Following the Money

Eighteen days to go: a fortnight plus four, making this our penultimate paper before we all plunge into the unknown.

This brief interval of relative calm may give us our last chance for the foreseeable future to attain anything like coherence. So let’s step back from this endless succession of crazy trees and try to perceive the forest. We’ll begin by looking at the arc of the life of the writer Kevin Phillips.

In his late 20’s, Phillips devised the Southern Strategy used by Richard Nixon to win the presidency in 1968: abandon moderate Republicans in the northeast, and court racist southerners. Watergate, and what it revealed about his former boss, turned Phillips around. Ronald Reagan’s economic policies—which, the media’s fawning pixie dust notwithstanding, ratcheted up economic inequality—were the last straw. By 1990, Phillips was writing highly regarded books denouncing the economic havoc wreaked on America’s middle class by the unholy alliance of big oil, evangelical Christianity, and finance.

What is finance? America went from being an agricultural backwater to a global power by organizing money so that industrialists could hire people to make, move, and sell things. That model became obsolete when bankers learned how to cut out the middlemen—industrialists and workers. The money makes itself, and the bankers take a nice fat cut.

Phillips’s diagnosis of the nation’s economic ills carried with it an implicit prescription: make the wealthy pay higher taxes, and use that money to make life more affordable for the rest. Unfortunately, among those high up in the American power structure, no one seems to have made much effort to change the nation’s trajectory.

Phillips died a year ago, almost forgotten, from complications of Alzheimer’s. The decade and a half since his last major works have only served to confirm his conclusions. For an updated view on today’s situation, we can look to John Lanchester.

In an article titled, “For Every Winner a Loser,” in the London Review of Books, Lanchester reviews a pair of books which explore what money is up to these days.

He begins by driving home two points: the incredible scale of the world of finance, and its uselessness to humankind:

“That’s finance. The total value of all the economic activity in the world is estimated at $105 trillion. … The value of the financial derivatives which arise from this activity … is $667 trillion. That makes it the biggest business in the world. … It does nothing and adds no value. It is just one speculator betting against another and for every winner, on every single transaction, there is an exactly equivalent loser.

“… The only benefit to wider society is the tax paid by the winners; though we need to remember that the losers will have their losses offset against tax, so the net tax benefit is not as clear as it might at first seem.”

One of the books Lanchester reviews, The Trading Game: A Confession, was written by one such winner, Gary Stevenson. Born to a middle-class British family, by the age of 24 Stevenson was working for CitiBank in London, gambling billions of dollars daily, and knocking down seven-figure bonuses. As his subtitle suggests, though, despite all that money, Stevenson never forgot whence he came. He quit his job, wrote a book, and is now committed to exposing and overturning the corrupt system he knows so well at his YouTube channel, https://www.youtube.com/@garyseconomics.

Unfortunately, Stevenson is one in a million. Lanchester gives us a more representative sampling of the species Homo economicus in the person of Robert Mercer, “a person whose brilliance in his specialist field is balanced by the idiocy of his simplistic, pull-up-the-drawbridge, dismantle-the-state politics. Mercer anointed Steve Bannon as his political mentor. On Bannon’s advice, he and his activist daughter, Rebekah, backed the alt-right portal Breitbart News, and the data analytics company Cambridge Analytica. Most important, he gave a lot of money to Donald Trump and has been credited as the most crucial of all Trump’s billionaire backers.” *

This is not to suggest that our catastrophe is the fault of Mercer alone. He’s got plenty of company: “Three people—Elon Musk, Miriam Adelson and Dick Uihlein—put a combined $220 million into groups supporting Donald J. Trump in July, August and September,” according to Wednesday’s New York Times.

Our world is shaped by Republican policy: use any means necessary to grab all available power, without regard for norms, morality, or legality. Use that power to further enrich yourself and your friends. Defend your position with a torrent of lies engineered by experts to terrorize those to whom the party has already done the most damage. Reward the chumps with false promises of relief.

Yikes! Sounds bleak! Should we have stuck with inspecting trees?

Naw. The future’s coming regardless. Best get ready.

* Here Lanchester is quoting from Gregory Zuckerman’s book about Jim Simons, The Man Who Solved The Market.