Mount Greylock Books LLC has published my autobiography as an historian, A Life in History. Long-time readers who want to find out how the author of this blog became the historian he is will find information about the book in a new blog, ALifeinHistory.com. The book can be ordered here.
I look forward to seeing your reactions. For the time being I am pinning this post. Thanks in any case to all of you for your faithful support.
Check below for more recent posts.
Friday, November 01, 2019
Friday, January 18, 2019
What Hath 80 Years Wrought
No one, it seems to me, who found their way here now, would disagree that the United States is struggling with a very serious political crisis. Regular readers know that I, influenced by William Strauss and Neil Howe, see this crisis as one in a series of crises, recurring every 80 years or so, that began with the era of the American Revolution and the Constitution (1774-1794 or so), continued with the Civil War (1860-68 approximately), and climaxed with the Depression and Second World War (1929-45.) Each crisis marked the death of an old order and the birth of a new one, and each established new institutions and new beliefs that shaped political and economic life for at least 50 years to come. All of us over 60--that is, all Boomers, Silents, and surviving GIs--lived most of our lives in the world created by the great crisis of the 1930s and 1940s. I have found it useful, from time to time, to compare the nature of our current crisis with the last one by comparing today's New York Times front page--January 18, 2019--with its counterpart from 80 years ago, on January 18, 1939. These were in at least one respect similar moments in history. Franklin Roosevelt was in the middle of his second term, just as Donald Trump is in the middle of his first, and both faced new and far more hostile Congresses. Roosevelt's Democratic Party still had majorities in early 1939, but it had lost heavily in the midterms, and conservative Democrats were starting to align with Republicans to block any further progress for the New Deal. Trump's Republicans have lost the House of representatives. Those wishing to look at the 1939 front page themselves can do so here. Today's is here.
The first thing that will strike any observer is how much more there was on the earlier page. It has 14 different stories (two of them brief sidebars); today's has only six. The shrinkage of the layout from eight columns to six obviously explains only part of that. Five of the 13 1939 stories, four on the left side of the page, are foreign news. Three of them come from Mexico. The first tells of the dispatch of a Mexican general on a diplomatic mission to Berlin, where, it is thought, he may conclude new agreements bartering Mexican oil for German machinery. The second recounts the expulsion of an American journalist from Mexico, and the third brief one talks about the resignation of three generals who are contenders for the Mexican presidency. The fourth is a military update from the Spanish Civil War, which was then entering its final stages. A brief but chilling sidebar reports that a British official has warned housewives to begin storing emergency food. Three other stories involve local and state politics. In the first, District Attorney (and future presidential candidate) Thomas Dewey is feuding with the chairman of the Board of Transportation over the extent of thefts of subway fares from turnstiles. The second speculates about a rift between Police Commissioner Valentine and Mayor LaGuardia, and the third reports progress for a housing program in Albany. The remaining six stories deal with national news.
The lead, in column 8, reports that President Roosevelt and both factions of organized labor--the A.F. of L. and the CIO--are attempting to restore a $150,000,000 cut from the appropriation of the Works Progress Administration, or WPA, one of two public works agencies that had been providing jobs for unemployed Americans during the Depression, which had worsened again in the last two years. In a second story, FDR has asked for an end to tax exemptions for income on federal, state and local municipal bonds, which had emerged as a popular tax dodge for wealthy people trying to avoid very high marginal tax rates. A third story prints a letter the President had written to a key Congressman, asking for the construction of a Florida ship canal, and another project to harness power from the extraordinary tides of Passamaquoddy Bay on the Maine-Canada border, where, as it happens, FDR had his summer home. Neither of those projects, clearly, ever came to much. A fourth story quotes an Assistant Secretary of War to the effect that the US can produce 7000 war planes a year, enough to protect the nation in an increasingly dangerous world. The bottom of the page reports a half-million dollar fraud case against certain contractors for the WPA, and another story,based on documents revealed in Vienna, seems to confirm that German agents during the First World War blew up a number of munitions factories inside the United States. All these stories are about things that the government is doing, or might be doing, to employ Americans, raise more money for the government, improve our infrastructure, or make necessary improvements in our national defense.
Today's front page tells a very different story.
The lead story, of course, deals with Donald Trump's childish cancellation of Nancy Pelosi's foreign trip. That leads in turn to the "Washington memo" just below it, entitled, "A Sandbox Where the Adults Need to Be Given a Timeout," dealing with a very different Washington atmosphere. A third story tells about economic help being given by private citizens to furloughed employees. A fourth story reveals that the children separated from their parents at the border were undercounted, a fifth is about the acquittal of cops accused of covering up a police murder in Chicago, and the last is about the teachers' strike in Los Angeles and what it reveals about the economic divide in the city. The contrast provides considerable food for thought.
In one way or another, four of the stories on the front page, including the three growing out of the shutdown, relate to immigration, which was absent not only from the January 18, 1939 front page, but from political controversy in the 1930s generally. The reason was that nativist feeling had been growing against immigration from southern and Eastern Europe since the late 19th century, culminating in 1924 in a very restrictive immigration act that had essentially taken the issue off ot he table before the great crisis began. Freezing our national community in place at that time, I am convinced, made it much easier for Roosevelt to cope with the national emergency he inherited in 1933 and to pull the country together for the Second World War. Donald Trump swept both the major parties before him in 2016 largely because they had failed to heed popular resentment over immigration, and it is quite possible that our nation needs another freeze to regain its political sanity now--while meanwhile fully assimilating the immigrants who are already settled here.
The lack of foreign news on today's front page is also interesting. Now as then, major European nations are in crisis, including Britain, France, Germany, Italy, and Spain, but the Times and other newspapers maintain far fewer permanent foreign correspondents overseas. Their readers know much less about what is happening and what it means to the US than they did then.
The specific problems we face today are less serious, I still think, than they were then. Neither in Europe nor in Asia do we find militant powers fighting, or planning to fight, vast wars of expansion. Unemployment, well over 10% in 1939, is at historic lows now. But as the front pages illustrate, our political system--very robust and effective in 1939, at federal, state and local levels, in most of the country at least--is in tatters, and the citizenry is far less informed. The question remaining to be answered in the current crisis is, how long can our society continue without a functioning political system?
The first thing that will strike any observer is how much more there was on the earlier page. It has 14 different stories (two of them brief sidebars); today's has only six. The shrinkage of the layout from eight columns to six obviously explains only part of that. Five of the 13 1939 stories, four on the left side of the page, are foreign news. Three of them come from Mexico. The first tells of the dispatch of a Mexican general on a diplomatic mission to Berlin, where, it is thought, he may conclude new agreements bartering Mexican oil for German machinery. The second recounts the expulsion of an American journalist from Mexico, and the third brief one talks about the resignation of three generals who are contenders for the Mexican presidency. The fourth is a military update from the Spanish Civil War, which was then entering its final stages. A brief but chilling sidebar reports that a British official has warned housewives to begin storing emergency food. Three other stories involve local and state politics. In the first, District Attorney (and future presidential candidate) Thomas Dewey is feuding with the chairman of the Board of Transportation over the extent of thefts of subway fares from turnstiles. The second speculates about a rift between Police Commissioner Valentine and Mayor LaGuardia, and the third reports progress for a housing program in Albany. The remaining six stories deal with national news.
The lead, in column 8, reports that President Roosevelt and both factions of organized labor--the A.F. of L. and the CIO--are attempting to restore a $150,000,000 cut from the appropriation of the Works Progress Administration, or WPA, one of two public works agencies that had been providing jobs for unemployed Americans during the Depression, which had worsened again in the last two years. In a second story, FDR has asked for an end to tax exemptions for income on federal, state and local municipal bonds, which had emerged as a popular tax dodge for wealthy people trying to avoid very high marginal tax rates. A third story prints a letter the President had written to a key Congressman, asking for the construction of a Florida ship canal, and another project to harness power from the extraordinary tides of Passamaquoddy Bay on the Maine-Canada border, where, as it happens, FDR had his summer home. Neither of those projects, clearly, ever came to much. A fourth story quotes an Assistant Secretary of War to the effect that the US can produce 7000 war planes a year, enough to protect the nation in an increasingly dangerous world. The bottom of the page reports a half-million dollar fraud case against certain contractors for the WPA, and another story,based on documents revealed in Vienna, seems to confirm that German agents during the First World War blew up a number of munitions factories inside the United States. All these stories are about things that the government is doing, or might be doing, to employ Americans, raise more money for the government, improve our infrastructure, or make necessary improvements in our national defense.
Today's front page tells a very different story.
The lead story, of course, deals with Donald Trump's childish cancellation of Nancy Pelosi's foreign trip. That leads in turn to the "Washington memo" just below it, entitled, "A Sandbox Where the Adults Need to Be Given a Timeout," dealing with a very different Washington atmosphere. A third story tells about economic help being given by private citizens to furloughed employees. A fourth story reveals that the children separated from their parents at the border were undercounted, a fifth is about the acquittal of cops accused of covering up a police murder in Chicago, and the last is about the teachers' strike in Los Angeles and what it reveals about the economic divide in the city. The contrast provides considerable food for thought.
In one way or another, four of the stories on the front page, including the three growing out of the shutdown, relate to immigration, which was absent not only from the January 18, 1939 front page, but from political controversy in the 1930s generally. The reason was that nativist feeling had been growing against immigration from southern and Eastern Europe since the late 19th century, culminating in 1924 in a very restrictive immigration act that had essentially taken the issue off ot he table before the great crisis began. Freezing our national community in place at that time, I am convinced, made it much easier for Roosevelt to cope with the national emergency he inherited in 1933 and to pull the country together for the Second World War. Donald Trump swept both the major parties before him in 2016 largely because they had failed to heed popular resentment over immigration, and it is quite possible that our nation needs another freeze to regain its political sanity now--while meanwhile fully assimilating the immigrants who are already settled here.
The lack of foreign news on today's front page is also interesting. Now as then, major European nations are in crisis, including Britain, France, Germany, Italy, and Spain, but the Times and other newspapers maintain far fewer permanent foreign correspondents overseas. Their readers know much less about what is happening and what it means to the US than they did then.
The specific problems we face today are less serious, I still think, than they were then. Neither in Europe nor in Asia do we find militant powers fighting, or planning to fight, vast wars of expansion. Unemployment, well over 10% in 1939, is at historic lows now. But as the front pages illustrate, our political system--very robust and effective in 1939, at federal, state and local levels, in most of the country at least--is in tatters, and the citizenry is far less informed. The question remaining to be answered in the current crisis is, how long can our society continue without a functioning political system?
Friday, January 11, 2019
Saturday, January 05, 2019
New values, new aristocracies
This week I read another remarkable book, Winners Take All, by Anand Giridharadas. Giridharadas, born in 1981, attended Sidwell Friends School in Washington--the alma mater of Chelsea Clinton and Sasha and Melia Obama--the University of Michigan, and Oxford. He was at one time a doctoral candidate at Harvard but appears to have abandoned that career path. He did a stint at the consulting giant McKinsey and Co. in the mid-2000s, and then moved into journalism with the New York Times. He became a fellow at the Aspen Institute. He was in short a very successful young member of our diverse new intellectual aristocracy. Suddenly, however, he had an epiphany about his role in the world and the system of which he had become a part, and this book is the result.
Winners Take All is an impressionistic but powerful survey of the role and attitudes of another part our new elite, the extraordinarily wealthy titans of IT and finance, our fastest growing sectors, as well as some heirs in other powerful industries such as pharmaceuticals and energy, and the leaders of some of our most prominent foundations. Giridharadas lumps them all together under the heading of "Market World," which appears to be his own coinage. These people congregate periodically at the Aspen Institute, meetings of the now-defunct Clinton Global Initiative, and in many other organized conferences, and share their thoughts and plans for changing the world. A remarkable consensus on basic issues prevails among them. First of all, they regard the private sector--especially the parts of it that they represent--as dynamic and creative, while the public sector, in their eyes, is static, bureaucratic, and hidebound. They believe, crucially, that only the dynamic private sector can solve the world's problems, primarily by maximizing efficiencies, opening up opportunities, and creating wealth. They have a real 19th century faith that their own success confirms that they are at the cutting edge of history and profess superior skills and, I think, superior moral worth as well. And while some of them feel some guilt about having so much while others have so little, that never seems to be enough to lead them to question their basic assumptions about the world and where it is going.
Giridharadas spends some critical pages in the book drawing on his experiences at McKinsey to explain the mindset that these people have learned in the corporate world. McKinsey consultants, he makes clear, do not help companies by studying what those companies do in any detail. Instead, they have their own algorithms for looking for ways to raise revenues or cut costs--and the latter often include proposals to eliminate whole portions of the enterprise that are not pulling their weight, profitwise. The consultants' status--and their income--comes from the perception that their protocols embody the secret of corporate life, whatever the specific characteristics or the particular role of the company that has enlisted them. One thing Giridharadas came to realize was that applying these protocols keeps the major trends of the world economy going: a growth in productivity, whose benefits flow exclusively to the owners of capital, not to the world's working classes, whether on the factory floor or in the office.
The protagonists of his book seem to understand this to a certain extent, and they want to do something about it. That brings them together in these various venues to discuss what might be done and to contribute some money to do it. But that money, naturally, never goes to challenges to the order that has made them (or their patrons) rich enough to worry about these things in the first place. They tend to like causes that allow them to open up some opportunities for less well off people--such as providing better data processing networks to third world entrepreneurs--rather than anything that would keep them from earning, or keeping, so much money in the first place. Resources remain under their control--rather than going into the coffers of a government that is elected by, and claims to act on behalf of, the whole people of the nation, as they did in the middle third of the twentieth century, when inequality reached historic lows and the lower orders of society actually shared in the proceeds of economic growth. I found it interesting that like Thomas Piketty--whom he quotes approvingy--Giridharadas doesn't seem to understand how crucial the wars of the twentieth century were in creating such a society, both by mobilizing truly gigantic resources on behalf of a common effort, and by creating a real obligation from the government to the people who had fought the war. Winners Take All is a very interesting complement to Crashed, which I reviewed last week. They deal with different parts and different generations of our new global aristocracy, but they both illustrate the hegemony of free market values, and the embrace of their consequences, which completely dominates that elite, without any effective countervailing force in today's world.
It was when Giridharadas referred to potential countervailing beliefs, in fact, that I found his book weakest. Again and again, when he refers to the evils of the modern world, he focuses on racism and sexism and implies that entrenched attitudes among a white male power structure are the biggest source of our problems. That, probably, is the view he imbibed in the educational system, where it is utterly hegemonic. That, however, is the problem. First of all, in my opinion, that view is wrong. The biggest problem we face isn't the role of race and gender in our society, it's the continually increasing concentration of wealth that is leaving the whole lower half of the population--and perhaps more--further and further behind, regardless of race, gender, or sexual orientation. The power structure can in fact easily bow to concerns about race and gender by integrating some favored men and women into its top ranks--and there, as Giridharadas shows very clearly and intimately, those people adopt the same pro-market values as everyone else. That is also, obviously, the strategy of our major educational institutions, which seem to be more beholden to the economic power structure than they have ever been, but salve their consciences by feeding a diverse group of favored young people into it. One such young woman, a Georgetown graduate, is a major protagonist in Winners Take All, and she abandons dreams of becoming a rabbi to go first to McKinsey and then to the new Obama Foundation, where she will help administer the new form of pro-corporate philanthropy, of which more in a moment. The major effect of left-wing activism over the last few decades, it seems to me, has been to diversify the elite, first in academia and journalism and foundations, and also--albeit to a lesser extent--in the corporate world. That does not change the elite's relation to the rest of the world. More importantly, it seemed to me, a veteran of a life in academia, that Giridharadas was missing an important point about intellectual trends there. The academic obsession with race, gender and sexual orientation, in my opinion, is just as dangerous an enemy to originality, free thought, and understanding the biggest problems we face as the emphasis on market efficiency is in the corporate world. Both provide astonishingly simple answers to every problem--and neither one, in my opinion, will allow us to get to the heart of the matter. Intellectually, the Boom generation--which shaped both of these trends--is a generation of sheep.
It was national governments, to repeat, that emerged in the middle third of the twentieth century as the supreme economic authority, effectively regulated financial markets and other parts of the economy, and gathered and redistributed resources on a massive scale. In an argument that left me shaken--and eager finally to read a classic that I have never opened--Giridharadas argues that Thomas Hobbes, in his famous work Leviathan, was arguing for a powerful state to protect the citizenry from the tyranny of lesser authorities--aristocrats in his time, corporations in ours. Out statesmen (and women) now, however, rely on corporate wealth to pursue their political careers, and accept that reforms in our society can only go as far as corporations will allow. In a long interview with Bill Clinton, Giridharadas hears about Clinton's efforts to keep soft drink manufacturers from getting their products into public schools, where they have helped trigger an epidemic of childhood obesity. Clinton in the end made no attempt to pass laws to keep these products out of schools, but settled for promises from the manufacturers to reduce their products' sugar content.
A new Democratic majority took over this week in the House of Representatives, pushing a new round of liberal proposals. We shall find if they have the power to challenge the economic orthodoxy that now rules the nation and the world--and whether they can appeal to all of us as citizens, rather than to certain particular demographics. I am skeptical that those things will happen. Tooze and Giridharadas, I think, have allowed me to see the future. They suggest that our new value system has already been pretty well established, that dissenters will remain an isolated minority, and that our great crisis--in the sense of a struggle over the values and direction of our society--may well come to an end as soon as the corporate elite has managed to put a reasonably competent and reassuring figure into the White House once again. And that figure, as we have seen in the last 20 years, can just as easily be a Democrat as a Republican.
Winners Take All is an impressionistic but powerful survey of the role and attitudes of another part our new elite, the extraordinarily wealthy titans of IT and finance, our fastest growing sectors, as well as some heirs in other powerful industries such as pharmaceuticals and energy, and the leaders of some of our most prominent foundations. Giridharadas lumps them all together under the heading of "Market World," which appears to be his own coinage. These people congregate periodically at the Aspen Institute, meetings of the now-defunct Clinton Global Initiative, and in many other organized conferences, and share their thoughts and plans for changing the world. A remarkable consensus on basic issues prevails among them. First of all, they regard the private sector--especially the parts of it that they represent--as dynamic and creative, while the public sector, in their eyes, is static, bureaucratic, and hidebound. They believe, crucially, that only the dynamic private sector can solve the world's problems, primarily by maximizing efficiencies, opening up opportunities, and creating wealth. They have a real 19th century faith that their own success confirms that they are at the cutting edge of history and profess superior skills and, I think, superior moral worth as well. And while some of them feel some guilt about having so much while others have so little, that never seems to be enough to lead them to question their basic assumptions about the world and where it is going.
Giridharadas spends some critical pages in the book drawing on his experiences at McKinsey to explain the mindset that these people have learned in the corporate world. McKinsey consultants, he makes clear, do not help companies by studying what those companies do in any detail. Instead, they have their own algorithms for looking for ways to raise revenues or cut costs--and the latter often include proposals to eliminate whole portions of the enterprise that are not pulling their weight, profitwise. The consultants' status--and their income--comes from the perception that their protocols embody the secret of corporate life, whatever the specific characteristics or the particular role of the company that has enlisted them. One thing Giridharadas came to realize was that applying these protocols keeps the major trends of the world economy going: a growth in productivity, whose benefits flow exclusively to the owners of capital, not to the world's working classes, whether on the factory floor or in the office.
The protagonists of his book seem to understand this to a certain extent, and they want to do something about it. That brings them together in these various venues to discuss what might be done and to contribute some money to do it. But that money, naturally, never goes to challenges to the order that has made them (or their patrons) rich enough to worry about these things in the first place. They tend to like causes that allow them to open up some opportunities for less well off people--such as providing better data processing networks to third world entrepreneurs--rather than anything that would keep them from earning, or keeping, so much money in the first place. Resources remain under their control--rather than going into the coffers of a government that is elected by, and claims to act on behalf of, the whole people of the nation, as they did in the middle third of the twentieth century, when inequality reached historic lows and the lower orders of society actually shared in the proceeds of economic growth. I found it interesting that like Thomas Piketty--whom he quotes approvingy--Giridharadas doesn't seem to understand how crucial the wars of the twentieth century were in creating such a society, both by mobilizing truly gigantic resources on behalf of a common effort, and by creating a real obligation from the government to the people who had fought the war. Winners Take All is a very interesting complement to Crashed, which I reviewed last week. They deal with different parts and different generations of our new global aristocracy, but they both illustrate the hegemony of free market values, and the embrace of their consequences, which completely dominates that elite, without any effective countervailing force in today's world.
It was when Giridharadas referred to potential countervailing beliefs, in fact, that I found his book weakest. Again and again, when he refers to the evils of the modern world, he focuses on racism and sexism and implies that entrenched attitudes among a white male power structure are the biggest source of our problems. That, probably, is the view he imbibed in the educational system, where it is utterly hegemonic. That, however, is the problem. First of all, in my opinion, that view is wrong. The biggest problem we face isn't the role of race and gender in our society, it's the continually increasing concentration of wealth that is leaving the whole lower half of the population--and perhaps more--further and further behind, regardless of race, gender, or sexual orientation. The power structure can in fact easily bow to concerns about race and gender by integrating some favored men and women into its top ranks--and there, as Giridharadas shows very clearly and intimately, those people adopt the same pro-market values as everyone else. That is also, obviously, the strategy of our major educational institutions, which seem to be more beholden to the economic power structure than they have ever been, but salve their consciences by feeding a diverse group of favored young people into it. One such young woman, a Georgetown graduate, is a major protagonist in Winners Take All, and she abandons dreams of becoming a rabbi to go first to McKinsey and then to the new Obama Foundation, where she will help administer the new form of pro-corporate philanthropy, of which more in a moment. The major effect of left-wing activism over the last few decades, it seems to me, has been to diversify the elite, first in academia and journalism and foundations, and also--albeit to a lesser extent--in the corporate world. That does not change the elite's relation to the rest of the world. More importantly, it seemed to me, a veteran of a life in academia, that Giridharadas was missing an important point about intellectual trends there. The academic obsession with race, gender and sexual orientation, in my opinion, is just as dangerous an enemy to originality, free thought, and understanding the biggest problems we face as the emphasis on market efficiency is in the corporate world. Both provide astonishingly simple answers to every problem--and neither one, in my opinion, will allow us to get to the heart of the matter. Intellectually, the Boom generation--which shaped both of these trends--is a generation of sheep.
It was national governments, to repeat, that emerged in the middle third of the twentieth century as the supreme economic authority, effectively regulated financial markets and other parts of the economy, and gathered and redistributed resources on a massive scale. In an argument that left me shaken--and eager finally to read a classic that I have never opened--Giridharadas argues that Thomas Hobbes, in his famous work Leviathan, was arguing for a powerful state to protect the citizenry from the tyranny of lesser authorities--aristocrats in his time, corporations in ours. Out statesmen (and women) now, however, rely on corporate wealth to pursue their political careers, and accept that reforms in our society can only go as far as corporations will allow. In a long interview with Bill Clinton, Giridharadas hears about Clinton's efforts to keep soft drink manufacturers from getting their products into public schools, where they have helped trigger an epidemic of childhood obesity. Clinton in the end made no attempt to pass laws to keep these products out of schools, but settled for promises from the manufacturers to reduce their products' sugar content.
A new Democratic majority took over this week in the House of Representatives, pushing a new round of liberal proposals. We shall find if they have the power to challenge the economic orthodoxy that now rules the nation and the world--and whether they can appeal to all of us as citizens, rather than to certain particular demographics. I am skeptical that those things will happen. Tooze and Giridharadas, I think, have allowed me to see the future. They suggest that our new value system has already been pretty well established, that dissenters will remain an isolated minority, and that our great crisis--in the sense of a struggle over the values and direction of our society--may well come to an end as soon as the corporate elite has managed to put a reasonably competent and reassuring figure into the White House once again. And that figure, as we have seen in the last 20 years, can just as easily be a Democrat as a Republican.
Friday, December 28, 2018
Our current crisis--another view
Over the last month weeks--two weeks of which I spent on a cruise--I have read three long books. I read The Path Between the Seas by David McCullough in preparation for cruising through the Panama Canal. It's a wonderful book, the kind of serious history that could become a best seller forty years ago, and the Canal turned out to be everything that I had hoped for. The second was Madame Bovary, which I finally got into and finished on my third or fourth try. And the last, which the cruise interrupted, was Crashed: How a Decade of Financial Crises Changed the World, by Adam Tooze, one of the foremost historians in the United States. Now 51, Tooze, a Brit, has taught at Yale and Columbia, and this is his third major work. He (and I) are among the few historians to have written very seriously about both Europe and the United States. His other two blockbusters are The Wages of Destruction, on the German war economy (which I had things to say about in Economic Diplomacy and the Origins of the Second World War), and The Deluge: The Great War, America and the Remaking of the Global Order, 1916-1931. Crashed is a financial, diplomatic and political history of the world since 2008 or so, and its mere scope--not to mention its many insights--marks it out as a most unusual work to appear nowadays. Viking Press deserves credit for commissioning and publishing it, but I have yet to read a review that really did it justice.
Rather than write a traditional review myself, I am going to approach the book from the standpoint of this blog more generally: the framework of the periodic 80-year crises that have convulsed the western world (and much of the rest of it) at least since the 18th century, and of which we are now in the midst of the most recent one. This view, in fact, comes up once during Tooze's book, when he is discussing Steve Bannon and the Trump Administration. Bannon, he says, saw the climax of the financial crisis in 2008 as the beginning of an apocalyptic "fourth turning," and his footnote cites Bannon's movie, Generation Zero, in which I, and Neil Howe, both appeared. He does not however mention Strauss and Howe, who discovered the 80-year cycle and analyzed it at length in two books. Their work can add a dimension to his.
Tooze's initial economic history of the last 75 years or so does parallel Strauss and Howe's vision of the saeculum (or 80-year period) that began in 1945 or so. The victorious Americans and British created a new international economic order after the Second World War, featuring a gold-exchange standard to keep currencies stable and the creation of money under control, the IMF to make international finance work smoothly and discipline errant nations, and the WTO to promote international trade. The United States also emerged from the New Deal with a very tightly regulated banking system. The system began to crack in the 1960s, when dollars piled up in Europe allowed European banks to expand the money supply more freely than the system originally allowed for, and broke down in important ways in the late 1960s and early 1970s, when flexible exchange rates replaced fixed ones. A decade and a half of inflation led in the 1980s to severe contraction, and then to the general turn away from economic regulation and high taxes under Thatcher in Britain and Reagan in the US. Deregulation continued in the 1990s, when New Deal regulation was abandoned, and big banks acquired unprecedented wealth and power. This coincided, of course, with an increase in inequality of both income and wealth, and it occurred, in the United States, under both Republican and Democratic institutions.
Hedge funds and a "shadow banking system" also allowed money to flow far more freely, and to flow into increasingly risky investments, such as subprime mortgages. The crash of 2008--exactly 79 years after the equally fateful crash of 1929--resulted. Tooze's book tells the story of the response to the crisis in the last decade--a very different response from the one that came from Franklin Roosevelt, leading to a very different economic picture now, in many ways, from the one that emerged from the Second World War.
Roosevelt, as I pointed out in No End Save Victory, interpreted the crash as an economic and moral failure in his first inaugural address and argued that the country needed new values as well as new regulations. The Glass-Steagall Act, the FDIC, and the Securities and Exchange Commission were designed to get speculation under control and avoid further panics such as had taken place at regular intervals after the Civil War (1872, 1894, 1907, 1929). They succeeded, and the United States did not experience another such panic for 79 years--until after these reforms had been undone. But the Bush and Obama Administrations--the latter of which included men like Larry Summers, who had helped design the new post-New Deal order--did not see the crisis that way. They saw it as a temporary liquidity crisis which the Federal Reserve could fix with massive infusions of liquidity. That was how Treasury Secretary Geithner and Federal Reserve Board Chair Bernanke handled the crisis, and it saved not only the big banks, but the freewheeling system of liquidity that had developed over the previous 40 years. One of the biggest lessons of Tooze's book is that the financial community--which provides the major capitalist governments with many of its economic policymakers--played a far more important role in devising and implementing the solutions to the crisis than the political process in any democracy. This was especially true in Europe, where bankers and finance ministers told the nation of Greece, in particular, in no uncertain terms, that it didn't matter whom their people elected to govern them--any government had to do what they asked to get the help they needed to survive. This is now the world we live in. The new regulations that the Obama Administration tried to impose were rather vague, and depended for their effectiveness on their implementation. The new administration is now discarding them wholesale.
The Federal Reserve took the lead in restoring liquidity both in the United States and Europe, both by buying toxic and other securities and by making dollars available to the Europeans by other means. The crisis, therefore, appeared to cement the global leadership of the United States, as President Obama, no less, noted in a speech that escaped my attention at the time.
Closely related to this problem is another: the whole management of the crisis, both here and Europe, was designed to shift the burden of its impact from the financial community to the rest of us. Whether the issue was subprime mortgages in the US or the Greek national debt, the proposed solutions put all the burdens upon the borrowers, not the lenders who had willingly made loans they should have known could never be paid back. Again and again, Tooze shows, European bondholders successfully resisted having to simply write off some of their bad loans. Meanwhile, many thousands of Americans lost their homes and their savings.
The contrast with FDR's New Deal approach is rather striking, and illustrates the difference in values between his generation, the Missionary generation (born approximately 1863-83) and the Boom generation (born 1943-60 in the US at least), which led us through this crisis. Roosevelt and his men blamed not only bankrupt economic and moral values, but also inequality itself, for the crisis, and imposed very high marginal tax rates, as well as regulation, to create a different world. Today's leadership sees nothing wrong in principle with the new power of financial institutions or our increasing inequality--which, as Thomas Piketty showed four years ago in his book, is a natural outcome of unregulated capitalism. Both 1929-33 and 2008 and its immediate aftermath were serious enough to make us question whether we were on the right path. In the first case, political authorities answered with a resounding no; in our own time, they reaffirmed the path that we were on. In Europe, too, the crisis became an excuse to try to roll back social spending and workers' rights in many nations--a process endorsed, as Tooze shows, by Angela Merkel, among many others. No major nation, as I write, has a governing elite that seriously disputes the power of modern finance and the necessity of enormous inequality. None of them responded to the Great Recession with New Deal-like measures to rebuild infrastructure and stimulate their economies, either--although China, as Tooze shows, did just that.
The new morality that is now emerging, moreover, is the morality of the Gilded Age. Tooze quotes Tim Cook, the CEO of Apple (whose name for some reason did not make the index), to the effect that antitrust issues, data protection, and government attempts to collect taxes are nothing but "political crap"--an echo of Cornelius Vanderbilt's famous declaration, "the public be damned." Peter Thiel goes even further, declaring that "competition is for losers." Thirty years ago Tom Wolfe created investment banker Sherman McCoy, a "master of the universe," in The Bonfire of the Vanities, but the Boomer McCoy is a field grade officer compared to the hedge fund and tech Xers and Millennials who are transforming our world today. Their prophets are the producers of the television series Billions, which, like The Wire, is worthy of Balzac or Zola, Wolfe's heroes.
There is far more to this book than I can mention in this post. Tooze looks carefully at the impact of the crisis on Eastern Europe. This story is remarkably parallel to one that I helped tell myself nearly 40 years ago. In the early 1930s, too, the newly independent states of Eastern Europe got into dreadful financial difficulties as a result of the depression, putting some of them at the mercy of western banks, and eventually leaving them with no option but to sell all the agricultural products that they could to Germany for Reichsmarks that could not be spent elsewhere. Now financial distress in Eastern Europe and in the former Soviet Union has led to intense great-power competition for influence again, fueled this time by financial help and energy supplies. Tooze also suggests, implicitly at least, why Vladimir Putin was so desperate to elect Donald Trump in 2016. The Obama Administration's sanctions had an extremely serious effect on the Russian economy and he really needs to find a way out of them.
There is however a catch, which Tooze explores at length in many contexts. While the elites of the western nations support globalization and its consequences, large parts of their electorates do not. This has led on the one hand to some resurgent leftism in nations like Spain, Greece, and to some extent in the United States (see Sanders, Bernie), and on the other, to right-wing anti-immigration populism, which led in Britain to Brexit and in the US to the election of Donald Trump--two developments which none of the elites actually favored, but which the Tory and Republican elites, respectively, allowed to happen. We do not yet know what the consequences of Brexit will be for Britain or the world economy, just as we do not know whether the United States can survive the incompetence and incoherence of Trump. And we do not know how the American electorate will eventually react when it turns out that--as Tooze had realized by the time he finished his book--Trump is really, in practice, an enthusiastic proponent of deregulation, more inequality, and more globalism, who has already been content with very slight changes to NAFTA and will in the end, I predict, accept even less from the Chinese and declare victory on that front, as well.
In the previous crisis, the New Deal, the allied victory in the Second World War, the Labour government in Britain, and the Marshall Plan and the economic recovery in Western Europe secured the very active allegiance of the electorates of the western nations while setting them on a path to greater equality and prosperity. I see nothing similar on the horizon now for any major western nation. Nor do we know, as Tooze points out in his last chapter, whether the Trump Administration, in particular, will be able to handle the next international economic crisis that breaks out--which Tooze is convinced that it is sure to do. That is one of the two huge questions that the book has left me with.
The second question however is even bigger, and it is one that Tooze does not, I think directly confront. It relates not to our politics but to the new economic system which he seems to know so well. Has deregulation made our international financial system inherently unstable? Is the insatiable greed of our bankers, hedge fund magnates, and others made excessive lending, and periodic crashes, inevitable, as in the late 19th century? I strongly suspect that the answer is yes, Tooze certainly raises this question a few times, usually in the words of others, but I don't think he really tries to answer it. He is still only 51, however, and I am sure that he will have plenty of time--and plenty of occasion--to revisit this question in the future. Meanwhile, he has performed a great service--and I am not aware of any other professional historian who could have written this book.
Rather than write a traditional review myself, I am going to approach the book from the standpoint of this blog more generally: the framework of the periodic 80-year crises that have convulsed the western world (and much of the rest of it) at least since the 18th century, and of which we are now in the midst of the most recent one. This view, in fact, comes up once during Tooze's book, when he is discussing Steve Bannon and the Trump Administration. Bannon, he says, saw the climax of the financial crisis in 2008 as the beginning of an apocalyptic "fourth turning," and his footnote cites Bannon's movie, Generation Zero, in which I, and Neil Howe, both appeared. He does not however mention Strauss and Howe, who discovered the 80-year cycle and analyzed it at length in two books. Their work can add a dimension to his.
Tooze's initial economic history of the last 75 years or so does parallel Strauss and Howe's vision of the saeculum (or 80-year period) that began in 1945 or so. The victorious Americans and British created a new international economic order after the Second World War, featuring a gold-exchange standard to keep currencies stable and the creation of money under control, the IMF to make international finance work smoothly and discipline errant nations, and the WTO to promote international trade. The United States also emerged from the New Deal with a very tightly regulated banking system. The system began to crack in the 1960s, when dollars piled up in Europe allowed European banks to expand the money supply more freely than the system originally allowed for, and broke down in important ways in the late 1960s and early 1970s, when flexible exchange rates replaced fixed ones. A decade and a half of inflation led in the 1980s to severe contraction, and then to the general turn away from economic regulation and high taxes under Thatcher in Britain and Reagan in the US. Deregulation continued in the 1990s, when New Deal regulation was abandoned, and big banks acquired unprecedented wealth and power. This coincided, of course, with an increase in inequality of both income and wealth, and it occurred, in the United States, under both Republican and Democratic institutions.
Hedge funds and a "shadow banking system" also allowed money to flow far more freely, and to flow into increasingly risky investments, such as subprime mortgages. The crash of 2008--exactly 79 years after the equally fateful crash of 1929--resulted. Tooze's book tells the story of the response to the crisis in the last decade--a very different response from the one that came from Franklin Roosevelt, leading to a very different economic picture now, in many ways, from the one that emerged from the Second World War.
Roosevelt, as I pointed out in No End Save Victory, interpreted the crash as an economic and moral failure in his first inaugural address and argued that the country needed new values as well as new regulations. The Glass-Steagall Act, the FDIC, and the Securities and Exchange Commission were designed to get speculation under control and avoid further panics such as had taken place at regular intervals after the Civil War (1872, 1894, 1907, 1929). They succeeded, and the United States did not experience another such panic for 79 years--until after these reforms had been undone. But the Bush and Obama Administrations--the latter of which included men like Larry Summers, who had helped design the new post-New Deal order--did not see the crisis that way. They saw it as a temporary liquidity crisis which the Federal Reserve could fix with massive infusions of liquidity. That was how Treasury Secretary Geithner and Federal Reserve Board Chair Bernanke handled the crisis, and it saved not only the big banks, but the freewheeling system of liquidity that had developed over the previous 40 years. One of the biggest lessons of Tooze's book is that the financial community--which provides the major capitalist governments with many of its economic policymakers--played a far more important role in devising and implementing the solutions to the crisis than the political process in any democracy. This was especially true in Europe, where bankers and finance ministers told the nation of Greece, in particular, in no uncertain terms, that it didn't matter whom their people elected to govern them--any government had to do what they asked to get the help they needed to survive. This is now the world we live in. The new regulations that the Obama Administration tried to impose were rather vague, and depended for their effectiveness on their implementation. The new administration is now discarding them wholesale.
The Federal Reserve took the lead in restoring liquidity both in the United States and Europe, both by buying toxic and other securities and by making dollars available to the Europeans by other means. The crisis, therefore, appeared to cement the global leadership of the United States, as President Obama, no less, noted in a speech that escaped my attention at the time.
Closely related to this problem is another: the whole management of the crisis, both here and Europe, was designed to shift the burden of its impact from the financial community to the rest of us. Whether the issue was subprime mortgages in the US or the Greek national debt, the proposed solutions put all the burdens upon the borrowers, not the lenders who had willingly made loans they should have known could never be paid back. Again and again, Tooze shows, European bondholders successfully resisted having to simply write off some of their bad loans. Meanwhile, many thousands of Americans lost their homes and their savings.
The contrast with FDR's New Deal approach is rather striking, and illustrates the difference in values between his generation, the Missionary generation (born approximately 1863-83) and the Boom generation (born 1943-60 in the US at least), which led us through this crisis. Roosevelt and his men blamed not only bankrupt economic and moral values, but also inequality itself, for the crisis, and imposed very high marginal tax rates, as well as regulation, to create a different world. Today's leadership sees nothing wrong in principle with the new power of financial institutions or our increasing inequality--which, as Thomas Piketty showed four years ago in his book, is a natural outcome of unregulated capitalism. Both 1929-33 and 2008 and its immediate aftermath were serious enough to make us question whether we were on the right path. In the first case, political authorities answered with a resounding no; in our own time, they reaffirmed the path that we were on. In Europe, too, the crisis became an excuse to try to roll back social spending and workers' rights in many nations--a process endorsed, as Tooze shows, by Angela Merkel, among many others. No major nation, as I write, has a governing elite that seriously disputes the power of modern finance and the necessity of enormous inequality. None of them responded to the Great Recession with New Deal-like measures to rebuild infrastructure and stimulate their economies, either--although China, as Tooze shows, did just that.
The new morality that is now emerging, moreover, is the morality of the Gilded Age. Tooze quotes Tim Cook, the CEO of Apple (whose name for some reason did not make the index), to the effect that antitrust issues, data protection, and government attempts to collect taxes are nothing but "political crap"--an echo of Cornelius Vanderbilt's famous declaration, "the public be damned." Peter Thiel goes even further, declaring that "competition is for losers." Thirty years ago Tom Wolfe created investment banker Sherman McCoy, a "master of the universe," in The Bonfire of the Vanities, but the Boomer McCoy is a field grade officer compared to the hedge fund and tech Xers and Millennials who are transforming our world today. Their prophets are the producers of the television series Billions, which, like The Wire, is worthy of Balzac or Zola, Wolfe's heroes.
There is far more to this book than I can mention in this post. Tooze looks carefully at the impact of the crisis on Eastern Europe. This story is remarkably parallel to one that I helped tell myself nearly 40 years ago. In the early 1930s, too, the newly independent states of Eastern Europe got into dreadful financial difficulties as a result of the depression, putting some of them at the mercy of western banks, and eventually leaving them with no option but to sell all the agricultural products that they could to Germany for Reichsmarks that could not be spent elsewhere. Now financial distress in Eastern Europe and in the former Soviet Union has led to intense great-power competition for influence again, fueled this time by financial help and energy supplies. Tooze also suggests, implicitly at least, why Vladimir Putin was so desperate to elect Donald Trump in 2016. The Obama Administration's sanctions had an extremely serious effect on the Russian economy and he really needs to find a way out of them.
There is however a catch, which Tooze explores at length in many contexts. While the elites of the western nations support globalization and its consequences, large parts of their electorates do not. This has led on the one hand to some resurgent leftism in nations like Spain, Greece, and to some extent in the United States (see Sanders, Bernie), and on the other, to right-wing anti-immigration populism, which led in Britain to Brexit and in the US to the election of Donald Trump--two developments which none of the elites actually favored, but which the Tory and Republican elites, respectively, allowed to happen. We do not yet know what the consequences of Brexit will be for Britain or the world economy, just as we do not know whether the United States can survive the incompetence and incoherence of Trump. And we do not know how the American electorate will eventually react when it turns out that--as Tooze had realized by the time he finished his book--Trump is really, in practice, an enthusiastic proponent of deregulation, more inequality, and more globalism, who has already been content with very slight changes to NAFTA and will in the end, I predict, accept even less from the Chinese and declare victory on that front, as well.
In the previous crisis, the New Deal, the allied victory in the Second World War, the Labour government in Britain, and the Marshall Plan and the economic recovery in Western Europe secured the very active allegiance of the electorates of the western nations while setting them on a path to greater equality and prosperity. I see nothing similar on the horizon now for any major western nation. Nor do we know, as Tooze points out in his last chapter, whether the Trump Administration, in particular, will be able to handle the next international economic crisis that breaks out--which Tooze is convinced that it is sure to do. That is one of the two huge questions that the book has left me with.
The second question however is even bigger, and it is one that Tooze does not, I think directly confront. It relates not to our politics but to the new economic system which he seems to know so well. Has deregulation made our international financial system inherently unstable? Is the insatiable greed of our bankers, hedge fund magnates, and others made excessive lending, and periodic crashes, inevitable, as in the late 19th century? I strongly suspect that the answer is yes, Tooze certainly raises this question a few times, usually in the words of others, but I don't think he really tries to answer it. He is still only 51, however, and I am sure that he will have plenty of time--and plenty of occasion--to revisit this question in the future. Meanwhile, he has performed a great service--and I am not aware of any other professional historian who could have written this book.
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