Emmott, arriving at this historic juncture, took note of the policy changes that had allowed Japan to harness this capital globally, and advised other states to follow suit: the abolition of exchange controls in 1980; the erosion of barriers between banking and brokerage; in 1984, a concerted opening that invited foreign banks into currency and government bond markets, with more reforms promised – of the sort the City undertook ‘after a long and gruelling battle with vested interests’ in 1986.13 Emmott found the doors of Japan Inc. wide open to him as a correspondent for the Economist, whose profile Norman Macrae had raised among the country’s ministerial and commercial elites. The famed Economist deputy editor was therefore an essential reference for Emmott, present in his attention to details of Japanese daily life, and how they had changed. On average, people were older, families smaller, farmers fewer, and a new group of pleasure-seeking youngsters had emerged, shinjinrui. Emmott pitched his analysis of Japan as a challenge to Macrae, however, in a book that would help him win the editorship, The Sun Also Sets: Why Japan Will Not be Number One, in 1989.
Emmott came out against the widely held view that Japan was about to overtake the US as both an economic and a political superpower – singling out Macrae for criticism. ‘Every risen economic power’, Macrae had argued in the Economist the year before, ‘seeks eventually to mould its era.’14 Macrae had welcomed the prospect, arguing that the Japanese might emerge as more ‘progressive top bankers’ than either the British under the first Duke of Wellington, ‘who opposed railways on the grounds that they would enable the working classes to move about’, or the Americans, ‘who thought that slavery was a peculiar social and economic institution that could endure’.15 In The Sun Also Sets, which Emmott drafted in London in 1988, he conceded ‘Japan is Asia’s natural leader’, but only America – with its unique mix of ‘free enterprise, open markets, individual initiative’ and inflow of driven young immigrants – could lead the world.16 And whereas Macrae had credited civil servants in Tokyo with almost heroic professionalism and creativity, Emmott scorned them as obsolete. Deprived of much of their power by market deregulation, the Ministry of Finance and ‘infamous’ Ministry of Trade and Technology were fighting ‘a losing battle’, he contended; ‘the trend is firmly set toward freedom and a more open system.’17
When the Tokyo stock market crashed just after the book appeared, leading to a ‘lost decade’ of economic growth and ending all talk of a Pax Nipponica, Emmott looked like an oracle. But that was somewhat misleading, for it was precisely the unshackling of finance that had led to the crisis which Emmott had celebrated as the harbinger of renewal and modernity. ‘The idea of Japan as a superpower is based primarily on the country’s huge exports of capital and on its sudden emergence as the world’s largest net creditor.’18 And when a rising yen threatened to staunch this flow after 1985, the stock market bubble that pumped it back up bedazzled him. From 1986 to 1989, residential and commercial property prices doubled. Foreign exchange and government bond futures markets – back in 1980 ‘long on exotic names and bewildering regulations and short on business volume, innovation and freely flowing cash’ – leapt ahead of those in Western countries. With nine of the ten largest commercial banks, the four top Eurobond underwriters and the four largest investment banks, ‘these command the same mixture of fear, admiration and hate as do Japanese car or video manufacturers’. By 1988, Tokyo’s market capitalization was 50 per cent greater than New York’s, and even ordinary Japanese were getting in on the act – buying ‘Roni Wrinkle’ condoms, as ‘gleaming white’ BMWs clogged the streets, housewives bought gold and shorted futures, and ‘money fever’ took hold.19
In 1989, there were clear signs pointing to a Japanese bubble. Average price to earnings ratios on the Nikkei index had risen past 60. Land prices were so high that the grounds of the imperial palace in central Tokyo were worth more than the state of California. But even if a bubble did exist, it was ‘convenient’ and ‘there might never be a crash’ and if there were, ‘Japan could, and almost certainly would, recover.’20 The stock market sank like a stone a few months later, losing half its value in a year, and Japan began two decades of deflation with low or negative growth. But it would have been easy to miss that in Emmott’s next books, Japan’s Global Reach in 1992 and Japanophobia in 1993. ‘The sunset of 1990–1993, first in finance but then in the real economy, has made life appear dark.’ But long-term prospects ‘are bright and warm’ and ‘the macroeconomic picture in Japan looks very healthy’.21 Since then, no crisis – however big – has dented his belief in the rationality of financial-market exuberance.
Emmott was just as blasé about a wave of savings and loan failures in the US in a special survey on banking for the Economist in 1988 – urging financiers to seize this chance to demand repeal of Glass-Steagall, which barred commercial banks from underwriting or trading securities. At the same time, he dismissed the Economist’s own Wall Street correspondent Christopher Wood, who predicted that soaring asset prices in New York, London and Tokyo were driven by unsustainable levels of private debt, and would soon lead to a major depression. Emmott called him ‘emotional’, a ‘doomster’ and argued that the ‘industrialized countries are chugging merrily along, apparently oblivious to the crash’ that had briefly spooked them in October 1987.22 In 1989 Michael Milken, the ‘king of junk bonds’ at Drexel Burnham Lambert, bankrupted the fifth largest US investment bank and went to jail. ‘There is nothing wrong, in principle, with junk bonds’, Emmott wrote. He bridled at caricatures of Wall Street as a ‘den of greed and chance’, which was a ‘harsh judgment to make of the freest-flowing and most sophisticated financial markets the world has ever known’.23 Made business affairs editor in 1989, Emmott surveyed the landscape from atop St James with optimism. A Labour voter when he joined the paper in 1980, he was now a devotee of Thatcher. Even if it required another decade of her monetarist disciplines – ‘it may even take a generation before British business has recovered fully from its conditions in the 1970s’ – the country could look forward to ‘again becoming the workshop of Europe’, as foreign direct investment flowed to Midlands factories, gleaming shopping malls opened in Newcastle, and financial firms rushed to open in London.24
The Tweed Jungle: ‘Free Minds, Free Markets, Free-for-All’
Back in Britain, Emmott also had time to pursue a hobby – planning to be editor when Pennant-Rea stepped down, a contest that turned out to be as cutthroat as the hostile takeovers he covered as business affairs editor, with ten colleagues (out of about fifty) duelling for the job. In Vanity Fair, Jacob Weisberg described a ‘bitter power struggle’ to replace Pennant-Rea turning ‘the chummy corridors of the world’s most prestigious financial weekly’ and ‘a place staffers have fondly compared to an Oxford common room’ into ‘a kind of Euro trading pit – Barbarians at the Gate in Tweed’.
In a gruelling seven-week competition that reached a ‘fever pitch of anxiety and neurosis’, what counted was age, class – and floor. The thirteenth floor, housing domestic and foreign writers, produced the most candidates, including Nico Colchester, deputy editor, formerly at the Financial Times; Matt Ridley, returning from Blagdon, his family’s 9,000-acre estate in Northumberland; and Mike Elliott, the gregarious, foul-mouthed Washington bureau chief. Floor twelve, where business writers worked, sent forth economics editor Clive Crook, and Emmott. ‘The 13th is more British. The 12th is more American’, Weisberg reported. ‘The 12s view the 13s as woolly-headed liberal academics who don’t understand economics. 13s stereotype the 12s as bloodless techno-heads and libertarian ideologues.’ Taking bets on the outcome, the associate editor David Lipsey gave odds to the two floors’ eventual finalists, Colchester and Emmott. Both men had to make it past a committee composed of the management guru Sir John Harvey-Jones, the chocolatier Sir Adrian Cadbury and Pearson’s director, Frank Barlow, before their fate was decided by the whole board ‘over a breakfast of kippers at the Savoy’ – a process some editors likened to a ‘set
up’, and which left Colchester ‘unable to talk about it without choking up’.25
Emmott had a less bloodstained account: his advantage was neither youth nor his books so much as his secondment to be editorial director of the Economist Intelligence Unit in 1992, where he got to know board members and executives (displaying ‘an Attila the Hun style of management’, according to Weisberg) – above all Marjorie Scardino, there after running the North American business, and who rose during the same period to lead the entire Economist Group.
Emmott was something of an ideas man among the Economist’s later editors – not only in his ‘Sphinxlike’ bearing, but in range: articles on Japan carried haikus, stock market surveys digressed into Dickens, laments about Italian backwardness were introduced by Dante. Like Bagehot, he wrote widely under his own name, his voice merging with the paper, even as his name transcended it. Three books and a documentary film have arrived since he stepped down, and his musings can be read hourly – on Twitter, where his sobriquet is ‘#bill_emmott: scarlet pimpernel, agent provocateur’, and in print in most major time zones, including the US, Britain, Italy, Japan and India. He is paid to share his thoughts at Alpine business retreats, and on corporate and nonprofit boards.
Emmott’s task as editor, he later told the Financial Times, was ‘to get readers and make them addicted to the paper’.26 He was successful. Circulation exploded from 500,000 to over a million in thirteen years under his reign, with the greatest rise coming in North America. He modernized the paper, hiring more foreign correspondents and implementing a rigorous fact-checking operation. But Emmott also displayed an interest in the traditions of the paper, and the history of liberalism continuous with it. On a trip to open a bureau in Kolkata, India, in 1999, he stopped at a Scottish cemetery for a ‘little ancestor worship’. The first editor, James Wilson, was buried there, having died ten months into his job as India’s finance minister in 1860. Tracking down his overgrown grave, Emmott happily observed the ledger inscription, ‘Wilson, the right Hon’ble James, who was expressly sent from England to restore order to the finances of India.’27 In 2006, his farewell was similarly mindful of his forebears. ‘What is striking is how strongly this period has fitted Wilson’s original view, how it made his principles feel more relevant than ever.’ For ‘the economic and political impact of the liberalisation of domestic and international markets for goods, services, technology and capital – globalisation … would bring delight to Wilson’s eyes.’28
The British Model: ‘Thatcher and Sons’
When Emmott became editor in 1993 in the aftermath of Thatcher’s revolution, Britishness itself had a new valence for him and other editors. The very harshness of the medicine Thatcher had meted out – double-digit interest rates, sweeping privatizations of the telecom, gas, airline and other state-owned industries, slashing of top income tax rates in half, undoing of labour regulations, enforcement of pit and plant closures amidst high levels of unemployment – now allowed the Economist to position itself at the cutting edge of change. By the time the New Economy boom arrived, the country appeared to have turned a corner; at home and abroad, the paper was once again in the enviable position of giving lessons, not taking them.
Full of confidence, Emmott and his deputies took one contrarian stance after another – eager to restore the Economist’s reputation for radicalism. In 1994, the paper came out against the monarchy as an ‘idea whose time has passed’, suddenly wishing to replace it, pending a referendum, with a republic. Bagehot, ‘the finest and most influential writer ever to have been editor’, had, it recognized, defended this ‘dignified’ part of the constitution back in 1867, saying ‘we must not let daylight in upon magic’. But much had changed, including the notion that loutish uneducated masses could not understand or even vote for a representative assembly. Bagehot, the leader added, had also said, ‘Among a cultivated population, a population capable of abstract ideas, it would not be necessary.’29
Economist board members, all members of the Order of the British Empire, grumbled. When asked, Knight called it shocking, ‘not at all in keeping with the traditions of the Economist’. Indeed, the paper had strong ties to the aristocracy and the royal family, not just by way of the royal-watcher Alastair Burnet, but also in Norman St John-Stevas. Sedulous courtier of the House of Windsor, swathed in downy shades of Tyrian purple (‘crushed cardinal’, he called it), who owned a framed pair of Queen Victoria’s stockings, St John-Stevas had been parliamentary correspondent from 1954 to 1967. After being elected a Tory MP for Chelmsford, St John-Stevas continued to write and pass information to the Economist.30 That helped at the start of the Thatcher era, when he advised the prime minister in his role as leader of the House of Commons until she sacked him as a tongue-wagging ‘wet’ in 1981. He called Thatcher ‘Blessed Margaret … she who must be obeyed … the leaderene … Attila the Hen’ and TINA (for ‘there is no alternative’), sometimes in her presence, and she later wrote: ‘I was sorry to lose Norman but he made his own departure inevitable. He turned indiscretion into a political principle.’ Royals sometimes returned the attention. Prince Charles disclosed his political frustrations to the Economist in 1986 in an interview with Simon Jenkins, who called it ‘the manifesto of a social democratic prince’.31
Emmott, for his part, had long held the monarchy in disdain, though not out of deeply republican convictions. Commenting on a picture of Charles and Diana rambling through a Balmoral wheat field, he once lamented ‘the Royal family sets a tone that remains anti-business’. The Queen was past hope, showing more interest in her corgis than any form of commerce. He encouraged her eldest son to act like a true role model, not a country squire, and ‘to promote interest in business of every sort, as much as places to work as a way to get rich’.32 In 1994, he observed ‘the crown even has a certain, though not inevitable, bias against capitalism’.33
This contrarian posture was effective optically even when it was wide of the mark. In 1997, the paper attacked New Labour on the eve of its landslide, since on economic policy its ‘basic instincts are illiberal’ – a misread of the party Tony Blair and Gordon Brown had pushed to the right in opposition, by dropping demands for public ownership and accepting the fiscal and monetary strictures Thatcher had laid down. For David Lipsey, now political editor and Bagehot columnist, this was the ‘one sour note of my tenure’ at the Economist, since Emmott ‘came to his decision in private, without discussing it face to face with me’. Emmott’s fear that ‘there was a hidden Old Labour wishing to get out from under the New Labour exterior’ proved ‘as wrong as could be’ – something Lipsey was in a position to know. Long on the Labour right – he had started out as an advisor to Anthony Crosland and James Callaghan, before turning to journalism in 1979 – the Bagehot columnist was so ‘carried away with excitement as Tony Blair threw away the baggage of Old Labour, as I had been urging’ that he ‘surreptitiously rejoined’ the party.34 As the Blair-Brown duumvirate pushed neoliberalism further than Thatcher had dared, in particular in the City – devising new ‘light-touch’ regulations, slashing capital gains from 40 to 10 per cent on long-term assets, granting the Bank of England full independence to set rates – Emmott backtracked. ‘Tiresome as third-way nonsense is to curmudgeons such as The Economist, its success as a marketing device is not in doubt.’ Downing Street spin-doctors, ‘reconciling Britain to the Thatcher revolution, consolidating it, extending it’ meant ‘voters are happy, leading-thinkers are happy, everyone except the bewildered souls who believed in Old Labour are happy.’35 Never a favourite, always shown grinning dementedly for no reason, in 2001 and 2005 Blair got the Economist’s blessing: superimposing his smiling face onto Thatcher’s head – lipstick, earrings, coiffure – it advised readers, ‘Vote conservative’.36
Pushing Buttons Abroad
Each tartly-worded leader and irreverent cover raised the circulation of the Economist, as well as its profile as intellectual maverick – above all in the US, where social issues became an index of it
s liberalism as such. In 1996 the paper came out for gay marriage, inflaming the religious right, though its reasons had little to do with romantic love: ‘single people were more likely to fall into the arms of the welfare state’, and marriage was a ‘great social stabiliser of men’.37 It repeatedly called for stricter gun laws, especially after the Columbine shooting in 1999, earning it the ire of America’s second amendment enthusiasts.38 Even ‘hard’ drugs ought to be legalized, it explained in 2001, with reference to the US, where one in four prisoners was locked up for minor drug offences. Had not John Stuart Mill written: ‘Over himself, over his own body and mind, the individual is sovereign’?39 If it took safer lines on the death penalty and euthanasia, there was nothing circumspect about its political interventions. After endorsing Bill Clinton in 1992, four years later it opted for Bob Dole; even more scandalous, judging by the letters that poured in from readers, it demanded Clinton resign as president in 1998 over his mendacity about an extramarital affair with an intern in the Oval Office, citing ‘deceit’, ‘moral weakness’, ‘bankruptcy’, ‘sleaziness’, ‘self-pitying paralysis’, ‘reckless risk-taking’, ‘broken trust’, ‘disgraced office’. It was not the ‘sexual dalliance’ itself that irked the paper – it had endorsed Clinton back in 1992, ‘knowing full well he was a bit of a rogue and a risk-taker’ – but the ‘flagrant lying’, ‘unworthy of a president’. (Later, it said Donald Rumsfeld should hand in his badge over torture at Abu Ghraib in Iraq.)40
There was a great deal of tough love to go around. Emmott claimed to ‘flinch a little’ when he remembered meetings with Bill Gates, co-founder of Microsoft, ‘a self-confessed devoted reader of The Economist’, who ‘would berate the publication’s then-editor-in chief for its support for the antitrust action against him and his company’ from 1998–2001. For fun, Emmott would tease Jon Corzine, CEO of Goldman Sachs.41 And Emmott fired shots across the bow of Japan. One article on the state tobacco monopoly’s unfair competition with foreign cigarette-makers, ‘Marlboro Country’, prompted the Japanese company to summon him to a boardroom where each of his sentences was cut out, pasted on a board and refuted. After a cover of a samurai tripping over himself in 1998, ‘Japan’s Amazing Ability to Disappoint’, the embassy in London issued a ‘petulant protest’ and Motoo Shiina, a Diet member, personally chided Emmott.42
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