7. Elizabeth Warren, A Fighting Chance (Metropolitan, 2014), p. 124.
8. This period of the Obama administration was painstakingly reconstructed by Ryan Lizza in the New Yorker, January 30, 2012.
9. The education part of the stimulus included Obama’s “Race to the Top” program. For my description, I am relying upon Diane Ravitch’s Reign of Error: The Hoax of the Privatization Movement and the Danger to America’s Public Schools (Knopf, 2013), pp. 15–17.
10. On direct federal hiring, Jonathan Alter writes: Obama’s “advisors rejected WPA-style direct government hiring, an idea that had fallen out of fashion in the 1970s.… Government jobs would have attacked unemployment immediately.” This decision, Alter continues, would “haunt the administration in the months ahead.” Alter, The Promise, p. 86. See also my own reflections on the subject, “More Government, Please!,” Harper’s Magazine, December 2011.
11. Suskind, Confidence Men, p. 355.
12. Alter, The Promise, p. 318.
13. Barofsky, Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street (Free Press, 2012), pp. 156–157.
14. I wrote about this in the Wall Street Journal on April 22, 2009.
15. The economist is Greg Mankiw, former head of George W. Bush’s Council of Economic Advisors. See his essay, “Economists Actually Agree on This: The Wisdom of Free Trade,” New York Times, April 24, 2015. Obama’s “drawbridge” remark was reported in the Times on May 8, 2015.
16. CFPB mission statement: See http://www.consumerfinance.gov/the-bureau/creatingthebureau.
17. Osawatomie is symbolically important because it was the home of John Brown as well as the place where Theodore Roosevelt went to announce his conversion to progressivism in 1910. Obama adviser: Balz does not give the adviser’s name, but his words appear in Dan Balz, Collision 2012: Obama vs. Romney and the Future of Elections in America (Viking, 2013), p. 58.
18. Ibid., p. 324.
19. GDP and wage growth: I am using numbers from the Bureau of Labor Statistics accessed via the website of the St. Louis Fed; the series I used for wages is called “Nonfarm Business Sector: Real Compensation Per Hour.” Private-sector labor union density: I am using numbers from the Current Population Survey, which is conducted by the Bureau of Labor Statistics and the Census Department. (http://www.bls.gov/news.release/union2.nr0.htm) My source for labor share and the profit share are given in note 1 of the Introduction.
20. According to Syracuse University’s Transactional Records Access Clearinghouse, which parses Justice Department data. See their report, “Federal White Collar Crime Prosecutions at 20-Year Low,” http://trac.syr.edu/tracreports/crim/398.
21. Breuer’s remarks were addressed to the New York City Bar Association and dated September 13, 2012. They are available on the Justice Department’s website: http://www.justice.gov/opa/speech/assistant-attorney-general-lanny-breuer-speaks-new-york-city-bar-association.
22. See Jonathan Alter, The Center Holds: Obama and His Enemies (Simon & Schuster, 2013), p. 111.
23. Bruni, “The Man or the Moment,” New York Times, January 6, 2015. For a longer list of pundits making similar arguments, see my essay in Salon, “It’s Not Just Fox News,” January 11, 2015. http://www.salon.com/2015/01/11/its_not_just_fox_news_how_liberal_apologists_torpedoed_change_helped_make_the_democrats_safe_for_wall_street.
24. Maron, “WTF,” Episode 613, June 22, 2015. http://www.wtfpod.com/podcast/episodes/episode_613_-_president_barack_obama.
25. Peter Thiel, the venture capitalist who founded PayPal, published a famous essay called “Competition Is for Losers” (Wall Street Journal, September 12, 2014). “Actually, capitalism and competition are opposites,” he wrote. “Capitalism is premised on the accumulation of capital, but under perfect competition, all profits get competed away.” And: “Monopoly is … not a pathology or an exception. Monopoly is the condition of every successful business.”
26. These numbers can be found on the “Division Operations” section of the Antitrust Division’s website; I am using the numbers for “Sherman Act § 2 —Monopoly.” http://www.justice.gov/atr/division-operations.
27. Dorgan, a populist from North Dakota, had been an early supporter of Obama. Upon hearing whom he’d named to his economic team, Dorgan said, “I don’t understand how you could do this. You’ve picked the wrong people!” (Suskind, Confidence Men, p. 164).
28. This is one of the themes of Tim Geithner’s memoir of his period as Treasury secretary, Stress Test: Reflections on Financial Crises (Crown, 2014).
8: THE DEFECTS OF A SUPERIOR MIND
1. The Massachusetts official was Jon Kingsdale, who once ran that state’s insurance exchange. Both of these quotes were brought to my attention by Washington state insurance commissioner Brendan Williams, whose 2015 book, Compromised, is an able summary of the legislation from its beginning to its present-day problems with increasing premiums and high deductibles.
2. Gruber spoke at the Annual Health Economics Conference in 2013. The video sparked an enormous controversy and can be watched on the website of the Washington Post: https://www.washingtonpost.com/news/post-politics/wp/2014/11/11/obamacare-consultant-under-fire-for-stupidity-of-the-american-voter-comment/.
3. The main proponent of this viewpoint was Gabriel Kolko, author of The Triumph of Conservatism: A Reinterpretation of American History, 1900–1916 (1963).
4. This particular passage is drawn from an email written by Bryant Hall, a lobbyist with PhRMA, in July of 2009. The emails were reprinted in many places, most notably the Wall Street Journal for June 13, 2012.
5. This astonishing record was compiled by Patrick Egan. See “Ashton Carter and the Astoundingly Elite Educational Credentials of Obama’s Cabinet Appointees,” Washington Post, December 5, 2014.
6. See Louise Story, “A Rich Education for Summers (After Harvard),” New York Times, April 5, 2009, and Joe Wiesenthal, “At D.E. Shaw, Larry Summers Worked Just One Day A Week,” on the Business Insider website, dated April 6, 2009. The median household income in the U.S. was $51,939 in 2013, according to the Census Bureau’s report, “Income and Poverty in the United States: 2013.”
7. Barofsky, Bailout, p. 139.
8. Warren, A Fighting Chance, p. 149, italics in original.
9. Alter, The Promise, p. 317.
10. The deputy attorney general who made this remark, James Cole, did so in order to get the Justice Department off the hook for failing to prosecute any high-ranking financiers for the many obvious frauds of the preceding decade. See Del Quentin Wilber, “Top Justice Deputy Cole Ready to Leave Post with Holder,” Bloomberg, October 16, 2014.
11. Carney’s remarks were made on December 2, 2011 at a routine White House briefing; I report them as they were transcribed by Political Transcript Wire. See also my essay in Baffler 19 (2012), “Too Smart to Fail.”
12. “Remarks by the President on Health Care and the Senate Vote on F-22 Funding,” from the website of the White House, July 21, 2009. See https://www.whitehouse.gov/the-press-office/remarks-president-health-care-and-senate-vote-f-22-funding
13. Bernard Crick, In Defence of Politics (Penguin, 1964), p.100: “Politics is, to many social scientists, a kind of disease: society is a patient ridden with tensions and political events are the unreal, neurotic fixations by which it tries to rationalize these contradictions.”
14. Iowa Democrat: Bruce Braley leveled the “law school” insult at Chuck Grassley. McChrystal: See Friedman, “What’s Second Prize?,” New York Times, June 23, 2010. Snowden: David Brooks called Snowden “the ultimate unmediated man” (“The Solitary Leaker,” New York Times, June 11, 2013). Writing in Politico, Roger Simon called Snowden a “total slacker,” a man with “all the qualifications to become a grocery bagger” (“Slacker Who Came in from the Cold,” June 11, 2013).
15. Alter,
The Promise, p. 338. In truth, most professions resist outside accountability; that’s part of the definition of the category. What’s different is that they don’t resist through a union.
16. Suskind, Confidence Men, p. 197.
17. I describe the electoral backlash against Obama and company at length in my last book, Pity the Billionaire, so I hope you will excuse me if I don’t belabor it here.
9: THE BLUE STATE MODEL
1. Bruni, “A Democrat to Watch in 2015,” New York Times, December 30, 2014.
2. “Gina Raimondo for Governor: JOBS PLAN,” n.d. (2014), found online at http://www.ginaraimondo.com/sites/ginaraimondo/files/gina-raimondo-jobs-plan.pdf.
3. Emanuel’s bemoaning of middle-class decline can be found in the book he coauthored with Bruce Reed, The Plan: Big Ideas for America (Public Affairs, 2006), especially in the Prologue and Chapter 3. The quotations from Emanuel are taken, respectively, from his introduction to the City of Chicago’s Technology Plan and his essay for CNN Money, “How Chicago Saved Its Small Businesses,” December 16, 2014. http://money.cnn.com/2014/12/12/smallbusiness/chicago-rahm-emanuel-innovation.
4. Cuomo’s book is available online at http://andrewcuomo.com/wp-content/uploads/sites/44/2014/10/Moving-the-New-NY-Forward-by-Andrew-M-Cuomo.pdf. Unfortunately, the Startup NY program has cost the state government many millions but has “created fewer than 100 jobs,” according to Susanne Craig and Jesse McKinley: “Jobs Effort That Cuomo Vowed Would Fire Up Economy is Slow to Take Hold,” New York Times, May 15, 2015. There is also a New York State venture capital fund that is supposed to invest in “the commercialization efforts of start-up companies associated with New York’s universities.” See the governor’s office press release dated December 12, 2014, “Governor Cuomo Launches $50 Million Innovation Venture Capital Fund to Support and Attract New High-Growth Businesses.” https://www.governor.ny.gov/news/governor-cuomo-launches-50-million-innovation-venture-capital-fund-support-and-attract-new-high.
5. My quotes are taken from a manuscript of the speech that was kindly furnished me by Markell’s office.
6. Jack Markell, “Americans Need Jobs, Not Populism,” Atlantic, May 3, 2015.
7. These statistics are reported in the Boston Redevelopment Authority’s publication, “Retaining Recent College Graduates in Boston: Is There a Brain Drain?” (2014), available online at http://www.bostonredevelopmentauthority.org/getattachment/170db5fb-ad3b-4fbb-a143-82f7d7f4539e.
The boast about Nobel laureates is a common one in Boston promotional materials. See Jonathan P. Marcus et al., Our Boston (MBI Publishing Co., 2003), p. 14. See also “The Prominence of Boston Area Colleges and Universities,” an article in the Bureau of Labor Statistics’ Monthly Labor Review for June 2009. The authors of the article are Denis M. McSweeney and Walter J. Marshall.
8. Massachusetts’ achievements on these indices are reported in “Creative Intelligence,” a newsletter produced in part by the Richard Florida Creativity Group and dated February, 2003. Boston itself does fairly well on Florida’s “gay index,” his “melting pot index,” and his “bohemian index.” See The Rise of the Creative Class, Table 14.3, p. 256; Table 14.2, p. 254; and Table 14.4, p. 261.
9. See Lily Geismer, Don’t Blame Us: Suburban Liberals and the Transformation of the Democratic Party (Princeton, 2015).
10. Specifically, the report estimates, it would be “the eleventh-largest economy in the world.” See Edward B. Roberts and Charles Eesley, “Entrepreneurial Impact: The Role of MIT,” a Kauffman Foundation report dated February 2009. http://cdn.executive.mit.edu/17/a2/bdcaf61a49479de51861040707ac/mitimpactfullreport.pdf.
11. See Barry Bluestone and Alan Clayton-Matthews, “Life Sciences Innovation as a Catalyst for Economic Development: The Role of the Massachusetts Life Sciences Center,” a May 2013 study published by the Kitty and Michael Dukakis Center at Northeastern University and downloadable here: https://repository.library.northeastern.edu/files/neu:330208.
12. Thanks to Harris Gruman for putting this unforgettable image in my head.
13. The Center on Budget and Policy Priorities’ study, “Pulling Apart: A State-by-State Analysis of Income Trends,” dated November 15, 2012, ranks Massachusetts number eight, seven, and two among the states, depending on the historical period in question. http://www.cbpp.org/research/poverty-and-inequality/pulling-apart-a-state-by-state-analysis-of-income-trends.
According to 2013 Gini coefficients calculated by the Census Bureau, Massachusetts ranks fourth after New York, Connecticut, and Louisiana (it is tied with Georgia and Florida). See “Household Income: 2013,” one of the Bureau’s American Community Survey Briefs, dated September 2014. https://www.census.gov/content/dam/Census/library/publications/2014/acs/acsbr13-02.pdf.
See also the Economic Policy Institute’s report, “The Increasingly Unequal States of America,” dated January 26, 2015. http://www.epi.org/publication/income-inequality-by-state-1917-to-2012.
14. See the U.S. Census Bureau’s State and County QuickFacts. The unemployment percentage is drawn from an ABC News story by Samantha Lavien, “Fall River Unemployment Rate Is the Worst in MA,” March 11, 2014.
15. See Jessica Geller, “Amazon Inks Deal on Fulfillment Center in Fall River,” Boston Globe, November 24, 2015.
16. “Fall River’s on the Bike Trail to Nowhere,” Fall River Herald-News, October 11, 2015; “Stand Up, Wal-Mart!,” creators.com, October 15, 2012; “Notes from a Liquor Store Before the Debate,” creators.com, October 8, 2012.
17. Dion, “A Sicker Fall River Eases Its Pain By Getting High,” Fall River Herald-News, October 4, 2015.
18. Mayor of Boston: These quotations are headlines from obituaries for Tom Menino from the Boston Globe and the WGBH radio station. Innovation Institute: See the introduction to their 2014 annual index, “Massachusetts Innovation Economy,” available online at http://www.masstech.org/sites/mtc/files/documents/InnovationInstitute/2014_index_web.pdf.
19. The fund is the XFund; it invests in ideas of former students from anywhere, but most of them so far have come from Harvard.
20. You can read it here for yourself: http://innovation.mit.edu/about. I learned about this from one of the only sarcastic stories about innovation that I have been able to find, Eric Levenson’s “Deval Patrick Joins MIT to Innovate Their Innovation Initiative,” a post on Boston.com dated January 13, 2015.
21. Obama even drew certain of his famous 2008 campaign themes from Patrick’s 2006 run for the Massachusetts governorship. On the connection between the two men, see Gwen Ifill’s book, The Breakthrough: Politics and Race in the Age of Obama (Doubleday, 2009).
22. Watch Harthorne’s TED talk here: https://www.youtube.com/watch?v=hisa30dJfP4.
23. For a concise summary of the life and times of Ameriquest, see the Financial Crisis Inquiry Report, pp. 12–14: http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf. For a lengthier version, see Michael W. Hudson, The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America—and Spawned a Global Crisis (Holt, 2010).
24. Ameriquest was one of the only subprime companies that journalists investigated thoroughly before the financial crisis hit; in its response to one of the landmark stories published in the Los Angeles Times, the company claimed, “Ameriquest pioneered innovative best practices in the mortgage industry” and insisted that they had “helped hundreds of thousands of homeowners purchase or refinance their homes, making it possible for them to achieve their financial goals and enhance their quality of life.” See Mike Hudson and E. Scott Reckard, “Workers Say Lender Ran ‘Boiler Rooms’: Critics say Ameriquest, Touted as an Industry Model, Fabricated Data, Forged Documents and Hid Fees. The Company Denies Wrongdoing,” Los Angeles Times, February 4, 2005.
25. “The Massachusetts economy”: Patrick said this at a groundbreaking for a pharmaceutical office complex, December 8, 2010, according to a story on Bu
sinessWire. http://www.businesswire.com/news/home/20100908007027/en/Cubist-Pharmaceuticals-Prepares-Continued-Growth. “Innovation is a centerpiece”: Patrick said this while opening an IBM software development lab in 2010, according to Hiawatha Bray, “IBM Unveils Two New Campuses,” Boston Globe, June 17, 2010.
26. On the latter, see the press release dated April 21, 2010: “Massachusetts Governor Signs Social Innovation Compact at Year Up Boston.” http://www.prnewswire.com/news-releases/massachusetts-governor-signs-social-innovation-compact-at-year-up-boston-91702664.html.
27. “It’s a pleasure to partner with the Churchill Club to host this evening’s town hall,” said the Hewlett Packard executive introducing the governor. Patrick replied, in his easy, self-assured way: “I’m a great, great admirer of this company of Hewlett Packard and of the many ways that you partner with us in Massachusetts.” See http://www.google.com/url?q=http://www.youtube.com/watch%3Fv%3DaOG44e3nZLE&sa=U&ei=Z-BhVenCFISHsAWdkYGoCg&ved=0CBUQtwIwAA&sig2=ze2ch111WRR12fLfinIt7A&usg=AFQjCNF2LQQ9N2BAx9cNu33iGoMmgnNNWQ.
28. On Patrick’s courting the CEO of a large company, see Brian Johnson, “Gov. Deval Patrick’s life sciences legacy,” MassDevice.com, January 12, 2015. “To provide assistance, mentoring,” etc., is the language of the law itself: House Bill Number 4377, dated July 30, 2014.
29. Matt Stout, “Gov Candidates Digging Deep in Final Days,” Boston Herald, November 2, 2014.
30. The Schmidt and Harthorne remarks are from Dennis Keohane, “MassChallenge Celebrates Innovation, Deval Patrick’s Influence in Tech Community,” Boston Globe, dated October 29, 2014.
31. Ryan Dezember, “Massachusetts Ex-Gov. Patrick to Run New Bain Unit,” Wall Street Journal, April 13, 2015.
10: THE INNOVATION CLASS
Listen, Liberal: Or, What Ever Happened to the Party of the People? Page 26