Rush Limbaugh. How can one possibly sum up such a well-lived life?
One way? To suggest that Rush was, as it were, both the substance and the music of the conservative movement – and of America itself.
As the Clinton era dawned at the end of 1992, Rush received this letter out of the blue:
Thanks for all you’re doing to promote Republican and conservative principles. Now that I’ve retired from active politics, I don’t mind that you have become the Number One voice for conservatism in our Country.
I know the liberals call you ‘the most dangerous man in America,’ but don’t worry about it, they used to say the same thing about me. Keep up the good work. America needs to hear ‘the way things ought to be.’
Ronald Reagan knew a conservative leader when he saw one, and Reagan, whose career began as a local radio star in Davenport, Iowa. Reagan was a sportscaster for five years between 1932 and 1937, a job that opened up his Hollywood career – the latter in turn opening his political career.
Along the way Reagan became a thoroughly well-read conservative, all of which he was able to translate into his countless speeches, more radio shows and television broadcasts.
This, too, was the essence of Rush Limbaugh. He knew his substance – and he communicated it on radio with innovative music, skits, soundbites, imitations and more. As a Rush 24/7 member I always found the skits and musical numbers laugh out loud funny. One Democrat after another was lampooned in hilarious fashion from both Clintons to Barack Obama, Ted Kennedy and more. Republican liberals never escaped the same treatment, with merciless skits starring, among others, an imitator of the late Senator John McCain.
It was that very ability to entertain, to make people laugh and not least to poke fun at himself that, combined with the quite serious conservative substance, built Rush’s audience of 20 million listeners on some 650 radio stations around America. Rush fans could be driving anywhere in America and know with certainty that a scan of the dial between noon and 3 Eastern Time would with certainty bring in the famous voice and an update on the news of the day.
Critical to Rush was context. He wrote this in his last “Limbaugh Letter”:
“I’ve never forgotten for a moment that one of my self-assigned duties as your host is to unravel what the drive-by media is saying or ignoring. I provide critical context and background that the media either suppresses or lies about. I make the complex understandable. I can tell you in a few minutes what The New York Times tries to lie about in five pages.”
Exactly. That is just what Rush did. Context, context, context.
He was so good at providing context that his exasperated critics came up with a term for it: “Whataboutism.” And as I frequently would say, “whataboutism” is liberal speak for “double standard.”
Rush was, most importantly, ever the optimist. “I’m not trying to be optimistic for the sake of spin. I am optimistic because we live in America.”
The well-lived life of Rush Limbaugh leaves forever a legacy of optimism and a love for America. A legacy that can stand as a sterling example for generations of Americans unborn. It is a legacy that will, without doubt, be carried forward by his great friends Sean Hannity and Mark Levin, not to mention so many more in and out of talk radio and conservative media.
Farewell, friend Rush. And thank you.
Thank you for the substance – and the music.
He is not a liberal, he’s the end of liberalism.
A few months ago, I wrote a column saying I would vote for Elizabeth Warren over Donald Trump. I may not agree with some of her policies, but culture is more important than politics. She does not spread moral rot the way Trump does.
Now I have to decide if I’d support Bernie Sanders over Trump.
We all start from personal experience. I covered the Soviet Union in its final decrepit years. The Soviet and allied regimes had already slaughtered 20 million people through things like mass executions and intentional famines. Those regimes were slave states. They enslaved whole peoples and took away the right to say what they wanted, live where they wanted and harvest the fruits of their labor.
And yet every day we find more old quotes from Sanders apologizing for this sort of slave regime, whether in the Soviet Union, Cuba or Nicaragua. He excused the Nicaraguan communists when they took away the civil liberties of their citizens. He’s still making excuses for Castro.
To sympathize with these revolutions in the 1920s was acceptable, given their original high ideals. To do so after the Hitler-Stalin pact, or in the 1950s, is appalling. To do so in the 1980s is morally unfathomable.
I say all this not to cancel Sanders for past misjudgments. I say all this because the intellectual suppositions that led him to embrace these views still guide his thinking today. I’ve just watched populism destroy traditional conservatism in the G.O.P. I’m here to tell you that Bernie Sanders is not a liberal Democrat. He’s what replaces liberal Democrats.
Traditional liberalism traces its intellectual roots to
- John Stuart Mill,
- John Locke,
- the Social Gospel movement and
- the New Deal.
This liberalism believes in gaining power the traditional way: building coalitions, working within the constitutional system and crafting the sort of compromises you need in a complex, pluralistic society.
This is why liberals like Hubert Humphrey, Ted Kennedy and Elizabeth Warren were and are such effective senators. They worked within the system, negotiated and practiced the art of politics.
Populists like Sanders speak as if the whole system is irredeemably corrupt. Sanders was a useless House member and has been a marginal senator because he doesn’t operate within this system or believe in this theory of change.
He believes in revolutionary mass mobilization and, once an election has been won, rule by majoritarian domination. This is how populists of left and right are ruling all over the world, and it is exactly what our founders feared most and tried hard to prevent.
Liberalism celebrates certain values:
- intellectual humility and
Liberalism is horrified by cruelty. Sanders’s leadership style embodies the populist values, which are different:
- bitter and relentless polarization, a
- demand for ideological purity among your friends and
- incessant hatred for your supposed foes.
A liberal leader confronts new facts and changes his or her mind. A populist leader cannot because the omniscience of the charismatic headman can never be doubted. A liberal sees shades of gray. For a populist reality is white or black, friend or enemy. Facts that don’t fit the dogma are ignored.
A liberal sees inequality and tries to reduce it. A populist sees remorseless class war and believes in concentrated power to crush the enemy. Sanders is running on a $60 trillion spending agenda that would double the size of the federal government. It would represent the greatest concentration of power in the Washington elite in American history.
These days, Sanders masquerades as something less revolutionary than he really is. He claims to be nothing more than the continuation of Franklin Roosevelt and the New Deal. He is 5 percent right and 95 percent wrong.
There was a period around 1936 or 1937 when Roosevelt was trying to pack the Supreme Court and turning into the sort of arrogant majoritarian strongman the founders feared. But this is not how F.D.R. won the presidency, passed the New Deal, beat back the socialists of his time or led the nation during World War II. F.D.R. did not think America was a force for ill in world affairs.
Sanders also claims he’s just trying to import the Scandinavian model, which is believable if you know nothing about Scandinavia or what Sanders is proposing. Those countries do have generous welfare states, but they can afford them because they understand how free market capitalism works, with fewer regulations on business creation and free trade.
There is a specter haunting the world — corrosive populisms of right and left. These populisms grow out of real problems but are the wrong answers to them. For the past century, liberal Democrats from F.D.R. to Barack Obama knew how to beat back threats from the populist left. They knew how to defend the legitimacy of our system, even while reforming it.
Judging by the last few debates, none of the current candidates remember those arguments or know how to rebut a populist to their left.
I’ll cast my lot with democratic liberalism. The system needs reform. But I just can’t pull the lever for either of the two populisms threatening to tear it down.
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.’ ” But fatca 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 Washington—they 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.”
Rogue nations thrive when the good lose all conviction.
Most of human history has been marked by war. Between 1500 and 1945, scarcely a year went by without some great power fighting another great power. Then, in 1945 that stopped. The number of battlefield deaths has plummeted to the lowest levels in history. The world has experienced the greatest reduction in poverty in history, as well as the greatest spread of democracy and freedom.
Why did this happen? Mostly it was because the United States decided to lead a community of nations to create a democratic world order. That order consisted of institutions like NATO, the U.N. and the World Bank. But it was also enforced by the pervasive presence of American power — military, economic and cultural power as well as the magnetic power of the democratic idea, which inspired dissidents worldwide.
Building any community requires exercising power. America’s leaders made some terrible mistakes (Vietnam, Iraq). The nation never got to enjoy the self-righteous sense of innocence that the powerless and reclusive enjoy.
But the U.S. having been dragged into two world wars, leaders from Truman to Obama felt they had no choice but to widen America’s circle of concern across the whole world. This was abnormal. As Robert Kagan writes in “The Jungle Grows Back,”“Very few nations in history have ever felt any responsibility for anything but themselves.”
A culture that disdained bad news contributed to overoptimistic forecasts and botched strategies
Jeffrey Immelt, the longtime boss at General Electric Co. , was a polished presenter who held court each year at a waterfront resort off Sarasota, Fla., where industrial executives and Wall Street listened for his outlook on the conglomerate.
“This is a strong, very strong company,” Mr. Immelt said at the event last May.
.. GE’s precipitous fall, following years of treading water while the overall economy grew, was exacerbated, some insiders say, by what they call “success theater.”
Immelt and his top deputies projected an optimism about GE’s business and its future that didn’t always match the reality of its operations or its markets
.. “The history of GE is to selectively only provide positive information,” said Deutsche Bank analyst John Inch, who has a “sell” rating on the stock. “There is a credibility gap between what they say and the reality of what is to come.”
.. “GE itself has never been a culture where people can say, ‘I can’t.’ ”
.. GE once had the highest market value of any U.S. corporation. Its alumni have gone on to run companies such as Boeing and Chrysler.
.. Few knew just how badly ailing the American icon was. Even GE’s board didn’t realize the depth of problems in the biggest division, GE Power, until months after directors had replaced Mr. Immelt
.. A spokesman for the former CEO pointed to his decision to purchase $8 million worth of GE shares in 2016 and 2017. That included 100,000 shares in mid-May at a price roughly twice today’s.
.. But Mr. Immelt didn’t like hearing bad news, said several executives who worked with him, and didn’t like delivering bad news, either. He wanted people to make their sales and financial targets and thought he could make the numbers, too, they said.
.. Over the past three years, GE spent more than $29 billion on share repurchases, at an average price of almost $30, twice the current level. That included billions of dollars spent less than a year before GE suddenly found itself strapped for cash last fall.
.. Trian Fund Management LP, which invested $2.5 billion in GE in 2015, wanted it to buy back even more stock. The activist investor urged the company to borrow $20 billion for repurchases (which it didn’t do), based on a belief that the profits Mr. Immelt was promising would send the stock soaring when they arrived.
.. Instead, at Mr. Immelt’s retirement in August the stock was below its level when he took over 16 years earlier. Including dividends, GE gained 8% with Mr. Immelt at the helm, while the S&P 500 rose 214%. Since he stepped down, the stock has lost about 43%, erasing almost $94 billion in market value
.. Instead of $2 a share GE now projects $1 to $1.07.
.. Several directors discussed in November whether the entire board should be fired
.. Jack Welch, delivered steady profit growth and sent shares soaring in the 1980s and ’90s by striking deals and aggressively slashing costs and jobs. Mr. Welch also built up a huge lending business called GE Capital that for years generated outsize profits—but nearly sank the company during the financial crisis on Mr. Immelt’s watch.
.. Results were strong at two of GE’s big units, aviation and health care (medical equipment).
.. Acquiring companies that help drillers pump and transport fuel, he had GE spend more than $14 billion over 10 years, most of it based on higher oil prices than today’s.
.. Mr. Immelt’s optimism was part of the problem, according to some people close to the situation. They said he told the board that management had identified risks in the power business, yet downplayed them. The probability and risk were way off, one said.
.. Lisa Davis, the U.S. chief of Siemens, said the German company’s executives “have seen this decline coming for the last several years.” So Siemens had reduced its capacity in its power business, she said, while GE bought more.
.. According to former executives, the upgrades meant lower service fees for customers, in exchange for one-time upgrade costs, meaning that future sales were being pulled forward.
Mr. Gates readily acknowledged that the person he is today is not one he would have recognized when he was in his 20s and single-mindedly building Microsoft. “I was a zealot,” he said. “I didn’t believe in weekends. I didn’t believe in vacations. I knew everybody’s license plate so I knew when they were coming and going. That was my life: doing great software.”
.. Plus, you don’t want a tech company run by somebody in their 60s. At least I didn’t want to. I ended up retiring at 53.
.. But for a young man in his 20s, writing software night and day may be the best way to add to human welfare. I’d never heard of vaccines. I didn’t have any money. But the personal computer, the internet, hey, that’s what I was good at. And I enjoyed doing it every day.
.. I came across statistics that homicide rates in the Middle Ages were about 35 times what they are today in Europe. When I posted this online, I started receiving correspondence citing more examples: The rate of death in warfare has come down by a factor of 20 since 1945. Domestic violence is down. Child abuse is going down. I was sitting on all these data sets showing reductions in violence that few people were aware of that I thought ought to be better known.
.. That “things getting better” is the greatest story that no one knows.
.. there’s the idea that we can’t want something good for ourselves without wanting it for everyone.
.. What makes Papua New Guinea — where there’s no police and revenge after revenge — different from Western society is that when we give ourselves over to the law, we want it to be executed impartially. We gain stability. But if you could get your son off, of course you’ll try.
.. the proposition, Philip — which comes from Spinoza. He said those under the influence of reason desire nothing for themselves that they do not desire for all humankind. But reason is not a powerful part of human nature. Innately, we favor family over strangers, our tribe over other tribes. It’s only when we’re called upon to justify our beliefs — not consult our gut feelings, but convince others of the right way to act — that we conclude that all lives have equal value.
.. when you consider a radical change, like “Hey, let’s tear up the global trade agreements; they’re a disaster,” you’re more likely to implement it if you think things are getting worse. “Let’s tear up the treaties. Let’s try a nondemocratic approach.” Your willingness to go off the current path is much, much higher.
.. There’s a tendency in journalism and political debates to assume that it’s easy to achieve a perfect society: “Good people would do that.” The fact that we don’t means that evil people must be running the system: “Let’s throw them out and find nobler ones.” This leads to empowering charismatic despots and destroying institutions that have done a lot of good.
.. I’m sure Bill gets this all the time: “Why throw money at the developing world? They’re just going to have more babies and be just as poor.”
.. What indicator improves even faster than reduction in violence? Our distaste for violence. We’re more upset about it today. If I see someone spanking a kid — I’m stealing from Steven’s book — I might get up and say: “Hey, wait a minute!” Forty years ago, it might have been more like: “Do you want to borrow my belt?”
.. Extreme global poverty has been reduced from 90 percent 200 years ago to 10 percent today.
.. The person who invents an affordable and efficient toilet should be made a saint.
Think how much human happiness will be granted, how much human suffering eliminated. We should think quantitatively; it’s the morally enlightened way. But it’s not the way our brains evolved when we make moral evaluations.
.. One of the biggest enemies of reason is tribalism. When people subscribe to an ideology, they suck up evidence that supports their preconceptions and filter out evidence that goes against them. Contrary to the belief of most scientists that denial of climate change is an effect of scientific illiteracy, it is not at all correlated with scientific literacy. People who believe in man-made climate change don’t know any more about climate or science than those who deny it. It’s almost perfectly correlated with left-wing versus right-wing orientation
.. But I’m optimistic. I do think awareness of how things have worked is important to recreate a conservative center — that is, make us careful about what we change.
.. innovation is not viewed as an unalloyed way to improve the human condition. And that’s fair, because it’s not pure. Does social media split us into tribes in a way that’s dangerous? Does it create, even in high school social circles, a channel for bullying, or a desire to look perfect in photos?
.. There are certain things that governments are always going to do better than private innovators. Basic research, for instance.
.. PG: Name a problem we may think of as intractable that you’re optimistic about solving in the near future.
SP: War between countries. Civil wars are harder to eliminate because there are so many insurgent and militia forces. But there are only 192 countries. They could agree not to declare war on each other. I think we’re on the way.