Wealth concentration near ‘levels last seen during the Roaring Twenties,’ study finds
By Christopher Ingraham
The 400 richest Americans – the top 0.00025 percent of the population – have tripled their share of the nation’s wealth since the early 1980s, according to a new working paper on wealth inequality by University of California at Berkeley economist Gabriel Zucman.
Those 400 Americans own more of the country’s riches than the 150 million adults in the bottom 60 percent of the wealth distribution, who saw their share of the nation’s wealth fall from 5.7 percent in 1987 to 2.1 percent in 2014, according to the World Inequality Database maintained by Zucman and others.
Overall, Zucman finds that “U.S. wealth concentration seems to have returned to levels last seen during the Roaring Twenties.” That shift is eroding security from families in the lower and middle classes, who rely on their small stores of wealth to finance their retirement and to smooth over economic shocks like the loss of a job. And it’s consolidating power in the hands of the nation’s billionaires, who are increasingly using their riches to purchase political influence.
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But “for the rich, wealth begets power,” according to Zucman. Our electoral system is highly dependent on outside financing, creating numerous opportunities for the wealthy to convert their money into influence and tip the political scales in their favor. As a result, politicians have become accustomed to playing close attention to the interests of the wealthy and passing policies that reflect them, even in cases where public opinion is strongly trending in the opposite direction.
“Wealth concentration may help explain the lack of redistributive responses to the rise of inequality observed since the 1980s,” Zucman writes. The interplay between money and power, in other words, may be self-reinforcing: The wealthy use their money to buy political power, and they use some of that power to protect their money.
‘State capture’: the corruption investigation that has shaken South Africa
By Mark Gevisser
“State capture” has become a buzzword in South Africa. It describes the way private individuals and companies have commandeered organs of state to redirect public resources into their own hands, and have gutted those institutions responsible for protecting the country against such corruption. These include the police, the prosecution authority, the tax collection service and even parliament itself.
Zuma, the Guptas, and the sale of South Africa
By Neil Arun
The concept of state capture was defined in a 2003 World Bank report on corruption in eastern Europe and central Asia.
Joel Hellman, a report co-author who now serves as dean of the School of Foreign Service at Georgetown University, said a new term was needed to describe the extraordinary tactics that certain firms, owned by oligarchs, were using to maintain their dominance of the market.
“We noticed that these firms were active players not just in lobbying, which goes on everywhere, but also in using private payments to public officials to shape the laws of institutions in their favour,” Mr Hellman told the BBC.
State capture theory initially helped explain the oligarchs’ hold over the fragile democracies of the former Soviet bloc. Today, the concept is applied more broadly for a range of dubious dealings between corporations and governments around the world.
How the Gupta Brothers Hijacked South Africa Using Bribes Instead of Bullets
By Karan Mahajan
If you wanted to do business in South Africa, it seemed, you had to go through the Guptas—much as certain white-owned enterprises had cornered the economy during apartheid. Respected international firms rushed to make deals with the brothers and their associates. McKinsey & Company, the global consulting giant, partnered with Eskom on a scandalous deal—its largest-ever contract in Africa—that wound up funneling money to a Gupta-linked firm. (McKinsey denies that it did “anything illegal.”) The London-based P.R. firm Bell Pottinger used Twitter and fake-news Web sites to inflame racial tensions in South Africa, spreading the idea that “white monopoly capital” was orchestrating the attacks on the Guptas to create “economic apartheid.” And KPMG, the accounting firm, was hired for $1.65 million by a top Zuma ally to discredit South African tax officials who were investigating the brothers. The firm essentially copied memos provided by the government, portraying the officials as a “rogue unit” that illegally spied on the Zuma administration and “engaged the services of prostitutes during their leisure time.” The fake-news campaign worked; several senior tax officials were forced to resign, and scores more quit.
Then, on October 23, 2015, the Guptas tried to bribe the wrong man.
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Jonas, a soft-spoken man with a neat white goatee and a tie that always seems on the verge of coming undone, was outraged. When he got up to leave, Ajay tried sweetening the deal. If Jonas was willing to cooperate, Ajay said, he would deposit money in an account of his choosing—in South Africa or Dubai. In fact, he could give him $45,000 on the spot. “Do you have a bag?” he asked Jonas. “Or can I give you something to put it in?” When Jonas again refused, Ajay followed him to the door. If he told anyone about the meeting, Ajay warned, the Guptas would have him killed. (In a sworn affidavit, Ajay insisted that he was not present at the meeting, which he calls an “intentional fabrication to implicate me in alleged wrongdoing in which I played no part.”)
In March 2016, as the Guptas and Zuma continued to try and bend the finance ministry to their will, Jonas decided to go public. This time, the A.N.C. was unable to brush off the allegations—they came from within the ruling party itself. The Guptas fled for Dubai in April, and the ensuing investigations toppled top executives at McKinsey and KPMG, which is under investigation for its ties to the Guptas, as are HSBC, Standard Chartered, and SAP. Bell Pottinger, the P.R. firm, imploded after accusations that it had tried to stir up racial resentments at the Guptas’ behest. Threatened by a vote of no confidence and with his candidate having lost the vote for A.N.C. president, Zuma was forced to step down in February 2018. A few months later, Duduzane appeared before a judge in shackles, wearing a gray wool jacket and a rakish black scarf, and was charged with corruption. The era of the Guptas, it seemed, was over.
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The economy, meanwhile, remains devastated by all the plunder and corruption. Tax collections have plunged by billions since Zuma’s purge of the once-respected state tax agency. The rand is reeling, and credit-rating agencies have downgraded the country’s bonds to junk status. A quarter-century after the end of apartheid, South Africa has the worst income inequality in the world—evident in the profusion of high walls, electric fences, and guards to protect parked vehicles. Almost two-thirds of blacks live in poverty, compared with only 1 percent of whites, and half of all young people are unemployed.
These young people, like the miners I met at Optimum, are growing impatient. In 2015, a student movement called “Rhodes Must Fall” successfully pressed for the removal of a statue of the colonialist Cecil Rhodes from the University of Cape Town. Now the movement has morphed into “Fees Must Fall,” demanding free university education for poor families as a means to self-empowerment—though it is unclear where the money for such largesse might come from. And calls for land reform—in a country where whites own 72 percent of all privately held farmland—are also growing. The less the country can deliver, the more radical the demands have become.
The Guptas have created an atmosphere of distrust in which ancient group feelings are being resurrected.
Are attacks on foreigners rising in South Africa?
By Reality Check team
Attacks have mainly taken place in large cities, but they have also been reported in smaller towns and rural areas.
The violence is often triggered by local disputes, with migrants being accused of taking jobs away from South Africans.
The country has experienced poor economic performance, with officially recorded unemployment at more than 27% at the end of last year.
Comedian Volodymyr Zelensky unseats incumbent in Ukraine’s presidential election, exit poll shows
By Anton Troianovski
During his campaign, Zelensky largely eschewed traditional advertising and unscripted interactions with journalists. Instead, the entertainer relied on social media and his television shows to reach voters. (Zelensky also is part of a Saturday-night comedy show.)
On his sitcom, Zelensky plays a simple, morally upright schoolteacher who is elected president after his rant of outrage over corruption is caught on camera and goes viral. He then takes on Ukraine’s entrenched business and political elites, refusing to be bought. The third season of Zelensky’s show, “Servant of the People,” aired this spring and includes scenes of a prosperous, corruption-free Ukraine in the aftermath of the Zelensky character’s presidency.
“I’m not a politician,” Zelensky said in Friday’s debate, channeling his character in his show. “I’m just a simple person who came to break the system.”
To be sure, his real-life political rise isn’t quite the Cinderella story told in his sitcom. The long-popular entertainer has benefited from his business partnership with Ukrainian billionaire Ihor Kolomoisky, who controls the television channel that airs Zelensky’s shows and gave largely positive coverage to his candidacy. Both men deny that Kolomoisky is behind Zelensky’s political ambitions.
Oligarch’s Return Raises Alarm in Ukraine
By Andrew E. Kramer
Under the departing president, Petro O. Poroshenko, the Ukrainian government had nationalized a bank co-owned by Mr. Kolomoisky and accused him of siphoning off millions of dollars in fraudulent loans.
The Ukrainian government took over the bank, PrivatBank, in the course of a $5.6 billion bailout at a time when lending by the International Monetary Fund, the European Union and the United States was propping up the government.
While the bailout was seen as necessary, the extraordinary cost of what the Ukrainian central bank called Mr. Kolomoisky’s mismanagement became Exhibit A for Western governments in the risk of financially supporting Ukraine despite widespread corruption.
Mr. Zelensky’s campaign was centered on the claim that, beholden to no one, he would be able to clean up Ukraine’s chronic corruption. How Mr. Zelensky handles the Ukrainian authorities’ protracted dispute with Mr. Kolomoisky is a key test of his election promises to break the grip of the oligarchs, who have held sway over the country’s politics almost since independence in 1991.
It will also test relations with Western governments, which are not eager to see more aid money vanish into Mr. Kolomoisky’s business empire.
While Mr. Kolomoisky has said he would “not be the shadow leader of the country and the gray cardinal,” he has spoken openly of his hopes that Mr. Zelensky would fire officials at the central bank who were behind the takeover of PrivatBank. And that was before he returned from exile.
Reflecting Western alarm over Mr. Kolomoisky’s return, Carl Bildt, a former prime minister of Sweden, posted on Twitter: “If he’s not careful this could be the undoing of Zelensky. Selective re-oligarchisation would be a disaster for Ukraine.”
Oligarchs and oligarchs
By Branko Milanovic
The Putin oligarchs are billionaires which “serve” at the discretion of the state. As a Russian commentator once said, they should all consider themselves to be temporary custodians of their wealth. If they fall from grace with the regime they could be stripped of their assets either through dubious legal proceedings, or if needed, more forcefully by being imprisoned.
The original kind of Yeltsin-type oligarchs, which “popularized” the term, were different. These oligarchs owned the state—so the state existed only at their discretion. At the peak of their power, after Yeltsin’s reelection in 1996 which they helped him win (in the deal that led to the infamous “loans for shares” trade) oligarchs, separately, controlled Yeltsin and practically most of the levers of state power. Since they also jockeyed for power amongst themselves with some being allied with the military, others controlling natural monopolies, and the third group having their own media, Russia at the end of the 1990s was a country on the verge of a civil war. It stood not so far from where Libya stands today. Under that “regime”, life expectancy fell from 69 to 64.5 years, the largest decline in life expectancy ever recorded in peacetime. It was today’s US opiate crisis multiplied by ten or more.
From Russian oil to rock’n’roll: the rise of Len Blavatnik
By Henry Foy and Max Seddon
Just as there will likely never again be such a remarkable shift of wealth from public to private hands as he and his peers enjoyed after the collapse of the Soviet Union, there will also likely never be another Blavatnik. The gates through which his fortune passed from east to west have slammed shut. His rise took place during a period of late-20th and early-21st century capitalism when money flowed with extraordinary freedom across borders and oceans, and when the western establishment eagerly welcomed the owners of that money.
Oligarchs, as U.S. Arts Patrons, Present a Softer Image of Russia
By Graham Bowley
Since the fall of the Soviet Union, rich Russians have emerged as influential patrons of the arts and Western cultural organizations have often been the beneficiaries. Carnegie Hall, the Metropolitan Museum of Art, the Art Institute of Chicago, the Brooklyn Academy of Music and Lincoln Center are among those who have received gifts from moneyed Russians or the companies they control over the past decade.
Though wealthy patrons have long used the arts to advance their individual tastes and social standing, much of the Russian giving is different. While the oligarchs also promote their personal preferences and support a wide range of cultural activities, they often employ philanthropy to celebrate their homeland, depicting it as an enlightened wellspring of masterworks in dance, painting, opera and the like.
These patrons have been quite public in their philanthropy, and there is little evidence that their donations have been directed or coordinated by Moscow. But they all enjoy good relations with the Kremlin — a prerequisite to flourish in business in Russia — and their giving fits seamlessly with President Vladimir V. Putin’s expanding efforts to use the “soft power” of cultural diplomacy as a tool of foreign policy.
The effect, however cultivated, helps burnish the image of a nation whose aggression in Ukraine and election meddling have led it to be viewed by many as a hostile power.
“When Western publics think about Russia, Putin wants them to think about Pushkin, Tolstoy, Tchaikovsky,” said Andrew Foxall, a Russia expert at the Henry Jackson Society in London. “What he does not want Western publics to think about is the actions of his regime that goes to war with its near neighbors.”
The real threat facing Europe isn’t Russian troops. It’s oligarchs
By Michael Carpenter
If any country defines the problem, it is Hungary, which is located in the heart of Europe.
Under the leadership of Prime Minister Viktor Orbán, Hungary’s ruling party has concentrated power over the last two decades by gradually yet systematically dismantling democratic checks and balances. This political attack on democratic institutions was only possible thanks to the concentration of economic resources in the hands of a small group of oligarchs personally tied to Mr. Orbán.
Through preferential government contracts, Orbán’s cronies amassed enormous resources. The resulting economic windfalls enabled them to buy up television channels and newspapers, leading to a virtual monopoly on major media in the hands of regime-friendly oligarchs. This media empire not only provided the ruling Fidesz party with a huge political advantage over its rivals but crucially it also kept stories about government corruption out of the mainstream media. At the same time, Mr. Orbán was gradually able to stack the courts and law enforcement bodies with trusted loyalists, ensuring favorable treatment for his oligarch friends.
While Hungary’s process of corrupt oligarchization is perhaps the most extreme outside of Russia, the recent scandal in Austria shows that West European countries are not immune. Scandals with Denmark’s Danske Bank and Germany’s Deutsche Bank show just how porous Western financial institutions are to corrupt, oligarchic influence. Russian President Vladimir Putin’s cultivation of Mr. Strache and Mr. Orbán also demonstrates how corrupt oligarchization is not just a governance problem but also part of a larger geopolitical competition in which Russia and China have leaned in to support budding oligarchic forces across Europe.
Fortunately, a popular European backlash against oligarchic corruption has also been building. Slovakia recently elected anti-corruption crusader as president, North Macedonia swept aside an oligarchic regime, and millions of demonstrators have collectively poured into the streets of Bratislava, Bucharest, and Belgrade to demand an end to oligarchic corruption. They need our support because theirs is a struggle for the heart and soul of Europe.
Putin and other authoritarians’ corruption is a weapon — and a weakness
By David Petraeus and Sheldon Whitehouse
Corrupt regimes also know that, even as they strive to undermine the rule of law around the world, they are simultaneously dependent on it to a remarkable degree. In contrast to the Cold War, when the Soviet bloc was sealed off from the global economy and sustained by its faith in communist ideology, today’s autocrats and their cronies cynically seek to spend and shelter their spoils in democratic nations, where they want to shop, buy real estate, get health care and send their children to school.
Ironically, one of the reasons 21st-century kleptocrats are so fixated on transferring their wealth to the United States and similar countries is because of the protections afforded by the rule of law. Having accumulated their fortunes illegally, they are cognizant that someone more connected to power could come along and rob them too, as long as their loot is stuck at home.
Fortunately, the United States has begun to take steps to harden its rule-of-law defenses and push back against foreign adversaries. The passage of the Global Magnitsky Act in 2016, for instance, provided a powerful new tool for targeting corruption worldwide that is being increasingly utilized. But there is more to do.
In particular, the United States should make it more difficult for kleptocrats, and their agents, to secretly move money through the rule-of-law world, whether by opening bank accounts, transferring funds or hiding assets behind shell corporations. Failure to close loopholes in these areas is an invitation to foreign interference in America’s democracy and a threat to national sovereignty.
Congress should tighten campaign-finance laws to improve transparency given that U.S. elections are clearly being targeted for manipulation by great-power competitors.
Russian-Style Kleptocracy Is Infiltrating America
By Franklin Foer
The defining document of our era is the Supreme Court’s Citizens United decision in 2010. The ruling didn’t just legalize anonymous expenditures on political campaigns. It redefined our very idea of what constitutes corruption, limiting it to its most blatant forms: the bribe and the explicit quid pro quo. Justice Anthony Kennedy’s majority opinion crystallized an ever more prevalent ethos of indifference—the collective shrug in response to tax avoidance by the rich and by large corporations, the yawn that now greets the millions in dark money spent by invisible billionaires to influence elections.
In other words, the United States has legitimized a political economy of shadows, and it has done so right in step with a global boom in people hoping to escape into the shadows.
American collusion with kleptocracy comes at a terrible cost for the rest of the world. All of the stolen money, all of those evaded tax dollars sunk into Central Park penthouses and Nevada shell companies, might otherwise fund health care and infrastructure. (A report from the anti-poverty group One has argued that 3.6 million deaths each year can be attributed to this sort of resource siphoning.) Thievery tramples the possibilities of workable markets and credible democracy. It fuels suspicions that the whole idea of liberal capitalism is a hypocritical sham: While the world is plundered, self-righteous Americans get rich off their complicity with the crooks.
The Founders were concerned that venality would become standard procedure, and it has. Long before suspicion mounted about the loyalties of Donald Trump, large swaths of the American elite—lawyers, lobbyists, real-estate brokers, politicians in state capitals who enabled the creation of shell companies—had already proved themselves to be reliable servants of a rapacious global plutocracy. Richard Palmer was right: The looting elites of the former Soviet Union were far from rogue profiteers. They augured a kleptocratic habit that would soon become widespread. One bitter truth about the Russia scandal is that by the time Vladimir Putin attempted to influence the shape of our country, it was already bending in the direction of his.
John Paul Stevens Was Right: Citizens United Opened the Door to Foreign Money in U.S. Elections
By Jon Schwarz
“If taken seriously,” Stevens wrote in his opinion, “our colleagues’ assumption that the identity of a speaker has no relevance to the Government’s ability to regulate political speech would lead to some remarkable conclusions. … It would appear to afford the same protection to multinational corporations controlled by foreigners as to individual Americans.”
U.S. law strictly forbids any “foreign national” from spending money in U.S. elections. A foreign national is defined as a foreign individual, a foreign corporation, or a foreign government.
Yet during the 2012 election, the notorious Malaysian financier Jho Low appears to have funneled over $1 million via an American LLC to a super PAC that supported Barack Obama’s candidacy.
During the 2016 election, an investigation by The Intercept discovered, a California corporation wholly owned by Chinese citizens gave $1.3 million to a super PAC supporting Jeb Bush’s presidential candidacy.
In 2017, a $100,000 donation to the Trump Victory committee — a joint fundraising committee for the 2020 Donald Trump campaign, the Republican National Committee, and several state GOP parties — may also have originated with Jho Low, with an intermediate stop at an American corporation.
And in 2018, an Illinois corporation largely controlled by a Canadian billionaire gave $1.75 million to a super PAC that supports Trump’s agenda.
FARA Zombies: How Some Retired Politicians Use Leftover Campaign Funds to Advance Their Careers as Foreign Agents
By Campaign Legal Center (PDF, 3.42MB)
Data obtained from the Center for Responsive Politics and cross-referenced with Federal Election Commission (FEC) records show that at least 17 former members of Congress have registered under FARA as agents of foreign governments or political parties since 2014 while maintaining active campaign committees still stocked with millions of funds raised from their time in office.
About half of those foreign agents have used leftover campaign funds to contribute to the same legislators they’ve lobbied on behalf of foreign clients, according to the Campaign Legal Center (CLC)’s review of FARA records and campaign finance reports conducted in collaboration with the Daily Beast. In some cases, the contributors were made within days or weeks of a lobbying contact.
Examples like these add another dimension to the familiar but ever-expanding story of money, influence, and access in Washington.
It is common knowledge that some politicians leave Congress and head to K Street, where they leverage the connections with former colleagues and insider knowledge developed during public service to promote their lobbying clients’ interests.
And it has been well-documented how lobbyists make political contributions to buy access and influence. As Mick Mulvaney memorably described the “hierarchy” his office had when deciding whom to let in the door: “If you were a lobbyist who never gave us money, I didn’t talk to you. If you were a lobbyist who gave us money, I might talk to you.”
How a Top GOP Lawyer Guided a Chinese-Owned Company Into U.S. Presidential Politics
By Jon Schwarz and Lee Fang
The Intercept has determined that a corporation owned by a Chinese couple made a major donation to Jeb Bush’s Super PAC Right to Rise USA — and it did so after receiving detailed advice from Charlie Spies, arguably the most important Republican campaign finance lawyer in American politics.
As Robert Weissman, president of the nonprofit advocacy organization Public Citizen, said, “We know that Citizens United opened the door for foreign money to influence U.S. elections. This case appears to be the first instance in federal elections where the money trail is clear and documentable from publicly available records.”
Spies presented his advice in a memo, obtained by The Intercept, which he prepared for Right to Rise USA, where he served as treasurer and general counsel. “We conclude,” he wrote, “that a domestic subsidiary corporation may now directly contribute to a Super PAC in connection with a federal election.”
The Spies memo was dated February 19, 2015. One month later, American Pacific International Capital Inc., a California corporation owned by Gordon Tang and Huaidan Chen, a married couple who are citizens of China and permanent residents of Singapore, made a $1 million donation to Right to Rise USA. APIC subsequently gave the group an additional $300,000, its total donation of $1.3 million making APIC one of the Bush Super PAC’s largest contributors.
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So are there many more APICs, quietly putting their thumbs on the scale of elections for president, Congress, and state houses across the country? The reality is that America’s system of big-money politics exists in such darkness that it’s impossible to know for certain. And this door to foreign influence will likely remain open unless Citizens United is overturned by a new Supreme Court or invalidated by a constitutional amendment.
“When the president condemned Citizens United and warned that it would open the floodgates to corporate money, including foreign money, he was contemplating this,” said Norman Eisen, who was special counsel to the president when Obama delivered his 2010 State of the Union address. “I think he was prescient. I’m sure there are many more secret examples out there. It’s a sad state of affairs, but the worst scandal in the United States is what’s legal.”
Foreign spending in our elections is a threat to our national sovereignty
By Ellen L. Weintraub
Political information — think polling data, opposition research and contact lists — is costly to generate. Campaigns pay dearly to acquire such information, either generating it themselves or buying it from vendors. Such information can, therefore, be a contribution if a campaign pays someone else less than fair-market value for it. And if the contributor is a foreign national, it is an illegal contribution.
So, can a campaign go out and buy phones from South Korea’s Samsung? Yes. That’s just a purchase. Samsung is not owed anything beyond the price. The transaction is reported as an expenditure. Can the campaign get those phones from Samsung for free or at a special low price? No. That’s a contribution — an illegal foreign national (and corporate) contribution — potentially making the campaign beholden in some way to a foreign national. That’s a problem. If all this is done in secret, it’s even worse; the power to expose the wrongdoing gives the foreign national or government secret leverage over the candidate.
Inside the Saudis’ Washington influence machine: How the kingdom gained power through fierce lobbying and charm offensives
By Tom Hamburger, Beth Reinhard and Justin Wm. Moyer
In the past two years, the Saudis have intensified their efforts to cement the U.S. relationship. The kingdom’s spending on U.S. lobbying and consulting, which had dropped from $14.3 million in 2015 to $7.7 million in 2016, surged to $27.3 million last year, according to public records. More than 200 people have registered as agents on behalf of Saudi interests since 2016, according to lobbying documents posted by the Center for Responsive Politics.
Among those on the payroll have been some of Washington’s top public relations and lobbying shops: the McKeon Group, helmed by Howard P. “Buck” McKeon, the former chairman of the House Armed Services Committee; BGR Group, a firm founded by prominent Republicans Ed Rogers and Haley Barbour; the Glover Park Group, which was launched by Democratic political strategists including Joe Lockhart and Carter Eskew; and the now-defunct Podesta Group, the former firm of Democratic superlobbyist Tony Podesta.
Rogers and Eskew are both contributing opinion writers for The Washington Post. Last week, both of their firms announced they were dropping their representation of Saudi Arabia. The Post had told them they could not continue to write for The Post and lobby for Saudi Arabia, according to spokeswoman Kristine Coratti Kelly.
Separately, Saudi money — and funds from its close ally, the United Arab Emirates — have also flowed into think tanks throughout Washington, including the Center for Strategic and International Studies, the Brookings Institution and the Middle East Institute. All three said last week that they are ending or reconsidering Saudi grants.
It Wasn’t Just Khashoggi: A Saudi Prince’s Brutal Drive to Crush Dissent
By Mark Mazzetti and Ben Hubbard
Saudi Arabia has a history of going after dissidents and other Saudi citizens abroad, but the crackdown escalated sharply after Prince Mohammed was elevated to crown prince in 2017, a period when he was moving quickly to consolidate power. He pushed aside Prince Mohammed bin Nayef, who oversaw the security services, giving the young prince sway over the intelligence agencies.
Since then, Saudi security forces have detained dozens of clerics, intellectuals and activists who were perceived to pose a threat, as well as people who had posted critical or sarcastic comments about the government on Twitter.
“We’ve never seen it on a scale like this,” said Bruce Riedel, a former C.I.A. analyst now with the Brookings Institution. “A dissident like Jamal Khashoggi in the past wouldn’t have been considered worth the effort.”
Think tanks reconsider Saudi support amid Khashoggi controversy
By Alexander Nazaryan
“Saudi influence on the think tank world is deep,” said one expert associated with Think Tank Watch, a website that monitors policy institutes. “Think tanks don’t always report all of their funding sources, and thus, it is nearly impossible to get an accurate picture of how many think tanks they fund. Moreover, lobbyists and PR firms who represent foreign governments sometimes donate to think tanks, so there is also that gray area of funding,” added the expert, who did not wish to be identified so they could speak freely to the press.
The expert added, “In return, the foreign governments often expect/request studies that are beneficial to them, the hosting of events that help promote a certain view, introductions to U.S. governments officials/lawmakers.”
For example, a 2015 list of advisers to the Council on Foreign Relations includes Lubna Olayan, chief executive of a major Saudi corporation. Also on that list was Vladimir Potanin, a Russian oligarch closely linked to Vladimir Putin. (Potanin remains an adviser; Olayan appears to no longer be one.)
While influence-peddling may be regarded as standard practice in Washington, including at think tanks, Khashoggi’s murder has brought that practice into stark relief.
“There are several Washington think tanks that should be ashamed,” wrote Karen Attiah, Khashoggi’s editor at the Washington Post, on Twitter. “Some of them definitely knew or hosted @Khashoggi at events. Quiet now so as to protect their Saudi funding.”
Hacked Emails Show UAE Building Close Relationship With D.C. Think Tanks That Push Its Agenda
By Zaid Jilani and Alex Emmons
Think tanks are independent institutions, but they are often funded by weapons companies, Wall Street banks, and even foreign governments. CNAS is transparent about the fact they have received money from the UAE, and even list the country’s embassy on website as a donor. These institutions, including CNAS, often assert that their scholars are independent of their donors, and that their analysis reflects their personal beliefs, not the interest of powerful donors.
The invoice, however, as well as emails obtained by The Intercept, portray a different picture: a close relationship between CNAS and Otaiba, with Otaiba paying for specific papers and discussing the views in the papers with the authors. Otaiba later explained to those responsible for creating the policy papers how the documents would be used to push the UAE’s drone program.
Amid Internal Investigation Over Leaks to Media, the Center for American Progress Fires Two Staffers
By Ryan Grim and Clio Chang
The Center for American Progress fired two staffers suspected of being involved in leaking an email exchange that staffers thought reflected improper influence by the United Arab Emirates within the think tank, according to three sources with knowledge of the shake-up. Both staffers were investigated for leaking the contents of an internal email exchange to The Intercept, but neither of the former employees was The Intercept’s source.
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At issue was an internal debate over how to frame CAP’s response to the murder of Washington Post contributing columnist Jamal Khashoggi, who was dismembered by Saudi Arabian officials inside the nation’s consulate in Istanbul on October 2.
The initial draft of the CAP’s statement condemned the killing and Saudi Arabia’s role in it, calling for specific consequences. Brian Katulis, a Gulf expert at CAP, objected to the specific consequences proposed in an email exchange with other national security staffers, according to sources who described the contents of the thread to The Intercept. At an impasse, the specifics were dropped, replaced merely with a call to “take additional steps to reassess” the U.S.-Saudi relationship, and the statement was released to the public on October 12.
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The dispute over the statement was widely discussed within CAP, and people outside the organization also learned of it. “I cannot overstate how widely known this was,” said one of The Intercept’s sources about the email exchange. CAP’s acceptance of UAE money has also been controversial within the organization for some time.
The UAE operated torture chambers in Yemen “in which the victim is tied to a spit like a roast and spun in a circle of fire,” the Associated Press has reported.
Gude has criticized U.S. policymakers for ignoring the UAE’s human rights abuses, an article that CAP itself pointed to when defending its record on the war in Yemen to The Intercept. “In United Arab Emirates (UAE)-controlled prisons, Yemeni detainees are stripped naked, tied up, have large rocks suspended from their testicles, and raped or sodomized by wooden or steel poles. All of it is filmed by guards,” Gude wrote, in perhaps CAP’s most graphic summary to date of the reports of UAE torture. “These are some of the gruesome details in a new report from The Associated Press (AP)—a follow-up to its June 2017 report—documenting the horrific torture and abuse occurring in UAE-run prisons in Yemen.”
The think-tank dilemma
By Yoichi Funabashi
The Brookings Institution in Washington, DC – perhaps the world’s top think tank – is under scrutiny for receiving six-figure donations from Chinese telecommunications giant Huawei, which many consider to be a security threat. And since the barbaric murder of Saudi journalist Jamal Khashoggi last October, many other Washington-based think tanks have come under pressure to stop accepting donations from Saudi Arabia.
These recent controversies have given rise to a narrative that Washington-based think tanks are facing a funding crisis. In fact, traditional think tanks are confronting three major challenges that have put them in a uniquely difficult situation. Not only are they facing increased competition from for-profit think tanks such as the McKinsey Global Institute and the Eurasia Group; they also must negotiate rising geopolitical tensions, especially between the United States and China. And complicating matters further, many citizens, goaded by populist harangues, have become dismissive of “experts” and the fact-based analyses that think tanks produce (or at least should produce).
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In terms of shadowy influence-peddling, China’s actions have been particularly concerning. Chinese President Xi Jinping has explicitly encouraged his country’s think tanks to “advance the Chinese narrative” globally. And in many cases, China-based think tanks have become instruments for expanding the country’s sphere of influence.
According to a report by the European Council on Foreign Relations, China’s Belt and Road Initiative, with its need for complex coordination, has created the perfect policy space for think tanks that “tell a good China story” to prosper. These include networks such as SiLKS and individual think tanks such as the Charhar Institute, which also recently established a “National Committee for China-US Relations.” Given their links to the Chinese government, these organisations threaten to muddy the waters in which genuinely independent think tanks operate.
But the most significant threat to think tanks is coming from the global populist backlash against “experts” and evidence-based research. As Michael D. Rich and Jennifer Kavanagh of the RAND Corporation have argued, we are currently living through a period of “truth decay.” The line between fact and opinion has become blurred, and people have increasingly grown distrustful of respected sources of information and data.
What have think tanks got to hide?
By James Bloodworth
The real issue is transparency – the public should have a right to know who funds organisations that wield such influence in public life. Many think tanks are indeed financially transparent, meaning people can draw their own conclusions about their research. However, according to Transparify, which ranks them based on their financial disclosure, several high profile think tanks continue to take money from sources which they choose not to disclose.
This matters when money translates into a form of soft power. Think tanks generate reports that can alter the direction of – some might even say distort – public debate. It doesn’t necessarily invalidate a report on, say, climate change to know that those who financed it have links to the oil industry. But is reasonable that readers are informed about such links.
One of the biggest issues in public life in Britain today is trust. The public lacks trust in politicians, in institutions, and in the way the country is being run. There is also a growing sense that politicians are too close to big business. Transparency in public life is essential to reversing this trend. As part of the democratic process, ‘Who funds you?’ is a vital question.
Soros and Koch brothers team up to end US ‘forever war’ policy
By Stephen Kinzer
These “talk shops” employ experts who pop up to advise politicians, journalists, Congressional staff members, and the public. They write opinion columns and bloviate on news channels. In foreign policy, all major Washington think tanks promote interventionist dogma: the United States faces threats everywhere, it must therefore be present everywhere, and “present” includes maintaining more than 800 foreign military bases and spending trillions of dollars on endless confrontations with foreign countries. That, with some variation, is the ethos that moves conservative think tanks like the American Enterprise Institute and the Heritage Foundation as well as liberal ones like the Center for American Progress and the Brookings Institution. Just as pernicious as their relentless support of the global-hegemony project is the corruption that lies behind it. Many Washington think tanks are supported by industries and foreign powers eager to inflate threats in order shape American law, policy and public opinion. Their “experts” are often paid shills who cloak themselves in institutional respectability so they can masquerade as independent analysts.
Abortion, gun control: How special interest groups push legislation
By Rob O’Dell and Nick Penzenstadler
Each year, state lawmakers across the U.S. introduce thousands of bills dreamed up and written by corporations, industry groups and think tanks.
Disguised as the work of lawmakers, these so-called “model” bills get copied in one state Capitol after another, quietly advancing the agenda of the people who write them.
A two-year investigation by USA TODAY, The Arizona Republic and the Center for Public Integrity reveals for the first time the extent to which special interests have infiltrated state legislatures using model legislation.
USA TODAY and the Republic found at least 10,000 bills almost entirely copied from model legislation were introduced nationwide in the past eight years, and more than 2,100 of those bills were signed into law.
The investigation examined nearly 1 million bills in all 50 states and Congress using a computer algorithm developed to detect similarities in language. That search – powered by the equivalent of 150 computers that ran nonstop for months – compared known model legislation with bills introduced by lawmakers.
The phenomenon of copycat legislation is far larger. In a separate analysis, the Center for Public Integrity identified tens of thousands of bills with identical phrases, then traced the origins of that language in dozens of those bills across the country.
Model bills passed into law have made it harder for injured consumers to sue corporations. They’ve called for taxes on sugar-laden drinks. They’ve limited access to abortion and restricted the rights of protesters.
In all, these copycat bills amount to the nation’s largest, unreported special-interest campaign, driving agendas in every statehouse and touching nearly every area of public policy.
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“This work proves what many people have suspected, which is just how much of the democratic process has been outsourced to special interests,” said Lisa Graves, co-director of Documented, which probes corporate manipulation of public policy. “It is both astonishing and disappointing to see how widespread … it is. Good lord, it’s an amazing thing to see.”
The impact of model legislation is undoubtedly larger than the 10,000 copied bills identified by USA TODAY/Arizona Republic.
Because the investigation relied on matching identical text, it flagged instances where legislators copied model legislation nearly verbatim, but it did not detect bills that adapted an idea without using the same language.
Hacked Emails Show GOP Demands on Border Security Were Crafted by Industry Lobbyists
By Lee Fang
While dozens of private security firms and trade groups lobbied on the immigration proposals, there is little public information on whether the lobbyists directly authored the bills.
Perceptics’ hacked emails, however, show a clear fingerprint. The legislative texts of both House bills include nearly identical language on LPR funding. The drafts also codify a pilot program in Laredo, Texas, to use the technology on high-volume tractor-trailer ports of entry.
Both bills ultimately failed as conservatives rallied against the compromise legislation put forward by moderates, and Democrats and moderates killed the conservative border bill.
But the lobbyists continued to press for further opportunities.
Business Group Spending on Lobbying in Washington Is at Least Double What’s Publicly Reported
By Andrew Perez, Abigail Luke and Tim Zelina
Influential corporate trade organizations and nonprofits spent $535 million on lobbying in 2017 and as much as another $675 million on unregulated efforts to influence public policy, according to a two-month investigation.
The figures, taken together, highlight how business interests can exploit loopholes in lobbying rules, which don’t cover many staples of modern influence campaigns, such as strategic consulting, broadcast advertising, media relations, social media posts, and polling — or even the financing of astroturf campaigns.
Protesters Collect Secret Cash to Oppose Fur Ban Proposed in California, Documents Reveal
By Lee Fang
The fur industry is relying on a small phalanx of vocal supporters who have rallied across the country to prevent a ban on fur products, often inflaming the debate with accusations of hypocrisy and racism.
Many of the impassioned defenders of fur hats and mink coats, however, have received undisclosed financial support for their activism.
At a hearing in Sacramento on Tuesday morning, a parade of opponents appeared before the state Senate Judiciary Committee panel at a pivotal hearing over California’s proposed ban on fur products, AB 44. Many of the same individuals appeared at another hearing before the California Senate Natural Resources Committee last month.
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Documents obtained by The Intercept show that several of the fur ban opponents received money in exchange for their testimonies.
Gray received at least $7,000 by the Fur Information Council of America, the leading trade group for companies that manufacture and sell fur products, an affiliation he did not disclose during his comments to legislators. Asked about the money, Gray said he was not required to inform lawmakers of his clients during the hearing.
Documents obtained by the activist group Direct Action Everywhere, or DxE, suggest that some of the students also received financial support for their activism.
“Anyone in LA down to make an easy $100 this Tuesday in Sacramento and fight tyranny?” wrote Aguero in a Facebook post two days before the June 25 hearing.
Benjamin Hunter, a recent graduate from California State Polytechnic University at Pomona, replied, “Haha! Sure.” Hunter appeared at both hearings to testify against the bill. He could not be reached for comment.
Several other students responded in the affirmative. One of the students happened to be a DxE volunteer asking in order to find more information about Aguero’s work. In messages exchanged with Aguero, the DxE volunteer, posing as an AB 44 opponent, was connected to DiGiovanna, who provided a contract with Mobilize the Message, a Republican consulting firm.
The contract listed various ways in which workers were expected to contact “4 key legislators” in opposition to AB 44. “You will be compensated $175 total for the program,” along with “additional opportunities and bonuses” for “top performers,” the contract noted.
Silicon Valley-Funded Privacy Think Tanks Fight in D.C. to Unravel State-Level Consumer Privacy Protections
By Lee Fang
The stakes of the online privacy fight could have ramifications the world over. American standards on data collection could shape political and business decisions across the world, said Jeff Chester, president of the Center for Digital Democracy, a privacy think tank that opposes overturning of state-level privacy laws.
“This is much bigger than Cambridge Analytica,” Chester said. Cambridge Analytica was involved in a scandal when, while working on behalf of Donald Trump’s presidential campaign, the data analytics firm illicitly scraped consumer data from Facebook in order to build advanced voter-targeting methods. The events stoked outrage over Facebook’s security around its users’ private data.
Chester said the money lavished by the tech industry on privacy think tanks was tantamount to funding lobbyists. “These groups should not take a dime of corporate money. This is basically lobbying dollars,” Chester said. “I think every one of these groups working on privacy that takes corporate money should return it.”
Meanwhile, actual tech industry lobby groups are pushing federal legislation along the same lines as that proposed by the tech-funded think tanks. One of the largest lobbying groups for Silicon Valley, NetChoice, has rallied behind Sen. Marco Rubio’s, R-Fla., privacy bill. His bill would roll back state regulation and place enforcement authority largely under the Federal Trade Commission, a notoriously toothless federal agency with no rule-making power, instead of letting consumers directly sue tech companies under the law.
NetChoice lobbies on behalf of Facebook, Google, Twitter, Airbnb, and eBay, among other tech companies. (Pierre Omidyar, founder of The Intercept’s parent company, First Look Media, is the chair of eBay.)
How to Think About Breaking Up Big Tech
By David Dayen
“The issue is not the size and current market dominance of these [tech] companies,” wrote the American Enterprise Institute’s Michael Strain for Bloomberg, in response to the Warren plan. “If anything, politicians should be celebrating these companies as crown jewels of the U.S. economy.”
Strain’s employer, AEI, is funded in part by Google, according to the company’s transparency page. This is not noted in Strain’s Bloomberg op-ed. But AEI and its writers have done several critical pieces about Warren’s proposal, as well a California privacy regulation that also imposes stricter rules on Big Tech. All of these opinion articles indirectly benefit one of AEI’s donors.
The episode points to a significant trend of writers and scholars opining on the Warren plan while conflicted by the overwhelming amounts of Big Tech cash that have infested Washington. Google’s list of organizations to whom it has donated is massive, and combined with Facebook and Amazon’s dominance of Washington, it’s hard to find anyone with a critical eye toward Big Tech regulation who doesn’t have something to disclose.
Rich Lowry of National Review unleashed a pack of industry talking points to explain how Big Tech “helps create a strong American society.” National Review takes Google money. Here’s a similar sentiment dragging the Warren plan on the pages of National Review, from a senior fellow at the Competitive Enterprise Institute, which also takes Google money. The American Action Forum seems to dislike the Warren plan; the group, well, takes Google money.
Geoffrey Manne and Alec Stapp condemn Warren for “wanting to turn the Internet into a sewer.” Manne’s organization, the International Center for Law and Economics, has taken a boatload of Google money; as of 2015, he had contributed to at least eight white papers commissioned or funded by Google that endorsed Google’s policy positions, in addition to being a frequent pro-Google commentator in news articles and congressional testimony. Stapp, before hooking up with Manne at ICLE, worked at the Mercatus Center at George Mason University, another recipient of Google funds. A former Manne co-author, Joshua Wright, worked at George Mason University and has been periodically on and off the Google payroll in between government work.
Manne and Stapp’s piece got the pile-on treatment on Twitter from representatives of the Google-funded Cato Institute and Niskanen Center; Stapp previously worked at Niskanen. Several venture capitalists who currently rely on Big Tech for exit strategies for their companies also gave the thumbs-up to the piece.
The Computer and Communications Industry Association, a trade group that includes Amazon, Facebook, and Google among its members, uses a subsidiary named Springboard to hurl critiques at regulatory tech policies. In addition to the aforementioned articles from AEI and National Review, Springboard points to the opinions of a partner at Andreessen Horowitz, an early investor in Facebook, and the CCIA’s own vice president for Law an Policy — which amounts to CCIA linking to itself as outside confirmation of its beliefs.
These linkages are virtually endless and show an incestuous network of academics, think-tankers, advocacy organizations, and trade groups, all of which happen to agree on every issue important to Big Tech. The money supports extending the prominence and megaphone of these organizations, and with nearly unlimited pocketbooks, it creates the impression of a tsunami of support for the industry.
Google Axes Lobbyists Amid Growing Government Scrutiny
By Brody Mullins and Ted Mann
In 2006, the year before Mr. Kovacevich joined Google, the company spent $800,000 on lobbying and had four lobbying firms on retainer. In 2018, Google had 100 lobbyists, employed nearly 30 firms, and spent $21.7 million to lobby Washington, making it the largest spender on lobbying among U.S. corporations, according to public lobbying filings compiled by the nonpartisan Center for Responsive Politics.
The company spent millions more on donations to think tanks, political entities, universities and other third-party groups that churned out papers, generated data and hosted policy conferences that Google used to help shape the debate on issues such as privacy, net neutrality and self-driving cars.
Meanwhile, Google employees helped the company become one of the largest sources of campaign donations to the Democratic Party and its candidates, including Hillary Clinton and Barack Obama, according to the Center for Responsive Politics. In the 2018 congressional elections, Google’s employee-funded PAC donated $1.9 million to political candidates in both parties, the group’s figures show.
Donations from employees made Google a top source of campaign money for both of Mr. Obama’s presidential campaigns, and the company’s employees ranked as the leading source of money for Mrs. Clinton’s 2016 presidential bid. Employees of the company donated a total of $1.6 million to Mrs. Clinton’s campaign, the center found.
After Mr. Obama took office, Google and its Washington lobbying team scored a string of victories. Most significantly, Mr. Obama’s FTC, which is technically an independent agency, declined to pursue an antitrust case against Google in 2013 after a lengthy investigation.
Google also won favorable net-neutrality rules from the Federal Communications Commission, headed off federal privacy regulations in Congress and secured a friendly ruling on self-driving vehicles from highway-safety regulators, among other matters.
How Google Influences the Conversation in Washington
By Nitasha Tiku
Georgetown law professor Marc Rotenberg, president of the Electronic Privacy Information Center, said that when EPIC filed complaints with the FTC to block Google’s acquisition of DoubleClick in 2007 and Nest in 2014, Google’s response was to pump money into universities, think tanks, and nongovernmental groups. “Money buys silence,” Rotenberg says. “Google doesn’t need the experts to agree with them. They only need them to look the other way.”
Experts who defend tech companies in Washington generally say they are not influenced by Google’s donations. Matt Stoller, of the Open Markets Institute, a left-leaning think tank that favors tough antitrust enforcement, finds that curious. “It’s funny that economists think that incentives work on everybody but economists,” Stoller says.
George Mason University’s Donor Problem and the Fight for Transparency
By Bethany L. Letiecq
Beginning in the 1980s, Charles Koch took an interest in GMU for its proximity to Washington, DC, and its potential to become a stronghold of libertarian economics. Between 2005 and 2015, Charles Koch and the Charles Koch Foundation contributed what is estimated to have been nearly $100 million to GMU, directing most of those funds to the economics department (which is now dominated by libertarian-leaning economists) and the GMU law school’s Law and Economic Center, which provides corporate-backed “free-market” educational workshops for federal and state judges and attorneys general.
The Charles Koch Foundation also funds two other entities housed on GMU’s campus: the Mercatus Center, a libertarian think tank known for its lobbying efforts in connection with the American Legislative Exchange Council and other conservative “bill mills,” and the Institute for Humane Studies (IHS), which recruits faculty and students to advance a libertarian ideology and free-market economic principles in higher education, among other goals. Mercatus and the IHS have complicated and curious affiliations with the university: they pay little to no rent for their campus offices; the entities use the Mason brand liberally; their staffs receive university benefits, such as tuition waivers; and the entities have their own private gmu.edu servers. Charles Koch, Charles Koch Foundation representatives, and Koch-funded faculty sit on the boards of both entities, and Koch is chair of the IHS. GMU has virtually no oversight of either corporation, yet both benefit from their affiliation with GMU, which provides them with a veneer of academic and intellectual legitimacy.
Like most other universities, GMU has a foundation to cultivate and manage philanthropic giving. Money flows from the Charles Koch Foundation through the GMU Foundation to the unit, entity, or faculty member, along with the terms and conditions stipulated by the gift agreement. Because the GMU Foundation, Mercatus, and the IHS are all 501(c)(3) nonprofit organizations, they are not subject to Virginia’s Freedom of Information Act. Thus, it is nearly impossible to follow the money at our public institution, to uncover the terms and conditions of gift agreements, or to protect against undue donor influence and academic abuses. Unless the GMU Foundation willingly makes gift agreements public, we cannot know if gifts have troubling strings attached that may violate the university’s mission or principles of academic freedom, academic control, or shared governance. At GMU and at many other public universities, only the university president, the president of the foundation, and a few others are privy to the terms and conditions of gift agreements.
It’s time for think tanks and universities to take the democracy pledge
By Thorsten Benner
The murder of Jamal Khashoggi has put the spotlight on think tanks and universities receiving funding from the Saudi regime. Under pressure by media reports, a few think tanks, such as the Brookings Institution, the Center for International Studies and the Middle East Institute, have decided to return Saudi money. Top universities such as Harvard, MIT and Georgetown have so far gotten away with their ties to the Saudi regime without confronting much public scrutiny. This makes it clear that most will act only when a questionable source of funding blows up in their faces.
Saudi funding is just the tip of the iceberg. Money from authoritarian governments is flowing into scholarship, not only from the Persian Gulf but also from the likes of China and Turkey. If leading think tanks and universities want to regain their credibility, they need to change course and commit to a “democracy pledge” to accept funding only from democracies.
The work of think tanks and universities is premised on independence, integrity and the search for truth. They are part of the very fabric of liberal democracy and embody the values of open societies. They stand for everything authoritarians despise: open debate, independent judgment, freedom of thought and freedom of speech. If think tanks and universities sell their brands to authoritarians, that has a corrosive effect not just on their own credibility. It also erodes their role as trustworthy pillars of liberal democracy.
Why Regulators Went Soft on Monopolies
By Jonathan Tepper
Since the early 1980s, economists have become wealthy moving in and out of government promoting mergers. Each time, they land at a cushy law firm or research firm that trades on their inside connections in government, and they return to government.
The problem is not restricted to the DOJ and FTC. According to The Washington Post, 10 years after the financial crisis brought the U.S. economy to the abyss, about 30 percent of the lawmakers and 40 percent of the senior staff who wrote the Dodd-Frank Act have gone to work for or on behalf of the financial industry.
The conflicts of interest within the antitrust world are receiving increased scrutiny, with even The Economist writing that “competition regulators have been captured.” It is a damning indictment of the status quo that the pro-market publication could write:
Competition regulators have a dated view of the economy and, in official forums about how to reform competition policy, lawyers acting for private firms are given undue weight. Academics are paid as witnesses or are sponsored by firms without disclosing it. Officials rotate between the agencies and law firms which defend big companies. Consumers rarely have a voice. In America things have slipped so badly that a material conflict of interest is not considered a disqualifying condition, or even a relevant consideration, for someone to pronounce on antitrust policy and be taken seriously.
The free-market-friendly publication even likened them to the financial regulators before the financial crash.
How an Élite University Research Center Concealed Its Relationship with Jeffrey Epstein
By Ronan Farrow
The M.I.T. Media Lab, which has been embroiled in a scandal over accepting donations from the financier and convicted sex offender Jeffrey Epstein, had a deeper fund-raising relationship with Epstein than it has previously acknowledged, and it attempted to conceal the extent of its contacts with him. Dozens of pages of e-mails and other documents obtained by The New Yorker reveal that, although Epstein was listed as “disqualified” in M.I.T.’s official donor database, the Media Lab continued to accept gifts from him, consulted him about the use of the funds, and, by marking his contributions as anonymous, avoided disclosing their full extent, both publicly and within the university. Perhaps most notably, Epstein appeared to serve as an intermediary between the lab and other wealthy donors, soliciting millions of dollars in donations from individuals and organizations, including the technologist and philanthropist Bill Gates and the investor Leon Black. According to the records obtained by The New Yorker and accounts from current and former faculty and staff of the media lab, Epstein was credited with securing at least $7.5 million in donations for the lab, including two million dollars from Gates and $5.5 million from Black, gifts the e-mails describe as “directed” by Epstein or made at his behest. The effort to conceal the lab’s contact with Epstein was so widely known that some staff in the office of the lab’s director, Joi Ito, referred to Epstein as Voldemort or “he who must not be named.”
The financial entanglement revealed in the documents goes well beyond what has been described in public statements by M.I.T. and by Ito. The University has said that it received eight hundred thousand dollars from Epstein’s foundations, in the course of twenty years, and has apologized for accepting that amount. In a statement last month, M.I.T.’s president, L. Rafael Reif, wrote, “with hindsight, we recognize with shame and distress that we allowed MIT to contribute to the elevation of his reputation, which in turn served to distract from his horrifying acts. No apology can undo that.” Reif pledged to donate the funds to a charity to help victims of sexual abuse. On Wednesday, Ito disclosed that he had separately received $1.2 million from Epstein for investment funds under his control, in addition to five hundred and twenty-five thousand dollars that he acknowledged Epstein had donated to the lab. A spokesperson for M.I.T. said that the university “is looking at the facts surrounding Jeffrey Epstein’s gifts to the institute.”
Massive new study traces how corporations use charitable donations to tilt regulations in their favor
By Christopher Ingraham
Merging charitable-giving data of Fortune 500 companies with a complete record of public comments submitted to the federal government on proposed regulations between 2003 and 2015, Bertrand and her colleagues are able to trace how individual corporations influence the rulemaking process via nonprofit donations.
The data set compiled by the researchers demonstrates three crucial findings: First, after a firm donates to a nonprofit organization, that group becomes more likely to comment on rules that the firm has also commented on. Second, the organization’s comments in those cases have more similarities with the firm’s comments than with comments from other nonprofit organizations not receiving money from the firm. And finally, when a firm and its grantees comment on a rule together, regulators’ final remarks on the rule are more likely to be in line with the firm’s comments on the rule.
The research “unearth[s] a channel of influence going from corporations to policymaking that was not measured before,” co-author Matilde Bombardini said in an email, “both in terms of monetary magnitude and impact on the agency’s views on the various regulations.”
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Nonprofit organizations often present themselves as independent entities not aligned with any particular for-profit interests. They are “providers of nonpartisan, technical expertise and are commonly expected to offer more neutral input into the lawmaking and rulemaking process, with a focus on cost-benefit analysis and broader societal interests,” Bertrand and her colleagues write.
But their research shows how corporations can influence nonprofit organizations’ input into the policymaking process, which can “distort the outcome of the political process away from the public good and towards private interests,” as they put it. Policymaking ends up reflecting the interests of the people who have enough money to make their voices stand out. Government becomes less representative. Authorities make decisions that benefit the wealthy few, rather than the broader society.
“The biggest losers are constituents who end up getting their perspectives drowned,” Wonderlich said.
Politicians Don’t Actually Care What Voters Want
By Joshua Kalla and Ethan Porter
We provided state legislators in the United States with access to highly detailed public opinion survey data — more detailed than almost all available opinion polls — about their constituents’ attitudes on gun control, infrastructure spending, abortion and many other policy issues. Afterward, we gauged the willingness of representatives to look at the data as well as how the data affected their perceptions of their constituents’ opinions.
What we found should alarm all Americans. An overwhelming majority of legislators were uninterested in learning about their constituents’ views. Perhaps more worrisome, however, was that when the legislators who did view the data were surveyed afterward, they were no better at understanding what their constituents wanted than legislators who had not looked at the data. For most politicians, voters’ views seemed almost irrelevant.
How Transparency Helps Lobbyists and Hurts the Public
By James D’Angelo and Brent Ranalli
The U.S. Congress is broken. Legislators prioritize political posturing and self-aggrandizement over the actual business of legislation. They have caused two costly and pointless shutdowns of the federal government in the past two years alone. Despite his campaign promises, President Donald Trump has not, in fact, drained the swamp. The Republicans’ 2017 tax reform bill set off a frenzy of lobbying, and in the 2018 midterm elections, total campaign spending broke the $5 billion mark for the first time. The only lawmakers who buck the party line tend to be those who have already announced their retirement—and even then, they dissent only rarely and with trepidation. No wonder 76 percent of Americans, according to a Gallup poll, disapprove of Congress.
This dysfunction started well before the Trump presidency. It has been growing for decades, despite promise after promise and proposal after proposal to reverse it. Many explanations have been offered, from the rise of partisan media to the growth of gerrymandering to the explosion of corporate money. But one of the most important causes is usually overlooked: transparency. Something usually seen as an antidote to corruption and bad government, it turns out, is leading to both.
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A number of factors may have contributed to the explosion of corporate lobbying. An onslaught of environmental and consumer regulations in the late 1960s and early 1970s provoked an antiregulatory backlash, and the authorization of political action committees in 1974 encouraged business to take sides in elections. But the most compelling explanation is the revolution in transparency that unfolded at the same time. Before the sunshine reforms, lobbyists could rarely tell for sure whether their targets were voting as intended. That lack of assurance proved crucial to keeping special interests on the back foot. During the deliberations that led to the Tax Reform Act of 1969, for example, members of Congress approved all kinds of special giveaways in open session, but when the conference committee met behind closed doors to draft the final language, it quietly stripped the pork away, dashing the hopes of scores of special interest groups. As the political scientist Lester Milbrath had noted in the early 1960s, “A lobbyist who thinks about using bribery … has no assurance that the bribed officials will stay bought.”
Transparency changed that. After the liberals’ winning streak in the early 1970s, the business lobby caught on to how the game was played and began playing it for even higher stakes.
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Consider the National Rifle Association. While it does contribute to members’ campaigns, the NRA’s real influence comes from the threat of “taking out” friendly legislators who step out of line. This is the tactic it employed with Debra Maggart, a Republican in the Tennessee House of Representatives and a lifetime NRA member who in 2012 dared to oppose a bill that would have allowed people to leave guns unattended in parked cars. The NRA entered the fray, releasing an onslaught of ads against her during a primary race, and successfully unseated her. A public execution like this sends a clear message to every legislator in the NRA’s orbit: do what we say or else.
It’s a winning strategy. In 2013, as the Senate considered a gun control bill in the wake of the Sandy Hook shooting, the NRA sent a seemingly innocuous letter to each senator noting that the organization might “make an exception to [its] standard policy of not ‘scoring’ procedural votes”-an announcement that surely sent panic into members worried about their standing with the NRA. Even though the measures in the bill enjoyed the support of a majority of Americans, the legislation failed. The key factor was not money but intimidation. And the NRA’s ability to issue a credible threat depends entirely on its ability to see precisely how legislators vote.
Would legislators vote differently if they were not under a microscope? One natural experiment occurred in the Florida Senate in 2018, when the legislature was debating a two-year moratorium on the sale, delivery, and transfer of AR-15-style rifles. When the legislature held a voice vote-in which individual members’ positions are not recorded-the bill passed. But when, for procedural reasons, the vote was repeated as a recorded roll-call vote, it failed.
Everyone Knows Money Influences Politics … Except Scientists
By Maggie Koerth-Baker
“It is kind of a ‘duh,” said Eleanor Neff Powell, a professor of political science at the University of Wisconsin-Madison. She’s one of many researchers who have found evidence that money and politics are linked, just like American voters always suspected. McKay isn’t the first scientist to show that the two forces connect outside the roll-call vote. Since the 1980s, research has established that interest groups are more likely to get their way in votes where there’s less public attention or debate, has found that companies that spend money on lobbying and campaign contributions do better financially, and has documented experimentally that groups identifying themselves as donors have an easier time getting face-to-face meetings with members of Congress and their high-level staffers.
What’s more, politicians will readily admit to the kind of thing McKay and others have found. Baucus, the Senate Finance Committee chair whose transparency made McKay’s work possible, was unsurprised to find that text from lobbyist letters ended up in his bill. “I’ve seen that happen from the get-go, from when I first arrived in Congress,” Baucus said. “But so what?” It’s not illegal.
The Supreme Court has established a precedent where the government can only ban a very specific type of corruption. If a donation can’t be shown to have been taken by a politician in exchange for an altered vote or other political favor, it’s not a bribe and so should be allowed, the court ruled. Powell and McKay both told me they hoped that proving money was shaping policy would convince the courts to overturn past rulings and allow tighter regulation of campaign finance. But that’s unlikely when what their research has proven is happening isn’t something the court sees as corrupt, legal experts told me. And all of this can make both McKay’s study and the whole process of accumulating evidence to identify and fix a problem in society — the entirety of social science, if you will — feel futile and broken. What’s the point of evidence if it proves something most people already believe and doesn’t change anyone’s behavior?
There is no ‘right’ v ‘left’: it is Trump and the oligarchs against the rest
By Robert Reich
In reality, the biggest divide in America today runs between oligarchy and democracy. When oligarchs fill the coffers of political candidates, they neuter democracy.
The oligarchs know politicians won’t bite the hands that feed them. So as long as they control the money, they can be confident there will be no meaningful response to stagnant pay, climate change, military bloat or the soaring costs of health insurance, pharmaceuticals, college and housing.
There will be no substantial tax increases on the wealthy. There will be no antitrust enforcement to puncture the power of giant corporations. There will be no meaningful regulation of Wall Street’s addiction to gambling with other peoples’ money. There will be no end to corporate subsides. CEO pay will continue to skyrocket. Wall Street hedge fund and private equity managers will continue to make off like bandits.
What Does Oligarchy Mean?
By Robert B. Reich
America has had an oligarchy before – in the first Gilded Age, which ran from the 1880s until the early 20th century.
Teddy Roosevelt called that oligarchy the “malefactors of great wealth,” and fought them by breaking up large concentrations of economic power–the trusts–and instituting a progressive federal income tax.
His fifth cousin, Franklin D. Roosevelt, further reduced their power by strictly regulating Wall Street, and encouraging the growth of labor unions. The oligarchy fought back but Roosevelt wouldn’t yield.
But the American oligarchy has returned. We are now in a second Gilded Age. As the great jurist Louis Brandeis once said, “We can have democracy in this country or we can have wealth concentrated in the hands of a few, but we cannot have both.”
Is Congress rigged in favour of the rich?
By The Economist
A new paper by Jeffrey Lax and Justin Phillips of Columbia University, and Adam Zelizer of the University of Chicago, suggests that the wealthy hold considerably less sway than is often assumed. Using data on 49 Senate votes on economic, social, and foreign-policy issues between 2001 and 2015, as well as on national survey data from polling firms such as Gallup and Pew, the authors analysed how often senators voted in line with the opinions of the rich and poor—defined as voters in the richest and poorest income quintiles in their state. They found that the rich get what they want from their senators about 60% of the time, whereas the poor receive their desired policy 55% of the time. When these two groups are on opposing sides of an issue, the rich get what they want 63% of the time. The middle class fare similarly when pitted against the rich.
That is unfair, yes, but not itself proof of a “rigged” game. For partisanship matters far more than the interests of affluent voters. According to the authors, when rich and poor voters oppose each other on a given issue, Democratic senators side with the rich 35% of the time and Republicans do so 86% of the time … . Since legislators often follow the party line, it is little wonder that Congress is viewed as biased towards the rich when Republicans hold a majority. “Affluent influence that results from partisan influence may be worrisome,” the authors conclude, “but it is not the same as living in an oligarchy.”
The audacity of America’s oligarchy
By Edward Luce
The Democratic party has been put on notice. If it picks a pro-tax candidate to take on Donald Trump next year, a billionaire will probably enter the US presidential race as a spoiler. Whether that is Howard Schultz, the former chief executive of Starbucks, or someone else, is secondary. Any third-party plutocrat would have the means to split the vote and enable Mr Trump’s re-election. The inference is clear: a large chunk of America’s plutocracy would risk a second Trump term to keep their taxes low.
This is no trivial consideration. Independent candidates have changed the result in three of the past seven US presidential elections. Even a 1 per cent share of the vote, which is what Jill Stein, the Green party candidate, received in 2016, can tip the electoral college. Hillary Clinton won almost 3m more votes than Mr Trump. But she lost Wisconsin, Pennsylvania and Michigan by 77,000 — roughly half of what Ms Stein garnered in those states. She spent just $3.6m in total on the 2016 race. It was enough to change history.
With a net worth of $3.4bn, Mr Schultz could spend a hundred times what Ms Stein did yet it would amount to barely a tenth of his wealth. Should Democrats nominate a candidate who would hit the likes of Mr Schultz with a wealth tax, his ability to neutralise that threat would be considerable. Even if he decided not to run, the mere prospect could intimidate Democrats into choosing a more plutocrat-friendly candidate.
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Mr Schultz’s view is that America’s embittered politics can only be saved by amateurs. People in politics are too compromised. Another view is that the state of US politics reflects what is happening in its economy. Acute inequality breeds oligarchy. Just as the middle class is being hollowed out, so the political middle ground is retreating. Mr Schultz epitomises that reality. That a billionaire could change the outcome in a democracy of 330m people might, in itself, be a sign of a broken system.
Internet billionaire Reid Hoffman apologizes for funding a group tied to disinformation in Alabama race
By Tony Romm, Craig Timberg and Aaron C. Davis
Internet billionaire Reid Hoffman apologized on Wednesday for funding a group linked to a “highly disturbing” effort that spread disinformation during last year’s Alabama special election for U.S. Senate, but said he was not aware that his money was being used for this purpose.
Hoffman’s statement is his first acknowledgement of his ties to a campaign that adopted tactics similar to those deployed by Russian operatives during the 2016 presidential election. In Alabama, the Hoffman-funded group allegedly used Facebook and Twitter to undermine support for Republican Roy Moore and boost Democrat Doug Jones, who narrowly won the race. Hoffman, the co-founder of LinkedIn and an early Facebook investor, also expressed support for a federal investigation into what happened, echoing Jones’s position from last week.
The Alabama effort was one of a series of multi-million-dollar expenditures that Hoffman made to dozens of left-leaning groups in the aftermath of the 2016 election, when he offered himself to reeling Democrats as a source of money, connections and Silicon Valley-style disruption to the staid world of party politics.
Rebekah Mercer, the billionaire backer of Bannon and Trump, chooses sides
By Kyle Swenson
Robert Mercer is a former IBM computer scientist who made billions later in life by applying complex programming techniques to financial trading as the co-CEO of Renaissance Technologies, Bloomberg reported. Quiet and socially awkward — he once told a friend he preferred the company of cats to people, according to the Wall Street Journal — Mercer has an extreme views on small government and wealth.
“Bob believes that human beings have no inherent value other than how much money they make,” a colleague told the New Yorker. “If someone is on welfare they have negative value. If he earns a thousand times more than a schoolteacher, then he’s a thousand times more valuable.”
Rebekah, the middle of the Mercer’s three daughters, studied biology and math at Stanford, and earned a master’s degree there in management science and engineering, The Post has reported. She worked for a brief period at her father’s hedge fund, then raised four children with her husband, a French-born Morgan Stanley managing director. The couple live in a $28 million apartment on Manhattan’s Upper West Side, according to Bloomberg.
As her family became more involved in conservative causes, Rebekah took the reins of the family foundation. According to an analysis by The Post, the foundation put $35 million into right-wing think tanks and policy groups between 2009 and 2014.
The Mercers’ journey to the White House began in 2011. It hinges on a Jimmy Stewart character.
In 2011, the future president first met Bannon to discuss a possible presidential run. The same year, the Mercers were introduced to conservative flamethrower Andrew Breitbart and Bannon, agreeing to invest $10 million into Breitbart News, according to the New Yorker. One stipulation of the Mercers’ deal was to place Bannon on the news company’s board. Breitbart died months later, which left the news operation in Bannon’s hands.
The key figure in the Bannon-Trump-Mercer White House success is Patrick Caddell, a former Democratic pollster. If the Mercers were the money, Bannon the strategist and Trump the candidate, Caddell was the player who first wrote the instruction manual. For years, the pollster conducted extensive public opinion research showing Americans were sick of the two-party system and “ripe for an outsider candidate to take the White House,” Mayer wrote in the New Yorker. The longtime political operative would eventually term this the Candidate Smith project, a reference to “Mr. Smith Goes to Washington,” a 1939 Jimmy Stewart film about an outsider political candidate.
The data increasing showed “mounting anger toward wealthy elites, who many Americans believed had corrupted the government so that it served only their interests,” Mayer wrote. By 2012, Caddell was sharing the populist trend in the numbers with Bannon. The data began to shape Bannon, and Breitbart’s, worldview.
‘You Have to Stop,’ Renaissance Executive Tells Boss About Trump Support
By Gregory Zuckerman
Some Renaissance executives chafed at the unwanted publicity brought to the firm by Mr. Mercer’s activities during the presidential race, according to people close to the matter. In addition to providing crucial financial help when Mr. Trump’s candidacy was lagging, Mr. Mercer and his daughter Rebekah advised the campaign, suggesting the installation of two Mercer family confidantes, Steve Bannon and Kellyanne Conway, atop the campaign. Those two now hold senior White House positions.
Until now, however, nobody within the tight-lipped hedge fund has gone public with a grievance.
“His views show contempt for the social safety net that he doesn’t need, but many Americans do,” said Mr. Magerman, 48 years old, during an interview with The Wall Street Journal at the Dairy Café, a kosher restaurant he owns in Bala Cynwyd, Pa. “Now he’s using the money I helped him make to implement his worldview” by supporting Mr. Trump and encouraging that “government be shrunk down to the size of a pinhead.”
4. Scoop: The millionaire funding the campaign to break up Facebook
By Axios
A Pennsylvania philanthropist and former hedge fund executive named David Magerman was the initial donor behind a high-profile campaign urging regulators to break up Facebook, he confirmed to Axios for the first time on Thursday.
Why it matters: Magerman has given more than $400,000 to the campaign — “Freedom from Facebook” — because he believes Facebook has too much power over how the world communicates. A Republican-oriented consulting firm hired by Facebook had tried to link the campaign to billionaire philanthropist George Soros.
Responding to Axios’ questions by email, Magerman said he felt that Facebook had a “huge financial disincentive to protect users’ data.”
- “By combining social media, news distribution, advertising, commerce, and business and political networking, it forces people to engage in its platform, even if they only want one of its offerings,” he told Axios, comparing Facebook’s algorithms to “telescreens” from the novel 1984 that both record people and show them content.
- He said his goal was to educate “the public about what Facebook was becoming and whether or not one might want to reconsider engaging with it based on that information.”
Details: Magerman said he has given $425,000 to the campaign so far, starting with a $200,000 donation.
- The effort involves a coalition of progressive groups spearheaded by Demand Justice, Citizens Against Monopoly, and its affiliate Open Markets Institute, a vocal critic of Big Tech.
- Magerman said that he became interested earlier this year in an effort to inform “the public about the risks of engaging with Facebook.”
“It was my goal to convince people that Facebook is not free, that it exacts a high price from users in the form of their private data, and I think users don’t understand that transaction, to all of our detriment.”
— David MagermanAn adviser suggested he work with Open Markets Institute, which has helped shape a conversation in Washington about the increasing concentration and influence of major tech firms including Amazon and Google.
- “I don’t know the details of when and how much they raised outside of what I gave them, but I was the only donor (as far as I know) in the early stages of the campaign,” he said.
- He said he does not hold a short position in Facebook or other companies, and has not benefited financially from the effort.
- Eddie Vale, a political consultant who helps run the Freedom from Facebook campaign, declined to comment on Magerman’s involvement or whether additional donors have funded the effort.
Where Did the ‘Freedom From Facebook’ Campaign Really Come From?
By Louise Matsakis
Freedom From Facebook has done more than stage protests on Capitol Hill. During Facebook’s annual shareholder meeting in May, the group chartered an airplane to fly overhead with a banner that read “YOU BROKE DEMOCRACY.” When Sandberg spoke at MIT in June, Freedom From Facebook took out a full-page advertisement in the student newspaper calling for the social network to be broken up. On Thursday, the group filed a complaint with the Federal Trade Commission asking the agency to investigate a Facebook breach disclosed in September that affected 30 million user accounts.
Freedom From Facebook also formed a coalition with a diverse set of progressive organizations, like Jewish Voice For Peace, which promotes peace in Israel and Palestine, and the Communications Workers of America, a labor union that represents media workers. The coalition now comprises 12 groups, who “all organize around this fundamental principle that Facebook is too powerful,” says Sarah Miller, the deputy director of Open Markets Institute. Confusingly, according to Freedom From Facebook’s website, the coalition also includes Citizens Against Monopoly, a nonprofit Miller says was set up by Open Markets itself.
Eddie Vale, a progressive public affairs consultant, also confirmed in an email that Open Markets hired him to work on the Freedom For Facebook Initiative. He led the protest in July featuring the octopus signs.
Computer scientist David Magerman wants to build a more ethical internet
By Keith Boag
But breaking up Facebook doesn’t guarantee something more socially responsible will slide into its place.
That’s where his new partnership with venture capitalists comes in. Last fall, Magerman joined Differential Ventures to work with a couple of angel investors, Nick Adams and Alex Katz. They both have experience seeding start-ups, with an interest in big data and its impacts.
It’s Magerman’s hope that they can begin to imagine a new kind of internet, one built to be safe and secure, where a constrained Facebook and Twitter would be worth just a fraction of what they are today — valued by what they actually do for their customers, not what their customers’ personal information does for them.
“I’m talking about creating that layer,” he says, “where everything is encrypted and every single communication in that environment has an identity associated with it — meaning a human being.” (Magerman concedes there is a need for some anonymous space to protect dissidents in repressive countries.)
Imagine a Twitter without anonymous trolls and bots, or a Facebook that didn’t presume to curate your life — or even a cyberspace safe for children.
The problem investors normally have with something like that sounds like a punchline.
“They don’t see how to monetize it,” says Magerman, “and I think there is truth in that.”
But actually, that’s the point. Part of the way many internet-based companies have become so fantastically successful is through their indifference to social responsibility. A company that profits by treating its customers as though they’re merely data-generating employees is not a socially responsible business model for the internet — it’s a parasite.
In the world according to Magerman, a company like Facebook would have to be content with being a $10-billion company, not a $500-billion company.
Therein lies the real obstacle. The first steps toward a new kind of internet will require government intervention, says Magerman. And, since it’s ultimately about taking power from the powerful, there will be resistance to that.
Lots of it, and well-funded — through all those profits earned by social media giants thanks to you and the personal data you’ve given up without so much as a whimper.
Influential Koch network casts wary eye on efforts to regulate Google and Facebook
By David McCabe
The big picture: For the libertarian-oriented network of political and philanthropic groups, regulation is the enemy, and even though many others on the right bristle at what they see as anti-conservative bias by Big Tech platforms, the Koch crowd is not ready to cheer government intervention.
Why it matters: Although the Koch network has seen its influence wax and wane under President Trump, whom it did not back, it nonetheless possesses powerful tools to shape policy debates and influence elections.
‘Kochland’: How The Koch Brothers Changed U.S. Corporate And Political Power
By Terry Gross
LEONARD: Absolutely. And you know, Steve Lonegan, who headed Americans for Prosperity in New Jersey, just gleefully described this stuff to me. I think he’s – he believes in what he’s doing. He’s really proud of what he’s doing. He would train folks how to get onto the talk radio station and what to say. And then he would teach folks, you know, you have got to harass these lawmakers around the clock. When that lawmaker gets in the office Monday, they need to have a hundred faxes from you, you know? So they would teach these techniques to their employees and to their volunteers.
But the technique you just described of the echo chamber is somewhat even larger than that. You know, Washington, D.C., is – it’s a kind of a cliche, but it’s a surprisingly small town. It’s kind of like this fishbowl of people sharing ideas with one another. And Koch, perhaps better than anybody else, has become an expert at seeding that ground with its own ideas without leaving fingerprints.
And here’s how it’ll do it, you know? The cap and trade fight is very heated. There’s a large movement in the United States to curb greenhouse gas emissions. So what Koch Industries does is it privately arranges a study to be done by this group called the American Council for Capital Formation, or ACCF. And Koch asked them to produce a report on global warming, and it paid for it surreptitiously, I would say, using a foundation controlled by the Koch family called the Claude Lambe Foundation, which funnels the money to the think tank to produce the report.
Well, the report is produced, and it’s extraordinarily negative on economic effects – like, way out on one end of the spectrum of what a cap and trade bill will do. I mean, they’re basically saying we’re going to live in this “Mad Max” hellscape (ph) of a world if you pass a cap and trade bill. But that’s not the end of it. Once that report is out, Koch uses the other think tanks that it has founded and that it operates, like the Institute for Energy Research, to amplify this message. And then it uses a political think tank group it started called the American Energy Alliance, which takes the study’s findings, packages it into these political ads that use the main talking point from the study and then uses those ads against very targeted legislators.
GROSS: In addition to the things you’ve already described that Koch Industries did to kill cap and trade, what incentives or threats did it offer directly to politicians? – because it wanted legislators to vote against cap and trade, against regulating greenhouse gas emissions.
LEONARD: From the earliest days, Charles Koch has made it clear that the focus of his attention is going to be the Republican Party. As he said at a gathering in 2005, you know, the Democrats are a lost cause. They’re going to do what Democrats do. We need to reshape Republicans and what Republicans believe in. So for decades, the Koch network has been trying to move the Republican Party toward this libertarian, very dramatically anti-government point of view.
So you know, when the cap and trade bill came out in 2009, it was actually – it enjoyed bipartisan support. John McCain was campaigning on the issue of global warming. And I interviewed one Republican legislator named Bob Inglis, who was as conservative as a lawmaker could be. He was from one of the reddest districts in America in South Carolina – very much a small government, limited budget, Christian kind of lawmaker.
Well, when he got to Congress, Bob Inglis sat on the science committee, and he started to see some of the actual underlying evidence that global warming was – I hate to use the term real. It’s undeniable that we are putting gigatons of carbon into the atmosphere and it makes the Earth warmer. Bob Inglis saw that and felt that it was a massive public policy priority, so he supported efforts to put a price on carbon.
Now, he was close with Koch Industries. Koch Industries had donated to his campaign. Koch Industries had given him tours of a Koch facility in his home district. But the moment he started talking about putting a price on carbon, Koch turned against him. And I don’t mean they just stopped giving them money. They donated to a competitor named Trey Gowdy. They helped raise up a competitor. They helped facilitate massive Tea Party demonstrations at Bob Inglis’ town hall events. You know, Americans for Prosperity would tell people time and place to go to protest Bob Inglis. They made him a villain in his home district, and he was voted out of office because he broke the orthodoxy on climate change.
And you saw this across the House and the Senate that Koch would invest resources in – you’d have to say – effectively punishing any Republican who dared cross that threshold.
How US billionaires are fuelling the hard-right cause in Britain
By George Monbiot
Among the world’s biggest political spenders are Charles and David Koch, co-owners of Koch Industries, a vast private conglomerate of oil pipelines and refineries, chemicals, timber and paper companies, commodity trading firms and cattle ranches. If their two fortunes were rolled into one, Charles David Koch, with $120bn, would be the richest man on Earth.
In a rare public statement, in an essay published in 1978, Charles Koch explained his objective. “Our movement must destroy the prevalent statist paradigm.” As Jane Mayer records in her book Dark Money, the Kochs’ ideology – lower taxes and looser regulations – and their business interests “dovetailed so seamlessly it was difficult to distinguish one from the other”. Over the years, she notes, “the company developed a stunning record of corporate malfeasance”. Koch Industries paid massive fines for oil spills, illegal benzene emissions and ammonia pollution. In 1999, a jury found that Koch Industries had knowingly used a corroded pipeline to carry butane, which caused an explosion in which two people died. Company Town, a film released last year, tells the story of local people’s long fight against pollution from a huge paper mill owned by the Koch brothers.
The Kochs’ chief political lieutenant, Richard Fink, developed what he called a three-stage model of social change. Universities would produce “the intellectual raw materials”. Thinktanks would transform them into “a more practical or usable form”. Then “citizen activist” groups would “press for the implementation of policy change”. To these ends the Kochs set up bodies in all three categories themselves, such as the Mercatus Center at George Mason University, the Cato Institute and the “citizens’ group” Americans for Prosperity. But for the most part they funded existing organisations that met their criteria. They have poured hundreds of millions of dollars into a network of academic departments, thinktanks, journals and movements. And they appear to have been remarkably successful.
As researchers at Harvard and Columbia universities have found, Americans for Prosperity alone now rivals the Republican party in terms of size, staffing and organisational capacity. It has pulled “the Republican party to the far right on economic, tax and regulatory issues”. It was crucial to the success of the Tea Party movement, the ousting of Democrats from Congress, and the staffing of Trump’s transition team. The Koch network has helped secure massive tax cuts, the smashing of trade unions and the dismantling of environmental legislation.
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The Koch brothers are famously careful with their money. According to Mayer, they exert “unusually tight personal control over their philanthropic endeavours”. David Koch told a sympathetic journalist: “If we’re going to give a lot of money, we’ll make darn sure they spend it in a way that goes along with our intent. And if they make a wrong turn and start doing things we don’t agree with, we withdraw funding.”
How an Oil Theft Investigation Laid the Groundwork for the Koch Playbook
By Christopher Leonard
Charles Koch believed that government was basically dysfunctional, and that any government program, no matter how well intentioned, did more harm than good. He disdained the idea of employing a team of lobbyists in the nation’s capital because he saw lobbying as a betrayal of free market principles. He may have funded libertarian think tanks and free-market academic programs, but he believed that he could avoid the down-and-dirty business of engaging daily with Washington, D.C.
The Senate Investigation taught Charles Koch otherwise. Koch Industries claimed, in a written response to the Senate, that it was scapegoated by the investigation because the company was “politically unimportant,” and made an easy target. Charles Koch would ensure that Koch Industries was never “politically unimportant” again.
When he went to build a political influence machine, Charles Koch didn’t draw on conventional political wisdom. Instead, he drew on Koch Industries’ corporate playbook. The company specialized in mastering complex systems. It ran pipeline networks, oil refineries and commodities trading desks that operated in opaque markets. The key to success was knowing more than your competitors and operating in way that didn’t publicly expose your trading strategies to the outside world. Koch’s political network mimicked this philosophy. Rather than simply hire lawyers and lobbyists, Koch used a network of front groups, training centers, and political operatives to combat the legal threat.
In 1989, the newly built Koch network was focused on one tactical goal—derailing the criminal investigation into Koch’s oil gathering operations.
Three decades later, the impact of the Koch network in politics has been enormous. It stoked the fire of anti-government animus that remade U.S. politics in the ‘90s and 2000s. It played a vital role in derailing the last best chance to regulate greenhouse gas emissions in 2010. Wal-Mart, General Electric and Boeing might all have lobbyists, but only Charles Koch has one of the biggest lobbying offices in America, combined with a grassroots army called Americans for Prosperity, that can knock on doors and send volunteers to town hall meetings; combined with a constellation of think tanks that can generate and amplify talking points; combined with a network of coordinated campaign donors that often raise enough money for an election cycle to rival the war chest of a political party. Even in the age of Trump, when the Kochs’ political influence is far smaller than it was earlier this decade, they still flex considerable muscle behind the scenes. In 2017, the network transformed the Republican tax plan by leading the charge to kill a tax benefit meant to benefit U.S. manufacturing (but that almost certainly would have hurt Koch’s oil refining operations) and turned it into a straightforward tax cut for big corporations and the richest Americans.
The Man With the $13 Billion Checkbook
By John Leland
From a tidy glass office in Midtown Manhattan, Darren Walker gives away $650 million a year of other people’s money, and is paid nicely to do so. When he got this job in 2013, as president of the Ford Foundation, he set his sights on tackling inequality.
There were complications.
Charities like Ford, he realized, owe their existence to inequality, and they reproduce it: they extend rich people’s influence, with no accountability, and they take money from the public tax rolls to do so. If a foundation gives a million dollars to a donor’s favorite pet cause, part of that gift is whatever tax the donor or foundation would have paid on that million — and neither you nor your elected officials has any say in the matter.
Perhaps people should be able to give away their money as they see fit, but this is not the full story: because of tax breaks, they are also giving away your money. By one estimate, these subsidies cost U.S. taxpayers more than $50 billion a year.
Davos Elites Love to Advocate for Equality – So Long As Nothing Gets Done
By Branko Milanovic
Not surprisingly, nothing has been done since the Global Financial Crisis to address inequality. Rather, the opposite has happened. Donald Trump has, as promised, passed a historic tax cut for the wealthy; Emmanuel Macron has discovered the attraction of latter-day Thatcherism; the Chinese government has slashed taxes on the rich and imprisoned the left-wing students at Peking University who supported striking workers. In Brazil, Jair Bolsonaro seems to consider praise for torture and the rising stock market as the ideal mélange of modern capitalism.
Bizarrely, this return to the industrial relations and tax policies of the early 19th century has been spearheaded by people who speak the language of equality, respect, participation, and transparency. The annual gathering in Davos, in that regard, is not just a display of the elites’ financial superiority. It is also supposed to showcase their moral superiority. This is in line with a longstanding trend: Over the past fifty years, the language of equality has been harnessed in the pursuit of the most structurally inegalitarian policies. It is much easier (and profitable), apparently, to call journalists and tell them about nebulous schemes whereby 90 percent of wealth will be—over an unknown number of years and under unknowable accounting practices—given away as charity than to pay suppliers and workers reasonable rates or stop selling user data. They are loath to pay a living wage, but they will fund a philharmonic orchestra. They will ban unions, but they will organize a workshop on transparency in government.
Against Against Billionaire Philanthropy
By Scott Alexander
Congress has an approval rating of 19% right now. According to PolitiFact, most voters have more positive feelings towards hemorrhoids, herpes, and traffic jams than towards Congress. How does a body made entirely of people chosen by the public end up loathed by the public? I agree this is puzzling, but for now let’s just admit it’s happening.
Bill Gates has an approval rating of 76%, literally higher than God. Even Mark Zuckerberg has an approval rating of 24%, below God but still well above Congress. In a Georgetown university survey, the US public stated they had more confidence in philanthropy than in Congress, the court system, state governments, or local governments; Democrats (though not Republicans) also preferred philanthropy to the executive branch.
When I see philanthropists try to save lives and cure diseases, I feel like there’s someone powerful out there who shares my values and represents me. Even when Elon Musk spends his money on awesome rockets, I feel that way, because there’s a part of me that would totally fritter away any fortune I got on awesome rockets. I’ve never gotten that feeling when I watch Congress. When I watch Congress, I feel a scary unbridgeable gulf between me and anybody who matters. And the polls suggest a lot of people agree with me.
In what sense does it reflect the will of the people to transfer power and money from people and causes the public like and trust, to people and causes who the public hate and distrust? Why is it democratic to take money from someone more popular than God, and give it to a group of people more hated than hemorrhoids?
Meet the New York couple donating millions to the anti-vax movement
By Lena H. Sun and Amy Brittain
Hedge fund manager and philanthropist Bernard Selz and his wife, Lisa, have long donated to organizations focused on the arts, culture, education and the environment. But seven years ago, their private foundation embraced a very different cause: groups that question the safety and effectiveness of vaccines.
How the Selzes came to support anti-vaccine ideas is unknown, but their financial impact has been enormous. Their money has gone to a handful of determined individuals who have played an outsize role in spreading doubt and misinformation about vaccines and the diseases they prevent. The groups’ false claims linking vaccines to autism and other ailments, while downplaying the risks of measles, have led growing numbers of parents to shun the shots. As a result, health officials have said, the potentially deadly disease has surged to at least 1,044 cases this year, the highest number in nearly three decades.
Trustafarians Want to Tell You How to Live
By Joel Kotkin
As the members of World War II’s “Greatest Generation” die off, they are set to pass on between $8.4 trillion and $11.6 trillion to their Baby Boomer descendants, according to a study by MetLife.
In the coming decades this tsunami of inherited money will likely accelerate class divisions, as those in the current top decile (in terms of income) gather in more than a million in parental bequests, while those in the lower class will at best count their inheritances in the thousands. Among boomers who will receive an inheritance, the top 10 percent will receive more than every other decile combined.
This is just the beginning of the process. The well-born members of the millennial generation are set for an even greater inheritance, which will distort the economy even more. The Social Welfare Research Institute at Boston College estimated that a minimum of $41 trillion would pass between generations from 1998 to 2052. This huge transfer, the researchers believe, will usher in what they call “a golden age of philanthropy.” Even as most younger Americans struggle to obtain decent jobs and secure property, the Welfare Institute concluded, America is moving toward an “inheritance-based economy” where access to the last generation’s wealth could prove a critical determinant of both influence and power.
These trends will affect everything from geography to culture and politics. For one thing, we are likely to see people settling in areas depending on their class status. For example, an examination of income data by Mark Schill of the Praxis Strategy Group finds that, with the exception of retirement communities, the areas with the greatest dependence on rents, dividends, and interest are concentrated in the expensive “luxury cities” New York, Boston, and the San Francisco Bay Area (and their surrounding pricey suburbs).
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Not involved with making their fortunes, and sometimes even embarrassed by how those fortunes were made, the new generation of “trust-fund progressives” often adopt viewpoints at odds with those of their ancestors. One particularly amusing, and revealing, development has been the recent announcement by the Rockefeller heirs that they would divest themselves of the very fossil fuels that built their vast fortune.
Of course, there remain many conservative foundations, such as those funded by the Koch brothers, who wield their fortunes for highly conservative causes. But roughly 75 percent of the political contributions of nonprofits tend to go in a left, green, or progressive direction.
This trend is likely to accelerate, as millennials—who will inherit the most money and may be the most inheritance-dominated generation in recent American history—enter adulthood. Schooled in political correctness, and not needing to engage in the mundane work of business, this large cadre of heirs to great fortunes will almost surely seek to shape what we think, how we live, and how we vote. They may consider themselves progressives, but they may more likely help shape a future that looks ever less like the egalitarian American of our imaginings, and ever more like a less elegant version of Downton Abbey.
The Rich Kid Revolutionaries
By Rachel Sherman
These progressive children of privilege told me they study the history of racial capitalism in the United States and discuss the ways traditional philanthropy tends to keep powerful people at the top. They also spend a fair amount of time talking about their money. Should they give it all away? Should they get a job, even if they don’t need the income? How much is it ethical to spend on themselves or others? How does money shape friendships and relationships? Resource Generation and its members facilitate these conversations, including one local chapter’s “feelings caucus.”
If you’re thinking, “Cry me a river,” you’re not alone. I have faced skepticism from other sociologists when discussing this research. One colleague asserted that rich young people struggling with their privilege do not have a “legitimate problem.” Others ask: How much do they really give, and what do they really give up? Aren’t these simply self-absorbed millennials taking another opportunity to talk endlessly about themselves?
I understand this view. There is certainly a risk — of which many of them are aware — that all this conversation will just devolve into navel-gazing, an expression of privilege rather than a challenge to it. It is hard for individual action to make a dent in an ironclad social structure. And it is impossible, as they know, to shed the class privilege rooted in education and family socialization, even if they give away every penny.
But like Abigail Disney, these young people are challenging fundamental cultural understandings of who deserves what. And they are breaking the social taboo against talking about money — a taboo that allows radical inequality to fade into the background. This work is critical at a moment when the top 1 percent of families in the United States owns 40 percent of the country’s wealth, and Jeff Bezos takes home more money per minute than the median American worker makes in a year.
As Holly Fetter, a Resource Generation member and Harvard Business School student, told me, “It’s essential that those of us who have access to wealth and want to use it to support progressive social movements speak up, to challenge the narrative that the 1 percent are only interested in accumulation, and invite others to join us.”
Wealthy people are more likely to convince other wealthy people that the system is unfair. And they are the only ones who can describe intimately the ways that wealth may be emotionally corrosive, producing fear, shame and isolation.
Scenes from McDonald’s, where distressed America takes refuge
By Alireza Naraghi
Q: What was the tipping point for you to make the transition from Wall Street and tackle this mammoth project?
A: There was mostly a slow realization over my career that both banking, and the larger society of successful, highly educated Americans that it was part of, was dramatically out of touch with the bulk of Americans. That realization played out over my long walks I would take with my camera on weekends. Sometimes 20-mile walks that weaved through parts of the city most successful people rarely go to, but have strong, mostly very negative opinions on. It was on those walks I saw just how wrong those opinions were.We were not only out of touch, but also had a deep hubris that made us believe we knew what was best for the rest of the country we didn’t understand.
If there was a tipping point it was the financial crisis, which helped expose just how much damage we could do, and yet suffer few if any consequences.
Q: Has this journey changed your thoughts and viewpoint of poverty?
A: I was never a poverty scold, never one to blame others for their “failures.” But I don’t think though I fully understood just how unfair our system is. It is one thing to read about it, and another to witness it and hear about it first-hand.Prior to this project I had very different views on religion and mobility. I didn’t understand why someone would stick to their religion or why they wouldn’t just move to find a better job (or get a better education). I came to realize how wrong I was. Both religion, and local community give huge value and meaning to many people—often the most important meaning and value they might have in their life. To demand, or think, they should give them up isn’t only arrogant, it is downright offensive.
Q: While you were covering nearly 200,000 kilometres throughout the country, McDonald’s remained your steady pit stop. Why?
A: Because they are often the only places open to the public in the communities I was spending time in that worked. Everyone I was documenting—mostly the very poor, the homeless and the addicted—were spending time in them. They used them for a clean bathroom, a place to use wifi and a place to charge their phone.Also as a place to rejoin broader society on their own terms. They could grab a paper from the garbage can, sit at a table, and just escape the streets for a while without being asked to move on. If they tried that in other places they would have the police called on them, or asked to move on.
There is a wonderful, rich, and deep social structure and community that takes place in most McDonald’s. It is, as I have written, the ad-hoc community centre for distressed communities.
Q: Did this project change your view of addiction?
A: I don’t see addiction as having much of anything to do with supply. It is a problem driven by demand. People want drugs because people are in pain and drugs numbs that pain for short periods of time. Cutting down the availability of drugs won’t end the problem, people will just find something else to try and cope with the pain.That pain isn’t just physical, although it partly is, but emotional.
Tens of thousands of Americans die each year from opioid overdoses
By The Economist
Drugs now kill about 70,000 Americans every year—more than car crashes or guns (both 39,000), more than AIDS did at the height of its epidemic (42,000), and more than all the American soldiers killed in the entire Vietnam war (58,000). In 2017 about 47,600 of those deaths were caused by opioid overdose—a fivefold increase since 2000.
Exclusive: David Sackler Pleads His Case on the Opioid Epidemic
By Bethany McLean
David Sackler is willing to concede the two major scientific assumptions that fueled the drug’s success were wrong—though he contends that both were supported by the science at the time. The first was the marketing claim, endorsed by the Food and Drug Administration, that OxyContin was less prone to abuse because of its extended-release formula. In fact, the timed-release tablets turned out to be more prone to abuse, in part because they packed more opioids into each pill. The inconvenient truth, as the FDA noted in 2010, was that “the risk for misuse and abuse is greater” for extended-release opioids.
The second claim—that less than 1 percent of patients taking OxyContin would become addicted—was based not on a peer-reviewed study, but on a five- sentence letter to The New England Journal of Medicine published in January 1980. The doctor who wrote the letter has since expressed regret that drug companies misrepresented it in their marketing campaigns pushing opioids as non-addictive.
The letter has become a central piece of the narrative of Sackler venality: How could anyone with any sense of morality use such flimsy evidence to sell a dangerous drug? David, however, insists that there was far more scientific consensus around the 1 percent figure than just a single letter. His representatives point me to “studies” showing that no less than four different entities, including the Institute of Medicine at the National Academy of Sciences, considered the risk for addiction to be very minimal. Sackler also cites the second edition of a standard clinical reference on pain medication, Bonica’s The Management of Pain, which was published six years before OxyContin was launched. “Narcotic addiction,” the textbook states flatly, “occurs rarely, or not at all, in patients receiving narcotics for medical use.”
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The FDA, for its part, acknowledges that it contributed to the epidemic. “The opioid crisis is one of the largest and most complex public health tragedies that our nation has ever faced,” says a spokesperson for the agency. “Sadly, the scope of the epidemic reflects many past mistakes and many parties who missed opportunities to stem the crisis, including the FDA.”
But even if Sackler’s larger point is valid—that the FDA and doctors bear responsibility as well—it hardly absolves Purdue. Aggressively marketing the drug as not addictive and then saying we warned you it’s addictive is a very dark version of trying to have your cake and eat it too. And if you understand that some percentage of patients are going to get addicted, then by definition you understand that the more pills you sell, the more addiction there’s going to be. And there were a lot more pills. Instead of trying to limit the supply, Purdue pushed hard to expand it. From 1996 to 2000, according to the General Accounting Office, the company more than doubled its internal sales force, recruited and trained more than 5,000 doctors, pharmacists, and nurses to help tout the benefits of OxyContin, handed out free 30-day prescriptions to new patients, and targeted its marketing efforts to doctors who were the highest prescribers of opioids. By 2008, the United States, which represents less than 5 percent of the world’s population, was consuming more than 80 percent of the world’s opioids.
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Underneath the legal arguments about what the Sacklers and Purdue may have done wrong lies a deeper, uglier truth. America’s system for approving, regulating, and marketing new drugs—for determining, in effect, what the “facts” are—is often influenced by corporate money. While Sackler defends his family’s actions as being in line with the FDA or with the consensus opinion from pain experts, the reality is that the consensus opinion is purchased so often, and in such insidious ways, that trust is impossible. Sidney Wolfe, M.D., a leading consumer advocate, points out that the FDA’s approval process for new drugs is funded mostly by fees from drug manufacturers. “It is the culture of the FDA, from the leadership down, to make things easier for industry,” says Wolfe, who served on the FDA’s Drug Safety and Risk Management Committee from 2008 to 2012. “It is beyond question that the FDA is also culpable” in creating and fueling the opioid crisis. (An FDA spokesperson calls allegations of industry influence “absurd and factually inaccurate.”)
Former FDA commissioner says agency erred in allowing drug companies to promote opioids for long-term use
By Bill Whitaker
60 Minutes has called on former FDA commissioner David Kessler many times for his expertise on drug safety issues. He ran the FDA in the 1990s when Oxycontin was first approved, but he left before the labeling change. Today, he’s been retained by cities and counties suing Big Pharma for the opioid crisis. After reviewing the documents we obtained, and checking on his own, he says changing the label to long-term use was a mistake.
Dr. David Kessler: There are no studies on the safety or efficacy of opioids for long-term use.
Bill Whitaker: But there’s a law that says that a drug cannot be promoted as safe and effective unless it’s proven to be safe and effective. But yet, with FDA sanction, these opioids are being used in that way that you say have not been proven.
Dr. David Kessler: That’s correct. The rigorous kind of scientific evidence that the agency should be relying on is not there.
The label change was a blank check – one the drug industry cashed in for billions and billions of dollars. Now, Big Pharma had a green light to push opioids to tens of millions of new pain patients nationwide.
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Dr. Andrew Kolodny: We found out that a group of experts and FDA and pharmaceutical companies were having private meetings and at these meetings, changing the rules for how opioids get approved.
He filed Freedom of Information Act Requests. In email after email between the FDA, Big Pharma and consultants, he learned of closed-door meetings at luxury hotels, like this Four Seasons in Washington, DC, where for $35,000 a piece, drug makers paid consultants to, “sit at a small table with the FDA,” “hobnobbing with the regulators.” Emails show one participant worrying it might be seen as “pay to play.”
Dr. Andrew Kolodny: They had drugs in their pipeline, pain medicines that they wanted approved. And through these meetings, they were able to get those products on the market.
Bill Whitaker: That sounds unethical.
Dr. Andrew Kolodny: It is unethical.
Bill Whitaker: If not illegal
Dr. Andrew Kolodny: If it’s not illegal, it should be illegal.
Equally suspicious but legal, the large number of key FDA regulators who went through the revolving door to jobs with drug manufacturers. The two medical officers, who originally approved Oxycontin, Curtis Wright and Douglas Kramer, went to work for the opioid maker, Purdue Pharma, not long after leaving the FDA.
Dr. Andrew Kolodny: The culture at FDA continues to be much too cozy with the industry it’s supposed to be regulating.
Opioid makers say there’s no proof they are responsible for the epidemic’s harms
By Lenny Bernstein and Katie Zezima
The municipalities are seeking billions of dollars to help pay for the costs of treatment, emergency aid and law enforcement in an epidemic they claim started when drug companies ignored clear signs that opioids were being diverted to the black market.
More than 200,000 people have died of overdoses from legal painkillers in the last two decades. A similar number have succumbed to heroin and illicit fentanyl in the second and third waves of the epidemic.
The municipalities’ claims against drug producers, distributors and retailers were made public Friday. They argued that some of the biggest and best-known companies in the United States participated in what amounts to a civil racketeering enterprise when they sold vast quantities of drugs that devastated communities across the country. Cuyahoga and Summit also argue that drug distributors created a “public nuisance” that endangered the health of their residents — a problem those companies must pay to help abate.
The Washington Post also revealed a previously undisclosed database maintained by the Drug Enforcement Administration last week. It shows that the drug industry inundated consumers with 76 billion opioids between 2006 and 2012, many more than experts had previously believed.
Opioid Executive John Kapoor Found Guilty In Landmark Bribery Case
By Gabrielle Emanuel
A jury in Boston has found onetime billionaire and drug company executive John Kapoor and his four co-defendants guilty of a racketeering conspiracy. The verdict came Wednesday after 15 days of deliberation.
The federal government accused Kapoor, the founder of Insys Therapeutics, and his co-defendants of running a nationwide bribery scheme. Between 2012 and 2015, Insys allegedly paid doctors to prescribe its potent opioid medication and then lied to insurance companies to ensure that the expensive fentanyl-based painkiller would be covered.
Kapoor is among the highest-ranking pharmaceutical executives to face trial amid a national opioid epidemic. By pursuing this case, the federal government was seen as sending a message that it is holding drug companies accountable for their role in the epidemic.
Doctors in seven states charged with prescribing pain killers for cash, sex
By Sari Horwitz and Scott Higham
Dozens of medical professionals in seven states were charged Wednesday with participating in the illegal prescribing of more than 32 million pain pills, including doctors who prosecutors said traded sex for prescriptions and a dentist who unnecessarily pulled teeth from patients to justify giving them opioids.
The 60 people indicted include 31 doctors, seven pharmacists, eight nurse practitioners and seven other licensed medical professionals. The charges stem from the government’s largest prescription-opioid takedown. It involves more than 350,000 illegal prescriptions written in Alabama, Kentucky, Louisiana, Ohio, Pennsylvania, Tennessee and West Virginia, according to indictments unsealed in federal court in Cincinnati.
“That is the equivalent of one opioid dose for every man, woman and child” in the region, Brian Benczkowski, an assistant attorney general in charge of the Justice Department’s criminal division, said in an interview. “If these medical professionals behave like drug dealers, you can rest assured that the Justice Department is going to treat them like drug dealers.”
Five more states take legal action against Purdue Pharma for opioid crisis
By Lenny Bernstein
Five states announced Thursday that they are taking legal action against Purdue Pharma and members of the Sackler family who control the drug company, accusing them of deceptively pushing powerful painkillers and misrepresenting the drugs’ safety as the pills sparked the opioid crisis.
Attorneys general of West Virginia, Maryland, Kansas, Iowa and Wisconsin took part in the coordinated effort against the manufacturer of the powerful narcotic OxyContin. All but Kansas targeted at least one member of the Sackler family, former president Richard Sackler, and Maryland named seven family members but not the company in an administrative filing.
In a news conference, West Virginia’s attorney general, Patrick Morrisey said his state was seeking to hold both the company and Richard Sackler responsible for deaths and other harms from the worst drug epidemic in U.S. history.
“Even when it became apparent that thousands of people were dying of opioid abuse, Purdue doubled down by continuing its relentless and deceptive campaign” to persuade doctors to write prescriptions for OxyContin, Morrisey said.
Maryland Attorney General Brian Frosh said his state’s efforts were based on “two foundational falsehoods” that Purdue promoted widely: That the risk of becoming addicted to Purdue’s drug was very low and that under-treating pain could cause great harm.
The Truth About Painkiller Addiction
By Sally Satel
In fact, only 22 to 35 percent of “misusers” of pain medication report receiving drugs from their doctor, according to the Substance Abuse and Mental Health Services Administration. (Misuse is a term that includes anything from taking an extra pill beyond the quantity prescribed by a doctor to full-blown addiction.) About half obtain pain relievers from a friend or relative, while others either steal or buy pills from someone they know, buy from a dealer, or go out looking for a doctor willing to write prescriptions.
People who abuse pills are rarely new to drugs. The federal government’s 2014 National Survey on Drug Use and Health, for example, revealed that more than three-fourths of misusers had used non-prescribed benzodiazepines, such as Valium or Xanax, or inhalants. A study of Oxycontin users in treatment found that they “were not naive individuals with accidental addictions who were introduced to painkillers by their physicians as reported by the media … [Instead they had] extensive drug use histories.”
Among people who are prescribed opioids, addiction is relatively uncommon. The percentage of patients who become addicted after taking opioids for chronic pain is measured in the single digits; studies show an incidence from less than 1 percent to 8 percent. Most of the estimates are skewed toward the low end of this range, when those at risk (due to a history of substance abuse or, to a lesser but meaningful extent, a concurrent mental illness) are removed from the sample.
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Policy makers have frequently used a reduction in total opioid prescriptions as a metric for success, but that metric does not account for how demand for those medications is distributed among patients. The potency of opioids is often measured in “morphine milligram equivalents,” or MMEs; 60 milligrams of oxycodone equals 90 MMEs … . It turns out that only a small minority of chronically ill people, about 10 percent (many of whom take high doses), account for 70 percent of the total MMEs prescribed. When an insurer boasts of a 25 percent reduction in total MMEs prescribed, that could mean that some chronically ill patients have successfully been shifted to a nonaddictive form of analgesia—or that patients who badly need opiates aren’t getting them.
Sackler Embraced Plan to Conceal OxyContin’s Strength From Doctors, Sealed Testimony Shows
By David Armstrong
The pending Massachusetts lawsuit against Purdue accuses Sackler and other company executives of determining that “doctors had the crucial misconception that OxyContin was weaker than morphine, which led them to prescribe OxyContin much more often.” It also says that Sackler “directed Purdue staff not to tell doctors the truth,” for fear of reducing sales. But it doesn’t reveal the contents of the email exchange with Friedman, the link between that conversation and the 2007 plea agreement, and the back-and-forth in the deposition.
A few days after the email exchange with Friedman in 1997, Sackler had an email conversation with another company official, Michael Cullen, according to the deposition. “Since oxycodone is perceived as being a weaker opioid than morphine, it has resulted in OxyContin being used much earlier for non-cancer pain,” Cullen wrote to Sackler. “Physicians are positioning this product where Percocet, hydrocodone and Tylenol with codeine have been traditionally used.” Cullen then added, “It is important that we be careful not to change the perception of physicians toward oxycodone when developing promotional pieces, symposia, review articles, studies, et cetera.”
“I think that you have this issue well in hand,” Sackler responded.
Friedman and Cullen could not be reached for comment.
Asked at his deposition about the exchanges with Friedman and Cullen, Sackler didn’t dispute the authenticity of the emails. He said the company was concerned that OxyContin would be stigmatized like morphine, which he said was viewed only as an “end of life” drug that was frightening to people.
“Within this time it appears that people had fallen into a habit of signifying less frightening, less threatening, more patient acceptable as under the rubric of weaker or more frightening, more — less acceptable and less desirable under the rubric or word ‘stronger,’” Sackler said at his deposition. “But we knew that the word ‘weaker’ did not mean less potent. We knew that the word ‘stronger’ did not mean more potent.” He called the use of those words “very unfortunate.”
He said Purdue didn’t want OxyContin “to be polluted by all of the bad associations that patients and healthcare givers had with morphine.”
In his deposition, Sackler also defended sales representatives who, according to the statement of facts in the 2007 plea agreement, falsely told doctors during the 1996-2001 period that OxyContin did not cause euphoria or that it was less likely to do so than other opioids. This euphoric effect experienced by some patients is part of what can make OxyContin addictive. Yet, asked about a 1998 note written by a Purdue salesman, who indicated that he “talked of less euphoria” when promoting OxyContin to a doctor, Sackler argued it wasn’t necessarily improper.
“This was 1998, long before there was an Agreed Statement of Facts,” he said.
The lawyer for the state asked Sackler: “What difference does that make? If it’s improper in 2007, wouldn’t it be improper in 1998?”
“Not necessarily,” Sackler replied.
OxyContin Maker Explored Expansion Into “Attractive” Anti-Addiction Market
By David Armstrong
From 2009 until at least 2014, McKinsey helped Purdue shape its message for selling OxyContin and overcoming concerns about addiction and overdoses, according to redacted passages. The consultant told Purdue in a slide presentation that it could increase prescriptions by convincing doctors that opioids provide “freedom” and “peace of mind” and give patients “the best possible chance to live a full and active life.”
Purdue staff, according to the complaint, told the Sacklers that McKinsey would study “patient pushback” to encourage hesitant doctors to prescribe opioids. In a meeting with Purdue executives, McKinsey planned how to “counter the emotional messages from mothers with teenagers that overdosed in [sic] OxyContin” by recruiting pain patients to talk about the need for the drugs.
In a 2013 report, McKinsey recommended directing sales representatives to focus on the most prolific opioid prescribers because that group writes “25 times as many OxyContin scripts” as less prolific prescribers. Because prescription rates rose in tandem with visits from sales reps to doctors, McKinsey recommended increasing each salesperson’s quota from 1,400 visits a year to closer to 1,700. McKinsey estimated that targeting the most frequent prescribers could boost OxyContin sales by hundreds of millions of dollars. The quotas rose, as did total visits, the complaint states. Purdue said it planned to decrease visits relating to opioid products, and any increase was due to promoting a laxative.
McKinsey also recommended Purdue fight back against efforts by a major pharmacy chain, the U.S. Drug Enforcement Agency and the U.S. Department of Justice to stop illegal opioid prescribing, the complaint states. These new rules were cutting into sales of the highest doses, which were also the most profitable, it says. The complaint doesn’t say if Purdue followed McKinsey’s recommendation. Purdue said the recommendations “actually relate to ensuring continued access to pain medicines for appropriate patients.”
A McKinsey spokesman declined comment.
McKinsey Advised Johnson & Johnson on Increasing Opioid Sales
By Walt Bogdanich
At the global consulting firm McKinsey & Company, the rule is sacrosanct: Never publicly disclose client advice. And for the most part, adherence to that rule has served the company well.
But in recent months, as government officials seek to assign blame for the opioid crisis that has strangled large parts of the nation, McKinsey’s advice is surfacing in ways that are deeply embarrassing for the influential firm, whose clients include many of the world’s most admired companies. One lawsuit stated that McKinsey advised a pharmaceutical company to “get more patients on higher doses of opioids” and study techniques “for keeping patients on opioids longer.”
And in a civil trial that wrapped up last week, Oklahoma joined two other states — Massachusetts and New Jersey — in showing that McKinsey offered advice to a drug company on how to increase opioid sales at a time when abuse of its pain medicine was widespread.
The Secretive Family Making Billions From the Opioid Crisis
By Christopher Glazek
The American market for OxyContin is dwindling. According to Purdue, prescriptions fell 33 percent between 2012 and 2016. But while the company’s primary product may be in eclipse in the United States, international markets for pain medications are expanding. According to an investigation last year in the Los Angeles Times, Mundipharma, the Sackler-owned company charged with developing new markets, is employing a suite of familiar tactics in countries like Mexico, Brazil, and China to stoke concern for as-yet-unheralded “silent epidemics” of untreated pain. In Colombia, according to the L.A. Times, the company went so far as to circulate a press release suggesting that 47 percent of the population suffered from chronic pain. image Napp is the family’s drug company in the UK. Mundipharma is their company charged with developing new markets.
In May, a dozen lawmakers in Congress, inspired by the L.A. Times investigation, sent a bipartisan letter to the World Health Organization warning that Sackler-owned companies were preparing to flood foreign countries with legal narcotics. “Purdue began the opioid crisis that has devastated American communities,” the letter reads. “Today, Mundipharma is using many of the same deceptive and reckless practices to sell OxyContin abroad.” Significantly, the letter calls out the Sackler family by name, leaving no room for the public to wonder about the identities of the people who stood behind Mundipharma.
The final assessment of the Sacklers’ global impact will take years to work out. In some places, though, they have already left their mark. In July, Raymond, the last remaining of the original Sackler brothers, died at ninety-seven. Over the years, he had won a British knighthood, been made an Officer of France’s Légion d’Honneur, and received one of the highest possible honors from the royal house of the Netherlands. One of his final accolades came in June 2013, when Anthony Monaco, the president of Tufts University, traveled to Purdue Pharma’s headquarters in Stamford to bestow an honorary doctorate. The Sacklers had made a number of transformational donations to the university over the years—endowing, among other things, the Sackler School of Graduate Biomedical Sciences. At Tufts, as at most schools, honorary degrees are traditionally awarded on campus during commencement, but in consideration of Raymond’s advanced age, Monaco trekked to Purdue for a special ceremony. The audience that day was limited to family members, select university officials, and a scrum of employees. Addressing the crowd of intimates, Monaco praised his benefactor. “It would be impossible to calculate how many lives you have saved, how many scientific fields you have redefined, and how many new physicians, scientists, mathematicians, and engineers are doing important work as a result of your entrepreneurial spirit.” He concluded, “You are a world changer.”
OxyContin Made The Sacklers Rich. Now It’s Tearing Them Apart.
By Jared S. Hopkins
Mortimer’s side of the family was known by staff and advisers as the “A Side,” for the share type they owned, and Raymond’s as the “B Side.” Relations between the brothers were strained for years. The brothers sat on opposite sides at board meetings and communicated through intermediaries, said people who attended.
At one meeting years ago, according to a person who was present, Mortimer tried to punch Raymond but, missing him, hit a company attorney in between.
Reasons for the strain are murky, although some people close to the family said Mortimer opposed tapping Raymond’s son Richard Sackler to be president in 1999, a post he held until 2003. Clashes between Richard and two of Mortimer’s children—Kathe Sackler and Mortimer D.A. Sackler—accounted for much of the sparring at board meetings, according to several people who attended.
One source of tension was when to take profits from the company. Mortimer’s heirs, who are more numerous, wanted to do so more frequently, while the Raymond side was more inclined to let Purdue reinvest in its business, according to people familiar with the situation.
Purdue has sold more than $35 billion of OxyContin since its introduction. Just since 2007, Purdue has distributed more than $4 billion in profits to its owners, civil complaints have said.
The Met Will Turn Down Sackler Money Amid Fury Over the Opioid Crisis
By Elizabeth A. Harris
The Metropolitan Museum of Art said on Wednesday that it would stop accepting gifts from members of the Sackler family linked to the maker of OxyContin, severing ties between one of the world’s most prestigious museums and one of its most prolific philanthropic dynasties.
The decision was months in the making, and followed steps by other museums, including the Tate Modern in London and the Solomon R. Guggenheim Museum in New York, to distance themselves from the family behind Purdue Pharma. On Wednesday, the American Museum of Natural History said that it, too, had ceased taking Sackler donations.
The moves reflect the growing outrage over the role the Sacklers may have played in the opioid crisis, as well as an energized activist movement that is starting to force museums to reckon with where some of their money comes from.
“The museum takes a position of gratitude and respect to those who support us, but on occasion, we feel it’s necessary to step away from gifts that are not in the public interest, or in our institution’s interest,” said Daniel H. Weiss, the president of the Met. “That is what we’re doing here.”
Museums Cut Ties With Sacklers as Outrage Over Opioid Crisis Grows
By Alex Marshall
The shunning of the family has also gone beyond the cultural world. The Wall Street Journal reported this month that a hedge fund, Hildene Capital Management, told the Sacklers last year it would no longer manage their money. Brett Jefferson, Hildene’s president, told the newspaper that “an opioid-related tragedy affected someone with a personal relationship to me and other members of Hildene.”
Louvre Removes Sackler Family Name From Its Walls
By Alex Marshall
The Louvre in Paris has removed the name of the Sackler family from its walls, becoming the first major museum to erase its public association with the philanthropist family linked with the opioid crisis in the United States.
The Louvre’s collection of Persian and Levantine artifacts is housed in a wing that has been known as the Sackler Wing of Oriental Antiquities since 1997.
But on Wednesday, a plaque acknowledging the Sacklers’ donations had been removed from the gallery’s entrance, and references to “the Sackler Wing” on other signs in the museum had been covered with gray tape.
Sacklers Received as Much as $13 Billion in Profits From Purdue Pharma
By Jared S. Hopkins and Andrew Scurria
OxyContin maker Purdue Pharma LP sent $12 billion or $13 billion in profits to members of the Sackler family who own the company, according to court records and testimony filed in the drugmaker’s bankruptcy case.
The amounts are the largest estimate so far of how much Sackler family members made from Purdue. The figures were revealed in bankruptcy court filings Thursday and Friday by states and other municipalities. It isn’t clear what years the distributions covered.
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No member of the Sackler family remains on Purdue’s board nor holds any position at the company any longer. For years, Sackler family members held board seats and served in senior management roles at the company.
FDA medical adviser: ‘Congress is owned by pharma’
By Adriana Belmonte
Pharmaceutical companies are under the spotlight with congressional hearings on the cost of drug prices and allegations of the industry’s role in the opioid crisis.
Dr. Raeford Brown, a pediatric anesthesia specialist at the UK Kentucky Children’s Hospital and chair of the Food and Drug Administration (FDA) Committee on Analgesics and Anesthetics, has been openly critical of big pharma and the lack of proper oversight from the FDA.
Despite many politicians, particularly declared presidential candidates, beginning to speak out against big pharma, Brown does not think that anything will come out of it “because Congress is owned by pharma.”
“The pharmaceutical industry pours millions of dollars into the legislative branch every single year,” he told Yahoo Finance. “In 2016, they put $100 million into the elections. That’s a ton of money.”
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“If we don’t change the regulatory process for opioids, it will happen again,” Brown said.
A climate of cash in votes on global warming
By Alec Goodwin
Senators who have publicly denied that humans have had a significant impact on climate change took in an average of $467,022 more from the coal mining and oil & gas industries since 2010 than those who have publicly accepted humans’ role in the global rise in temperature.
In connection with a bill focused on the now-failed Keystone XL pipeline in Jan. 2015, Sen. Brian Schatz (D-Hawaii) introduced an amendment that read ”climate change is real and human activity significantly contributes to climate change.”
The first part of the amendment wasn’t controversial; the Senate had passed an amendment earlier that day acknowledging the existence of climate change by a nearly unanimous margin; only Sen. Roger Wicker (R-Miss.) voted against it. The stumbling block was the addition of language acknowledging that climate change is caused by people’s actions. Nearly half of the Senate opposed the amendment containing that text.
Senators who voted for the amendment received an average of $102,594 from individuals and PACs of the coal mining and oil & gas industries since 2010, while senators who voted against it received more than five times as much: $569,616.
Both the oil & gas and coal mining industries have significant incentives to halt efforts to stop climate change, which is caused in large part by gas-burning vehicles and coal-fueled power plants that produce greenhouse gases; any plans to tackle climate change would mean curbing the output of these gases, cutting into industry profits. Donating to lawmakers in the hope of preventing action on the issue would seem to be a good investment for them.
Much of the controversy that surrounds climate change has been fanned by organizations funded by the oil industry, including ExxonMobil and the billionaire industrialists David and Charles Koch. They’ve helped create the illusion of a debate when in reality few scientists dispute that climate change is real and is caused in large part by human actions.
Fossil fuel companies lobby Congress on their own solutions to curb climate change
By Karl Evers-Hillstrom and Raymond Arke
A new coalition of 13 Fortune 500 companies and four environmental groups, named the CEO Climate Dialogue, launched this week to call for action on climate change. Some of the prominent industry names include BP, Ford and BASF, along with environmental groups like the Nature Conservancy and the Environmental Defense Fund. The involved companies and groups have significant influence in Washington, spending a combined $55.8 million on lobbying last year.
As major oil companies have publicly accepted the reality of man-made climate change amid growing investor pressure, they’re now calling for “market-based” solutions to lower emissions. Several major oil companies, including ExxonMobil, which is embroiled in lawsuits over allegations that the company hid its knowledge of climate change, have lobbied in support of increased investment toward carbon capture, one of the industry’s favored methods for reducing emissions.
Carbon capture technology traps greenhouse gas as its emitted, preventing it from entering the atmosphere, then either stores it underground or uses the captured carbon dioxide as a resource.
Energy giants reportedly invested more than $1 billion in the three years following the Paris Climate agreement to sell lawmakers and the general public on gradual climate policy such as an expansion of carbon capture and natural gas.
Recording Reveals Oil Industry Execs Laughing at Trump Access
By Lance Williams
Just five months into the Trump era, the energy developers who make up the Independent Petroleum Association of America had already watched the new president order a sweeping overhaul of environmental regulations that were cutting into their bottom lines — rules concerning smog, fracking and endangered species protection.
Dan Naatz, the association’s political director, told the conference room audience of about 100 executives that Bernhardt’s new role meant their priorities would be heard at the highest levels of Interior.
“We know him very well, and we have direct access to him, have conversations with him about issues ranging from federal land access to endangered species, to a lot of issues,” Naatz said, according to an hourlong recording of the June 2017 event in Laguna Niguel provided to Reveal from The Center for Investigative Reporting.
The recording gives a rare look behind the curtain of an influential oil industry lobbying group that spends more than $1 million per year to push its agenda in Congress and federal regulatory agencies. The previous eight years had been dispiriting for the industry: As IPAA vice president Jeff Eshelman told the group, it had seemed as though the Obama administration and environmental groups had put together “their target list of everything that they wanted done to shut down the oil and gas industry.” But now, the oil executives were almost giddy at the prospect of high-level executive branch access of the sort they hadn’t enjoyed since Dick Cheney, a fellow oilman, was vice president.
“It’s really a new thing for us,” said Barry Russell, the association’s CEO, boasting of his meetings with Environmental Protection Agency chief at the time, Scott Pruitt, and the then-Interior Secretary, Ryan Zinke. “For example, next week I’m invited to the White House to talk about tax code. Last week we were talking to Secretary Pruitt, and in about two weeks we have a meeting with Secretary Zinke. So we have unprecedented access to people that are in these positions who are trying to help us, which is great.”
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He also warned of what could go wrong in the Trump era.
Trump was slow to make middle-level appointments at the regulatory agencies to carry out the pro-industry policies he ordered, Naatz contended. Without supervision, career federal employees might well slow-walk, or resist the sweeping regulatory changes the industry favors, he said.
“If you don’t have the politicals pushing down, bureaucracy is going to take over and push up,” Naatz said.
White House blocked intelligence agency’s written testimony calling climate change ‘possibly catastrophic’
By Juliet Eilperin, Josh Dawsey and Brady Dennis
Officials from the White House’s Office of Legislative Affairs, Office of Management and Budget and National Security Council all raised objections to parts of the testimony that Rod Schoonover, who works in the office of geography and global affairs, prepared for a hearing Wednesday.
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According to several senior administration officials, all of whom spoke on the condition of anonymity in order to talk about internal deliberations, Trump officials sought to cut several pages of the document on the grounds that its description of climate science did not mesh with the administration’s official stance. Critics of the testimony included William Happer, a National Security Council senior director who has touted the benefits of carbon dioxide and sought to establish a federal task force to challenge the scientific consensus that human activity is driving recent climate change.
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President Trump has been steadfast in shrugging off the warnings from scientists about the potential impacts of climate change, reiterating in an interview with Piers Morgan on “Good Morning Britain” this week that he does not regret pulling the United States out of a 2015 global climate accord aimed at curbing greenhouse gas emissions..
“I believe that there’s a change in weather, and I think it changes both ways,” he said. “Don’t forget, it used to be called global warming. That wasn’t working. Then it was called climate change. Now it’s actually called extreme weather, because with extreme weather, you can’t miss.”
During the interview he blamed China, India and Russia for polluting the environment and insisted the United States has “among the cleanest climates,” and noted the United States had suffered extreme weather in the past. ““Forty years ago, we had the worst tornado binge we’ve ever had. In the 1890s, we had our worst hurricanes.”
The United States remains the world’s second-largest emitter of carbon dioxide, behind China.
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Despite the internal controversy over the testimony prepared for Wednesday’s hearing, all three witnesses detailed ways in which climate-related impacts could exacerbate existing national security risks. Peter Kiemel, counselor at the National Intelligence Council, and Jeffrey Ringhausen, a senior analyst at the Office of Naval Intelligence, talked about issues ranging from how terrorist cells could capitalize on water shortages to disputes with other nations over shifting fishing grounds.
Schoonover, for his part, said in his opening statement that the planet was warming and that it could pose a major risk to the United States and other nations.
“The Earth’s climate is unequivocally undergoing a long-term warming trend, as established by decades of scientific measurements and multiple, independent lines of evidence,” he said, adding later, “Climate change effects could undermine important international systems on which the U.S. is critically dependent, such as trade routes, food and energy supplies, the global economy and domestic stability abroad.”
Companies See Climate Change Hitting Their Bottom Lines in the Next 5 Years
By Brad Plumer
After analyzing submissions from 215 of the world’s 500 biggest corporations, CDP found that these companies potentially faced roughly $1 trillion in costs related to climate change in the decades ahead unless they took proactive steps to prepare. By the companies’ own estimates, a majority of those financial risks could start to materialize in the next five years or so.
The disclosures show how business leaders expect climate change, and the policy responses to it, to ripple through every corner of the global economy.
Many firms are bracing for direct impacts. Hitachi Ltd., a Japanese manufacturer, said that increased rainfall and flooding in Southeast Asia had the potential to knock out suppliers and that it was taking defensive measures as a result. Banco Santander Brasil, a large Brazilian bank, said increasingly severe droughts in the region might hurt the ability of borrowers to repay loans. Google’s parent company, Alphabet, Inc., noted that rising temperatures could increase the cost of cooling its energy-hungry data centers.
Others are keeping a close eye on the potential public reaction to climate change. Total, a French energy company, is grappling with the possibility that ambitious efforts by nations to limit global warming and restrict fossil fuel use could render some oil and gas reserves “unburnable.” BASF, a German chemical company, said it has a “significant corporate carbon footprint” that could scare off environmentally conscious shareholders unless it takes steps to act on climate change.
In all, the world’s largest companies estimated that at least $250 billion of assets may need to be written off or retired early as the planet heats up. Those assets include buildings in high-risk flood zones, or power plants that may have to shut down in response to tighter pollution rules.
Corporate America Is Getting Ready to Monetize Climate Change
By Christopher Flavelle
Climate change isn’t all downside for the largest U.S. companies. Many of those that filed reports with CDP said they believe climate change can bolster demand for their products.
For one thing, more people will get sick. “As the climate changes, there will be expanded markets for products for tropical and weather related diseases including waterborne illness,” wrote Merck & Co. The company didn’t respond to a request for comment.
More disasters will make iPhones even more vital to people’s lives, Apple predicted.
“As people begin to experience severe weather events with greater frequency, we expect an increasing need for confidence and preparedness in the arena of personal safety and the well-being of loved ones,’’ the company wrote. Its mobile devices “can serve as a flashlight or a siren; they can provide first aid instructions; they can act as a radio; and they can be charged for many days via car batteries or even hand cranks.’’
Apple didn’t respond to a request for comment.
Living with climate change is also going to cost money, which some banks see as an opening. “Preparation for and response to climate-change induced natural disasters result in greater construction, conservation and other business activities,” Wells Fargo and Co wrote, adding that it “has the opportunity to provide financing to support these efforts.”
More disasters will mean increased sales for Home Depot, the company wrote. And as temperatures get higher, people are going to need more air conditioners. Home Depot predicted that its ceiling fans and other appliances will see “higher demand should temperatures increase over time.”
A spokeswoman for Home Depot, Christina Cornell, declined to comment beyond what was in the company’s report.
Climate change will break the housing market, says David Burt, who predicted the 2008 financial crisis
By Rachel Koning Beals
Burt was a consultant at Cornwall Capital, the firm that made about $80 million when it shorted the subprime mortgage market whose eventual implosion left the housing market in a shambles and lured well-positioned investors to pick through the bones. Cornwall was profiled in the Lewis narrative and one of Burt’s colleagues was played by Brad Pitt in the movie adaptation.
As Vice reports, just as Burt did before the last crash, he has left his big-time investing job, this time splitting with the $1 trillion Wellington Management. Burt now heads an investment firm that believes it can profit from the lack of attention being paid to the risk of climate change in a property industry that’s building, buying, selling and lending (cheaply) without taking into account rising sea levels and inland flood risks.
The problem, other climate-change experts allege, starts with government flood maps that under-report risk and continues through the complex multilayer housing, lending and insurance market where risks are diluted, or at least, mispriced.
Between $60 billion to $100 billion worth of mortgages for U.S. coastal homes are issued each year. Some 311,000 existing coastal homes will be repeatedly flooded, or lost altogether, within the next 30 years, according to sea-level calculations that the Union of Concerned Scientists publishes. That means the often high-population states of California, Texas, Florida, Maryland, New Jersey and New York are vulnerable, as are retirement destinations including the Carolinas.
The number and total value of flood insurance policies has been declining since 2006, meaning that households that purchased a property in coastal areas especially may be at increased risk of defaulting on their mortgages, a recent academic paper says.
In 2016, Freddie Mac’s then–chief economist Sean Becketti wrote that “the economic losses and social disruption [of rising seas on coastal housing] may happen gradually, but they are likely to be greater in total than those experienced in the housing crisis and Great Recession.”
Rising sea levels pose threat to homes of 300m people – study
By Jonathan Watts
Land that is currently home to 300 million people will flood at least once a year by 2050 unless carbon emissions are cut significantly and coastal defences strengthened, says the study, published in Nature Communications. This is far above the previous estimate of 80 million.
The upward revision is based on a more sophisticated assessment of the topography of coastlines around the world. Previous models used satellite data that overestimated the altitude of land due to tall buildings and trees. The new study used artificial intelligence to compensate for such misreadings.
Researchers said the magnitude of difference from the previous Nasa study came as a shock. “These assessments show the potential of climate change to reshape cities, economies, coastlines and entire global regions within our lifetimes,” said Scott Kulp, the lead author of the study and a senior scientist at Climate Central.
“As the tideline rises higher than the ground people call home, nations will increasingly confront questions about whether, how much and how long coastal defences can protect them.”
The biggest change in estimates was in Asia, which is home to the majority of the world’s population. The numbers at risk of an annual flood by 2050 increased more than eightfold in Bangladesh, sevenfold in India, twelvefold in Thailand and threefold in China.
The threat is already being felt in Indonesia, where the government recently announced plans to move the capital city from Jakarta, which is subsiding and increasingly vulnerable to flooding. The new figures show 23 million people are at risk in Indonesia, up from the previous estimate of 5 million.
Benjamin Strauss, Climate Central’s chief scientist and CEO, said more countries may need to follow Indonesia’s lead unless sea defences were strengthened or carbon emissions were cut. “An incredible, disproportionate amount of human development is on flat, low-lying land near the sea. We are really set up to suffer,” he said.
The authors say the calculations could still underestimate the dangers because they are based on standard projections of sea level rise in a scenario known as RCP2.6, which assumes emissions cuts in line with the promises made under the Paris agreement. Countries are currently not on course to meet these pledges.
How Climate Change Could Trigger the Next Global Financial Crisis
By Robinson Meyer
Robinson Meyer: In your Foreign Policy piece, you draw an analogy between the financial crisis of 2008 and what’s happening now with climate change. You describe a crisis in a near-term future, one where climate change has taken hold but where much of the economy is still tied up in oil.
I will say: I’m a little skeptical. I’m not sure you could get the kind of sudden financial stop through climate change that you got in 2007 and 2008. What’s the right way to think about that analogy?
Adam Tooze: That skepticism is perfectly warranted. I’d say that in some sense, I’m here writing with my historian’s hat on, and all I’m really observing is that Mark Carney, the governor of the Bank of England, in 2015, in a speech which has subsequently received massive coverage—and he is a man, after all, absolutely of the global financial establishment—coined the idea of a climate Minsky moment. [Editor’s note: A Minsky moment is when an asset’s price suddenly collapses after a long period of growth.]
So the point, to me, is not so much the realism of that prospect, of the fact that we could have some kind of subprimelike scenario. For me, the significant thing is that the argument is actually going on inside the establishment, in the network of financial regulators and central-bank thinkers.
Are we likely to see a financial Minsky moment? I think that is a reasonable question mark. We would need [fossil-fuel assets] to be on the balance sheet of actors who were under huge pressure in a fire-sale situation and who couldn’t deal with a sudden revaluation. We would need an entire network of causation to be there, which is what produced the unique crisis of 2007 to 2008.
Meyer: What would cause that kind of sudden revaluation? Would there need to be a policy shock, such as the United States suddenly imposing a climate policy?
Tooze: That would be one way in which this could be sudden. So imagine that we stay on our current path, and we’re headed toward 3 or 4 degrees’ [Celsius] temperature change. And then imagine some of the nonlinearities kick in, which the climate scientists tell us about, and we face a Fukushima-style event.
What happens next? You then get nervous democratic politicians—and not necessarily those who are known for their populism, but just nervous democratic politicians—suddenly deciding that we have to stop doing one or another part of our carbon-based economy. It has to stop, and it has to stop immediately. And then you get big shocks. Then you get sudden revaluations.
That, I think, is the sort of scenario that the Bank of England people are working with. In other words, the success of the delaying tactics of the carbon lobby create a situation in which we’re then faced with the possibility of a sudden regulatory shock, something that really inflicts major losses.
Revealed: How the Tobacco and Fossil Fuel Industries Fund Disinformation Campaigns Around the World
By Mat Hope
There exists an ever-growing network of self-described ‘free market’ organisations that create reports, make media appearances, and disseminate information that the industry then uses to lobby policymakers. This analysis shows that many of these organisations also take donations from the industries they research and report on.
As a Guardian investigation by Jessica Glenza, with additional reporting by Sharon Kelly, recently revealed, these organisations provided “a powerful voice of support to cigarette manufacturers in battles against tougher regulations”. And as DeSmog has previously shown, the same organisations have a long history of promoting climate science denial to discourage policymakers from implementing carbon pollution regulations.
It matters where the money for the thinktanks’ activities comes from, Hsu says:
“There’s a lot of good research that shows that regardless of what people think of how money affects what they do, people that receive large donations are responsive to those donor interests.”
“The fossil fuel industry and the tobacco industry are funding disinformation campaigns so societies and countries can’t take action in ways that would generally benefit everyone except the fossil fuel and tobacco industries.”
Contesting the Science of Smoking
By David Heath
In a landmark ruling nearly a decade ago, a federal judge ordered tobacco companies to stop lying.
After listening to 84 witnesses and perusing tens of thousands of exhibits, U.S. District Judge Gladys Kessler of the District of Columbia took a year to write a 1,652-page opinion detailing the companies’ elaborate strategy to deny the harmful effects of smoking.
“In short, [the companies] have marketed and sold their lethal product with zeal, with deception, with a single-minded focus on their financial success, and without regard for the human tragedy or social costs that success exacted,” Kessler wrote in United States of America v. Philip Morris USA.
Kessler noted that the Justice Department, in a racketeering lawsuit, had presented “overwhelming evidence” of a conspiracy to defraud the public. She ordered the companies to take a number of actions, including ceasing to claim there was such a thing as a low-tar cigarette that reduced the risk of disease. The evidence showed this simply was not true.
Yet in about a dozen pending lawsuits, Philip Morris continues to do just that. As of 2010, it still routinely argued that the nation’s top-selling cigarette, once known as Marlboro Lights and now called Marlboro Gold, reduces the risk of cancer.
To find scientists willing to make this claim, Philip Morris turned to consultants for the chemical industry. The experts Philip Morris hired work for firms whose scientists regularly contend in medical journals, courtrooms, and regulatory arenas that their clients’ chemical products pose little or no health risks to the public. The firms have been instrumental in delaying new regulations by criticizing the work of other scientists, and emphasizing the doubt inherent in health science. The resultant uncertainty has helped delay attempts by the U.S. Environmental Protection Agency to crack down on ubiquitous chemicals with known dangers, such as formaldehyde, arsenic, and hexavalent chromium.
The irony in this arrangement is that the tobacco industry pioneered such tactics. “The tobacco industry wrote the playbook for the rest of the industries,” said Matt Myers, president of the Campaign for Tobacco-Free Kids. “Whether it’s the chemical industry, whether its climate change … You see it in industry after industry.” Now, it’s hiring consultants who took its techniques and pushed them further in other industries, relying on their experience to contest the scientific consensus on the dangers of low-tar cigarettes.
The industry’s tactics continue to have catastrophic consequences. The Centers for Disease Control and Prevention attribute 480,000 deaths each year to smoking, equal to one in every five deaths. Since 1964, when the U.S. Surgeon General warned that smoking caused cancer, the government estimates that tobacco has killed more than 20 million Americans. That is 15 times the number of Americans who have perished in all wars combined.
Although millions have quit, smoking continues to be the most preventable cause of death in the United States today.
How the fossil fuel industry got the media to think climate change was debatable
By Amy Westervelt
Though some outlets have moved to extricate deniers from the conversation, too many television news programs continue to bring on “contrarian” experts, giving a platform to tired lies. I say “lies” because fossil fuel industry scientists debunked these theories themselves decades ago, so they are knowingly perpetuating falsehoods. In a “global warming primer” prepared in the 1990s by the Global Climate Coalition, a since-disbanded consortium of fossil fuel producers, utilities, manufacturers, and other U.S. business interests (including the U.S. Chamber of Commerce), a Mobil scientist debunked all of the prevailing contrarian theories of the day on climate change. That part of the primer was left unprinted, of course, and oil companies went on to fund scientists promoting those very theories — the same ones that industry spokesmen and conservative politicians spout today.
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It’s well past time the media stopped allowing itself to be a tool in the fossil fuel industry’s information war. Oreskes likens the push for “balance” on climate change to journalists arguing over the final score of a baseball game. “If the Yankees beat the Red Sox 6-2, journalists would report that. They would not feel compelled to find someone to say actually the Red Sox won, or the score was 6-4,” she says.
Peter Thiel is funding a science publication questioning evolution and climate change
By Michael J. Coren
There’s nothing necessarily nefarious about a publication dedicated to an unconventional review of science. One of the founders of Inference, David Berlinski, said his intention was to start a conversation with the global scientific community through “more sophisticated articles” than might appear in outlets as such as Aeon, n+1, or Quanta. But skepticism is warranted—among other potential concerns, Berlinski has stated that he rejects scientific consensus on evolution.
There have been efforts to create false or misleading “journals” in order to promote questionable research or even conspiracy theories in the past, says Ivan Oransky, a medical doctor and co-founder of RetractionWatch, which tracks retractions in scientific journals. For example, the Journal of American Physicians and Surgeons, linked to the politically conservative non-profit Association of American Physicians and Surgeons, has in the past printed articles claiming HIV doesn’t cause AIDS, stating that climate change doesn’t exist, and linking autism and vaccine. But, Oransky said, Inference doesn’t fit neatly into the same category as the Journal of American Physicians and Surgeons. Inference doesn’t claim to be peer-reviewed, and purports to be non-ideological. Rather, its editors grant writer plenty of leeway to publish their views—it doesn’t matter if they may be contradicted by the vast majority of scientists
For Thiel, this lack of filter may be by design. An increasingly vocal cohort in Silicon Valley’s libertarian circles sees mainstream discourse as hostile to unorthodox ideas, especially those from the right of the ideological spectrum. By pushing back against the conformity of today’s acceptable thought, Thiel and others have claimed they are promoting freedom of speech and Enlightenment ideals.
How G.O.P. Leaders Came to View Climate Change as Fake Science
By Coral Davenport and Eric Lipton
Conservative-leaning governments in Britain, France, Germany and Japan all signed on to successive climate change agreements.
President Trump’s decision to withdraw from the Paris climate agreement drew immediate reaction from big-city mayors, governors and Congress members.
Yet when Mr. Trump pulled the United States from the Paris accord, the Senate majority leader, the speaker of the House and every member of the elected Republican leadership were united in their praise.
Those divisions did not happen by themselves. Republican lawmakers were moved along by a campaign carefully crafted by fossil fuel industry players, most notably Charles D. and David H. Koch, the Kansas-based billionaires who run a chain of refineries (which can process 600,000 barrels of crude oil per day) as well as a subsidiary that owns or operates 4,000 miles of pipelines that move crude oil.
Government rules intended to slow climate change are “making people’s lives worse rather than better,” Charles Koch explained in a rare interview last year with Fortune, arguing that despite the costs, these efforts would make “very little difference in the future on what the temperature or the weather will be.”
Humans Are Speeding Extinction and Altering the Natural World at an ‘Unprecedented’
By Brad Plumer
Humans are transforming Earth’s natural landscapes so dramatically that as many as one million plant and animal species are now at risk of extinction, posing a dire threat to ecosystems that people all over the world depend on for their survival, a sweeping new United Nations assessment has concluded.
The 1,500-page report, compiled by hundreds of international experts and based on thousands of scientific studies, is the most exhaustive look yet at the decline in biodiversity across the globe and the dangers that creates for human civilization. A summary of its findings, which was approved by representatives from the United States and 131 other countries, was released Monday in Paris. The full report is set to be published this year.
Its conclusions are stark. In most major land habitats, from the savannas of Africa to the rain forests of South America, the average abundance of native plant and animal life has fallen by 20 percent or more, mainly over the past century. With the human population passing 7 billion, activities like farming, logging, poaching, fishing and mining are altering the natural world at a rate “unprecedented in human history.”
At the same time, a new threat has emerged: Global warming has become a major driver of wildlife decline, the assessment found, by shifting or shrinking the local climates that many mammals, birds, insects, fish and plants evolved to survive in. When combined with the other ways humans are damaging the environment, climate change is now pushing a growing number of species, such as the Bengal tiger, closer to extinction.
As a result, biodiversity loss is projected to accelerate through 2050, particularly in the tropics, unless countries drastically step up their conservation efforts.
Brazil Is a Bigger Threat Than Either Iran or China
By Tyler Bellstrom
Despite Wall Street’s excitement at Bolsonaro’s election, Brazil’s economic forecast is gloomy. Unemployment is high, debt load is high, and cuts to pensions and social security loom. The economic situation, combining with a lax view on environmental law enforcement, makes it more likely that deforestation will accelerate. But, the economic vulnerability gives opportunity for foreign policy carrots and potentially sticks to influence behavior.
Policymakers should consider offering direct aid to Brazil to reverse deforestation, similar to how Norway and Germany have through the Amazon Fund. The European Union should not ratify any trade deal until they get concrete and verifiable promises from Bolsonaro’s government. And it’s worth trying to get China involved, given its leverage as a huge buyer of Brazil’s soybeans. Targeted sanctions to Brazilian agribusiness should be attached to measures of direct aid. We can’t make Bolsonaro into a trustworthy politician. But like most people, he will likely respond to clear incentives and disincentives.
Policymakers need to broaden their definition of threats, incorporating climate change into policy decisions. The reality of another financial crisis due to climate change’s effect on insurance companies has motivated central banks around the world to start to look at climate change as something that will fall within their purview, something they need to address. Security and foreign policy strategists need to follow suit.
Climate Change Still Seen as the Top Global Threat, but Cyberattacks a Rising Concern
By Jacob Poushter and Christine Huang
Broadly speaking, people around the world agree that climate change poses a severe risk to their countries, according to a 26-nation survey conducted in the spring of 2018. In 13 of these countries, people name climate change as the top international threat.
But global warming is just one of many concerns. Terrorism, specifically from the Islamic extremist group known as ISIS, and cyberattacks are also seen by many as major security threats. In eight of the countries surveyed, including Russia, France, Indonesia and Nigeria, ISIS is seen as the top threat. In four nations, including Japan and the United States, people see cyberattacks from other countries as their top international concern. One country, Poland, names Russia’s power and influence as its top threat, but few elsewhere say Russia is a major concern.
Maybe We’re Not Really Doomed After All
By Jon Gertner
In the past few years, some commentators have warned that modern society’s faith in technology has led to a mistaken belief that it will save the world. They embrace solutions that encourage widespread behavioral changes, like consuming less, traveling infrequently and adopting a plant-based diet. We’re likely to need both technological and personal transformations. But in the end, it’s technology that will save us, not only because it can but also because it will have to.
In many respects, technology is saving us already: by identifying the magnitude of the threat, providing the extraordinary computing power required to run climate models to predict the future, and enabling architects and engineers to design for resilience against tempestuous storms and encroaching seas.
Technology has made possible clean and efficient energy systems that wouldn’t have been achievable a few decades ago, including cheap solar panels, LED lighting and batteries for electric cars. We now have green buildings that reduce energy usage and an emerging class of solar cells known as perovskites that may greatly lower the costs of renewable energy, and we are developing techniques to produce concrete that absorbs carbon dioxide rather than emitting it.
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Adopting a measure of technological optimism is not the same as adopting the blithe and complacent outlook of a techno-utopian. Neither is it to assume that we won’t suffer in the coming years from heat waves, storms and floods — or from elected officials who disregard the urgent need for action.
Rather, it’s to view 20th-century history as an accumulation of hard-won knowledge that arose from using our wits to understand the climate. It’s also to see that important technological and engineering achievements — developing mass transit systems, huge wind farms, even nuclear power plants — are possible when we choose to act, especially through our politics and policies.
Proof of this can be found in the most unlikely places. For the past few years I’ve been tracing the history of scientific discovery on the imperiled Greenland ice sheet. Greenland’s ice is so thick and so old that scientists can drill down and extract samples that contain evidence of what the environment was like thousands of years ago. With the help of lab instruments, researchers can reconstruct ancient temperatures and atmospheric conditions.
Amid the trace chemicals that turn up in the old ice, there is an unmistakable fingerprint of lead from a few thousand years ago — traces from silver smelters in Europe, during the height of the Roman Empire, which released lead into the air that was deposited on the icy surface of Greenland. In more recent records, we can see vestiges of the metal from the fumes of the early years of the Industrial Revolution and, later still, the residue from leaded gasoline.
But by the early 1990s, these traces had receded from Greenland’s snow and ice. That was after new regulations and new products — created over the opposition, incidentally, of fossil-fuel concerns — eliminated the lead that was poisoning us from gasoline.
And life went on as usual.
Think of that the next time dread creeps in. Without question, reducing carbon dioxide is a far bigger challenge than reducing lead, and the stakes are much higher. But we now have a deeper well of knowledge and considerably better technologies. Indeed, if we don’t deploy the resources we now wield, many years into the future our story of failure will simply be this: We understood the threat, we were very smart and exceedingly capable. We had money and we had tools. And we chose not to act.
Grass roots activists won the war on smoking. Can they win the war on climate change?
By Sarah Milov
The phrase “tobacco playbook” typically describes the many strategies pursued by Big Tobacco to forestall lifesaving regulation: the constant mongering of doubt, misinformation and phony research. Big Tobacco, like Big Oil, waged anti-regulatory campaigns through industry-funded, third-party think tanks. They also paid millions to mercenary scientists to insist that “no scientific consensus” existed about smoking.
But the story of tobacco has a happy ending: rates of cigarette consumption have fallen dramatically in the United States. In 2015, 15 percent of adult Americans smoked, down from nearly 40 percent in 1970. The first sentence of the most recent Surgeon General’s Report on Smoking proudly proclaimed, “We have learned how to end the tobacco epidemic.”
This change was the result of local action by single-issue citizen groups. That is the real tobacco playbook.
Activists won the fight against tobacco by working on the local, not national, level. Neither the Occupational Safety & Health Agency nor the Environmental Protection Agency regulate secondhand smoke. Congress has never passed a Non-Smokers’ Rights Act. Instead, 41 states and 1,354 cities have enacted laws to protect the health of citizens. They did so in response to the sustained activism of men and women who argued that the government was not doing enough to protect their rights.
Joseph Stiglitz: Corporate greed is accelerating climate change. But we can still head off disaster
By Joseph E. Stiglitz
Dealing effectively with climate change is well within our reach; in fact, I recently co‐chaired an international commission that showed that the global goals of limiting the increase in global temperatures to 1.5 to 2 degrees Celsius were clearly achievable. It would make so much more sense to spend money retrofitting our economy to reduce the risk of disastrous climate change rather than spending money to deal with the enormous economic and human costs of coping with its consequences.
Some of the required resources would come simply from eliminating the huge subsidies we provide for fossil fuels, or from taxing corporations that inflict damage on our environment. This would encourage corporations to work hard to prevent it. But there are broader changes that would help grow the economy, providing some of the needed resources: curbing the excesses of corporate power more generally would lead to a more efficient economy and to more equality. So, too, would curbing the abuses of corporate governance, like CEOs paying themselves so much at the expense both of workers and investment. Policies that reduce discrimination in the labor market and provide more flexibility in hours are examples of supply‐side measures that work. And over the long run, education policies that help all citizens live up to their potential would also help the economy grow.
The mobilization during World War II had some long‐term salutary effects on our economy and society: It brought women into the labor force and it helped transform us from an agrarian to an urban society. The mobilization required to fight climate change has a similar potential. As we restructure our economy and society away from a high‐carbon economy and toward a more sustainable one, we should seize this opportunity to create the society that benefits all of us, as well as the planet.
“Avoiding Plutocracy Would Require a Political Change”: Branko Milanovic on the Future of Capitalism
By Asher Schechter
Q: You make some policy proposals in the book. How can Western countries avoid devolving into full-on plutocracies?
I divide my recommendations into three main parts:
The first one has to do with de-concentrating capital ownership through tax advantages for the middle class and a corresponding increase in taxes for the rich, as well as reinstating high taxes on inheritance. Reducing the concentration of wealth would also reduce the concentration of income and give the middle class a much bigger stake in the financial ownership of capital.
The second element is enhancing public education and equality of opportunity by increasing funding for and improving the quality of public schools. Despite individual cases of people who are poor being able to go to top schools, the number of such cases is small and of no statistical importance. Moreover, the high cost guarantees that top schools essentially cater to the rich. In other words, the extremely high cost of private education is used as a tool by the rich to reduce competition faced by their children.
The third part is changing the financing of political campaigns to reduce the ability of the rich to control the political process.
The apogee of capitalism and our political malaise
By Branko Milanovic
Politicians were seen as just another set of entrepreneurs who, instead of taking their skills and risk-taking preferences to banking or software development, moved into politics. It was thought normal that goal-directed, self-interested rational behaviour need not be limited to the economic sphere—it was more general and embraced politics as well.
This view of the world was amazingly vindicated. Not only did politicians often behave in a self-serving manner (which perhaps they had often done in the past too), but such behaviour began to be expected of them. Not necessarily approved of, but expected in the sense that it was not considered odd or unusual that politicians would first and foremost think of their own financial interests.
They could cash out on the connection and power they had acquired in office by finding lucrative jobs in the private sector (José Manuel Barroso, Tony Blair, Jim Kim from the World Bank). They could give multi-million-dollar speeches to corporate moguls (Barrack Obama, Bill Clinton, Hillary Clinton). They could sit on a plethora of company boards.
Or, some, coming from the private sector (Silvio Berlusconi, Thaksin Shinawatra), would openly advertise their political parties as just clientilistic organisations: if you have a problem and want it solved, join the party. I remember seeing in the streets of Milan such an advertisement by Berlusconi’s Forza Italia—a movement whose lack of ideology, aside from economic self-interest, was reflected in its banal name, borrowed from football fans supporting Italy’s national team.
The list of politicians who took their own (and their supporters’) money-making to be the normal function of homo economicus once in office is long. We know some of its most prominent members, often by failure—when their activities went a bit too far or when they were unable fully to hide them. We know them through financial scandals and at times jail terms. For example, two out of the last three Brazilian presidents are in prison for bribery. All five former Peruvian presidents have been jailed for corruption, are under investigation or are fugitives from justice. The daughter of Uzbekistan’s late president has been imprisoned for multi-billion dollar embezzlement schemes. The shadow of prosecution hangs over the former Angolan president’s daughter, and chair of its state oil company, the richest woman in Africa, were she to return to the country.
In Europe, the former French president Nicolas Sarkozy has been subject to investigation in connection with a number of financial scandals, the most serious arising from reports of illicit financial support for his 2007 election campaign by the late Libyan dictator Muammar Gadhafi. The former German chancellor Helmut Kohl had to resign as honorary chair of the Christian Democratic Union in 2000 after revelations of secret party bank accounts over which he presided.
The US president, Donald Trump, has refused to disclose his multi-year tax returns and failed to put his business dealings into a blind trust to insulate him from external inducements. His Russian counterpart, Vladimir Putin, has been able to parlay political power into wealth way beyond his income.
Politicians, east and west, north and south, have thus fully confirmed to neoliberal ‘economic imperialism’—the idea that all human activities are driven by the desire for material success, that success in money-making is the indicator of our social worth and that politics is just another line of business.
The Corruption Before Trump
By Ross Douthat
This kind of thinking has animated and justified elite self-enrichment throughout my lifetime. Think of Dick Cheney’s smooth move from supervising the Defense Department to running a defense contractor to supervising the Defense Department once again, or the extraordinary post-presidential buckraking of the Clinton family and their foundation’s global funding stream.
But the pattern isn’t just personal, it’s also structural, with specific opportunities for moneymaking embedded in big-picture, bipartisan projects: the Clinton-era attempt to transform post-Soviet Russia into a functioning capitalist democracy; the Bush-era attempt to remake the Middle East; the multi-administration push to unite American and Chinese markets, creating a free and prosperous “Chimerica” on which the sun would never set.
We are where we are in American politics, in part, because all these big-picture projects succeeded in enriching private interests … but failed to achieve their stated public goals. The “shock therapy” delivered to Russia midwifed Putinism instead of a prosperous American ally. The war in Iraq ushered in a regional conflict that’s still burning to this day. Chimerica worked out better for the Chinese than for many working-class Americans, and far better for the Chinese Politburo than for the cause of liberty. And the self-justifying doctrine of the present elite — that you can serve the common good while in office and do well for yourself afterward — became far more implausible when the elite’s projects kept failing even as the officeholders kept on cashing in.
The Real Legacy of the 1970s
By Michael Tomasky
But others have a responsibility here too — notably, our captains of commerce. They have enormous power, and in a country this polarized, they can move moderate and maybe even conservative public opinion in a way that Democratic politicians, civic leaders and celebrities cannot.
They will always be rich. But they have to decide what kind of country they want to be rich in. A place of more and more tax cuts for them, where states keep slashing their higher-education spending and tuitions keep skyrocketing; where the best job opportunity in vast stretches of America is selling opioids; where many young people no longer believe in capitalism and record numbers of them would leave this country if they could? Or a country more like the one they and their parents grew up in, where we invested in ourselves and where work produced a fair and livable wage?
Elite gathering reveals anxiety over ‘class war’ and ‘revolution’
By Andrew Edgecliffe-Johnson, Lindsay Fortado and James Fontanella-Khan
Guggenheim Partners’ Alan Schwartz put the risks of rising income inequality more starkly. “You take the average person . . . they’re just basically saying something that used to be 50:50 is now 60:40; it’s not working for me,” he told another conference session, pointing to the gap between wage growth and the growth of corporate profits.
“If you look at the rightwing and the leftwing, what’s really coming is class warfare,” he warned. “Throughout centuries what we’ve seen when the masses think the elites have too much, one of two things happens: legislation to redistribute the wealth . . . or revolution to redistribute poverty. Those are the two choices historically and debating it back and forth, saying ‘no, it’s capitalism; no, it’s socialism’ is what creates revolution.”
There was less discussion of the prospect of higher taxes on America’s wealthiest, which some Democrats have proposed to finance an agenda many executives support, such as investing in education, infrastructure and retraining a workforce threatened by technological disruption and globalisation.
One top investment company executive echoed the common view among the conference’s wealthy speakers: “Punitive redistribution won’t work.”
But another financial services executive, who donated to Hillary Clinton’s US presidential campaign in 2016, told the Financial Times: “I’d pay 5 per cent more in tax to make the world a slightly less scary place.”
I’m in the 1 Percent. Please, Raise My Taxes.
By Eli Broad
Don’t get me wrong: I am not advocating an end to the capitalist system that’s yielded some of the greatest gains in prosperity and innovation in human history. I simply believe it’s time for those of us with great wealth to commit to reducing income inequality, starting with the demand to be taxed at a higher rate than everyone else.
This does not mean I support paying higher taxes without requiring government to be transparent, accountable and equitable about how it spends the revenue, particularly for health care, public education and other programs critical to social and economic mobility. But let’s end this tired argument that we must delay fixing structural inequities until our government is running as efficiently as the most profitable companies. That’s a convenient tactic employed to distract us from the real problems.
The enormous challenges we face as a nation — the climate crisis, the shrinking middle class, skyrocketing housing and health care costs, and many more — are a stark call to action. The old ways aren’t working, and we can’t waste any more time tinkering around the edges.
Hedge fund billionaire Ray Dalio: ‘Capitalism basically is not working for the majority of people’
By Catherine Clifford
“Today, the top one-tenth of 1 percent of the population’s net worth is equal to the bottom 90 percent combined. In other words, a big giant wealth gap. That was the same — last time that happened was the late ’30s,” Dalio said. (Indeed, research from Emmanuel Saez and Gabriel Zucman of the National Bureau of Economic Research of wealth inequality throughout the 20th century, covered by The Guardian, bears this out.)
Further, Dalio points to a survey by the Federal Reserve showing that 40 percent of adults can’t come up with $400 in the case of an emergency. “It gives you an idea of what the polarity is,” Dalio said. “That’s a real world. That’s an issue.”
And Dalio says the income gap will only get worse.
“We’re in a situation when the economy is at a peak, we still have this very big tension. That’s where we are today,” he said in November. “We’re in a situation where, if you have a downturn, and we will have a downturn, I believe that — I worry that that polarity will become greater.”
The Investor Seth Klarman, in a Rare Interview, Offers a Warning. Davos Should Listen
By Evan Osnos
He told me, “I don’t think it’s too late for business leaders to start doing the right thing for their employees, their clients, and their communities.” And if they don’t? It could lead to regulations that, in his mind, would go too far in constraining corporate behavior. In his speech, he said, “When capitalism goes unchecked and unexamined, and management is seduced by a narrow and myopic perspective, the pendulum can quickly swing in directions where capitalism’s benefits are discounted, and its flaws exaggerated.” Klarman hopes that politicians in Washington will hear his message, but, more to the point, he wants fellow-practitioners to hear him. “If every businessperson, or enough businesspeople, don’t act as stewards of more than just the bottom line, somebody’s going to come along and do it for them.”
Klarman’s critiques of Washington and of irresponsible business practices share a common target: the selfish disregard for the future. “If we think of free enterprise and democracy as games, a lot of people are breaking the rules and disrespecting the other players and even the game itself. Mitch McConnell is disrespecting the game. Donald Trump doesn’t even know what the rules are. Free enterprise has been good for me and for the world. It has been good for my two-hundred and eighty employees. It has been good for my clients. Let’s honor the system. Let’s make sure that we leave and improve it for the next generation to benefit just as much as we did and with as much respect as we showed.” Otherwise, he said, “What kind of scorched-earth cost might we have to pay for that?”
Capitalism in crisis: U.S. billionaires worry about the survival of the system that made them rich
By Greg Jaffe
The setting was the opening of Klarman Hall, a new $120 million conference center, built with his family’s donation. “It’s a choice to pay people as little as you can or work them as hard as you can,” he told the audience gathered in the 1,000-seat auditorium. “It’s a choice to maintain pleasant working conditions . . . or harsh ones; to offer good benefits or paltry ones.” If business leaders didn’t “ask hard questions about capitalism,” he warned that they would be asked by “ideologues seeking to point fingers, assign blame and make reckless changes to the system.”
Six months after that speech, Klarman was struck by how quickly his dire prediction was coming to pass. Leading politicians, such as Trump, Sanders and Sen. Elizabeth Warren (D-Mass.), were advocating positions on tariffs, wealth taxes and changes in corporate governance that would have been unthinkable a few years ago.
Klarman wasn’t opposed to more progressive taxation or regulation. But he worried that these new proposals went much too far. “I think we’re in the middle of a revolution — not a guns revolution — but a revolution where people on both extremes want to blow it up, and good things don’t happen to the vast majority of the population in a revolution,” he said.
Why and How Capitalism Needs to Be Reformed (Parts 1 & 2)
By Ray Dalio
In addition to social and economic bad consequences, the income/wealth/opportunity gap is leading to dangerous social and political divisions that threaten our cohesive fabric and capitalism itself.
I believe that, as a principle, if there is a very big gap in the economic conditions of people who share a budget and there is an economic downturn, there is a high risk of bad conflict. Disparity in wealth, especially when accompanied by disparity in values, leads to increasing conflict and, in the government, that manifests itself in the form of populism of the left and populism of the right and often in revolutions of one sort or another. For that reason, I am worried what the next economic downturn will be like, especially as central banks have limited ability to reverse it and we have so much political polarity and populism.
The problem is that capitalists typically don’t know how to divide the pie well and socialists typically don’t know how to grow it well. While one might hope that when such economic polarity and poor conditions exist, leaders would pull together to reform the system to both divide the economic pie and make it grow better (which is certainly doable and the best path), they typically become progressively more extreme and fight more than cooperate.
In order to understand the phenomenon of populism, two years ago I did a study of it in which I looked at 14 iconic cases and observed the patterns and the forces behind them. If you are interested in it, you can read it here. In brief, I learned that populism arises when strong fighters/leaders of the right or of the left who are looking to fight and defeat the opposition come to power and escalate their conflict with the opposition, which typically galvanizes around comparably strong/fighting leaders. The most important thing to watch as populism develops is how conflict is handled—whether the opposing forces can coexist to make progress or whether they increasingly “go to war” to block and hurt each other and cause gridlock. In the worst cases, this conflict causes economic problems (e.g., via paralyzing strikes and demonstrations) and can even lead to moves from democratic leadership to autocratic leadership as happened in a number of countries in the 1930s.
We are now seeing conflicts between populists of the left and populists of the right increasing around the world in much the same way as they did in the 1930s when the income and wealth gaps were comparably large. In the US, the ideological polarity is greater than it has ever been and the willingness to compromise is less than it’s ever been.
…
In assessing the position we are in, we can look at both cause-effect relationships and historical comparisons. The most relevant causes that are leading to the effects we are seeing are:
- The high debt levels that led to the 2008 debt crisis (and have since increased) led to…
- Central banks printing a lot of money and buying financial assets, which pushed asset prices up and pushed interest rates down. This has benefited those with financial assets (i.e., the haves) and has left central banks with less power to stimulate the economy.
- These factors and new technologies created very wide income/wealth/opportunity and values gaps, which are expected to increase and are leading to…
- Increased populism of the left and populism of the right that are causing greater domestic and international conflicts at the same time as…
- There is a rising power (China) to compete with the existing dominant world power (the United States), which will lead to competitions that will be economic, ideological, and military and will be determined by the two powers’ relative skills and technological abilities. This competition will establish what the new world order will be like vis-à-vis the rest of the world.
The last time that this configuration of influences existed was in the late 1930s when there were great conflicts and economic and political systems were overturned. For the fundamental reasons explained earlier, I believe that we are at the sort of critical juncture in which the biggest issue will be how we deal with each other rather than any other constraints.
There are enough resources to go around to deal with the risky issues and produce much more equal opportunity plus improved productivity that will grow the pie. My big worry is that the sides will be intransigent in their positions so that capitalism will either a) be abandoned or b) not be reformed because those on the right will fight for keeping it as it is and those on the left will fight against it. So to me, the biggest questions are a) whether populists of the right or populists of the left will gain control and/or have conflicts that will adversely affect the operations of government, the economy, and international relations or b) whether sensible and skilled people from all sides can work together to reform the system so it works well for the majority of people.
Capitalism used to promise a better future. Can it still do that?
By Richard Reeves
Right now, there are three big challenges to the capitalist promise of a better tomorrow: slower income growth for many across their own working lives and into retirement; diminishing odds that children will, economically, do better than their parents; and a deepening climate crisis.
First, the expectation of a steadily growing income over time has become harder to meet, as growth slows and job uncertainty grows. Upwards earnings mobility across the span of a working life has dropped. Work by Michael Carr and Emily Weimers shows that the chances of middle class earners moving up to the top rungs of the earnings ladder has declined by approximately 20% since the early 1980s. In part this is because of a growing premium of acquiring skills early, and getting on a fast track from the start of a career. It has become harder to move up the ladder if you start at the bottom. Corporate CEOs used to boast of starting out in the mailroom. There will not be many of those stories in the future.
Not only is income growth slower today than a generation ago, for some workers there is also more volatility in terms of wages, in part because of more uncertain schedules, but also because of the risk of losing a job in a sector impacted by trade or, more likely, automation and having to take another job at a lower wage. What economists label “income volatility” has increased over time, most worryingly for those right at the bottom of the income ladder, as work by Bradley Hardy and James Ziliak shows. Some volatility is good: an unexpected bonus, or a good year in a side enterprise. But much of it comes in the form of a loss of income. These downward economic shocks are psychologically demanding. Humans are hardwired to have “loss aversion” – in other words to experience much more pain from a loss than pleasure from an equivalent gain. Small wonder that so most workers rank “security” as their highest priority. The reliability of a flow of income is as important, to many, as its size.
But workers displaced by automation have been treated as effectively disposable by policymakers. Retraining schemes have been almost universally ineffective. Investment has been tepid: for the last few decades, for every dollar spent on Trade Adjustment Assistance, the US has spent $25 on tax breaks for endowment funds at elite colleges. Many scholars now argue for some form of wage insurance to compensate for downward shocks to pay.
Second, the assumption that our children will do better than us is being threatened. Nine in 10 Americans born in 1940 ended up richer than their parents; for those born in the 1980, the numbers is 50%. This finding, from the Harvard professor Raj Chetty and his colleagues, can certainly be quibbled with: the 50% number does not take into account the shrinking size of households (if it did, it would be 60%); the people born in 1940 largely had parents whose prime working years included the Great Depression, making it easier to surpass them.
Still, the fact remains: intergenerational mobility has slowed. This is for two main reasons: economic growth has slowed, and the proceeds of that growth have accrued to a much smaller slice of the population – the people at the top. (See Heather Boushey’s piece in the series). Chetty estimates that about a third of the mobility drop can be explain by slower growth; the rest is the result of rising inequality. This lack of upward economic lift is filtering into general consciousness. Only about one in three US parents think the next generation will be better off; and the gloom is even deeper in many other nations, including the UK.
Mood matters. If the future looks less bright in general, it may seem less rational to invest in an education, take the risk of starting up a business, or move to another town in search of a better job. The interaction between facts and feelings is complicated; but it is important to strike a balance between calling out troubling trends and resorting to a general everything-is-going-to-hell-in-a-handcart declinism.
The third challenge is not psychological, but bluntly physical: the climate crisis. Increases in global temperatures, faithfully reported by the IPCC, are leading to more extreme weather events, endangering certain heavily-populated areas and threatening agricultural systems. It is of course necessary to weigh costs and benefits here. If economic growth is responsible for changing the climate – and it is – it has also massively increased the material welfare of billions of people.
Why the world economy feels so fragile
By Martin Wolf
The transformation of the global environment brings further dangers, both negative and positive. The biggest negative risk is that it would be impossible to mount a co-ordinated and effective response to a severe global economic slowdown. One obvious positive danger comes from the possible unmanageability of the past accumulations of private and public debt. Another danger is that a breakdown in the global political order creates severe economic disruption on its own, perhaps through a collapse in trade, perhaps as a result of another geopolitical event.
The issue to worry about then is not the state of the short-term cycle. It is perfectly likely that there will be a modest and manageable slowdown, with nothing much damaged as a result. The worry must rather be over the context in which such a slowdown might occur. It is the political and policy instability, combined with the exhaustion of safe options for credit expansion, that would make handling even a limited and natural short-term slowdown potentially so tricky.
Unfortunately, no simple mechanisms for reducing these sources of fragility now exist. These are deeply ingrained and, given recent political developments, are more likely to get worse than better. If you do want to worry, you should worry about that.
The Pitchforks Are Coming… For Us Plutocrats
By Nick Hanauer
Dear 1%ers, many of our fellow citizens are starting to believe that capitalism itself is the problem. I disagree, and I’m sure you do too. Capitalism, when well managed, is the greatest social technology ever invented to create prosperity in human societies. But capitalism left unchecked tends toward concentration and collapse. It can be managed either to benefit the few in the near term or the many in the long term. The work of democracies is to bend it to the latter. That is why investments in the middle class work. And tax breaks for rich people like us don’t. Balancing the power of workers and billionaires by raising the minimum wage isn’t bad for capitalism. It’s an indispensable tool smart capitalists use to make capitalism stable and sustainable. And no one has a bigger stake in that than zillionaires like us.
Classless Utopia versus Class Compromise
By Michael Lind
For generations or ages to come, most people in the United States and other technologically advanced societies will be assigned by birth to the status of managers or proletarians, and only a minority will move up or down. If there is not to be perpetual conflict among these two broad classes, the class war must come to an end in one of two ways.
One possibility is that there will be a cross-class compromise, embodied in a new class warfare constitution that allows working-class majorities at least partly and imperfectly to check the domination of the managerial minority. The updated class warfare constitution should be a virtual one, like those of the Western democracies from World War II until the end of the Cold War: an informal, extragovernmental, extraconstitutional system of institutions rooted in the autonomous private and public institutions of the working-class national majority, and providing the working class with greater collective bargaining power in employment and politics.
The other possibility, perhaps more likely, is that today’s class war will come to an end when the managerial minority, with its near-monopoly of wealth, political power, expertise, and media influence, completely and successfully represses the numerically greater but politically weaker working-class majority. If that is the case, the future North America and Europe may look a lot like Brazil and Mexico, with nepotistic oligarchies clustered in a few fashionable metropolitan areas but surrounded by a derelict, depopulated, and despised “hinterland.” What Fritz Lang’s Metropolis (1927)—with its managers in skyscrapers and its oppressed factory workers underground—was for the first industrial era, Neill Blomkamp’s Elysium (2013)—with its sybaritic elite in orbit and its desperate earthbound slum-dwellers—might prove to be for the second managerial era: a prophecy in the form of a nightmare.
Of the 1%, by the 1%, for the 1%
By Joseph E. Stiglitz
Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.
The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.
The Only Thing, Historically, That’s Curbed Inequality: Catastrophe
By Walter Scheidel
Throughout history, only massive, violent shocks that upended the established order proved powerful enough to flatten disparities in income and wealth. They appeared in four different guises: mass-mobilization warfare, violent and transformative revolutions, state collapse, and catastrophic epidemics. Hundreds of millions perished in their wake, and by the time these crises had passed, the gap between rich and poor had shrunk.
The first of these forces was very much a creature of the industrial age. Earlier wars had produced mixed results, as victors profited and losers paid. The Civil War is another example: It launched the careers of John D. Rockefeller, Andrew Carnegie, and other Northern plutocrats, but ruined Southern slave-owners. Not since the times of the ancient Greeks had intense popular military mobilization (paired with egalitarian norms and institutions) helped curb economic inequality.
Second are revolutions that truly transformed societies—the sort that were born of the two world wars. From 1917 on, communists in Russia, China, and elsewhere confiscated, redistributed and collectivized private wealth, and set wages, leveling inequality on an unprecedented scale. Revolutions before these, by contrast, were rarely extreme enough to have the same effect: The French Revolution, by comparison a far less bloody affair, made more modest headway.
Third, violent turmoil sometimes destroyed states altogether, taking the rich and powerful down with them. While everyone stood to suffer in times of collapse, the richest simply had more to lose. Records of equalizing misery reach back thousands of years: The last Roman aristocrats lined up for handouts from the Pope, and Mayan nobility had to make do with the same diet as commoners. More recently, Somalia’s anarchy reduced the inequalities of the brutal kleptocracy that had preceded it.
Humans have long faced competition in inflicting damage serious enough to rebalance the scales, which brings up the fourth leveling force. The first pandemic of bubonic plague at the end of antiquity, the Black Death in the late Middle Ages, and the merciless onslaught of smallpox and measles that ravaged the New World after 1492 claimed so many lives that the price of labor soared and the value of land and other capital plummeted. Workers ate and dressed better, while landlords were reduced to complaints that, as one English chronicler put it, “such a shortage of laborers ensued that the humble turned up their noses at employment, and could scarcely be persuaded to serve the eminent for triple wages.” Surviving tax registers from late medieval Italy also bear witness to the sweeping erosion of elite fortunes.
But what of less murderous mechanisms of combating inequality? History offers little comfort. Land reform often foundered or was subverted by the propertied. Successful programs that managed to parcel out land to the poor and made sure they kept it owed much to the threat or exercise of violence, from Mexico during its revolution to postwar Japan, South Korea, and Taiwan. Just as with the financial crisis of 2008, macroeconomic downturns rarely hurt the rich for more than a few years. Democracy on its own does not consistently lower inequality. And while improving access to education can indeed narrow income gaps, it is striking to see that American wage premiums for the credentialed collapsed precisely during both world wars.
….
Even the most progressive welfare states of continental Europe are now struggling to compensate for the widening income disparities that exist before taxes and transfers. In the coming decades, the dramatic aging of rich countries and the pressures of immigration on social solidarity will make it ever harder to ensure a fairly equitable distribution of net incomes. And on top of everything else, ongoing technological change might boost inequality in unpredictable ways, from more sophisticated automation that hollows out labor markets to genetic and cybernetic enhancements of the privileged human body.
…
History cannot predict the future, but its message is as unpalatable as it is clear: With the rarest of exceptions, great reductions in inequality were only ever brought forth in sorrow.
Meritocracy’s Miserable Winners
By Daniel Markovits
Nevertheless, there are grounds for hope. History does present one clear-cut case of an orderly recovery from concentrated inequality: In the 1920s and ’30s, the U.S. answered the Great Depression by adopting the New Deal framework that would eventually build the mid-century middle class. Crucially, government redistribution was not the primary engine of this process. The broadly shared prosperity that this regime established came, mostly, from an economy and a labor market that promoted economic equality over hierarchy—by dramatically expanding access to education, as under the GI Bill, and then placing mid-skilled, middle-class workers at the center of production.
An updated version of these arrangements remains available today; a renewed expansion of education and a renewed emphasis on middle-class jobs can reinforce each other. The elite can reclaim its leisure in exchange for a reduction of income and status that it can easily afford. At the same time, the middle class can regain its income and status and reclaim the center of American life.
Rebuilding a democratic economic order will be difficult. But the benefits that economic democracy brings—to everyone—justify the effort. And the violent collapse that will likely follow from doing nothing leaves us with no good alternative but to try.
