The famous liberal economist wants to take back the language of liberty from the right.
Source photograph by Joel Saget / AFP / Getty
In the early days of the COVID-19 pandemic, when there was no vaccine in sight and more than a thousand people who had contracted the virus were dying each day in the United States, Joseph Stiglitz, the economics professor and Nobel laureate, was isolating with his wife at home, on the Upper West Side. Stiglitz, who is now eighty-one, was a high-risk individual, and he followed the government’s guidelines on masking and social distancing scrupulously. Not everyone did, of course, and on the political right there were complaints that the mask mandate, in particular, was an unjustified infringement on individual freedom. Stiglitz strongly disagreed. “I thought it was very clear that this was an example where one person’s freedom is another’s unfreedom,” he told me recently. “Wearing a mask was a very little infringement on one person’s freedom, and not wearing a mask was potentially a large infringement on others.”
It also struck Stiglitz, who had served as chair of the White House Council of Economic Advisers during the Clinton Administration, that the experience of the pandemic could provide an opportunity for a wide-ranging examination of the question of freedom and unfreedom, which he had been thinking about from an economic perspective for many years. The result is a new book, “The Road to Freedom: Economics and the Good Society,” in which he seeks to reclaim the concept of freedom for liberals and progressives. “Freedom is an important value that we do and ought to cherish, but it is more complex and more nuanced than the Right’s invocation,” he writes. “The current conservative reading of what freedom means is superficial, misguided, and ideologically motivated. The Right claims to be the defender of freedom, but I’ll show that the way they define the word and pursue it has led to the opposite result, vastly reducing the freedoms of most citizens.”
Stiglitz’s title is a play on “The Road to Serfdom,” Friedrich Hayek’s famous jeremiad against socialism, published in 1944. In making his argument, Stiglitz takes the reader on a broad tour of economic thinking and recent economic history, which encompasses everyone from John Stuart Mill to Hayek and Milton Friedman—the author of the 1962 book “Capitalism and Freedom,” which has long been a free-market bible—to Ronald Reagan and Donald Trump. The going can get a bit heavy when Stiglitz is explaining some tricky economic concepts, but his essential argument comes across very clearly. It is encapsulated in a quote from Isaiah Berlin, the late Oxford philosopher, which he cites on his first page and returns to repeatedly: “Freedom for the wolves has often meant death to the sheep.”
Stiglitz begins not with pandemic-era mask mandates but with the American plague of gun violence. He notes that there is a simple reason why the United States has far more gun deaths than other countries do. It has far more guns, and, thanks to a tendentious reading of the Second Amendment by the courts, including the Supreme Court, many Americans now regard owning a gun, or even a closet full of semi-automatic rifles, as a constitutionally protected right. “The rights of one group, gun owners, are placed above what most others would view as a more fundamental right, the right to live,” Stiglitz writes. “To rephrase Isaiah Berlin’s quote . . . ‘Freedom for the gun owners has often meant death to schoolchildren and adults killed in mass shootings.’ ”
Gun violence and the spread of diseases by people who refuse to abide by health guidelines are examples of what economists call externalities, an awkward word that is derived from the fact that certain actions (such as refusing to wear a mask) or market transactions (such as the sale of a gun) can have negative (or positive) consequences to the outside world. “Externalities are everywhere,” Stiglitz writes. The biggest and most famous negative externalities are air pollution and climate change, which derive from the freedom of businesses and individuals to take actions that create harmful emissions. The argument for restricting this freedom, Stiglitz points out, is that doing so will “expand the freedom of people in later generations to exist on a livable planet without having to spend a huge amount of money to adapt to massive changes in climate and sea levels.”
In all these cases, Stiglitz argues, restrictions on behavior are justified by the over-all increase in human welfare and freedom that they produce. In the language of cost-benefit analysis, the costs in terms of infringing on individual freedom of action are much smaller than the societal benefits, so the net benefits are positive. Of course, many gun owners and anti-maskers would argue that this isn’t true. Pointing to the gun-violence figures and to scientific studies showing that masking and social distancing did make a difference to COVID-transmission rates, Stiglitz gives such arguments short shrift, and he insists that the real source of the dispute is a difference in values. “Are there responsible people who really believe that the right to not be inconvenienced by wearing a mask is more important than the right to live?” he asks.
In 2002, five years after he left the White House, Stiglitz published “Globalization and Its Discontents,” which was highly critical of the International Monetary Fund, a multilateral lending agency based in Washington. The book’s success—and the Nobel—turned him into a public figure, and, over the years, he followed it up with further titles on the global financial crisis, inequality, the cost of the war in Iraq, and other subjects. As a vocal member of the progressive wing of the Democratic Party, Stiglitz has expressed support for tighter financial regulations, international debt relief, the Green New Deal, and hefty taxes on very high incomes and large agglomerations of wealth.
During our sit-down interview, Stiglitz told me that, for a long time, he had cavilled at the negative conception of freedom used by conservative economists and politicians, which referred primarily to the ability to escape taxation, regulation, and other forms of government compulsion. As an economist accustomed to thinking in theoretical terms, Stiglitz conceived of freedom as expanding “opportunity sets”—the range of options that people can choose from—which are usually bounded, in the final analysis, by individuals’ incomes. Once you reframe freedom in this more positive sense, anything that reduces a person’s range of choices, such as poverty, joblessness, or illness, is a grave restriction on liberty. Conversely, policies that expand people’s opportunities to make choices, such as income-support payments and subsidies for worker training or higher education, enhance freedom.
Adopting this framework in “The Road to Freedom,” Stiglitz reserves his harshest criticisms for the free-market economists, conservative politicians, and business lobbying groups, who, over the past couple of generations, have used arguments about expanding freedom to promote policies that have benefitted rich and powerful interests at the expense of society at large. These policies have included giving tax cuts to wealthy individuals and big corporations, cutting social programs, starving public projects of investment, and liberating industrial and financial corporations from regulatory oversight. Among the ills that have resulted from this conservative agenda, Stiglitz identifies soaring inequality, environmental degradation, the entrenchment of corporate monopolies, the 2008 financial crisis, and the rise of dangerous right-wing populists like Donald Trump. These baleful outcomes weren’t ordained by any laws of nature or laws of economics, he says. Rather, they were “a matter of choice, a result of the rules and regulations that had governed our economy. They had been shaped by decades of neoliberalism, and it was neoliberalism that was at fault.”
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Stiglitz’s approach to freedom isn’t exactly new, of course. Rousseau famously remarked that “Man is born free and everywhere he is in chains.” In “Development as Freedom,” published in 1999, the Harvard economist and philosopher Amartya Sen argued, in the context of debates about poverty and economic growth in developing economies, that the goal of development should be to expand people’s “capabilities,” which he defined as their opportunities to do things like nourish themselves, get educated, and exercise political freedoms. “The Road to Freedom” falls in this tradition, which includes another noted philosopher, Franklin Delano Roosevelt. Stiglitz cites Roosevelt’s Four Freedoms speech, delivered in January, 1941, in which the President added freedom from want and freedom from fear to freedom of speech and freedom of worship as fundamental liberties that all people should enjoy.
“A person facing extremes of want and fear is not free,” Stiglitz writes. He describes how, at a high-school reunion, he spoke with former classmates from the city he grew up in—Gary, Indiana, which had once been a thriving center of steel production. “When they graduated from high school, they said, they had planned to get a job at the mill just like their fathers. But with another economic downturn hitting they had no choice—no freedom—but to join the military . . . . Deindustrialization was taking away manufacturing jobs, leaving mainly opportunities that made use of their military training, such as the police force.”
Among the hats Stiglitz wears is one as chief economist at the Roosevelt Institute, a progressive think tank. He doesn’t claim to have a surefire recipe for reviving rusting American steel towns. But in the second half of “The Road to Freedom” he calls for the creation of a “progressive capitalism” that would look nothing like the neoliberal variant he has spent the past two decades excoriating. In this “good society,” the government would employ a full range of tax, spending, and regulatory policies to reduce inequality, rein in corporate power, and develop the sorts of capital that don’t appear in G.D.P. figures or corporate profit-and-loss statements: human capital (education), social capital (norms and institutions that foster trust and coöperation), and natural capital (environmental resources, such as a stable climate and clean air). Not-for-profits and workers’ coöperatives would play a larger role than they do now, particularly in sectors where the profit motive can easily lead to abuses, such as caregiving for the sick and elderly.
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In political terms, Stiglitz started out as a self-described centrist. Over the years, he has shifted to the left and become ever more gimlet-eyed about how policies and laws are made and upheld, and whom they benefit. In “The Road to Freedom,” he inveighs against the Supreme Court for adopting the perspective of the “white male slave-owning drafters of the Constitution,” and reminds us that conservative billionaires and major corporations underwrote the neoliberal policy revolution, which bestowed upon big corporations what Stiglitz refers to as “The Freedom to Exploit.” He writes, “We cannot divorce the current distribution of income and wealth from the current and historical distribution of power.”
Given this conjuncture, and the rise of authoritarian populists like Trump, Orbán, and Bolsonaro, it is easy to get fatalistic about the prospects for creating the “good society” that Stiglitz describes, in which “freedoms of citizens to flourish, to live up to their potential . . . are most expansive.” He’s under no illusion that winning the battle of ideas would be sufficient to bring about such a transformation. But he’s surely right when he writes that, if “we successfully dismantle the myths about freedom that have been propagated by the Right,” and reshape the popular conception of human liberty in a more mutual and positive direction, it would be an important first step.
And how likely is that? In his book, Stiglitz lists a number of reasons to be pessimistic, including the fact that “neoliberal ideology runs deep in society,” and that people stubbornly “discount information that runs counter to their preconceptions and presumptions.” On the positive side, he points to a widespread rejection, particularly among younger people, of the neoliberal approach to issues like inequality and climate change. During our conversation, he cited the Biden Administration’s industrial policy, which provides generous incentives to green-energy producers and purchasers of electric vehicles, as an example of a “sea change” in views about economic policymaking. “Neoliberalism is on the defensive,” he said. However, he also noted the enduring power of simplistic slogans about freedom and averred that he didn’t want to sound like a Pollyanna. “I am optimistic, over-all,” he said. “But it is going to be a battle.” ♦
The Dream of Fed Rate Cuts Is Slipping Away
Fed Chair Jerome Powell has dialed back expectations on interest-rate cuts. Photo: Samuel Corum/Bloomberg News
Thursday’s report on economic activity delivered the latest in a series of rude awakenings to investors and Federal Reserve policymakers who have held their breath in anticipation that lower inflation would allow interest-rate cuts to begin in earnest this summer.
Instead, Commerce Department data showed that, for the third straight month, inflation was proving stickier than expected after an immaculate cooling in the second half of last year.
Individual readings on growth and prices so far this year haven’t been enough on their own to dramatically change the outlook for the Fed. But the cumulative effect of those serial disappointments has been notable.
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In particular, inflation data has consistently been firmer than expected, with recent months getting revised somewhat higher in subsequent reports. This trend has led investors and Fed officials to rethink whether rate cuts will be appropriate this year.
“I always say, one month is no months, but three months—that’s at least one real month,” said Chicago Fed President Austan Goolsbee in an interview last week. “Now that we’re seeing—after six, seven months of very strong improvement and close-to-2% inflation—something that’s well above that, we have to recalibrate, and we have to wait and see.”
Policymakers and financial-market participants began the year broadly expecting slower growth and cool inflation would allow the Fed to begin rolling back interest-rate hikes.
But the opposite has occurred. Growth has proven more resilient than expected, and inflation has been surprisingly firm. On Thursday, the Commerce Department reported that gross domestic product expanded at a 1.6% seasonally- and inflation-adjusted annual rate, but a broader measure of underlying demand ran closer to 3%, suggesting solid momentum.
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Meanwhile, inflation was stronger-than-expected during the first quarter. Core prices, which exclude volatile food and energy items, rose at a 3.7% annualized rate during the quarter and were up 2.9% from a year ago, according to the personal-consumption expenditures price index.
Price data for March will be released by the Commerce Department on Friday. Thursday’s report suggested that figures for January and February are likely to have been revised higher from already firm levels and that inflation didn’t ease and may have picked up in March, keeping the 12-month inflation rate around 2.8%.
Omair Sharif, founder of research firm Inflation Insights, said he believed revisions to seasonal adjustments could explain some of the likely revisions to inflation in Friday’s report.
Others have said a stock-market rally fueled by rate-cut hopes late last year may have boosted prices for financial-management services that feed into the inflation gauge.
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The Fed targets 2% inflation over time. Officials have signaled since late last year they could begin lowering interest rates on the assumption that price growth would slow to around 2.5% later this year and reach 2% after that. The core PCE index rose at a 2% annualized rate in both the third and fourth quarters of last year, buoying optimism that the Fed might have finished its inflation battle without the hand-to-hand combat for which senior officials had braced themselves.
Analysts at forecasting firm LH Meyer said Thursday they now anticipated just one cut this year, at the Fed’s December meeting, after having recently revised their projection of three rate cuts beginning in June to just two beginning in September.
“We still think inflation is headed toward 2%, we still think the [Fed] is heading toward rate cuts, and we still expect them to start cutting this year. And we continue to see little chance that the next move will be a rate hike,” analysts wrote in a client note Thursday. “But the risks have again shifted toward fewer cuts this year and a later onset.”
Markets largely agree. Investors in interest-rate futures markets began the year anticipating six cuts, but now many anticipate just one—or none at all. Bond investors sold U.S. Treasurys on Thursday morning, pushing yields on the benchmark 10-year note above 4.7% for the first time since November, when Fed officials hadn’t yet signaled they were done raising interest rates.
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The Fed has been especially focused on monthly inflation readings in part because central bank economists and the economics profession more broadly have struggled to forecast inflation since the pandemic. Many failed to anticipate just how much it would rise in 2021 and 2022, and then they likewise were surprised by how quickly it appeared to fall last year despite solid hiring and spending.
Officials including Fed Chair Jerome Powell initially played down higher inflation readings in January and February as “bumps” on the path to lower inflation. At a news conference last month, he said those readings “haven’t really changed the overall story.”
But Powell acknowledged a limit to that line of thinking. “I always try to be careful about dismissing data that we don’t like. So you need to check yourself on that, and I’ll do that,” he said. Last week, Powell said that firmer inflation in March had likely pushed the timetable for starting rate cuts back by several months.
Core inflation hit a high of 5.6% in February 2022 and began falling steadily a year ago. The latest reports have revived fears that the so-called “last mile” in bringing inflation all the way back to 2% will prove more challenging. Some Fed officials have said they are anxious about leaving rates too high for too long and causing unnecessary harm to the labor market.
The Fed’s inflation fight “has been straightforward” as supply chains healed and labor markets benefited from an influx of workers, said Goolsbee. “It definitely becomes harder this year.”
Analysis from The Wall Street Journal, selected by the editors
The Counter-Revolt Finally Begins
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Wonder Land: Columbia, Yale and NYU camp out while the rest of the U.S. flees from wokeness. Images: AFP/Getty Images Composite: Mark Kelly
Before this column ends, we’ll get to the unmissable fact that anti-Israel, often antisemitic, protests are proliferating at what we amusingly choose to call our most “selective” universities—Columbia, Yale, New York University, Stanford, Berkeley. For the moment, add these North Face tent protests on $75,000-a-year campus quads to the sense among the American public that their country is running off the rails.
A list of the phenomena laying us low includes: wokeness, DEI (diversity, equity and inclusion), defund the police (a depressing subset of wokeness), conspiracy theories, head-in-the-sand isolationism and a self-centered political polarization typified—from left to right—by Reps. Alexandria Ocasio-Cortez, Ilhan Omar, Cori Bush, Marjorie Taylor Greene, Matt Gaetz and Lauren Boebert.
Ironically this time of year is associated with hope, amid spring and college graduations—except at the University of Southern California, which, fearing trouble, canceled its commencement speakers and told honorary-degree recipients not to show up.
Setting silenced USC aside, a hopeful note one hears at college commencements is that the American system is self-correcting, that despite recurrent stress, it always rights itself. Opinion polls suggest few believe this anymore but—happy spring—it looks as if we may be on the brink of a real counter-revolt against the craziness.
Last week in the hopelessly gridlocked House, Republican Speaker Mike Johnson, facing threats to his job from the chaos caucus, cast his lot with the enough-is-enough caucus. The House passed bills to sustain allies in Ukraine, Israel and Taiwan. Congress isn’t dead—yet.
Blue states and cities that looked willing to collapse rather than defend their citizens have begun to push back against progressives’ pro-criminal and antipolice movements.
At the urging of Gov. Kathy Hochul, New York’s just-passed state budget includes measures to crack down on shoplifting. Assaulting a retail worker will be a felony. Larceny charges can be based on the total goods stolen from different stores. Progressives in the state’s Legislature opposed the measures. Philadelphia Mayor Cherelle Parker, elected in January on restoring law and order (yes, it can be a Democratic issue), last week announced a plan to support policing in the most crime- and drug-plagued neighborhoods.
March seemed to be a tipping point. The hyperprogressive Council of the District of Columbia, in a city that had become an embarrassing carjacking hellhole, passed an array of anticrime measures. Oregon’s Legislature voted to reverse the state’s catastrophic three-year experiment with drug decriminalization. San Francisco voters approved two measures proposed by, of all people, Mayor London Breed, to ease restrictions on policing and require drug screening for welfare recipients. The results in Los Angeles County’s primary for district attorney strongly suggest progressive George Gascón will be voted out in November.
In all these places, the reversals by elected officials are driven by the prospect of voters’ turning them out of office. That is the U.S. political system trying to right itself.
In California, a safety coalition has collected about 900,000 signatures to reverse parts of Proposition 47, the state’s now-notorious 2014 decision to reduce some theft felonies to misdemeanors. This week, the U.S. Supreme Court’s conservative majority appeared sympathetic to overturning a Ninth Circuit decision that bars cities and towns from enforcing vagrancy laws. Though the case emerged from Grants Pass, Ore., which is trying to ban homeless encampments, about three dozen elected officials and organizations in California filed briefs arguing that the Ninth Circuit’s ruling made cleaning up the streets almost impossible.
News stories since the start of the year have noted that many private companies are rethinking policies on DEI, partly under legal pressure, such as the Supreme Court’s decision last year to strike down the use of race in college admissions.
Some in the corporate DEI movement thought they were immune to restraints. No longer. Companies are rediscovering that the constituency most needing inclusion is their customers. The loudest shot across the bow came last week, when Google fired 28 employees after some staged sit-in protests at its New York and California offices over a contract with Israel’s government. Google’s firing statement describes “completely unacceptable behavior.” No one saw that coming.
All this adds up to a nascent counter-revolt against America’s lurch toward self-destruction. The exception is elite U.S. universities. Their leadership has seen itself as answerable to no one and politically immune.
Robert Kraft, a Columbia grad and owner of the New England Patriots, said this week he will no longer give the school money “until corrective action is taken.”
If big donors ever regain control of these so-called selective schools, a suggestion: Firing the president won’t close the barn door. Instead, fire the admissions office. What a tragedy to think how many serious high-school students were rejected by Columbia, Yale and NYU, edged out by nonuseful idiots whose chosen major is the political structure of re-education camps.
Someone has to be a lagging indicator, and these schools are it.
Appeared in the April 25, 2024, print edition as 'The Counter-Revolt Begins'.
Wednesday 24 April 2024
The Folly of China’s Real-Estate Boom Was Easy to See, but No One Wanted to Stop It
When New York hedge-fund manager Parker Quillen visited a glitzy new development in northern China called Tianjin Goldin Metropolitan, he wondered how on earth the developer would fill all that space.
It had apartments starting at $1 million and plans for an office tower bigger than the Empire State Building, an opera hall, shopping malls and hotels. Its total square footage was to exceed the land area of Monaco.
Was there a plan for attracting buyers? Quillen asked. Polo, said the marketing agent showing him around.
“Polo? You mean the horse thing?” he asked.
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“Exactly,” he recalled her saying.
The agent, dressed in riding gear, led him through a stable with more than 100 polo ponies. Quillen asked if Goldin’s founder, a billionaire polo enthusiast who got rich selling computer monitors, had done a viability study for the project. She said she had no idea.
“Then I realized that the vision was that international executives would come to Tianjin and set up their corporate headquarters here because they like polo,” Quillen said. “I was like, oh my God.”
When Quillen returned to New York, he poured more money into his wagers against Chinese property stocks.
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Polo was supposed to draw buyers to the Tianjin project, which has foundered.Photo: Kevin Frayer/Getty Images
That was 2016, during the heady days when the Chinese property boom was just getting going. Even then, the truth was obvious to anyone who knew what to look for: The boom had turned into a bubble—and was likely to end very badly.
The bubble proceeded to get even worse, though, because no one wanted the music to stop. Chinese developers, home buyers, real-estate agents and even the Wall Street banks that helped underwrite the boom all ignored warning signs.
Developers found ways to obscure the amount of debt they were holding, with the help of bankers and lawyers. Buyers who suspected the property markets were overbuilt bought more anyway. Chinese and foreign investors seeking juicy returns flooded developers with funding.
The cheerleaders were operating on a seemingly bulletproof assumption that China’s government would never allow the market to crash. Chinese people had invested the majority of their wealth in housing. Letting the market tumble could wipe out much of the population’s savings—and erode confidence in the Communist Party.
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Now China is paying the price for failing to act earlier to rein it all in.
More than 50 Chinese developers have defaulted on their international debt. Around 500,000 people have lost their jobs, according to Keyan, a private think tank focused on Chinese property. Some 20 million housing units across China have been left unfinished, and an estimated $440 billion is needed to complete them.
Prices for secondhand homes in major cities fell 5.9% in March. Local governments, deprived of income from selling land to developers, are struggling to service their debts. The overall economy is fragile, as real estate and related industries, which once accounted for around 25% of gross domestic product, become a bigger drag on growth.
‘Worth nothing’
In 2016, the same year Parker Quillen toured the polo grounds in Tianjin, a pair of Hong Kong-based accountants traveled to mainland China and hit the road in a rented Buick.
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Gillem Tulloch and Nigel Stevenson and their firm, GMT Research, specialize in digging out what they call “financial anomalies” and “shenanigans,” and they suspected a lot of that in China’s housing market.
Decades earlier, in the Mao Zedong era, the market was controlled by the state, and most people lived in homes provided by their Communist Party work units. In the 1990s, authorities started liberalizing the market, and private developers sprang up everywhere, erecting row after row of housing towers in one of the biggest investment booms in history.
By the time Tulloch and Stevenson began their trip, many government officials and economists were warning of a bubble. But whenever the market showed signs of faltering, the government would step in. Beijing rolled out new policies to stimulate buying, lowered interest rates and lifted home purchase limits. Confidence was restored, and sales took off again.
Tulloch and Stevenson were suspicious. As they drove across the country, they were amazed by the number of empty buildings and busted projects.
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They zeroed in on the projects of China Evergrande Group, the country’s largest developer by sales. Its founder and chairman, Hui Ka Yan, was on his way to becoming China’s richest man, with personal wealth of more than $40 billion in 2017, according to Forbes.
China Evergrande founder and chairman Hui Ka Yan was once one of the nation’s richest men. Photo: Bobby Yip/REUTERS
Tulloch and Stevenson visited 40 Evergrande projects in 16 cities, concluding that many of them were “dead assets,” earning little or no income. Those included sparsely occupied hotels, shops that hadn’t ever been occupied and entire developments far from major population centers.
At one project, in a port city a few hours from the North Korean border, six residential towers were abandoned, with no workmen, residents or marketing staff. Yet according to Tulloch and Stevenson, Evergrande still treated the project on its books as a performing asset, without writing down its value.
Tulloch and Stevenson paid special attention to Evergrande’s parking garages. Many were nearly empty. By their reckoning, Evergrande had built some 400,000 parking spaces it was struggling to rent or sell, yet in audited statements it continued to value the spaces at $7.5 billion, or nearly $20,000 per space.
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The developer booked the parking spaces as investment properties rather than inventory assets—an accounting treatment, unusual among its peers, that allowed Evergrande to overstate their value and book gains early, the two accountants said.
“The company is insolvent by our reckoning, and its equity worth nothing,” they wrote to clients later that year, in a report titled “Auditors Asleep.” The report concluded Evergrande could stay afloat only by borrowing more.
Evergrande has defended its accounting and business practices, saying its financial results were audited.
Tulloch and Stevenson said that many of their clients agreed with their analysis, but they don’t think many of them acted on it.
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Hong Kong-based accountant Gillem Tulloch and a colleague traveled around China in a rented Buick to see for themselves what was happening with the nation’s housing market.Photo: Anthony Kwan/Bloomberg News
They were right not to. China’s property market was on the eve of a rebound, thanks to the government’s property-market rescue plan rolled out a year earlier. The next year, 2017, home sales rose 11%, and Evergrande’s Hong Kong-listed shares surged 458%.
To many Chinese people, real estate seems like a smarter and safer investment than stocks. Many bought multiple units and left them empty, satisfied just to see their values increase.
Chen Yanzhi, now 35, says she began buying homes while still in college, after making a bit of money trading stocks. She started visiting new projects around the country, snapping up units whenever she saw one she liked.
Over a decade, she bought and sold more than 20 homes in places such as Nanjing, Shanghai and Hainan province. The first cost around $70,000. Years later, she paid $3.8 million for a property in Shanghai. “I love houses, and I love everything about houses,” Chen said in an interview.
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Young people made fortunes working for developers.
Remen Xia, 40, was a sales manager at Evergrande in China’s northern Jilin province before he jumped to other property companies. By 2018 and 2019, he said, he was earning $280,000 a year, when the average salary for Jilin was less than $4,500, according to data provider Wind.
Developers needed a lot of capital, which meant fees for financiers willing to raise it. From 2017 to 2021, Chinese real-estate developers raised $258 billion by selling dollar-denominated bonds, according to data provider Dealogic. Banks, including Wall Street heavyweights such as Goldman Sachs and Morgan Stanley, collected $1.72 billion for underwriting these deals.
Bankers met to discuss deals in the lobby of the Hong Kong Four Seasons hotel. One hedge-fund manager recalled attending parties at least once a month on yachts owned by Chinese developers, with Champagne and female escorts.
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An unfinished China Evergrande residential compound on the outskirts of Shijiazhuang, in Hebei province.Photo: tingshu wang/Reuters
‘Hole-digging’
Chinese banks and international institutions such as Fidelity, Invesco, BlackRock and Pimco invested in Chinese property bonds. Demand for the bonds, which yielded double-digit returns, far exceeded supply, so investors appeared willing to tolerate dubious deal structures.
One popular tactic, which bankers and investors nicknamed “hole-digging,” involved using shell subsidiaries to borrow money, guaranteed by the parent development companies. The guarantee was valid all year long—except, according to documents reviewed by The Wall Street Journal, for June 30 and Dec. 31, the cutoff days most Chinese property companies use to base their financial results on.
The structure enabled the parent companies to avoid disclosing on their own balance sheets the liabilities incurred by guaranteeing the subsidiary’ debt. It wasn’t illegal, lawyers and accountants said, because a balance sheet is supposed to provide only a snapshot of a company’s financial health at a specific point in time.
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Developers sometimes pledged the same collateral multiple times when borrowing money, according to developers and bankers familiar with the activity.
An executive at one hedge fund recalled seeing the same list of collateral—shares of developers’ subsidiaries, receivables or company officials’ private jets and mansions—on term sheets for a half-dozen private debt offerings. He bought the debt anyway, given the need for high returns.
“If a portfolio manager chooses not to overlook the collateral issue and refuses to buy those bonds, his performance will rank last, and he will get fired,” he said.
Chinese banks were so eager to underwrite such offerings that they sometimes agreed to invest tens of millions of dollars of their own money in the bonds, no matter the pricing, according to bankers and an executive at one development company. Such bank participation would suggest to other investors that the deal was hot, thereby holding down the interest rate and making it less expensive for developers to raise money.
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“At that time, we chose investors, not the other way around,” the executive said.
Evergrande, having become China’s biggest developer, set its sights on becoming one of the world’s top 100 companies by 2020.
One executive at a Chinese rating agency said Evergrande asked him to award the company a sovereign credit rating, which would signal Evergrande was as safe as the Chinese government.
Some 20 million housing units across China have been left unfinished, including many in this stalled China Evergrande project outside Shijiazhuang.Photo: tingshu wang/Reuters
Three large Chinese domestic companies awarded it triple-A ratings, the highest possible. S&P Global gave Evergrande only a B-plus rating, junk-bond territory.
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Chinese state media highlighted the discrepancy, with People’s Daily writing that it was partly due to “a lack of understanding of [Chinese] companies.” People’s Daily blamed Western firms for “exaggerating the potential risks of the Chinese economy and companies,” and said international firms could be helping short sellers.
The total value of Chinese homes and developers’ inventory hit $52 trillion, according to Goldman Sachs, twice the size of the U.S. residential market and bigger than the entire U.S. bond market. Chinese people had nearly 78% of their wealth tied up in residential property, compared with 35% in the U.S., according to a report by China Guangfa Bank and Southwestern University of Finance and Economics.
Skeptics like Quillen, the New York hedge-fund manager, and Tulloch and Stevenson, the Hong Kong accountants, were flummoxed.
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Quillen had lost millions of dollars on the short positions he accumulated after his visit to the Tianjin development. Shorting China property stocks, he said, was like having a conversation with the devil in which the devil promised that a $10 stock would go to zero within two years. “But what the devil didn’t tell you,” he said, “is that within those two years, the stock goes to 100 first, then goes to zero.”
By late 2020, it was becoming harder to ignore the warning signs.
Prices in Tianjin were comparable with the most expensive parts of London. Millions of units across China sat empty.
Quillen figured the writing was truly on the wall now. President Xi Jinping kept declaring that “homes are for living in, not for speculation,” and reports surfaced that regulators were planning to tighten credit. Quillen made new short bets.
Opinion | Columbia’s Surrender to Hatred on Campus
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On the main quad of Columbia University in New York, April 20.Photo: Andrea Renault/Zuma Press
As a Jewish Columbia University student walking past chants of “Yahoodi [Jew], f— you,” and being threatened that “every day will be Oct. 7,” I appreciate President Minouche Shafik’s courage in bringing the NYPD to campus last Thursday. She finally took a tangible step supporting her congressional testimony to “forcefully and relentlessly reject” antisemitism. The terrorist-glorifying protesters, far from desiring peace, are the left-wing counterparts to the Charlottesville mob that chanted “Jews will not replace us.”
After the initial NYPD action, however, the complete destruction of Columbia’s learning environment has again persisted for days (“Columbia Fails to Protect Its Jewish Community” by Michael Oren, op-ed, April 20). More precisely, Columbia has allowed it to persist. No wonder anti-Israel organizers declare victory.
On Thursday, as part of a group of counterprotesters peacefully singing “The Star-Spangled Banner,” I was told by an NYPD officer that my safety was at risk and was advised to leave campus immediately. The conditions on campus are dangerous for students who hold other points of view, especially Jews.
The lack of substantial disciplinary consequences over the past six months for breaking Columbia policy has emboldened these campus antisemites to escalate. I implore President Shafik to follow through with campus removals of faculty, students and outside instigators, followed by suspensions, expulsions and terminations, to restore Columbia University’s safe campus and reputation.
Michael Lippman
New York
As I watched some protesters at Columbia chant, “We are all Hamas,” I wished they knew Arabic, so they would fully understand Hamas declarations. I was born in Baghdad and finished college there before immigrating to the U.S., so I am fluent in Arabic. Hamas has announced that the reason for the Oct. 7 attack is that Jews praying around the Al Aqsa Mosque (on the Temple Mount, Judaism’s holiest site) dirty the site. They declare that Jews come from monkeys and pigs and that God will conspire with Hamas-like extremist Muslims to kill all Jews.
The analogy would be someone claiming that blacks shouldn’t pray at the Vatican because they will dirty it. How would those students react to such racist remarks?
Palestinians deserve the dignity of self-determination and peace like the rest of us. But Hamas is probably among the worst things that ever happened to them.
N. Peter Antone
Farmington Hills, Mich.
As a high-school junior, I am considering where to apply for college. I had found myself drawn to Columbia University, where my father went, but recent events give me pause.
The director of the Jewish Learning Initiative on Campus at Columbia has recommended that Jews return home until campus conditions improve. I can’t imagine that I would attend a university that would force me to compromise my identity to obtain an education. I hope that the intimidation taking place at Columbia won’t be tolerated any longer, and that Columbia will again become a safe place for Jewish students.
As Columbia doesn’t appear committed to protecting people of all faiths at present, I will shy away from applying there. There are other schools with greater tolerance of diversity and respect for all.
Zachary Kochin
New York
The recent protest at Columbia was organized by students demanding the university divest from financial interests in corporations with ties to Israel. I suggest we take it one step further: Could those students publish their names, so business owners like me and other corporations with ties to Israel (Google, Intel, etc.) don’t waste time and make sure never to hire those people who don’t share our corporate values?
Appeared in the April 24, 2024, print edition as 'Columbia’s Surrender to Hatred on Campus'.
The Flaw of Liberalism
The vice of the two editorials that we are reproducing in succession bere - one from the WSJ and the other from the FT - is that they present liberalism as the natural order of society when in fact, as we have sought to establish repeatedly here and elsewhere, it is merely the ideology of capitalism as a specific historical social formation, as a mode of production and consumption that requires for its reproduction equally specific political institutions.
The ideological kernel of liberalism is that it posits the neat hermetic separation between the private sphere and the public sphere, between civil society and the State, between the Economic and the Political. The doctrine of liberalism, its fundamental tenet, is that the Political is a purely subjective conjeries of opinions, creeds, customs and beliefs collectively known and described as Public Opinion, whereas the Economic - which encompasses what is known as market capitalism - is a set of objective relations of production aimed at the maximisation of social welfare. In liberal doctrine, the role of the State is precisely to ensure the technical-neutral separation of these two spheres, the Political and the Economic - whence is derived the classification of "economic science" as Political Economy from Adam Smith to Milton Friedman.
The crucial flaw of liberal political theory is that unfortunately, contra Lenin's dictum, it is not that "politics is a concentrate of economics" but much rather the contrary, that is to say, that "economics is always and everywhere a concentrate of politics". Because liberalism pretends or assumes that the Political can be left to the subjective sphere of Public Opinion so long as the Economic is managed scientifically, with the State as the ultimate guarantor of this neat hermetic separation against all interference from civil society, it follows ineluctably that the State in its technical-neutral role of arbiter of society, as the guarantor of social peace and of civil liberties, allows the free expression and exercise of private beliefs and customs to the single individuals.
And this is where liberalism must collapse under the weight of its own theoretical political inconsistencies. It is a fact, indeed, that a society (the whole) is much greater than the sum of its parts (its individuals) and that the private interests or egoisms of individuals must sooner or later inevitably bring about the collapse of the salus publica (social peace), of State institutions, and ultimately of the Economic as well!
So, whilst we sympathise with the noble ideals of liberal theory, we must also warn forcefully against its flawed theoretical and indeed its false ideological tenets.
Opinion | We have a radical democracy. Will Trump voters destroy it?
(Sam Green for The Washington Post)
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For some time, it was possible to believe that many voters could not see the threat Donald Trump poses to America’s liberal democracy, and many still profess not to see it. But now, a little more than six months from Election Day, it’s hard to believe they don’t. The warning signs are clear enough. Trump himself offers a new reason for concern almost every day. People may choose to ignore the warnings or persuade themselves not to worry, but they can see what we all see, and that should be enough.
How to explain their willingness to support Trump despite the risk he poses to our system of government? The answer is not rapidly changing technology, widening inequality, unsuccessful foreign policies or unrest on university campuses but something much deeper and more fundamental. It is what the Founders worried about and Abraham Lincoln warned about: a decline in what they called public virtue. They feared it would be hard to sustain popular support for the revolutionary liberal principles of the Declaration of Independence, and they worried that the virtuous love of liberty and equality would in time give way to narrow, selfish interest. Although James Madison and his colleagues hoped to establishment a government on the solid foundation of self-interest, even Madison acknowledged that no government by the people could be sustained if the people themselves did not have sufficient dedication to the liberal ideals of the Declaration. The people had to love liberty, not just for themselves but as an abstract ideal for all humans.
Americans are going down this route today because too many no longer care enough whether the system the Founders created survives and are ceding the ground to those, led by Trump, who actively seek to overthrow what so many of them call “the regime.” This “regime” they are referring to is the unique political system established by the Founders based on the principles of universal equality and natural rights. That, plain and simple, is what this election is about. “A republic if you can keep it,” Benjamin Franklin allegedly said of the government created by the Constitutional Convention in 1787. This is the year we may choose not to keep it.
A healthy republic would not be debating whether Trump and his followers seek the overthrow of the Founders’ system of liberal democracy. What more do people need to see than his well-documented attempt to prevent the peaceful transfer of power with the storming of the U.S. Capitol, the elaborate scheme to create false electoral slates in key states, the clear evidence that he bullied officials in some states to “find” more votes, and to persuade Vice President Mike Pence not to certify the legitimate results? What more do they need to know than that Trump continues to insist he won that election and celebrates as heroes and “patriots” the people who invaded the U.S. Capitol and smashed policemen’s faces with the stated aim of forcing Congress to negate the election results? As one 56-year-old Michigan woman present at the Capitol on Jan. 6, 2021 explained: “We weren’t there to steal things. We weren’t there to do damage. We were just there to overthrow the government.”
Trump not only acknowledges his goals, past and present; he promises to do it again if he loses this year. For the third straight election, he is claiming that if he loses, then the vote will have been fraudulent. He has warned of uprisings, of “bedlam” and a “bloodbath” and he has made clear that he will again be the promoter of this violence, just as he was on Jan. 6, 2021. Trump explicitly warned in 2020 that he would not accept the election results if he lost, and he didn’t. This year he is saying it again. Were there no other charges against him, no other reason to be concerned about his return to the presidency, this alone would be sufficient to oppose him. He does not respect and has never pledged to abide by the democratic processes established by the Constitution. On the contrary, he has explicitly promised to violate the Constitution when he deems it necessary. That by itself makes him a unique candidate in American history and should be disqualifying.
This kind of open challenge to our democracy was never meant to be addressed by the courts. As the Founders well understood, you don’t serve a subpoena to a would-be tyrant and tell him to lawyer up. Nor was it meant to be addressed by the normal processes of democratic elections. They knew, and feared, that a demagogue could capture the allegiance of enough voters to overthrow the system. That was why they gave Congress, and particularly the Senate, supposedly more immune from popular pressures, the power to impeach and remove presidents and to deny them the opportunity to run again — and not simply because they violated some law but because they posed a clear and present danger to the republic. After Trump’s attempt to overthrow the government in 2020, Congress had a chance to use the method prescribed by the Founders in precisely the circumstances they envisioned. But Senate Republicans, out of a combination of ambition and cowardice, refused to play the vital role the Founders envisioned for them. The result is that the nightmare feared by the Founders is one election away from becoming reality.
The problem with Trump is not that he has some carefully thought-out plan for seizing power, much less an elaborate ideological justification for doing so. (Others do have such plans and such justifications, including many of those who will populate his administration — more on that in a moment.) With Trump, everything is about him and his immediate needs. He will run roughshod over the laws and Constitution simply to get what he wants for himself, his family and his business interests. Americans know that if he is elected, he would abuse the justice system to go after his opponents. They know this because he says so. “I am your retribution!” he declares, and by “your” he means “my.” Americans know he would use his power as president to try to solve his financial problems. He did it as president and is doing it now as a presidential candidate. They know he would not respect the results of fair elections if he loses, which is the very definition of a tyrant.
So, why will so many vote for him anyway? For a significant segment of the Republican electorate, the white-hot core of the Trump movement, it is because they want to see the system overthrown. This should not come as a shock, for it is not a new phenomenon. On the contrary, it is as old as the republic. Historians have written about the “liberal tradition” in America, but there has from the beginning also been an anti-liberal tradition: large numbers of Americans determined to preserve preliberal traditions, hierarchies and beliefs against the secular liberal principles of the Declaration of Independence and Bill of Rights. The Founders based the republic on a radical set of principles and assertions about government: that all human beings were created equal in their possession of certain “natural rights” that government was bound to respect and to safeguard. These rights did not derive from religious belief but were “self-evident.” They were not granted by the Christian God, by the crown or even by the Constitution. They were inherent in what it meant to be human.
This is the central tenet of liberalism. Before the American Revolution no government had ever been founded on liberal principles, and the vast majority of human beings had never believed in these natural rights — certainly not the Christian church in either its Protestant or Roman Catholic versions nor Islam nor Judaism nor Hinduism nor Buddhism. People might be equal in the eyes of their god, but no government or religious institution had ever been based on the principle of equal rights. Not even the English system was based on this principle but rather on monarchy, a ruling aristocracy and a contract between crown and subjects that was modified over the centuries but was not based on the principle of universal “natural” rights.
The Founders knew these ideas were radical, that they were inaugurating, in their own words, a novus ordo seclorum — a new order of the ages — that required a new way of thinking and acting. They knew, as well, that their own practices and those of 18th-century American society did not conform to their new revolutionary doctrines. They knew that slavery was contrary to the Declaration’s principles, though they permitted slavery to continue, hoping it would die a natural death. They knew that established churches were contrary to those principles because they impinged on that most important of rights, “freedom of conscience,” which was vital to the preservation of liberty, yet a number of states in the 18th and 19th centuries retained all kinds of religious tests for office. In short, they knew that a great many Americans did not in fact believe in the liberal principles of the revolution. As Benjamin Rush, a signer of the Declaration of Independence, put it, “We have changed our forms of government, but it remains yet to effect a revolution in our principles, opinions and manners so as to accommodate them to the forms of government we have adopted.” They did not insist that citizens believe in those principles. One could be an American citizen whether one believed in the Declaration or not.
And a great many did not. Leaders of the slaveholding South called the Declaration “a most pernicious falsehood.” South Carolina’s John C. Calhoun called the very idea of equal rights a “false doctrine.” They believed in democracy, but only if it was an exclusively White democracy. When democracy turned against them in 1860, they rebelled and sought an exit from the system. That rebellion never ended. It has been weakened, suppressed — sometimes by force — and driven underground, but it has never gone away. Although the South was militarily defeated and deprived of its special advantages in the Constitution, its hostility to the Founders’ liberalism did not abate. As Southern writer W.J. Cash observed in 1941, if the war had “smashed the southern world,” it had nevertheless “left the essential southern mind and will … entirely unshaken” and Southerners themselves determined “to hold fast to their own, to maintain their divergences, to remain what they had been and were.” In 1956, almost a century after the Civil War, a fifth of Congress, almost all Democrats — signed the “Southern Manifesto” calling on states to refuse to obey the Supreme Court’s 1954 decision to end segregation in public schools. Nothing had changed. Are we so surprised that for many Americans, nothing has changed even today?
Nor has anti-liberalism only been about race. For more than a century after the revolution, many if not most White Anglo-Saxon Protestants insisted that America was a Protestant nation. They did not believe Catholics possessed equal rights or should be treated as equals. The influential “second” Ku Klux Klan of the 1920s was anti-Catholic and anti-Jewish as well as anti-Black, which was why, unlike the original Klan, it flourished outside the South. Many regard today’s Christian nationalism as a fringe movement, but it has been a powerful and often dominant force throughout America’s history.
For two centuries, many White Americans have felt under siege by the Founders’ liberalism. They have been defeated in war and suppressed by threats of force, but more than that, they have been continually oppressed by a system designed by the Founders to preserve and strengthen liberalism against competing beliefs and hierarchies. Since World War II, the courts and the political system have pursued the Founders’ liberal goals with greater and greater fidelity, ending official segregation, driving religion from public schools, recognizing and defending the rights of women and minorities hitherto deprived of their “natural rights” because of religious, racial, and ethnic discrimination. The hegemony of liberalism has expanded, just as Lincoln hoped it would, “constantly spreading and deepening its influence, and augmenting the happiness and value of life to all people of colors everywhere.” Anti-liberal political scientist Patrick Deneen calls it “liberal totalitarianism,” and, apart from the hyperbole, he is right that liberalism has been steadily deepening and expanding under presidents of both parties since the 1940s.
The fury on the anti-liberal right against what is today called “wokeness” is nothing new. Anti-liberal movements in America, whether in defense of the White race or Christianity, and more often both together, have always claimed to be suffering under the expanding hegemony of liberalism. They have always claimed that a liberal government and society were depriving them of their “freedom” to live a life according to Christian teachings and were favoring various minority groups, especially Black people, at their expense. In the 1970s, influential theologian R.J. Rushdoony complained that the Christian in America had “no right to his identity” but was forced to recognize “all others and their ‘rights.’” And he was correct if a Christian’s “rights” included the right not only to lead a Christian life oneself but to impose that life on the entire society or if a White person’s “freedom” included the freedom to preserve white primacy in society. In the 19th century, enslavers insisted they were deprived of their “freedom” to hold human beings as property; Southerners in the post-Reconstruction era insisted on their “freedom” to oppress Black citizens in their states.
Today, anti-liberals in American society are indeed deprived of their “freedom” to impose their religious and racial views on society, on public schools, on the public square and on the laws of the nation. What Christian nationalists call “liberal totalitarianism,” the Founders called “freedom of conscience.”
Six decades ago, people like Rushdoony were responding not to “woke” corporations or Black Lives Matter but to civil rights legislation. Today, anti-liberal conservatives complain about school curriculums that acknowledge the racism that has shaped America’s history, but even five decades ago, before the invention of “critical race theory,” anti-liberal White people such as Rushdoony insisted that the “white man” was being “systematically indoctrinated into believing he is guilty of enslaving and abusing the Negro.” Nor is it new that many White people feel that the demands of minority groups for both rights and respect have “gone too far” and it is they, the White people of America, who are suffering the worst discrimination. In the 1960s, surveys taken by the New York Times showed that majorities of White people believed even then that the civil rights movement had “gone too far,” that Blacks were receiving “everything on a silver platter” and the government was practicing “reverse discrimination” against White people. Liberalism is always going too far for many Americans — and certainly for anti-liberals. Anti-liberals these days complain about wokeness, therefore, but it is the liberal system of government bequeathed by the Founders, and the accompanying egalitarian spirit, that they are really objecting to, just as anti-liberals have since the founding of the nation. Many of Trump’s core supporters insist they are patriots, but whether they realize it or not, their allegiance is not to the Founders’ America but to an ethnoreligious definition of the nation that the Founders explicitly rejected.
Some do realize it. The smartest and most honest of them know that if people truly want a “Christian America,” it can only come through “regime change,” by which they mean the “regime” created by the Founders. The Founders’ legacy is a “dead end,” writes Glenn Ellmers, a scholar at the Claremont Institute. The Constitution is a “Potemkin village.” According to Deneen and Harvard Law School’s Adrian Vermeule, the system established by the Founders to protect individual rights needs to be replaced with an alternative form of government. What they have in mind is a Christian commonwealth: a “culture that preserves and encourages order and continuity, and support for religious belief and institutions,” with legislation to “promote public morality, and forbid its intentional corruption,” a “forthright acknowledgment and renewal of the Christian roots of our civilization,” “public opportunities for prayers,” and a “revitalization of our public spaces to reflect a deeper belief that we are called to erect imitations of the beauty that awaits us in another Kingdom.”
These anti-liberal conservatives know that bringing such a commonwealth into being means jettisoning the Founders’ obsession with individual rights. The influential advocate of “conservative nationalism,” Yoram Hazony, wants Americans to abandon the Declaration in favor of a nationhood built on Protestantism and the Bible. America is a “revolutionary nation,” Sen. Josh Hawley (R-Mo.) insists, not because of the principles of the Declaration and not even because of the American Revolution itself, but “because we are the heirs of the revolution of the Bible” that began with “the founding of the nation of Israel.” There could hardly be a statement more at odds with the American Founders’ liberal, ecumenical vision.
Expressing a belief in God is no threat to the Founders’ system, but reshaping society in accord with Christian teachings is. To build the nation Hawley and Hazony imagine would require jettisoning not only the Declaration but also the Constitution, which was designed to protect the Declaration’s principles. The Christian commonwealth would not and could not be a democracy because the majority of people can’t be trusted to choose correctly. According to the Claremont Institute’s Ellmers, “most people living in the United States today — certainly more than half — are not Americans in any meaningful sense of the term.” They are a “zombie” or “human rodent” who lives “a shadow-life of timid conformity.” Only “the 75 million people who voted in the last election” for Trump are true Americans. Instead of trying to compete with Democrats in elections that don’t reflect the will of the people, Ellmers writes, “Why not just cut to the chase and skip the empty, meaningless process?” The “only road forward” is “overturning the existing post-American order.”
For these intellectuals, Trump is an imperfect if essential vehicle for the counterrevolution. A “deeply flawed narcissist” suffering from a “bombastic vanity,” as Deneen and Ellmers note, he has “lacked the discipline to target his creative/destructive tendencies effectively.” But this can be remedied. If Trump failed to accomplish the desired overthrow in his first term, Deneen argues, it was because he lacked “a capable leadership class.” Things will be different in his next term. What is needed, according to Deneen, is a “self-conscious aristoi,” a class of thinkers who understand “both the disease afflicting the nation, and the revolutionary medicine required for the cure,” who know how to turn populist “resentments into sustained policy.” Members of Deneen’s would-be new elite will, like Vladimir Lenin, place themselves at the vanguard of a populist revolution, acting “on behalf of the broad working class” while raising the consciousness of the “untutored” masses. Indeed, according to Harvard’s Vermeule, it will be necessary to impose the common good even against the people’s “own perceptions of what is best for them” — a most Leninist concept indeed.
The Christian commonwealth, then, would require a powerful executive freed from the Constitution’s liberal and democratic constraints. The new state, Vermeule wrote, with its “robust executive,” would “sear the liberal faith with hot irons,” wielding the “authority to curb the social and economic pretensions of the urban-gentry liberals.” The whiff of violence and oppression in such statements is intentional. The anti-liberal intellectuals understand that changing the liberal system will require far more than an election and a few legislative reforms.
Deneen and Vermeule are often dismissed as mere intellectual provocateurs, but their writings stand out because they have the courage to acknowledge that what they seek is incompatible with the Founders’ liberal system. While others conceal their views under a phony fidelity to American liberal principles or claim that what they want accords with the Founders’ true intent, Deneen, Vermeule and other anti-liberals acknowledge that the country they want, a country subservient to the Christian God, a country whose laws are based on the Bible, cannot be created absent the overthrow of the Founders’ liberal and defiantly secular system. Even a justice of the U.S. Supreme Court, Neil M. Gorsuch, speaks of the “so-called separation of church and state.” Anti-liberalism at the Supreme Court is nothing new, either.
And the anti-liberals know as well that this year may be their last chance to effect their counterrevolution. The percentage of the population made up of White people (let alone White Protestants) is steadily shrinking. Just as the anti-liberal conservatives of the pre-World War II years closed the immigration gates too late and were overwhelmed by a tide of non-Nordic peoples from southern and Eastern Europe, so the immigration wave of largely non-White people since 1965 has brought the nation to the cusp of a non-White majority. The anti-liberals thus face the task of engineering the revolution with only a minority of the electorate committed to “regime change.”
Trump’s takeover of the Republican Party makes this possible. Trump is not a unique figure in American history. In each generation, anti-liberal forces have turned to the same breed of demagogue, the flouter of norms, the boorish trampler of liberal nostrums. William Buckley noted that the very “uncouthness” of George Wallace seemed to “account for his general popularity.” James Burnham marveled at how Joseph McCarthy’s “inept acts and ignorant words” had a “charismatic” quality that well expressed the fears and angers of his devoted followers.
What their critics saw as boorishness and malevolence, however, their followers saw as strength and defiance against a liberal system stacked against them. They were rebellious opponents of the system, “wreckers,” unabashedly anti-liberal in both thought and manner, and that is precisely what made them popular among a broad swath of White Americans who felt themselves losing ground in the culture and society — to Black people, Catholics, Jews, and immigrants from non-Nordic countries. Today, exactly a century after the most overtly racist immigration restriction in American history, Trump once again calls for more immigrants from “nice” European countries, such as Denmark, Switzerland, and Norway.
Trump did not just stumble into leadership of this movement of White rebellion. He summoned it. He made his debut as presidential aspirant on an unabashed white supremacist platform, championing the birther conspiracy that America’s first Black president was not in fact an American. Riding that issue alone, he catapulted to the front of the Republican pack, according to polls in 2011, before bowing out to continue his hit show, “The Apprentice.” Whether his debut as a white supremacist was opportunism or sprang from conviction hardly matters — it certainly has not mattered to his followers. The fact is, white supremacy has been his calling card, and millions have responded to it to the point where white nationalists have become the core of his movement. Many Christian nationalists already see him as a suffering Christ, and in this bizarre sense it is true that the prosecutions have “helped” him: The more adversity he faces, the more court battles he must wage, the more allegations that are slung at him, the more devoted they are to him.
No other group can be counted on for such absolute loyalty. While some Republicans wobble when asked if they would support Trump if convicted of a crime, White Christian Evangelicals overwhelmingly say they will support him no matter what. Trump needs that unshakable loyalty because he is fighting for his life. The thought that he might end up in jail has given him every reason to hew as closely as possible to the people who will stick with him even if he is convicted. These are also the people he will need to back him unconditionally in challenging the results of the election should he lose. If he wins, he will need them in what are sure to be titanic fights with Democrats and the legal system and to keep the Republican Party in line.
This is one reason Trump has so far shown no inclination to reach out beyond his base, to Nikki Haley voters, to more moderate suburban Republicans, to those who are made uncomfortable by his statements and actions. He may show flexibility on the important issue of abortion to secure his own election, but since clinching the nomination, he has only hardened his Christian nationalist message. His “poisoning the blood” campaign, his “dictator-for-a-day” comments, his release of the Trump Bible, his claim that, upon taking office, he will create “a new federal task force” to fight “anti-Christian bias to be led by a fully reformed Department of Justice,” are all aimed directly at his white Christian nationalist base without much concern for how millions of other Republican voters feel about it. Christians are “under siege,” he claims in hawking his Bible. “We must make America pray again.”
Besides, his hard tack toward white supremacy and Christian nationalism has cost him little among the broader Republican electorate.
Why not? Why is there so little resistance to Trump even as he commits ever more deeply to a Christian nationalist program for undoing the Founders’ liberal project?
For many, the answer is simply narrow self-interest, either a positive interest in supporting him or a negative interest in not opposing him or being seen to oppose him. This seems to be the answer for corporate America. Having first followed marketing data to appeal to the broadest cross-section of Americans by embracing communities only recently enjoying more of the full panoply of rights, businesses learned the hard way that Trump and his movement will not tolerate this and have mostly retreated to silence and neutrality. But they have also gone further, making clear as much as possible that they will not be a problem for him — either before he is elected or after.
This was the message JPMorgan Chase CEO Jamie Dimon sent, from Davos, Switzerland of all places, early this year when he declared that Trump was “kind of right about NATO, kind of right about immigration,” that he “grew the economy quite well.” There is no reason to doubt that he spoke for many of the richest Americans and for other corporate leaders. There was no outcry among them that anyone could hear. The truth is, they have no financial reason to oppose Trump. They know that Trump’s White working-class followers don’t have to be paid off economically because most care chiefly about the culture wars. Trump can still cut taxes and reduce federal regulations and other obstacles to corporate profit. The rich and powerful will always have some purchase in a Trump administration if only because he needs and respects money and will want to make deals for himself and his family, as he did in a first term. Whatever moral or political qualms business leaders may have about Trump, the bottom line dictates that they get along with him, and if that means turning a blind eye to his unconstitutional actions — Dimon’s favorable recounting of Trump’s first term notably ignored his attempt to overthrow the government — then so be it.
We already know that little or no opposition will come from the Republican Party ecosystem. Among elected officials, the few willing to stand up to Trump have either been driven out of the party or are retiring so fast that they cannot even bear to finish out their terms. Those who remain have accepted Trump’s iron rule and therefore now have an interest in his success.
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But what about the average Republican voter, the “normal” Republicans who happily voted for George W. Bush, John McCain, and Mitt Romney? Do they not see the difference between those Republicans and Trump — or do they not care? They, too, may feel their narrow interests are served by a Trump victory, and although they may not be Christian nationalists themselves, their views as White Americans make them sympathetic to the complaints of the anti-liberals. They, too, may feel they — or their children — are at a disadvantage in a system dedicated to diversity and wokeness. Their annoyance with a liberalism that has “gone too far” makes them susceptible to Trump’s appeal, and, more importantly, unconcerned about the threat he poses. Left to their own devices, they would not be interested in overthrowing the regime. But neither are they inclined to stand in the way of those who are.
Are these voters and GOP power players right to believe that they, like Dimon, will be just fine in a system no longer faithful to the Founders’ liberal ideals? Perhaps so. They will not be the first to suffer from a shift back toward a 1920s America. White Americans tolerated the systematic oppression of Black people for a century after the Civil War. They tolerated violence in the South, injustice in the courtrooms, a Supreme Court that refused to recognize the equal rights of Black people, women and various minorities. Will they rise up against a second Trump term infused by Christian and white nationalism, or will they acquiesce in the gradual dismantling of the liberal gains of the past eight decades?
The shame is that many White people today seem to have conveniently forgotten how much they and their forebears have depended on the Founders’ liberalism to gain their present status as fully equal members of American society and to enjoy the freedoms that they take for granted.
Most White Republicans, after all, do not have the “legacy European” lineage that Tucker Carlson praises. They do not have ancestors who stepped off the Mayflower or fought in the revolution. The ancestors of the great majority of “White” Americans today were not considered “White” when they first set foot on American shores. Irish Americans may no longer remember that the Thomas Nast cartoons of the late 19th century depicted the Irish as apelike creatures. Many Italian Americans may not recall that a riot made up of “New Orleans’ finest” lynched and murdered 11 Sicilian immigrants and were never charged.
Many Catholics seem to have forgotten that they were once the most despised group in America, such that one of the Founders, John Jay, wanted them excluded from citizenship altogether. Most White Americans were at one time members of despised immigrant groups. They were the victims of the very anti-liberalism they are now voting back into power. They climbed to equality using liberalism as their ladder, and now that they have reached their destination they would pull away the ladder and abandon liberalism. Having obtained their equality using the laws and institutions of liberalism, their passion for liberalism has faded.
The Founders understood, and feared, that the fervor for rights and liberalism that animated the revolution might not last. Writing in 1781, two years before the end of the war, Thomas Jefferson predicted that once the war ended, “we shall be going down hill.” The people would return to their quotidian lives, forgetting their passionate concern for rights, intent only on “making money.” They might never again come together “to effect a due respect for their rights,” and so their government would stop being solicitous of their rights. Over a half-century later, Lincoln, in his famous Lyceum address, lamented that the original spirit of the revolution had dissipated with time, leaving Americans with only the normal selfishness of human beings. The original “pillars of the temple of liberty” had “crumbled away.” A little over two decades later, the nation fell into civil war.
If the American system of government fails this year, it will not be because the institutions established by the Founders failed. It will not be because of new technologies or flaws in the Constitution. No system of government can protect against a determined tyrant. Only the people can. This year we will learn if they will.
