volume III of Capital and also of his Theories of Surplus Value– which was Marx’s history of economic thought and the theories leading up to him – he collected everything from Martin Luther to other analyses pointing out that debts grew so rapidly at compound interest that it is impossible to pay them.

[Jim] You have a great chart where you talk about compound interest, a penny that was invested at 5% interest from Christ’s time to 1776.

[Michael] Richard Price was an actuarial accountant. He calculated that a penny saved that at the time of Jesus’s birth at 5% interest would become a solid sphere of gold extending from the sun out to the planet of Jupiter.

[Jim] Amazing.

[Michael] Obviously, many people did save pennies at the time of Christ, and the annual interest rate then in Rome was 8 1/3%, one twelfth per year. But of course nobody has a sphere of gold extending out to Jupiter. That’s because debts that can’t be paid, won’t be.

That’s basically my motto: Debts, that can’t be paid, won’t be paid, because there’s no way of paying out of current income that grows much more slowly, tapering off.

[Jim] Right!

[Michael] So debts have to be written down. It usually takes the form of a financial crash. Nobody before Marx explained crashes in terms of the financial claims growing and causing a break in the chain of payments. The actual break could be a result of fraud or embezzlement, or a bad crop, because crashes happened in the autumn when the crops were moved and there was a drain of money from the banks to pay for moving the crop and paying the harvesters. But at least a crash wiped out debts, and then the debt buildup could begin all over again.

[Jim] But in pre-industrial civilizations that didn’t occur did it? We want to play a short little clip from your book, “… and Forgive Them Their Debts,” in which you talk about the debt phenomenon in primitive or pre-industrial civilizations, very different than what we’ve experiencing today, correct?

[Michael] That’s right. You mentioned the Financial Times report of the economists who did see the crash coming. I was the only one who actually made a chart showing why the break had to come. The Financial Time review was by Dirk Bezemer, who showed the chart that I published in a Harper’s magazine, based on an earlier paper I’d given at the University of Missouri at Kansas City for one of our Minsky Conferences.

[Jim] Let’s play this. It’s a two-minute clip on what you talking about, and debt within pre-industrial societies.


[Michael] Economists don’t talk much about religion or society, or how these concerns shape markets. Theologians for their part act as if religion is all about heaven and sex, so debt is left out. Yet it used to be at the core of Judaism, Christianity, and earlier Near Eastern religion.

[Host] Why is that? If religious leaders are interested in social justice, as Jesus was, it you have to talk about economics.

[Michael] I think part of the reason is that when they translated the Bible into English, German and the vernacular, they didn’t know what many of the words originally meant, like deror  (for the Jubilee Year), or how to distinguish between “sin” and “debt” as originally a reparations payment for sin. They didn’t understand that most of the Bible was redacted by the returnees from the Babylonian captivity, who brought back this concept of debt cancellation, “andurarum” – Clean Slate. The Hebrew word was “deror.” In the Bible, you’ll have other words or terms for the Clean Slate, the Jubilee year of Leviticus 25, such as “Year of the Lord” in Jesus’s first sermon.

They didn’t realize that the word “gospel” was the “good news.” That good news was that there was going to be a debt cancellation. They didn’t realize that the Ten Commandments were very largely about debt; that “one shall not covet the neighbor’s wife,” that means you don’t make a loan to the guy so he has to pledge his wife as a debt slave to her so that you can have your way with her.

[Jim] But ordinarily that just gets translated as adultery.

[Michael] Yes, but they didn’t realize that the vehicle for this immorality was largely debt bondage. “Thou shalt not take the Lord’s name in vain” meant that a creditor couldn’t swear that so-and-so owes you money if he didn’t. All of this had to do with fact that the great destabilizing factor in society in the first millennium BC was debt beyond the ability to be paid, leading to bondage of the debtor, and ultimately forfeiture of land to wealthy creditors eager to grab it and do as Isaiah accused, join plot to plot and house to house until there were no more people left in the land.

[Jim] “No more people left in the land.” This is an incredible narrative. Please flesh out the narrative so that we can understand what was going on at that time.

[Michael] In order to explain the dynamics of debt in early times, you have to explain how the overall economic system worked as part of the social system. Most people ran into debt not by borrowing, but simply by not being able to pay the taxes or other payment obligations that accrued. These debts weren’t the result of loans. Most personal debts in Sumer and Babylonia were owed to the palace, so when the crops failed or there was a military fighting they couldn’t pay what they owed to the bureaucracy of tax collectors or for public services.

[Jim] Who were working for the palace.

[Michael] Yes. The rulers had a choice at this point: Either they could let the debtor fall into bondage when he couldn’t pay the tax collectors or the palace. If that happened, he’d owe the crop surplus to the creditor, not the palace.

He owed his payment in labor. That was the scarce resource in antiquity. He’d owe his labor to the creditor, so he couldn’t serve in the army, or do corvee work to build infrastructure or palace walls.

So rulers canceled these personal debts to regain control over agrarian labor and its crop surplus. Every new ruler who took the throne in Sumer and Babylonia started the reign with an amnesty, a Clean Slate to start from a position of balance in Year One. During their subsequent reign, if the crops failed or if there was a military conflict, the ruler would cancel consumer debts (but not commercial debts among businessmen for foreign trade or similar enterprise). That’s in the laws of Hammurabi, cancelled Babylonian debts four times. It’s obvious that if you’re at war or if the crops are hurt, cultivators can’t pay the loans.

What early modern scholars could not believe, until our Harvard group began to compile the economic history of antiquity, that canceling such debts actually was what maintained stability. We began our Harvard group in the 1990’s , and we’ve published five colloquia volumes of the origins of economic enterprise in the ancient Near East, on land tenure, urbanization, debt, and debt cancellation.

Our researches showed that as soon as you had interest-bearing debts (mainly in the commercial sphere), you had debt cancellation for the personal agrarian debts. Business debts were not canceled because the merchants were also citizens, so no matter what, all citizens had their designated self-support land. So only the barley debts were canceled; not the personal debts. We showed that rulers canceled the debts because number one, they were canceling debts owed to themselves. It’s politically easy to forgive a debt if it’s owed to you. But it’s more difficult if there is an oligarchy and debts are owed to private creditors.

Canceling crop debts was what maintained economic stability without mass bankruptcy, which would have meant that a lot of debtors would have ended up as bond servants to their creditors. It also maintained demographic staility, because otherwise, debtors would have run away and joined another community. Many did run away after Babylonia fell in 1600 BC. Four centuries later we find them joining the hapiru, which many people connected to the Hebrews. They were sort of gangs of laborers who also would do a little bit of piracy or serve as mercenaries. Their own groups were very egalitarian, just as pirates were egalitarian in their own ranks in the 18thcentury West.

With the hapiru  you find for the first time an ideology saying that they were not going to let themselves fall into debt to the rich or to landlords. Their ranks were joined by fugitives walking out. Of course, that’s how Rome came to be settled under its “kings,” and what the Roman commoners did 594 BC after the kings were overthrown. The oligarchy took over, and tried to reduce the Roman population to bondage. You had numerous Secessions of the Plebs, for instance, again when the oligarchy broke its word by 449 BC.

[Jim] the aim was to forgive all the debts, just as in the Bible, right?

[Michael] When the Bible really was edited and put together by the Jews who were coming back from Babylonia, they brought back with them many Babylonian practices.

[Jim] So, they had learned from that experience . . .

[Michael] At that time all the Near Eastern kingdoms, even the Neo-Assyrian and Neo-Babylonian empires had rulers who continued to proclaim Clean Slates.

[Jim] The Persians and so on. But that tradition didn’t survive into modern times, although it became a tradition within the old Judaism.

[Michael] And also the original preachings of Jesus. Leviticus 25 projected the practice all the way back to the commandments of Moses. But there’s not very much documentation of Judaism after the compilation of the Jewish Bible, because the Judeans didn’t write on clay tablets, they wrote on perishable materials that haven’t survived. The little that did survive was the sacred library of Jerusalem, which became the Dead Sea Scrolls. When the Romans came, they took the library and they put it in pots. We now have many of these scrolls. One was a midrash, a collection of all of the biblical passages about debt cancellation, including those of the prophets.

[Jim] Interesting!

[Michael] So we know that by the time of Jesus, there was an active popular demand for another Jubilee. But meanwhile, within Judaism itself, the wealthiest families became the rabbinical school. Luke’s description of Jesus in the New Testament said that the Pharisees loved money. They became the rabbinical school of Hillel. Luke said that Jesus went back to the temple in his hometown to give a sermon, and unrolled the scroll of Isaiah to read the passage about the Year of the Lord – meaning the Jubilee Year – and said, that he had come to proclaim this year. That was his destiny.

Early translators of the Bible just read “the Year of the Lord” without realizing that this meant the Jubilee Yearderor, a debt cancellation. Luke immediately says a lot of families got very angry and chased Jesus out of town. They didn’t like his message. The Pharisees in particular got upset, and complained to the Roman that Jesus wanted to be King. Well, the reason they said was that they knew that Rome hated kingship. Roman tradition as written by Livy and by Dionysius and Halicarnassus described Servius as cancelling the debts, and most other kings of trying to keep the oligarchy in its place. Rome grew by making itself a haven for immigrants, whom they attracted precisely by keeping the oligarchy in its place.

[Jim] But they also had an empire. . .

[Michael] We are talking before the eighth to sixth centuries BC. But then the oligarchs took over and throughout the rest of Roman history down to the empire, the great fear was that somebody would do what the kings did: cancel the debts and redistribute the land to the poor. Julius Caesar was killed for “seeking kingship,” meaning that the Senate worried that he was going to cancel the debts after decades of civil warfare over this issue and the assassination of Catiline and other advocates of debt cancellation.

[Jim] And people will be free from their economic bondage

[Michael] Yes. Even many rich people were behind Catiline, who led the revolt a generation before Caesar, who actually seems to have been an early sponsor of Catiline. We’re talking about 62 to 64 BC; Caesar was killed in 44 BC.

So to make a long story short, what made the West “Western” was that it was the first society notto cancel the debts. It was to prevent this that oligarchies opposed a central authority. We don’t find any sign of debt in Greece and Rome until about 750 B.C. It was brought by near Eastern traders, along with standardized calendrically based weights and measures, ritual and religious practices. They set up temples as trading vehicles. For thousands of years, traders had set up local temples to act as a sort of Chamber of Commerce, to negotiate trade. In Greece, and Rome at that time there were chieftainships, which began to adopt the patronage practices of extending loans to the population, and then taking the payment and labor.

These dependency relationships are what made Western civilization different from what went before. There was no palatial economy, no state authority to override the oligarchy, cancel debts, redistribute land or liberate citizens who had been reduced to bondage as a result of their debt.

[Jim] You’re talking about the Middle Ages as well, feudalism?

[Michael] No, I’m talking about Greece and Rome in contrast to the Near Eastern mixed economies that were palatial as well as private. There was much private mercantile enterprise in Sumer. Its foreign trade was largely left to private enterprise (with the palace being a major customer, to be sure), so, these were mixed economies, as the five volumes that our Harvard group published have shown.

[Jim] This is all contained in your book “… and Forgive Their Debts.”

[Michael] Yes.

[Jim] So this is what is crucial to understanding lending, foreclosure and redemption from the Bronze Age finance to the Jubilee.

[Michael] Yes.

[Jim] This is a fascinating history. Can we bring it up to date, including issues of militarization and empire and imperialism in the 20thcentury, World Wars I and II? What are some of the things that occurred, the inception of the World Bank and the IMF? How did America control and attempt to defend its empire by using debt leverage?

[Michael] Already in Greece and Rome there was a linkage between debt and militarization. A Greek general, Tacticus in the third century BC, wrote a book of military tactics. He said that if you want to conquer a town, the way to take it over is to promise to cancel the debts. The population will come over to your side. And conversely, he said, if you’re defending a town, cancel the debts and they’ll support you against the attacker. So that was one of the reasons that debts tended to be canceled by one group or another. It’s what Coriolanus did, and then he went back on his word in Rome. That’s what Zedekiah did in Judea. Well, today it’s different. Here you have the imposition of a military force – really NATO – to enforce debt collection, not only from individuals but on debt entire countries. The job of the World Bank and IMF is to impose such heavy debt service on countries, and indeed to impose it in dollars, that countries have to earn these dollars to pay their debts. They can’t simply print the money to pay these debts like America can do. They have to obtain dollars by steadily lowering the price of their labor. But as yet there is no debt revolt.

[Jim] Because, when we went off the gold standard the American dollar became all powerful.


[Jim] And we control 75% of the gold reserves?

[Michael] By the end of World War II, we controlled 75%, right.

[Jim] These are tremendous transformations in the world economy. The IMF and World Bank have supposedly developed through the UN for development, but as you argue, it’s more to create dependency.

[Michael] The World Bank is effectively part of the Defense Department. Their heads are usually former Secretaries of Defense, from John J McCloy, the first president, to McNamara and subsequent heads. What the United States discovered is that you don’t need to go to war to control other countries. If you can have them accept the assumption that all debts should be paid, they will voluntarily submit to austerity, which is class warfare against their own labor force. They will continue to devalue their currency

[Jim] And create puppet governments that will support that as surrogates.

[Michael] Yes. What the free market boys at the University of Chicago discovered is that you can’t have a pro-financial free market – free of government regulation and its own public infrastructure and credit system – unless you’re prepared to assassinate everyone who wants a strong government. When they went to Chile and supported Pinochet, U.S. officials provided a list of who had to be killed

  • land reformers,
  • labor leaders,
  • socialists, and
  • especially economics professors.

They closed down every Economics Department in the country, except for the one at Catholic University, the right wing economics department teaching Chicago School neoliberalism. So, you have to be totalitarian in order to impose a free market pro-financial style – which, under today’s circumstances, means pro-US.

[Jim]  It’s occurring across Latin America, right?

[Michael] Yes. A free market means libertarianism and totalitarian government. What the Chicago boys and the so-called New Institutional Economics school calls the rule of contracts. You have the history of Western civilization now being taught almost everywhere as if what created civilization was the rule of contracts, not canceling the debts. So, you’ve created an inside-out view of history. Its aim is to deny the fact that the only way that you can prevent the kind of economic slowdown that we’re having in America now is to write down the debts. If you don’t write down the debts, you’re internal market will shrink and you’re going to end up looking like Greece, or like France with all the riots that they are having there, or like the other countries that are rioting because they don’t want to be turned into a Neo-feudal society.

[Jim] This seems to be occurring in Puerto Rico as well. So what becomes more profitable for American economy is the military and the armaments that we ship and use in all these adventurers wars that we have in the 800 hundred US military bases around the world.

[Michael] The difference is that in the past when you had militarism, you actually had to fight a war. Soldiers had to go in. You know the old joke about wine that’s being sold in an auction. It’s a hundred-year-old bottle and is very, very expensive. A rich guy buys it and pours it out to impress his friends, but it tastes like vinegar. He complains to the auction house, but is told, “Oh, that’s not wine for drinking! That’s for trading!” That’s what most U.S. arms are for: not really to use. You’re never again going to get Americans to be drafted and go into the army to actually, use them. These arms are not for fighting; they’re for making profits. Seymour Melman explained that in Pentagon Capitalism.

[Jim] The permanent war economy.

[Michael] That’s right. Meaning more profits for the military industrial complex. You don’t actually use the arms. You just pay to produce them and throw them away. It’s like what Keynes talked about, building pyramids in order to create domestic purchasing power.

[Jim] And you can’t, as Melman tried to do, use economic conversion to more civilian uses. That never happened.

[Michael] Seymour Melman explained that the U.S. government decided to make a different kind of a contract with the arms manufacturers. It’s called cost-plus. As he summarized it, the government guarantees them a profit, but to prevent monopoly rents, they determined the prices to be paid at, say, ten percent over the actual cost of production. This led the arms-makers to see that if their profits were going to rise in keeping with the cost of production, they wanted as high of a cost of production as possible.

So, the engineers working on the American military industrial complex aimed at maximizing costs. That’s how we got toilet seats that cost $650.

Countries that don’t have Pentagon capitalism, like Russia or China, are able to produce weaponry that outshines America. Even broke Iran, can make missiles that apparently get right through the U.S. defenses in Syria and Iraq, because they don’t have cost-plus. They’re trying to be efficient, not just to have an excuse for making money via a cost-plus contract.

[Jim] How do we turn this around? You’ve made the connections to show that everyday people and their lives are profoundly impacted by the unreal world that the financial predators are creating.

[Michael] Reality isn’t the aim of their economic models. For instance, just today I saw Paul Krugman on Democracy Now. He said that the reason we’re in a depression is because President Obama did not run a large enough budget deficit! He’s a Keynesian, but goes so far as to insist that debt has no role to play in deflating the economy. That’s largely because Krugman serves in effect as a bank lobbyist – not only here, but in Iceland and other countries. To me, the current economic squeeze is that Obama didn’t let the banks collapse. He kept the bad he debts on the books instead of treating them as bad loans to be absorbed by the banks that wrote the junk mortgages and lost in their speculative gambles.

[Jim] And ate the homeowners!

[Michael] Yes. He kept their bad, outrageously priced loans on the books and evicted 10 million families. He called them “the mob with pitchforks,” and Hillary called them “deplorables.” That shows you where the Democratic Party is at, and why it was so easy for Donald Trump to make a left wing  run around the Democratic Party. That is how right wing Obama was. His legacy was Donald Trump, via Hillary Clinton.

[Jim] Krugman is the most well-known so-called Keynesian economist in the country, right?

[Michael] The reason he’s so well-popularized by the pro-financial class is precisely because he doesn’t understand money. So bank lobbyists love him and he’s popularized by the right-wing New York Times. He had a wonderful debate with Steve Keen that anybody can see on Google, where he says that it’s impossible for banks to create money and credit. He thinks that banks are savings banks, and they’re just relending deposits. Steve Keen explained what endogenous money is. That’s what we talk about in Modern Monetary Theory.

[Jim] And the Wall Street Journal.

[Michael] And the Washington Post. They go together. They don’t want economists to be popular who talk about debt and why the debts can’t be paid or the need for a debt write down. Krugman attacks Bernie Sanders as if he is an unbelievable radical for backing public medical care.

[Jim]  On February 17, Krugman wrote a column “Have Zombies eaten Bloomberg’s and Buttigieg Brains?” He said “My book is arguing with zombies.” And one of the zombies is his obsession with public debt and the belief that we should be terribly scared of government debt, can’t do anything because of deficits. Eeek! And that’s the way Buttigieg talks. The very moment when mainstream economics, if you like centrist economics, has concluded that these debt worries, were way overblown. The president of American Economic Association gave this presidential address saying that debt is not nearly the problem people think it is. It’s not a constraint, and of course, Republicans have pulled off one of the greatest acts of policy hypocrisy in history – you know, the existential deficit threat. I don’t want to see a democratic centrist bring us into this deficit scaremongering. That would be a really bad thing that would block any kind of initiative.

So, what does the everyday person make of this debate? And what’s the attraction of Trump his message to people who feel that their real-world needs are being addressed?

[Michael] I think the reason people voted for Trump’s was mainly Hillary. She said that voters should vote for the lesser evil. There was no question who the “lesser evil” was. It was Donald Trump. Did you want World War III, or Donald Trump? It’s not a very nice choice, but Hillary’s viciously right-wing, especially where Russia is concerned. The Democratic National Committee and deep state are all about Russia, Russia, Russia! And calling Trump Putin’s puppet.

Then finally the Mueller report came out and found nothing there! So you can view the Democratic Party as the political arm of the military industrial complex and the banking complex.

[Jim] And Obama totally propped them up. But now, Bernie! What about him? The Democratic establishment is against him, and so is the Republican establishment.

[Michael] If the enemy of my enemy is my friend, then Bernie’s enemies are the Democratic Party establishment and the Democratic National Committee. So of course a lot of people are going to love him.

[Jim] Yup. He wants to cancel student debt! He is talking your language!

[Michael] If the student debt is not canceled, you’re going to have a generation of graduates unable to get the mortgage loans to buy homes, because they’re already paying their income to the banks.

[Jim] They’re living at home!

[Michael] That means that you’re going to have a shrinking economy. So of course you have to write down student debt, and also other forms of debt – credit card debt and other debt. The economy cannot recover if you don’t write down the debt overhead.

The good thing about writing down the debts is that you wipe out the savings on the other side of the balance sheet. Some 90 percent of the debts in America are owed to the wealthiest 10 Percent. So the problem is not only the debt; it’s all these savings of the One Percent! The world is awash in their wealth. If you don’t wipe out their financial claims – which are the basis of their wealth – they’re going to take you over and become the new financial Lords, just like the feudal landlords. The banks are the equivalent of the Norman invasion. and the conquering landlords that reduce the economy to a peonage!

[Jim] But the moral argument is made that they’re the best. They’ve survived, right? I’m playing devil’s advocate here. So they serve a purpose, don’’ they? Their wealth is a sign that the system is working.

[Michael] That’s not what Adam Smith and John Stuart Mill said, or Ricardo and the entire 19th century classical economic school. They said that economic rent is unearned income. So the aristocracy (“the best”) doesn’t earn it. It is a result of privilege, which almost always is inherited wealth or monopoly privilege, that is, the right to appropriate something that really should be public. Land ownership and mining should be public wealth, as are mineral resources in much of the world. Education should be public. People shouldn’t have to pay for it. The idea initially in the United States was that education should be free as a human right. Medical care is also, as Bernie says, a human right, as it is in a lot of the world. So America, which people used to think was the most progressive capitalist country, suddenly becoming the most neo-feudal economy.

[Jim] How about Max Weber and the Protestant ethic as the spirit of capitalism? The argument is made that those who are productive are rewarded by heaven, while those who are poor deserve it. Wealth was a sign that God had bestowed his grace on its owner.

[Michael] That sort of the patter talk a century ago hasn’t stood up very well. The wealthy claim to be wealthy because God loves them. If they can convince other people that God loves them and hates the rest of the people, they make God into the devil. They make him hate the working class, and make them dependent on this unnecessary class of parasites. That’s crazy! But that’s what happens if you let the wealthy take over religion. Of course, they’re going to say that religion justifies their wealth.

That’s what makes modern religion the opposite of the religion that I described in the Bronze Age. Upon taking the throne, rulers took a pledge to the gods to restore equity and cancel the debts. That included restoring lands that had been forfeited, giving it back to the defaulting debtors to re-establish order. That was the idea of religion back then. But today’s religion has become a handmaiden of wealth and privilege, and of “personal responsibility” to make people pay for education, health care, access to housing and other basic things that should be a public right.

[Jim] Which is what preoccupies the average American, when seventy percent of their earnings are going to these sorts of things, and for taxes and rent. I have a brief quote here from Martin Luther King, who I think represents the sort of religious tradition you’re advocating. He had been deeply influenced by the theologian, Walter Rauschenbusch and his 1907 book, Christianity and the Social Crisis.

[Michael] Read it, so that so they can hear it.

[Jim] Here’s the main quote: “The gospel at its best deals with the whole man; not only his soul, but his body; not only the spiritual well-being, but his material well-being.” King wrote in an inspired passage, “any religion that professes to be concerned about the souls of men and is not concerned about the slums that damned them, the economic conditions that strangled them and the social conditions that crippled them is a spiritually moribund religion awaiting burial.”

[Michael] That’s right. Religion was about the whole economy. Not just a part of the economy. Today they’ve separated religion, as if only spiritual and has nothing to do with the economic organization of society. Religion used to be all about the economic organization of society. So, you’ve had a decontextualization of religion, taking away from analyzing society to justify the status quo by teaching that if things are the way they are, it’s because God wants it this way. That’s saying that God wants the wealthy and privileged to exploit you, especially by getting you into debt. And that’s just crap!

[Jim] And that gets us away from the classical tradition, which does try to see this as social.

[Michael] And that’s why Christian evangelicals hate Jesus so much.

[Jim] There you go! But we love Bernie! Can he win? We’ve only got about a minute to go …

[Michael] Of course he can.

[Jim] You think he will be able to withstand the onslaught that he’s going to get?

[Michael] A year ago I was pretty sure that the Democratic National Committee was going to put the super delegates in to sabotage any attempt that he was going to make to get the nomination. Now it’s clear that the Democratic Party will be torn apart, and this means the end of it if he’s not the nominee.

[Jim] All right! Well, from your mouth to God’s ears! Thank you, Michael. This has been so enlightening.

[Michael] Thank you.

[Jim] I’m so blessed that we are in the audience here too on the Radical Imagination. So happy to have had you here. I hope you’ll come back again. This is your most recent book, “… and Forgive Them Their Debts.” Thank you very much! This is Jim Vrettos for the Radical Imagination. See you next week. Thank you, Michael!


Andrea Bernstein is a senior editor at WNYC and co-host of the “Trump, Inc.” podcast. A Peabody and duPont-Columbia award-winning journalist, Bernstein’s new work is an exposé on two families at the pinnacle of American power. American Oligarchs: The Kushners, the Trumps, and the Marriage of Money and Power, is Bernstein’s investigative journey into two emblematic American families—the Kushners and the Trumps.

Jared Kushner and Ivanka Trump enjoy limitless access to the Oval Office, but beyond their marriage, little about the families’ relationship is public knowledge. Throughout American Oligarchs, Bernstein reveals their campaign into the White House by tracing history stretching from the Gilded Age to WWII to the 21st century. Bernstein draws on private interviews, never-before-seen documents and forgotten files in order to expose the families’ accumulated wealth through real estate, manipulation and crime.

Bernstein’s American Oligarchs is a serious examination of the half-truths, secrecy and media manipulation weaponized by the Trumps and the Kushners. Join us as she discusses the Trumps, Kushners, and the marriage of money and power.

The Bloomberg Effect: Huge Spending Transforms 2020 Campaign Dynamics

Michael Bloomberg has spent roughly three-quarters of the amount spent by all other presidential campaigns combined on ads

The presidential election is 10 months away, but Michael Bloomberg’s long-shot campaign is running like it’s already late October.

The candidate has spent $217 million so far on television and digital advertising, mostly ignoring the Democratic primaries and squarely challenging President Trump. The total is roughly three-quarters of the amount spent by all other campaigns, including Mr. Trump’s, combined.

It’s the game plan the billionaire used in his campaign for mayor of New York City in 2001, when he outspent his competitor nearly 5 to 1. Big spending has also made his philanthropy a dominant force on climate change, gun control and other issues. And it is how he has managed his lucrative business, paying up to bring in talent.

The flow of cash—dubbed the Bloomberg effect by media-measurement firm Advertising Analytics LLC—has upended the financial dynamics of the election. Television ad rates jumped 45% in Houston after the Bloomberg campaign bought $1 million worth of ads in November, Advertising Analytics said. The campaign paid as much as double the going rate for staff and promised jobs to workers through November, whether or not Mr. Bloomberg stays in the race. The candidate now has 1,000 campaign staffers.

It’s a big part of the reason roughly $20 billion is expected to be spent on political advertising this election cycle, dwarfing the previous record of $12 billion in 2016, according to media research firm, Borrell Associates.

“Everything about what Bloomberg is doing is unprecedented,” said Rufus Gifford, former finance director for Barack Obama’s presidential campaign. Mr. Bloomberg remains a long shot, Mr. Gifford said, “but when you have Donald Trump as president and one of the 10 richest people running for president, anything can happen.”

Late Show

Michael Bloomberg has hugely outspent other presidential candidates, and is focusing on Super Tuesday and later primaries.

Spending on local TV ads




Feb. 3


Feb. 11


Feb. 22 Nev.

Feb. 29 S.C.

March 3

Super Tuesday*


March 10 N.D., Wash., Mo.

Miss., Idaho, Mich.



March 17

Fla., Ohio, llI., Ariz.



March 19 Ky.


March 24 Ga.


April 7 Wis.


April 28 N.Y., Pa.



May 19 Ore.


June 2 D.C., N.M.


*Alabama, Arkansas, California, Colorado, Maine, Massachusetts, Minnesota, North Carolina, Oklahoma, Tennessee, Texas, Utah, Vermont, and Virginia.
Notes: Figures include future bookings, which are subject to change; don’t include national and digital ad spending. Data from Jan. 1, 2019 to Jan. 15, 2020.

Source: Kantar/CMAG

Kevin Sheekey, Mr. Bloomberg’s campaign manager, said there’s more to Mr. Bloomberg’s candidacy than his spending, pointing to wealthy but politically inexperienced candidates such as Meg Whitman or Ross Perot who failed in the past. “Money won’t just determine elections,” he said. “You have to have a record and a message.”

Lots of rich people have run for office, lots of candidates have claimed excellent business credentials and many have claimed to have top-flight data operations, which Mr. Bloomberg emphasizes. What sets his campaign apart is his $55 billion checkbook.

Mr. Bloomberg is No. 9 on the Forbes list of the world’s richest people, ahead of each of the Google founders, either Koch brother and the wealthiest members of the Walton family. A person familiar with the plans said he could spend $500 million on the primaries alone, and Mr. Bloomberg hasn’t ruled out spending $1 billion before November if needed.

“Certainly it’s going to be disruptive,” said Robert Wolf, former chairman and CEO of UBS Americas and a longtime Democratic donor. “We just don’t know how yet.”

Spending by Mr. Bloomberg, shown in Los Angeles earlier this month, has upended the financial dynamics of the election. PHOTO: FREDERIC J. BROWN/AGENCE FRANCE-PRESSE/GETTY IMAGES

Mr. Bloomberg, who was mayor of New York from 2002 to 2013, is currently supported by 6% of voters, compared with 27% for former Vice President Joe Biden in the Real Clear Politics average of polls. More voters have a negative than a positive view of Mr. Bloomberg, according to a Quinnipiac University National Poll from mid-December.

Mr. Bloomberg said he entered the race at a moment when polling data suggested voters placed less importance on ideology and more on finding a candidate who could beat Mr. Trump. His campaign believed Mr. Trump was winning the race and was going unchallenged in political ads in competitive states as Democratic candidates focused on the primary battle.

At the time, Massachusetts Sen. Elizabeth Warren was surging. Polls showed Mr. Biden beating Mr. Trump but within the margin of error. Ms. Warren’s policies, such as a wealth tax, would likely hurt Mr. Bloomberg, and she is generally disliked by his circle of wealthy New Yorkers, according to a longtime staff member. Mr. Bloomberg has said he will back whoever wins the nomination, even if it is Ms. Warren or Vermont Sen. Bernie Sanders.

Off the Map

Michael Bloomberg, who entered the presidential race just two months ago, has already spent roughly three-quarters of what the rest of the candidates combined have spent on TV, radio and digital ads.

Total ad spending


$216.8 million















Note: Between Jan. 1, 2019 and Jan. 15, 2020.  Figures include future bookings, which are subject to change.

Source: Kantar/CMAG

To offset criticism that he was running out of his own self interest, Mr. Bloomberg pledged $15 million to $20 million to register 500,000 voters before the election. His attacks on Mr. Trump are part of that effort.

“There’s a sense that Bloomberg is doing something that the party can’t do—going negative on Trump,” Mr. Gifford said. “It’s work that the party doesn’t have the money to do, and other candidates don’t have the ability to do.”

After Mr. Trump’s campaign said it had bought a 60-second TV spot during the Super Bowl on Feb. 2, the Bloomberg campaign bought a 60-second spot that will target the president. The Bloomberg campaign declined to disclose how much it was spending for the spot, but advertising tracker Kantar/CMAG estimates it is worth $10 million.

Bloomberg spending has drawn Mr. Trump’s attention. When the campaign aired an ad saying the president had broken his promise of protecting those with pre-existing health conditions, Mr. Trump pushed back on Twitter and labeled Mr. Bloomberg “Mini Mike.”

Facebook ads for Mr. Bloomberg. PHOTO: MIKE BLOOMBERG 2020

Mr. Bloomberg’s campaign said that because he started late, it is focusing on the Super Tuesday votes on March 3, rather than the early voting states such as Iowa and New Hampshire. The plan plays to Mr. Bloomberg’s financial advantage and minimizes his weaknesses—shaking hands and making small talk with voters, and giving stump speeches. The Super Tuesday states, where 40% of delegates will be chosen, instead depend more on television and digital advertising.

In addition to huge TV spending—$193 million on ads since his campaign began—the campaign has spent heavily online. It spent $16.1 million on Google ads as of Jan. 11 and $6.8 million on Facebook as of the end of December according to Kantar/CMAG.

Mr. Trump has spent $6.5 million on digital ads, and Tom Steyer, the other billionaire Democratic candidate, has spent $5.6 million since Mr. Bloomberg entered the race in November, as of the end of last year.

The Bloomberg campaign is offering field organizers salaries of $6,000 a month. For state data directors, it’s between $10,000 and $12,000 a month, according to job postings.

The campaign’s 1,000-person payroll is more typical of an operation in the final months before Election Day. Mr. Biden has roughly 400 campaign staffers, while Mr. Sanders has built an 800-person staff.

Spending Strategy Michael Bloomberg vastly outspent hiscompetitors during his campaigns for NewYork City mayor.New York mayoral campaign spendingSource: New York City Campaign Finance BoardNote: Mr. Bloomberg ran as a Republican in 2001 and2005, and as an independent in 2009.
M. BloombergM. GreenF. FerrerW. Thompson200120052009$0 million$25$50$75$100$125

The former mayor’s late entry into the race has forced the campaign to “create a sense of momentum and hope people will actually jump on,” said a person familiar with Mr. Bloomberg’s state operations.

Campaign veterans said money won’t necessarily bring in the best staff and said many experienced staffers want to work for people they support. Other campaigns, including Ms. Warren’s and Mr. Sanders’s, already have operations in Super Tuesday states and are ramping up hiring in later states.

Mr. Bloomberg has spent in markets that haven’t been targeted by other Democrats. His campaign has plunked down $21.2 million on television advertising in Texas, where none of the leading Democrats have spent a penny. It has spent $8.4 million in Pennsylvania, which doesn’t hold its primary until April 28.

It has even poured resources into smaller states that are typically not on the primary radar. In Idaho, it has spent $979,000 so far; in Utah, $1.6 million.

“He is going far, far ahead of where the rest of the guys are scrumming,” said Kip Cassino, executive vice president at Borrell Associates, the media research firm. “He is basically saying, ‘I’m not going to win in Iowa, and I am not going to get out there and kiss pigs. And I won’t win in New Hampshire, but I will win in the rest of the states, and I will get the states that most everyone didn’t care about before.’ ”

Bloomberg Announces 2020 Democratic Presidential Campaign


0:00 / 0:42

Bloomberg Announces 2020 Democratic Presidential Campaign

Bloomberg Announces 2020 Democratic Presidential Campaign
“I’m running for president to defeat Donald Trump and rebuild America,” Mr. Bloomberg said when he announced his candidacy. Photo: YANA PASKOVA/GETTY IMAGES

At the beginning of January, candidates had spent close to $540 million on political ads in the presidential race over the prior 12 months, about 10 times what would have been expected at this point in this election cycle, Mr. Cassino said.

“We have never seen anything like this,” Mr. Cassino said, referring to Mr. Bloomberg’s spending. “We are only just starting to see how distorting this might be.”

Mr. Bloomberg’s potential handicaps among Democratic voters include his support for Republican candidates in the past, including former President George W. Bush. Other issues that could hurt are his support for charter schools in his education-reform efforts, and the stop-and-frisk policy he adopted as mayor, in which New York police had wide latitude to detain and search passersby for contraband. A federal judge eventually ruled the policy violated the constitutional rights of minorities. Mr. Bloomberg apologized for the stop-and-frisk policy before he kicked off his campaign.


What are Michael Bloomberg’s chances at the Democratic nomination, as of today? Why? Join the discussion below.

Some Democrats fear Mr. Bloomberg could drag out the primary with his limitless budget, or use his money to try to influence the leading candidates, hoping to pull some of them to the political center, which he sees as the way to beat Mr. Trump.

Mr. Bloomberg’s team said the data operation he is building will benefit Democrats overall, which he said are far behind the Republicans on the gathering and use of voter data. His data firm, Hawkfish LLC, launched in the spring. It has hired Facebook’s former chief marketing officer and the former CEO of Foursquare, the location tracking firm.

As New York mayor, Mr. Bloomberg announced an operation in 2012 to reduce the sale of illegal firearms. PHOTO: JOHN MINCHILLO/ASSOCIATED PRESS

Mr. Bloomberg has cited his research and spending on the 2018 midterm elections as evidence of his commitment to the party’s success. Democratic candidates won 21 of the 24 races in which he was involved. In most races, the spending focused on digital advertising early in the election cycle and TV advertising closer to election day, when ad reservations were more expensive and Republican groups could not as easily counter their message.

In an Oklahoma House of Representatives race, which appeared to be a long-shot for the Democrats, Mr. Bloomberg unleashed a wave of last-minute ads that attacked the Republican candidate. Democrat Kendra Horn won by a few thousand votes.

“I supported 24 candidates who were good on guns and good on environment, and 21 of them won, and that flipped the House,” he said at a recent campaign stop in Philadelphia. “So if it wasn’t for that, you wouldn’t have Pelosi and you wouldn’t have impeachment.”

“How Do Democracies Fall Apart (And Could it Happen Here)?” Session 2

which this with this Chetty study has
established which I won’t belabor
likewise lack of mobility as such is
strongly related to lack of social
mobility if you’re between 18 and 34 in
the United States you are you are most
likely living with your parents it’s
more likely than any other arrangement
which means that literally you have not
moved right lack of geographical
mobility like worsening health like
shortening lifespans like lack of social
mobility works against a sense of time
which allows you to think that time is
moving forward right and so the time
escapes start to change now how does
this work in politics in politics it can
be it can be you can be channeled moved
incorporated exploited however you
prefer by politicians who talk in terms
of a different time scape so for example
make America great again is a time scape
which doesn’t refer to a better future
it’s a time scape which loops back to an
unnamed and mythical past right so now
there are studies now about what make
America great again means for Americans
for example Taylor at all in the Journal
of applied research and memory cognition
finds not surprisingly that Americans
define the moment when America was great
in the past as the moment when they were
young right
which is funny but I think it’s also
politically very significant because it
refers us to a certain political style
which I’m going to call the politics of
eternity or the government as being
rather than than doing because one of
the things about youth is that
government can’t give it back to you
right I mean whether wherever we are on
the span of like how much government
should do not do can we will generally
agree that government cannot in fact
make you young again right so this is
funny but it’s also revealing because
the pot what I’m gonna call the politics
of eternity the politics of cycling back
to the past rather than imagining of
future is precisely about defining
political problems in fictional terms
and therefore in irresolvable terms so
if what you want out of politics is to
be young again you might keep voting for
that promise but government is not going
to give it for you and can’t I will now
give you a more serious example one of
the things which distinguishes white
trump voters from white Clinton voters
is that a significant majority of white
Trump voters in a very small minority of
white Clinton voters it’s an interesting
difference a significant majority of
white Trump voters believe that White’s
face greater racial discrimination in
the United States than blacks do now
that is interesting but it’s also
interesting politically because that’s a
fictional problem if you are white and
you believe that your problem is that
you face Greater racism then black
people do again that is not a problem
that government can solve right it’s an
in it’s an because it’s a fictional
problem now I’m trying this is not meant
to be funny it’s meant to define a
different political style a Timescape in
which government doesn’t promise you a
better future but instead regularly in a
cyclical way mentions the things which
irritate you which are important to you
which cannot be solved the politics of
doing rather than being if that seems
imaginary consider the first year of the
Trump administration there is no
legislation which is going to make any
of these kinds of voters it’s not going
to speak to what we would regard as
their interests or even to an ideology
um the two major initiatives are take
health insurance away from people which
is precisely interesting because it’s
people who needed the health insurance
most who were the swing group which
brought him into office right that’s the
first one and the second one is tax
regression right
the second major policy initiative his
tax regression precisely taking income
away from poor people and giving it to
richer people that’s it in the landscape
of the first year those are the only two
things neither of those things can be
thought of as creating a future right
those things if anything only makes only
make matters only make matters as one
might see it worse so where does this
where does this lead us to the first
thing is I’m gonna referring to to where
reception Dvorsky ended up it may not be
that the thing we have to worry about is
whether mr. Trump will fail I mean I
don’t think he’s actually after success
in the normal liberal sense of the word
I think he’s after failure I don’t think
they intend to make policy which makes
life better for their constituents I
think they’re moving very consciously
towards a different kind of policy um I
think it’s a mistake
therefore to refer to this as populism
because in American tradition anyway
populism means you’re against the elites
but you still imagine the government is
going to do something for you I think
we’re in a different territory I think
we’re in something which is more
accurately characterized as Sadopopulism
where you you are against the
elites right but you don’t expect
government to do anything for you in
fact you kind of want government not to
do anything because that reinforces your
beliefs about the way the world works so
where does this lead us this is my final
word where does this lead us on the
question of of comparison right so what
I worry with when when people say well
it’s it doesn’t line up well to the
interwar cases there are difference
between US and Nazi Germany what I were
with is about that is the implicit
conclusion that therefore everything’s
a-okay right everything’s not a okay
just because it’s not February 1933 and
thoughts of Germany I think the way to
understand the comparisons is more as a
source of normative
action right I’m not gonna make that
case now because it’s the case I made in
the book on tyranny it’s not that where
we are now is going to inevitably lead
to czechoslovakia 1948 or you know
germany in 1933 it’s that those regime
changes or the witnesses to those regime
changes give us useful and timely advice
about how to head off regime changes in
in rule of law states I think the
comparisons are most useful in that way
most useful is a general guideline that
globalization’s can crash
most of our comparisons are about the
first globalization crash we’re now in
the middle we’re now in the middle of
number two what I think is that we can
move away from democracy we can learn
away we can learn from other people
while we’re doing didn’t try to resist
it even though where we’re going is
going to be somewhat different I mean as
for me where I think we’re going or
where we seem to be going is is
something like you know oligarchy with
just enough fascism to get by as a kind
of lubricant and and the and the way
this would look would be not so much the
creation of something new but just the
dissolution of what we have right and
not I completely agree with the point
not mobilization but demobilization are
only very occasional mobilization like
very occasional marches very occasional
violence but mostly the mobilization at
atomization and what’s worrying about
that is that then you know implicitly
the people who in some of these
presentations were counted on to come
save us right the economic elites
whoever they are that the economic
elites can be on the same side that you
you can be an economic elite and you can
think in you know environment Germany
you can be the economic or in Italy you
can be the economic elites and you can
think rightly or wrong you can think
wrongly we can outwit these guys maybe
in America you’re the economic elites
and you think correctly you can outwit
these guys but the outcome still isn’t
democracy right if you continue to have
the kinds of drift that we’re having
with the outcome still to democracy it
might not be anything that has another
dramatic name but it’s not necessarily
democracy so the the point that I’m
trying to make is that we’re at this
historical moment in the sense that not
just that great things are at stake and
that in that in the actions and
that we take now make a lot of
difference but also historical in the
sunset the way people are thinking about
time is changing I mean if that tips if
that if we tip from one way of thinking
about time to another if I’m right that
there is such a tipping point then we’re
closer to dramatic change than other
kinds of indicators might suggest okay
thanks thank you for those amazing
presentations I think that probably we
could re title this whole conference how
scared should we be and this panel in
particular you know sort of how
terrified should we be and I think the
reason we’re seeing a lot of answers to
that question that kind of vary across
the spectrum from you know completely
terrified to only mildly concerned is
that we really don’t know I mean who
knows you know that’s sort of the point
no one knows how history is going to
unfold we’ve certainly been surprised by
it in the last year and not just in the
last year so the answer to the question
is not is not no and I like to tell my
students you know I asked them a
question I say that’s a real question
not a professor question you know we we
really don’t know and so if you’re like
me at all you you go back and forth in
your own mind over even over the course
of the day I wake up in the morning and
I think oh you know it’s gonna be okay
and then by you know 3:00 in the
afternoon I want to crawl under a pillow
and just you know be one of these actors
who’s stayed away from Rome for the
whole whistling period so so we have we
do have kind of a range of responses and
one of the inspirations for bright-line
watch is that you know you look for
signs of what is going to happen and the
last thing you want to do is see the
sign in the rear view mirror we don’t
want to be treating in retrospect at the
signs we don’t want to say well it
really was the moment when Judge Garland
didn’t get a chance to be confirmed or
it was the moment when you know fill in
the blank when things really became
irreversible and and democracy died or
became severely eroded in the United
States in a way that would be very very
difficult to recuperate over any
meaningful time period so
I have some some questions I remember
that you folks are writing down
questions and filtering them to headman
who’s standing over to the side we have
a few questions I like a two-door I’m
going to take some moderator prerogative
enact ask a few questions but I’m
mindful of not taking too much time
because I know that there will be more
questions from the audience and that
these were highly provocative and
interesting presentations so just just a
few questions for Nancy you and there
the concept of distancing which which I
took to mean and I’ve taken from your
early earlier work to mean that even if
my ally even if the person who I’m a
elite political actor and someone who
I’m in alliance with violates a critical
norm or constitutional feature I will
join the effort to punish that actor but
I’m thinking about another kind of not
distancing but let’s call it
constitutional action and I’ve I’m
thinking about this in part because
seeing our tutor this morning thinking
about his fascinating retrospective
considerations of what happened in Chile
there were moments in the sort of
slow-moving debacle of Chilean politics
where it went from being a long-standing
democracy to being a coup and a military
dictatorship that lasted for 17 years
and was extremely repressive and harsh
there there’s the sense of you know
moments when say the Christian Democrats
might have said it’s good for us if this
happens but it’s really it’s a it’s a
danger for Chilean democracy so that’s a
slightly different concept I think
that’s putting the long-term health and
viability of the constitutional order
ahead of immediate partisan advantage
and I wonder whether in the cases you
examined and more to the point in
American politics today you see room for
those kinds of moments of constitutional
action on it your presentation makes me
think that Trump is Fidesz and piece
right that we’re sort of we you walk
through the actions that those
governments amazingly parallel kind of
template’s as you described them and it
makes me think that we’re sort of only
halfway there so the courts are
politicized well you know Melania is not
making judicial appointments yes or I
guess it the real equivalent would be
mrs. pence so the media in the United
States is harassed but there aren’t
really formal constraints that have been
imposed for the most part yet
and the question then is again this this
issue of what are the signposts and when
do you see them in in Hungary and Poland
2010-2015 was it predictable were there
you know forward-looking intellectuals
journalists concerned citizens who saw
these things coming or or were they
really surprises questions for sort of
this is sort of Susan and Tim but well
Susan mostly I it’s it’s you both raised
in your presentations the very important
point that what we are observing is
taking is unfolding in an international
context and what we do influence is what
other democracies do and likewise what
they do influence is what we do and I
guess I’m looking for any hope in that
so instances in which we might learn or
be or be forewarned or take actions
drawing on international contemporary
international events that that might
help with the situation here there were
I recall with the French election there
was some speculation that it didn’t help
lepen to have a Trump out there that
perhaps that gave that gave some french
voters pause Daniel you it was
interested in the so the the sort of
problems of lines being crossed of norms
being violated and the examples you gave
were pretty much on the Republican side
and I so our colleague Jacob hacker has
written a lot about asymmetric
polarization I wonder if you think this
is an asymmetric problem or if they’re
symmetric more along the lines of what
team or Quran was talking about this
morning if there’s a kind of symmetrical
equilibrium that we’ve that was sort of
a bad equilibrium that we’ve entered
into Tim I am it’s mind-blowing to think
about the you know the sort of social
construction of our sense of time and
and and how that influences politics on
the other hand I’m very struck by you
know the make America great again
narrative so that means he you know the
the the the slogan is collectively sort
of doing what you say we do as
individuals thinking that there’s a you
know there’s an adolescence or a teenage
period of early 20s sort of in in our in
our national so I’m equivalent to that
in our national history that is a moment
we want to get back to and that strikes
me as setting up setting the government
up for the setting Trump up for you know
greatly disappointing his constituents
for some of the reasons act reasons you
gave and although I take what you say
that perhaps you know the the the goal
is not success on the Ute and the usual
metrics that politicians use such as
high popularity when the next election
comes around in re-election so those are
some questions maybe we could just get
to them while while people in the
audience are filtering out any other
written questions that you want to have
a so yeah I I’m delighted that you asked
this question about distancing in the US
and whether there could possibly be a
different kind of distancing here
because I I was struggling with that way
myself as I was writing this the kind of
distancing that we saw in interwar
Europe where political elites were
facing fascist parties were engaging in
violence gave them a less ambiguous
signal than we’re getting
here you know if mobs are killing people
you know that wrong has been done if
you’re talking about violations of
constitutional principles or norms that
fight is is much much more ambiguous and
so distancing under those circumstances
is much harder and so frankly I’m still
grappling with the idea that how that
concept can be transferred to this kind
of system but there’s no doubt that
battles over the constitutional norms in
the courts would be a place to start
that would be an arena for distancing
but it’s going to be much harder here
except that I am assuming that money
still has a huge amount of importance
universe politics and that if you if if
the most dynamic sectors of our economy
can get behind some sort of distancing
and realize that they don’t need the
nationalism especially or the xenophobia
that’s embodied in the particular kind
of challenge we have which doesn’t
involve actual killing yeah
then I think that that it is still
possible but that the battles may take
place in the court and that’s part of a
historical continuity but not completely
so it was was what happened in Poland
and Hungary predictable um it was I mean
this is you know – this is basically the
death of a democratic there’s a
chronicle the Democratic Death Foretold
um and it was predictable because you
know the leaders were very clear on this
right they wanted not just to remake
policies but to remake the institutions
of polish and Hungarian democracy to
better serve national interests right
this was very much you know making
Poland and Hungary great again secondly
there was precedent right the
institution’s had not been impervious to
this before there’s been put the
polarization of the judiciary in the
past there was a previous attacks on the
media this was just a much more
concerted effort um and third I think
will response important was that these
are parliamentary systems and in times
past these fairly fragile governing
coalition’s I will kept these parties
from fully exercising their Prague
and now in the absence of either in
opposition or coalition partners they
were able to do exactly what he said
they would so serious question for me
was what basically what’s the hope from
thinking about this isn’t international
events both u.s. you deserve in other
countries in that other countries are
affecting the US and that was a very
difficult question I have lots of things
that I might say I mean one thing to
just note is part something that I don’t
think isn’t a viewpoint that’s it’s
going to be presented much at the
conference which is sort of Mia culpa
from some of the IR scholars with who
are really promoting open economy
politics Pro globalization stuff which
is just that you know the the embedded
liberal liberal liberal compromise that
we knew about and we have known about
for a very long time was not
successfully implemented in the US and
that that both economically and
culturally maybe maybe a fault and is
maybe something that policies
prescriptions could deal with right
their policy that others have have
potentially thought about I guess the
other thing that is not really hopeful
but I think something that I skipped
over in my remarks because I was 10
which has just said when I very much
interested in how countries react to
international pressure to look and act a
certain way right and so some autocratic
posturing that I think we are seeing now
might be for short term sort of applause
and political gain rather than like it
might some of it might sound worse than
it actually is which is not really that
hopeful but I do think that there are
incentives that that some leaders that
we see throughout the world to act you
know more more totalitarian more fascist
more you know they sort of take these
these dances that are that are quite
extreme because they know they will get
attention for taking those those dance
which is not entirely good news but I
think can be interpreted as something
that is maybe slightly less nefarious
and the extremely clever long-term long
game autocrats that it’s referencing who
are able to abide by the rules of the
game up right up until the moment in
which they they break with them right so
I think that that is a long term in the
long term I’m more worried about that
sort of strategy rather than the sort of
splashy head like grab bean you know
attacks in the media and that’s not sort
of thing which are consequential but I
think not quite as nefarious as some of
the other strategies that one could
imagine and that are harder to observe
unhappy yeah so two thoughts one
directly on your question on the
asymmetric polarization no I I mean I
think that the record shows that it
began on the right you know and you know
people often date this the Gingrich
revolution and kind of change tactics in
Congress and Orrin Mann and Ornstein and
the work on the US Congress have kind of
shown this but it you know it’s not it’s
not only Republicans who are vulnerable
to this I mean Harry Reid’s use of the
filibuster in the early 2000s against
Bush I mean this is clearly another
instance of this and that I guess that’s
what’s dangerous is that is that it mate
you know it doesn’t at some level you
know begins on one side but then when it
escalates and it becomes a kind of
spiral that’s exactly exactly the
dangerous scenario even the dilemma of
course is you know we should stay
high-minded and continue act with four
born before Barents in the face of
somebody who’s not I mean it’s like
going into a box you mean with one one
hand tied behind your back does that
really make sense and I guess my thought
on that is that as long as there are
Democratic channels still available
that’s the way to go I mean you know
this is the right answer but that’s
that’s that’s kind of how I think about
it I just wanted to say something also
on the distancing and learning because I
think there is actually something that
can be learned about other cases of dis
distancing and just you know just
recently in the last two years I mean
what’s striking about the Austrian
elections last year of presidential
elections and the French presidential
elections in both cases in the Austrian
case the Catholics didn’t make it to the
second round and they and a lot of
Catholic politicians endorsed the Green
Party candidate for president in France
fiown and endorsed that you know the
– right candidate endorsed McCrone
rather than lepen and so both cases
there’s instances of distancing kind of
on the right – against the far right and
so we can learn from that and I think
one of the interesting things is why in
these countries this has happened the
waters in the US this hasn’t happened
and I think part of the reason is in a
in a multi-party system in Austria and a
two tiers you know with a runoff system
and in France there’s a history of this
and in both instances people were in
Austria they refer back to Kurt Waldheim
and say well you know we have learned
from this in France there’s the
experience of father lepen and dealing
with father lepen and so I think you
know if the idea is that you know the
u.s. we just didn’t have we haven’t had
experience with this and there’s
possibility for learning and this is
kind of where you know human action
actually can make a difference so people
could learn from we can learn from our
mistakes and my guess is next time
around you know hopefully people learned
something right so there’s something I
learned from other cases as well okay so
there were the the question about any
hopeful things internationally and then
the idea of making America great again
it cannot lead to disappointment so
internationally I’m just gonna take a
step back and make the point that I
think the winning the Cold War both the
idea and the fact has turned out to be
very poison chalice for us so the idea
that therefore there were no
I think stultified our political debate
precisely about alternatives and made
inequality much worse in this country in
the last quarter century and the reality
of the end of the Cold War was also bad
for us because one of the reasons we had
civil rights in the welfare state was to
compete with not so much with the
Soviets but to respond to their
propaganda and without that challenge we
drifted in another direction so that’s
just I mean that’s just by way of making
oneself conscious so that one can learn
things well could we have learned I mean
the book that I’m that I’m finishing now
is about this it’s about the last five
or six years not starting from us but
starting from Russia with the idea that
most of the things which happened here
which seem surprising to us are just
more sophisticated versions of things
which happened in other countries which
we didn’t recognize at the time so I
mean here I’m 5050 there are a lot of
things we could have learned for
Russia and Ukraine between 2011 and 2015
but we didn’t learn any of them um
and the consequence was that in 2016 in
my world at least it was the Russians
and Ukrainians who were jumping up and
down saying you know Trump is possible
this is how it works in other people’s
worlds it would be the African Americans
but there are plenty of segments of the
pocket or the renegade Midwesterners
right there were various demographics
who said Trump was gonna win but the
Russians and Ukrainians said he was
gonna win and they had a reason
no um people there are people there are
positive exceptions like Peter
pomerantsev in his book nothing is true
but everything is possible which is you
know on its surface a book about the
media in Russia ends that book which
concludes in 2014 ends that book by
forecasting that that combination of
media unreality and political
authoritarianism is going to come to the
UK and to United States and then there’s
brexit and then there’s and then there’s
Trump so and then there are people like
pet rock Rocco in Hungary you know who
runs political capital who does who do
Studies on directed unreality right
foreign projections of unreality in the
Czech Republic and Slovakia and those
things are useful for us to read because
the things that were happening gotten
further in the Czech Republic and
Slovakia and Hungary then here
nevertheless started to turn up here in
2050 so yeah I mean analytically we can
definitely learn from others and of
course civil resistance is something
that we can learn from other people
right we can swallow our pride and
realize that there’s been a lot of
successful civil resistance movements in
other countries and that the social
science on civil resistance is actually
very mature the second point on whether
some of these some of these voters will
be disappointed because they imagine a
better world in the past and they’re not
going to get it I don’t think so and
I’ll tell you why I think I mean there
there will be Republican voters will be
disappointed with Trump but that’s a
different set of Republican voters there
are two sets of Republican voters there
are the ones who own house doesn’t have
money in the stock market and are the
ones who don’t own houses that don’t
have money in the stock market the ones
who own houses are gonna be disappointed
when the stock market crashes and that’s
not gonna have anything to do with these
narratives that I’m talking about
and I don’t treat them as the critical
bloc of voters because they went for
Romney – right they did they didn’t
change anything but these folks the nine
million people who voted for Obama and
for Trump or the people whose health is
getting worse but voted for Trump the
people in Michigan Wisconsin West
Virginia Ohio Pennsylvania who swung the
these folks I don’t think can be
disappointed in that way that that’s my
point you know it’s you want to be young
again but you know at some level you’re
not going to be young again you’d like
the person who tells you look great but
you know at some level it’s not true
right and that’s how that no look for
you it’s true you’re like 15 but but I
mean the general right you know it’s not
true and that’s how this kind of
politics works it’s not by the delivery
of goods it’s by the regular delivery of
affirmation as against someone else
we’re where white Republicans become in
political science terms the slope the
identitarian subalterns who are
expecting to own the state but what they
only expect from the state is that they
own it
that’s it they’re not expecting that
it’s going to do anything for them the
other thing I want to say about making
America great again that links back to
the other point is that the make America
great again does have a specific
historical referent not for us for us
it’s about being young again that for
mr. Trump it’s about the 1930s or the
1920s it is a it’s a revision of the
1930s as being a time where we didn’t
have a welfare state and where we didn’t
go to war against Nazi Germany right
that’s what America first means America
first is Deutschland uber alles in
English America first means we have more
in common with Nazis than divides us and
there is you know the fact they did they
commemorate Holocaust Remembrance Day by
saying other people suffer besides the
Jews which is like commemorating the
fourth of July by talking about French
independence I mean it’s true that there
are like other possible references in
history but like the holiday is for one
of them and there are a number of other
examples of this how they’re trying to
undo a certain American myth and what it
comes down to is that we used to think
the 1930s were a bad time to be learned
from and now we’re being instructed not
just in America this is international in
Russia Poland Hungary and also
implicitly by the fullness and island
France said by the brexit movement in
Britain we are we were being instructed
the 1930s were a good time to which to
which we should loop back
I have some questions so this is a
question for Susan Hyde and Anna G B
while the EU is powerless not able and
willing to move effectively against
democratic erosion how successful have
other regional organizations around the
world been to fight forms of democratic
erosion eg Mercosur a you just one
question at a time uh yeah I think so I
think we will see how far behind we get
on that yeah yeah I mean the so there
there’s some empirical work on this that
other people have done and and you know
it’s very hard to separate from the
international environment entirely right
so I don’t know who I should but
basically I I think that the the
European Union and other regional
organizations most of which in the world
have a stated preference to support
democracy have some ability to do
something right now right I mean there’s
no reason why the US needs to be the
only country that is willing to stand in
defense of democracy and and
increasingly I think others are stepping
into that role what can they do you know
not much but a little they can they can
sort of make clear that this is a value
that the groups of countries definitely
support I don’t know that they can do
anything for the u.s. specifically the
case that were most concerned with today
but in smaller countries they certainly
have made it clear that Jews are
unacceptable for example this is already
one of the biggest moments we’ve seen in
recent memory on this front is that most
countries that have coos many of them
have been pro-democracy coos right that
they’re not against democratically
elected leaders they’re against
basically authoritarian leaders we’ve
seen a few of these but even those have
been on pretty strict timelines for
democratic elections following those so
you know we’ll see I’m not super
optimistic that they’re the saviors of
us democracies certainly and I would say
that knew the EU shizuka-san was
familiar with isn’t captain some ways
responsible for the rights of the
populace right because and they run up
to you accession in 2004 there’s
basically this elite consensus among all
mainstream parties that the EU was this
fantastic good that premarket was
wonderful and free trade and everything
else have went together as a wonderful
package and the only parties that
criticizes consensus or the populist who
at the time we’re getting you know five
percent of the vote and it’s after the
accession when it becomes apparent that
neo maybe this there was some room more
for criticism
it’s the populace who make hay out of
every single
some deleterious effect of free trade of
the EU and so on and they’re the ones
who then come to power on the basis of
this elite consensus and now anytime
that the EU speaks against these parties
they point to it as this is further
severe negation of our national self
interests that the EU is prompting so we
now have to you know go to our loins and
defend against the EU okay this is a
question for the panel in general and
Nancy bur mayo in particular you say
that the tendency what can you say about
the tendency of citizens to vote along
personal political issues ie those
heavily influenced by cultural
predilection predilections such as gun
control or abortion rather than in the
interest of democratic norms
not much so what one thing I think that
we don’t fully appreciate that is that
at least going back to the 1930s
earliest opinion surveys thirty percent
of Americans are authoritarian I mean I
think you know if you look at who you
know father Coughlin had thirty percent
of the vote George Wallace had thirty
percent of the vote you know support in
opinion polls McCarthy had up to forty
percent support you know this is there’s
a kind of strand in the electorate that
I mean you know I this is a bit
provocative I you know I don’t have
details you know add an attitude data
but these they supported authoritarians
and so the issue is not what you know is
the American electorate becoming more
authoritarian the issue is how do you
prevent that portion of the electorate
and those tendencies from putting
somebody in leadership positions and so
until 2016 we had a presidential
selection system that kept that served
as a gatekeeping system and kept these
kinds of dynamics out of the top
leadership positions in the u.s. say a
few words about that but I think the
question is actually really important
whoever asked it all right because it’s
forcing us yeah I think you’re asking us
to to think about these small these
issues that seemed small in our abstract
discussion of democracy but actually
loom very large in the minds of
individual voters and gun control is a
wonderful example of that so political
elites to really have to do more
research on what makes certain issues
salient and what makes certain issues
Trump all of the other much more
important issues like health care at the
polls and motivate you know a trump vote
and but I just I think social science
can be an answer to that
first of all identifying those voters
and then targeting those voters and in
an alliance with moderate politicians
changing their minds and changing the
salience of issues in people’s heads I
think it can be done with the media
if we’re just not doing it so do you
disagree because I think you know gun
control or abortion our democratic
values right these are things that
political parties have traditionally
espoused I mean the Republican Party has
espoused it and there’s nothing you know
there’s nothing inherently wrong with
being pro-life or promotion or non
democratic about those stances right I
think you know what I’m more concerned
with is the the statistic that the
Daniell brought up which is that it’s
not just the United States if you look
at you know Poland or hungry or France
in the last elections there’s a steady
35 to 40 percent of the electorate that
is willing time and time again to plump
for authoritarian populist right-wing
nativist etc to parties and so the
question is how do you contain that yeah
I don’t think it’s I don’t think it’s a
question of persuading I think it’s a
question of containing well I certainly
don’t want to say that all of those
positions of the abortion position is
anti-democratic I’m just thinking about
the salience of
issues as someone approaches the polls
so they can say this candidate like
Trump for instance this candidate is
clearly anti-democratic and repulsive on
many issues but I really give priority
to anti-abortion and he appeals to be an
anti-abortion candidate so I’m going to
vote for him that’s the that’s the sort
of calculation that I think demands more
research and more thought on the part of
politicians but there’s certainly not
especially an issue like abortion that’s
not an anti-democratic issue I think so
this is a question for Daniel’s if lat
but Tim Snyder might also reflect on it
how and why were those norms of mutual
tolerance and forbearance built in the
1880s through the 1900s what lessons
does that period have for for for us
ya know it’s it’s a it’s a tragic story
in fact and then and we dig into this in
our book and this is kind of more a
discovery after admit as somebody who
didn’t spend my life studying American
politics I think the norms of mutual
toleration and forbearance were built on
racial exclusion you know it’s the end
of Reconstruction 1890 the failure of a
voting rights bill the lodge act that
allowed Southern Democrats and northern
Republicans to get along so you know
what do we do about that I mean at some
level these so-mei I hesitate even to
call these Democratic columns these are
norms of stability
forbearance a mutual toleration so the
real dilemma I think we fit in at some
level one can think that you know the
post 1965 rule there’s one in which
racial inclusion of making our political
system finally democratic really after
only 1965 I would argue has generated a
backlash which now threatens those norms
and so the dilemma that Democrats face
you know with it with a small D is how
do you reconcile these things can’t can
a political system be built that is both
democratic inclusive as well as one that
sustains these norms because
historically they have not there’s a
tension that there’s really a tension
there’s a just following from Daniels
point we did the United States undertook
two experiments more or less
simultaneously and they were I don’t
think there were two experiments that go
well together the first was the
experiment which I think probably none
of us would call into question of
actually trying to make the country
democratic by allowing its citizens to
vote right 1965 is clearly an important
step towards American democracy which
again I would emphasize American
democracy is and remains an aspiration
but 1965 is an important step towards it
but not long after that about 15 years
after that we began the experiment of
inequality which we are still in the
midst of professorship gorski’s charge
of the gap which is from the economic
policy something it’s a
that this shows that the gap growing
from 1980 between productivity and wages
right and the experiment that we’ve
conducted on ourselves since 1989 about
what what it means when you say there
are no alternatives
those two experiments have been
happening simultaneously and so on the
American Left when I talk to people on
the American Left which I do know all
the time
there’s this constant disagreement about
whether it’s a race or whether it’s
inequality and I just I don’t see why we
have to choose between those two things
it’s both and the way they work together
is that if white people feel privileged
then they react to inequality laughs and
in a way which is louder and which might
be more disruptive of the system than
others but the inequality to the way to
which they react is nevertheless real
right so that the racism may be harder
to get a handle on and the inequality
may be more tractable by policy
instruments so we have lots of questions
unfortunately thing we’re gonna have to
do it just a couple of more so this is a
question for Susan Hyde you emphasized
the demand side of the information
problem but what about the supply side
how worried should we be about state
media like Tennant sorry I don’t think I
read that right media tendencies like
Fox and how do you compare to other
cases like Venezuela or Italy yes state
media tendencies media like tendencies I
guess yeah I mean there’s there’s an
abundant you know there’s an abundance
of information right now right it’s not
that people can’t access accurate
information it’s it their self-selecting
into inaccurate information and I think
one can talk about the supply side of
this issue as as a contributor to how we
got here but I’m not sure that it
matters in terms of where we go from
here if that makes sense so once you get
into a space in which people are just
unwilling to look at the same sources of
information and many people may be
unwilling to consider objective
information or know how to judge whether
piece of information is objective I feel
like the demand side is just something
we understand a lot less well than then
we understand the supply side so because
of the individual access to to the
Internet to lots of sources of
information and because of the lack of
trust in all institutions I think also
expert institutions right those
individuals that might be perceived as
providing expertise on any given topic
and I think that confidence in their
their opinions has also been undermined
already we don’t trust expertise we
don’t trust objectivity we don’t trust
science we don’t you know all of these
things are undermined that to me I mean
I feel like just the demand side is is
broken enough that fixing the supply
side at the moment is not going to
change that problem so I’m sort of
evading the question of it okay last
question and this is directed to Nancy
burr Mayo but others on the panel may
want to address it as well focus is on
importance of distancing by elites and
optimism is based on the idea that US
democracy does not present an immediate
threat via redistribution to elite
interests yet earlier presentations levy
she wore ski suggests that the lack of
progressive redistribution is
undermining confidence and democratic
is there an irreconcilable difference
here over weathered redistribution
counts as a threat or an asset to
American democracy I think there’s an
important distinction between
redistribution and actual property
seizure and revolution and we are
clearly in remedying the inequality that
we talked about in an earlier panel
would not require revolution if which
require redistribution of the old social
democratic component and I think that
folks in Silicon Valley are probably not
even worried about that I think they
could handle it and I think that I
haven’t seen survey research but maybe
some of you have done it I’d like very
much to look at the values of the young
entrepreneurs in the tech industry and
to see whether they would in fact halt
much more redistribution than we have
I’d love to see that data I sense that
there’s probably more room there than we
might anticipate and certainly more room
than there was in fascist Italy yeah
comments on that last yes there you go
no but it’s it’s just fall short of
revolution and it falls short of backing
anti-democratic action on the part of
truck so but it’s basically buying
social goodness sure well I want to
thank our panelists very much for a
fascinating session

Libra Crypto Curreny: The Spanish Prisoner

Seven or eight years ago, I was on a commuter flight, sitting in an aisle seat. Two rows ahead of me, across the aisle on my right, a guy was arguing with his wife/girlfriend. It wasn’t a ferocious argument, but any sort of personal disagreement is noticeable in these circumstances, and it had been simmering since I noticed them boarding the plane.

There were two other things I noticed when they sat down. The wife/girlfriend had the husband/boyfriend’s name – Randy – tattooed on the back of her neck, and Randy had the letters T – R – U – S – T tattooed on the fingers of his left hand. I remember smiling to myself when I saw this. Obviously these two were from a very different background than me, but I really appreciated the public display of commitment they had made by getting these tattoos. I remember thinking to myself that I bet their relationship was a strong one, even though the disagreement seemed to simmer throughout the flight.

The plane landed and we all stood up. And then I saw the letters tattooed on Randy’s right hand.

N – O – O – N – E

All of a sudden, I was pretty sure this guy’s name wasn’t Randy. All of a sudden, I was pretty sure this relationship wasn’t likely to last.

I feel like I have TRUST NO ONE tattooed on my hands today, and if you’ve been working in finance for more than 10 years, I bet you feel exactly the same way.

Used to work for Bear? I know you feel this way.

Used to work for Lehman? I know you feel this way.

Used to work for Citi? I know you feel this way.

Used to work for Merrill? I know you feel this way.

Used to work for Deutsche Bank? I know you feel this way.

Yeah, we’ve all got these tattoos today. We have them as a reminder, as a figurative reminder (or literal in the case of “Randy”), that we really really really shouldn’t trust anyone AGAIN.

Because we need a reminder. Because we want to trust again.

Jimmy Dell is the con man in the 1997 David Mamet movie, played by Steve Martin in his finest dramatic role. In lines like above and below, Jimmy builds a personal trust with the mark by calling his attention to the lack of trust in business relationships. Effective consultants do this a lot, speaking of confidence games.

Jimmy Dell: Always do business as if the person you’re doing business with is trying to screw you, because he probably is. And if he’s not, you can be pleasantly surprised.

That’s the thing about the Spanish Prisoner con. It doesn’t work on saints. It doesn’t work on people who forgive and forget, who turn the other cheek and have an unending reservoir of faith in their fellow humans. It also doesn’t work on sociopaths. It doesn’t work on people who truly trust no one, who can lie to themselves and others without consequence or remorse.

The Spanish Prisoner con works best on smart and accomplished people who think they have TRUST NO ONE figuratively tattooed on their hands, who think they’re too clever to be fooled again, but end up only being too clever by half.

The Spanish Prisoner con works best on coyotes.

Too Clever By Half

Who is a coyote? A coyote is a clever puzzle-solver who really has the best of intentions. Who really wants to be successful for the right reasons. Who really wants to accomplish something of meaning in the world. Who is smart and aware and nobody’s fool. Who has been beaten up professionally a bit and has a healthy skepticism about the business and political world.

And who is just a little bit on the make.

The defining characteristic of the Spanish Prisoner con is that the mark believes he is doing well while doing good. The mark believes that he is doing the right thing, that he’s the good guy in this story. And if the liberated Prisoner is financially grateful, or if the Prisoner’s sister is grateful in her own way if you know what I mean and I think you do … well, that seems only fair, right?

Now the Spanish Prisoner doesn’t have to be an actual person that needs rescuing. That’s a con for the rubes. The Spanish Prisoner is what Alfred Hitchcock called a MacGuffin – anything that serves as an Object of Desire for the mark, anything that motivates the mark and furthers the narrative arc of the con.

In fact, the most effective MacGuffins are rarely simple signifiers of wealth like an rich Spanish dude. No, the most compelling Spanish Prisoners are Big Ideas like social justice or making America great again or resisting the Man. That’s what gets a coyote’s juices going. Especially if there’s also a pot of gold associated with being on the right side of that Big Idea.

The most successful con operators are the Nudging State and the Nudging Oligarchy. Why? Well, partially because you’ve gotta have some heft to credibly commit to rescuing a Big Idea from the clutches of whatever Big Baddie has it now. But mostly because running the con for money is just thinking waaaay too small.

The Nudging State and the Nudging Oligarchy don’t need your money. They already have it!

The con here is to gain your trust – again – so that you willingly hand over your autonomy of mind. So that you accept without thought or reflection the naturalness of your current relationship to the State and the Oligarchy.

You’d never fall for this con if it were part of a straightforward commercial arrangement like a job or a purchase. Please! You’re much too savvy for that. You have TRUST NO ONE tattooed on your hands, remember?

But for the chance to help rescue a Big Idea …

But for the chance to make a few bucks or enjoy yourself a bit more as part of doing the right thing …

There’s not a coyote in the world that can resist that bait. And that’s why once you start looking for the Spanish Prisoner con, you will see it everywhere.

Libra, the cryptocoin promoted by Facebook, is a Spanish Prisoner con.
What’s the Big Idea? Why it’s banking the unbanked. It’s facilitating cross-border remittances. It’s bringing the benefits of crypto to the global masses. ALL OF THIS IS TRUE. So far as it goes.

And if it facilitates e-commerce along the way? if it’s possible to make a few bucks or enjoy some greater conveniences as part of Facebook and its partners executing on this Big Idea? Well, what’s wrong with that?

What’s wrong is that this is how Bitcoin dies.

This is how a censorship-embracing coin replaces a censorship-resistant coin. This is how the State and the Oligarchy co-opt crypto. Not with the heel of a jackboot. But with the glamour of convenience and narrative.

And in a few years it will all seem so natural to you.

Using government-approved electronic money will be the water in which you and your children swim. You will not be able to imagine a world where a censorship-embracing coin is not everywhere.

Libra was designed to co-opt Bitcoin.

Libra was designed to allow government oversight over your economic transactions.

Libra was designed to provide a transparent regulatory window and control mechanism over your money.

Libra was designed for Caesar.

“Boo, terrorists!”

A year from now, the narrative story arc regarding “criminal activity” through cash transaction networks AND censorship-resistant transaction networks like Bitcoin will be louder, not softer. In three years, it will be deafening.

Libra and its e-commerce convenience, together with its Big Idea skin of helping The Poors … that’s the carrot.

The “Boo, terrorists!“ narrative … that’s the stick.

Will Bitcoin itself be outlawed? Maybe. But I really doubt it. It’s too useful as a societal steam valve, now that we’ve got Libra and (soon) other Oligarchy-sponsored and State-supported cryptos in circulation.

What does Bitcoin become in a world where state-approved e-money is in wide circulation?

It becomes an act of effete rebellion, like a non-threatening tattoo on your upper arm that you can cover up with a shirt if you like.

Bitcoin becomes a signifier of Resistance rather than a tool of Resistance.

Owning Bitcoin will make you a Bad Boy! or a Bad Girl! … a safe malcontent that the Nudging State and Nudging Oligarchy are delighted to preserve.

What’s my message to the true-believers who continue to see Bitcoin as a tool for Resistance?

For the next fifty years, you get to play the role of the grumpy old man yelling at clouds.

You know, the role that gold true-believers got to play for the past fifty years.

It’s a miserable way to live.

It’s a miserable way to live for two reasons.

First, and most crucially, this role that the Nudging State is laying out for you is steeped in negative energy. You will find yourself rooting for catastrophe. You will find yourself hoping for decline and collapse. You will find yourself conflating justice with loss and comeuppance. You will take on sadness and schadenfreude as your resting psychic state. Trust me when I say that I know of which I speak. Negative energy is deadly. That is not a figurative statement. It will literally kill you.

Second, you’ll be infested by raccoons, which will be tolerated if not encouraged by regulators, in exactly the same way they are tolerated if not encouraged by regulators in gold-world. Sure, you’ll have the occasional show trial of egregiously aggressive security frauds and Crypto-Funded Criminals ™, but the run of the mill hucksters and con men will walk with impunity.

Because this is what ALWAYS happens.

The money quote from Too Clever By Half:

And that brings me to what is personally the most frustrating aspect of all this. The inevitable result of financial innovation gone awry, which it ALWAYS does, is that it ALWAYS ends up empowering the State. And not just empowering the State, but empowering the State in a specific way, where it becomes harder and harder to be a non-domesticated, clever coyote, even as the non-clever, criminal raccoons flourish.

That’s not an accident. The State doesn’t really care about the raccoons, precisely because they’re NOT clever. The State — particularly the Nudging State — cares very much about co-opting an Idea That Changes Things, whether it changes things in a modest way or massively. It cares very much about coyote population control.

It’s all about coyote population control. It always is.

Is there a way out of this for Bitcoin? No. Co-option by the State and Oligarchy was the Doom of Bitcoin from the beginning.

I mean … I say “Doom” like it’s going to be hurled into the fires of Mordor, but that’s not it at all. There will still be true-believers and raccoons alike generating tradable narratives. You’ll still be able to make money by trading Bitcoin on these narratives (and altcoins, too, I’d expect, although I have no idea how you generate a compelling altcoin narrative these days).

It’s not like Bitcoin is going to go away.

But Bitcoin is going to be permanently diminished in its social importance by the adoption of Libra and other Oligarchy-sponsored and State-embracing crypto currencies. Bitcoin will never again mean what it used to mean.

You know … just like gold was permanently diminished in its social importance by the adoption of Oligarchy-sponsored and State-embracing fiat currencies. Just like gold will never again mean what it used to mean.

I wrote this note six years ago. It was the first Epsilon Theory note to get widespread recognition. You’ll see hints – more than hints, actually – of all the big ET themes over the past few years, particularly The Three-Body Problem.

How Gold Lost Its Luster, How the All-Weather Fund Got Wet, and Other Just-So Stories

The core of this note is a quote by Bob Prince, Bridgewater’s co-CIO and an actual prince of a guy. I just think he’s wrong when he says this:

The relationships of asset performance to growth and inflation are reliable – indeed, timeless and universal – and knowable, rooted in the durations and sources of variability of the assets’ cash flows.

I think Bob Prince is wrong in exactly the same way that JP “Jupiter” Morgan was wrong when he said this:

Gold is money. Everything else is credit.

If you get nothing else from Epsilon Theory, get this:

There are no timeless and universal relationships between asset performance and ANYTHING.

The only determinant of price for a non-cash-flowing thing is Narrative. Actually, the only determinant of price for a cash-flowing thing is Narrative, too, but we can save that argument for another day. And what I am saying about these non-cash-flowing things is this:

The introduction of Libra changes the Bitcoin narrative in exactly the same way that the introduction of fiat currency changed the gold narrative. And by change I mean crush.

That makes me sad. That makes me angry. I am convinced that it is part and parcel of a Spanish Prisoner con game. But I refuse to give into the negative energy of that realization AND I refuse to give up on the Big Ideas that I believe in.

So what do I do?

I con the con man.

I know what Mark and Sheryl and all the other Davos-going Team Elite sociopaths are about.

I see what they are offering me and I TAKE it. Without hesitation. Without remorse. I take it just as they are trying to take from me … in full sociopathic bloom.

And what do I give them in return?


Do I care about banking the unbanked and cross-border remittances? Yes, I do. Very much. So I will TAKE the protocols and the KYC procedures and everything else Libra offers, and I will USE all of that to further the social justice goals that I maintain. And they will get NOTHING from me in return. I will keep my autonomy of mind. I do NOT forget what they are trying to steal from me. I do not ALLOW them to steal that from me.

I refuse to give them my trust.

And I will look for every opportunity to destroy their Little Kingdom.


Do I really have TRUST NO ONE tattooed on my hands? No.

I trust lots of people. I trust my pack.

But Mark and Sheryl and Christine and Jay and Donald and Barack are not in my pack. And they never will be.

Trust no one? No.

I just don’t trust THEM.

The French Economist Who Helped Invent Elizabeth Warren’s Wealth Tax

To trace the progress of the wealth tax from a fringe academic idea to the center of the Democratic Presidential primary, it is helpful to begin a bit off-center. On September 15, 2008, the day that Lehman Brothers filed for bankruptcy, a twenty-one-year-old student of Thomas Piketty, Gabriel Zucman, started work as a trainee economic analyst in the offices of a Paris brokerage house called Exane. Zucman felt obviously underequipped for the task before him: to write memos to the brokerage house’s clients and traders helping to explain why the very durable and minutely engineered global financial system appeared to be on the verge of collapse. Poring over some of the data he was given, which concerned the international flows of investments, Zucman noticed some strange patterns. The amount of money that had been moving through a handful of very small economies (Luxembourg, the Cayman Islands, the tiny Channel Islands of Jersey and Guernsey) was staggering. “Hundreds of billions of dollars,” Zucman recalled recently, making the “B” in “billions” especially emphatic. Eventually, he would calculate that half of all foreign direct investment—half of the risk-seeking bets, placed from overseas in India, China, Brazil, and Silicon Valley, and of the safety-seeking investments, placed in the United States and Europe and stock indexes—was moving through offshore hubs like these.

Before the financial crisis, the rise of offshore tax havens hadn’t been ignored—one element of the Enron scandal of 2001, for instance, was the eight hundred and eighty-one overseas subsidiaries the company had created, which had helped it avoid paying federal taxes for three years—but those stories took place within a more confined and more frankly moral framework: it was a cat-and-mouse plot, about the mobility of wealth, and the fruitless efforts to pursue it. Zucman’s intuition was that these arrangements did not describe a moral or a legal drama but a macroeconomic one. That much wealth, poorly documented or regulated, might have helped to destabilize the global economy. It also seemed that, if economists were not attuned to the amount of wealth stored in offshore havens, they might also have missed the extent of global inequality, since it was billionaires who stored money in the Cayman Islands, not retirees. “You know, the way we study inequality is we use survey data, state-tax data,” Zucman told me, “and that’s not going to capture these Swiss bank accounts.” After half a year at Exane, Zucman was back in graduate school, working with Piketty on the study of wealth inequality in the United States and Europe that became Piketty’s landmark book, from 2013, “Capital in the Twenty-First Century,” as well as on his own fixation—on how big the island-shaped loopholes in the global economy would turn out to be.

For the next several years, Zucman followed two tracks. The first led deeper into the mists of offshore banking systems. In obscure monthly reports of the Swiss central bank he discovered that foreigners held $2.5 trillion in wealth there (Zucman would eventually calculate that $7.6 trillion, or eight per cent of global household wealth, was held in tax havens, three-quarters of it undeclared) and that these immense sums were mostly being diverted to mutual funds incorporated in Luxembourg, the Cayman Islands, and Ireland. The second track—the work he did first with Piketty and then with the Piketty collaborator and Berkeley economist Emmanuel Saez—mapped the acceleration of inequality around the world and in the United States. The American story was of a snowball effect, as Zucman described it, in which the very high top incomes of the nineteen-eighties and nineties were saved and invested, “and that creates a spiral which is potentially very powerful and leads to very, very high rates of wealth inequality.” The two stories were in fact one. The concentration of wealth in secretive tax havens was an expression of the broader wealth imbalance—the laissez-faire spirit of the Reagan era working its way through the country and then the world. “One thing that became clear in my mind when I did the study of the U.S. wealth inequality is how hard it is to stop the rise of wealth inequality if you don’t have progressive taxation and, in particular, progressive wealth taxation,” Zucman told me. Without it, the snowball just keeps growing.

This work took place during Obama’s Presidency, a period in which, a bit paradoxically, the global populist reaction to accumulated wealth was consolidating even as liberal institutions, belatedly, began to get a handle on the problem. In 2010, early in Zucman’s doctoral work, Congress had passed the Foreign Account Tax Compliance Act (fatca), which required tax havens to share banking information with the United States or suffer significant economic sanctions. The program worked, and, by the middle of the decade, European regulators had compelled tax havens to share the same information with them. “That actually had a very big impact on my thinking, because it showed that new forms of international coöperation can emerge very quickly,” Zucman told me. “In particular, sometimes we have this view that, ‘Oh, we can’t do anything about tax havens. Countries are entitled to their own laws, and, if they want to have a zero-per-cent corporate-tax rate of bank secrecy, that’s their own right.’ ” Bufatca had demonstrated that tax havens were not autonomous zones. “At the beginning of my Ph.D., whenever I or N.G.O.s would talk about having some automatic exchange of banking information, policymakers would say, ‘Oh, that’s a pipe dream.’ And so I witnessed the transition from pipe dream to now everybody does it.” He went on, “It can happen very fast.

As WikiLeaks oriented international relations around a central tension, between transparency and secrecy, similar themes and patterns were emerging in the area of wealth. To parse them required the tools of an investigative journalist, of discovery and cajoling. Zucman is an economist, but he also had some of the qualities—youth and fervency—that investigative reporters often have, and that made him someone people would go to when they thought something was very wrong. A leaked trove of foreign wealth data from the Swiss subsidiary of the banking giant H.S.B.C. made its way to various national tax authorities, and Scandinavian government officials shared it with Danish and Norweigan academics who were collaborating with Zucman. There were limits to what he could see in the H.S.B.C. trove, but it provided a suggestion of how much wealth from Scandinavian countries was being stored away in offshore hubs like Switzerland. In 2015, when the Panama Papers leaked, detailing the evasion efforts of the law firm Mossack Fonseca, it was possible to see the business of tax evasion in action—the lawyers, the pitch decks, the business analysts. Shrouding fortunes was the work of meticulous professionals; when Zucman and colleagues traced this wealth through tax shelters, they found it often was finally invested in ordinary stocks and bonds. “It was very mundane,” Zucman said.

Gradually, Zucman came to see tax evasion differently. “It’s not a psychological thing,” he said. There was a market. The key player wasn’t the billionaire, but the bankers and lawyers who Zucman came to think of as the tax-evasion industry. The professionals in this industry had bosses, and partners or shareholders; they worked within a regulated system. “If you have banks that feel that they are too big to indict then they will continue to commit some form of financial crimes,” Zucman said. “They will budget costs for fines.” In 2009, tax havens seemed like black holes, sucking out so much wealth that it warped the global economy. By 2019, they seemed dependent on the continued dormancy of the great liberal apparatus of international banking regulation, which could be quickly revived. “And the U.S.,” Zucman said, “you know, if there is a U.S. President that is serious about fighting global oligarchy, he or she has a ton of power.”

Zucman works in a small, spare office next door to Saez’s, on the sixth floor of Evans Hall at U.C. Berkeley. The cinder-block walls are undecorated, and the only personal touch I could see, when we met there a few weeks ago, was a small espresso machine. Zucman is fair-skinned, with round cheeks, light brown hair, and a longish nose, and he was wearing a black V-neck T-shirt and jeans. (The next morning, when we met again, he would be wearing a different black V-neck T-shirt and a different pair of jeans.) The scene seemed a bit unadorned for someone who had, this year, been named by Prospect magazine, in the U.K., as one of the fifty most influential thinkers on the planet. He speaks with a French accent and has an outsider’s sweeping, offhand way of talking. For all of Piketty’s fame—and his own, and Saez’s—Zucman mentioned several times that the economics profession had been slow to recognize inequality as a legitimate topic. He still seemed to have the outlook of a less powerful person than he now is.

Saez and Zucman have written a book, published this month, called “The Triumph of Injustice,” which assembles their research into a policy plan. (Its subtitle is the instruction-manual-like “How the Rich Dodge Taxes and How to Make Them Pay.”) One way to understand the book is as marking a new phase in the project that Piketty, Saez, and Zucman share. Having done more than just about any other economists to describe the powerful effect that accumulated wealth has on global inequality, they are now advocating for a solution: a highly progressive annual tax on wealth, an idea that has been adopted by Elizabeth Warren and Bernie Sanders. Zucman is the junior partner in the enterprise, but he has also been its chief propagandist, duelling on Twitter with economists who raise objections or philosophical gripes, and so the wealth-tax cause has come to reflect some of his own attributes: his tremendous explanatory power, his comfort with being an outsider to the establishment, and his great optimism in what government can know and do about the concentration of wealth.

A few weeks ago, Saez and Zucman flew to Washington for a pair of panels at the Brookings Institution presenting their ideas—one closed to reporters, and the other open to them—and at the open session Zucman gave a ten-minute presentation of the book, which, with admirable concision, boiled the essential story of wealth and the tax code down to two slides. The first displayed the results of their study of the aggregate burden of all federal, state, and local taxes after the 2017 Trump tax cuts, which concluded that the United States no longer has a progressive tax system—statistically, the Trump cuts dealt it a death blow. Most Americans now pay about the same portion of their income to the government (the upper-middle class pays very slightly more), and the wealthiest pay less. The slide is titled “A Giant Flat Tax Which Is Regressive at the Top End.”

To explain how this could be, Zucman likes to use the example of Warren Buffett. Forbes had estimated Buffett’s wealth to be sixty billion dollars, which suggested that his wealth was growing by about three billion dollars per year. But Buffett reported to the I.R.S. capital gains of about ten million—based on his sales of some shares in his own company, Berkshire Hathaway. For many years, Buffett has been pointing out that his tax rate is too low—the line has often been that he pays a lower effective rate than his secretary—and urging politicians to turn the screws a bit tighter on the ultra-wealthy. In response, Barack Obama proposed the Buffett Rule, a principle adopted by Hillary Clinton, in which people making more than a million dollars a year would have a minimum federal tax rate of thirty per cent. As of a couple of years ago, this was the frontier of mainstream Democratic tax policy, but, to Zucman, it was outlandishly inadequate. Raising the rate on the ten million dollars that was accessible to the I.R.S. made no statistical difference at all. The issue was the $59,990,000,000 that they could not touch. Apply the Buffett Rule, don’t apply the Buffett Rule; it didn’t much matter. “Functionally, his tax rate is zero per cent,” Zucman said.

The second chart examines the share of wealth held by the Forbes 400, which has mushroomed from one per cent of total wealth, at the outset of the Reagan era, to well over three per cent today. Had Warren’s wealth tax been in place all along, the Forbes 400’s share would now be about two per cent. Zucman and Saez propose a stricter wealth tax (ten per cent annually), which they say would have held the Forbes 400’s share constant, around one per cent. If you wanted something like the more equal pre-Reagan America for which Democratic politicians often grow nostalgic, they suggest, it would take a tax like that.

At the end of last year, Saez got an e-mail from Bharat Ramamurti, a longtime economic policy adviser of Elizabeth Warren’s, who said that Warren was interested in proposing a tax on wealth in some form. Zucman and Saez created a spreadsheet, using their own estimates of wealth, that allowed the Warren campaign to play around with different thresholds and rates for the tax. At first, Ramamurti sketched out a plan that taxed fortunes of twenty million dollars or more at one per cent. But in Saez and Zucman’s analysis—on the spreadsheet—wealth was so concentrated at the highest end that a more radically progressive tax, one which targeted a relatively small number of households, could still generate trillions in revenue. Eventually, the Warren campaign settled on a plan that would tax fortunes over fifty million dollars at two per cent annually, and those over one billion at three per cent, which Saez and Zucman estimated would raise the astonishing sum of $2.75 trillion over the course of ten years. (The entire revenue of the federal government, in the current budget year, is $3.4 trillion.) To Zucman, the choice had the added effect of averting a political problem that had bedevilled European wealth taxes, which tended to start with much smaller fortunes. “Above fifty million, you can’t really argue that these people can’t afford to pay,” Zucman told me.

Something quietly revolutionary was happening in these conversations, in January, between Ramamurti and the Berkeley economists, and between Ramamurti and his boss. For Democratic politicians and policymakers, taxes have generally served as a tool, to fund a program that they believe the people want. When Barack Obama proposed a broad expansion of public health insurance, his advisers developed an intricate, progressive system of taxes to pay for it, but the rates and thresholds for those taxes had been determined by the cost of the program. Ramamurti and Warren wanted to maximize revenue, and they also wanted to reduce inequality, which meant that they wanted a way to make the wealthy give up more of their fortunes. It wasn’t an ideological change so much as a conceptual one—about how pervasive and controlling the effects of inequality are. Taxing wealth to limit fortunes became a goal in itself.

Elizabeth Warren wasn’t the first candidate to consider tackling American wealth in this way. During the 2016 Presidential primaries, Zucman and Saez had an extended conversation with Warren Gunnels, Bernie Sanders’s longtime economic adviser, after Sanders had expressed interest in the idea of a wealth tax. The Berkeley economists scored various versions of the plan, estimating the revenue and economic effects, and eventually Gunnels brought a proposal to Sanders and the campaign. The reaction among his advisers was mixed, and, among the many other policy ideas the Sanders campaign was considering, this one simply drifted away. Sanders was already asking Americans to dream of a socialist society like Denmark’s or Sweden’s, and the wealth tax, which had not succeeded even in Europe, might have seemed especially exotic, and likely to trigger another round of denunciations in the American press.

After Hillary Clinton won the Democratic Presidential nomination, her advisers also spent several weeks considering whether to propose a wealth tax. As a matter of framing, one of her advisers explained to me, “There’s huge merit in the wealth tax—it does bring into sharp focus the inequity in our tax code as it relates to how you treat taxing income to wealth.” The campaign’s policy officials would evaluate how prone it might be to legal challenges, or to the wealthy avoiding or evading it—but it had an intuitive appeal. Because of the concentrations of wealth, the adviser said, “the sheer amount of money you can raise off a wealth tax is staggering.” Clinton herself was intrigued by the idea, and legal experts prepared memos about its constitutional viability, while Saez and Zucman helped Clinton’s tax advisers measure the revenue and economic impacts. But, as with the Sanders campaign, it was never formally proposed. The adviser went on, “It was a pretty exotic proposal. Given the way the election was shaping up, it didn’t seem like the proposal was going to alter the overarching narrative of the race. The reason I keep coming back to is inertia.”

But in 2016 not even the socialists had made the conceptual leap: that a wealth tax could have political appeal separate from, even exceeding, the appeal of the programs it funded. In September, eight months after Warren formally announced her proposal, Sanders introduced a wealth tax that was more extreme still: it starts at a one-per-cent marginal annual rate for households worth more than thirty-two million, and increases steeply, to eight per cent, on households worth more than ten billion. “What we are trying to do,” Sanders told reporters in September, “is demand and implement a policy which significantly reduces income and wealth inequality in America by telling the wealthiest families in this country they cannot have so much wealth.”

As a political matter, those eight months will be hard for Sanders to make up. The tax itself is now Warren’s signature proposal, and she has refined her campaign message around it. At rallies, she asks the crowd how many people own their own homes, and, once hands are in the air, points out that most Americans already pay a wealth tax on their biggest asset, they just call it a property tax. (“Great line,” the Clinton adviser told me. “We didn’t have that.”) “Your first fifty million is free and clear,” Warren likes to say on the campaign trail. “But your fifty millionth and first dollar, you gotta pitch in two cents, and two cents for every dollar after that.” By the time Warren held a rally before the brilliant edifice of the Washington Square arch last month, the crowds had begun to anticipate the line, and, as her speech wound toward the wealth tax, they chanted back at her, “Two cents! Two cents!” In 2016, Donald Trump would test out new lines at his rallies, little lures dropped into the depths of the crowd. Was there a bite? “Build the wall” and “Lock her up” came back at him, and eventually they became the substance of the campaign. Shout a slogan back to a candidate, and you have explained the campaign to itself.

The real resonance between Zucman and Saez’s proposals and the Presidential campaign of Elizabeth Warren, the champion of the Consumer Financial Protection Bureau, may be in their shared optimism about what the modern American administrative state can accomplish. When I asked William Gale, the co-director of the Urban-Brookings Tax Policy Center, what distinguished Saez and Zucman from the center-left policymakers who had preceded them, he mentioned two elements. First, he said, they wanted steeper taxes on the wealthy than even most progressives in Washingtonthey were left, not center-left. The second difference, Gale said, was more pronounced. “What I would describe as the previous center-left consensus is that we ought to raise taxes on the very rich, but that’s really hard to do,” Gale said. “Saez and Zucman come in and say, ‘In fact, it’s quite possible; it’s just a matter of enforcement and getting the taxes right—pushing on both fronts.’ Their policy optimism is very different from the conversations that people had in the Obama Administration, where it was often about how the wealthy had these tax-avoidance strategies, these armies of lawyers, that the administrative problems were extreme.”

As Saez and Zucman’s ideas moved to Washington, they met points of resistance, small and big. Jason Furman, who chaired President Obama’s Council of Economic Advisers, recently suggested on Twitter that the rich paid slightly more in taxes than Zucman and Saez’s graphs suggested. But the broader critiques took aim at their administrative optimism. Since the spring, the former Treasury Secretary Larry Summers and his colleague Natasha Sarin, a law professor at the University of Pennsylvania, have been arguing that Zucman and Saez have radically overestimated how much revenue a wealth tax would generate, and that the more realistic return, based on what the I.R.S. had been able to recoup from the estate tax, might be as little as one-eighth of their projections. Sarin told me, “The excitement around the Warren proposal is that, by taxing seventy-five thousand households and imposing a relatively minor additional tax burden on them, we can pay for just about everything we want. If that sounds a little unbelievable, I think that’s because it is a little unbelievable.”

Zucman and Saez published a full response in June, pointing out that, in several European countries that had tried a wealth tax, as well as Colombia, the average avoidance rate was about fifteen per cent; Summers and Sarin, they argued, assumed tax-avoidance rates of between eighty and ninety per cent. “They start from the premise that the rich cannot be taxed, to arrive at the conclusion that a tax on the rich would not collect much,” Zucman and Saez wrote. Their more colloquial argument was that there was nothing mysterious about wealth. Seventy per cent of the wealth of the top 0.1 per cent, Zucman argued, was in the form of stocks, bonds, and real estate—it was easily valued. More portable forms of wealth, like art or jewelry, could be assessed through insurance estimates. The trickiest form of wealth for tax authorities to value is privately held businesses; Saez and Zucman propose in their book that the I.R.S. could make an assessment, and if anyone disagreed they could simply transfer two per cent of their shares in the business to the government, which would then sell them at auction. Zucman’s deeper theory seemed to be that no strong wealth tax had ever been tried. The European models had very low thresholds (often starting around a million dollars), which made them vulnerable to political attack and legislative exemptions. Enforcement was often nonexistent. The largest economy to tax wealth in recent years is France’s, and that levy, Zucman pointed out, relied on self-reporting. “There was a box on the return for wealth, and you wrote a number in the box. That was all.”

Liberals have been agitating, for many years, for an end to the Reagan regime. Now, in Elizabeth Warren, the Democrats have a leading Presidential candidate who intends to unwind that era, and the question—the anxiety—is about how much might come undone. Natasha Sarin, Summers’s co-author, told me, “There’s another conceptual point that I find interesting. Bill Clinton, when he was running for President, said the world would be better if there were more millionaires. I was kind of stunned when I heard Bernie Sanders say that billionaires should not exist. There is something about that view that seems deeply alien to what many progressives, I think, believe. And, economically, I worry, it is deeply inefficient.” Zucman, by contrast, said at the Brookings conference that Piketty’s next book, due out next spring, would advocate a wealth tax of ninety per cent for billionaires. “Really,” Zucman told me, “you could abolish billionaires if you wanted to.”

From Zucman’s office window in Berkeley, it is possible to see clear across the bay to San Francisco, where the escalating forces of inequality had sent housing prices sky-high and pushed working-class people to the periphery of urban life, as they had in Paris. The formative political event in Zucman’s life was the 2002 French Presidential election, when he was fifteen, in which the nationalist Jean-Marie Le Pen won nearly five million votes in the first round, making it into the runoff, in part because of the sense that all of the gains of society were being hoarded by élites.

“You know,” Zucman said, “when you have the fall of the U.S.S.R., the fall of the Berlin Wall, some people say it’s the triumph of the free-market economy, the end of history, you won’t do better than that. And, especially now, in a globalized, integrated world, there’s no viable progressive platform that’s possible. And the left became discouraged, as it does—you know, ‘This is all a messy failure. It’s game over,’ ” Zucman said. “And now, thirty years later, people are realizing that there are all kinds of contradictions in the way our economies work, and we can do better.” The United States is only four per cent of the global population, he went on, but much of the rest of the world had remade itself in our image thirty years ago, and—if a progressive administration in Washington could implement a wealth tax, and strengthen international coöperation for higher corporate tax rates against tax evasion and offshore havens—maybe it would do so again. “You could change the U.S., but you could also change the world,” Zucman said. “Actually, you could be much more radical.”