Evil Geniuses: The Unmaking of America: A Recent History (11 page)

Making old right-wing economic ideas seem fresh and respectable was essential, but so was making them
operational
. As the Powell Memo had instructed, Scaife two years later provided the funds to some members of Governor Reagan’s staff in California to create the Pacific Legal Foundation, a new kind of pro bono right-wing law firm devoted to litigating against government regulations, especially environmental ones. A few years later Coors put up the money for another, the Mountain States Legal Foundation.

But the main location for weaponizing right-wing ideas, this grand project to undermine and roll back twentieth-century reforms of the political economy, was naturally Washington, D.C. The correct senators and House members had to be helped or hurt, elected or beaten; Congress and the executive branch had to be aggressively lobbied and effectively bribed; laws had to be defeated and passed; the tax code had to be made easier on the rich and big business; and regulations on business had to be blunted or repealed.

The Chamber of Commerce and the other main business organization, the National Association of Manufacturers, had arisen at the turn of the twentieth century during the Progressive Era, to oppose unionization, and they later fought the New Deal. Because they were so large, representing Ford and General Electric as well as thousands of local widget companies, they tended to be cumbersome and ineffectual. In other words, for decades corporate executives and the rich simply hadn’t been exercising maximum political leverage—not even to cadge government treats for particular corporations but definitely not, as Powell complained in his memo, to serve the interests of the capitalist side.

You’ll notice I didn’t say capitalist
class
. I’ve never had any hesitation using the terms
working class
or
middle class,
of course, but as an educated American liberal coming of age in the 1970s, I learned it was simple-minded and vulgar-Marxist to speak of the economic overlords and the very rich as a class or even as capitalists. And while I still resist defaulting to conspiracist explanations, pieces of this story do look and swim and walk and quack an awful lot like ducks—that is, resemble a well-executed conspiracy, not especially secret, by the leaders of the capitalist class, at the expense of everyone else.

In late 1971, as the Powell Memo was still fresh and essentially secret but rippling through America’s C-suites, the chairmen and CEOs of General Electric and Alcoa started dreaming up a powerful new alliance of exclusively
big
businesses, like theirs, that would exercise serious power in Washington in a way that hadn’t been done since the old days, before the Crash of 1929 and the New Deal and the deaths of the last of the original industrial oligarchs.

The heads of GE and Alcoa met in early 1972 in Washington with Nixon’s Democrat-turned-Republican treasury secretary, John Connally, and Federal Reserve chairman Arthur Burns—who emphatically told them, according to a participant, that business had “to shape up in sophistication and techniques in Washington or go down the political tube.”
^*5
Weeks later, the GE and Alcoa organizers convened other CEOs from among America’s largest corporations at a private men’s club on Manhattan’s Upper East Side called the Links, and made it official. A year later, at the same club, they merged their group with some similar new antiunion, antiregulation, antitax cabals created by other suddenly militant CEOs, and the Business Roundtable was born. Unlike their weaker, wankerish predecessor groups, the Business Roundtable would consist
only
of the CEOs of the
biggest
businesses, and they were all expected to attend important strategy and decision-making meetings themselves and lobby elected officials personally.
^*6
Organized labor had had its run, and now it was time for organized capital to give it a serious go.

Not for a few more years, after Washington had dispensed with Watergate and Nixon, did the press barely begin noticing these new pieces of the emerging counter-Establishment. In 1975 the
Times
published a front-page story about the spectacular success of “a carefully organized lobbying effort, chiefly directed by a little-known organization whose members are all giant corporations”—the Business Roundtable. In the Democrat-majority House, by means of CEOs personally lobbying, the Roundtable managed to kill a bill to expand the enforcement of laws against excessive corporate power.

The same year
The Washington Post
ran a story announcing its discovery that Joseph Coors had been “funneling millions of dollars to new right-wing groups, mainly based in Washington.” The world was still largely unaware of the Kochs and their funneling. The
Times
passingly mentioned each of them, apparently for the first time, in 1979—“David Koch, a New York lawyer,” because he was going to be the Libertarian Party’s 1980 vice-presidential nominee, and his brother in a separate story simply for being so extremely rich yet so little-known. But staying in the shadows was a strategic choice back then. For one of the annual libertarian conferences that Charles Koch sponsored during the 1970s, he wrote a paper recommending that because their “radically different social philosophy” could attract “undesirable criticism,” exactly “how the organization is controlled and directed should not be widely advertised.” Even when he finally stepped out from behind the curtain two decades later, he told a reporter, “I don’t want to dedicate my life to getting publicity.”
^*7
During the 1970s his Cato Institute apparently wasn’t mentioned at all in the
Times,
and the Heritage Foundation only very occasionally.

“History doesn’t repeat itself but it
rhymes,
” Mark Twain is alleged to have said. As I discussed earlier, the Civil War had been a struggle between plunging forward and clinging to the past, between new and old Americas. As soon as the war ended, the country underwent an explosion of nostalgia and mass-market corniness and self-celebratory Americana—Currier & Ives pictures, John Philip Sousa marches, the new Christmas and popular music industries, the six-month-long U.S. Centennial Exhibition in Philadelphia with a reproduction seventeenth-century “New England Farmer’s Home” and colonial windmill.

And then a century later, history rhymed. In the 1960s our struggles were between old and new, once again involving race and a war, this time a foreign war, that terribly divided Americans. And in the 1970s as in the 1870s, we got a nostalgia explosion: the pop cultural nostalgia, the social nostalgia among Archie Bunkers for more subservient blacks and women—and a de facto economic nostalgia among the wealthy for the unregulated businesses and untaxed fortunes of the 1920s and earlier, the economic foundation of what Twain in 1873 named the Gilded Age.

The political reality of that first Gilded Age was that wealthier and more powerful businessmen than ever before bribed and otherwise improperly influenced U.S. officials and legislators on a much bigger scale than ever before. Then during the 1900s laws and norms restigmatized and criminalized the most brazen corruption and indifference to the public good. Organized Washington lobbying by big business and the rich was relatively small-scale, even when Senate majority leader Lyndon Johnson was distributing Texas oil money to senators to persuade them to vote his way in the 1950s—until history started rhyming in the 1970s. Along with capitalists’ post-1960s-specific ideological grievances—the loss of public and political respect and support, the second-guessing and meddling by citizens and their government—they were also eager to enrich themselves directly the ways their capitalist forebears had done in the old days.

In 1971 about 175 big companies had full-time lobbyists—that is, “public affairs offices”—in Washington. By 1978 five hundred did, and just four years later, in the second Reagan year, nearly 2,500 corporations employed Washington lobbyists. While today a
majority
of senators and congresspeople become lobbyists when they leave Congress, in 1975, as a definitive
Washington Post
history of modern lobbying explains, “the rare hiring of a former member of Congress as a lobbyist made eyebrows rise.” In other words, as the 1970s played out, behind and beneath all the fervent and wonky ideological arguments for unfettered capitalism lay a particular type of animal spirit—piggishness.

And 1975, remember, was in the very wake of Watergate. Much of the Watergate criminality had been funded by the Nixon reelection campaign, to which corporations and rich individuals had secretly donated large sums of cash, actuals bags of paper currency. So even as suddenly jacked-up, lobbying-mad corporations began systematically ravishing the federal government, the Watergate scandal prompted Congress to pass campaign finance rules to limit donations’ size and disclose who was giving. The newly politicized corporations promptly subverted those new rules in order to increase their power in Washington. A report by AEI, the conservative think tank, smirkingly explained at the time how those reforms had unintentionally “legitimized the role of corporations and business-related groups in federal elections, greatly improving their position vis-à-vis labor and other social interests.”

By the fall of 1975, three hundred corporations and business groups had set up one of these new species of donation pipelines—political action committees. The new Federal Election Commission ruled that it was entirely up to a company’s executives, without their shareholders’ approval, to decide which campaigns and candidates to fund. Two months later, in a case brought by both conservatives and liberal civil libertarians, the Supreme Court ruled that donors not formally connected to candidates—such as corporate PACs—could contribute to political causes as much as they wanted. And in another important case, the Court ruled that corporations were free to finance state and local referenda unrelated to their business.
^*8
Corporations, they decided, just like citizens, have free speech rights that may not be limited.

Thus began a “quiet revolution,” the head lawyer of the National Association of Manufacturers marveled at the time, by “corporations in the political arena, which would not have been possible only four years ago.” And right after the decision removing limits from PAC donations, the number of business PACs increased from three hundred to twelve hundred, generating gushers of money that helped triple the cost of campaigns for a House seat by the mid-1980s, which in turn gave PACs more power, and so on it has gone ever since, a vicious cycle corrupting democracy.

Once again the economic right and big business keenly channeled and twisted the democratic anti-Establishment 1960s spirit. The first spectacular 1960s protests had happened in 1964 in Berkeley, where pissed-off, idealistic students refused en masse to submit to the university’s rules restricting public political activity—the Free Speech Movement. The free speech movement launched just a decade later by pissed-off rich adults with a long-term strategy to pursue their economic interests was at least as transformative and consequential.

*1
Curiously, four of the five trained as chemical engineers at MIT or Cornell—and had fathers who’d also studied chemical engineering at MIT or Cornell.

*2
Another funder of Heritage and other right-wing start-ups was Richard DeVos, a cofounder of Amway, the unorthodox, somewhat cultish Michigan-based merchandising company that was the subject of a Federal Trade Commission investigation in the 1970s. He was the father-in-law of Trump’s secretary of education, Betsy DeVos.

*3
That wasn’t enough to prevent Henry Ford II, so environmentally woke in 1970, from resigning in a huff in 1977 from the board of the Ford Foundation because it was too “anticapitalist.”

*4
One data point refuting the notion that elite universities are strictly leftist indoctrination camps: from 1984 through 2019, Harvard’s introductory undergraduate economics course was taught only by conservative professors—first Feldstein, who served as Reagan’s chief economic adviser, then his student Greg Mankiw, who was George W. Bush’s chief economic adviser.

*5
At the beginning of the Great Depression, when the young Burns taught economics at Rutgers University, one of his most devoted students was Milton Friedman.

*6
Not-so-fun fact: In 2019, nearly half a century after the Business Roundtable formed, no less than 83 percent of its 182 CEO members—among them its chairman Jamie Dimon, Jeff Bezos, Tim Cook, Michael Dell, and Stephen Schwarzman—were still white men.

*7
Not until 1994 did the
Times
run an article all about the Kochs, and then almost entirely about their business—it included just two paragraphs (of sixty) about their two decades of world-changing political work.

*8
The majority opinion in this second case,
First National Bank of Boston v. Bellotti,
was written by…Justice Lewis Powell. That decision formed the foundation for the Court’s definitive
Citizens United v. Federal Election Commission
decision in 2010 that invalidated limits on campaign spending by groups that candidates don’t officially, directly control.

I mentioned how Milton Friedman’s confrontational bluntness and zealotry—
telling it like it is,
in 1960s-speak—gave his 1970 manifesto oomph and traction. In fact, ironically, it was a particular set of quintessentially late-1960s attitudes that endured and made America ripe for the project undertaken by the economic right starting in the 1970s. It wasn’t so much that people were suddenly primed to respect and glorify business and businesspeople as they had sometimes done in the past. Rather, the reflexive fear and loathing of the government that had become a left-countercultural
and
right-wing reactionary habit during the 1960s grew and spread during the 1970s and found new expressions.

The murderousness (and incompetence) of the Vietnam War, together with the misconduct of the FBI and intelligence agencies in spying on antiwar groups, and the war on drugs, were one set of reasons to hate the federal government in the 1960s and ’70s. For some white people, passage and enforcement of laws to help black Americans were another. Violent crime continued to increase in the 1970s, especially in cities, on its way to more than doubling again—which meant that government was failing, and although Washington had next to no involvement with local law enforcement, it was Washington that had passed civil rights laws and expanded antipoverty programs, so it was easy for racist and racist-ish whites to conflate all that and blame Washington for the new criminal mayhem. The increase in violent crime also prompted modest gun control—which in turn provided people who liked guns excessively with a new, self-righteous, 1960s-style individualist reason to despise and fear the government.

Every two or four years, a gold-standard academic survey asks Americans if they “trust the government in Washington to do what is right just about always, most of the time, or only some of the time?” In 1964, 77 percent of them said always or most of the time. By 1970 that majority had shrunk to 54 percent, where it remained for a couple of surveys. But the Vietnam War continued, and we continued losing it. The one universally approved recent U.S. government achievement, the manned space program, was abruptly kaput. Starting in the 1970s, the phrase
good enough for government work
became a piece of viral snark. And of course, there were the Watergate crimes committed by Nixon and his lieutenants. Between the surveys of 1972 and 1974, the Washington-trusting cohort of Americans shriveled to 36 percent. In the next presidential election, the incumbent Republican president said in a debate that the “considerable anti-Washington feeling throughout the country…is misplaced,” but his Democratic anti-Washington opponent won after saying, in the same debate, that he would undertake “a great reduction in agencies and programs” and end the “gross waste of money.”

Once a large majority of Americans came to believe that the federal government was uninspiring or incompetent or corrupt or evil, as they rapidly had over the previous decade, it was going to be a lot easier for the economic right to persuade people that regulating big business and taxing the rich were just plain
wrong
. Those people wouldn’t necessarily become crusaders for free enterprise, but if they started focusing more of their resentment and anger on the federal government, the smart right-wingers knew, it could have the same effect.

On the first Sunday of 1976, Washington journalism’s elder statesman at the time, James Reston, the former editor of
The
New York Times
and then its main political opinion writer, wrote a column called “Presidential Job Description.” He said that “a new majority in America,…increasingly self-concerned and even cynical, is not impressed by
…
the smooth theatrical conservative nostalgia of Ronald Reagan.” Yet over the next month Reagan ran an extremely close second to President Ford in the Iowa and New Hampshire primaries and very nearly won the nomination. As that presidential election got going, another leading political journalist noted that “layered over everything” in the political landscape “are apathy, nostalgia and cynicism.”

Reston’s idol Walter Lippmann, the great American political commentator and author who’d recently died, had derided politicized nostalgia sixty years earlier, at the beginning of his career and the modern age. “Men generally find in the past what they miss in the present,” he wrote.

For most of us insist that somewhere in the past there was a golden age. But people who are forever dreaming of a mythical past are merely saying that they are afraid of the future. The past which men create for themselves is a place where thought is unnecessary and happiness is inevitable. The American temperament leans generally to a kind of mystical anarchism.

In 1976 the Republicans were not yet the party of unhinged mystical anarchism they became over the next four decades. Rather, after the unhappiness, unfriendliness, cynicism, paranoia, and finally the high crimes of Richard Nixon, Americans were eager to install Mr. Rogers in the White House—that is, sincere, low-key, straightforward Jimmy Carter, a devoutly Protestant goody-goody complete with toothy smile and cardigan sweater whom Reston hadn’t even mentioned as a contender in his New Year’s election preview.

The choice was between two basically boring, moderate nice guys whom nobody’d heard of a couple of years earlier—a governor running against Washington, Carter, and a lifelong Washington congressional hack who stepped in to replace Nixon’s criminal vice president and then pardoned Nixon for his crimes, Gerald Ford. Not only did Carter appear to be Nixon’s opposite, he also seemed to fit the zeitgeist’s nostalgia requirement: a farmer from a small town called Plains, a Sunday school teacher, and on race a latter-day Atticus Finch.

Electing Jimmy Carter in the fall of 1976 was a natural follow-up to the U.S. bicentennial summer. The bicentennial commemorations were a surprisingly big-deal reboot of national solidarity—a Fourth of July nostalgiapalooza that came along at a ripe moment. In addition to the two hundredth national birthday party, they served as a de facto celebration of the end of the Sixties hangover that had included the finales of Vietnam (1975) and Watergate (1974). I’d just graduated college and arrived in New York City, where people—jaded, sophisticated
New Yorkers
—were fully, enthusiastically engaged in this Americana spectacle. The Grand Parade of Sailing Ships, sixteen old square-riggers each a hundred yards long, gliding into the harbor as if from out of the nineteenth century and past the Statue of Liberty! Plus dozens of military ships disgorging thousands of excited sailors all over the city,
On the Town
come to life!

But after hopeful visions of old-fashioned American virtue helped elect him, Jimmy Carter couldn’t manage to play the nostalgia card worth a damn, and
President
Carter never came across as a leading man. Americans don’t require presidents (or leading men) to be cheerful or manly all the time, but in the modern era they really can’t abide mopes and wimps and scolds.

The previous paradigm shift in the U.S. political economy, embodied and enacted by the New Deal in the 1930s, had been triggered by economic catastrophe—a quarter of all workers suddenly unemployed, the pay of the ones still working significantly cut, savings wiped out by the failures of almost half the banks, stock prices down 89 percent in three years. Nothing remotely as horrible as the Great Depression happened in the 1970s to persuade Americans to make a sharp right turn or reverse course from the country the New Deal had built. Our successful free-market system, as rebuilt in the 1930s and tweaked since, had not teetered or collapsed. In fact, despite a recession, the 1970s were a great decade for business: from 1970 to 1979, corporate profits overall nearly doubled, getting higher than they’d been since 1951. Inequality was as moderate as it had been in the twentieth century. But two very unpleasant and unfamiliar new economic conditions—high inflation year after year and much higher-priced oil and gasoline—made citizens more willing to accept big changes in the economy.

For the three decades since the Truman administration, inflation had been practically imperceptible, mostly running between 1 and 3 percent, as it is in the twenty-first century and has been for three decades. But from 1973 to 1975, the annual rate of inflation rose from less than 4 percent to more than 12 percent, and in 1980 it nearly reached 15 percent. The prices of everything were increasing by half or more every few years. Inflation made for a sense of out-of-control flux that almost nobody enjoyed, as if the 1960s’ dismaying rate of change were continuing but without any of the good or fun parts. In a decade, prices more than doubled, meaning that the value of cash savings shrank by more than half. Interest rates on loans naturally doubled as well. Many Americans were disconcerted, angry, and a little panicky. If your middle-class salary doubled between 1973 and 1980, for instance, your purchasing power didn’t actually increase
at all,
and yet because of inflation, your marginal federal tax rate could have gone from 24 to 30 percent. Which might well incline you in the next election to vote for the candidates of a Republican Party that was starting to make lower taxes its central promise.

When inflation had begun creeping higher at the end of the 1960s, the economy was still growing fast. But in the mid-1970s there was a double whammy—crazily inflating prices were accompanied by a long economic recession, a combination so unusual the new word
stagflation
was coined. In fact, it was a triple whammy: during the 1970s in America (as in the whole developed world), a
post
–post–World War II slowdown in growth and productivity was becoming apparent. During a single recessionary year, 100,000 U.S. steelworkers were laid off. But even during a more economically ordinary year, 1979, the auto industry laid off a third of its workforce.

The mid-’70s recession had been triggered by a sudden quadrupling of oil prices by OPEC, the dozen-nation cartel that produced most of the world’s petroleum. Yet for Americans, the oil crisis wasn’t just about the oil crisis and the higher gasoline and home heating prices—it was routinely called the
Arab
oil crisis. OPEC consisted of
third world
countries, and we were also months away from officially losing our disastrous decade-long war to a third world country, North Vietnam. On multiple fronts, the end of America’s twentieth-century invincibility suddenly seemed nigh.

While there was nothing in the 1970s economically comparable to the Depression to trigger an equivalent political about-face, there were several simultaneous and mutually reinforcing narratives about our failing national moxie. The federal government seemed manifestly incompetent
and
weak, both at home
and
abroad,
and—
don’t forget Watergate, don’t forget the new revelations of FBI and CIA misdeeds—
evil
to boot.
It didn’t used to be this way.
Why can’t things be like they used to be?

The pivotal year for the energized economic right was 1978. Its dreams were starting to come true. Americans were now more skeptical of government than of big business. At the beginning of the year a CBS News/
New York Times
survey found that 58 percent of Americans agreed that “the Government has gone too far in regulating business and interfering with the free enterprise system,” up from 42 percent during the 1960s.

A critical mass of the people elected to run the government had also been persuaded to give big business what it wanted. Democrats held the presidency and a two-to-one House majority and a historic sixty-two-seat Senate majority. Yet in early 1978, a bill to create a new consumer protection agency was defeated in the House because 101 Democrats voted against it, including a majority of the Democratic freshmen, thanks in large part to lobbying by CEOs from the Business Roundtable.

And 1978 was also a tipping-point year in the economic right’s crusade to persuade people that because government now sucked, all taxes paid to all governments by everyone, no matter how wealthy, were way too high and also sucked. The overwhelmingly Democratic Congress overwhelmingly passed and the Democratic president signed into law a huge reduction in taxes on income from selling stocks, capital gains—a definitive turn toward making extra-sure the rich got richer faster. Just five years earlier, when he was governor of California, Ronald Reagan had pushed a ballot initiative to cut and permanently limit various state and local taxes; it was decisively defeated. In 1978 Proposition 13, a California state constitutional amendment to cut property taxes by more than half and permanently limit increases, was decisively approved.

Carter was elected as the sweet, honest anti-Nixon. Ironically, the rapid zeitgeist shift of the 1970s meant that after a Republican who’d governed as a liberal, certainly by the standards ever since, his immediate successor governed as “the most conservative Democratic President since Grover Cleveland,” according to the liberal historian Arthur Schlesinger, Jr. But conservatives weren’t buying it, any more than liberals had bought Nixon’s liberalism. By the summer of 1979, even though he’d presided over no disasters (yet), only about 30 percent of people told pollsters they approved of the job the president was doing, fewer than for any postwar president so far except Nixon in his final Watergate year.