History Doesn't Repeat Itself, but It Often Rhymes: with guest Kurt Anderson

Richard Kramer: Welcome to Bubble Trouble, conversations between the economist and author Will Page and myself, independent analyst, Richard Kramer, where we lay out some inconvenient truths about how financial markets really work. Today, I'm delighted to be joined by the author, Kurt Andersen, who's written two books that I enjoyed greatly. One, Fantasyland: How America Went Haywire. And the other which I've just finished, Evil Geniuses: The Unmaking of America: A Recent History. More in a moment.

 Kurt Andersen, welcome to Bubble Trouble. Uh, would you like us take a time out, introduce yourself, your work, and most importantly, where our listeners can find you?

Kurt Andersen: Sure. Happy to be here Will and Richard. I am, uh, a writer mainly these days, and I've, used to be an editor. I started a thing which is, I guess, relevant to the subject of bubbles and sycophancy and, uh, the rest, called Spy Magazine, uh, back in the '80s and '90s. And, uh, I've, I've hosted radio shows and things like that. But no, I spent most of my last 20 years writing books, both novels, which deal with some of these me and you, and subjects as well, but most recently, a Fantasyland and Evil Geniuses, which are histories, cultural histories, as well as economic histories, certainly in the case of Evil Geniuses. And, um, that's who I am. And I have a website, kurtanderson.com. They can see me on Twitter @KBAndersen, which Andersen is spelled in the Scandinavian way, with an E.

Richard Kramer: So Kurt, just to start off, I, I really thought Fantasyland was epic as a cultural history talking about the fantasy industrial complex, and that's something that's sort of near and dear to our hearts in thinking about Bubble Trouble, because the markets are basically full of fantasies. And I guess, segueing into Evil Geniuses, how did that make you think about finance and the stories it uses to perpetuate itself to, to justify what it's the financialization of the America economy that, uh, I think an evil genius as you lay out, has had so many damaging impacts?

Kurt Andersen: Well, one of the late chapters in Fantasyland, I, I take it on in what happened in 2008, 2009, which was obviously global, but had its, its infectious epicenter in the United States of the crash. And, and what led to that and the set of bubbly fantasies about how certain markets were to always rise, especially housing markets, and the particular weakness, the defining weakness, as I argue in that book, in America that has been here from the very beginning for, for exciting mythic falsehoods of, of, of various kinds, but most recently in the, in the '90s and oats about the nature of financial reality and, and [laughs] and markets that would just keep going up forever.

And, and, and then I, you know, once I finished that book, I realized there was another half of this story of how can those predispositions to believe exciting untruths be used by what I decided to call, not tongue in cheek but with some impertinence, Evil Geniuses, among whom are people running the financial industry and who have run, especially but not exclusively in the United States. It's not just about making money in dubious and destructive ways, but also about fortifying political power in order to ensure those [laughs] who are making money in dubious and unethical ways continue to do so.

Richard Kramer: Uh, so Kurt, just quickly, just, if I was allowed to use music in a podcast, the soundtrack for this one would have to be The Who's – Won't Get Fooled Again. And I just wanted to throw that back at you, which is, you've been writing so eloquently over so many decades in this topic. How do you wrestle with a sense of Déjà vu every 10 years or so?

Kurt Andersen: That's a great question. Well, I mean, in my case, one of the, one of the ways as I write about in Evil Geniuses is, is, is it took me, I, you know, since I was back in the '80s and '90s, less acutely, I guess, aware, or permitting myself to be aware of all that was going on, even as I saw the Hokum and the Humbug and the rest. So once I, I kinda woke up, listened to more Get Fooled Again, more [laughs] or played that in my head more rigorously in the oats of this century.

So for me personally, it's like, "Oh, it wasn't Déjà vu." It was, "Oh yeah. I should have paid more attention to what was going on." But yes, some people find Fantasyland, who read it, in a certain way, reassuring that, "Oh, yes, this has happened again and again, and again and again, in various ways, over hundreds of years." There's a famous quote that I, uh, use in both of these books, Fantasyland and Evil Geniuses, that was, has always been attributed to Mark Twain, "History doesn't repeat, but it rhymes." And, and that, and this-

Richard Kramer: Wow. [laughs].

Kurt Andersen: And I love that because it's not, it's never exactly the same, what happened in various railroad bubbles in the 1870s. Do- don't, doesn't repeat exactly in the, you know, 1920s or in the 1990s and 2- uh, 2000s, but it definitely rhymes again and again. And, and I, I would say that the task for us all, and especially historians, is to see those rhymes and depict them.

Richard Kramer: One of our favorite quotes in Bubble Trouble that I keep coming back to was also attributed to Mark Twain wrongly, because I believe it was Upton Sinclair. And that is, "Never expect a man to understand something when his job depends on not understanding it."

Kurt Andersen: Well, exactly. No, it's a great quote. And to my point of, of what was going on with many of us, and me in my small way. I wasn't in the financial business, but, but I, I, my, my, certainly my prosperity to some degree derived from a world and a paradigm and a situ- set of situations that if not, depending on me to not understand them, certainly incentivized me to not publicly und- understand them, you know, I, I would say as a neoliberal shell, as a former neoliberal. So yes, I think that's, that's an, uh, that's a very, that's an important thing for everyone to keep in mind.

Richard Kramer: And one of the words that I really loved you bringing out in Evil Geniuses and it was a, a lovely, a well written book I have to say, is this nostalgify, and your notion of competing nostalgias. Uh, but I think about America as uniquely prone to these gold rush nostalgias, the idea of the get rich quick scheme, the idea that the rags to riches, which of course in all the study of social mobility proves not to be true.

I mean, how do you think about these nostalgias they play out in the markets, which are all about giving you something new, the shock of the new, if you wanna say it, call it that way. It's gonna be the latest craze in the market. You don't wanna talk about the old world companies. You wanna talk about the disruptors. So how do you balance that American pension for nostalgia, for harking back to a golden age, with this constant desire to find just what's over the frontier or the horizon?

Kurt Andersen: No, and you've put it really well, what the American challenges is [laughs] is managing that juggle. And if you're doing it in, in good faith rather than just trying to make a bucket of grifter, you know, I started an over capitalized website and I was involved. So I, I see that in that instance, back in the, in the late '90s and early, oh it's, it's a new economy, it's entirely different.

And of course in that case, the, the internet was making for newness. Still is making for newness. And, and, and there's some truth to that. But of course, it wasn't so new that the need to generate say earnings, were still important, and eventually brought the fallacious bubbliness to earth as it does again and again, and again. Nostalgia, it can lead people to all kinds of wrong directions. It leads you to fallacies either-

Richard Kramer: Hmm.

Kurt Andersen: ... or, you know, understand that you're a crook and you're a grifter, and you're using those fallacies to sell bullshit, which, you know, I don't know, I guess some of the people running the financial industry in the 2000s, early 2000s knew that and weren't just believing their own bullshit but, you know?

Richard Kramer: But, that's the, that's the trick.

 Well, I mean, two, two things quickly to pick up on, I think in, in those, in that dot com world, I mean, the only people who did make money from monetizing eyeballs ended up being ophthalmologists because no one really made money in that. But if you flip forward having s- had that ringside seat in the dot com boom, when you got to Alan Greenspan and irrational exuberance, when you got to the froth that returned, uh, near the end of that decade, were you able to see, "Hey, uh, I, I've s- I think I, I, I sense a rhyme here. I sense some s- a return to something that, let's just say, charitably didn't end well," or did you spot the pattern as it was coming through?

Kurt Andersen: Uh, certainly, uh, when I went through my brief period of, of, of being in the heart of that, and from, you know, 1999 to 2002, coming out of that, I, I saw absolutely what was going on and, and, uh, and, and did indeed was able then to, with that firsthand experience, see what had happened and, and what, not in an evil way myself, was trying to take advantage of. I mean, I wasn't... I thought we were this, it was, it was this upper thing called Inside and inside.com and it's associated magazine. I thought we were trying, we were indeed creating, trying to create a legit sustainable journalistic enterprise using this new technology.

But I certainly did see, even at the time, how absurdly easy it was for us to raise too much money to fund this thing. But I thought, "Oh, we're, we're intelligent, well, intentioned people. We'll use these tens of millions of dollars to create a good thing." And that's, that was our intention. But, but in the larger sweep of both [laughs] immediate experience and history, I saw that indeed it was, it was, you know, I mean, I could have looked back to Anthony Trollope in the, in the 19th century to see what became of most of those, those well-intended [laughs] you know, railroad entrepreneurs back then.

Richard Kramer: With regards to this entrepreneurial dream and vision and nostalgia that America has, a debate that we've been having on Bubble Trouble is, well, let's look at the counterfactual. The argument in America goes, no cultural safety net, no social safety net, encourages you to take risks, encourage you to place bets. Those bets play off big.

But if I look at Sweden where I've spent a large part of the past 10 years going up and down to Spotify's overseas, that country has an unparalleled social safety net, an ample entrepreneurial spirit, startups galore, Klarna being the latest one. Now, if I look at the two side by side, I'm struggling to buy into this dream when the alternative is the other end of the spectrum, and seems to have captured the best of both worlds. Can you kind of wrestle with that for me please?

Kurt Andersen: Well, the, we should all be wrestling with that. Anybody who believes in, in, in basic potential good sense and practicality of free market economies, look at the Nordic economies, Sweden, Finland, Denmark, Iceland, Norway, as the models. Because as they understand clearly to afford a big social welfare state, you need a vibrant free market economy, and vice versa. And the degree to which Americans certainly, and probably Brits for that matter, are unaware of the degree to which that's so. And in this country, in the United States, believe that no, those are, those are these socialist countries that don't, where risk is impossible and they... It's not understanding what is true.

And even as I point out in Evil Geniuses, the, the, the, you know, libertarian free marketeer think tanks in the United States, when they rank countries and political economies on their degree of freedom, say, "No, those countries have systems every bit as free in terms of how easy it is to set up businesses and so forth, as that in the United States." So, I mean, yeah, they're small countries, they're homogeneous, but certainly in terms of how capitalist political economies can arrange themselves, they are models, in my view, to be looked at and, and in many ways, emulated.

Richard Kramer: And I love that point that you made there about how markets react with nervousness of its socialism and red under the bed type paranoia. But when you see the Swedish model at work, you realize, yes, you're gonna have a legal department with lots of departure for maternity and paternity leave. But yes, the market responds with really insular solutions with parachuting lawyers and who cover for maternity and pa- paternity leave. And it's just to trust the market, not fear and intervention in the market, to work out how the market should perform best.

 But, but is that, is that entirely a fantasy itself? Because what we would observe very clearly in the U.S. is a very high degree of corporate socialism. The vast majority of large American companies pay nearly no cash income tax. And you have at the heart of the American economic system, what I would call, the original sin, which is tax deductibility of interest, which encourages those who can't afford to borrow huge sums, to borrow as much as they can.

So you have an implicit socialist type subsidy for large companies because they can afford to manage that. Whereas most of individuals who can't afford to take out huge loans to buy homes, they don't get those tax breaks. And, and how do you, how would you reorient a system like that, that at the heart of it is privileging those who can take those huge risks as opposed to those who don't have that opportunity?

Kurt Andersen: Well, it's a matter of, of education and of educating people, Americans, to the fact that only the top 20%, 25% charitably of Americans have benefited from the system. That changed. That changed pretty dramatically around 1980. And, and by the way the, the people at the 28% level are not benefiting nearly as enormously as the top 1% are by the way the system was changed, and the incentives changed around 1980. There was, and again, the point I'm making in, in Evil Geniuses is, is not a vast nostalgia for the way things were, because they were obviously very terrible in all kinds of ways of how women were treated and pe- Black people were treated and everything else before 1980.

But what was going on from World War II, the end of the World War II, '45 to around 1980 was a, was an increasing fairness, an increasing taxation, a high taxation on the wealthy and on corporations and all the rest together, of course, with, with interest on mortgages being deductible for everyone, meaning not so much for Black people who were denied access to the capital to buy houses, but that there was a different, more social democratic paradigm since the new deal that was operating here in this country. And then suddenly in 1980, it wasn't any longer.

And, and, and, and that's... So it's a matter of saying, "Look, it's done differently in different countries today, and it was done differently in this country before around 1980."

Richard Kramer: Hmm. Well, let's take it to the break. We're already swimming in incredibly deep water, but in part two, I wanna bring it up for air. Back in a moment.

 Welcome back to part two of Bubble Trouble. We're here with author, Kurt Andersen, talking about Evil Geniuses and how they have reformulated the U.S. economy over the last 20 or 30 years. Kurt, I guess one of the questions I'm wrestling with is, who's out there to speak truth to power versus these conflicts of interests that you lay out, versus the Evil Geniuses?

Uh, a good friend of mine, uh, who we hope to have on the podcast shortly, Jesse Eisinger, he wrote a book called The Chickenshit Club, which you might have seen, which was about how the reason that lawyers end up settling with big companies is because when they leave public service, they hope to get jobs at wealthy law firms and, and, and send their kids to private school. And he's also done some fantastic work at ProPublica showing what little tax, if any, the top 10 richest people in America pay, which I'll tell you, it ain't very much, may have a, a terrific pattern of borrowing money, uh, buying stuff and dying, borrow, buy, and die, which avoids all their tax liabilities.

So we can see that time and again, these, the critics of the system get co-opted. And you certainly laid out in Evil Geniuses, all the lefties that drifted rightward under the sway of the various think tanks. I mean, how do you see a, a, a new class of people that can speak truth to power that understand these, the system wide drift and can kinda course correct back to a world that's a little bit more equitable, since we've talked about inequality now for the past years and years and years, but it's clearly just getting worse?

Kurt Andersen: Well, we have talked about inequality for the past decade in a robust mainstream way, I would say. And, and so it's a long game. As, as I sketch and depict in Evil Geniuses, it took them a long time [laughs] that is to say the Evil Geniuses of the economic right, to shift the paradigm in their direction. They were on the outs for many years. And then in the '60s and '70s began being not so much on the outs. And then hallelujah, had their great successes starting around 1980. So it's a long game.

And I would say, that's what needs to be done is keep at it and don't imagine that it's gonna happen overnight. And, and whatever one's differences with the Bernie Sanders view of, of the world and how the American system should be fixed, or Elizabeth Warren, who is more my cup of tea in her critique of free economies or free market economies and the U.S. and how they ought to be fixed. And yes, inequality is increasing. And yes, it's not all getting better overnight, because nothing gets better overnight. It's a long game in the pendulum.

From 1933 to 1980, we had, the pendulum has swung in one direction and, and maybe I hope, I cross my fingers in hope that in the last decade or so, Bubble Trouble and Elizabeth Warren [laughs] and Thomas Picketty and many other voices, are helping to swing the pendulum in, in the proper direction, the other way.

Richard Kramer: Kurt, just on Elizabeth Warren. I was really... I'm a U.S. political junkie, and I was following her with particular attention on the last campaign trail. And she seemed to be getting dismissed because she was too intellectual or too much of a technocrat.

Now, from this side of the pond, if I look at leaders like Gordon Brown, he was admired for being an intellectual, admired for being a technocrat. What needs to change when somebody like Elizabeth Warren to become electable, if I can frame it that way?

And you're referring your book to media stewardship. Do we need to bring the horse to water or water to the horse to make people like her electable? And I wanna take a view of left or right here, just people who come with that elect intellectual gravitas. Why do they get dismissed in the role of being the most powerful person on the planet?

Kurt Andersen: Because politics are a different thing than what is correct. And, and, and to, to be elected-

Richard Kramer: Mm-hmm [affirmative].

Kurt Andersen: ... in the United States or anywhere else for that matter, but especially in the United States, you know, you can't be the, just the smartest person in the room or the most correct person in the room, obviously. And a, a non parliamentary system like ours certainly makes it even harder for an Elizabeth Warren, let's say, to be elected president.

So we'll see who the next generation of potential electable, not just U.S. senators and members of the house, but presidents are, who will make the democratic party in the United States once again, the more of a labor party that it was in the 1930s and '40s and '50s and '60s. So we'll see who those individuals are, and how to properly frame the case to make it work.

You know, who was doing a, a remarkably, amazingly good job at that when he was running for president in 2016, was Donald Trump. If you look back and, and look at his, his framing of, in a, in a, let's just say, crude way, but you look at final two minute ad of the 2016 campaign was a economic pitch of how Wall Street had cheated you, America, and, and how that was needed to be fixed, and together with we would fantastic healthcare of a generous and fair kind, on and on and on.

So of course, it was a giant set of lies that the moment he got elected in 2016, proceeded to ignore and do the opposite. But we see that there was, a part of his appeal was actually that. And, and-

Richard Kramer: Hmm.

Kurt Andersen: ... you know, the, the Republican Party as it's constituted in this country, won't, and can't deliver on any of that, but there was the political framing that he did quite successfully in order to get elected and then ignore it for the rest. So I think there, there are some lessons there for, for what can, what is politically possible in this country.

Richard Kramer: Just to pick up on that, what we're observing now is that the, the politics in America seems to be very much determined or in the service of corporations, of money. And whether it's Jane Meyer's Dark Money book, or all the phrases you hear from the very bland and anidine CEOs that you profiled in Evil Geniuses, who became like quasi politicians. They now adopted this greenwashing in the form of greenwash of money to say, "Well, we're, we're supporting diversity, we're supporting opportunity."

How do you get genuine corporate stewardship? The kind that you might think still exists in some places, Europe, and some places exist by, by law because half the boards in Germany have to be representing the workers, and the other half are representing the management and, and the shareholders? But how do you inculcate an honest and longer term corporate stewardship in America when the incentives are just to take the profits, pay yourself enormous pay packages, and by the way, if you have any pesky regulations, let's just make a few donations and buy off the politicians?

Kurt Andersen: Yeah. It's... Part of it are, are, are norms. Part of it are corporate norms. And, and those that, that were observed and enforced by social opprobrium or approval in the '50s and '60s, to encourage a, a sense of stakeholders rather than just shareholders to whom one is responsible.

So that's part of it, but it's not the only thing, obviously, uh, because as soon as what we saw happen with Milton Friedmanism in the '70s, and Reaganism in the '80s, which were different ways of calling the same thing, were that as soon as there were alternate norms and also a reduction of actual regulatory muscle and legal muscle to prevent you from crushing unions or to not paying overtime or not paying fair minimum wages and all the rest, those, those norms were...

And so you need the, the norm changing, whether it's unions or, or new forms of labor power, and or legal requirements of, of, of how, of about corporate governance, about minimum wages, about overtime pay, about parental leave and all the rest. So it is a matter of, of statutory change, and regulatory change, and change of norms, and enabling labor power. It's all those things at once, you know?

I mean, they did such a, an amazing job in this country and elsewhere, but especially, and, and to an extreme degree in the United United States, of crushing unions starting in the 1980s, that the conventional and traditional union organized labor part of the equation is a tough one 'cause you're starting from such a, in, in the private sector, uh, a, a, a tiny degree of union power at this point. But you know, that, that's part of it, but that's why there are other means, like you mentioned, the, the, the rules in Germany, for instance. There are other legal statutory means, you know, in, in a, in a political democracy to get the scales fair again, fairer as they once were.

Richard Kramer: So we tend to close out an episode of Bubble Trouble with what we call Smoke Signals. So we wanna get smoking here. These are the couple things that we asked our guests to help advise people to look out for as signs of Bubble Trouble, but maybe we'd flip it in a more positive direction with yourself and say, what are a couple of smoke signals we could look for over the horizon to say, "Geez, I see some of the castle walls of the kleptocracy being burned down."

Some of the things I can look out for that might give us some hope that we can re-tilt those, uh, unequal scales that have led to such pervasive inequality. And, and you all know the statistics about what's owned by the top 1% and the top 1% of the 1%. But what are the couple things we can look out for over the horizon and say, "You know, someone is starting to start a fire at the castle wall right now, and maybe, maybe creating a bit of opening, a bit of space."

Kurt Andersen: I, I, one thing I look at and, you know, it's hard to know how it'll play out, but it's so interesting at a moment of this apparent widening fisher within the Republican Party in the United States, which is the building bipartisan suspicion of specifically large tech corporations, and, and an interest in antitrust or whatever, we will now call antitrust in the tech 21st century, r- regulation of those big companies in breaking up or whatever they are.

Th- that is really interesting to me, because it's a place where, you know, that is, it is, you know, the way, the way we used to have aggressive antitrust in this country. There, there seems to be, at least in theory, an appetite for that in all, you know, across the board. And, you know, it comes and goes month to month, depending on what Facebook has or hasn't done. And I find that a very interesting, potentially hopeful place where potentially great and radical things could be done.

I guess that's, that's the place I look most hopefully partly because as I suggested that as the Republican Party tries to cast itself as the populous party of the working class and the common man, it, I, it's gonna, it has to start. I think it has to start. And we see it with otherwise egregious people like Josh Holly, teaming up with Bernie Sanders to say, "Oh yeah, let's send the checks. Oh yeah, let's break up these companies." For their own bad faith reasons, there they are actually disobeying the evil genius kleptocracy donor class principles about radical market intervention saying, "No, let's break up these companies."

So I don't know. I, I, that, that's one place. I mean, apart from all the obvious things of, you know, wage levels, low wage, averages, wages going up and all that, but this appetite at hand for, for, you know [laughs] doing some serious regulatory rethinking and reinvention, and redesigning of, of monopolies is, is, I find hopeful.

Richard Kramer: Well, let me put you on the spot. Uh, William Gibson famously said, "The future is already here. It's just not evenly distributed." And one on-the-spot question I'd like to ask my guest is, what do we need to change? Uh, do we need to change the future, or do we need to change the distribution? Your answer on a post card, please.

Kurt Andersen: Yes. That, no, that's the great extension of the Gibbson quote. I think, I would say the, the most important of those things is to change the future in the sense of changing how the potential bounties, economic bounties of the future technology can be properly distributed. I mean, we have to fix the distribution of goods of which amazing digital bounty and, is one before we, you know, before we get to the future.

Richard Kramer: And that's a wrap for Bubble Trouble. We are so grateful for Kurt Andersen, and the best guest we've had on today. This has been a joy. And to repeat the book, Evil Geniuses, are worth your read. And we'll be back next week with more bubbles and more troubles.

 If you're new to Bubble Trouble, we hope you'll follow the show wherever you listen to podcasts. Bubble Trouble is produced by Eric Newsom, Jesse Baker, and Julie Annette, at Magnificent Noise. You can learn more at bubbletroublepodcast.com. Will Page and I will see you next time.