Exit Stage Right
In the aftermath of the Iraq invasion, there was more bickering inside the Economist – albeit with US foreign policy a side show to the main event: jockeying to replace Emmott. Even at the start of his tenure, there had been rows. After convincing Crook and Emmott to send an office email announcing a ‘triumvirate’ in 1994, Asia editor (and ardent admirer of Singapore’s Lee Kuan Yew) Jim Rohwer quit in a storm when Crook got cold feet. In 1997, there was the fallout over Emmott’s secretive decision to back the Conservatives over New Labour. In 1999, Sebastian Mallaby, the Washington bureau chief, resigned after Emmott spiked his American politics survey, which argued that the checks and balances of the US constitution actually hampered effective government. Pressing Emmott to punish this ‘illiberal’ heresy and banish Mallaby to Berlin, Crook emerged one rival down for the editorship when Mallaby left.73 But it soon became clear that Emmott was determined to stay past the usual ten years. In 2005, it was Crook’s turn to leave in frustration for the Atlantic Monthly. By then the board of directors was putting pressure on Emmott, concerned that top talent was fleeing the paper because of his determination to stay. When Emmott replaced Crook with Emma Duncan as deputy editor, viewed as unlikely to challenge him, John Micklethwait did so instead – bringing the board a job offer from the rightwing British weekly the Spectator that forced Emmott to depart suddenly in March 2006.
Dukes of Moral Hazard: Micklethwait and Wooldridge
The appointment of John Micklethwait as the sixteenth editor was announced with great fanfare in 2006. ‘In his tailored suit and polished shoes’, the Guardian found him ‘poised, unmistakably upmarket … the essence of a well-educated English gentleman editor, charming, a touch self-deprecating, but to the point.’ The Independent caught up with the new forty-three-year-old head of ‘one of Britain’s greatest media brands’, ‘blood relative of the Duke of Norfolk, tall, straight-backed with a thick mop of hair, a clipped English accent and a desk that looks out across the royal parks’.74 Micklethwait was cool, polite, experienced; having spent the 90s in New York and Los Angeles – the two fastest growing urban markets in the fastest growing national market for the Economist – he told the board he could double circulation again to 2 million inside a decade.75 The first person to move directly from editing the American section to editing the paper, his experience gave him an edge over the other finalists, business editor Ed Carr and deputy editor Emma Duncan.
A practising Catholic, Micklethwait attended Ampleforth, the same school as Knight, a mentor who brought him along to Bilderberg conclaves, where he became a well-connected note-taker. Like Emmott, he went to Magdalen, though he studied history, not PPE. In personality, Micklethwait was a combination of the two men – at meetings, ‘vague, diffident, easy to underestimate’, but with a class profile and worldly ambitions cut from much the same cloth as Knight. After university he got a job at Chase Manhattan Bank in New York. ‘I was not a terribly successful banker’, he confessed later, joking that his first investment was in Eurotunnel, which lost £925 million in its first year and later went bankrupt.76 His next job was at the Economist as finance and business editor in London, before his posting to Los Angeles.
During and after his sojourn in America, much of the intellectual thrust came from his colleague and writing partner, Adrian Wooldridge, described as a ‘Norman Macrae-like figure – clever, if rather kooky’. ‘When I first arrived he terrified me, because he seemed so posh, always dressed in very stripy Jermyn Street shirts and nodding emphatically in meetings.’ Wooldridge came to the paper in 1988 – after Balliol and All Souls, Oxford, and a Harkness Fellowship to Berkeley, in pursuit of modern history – developing a distinctly wry and assertive writing style, as Washington bureau chief from 2000–10, and in a series of columns, as Lexington, Schumpeter and, presently, Bagehot.
The Liberalism of Frequent Flyer Miles: Redeeming Globalization
Micklethwait and Wooldridge spent well over a decade in the US working and raising families, feeling so at ease in New York, Los Angeles and everywhere in between – from authentic Texas to suburban Illinois – they began to write with a curious Oxbridge-on-the-Mississippi twang: conservatives were not just mad or proud but ‘pig-wrestling mad’, ‘damned proud’, ‘country-club Yankees’ being ‘just the sort who get up Joe Sixpack’s nose’.77 Emmott had raised the bar for future editors, penning three books before, and one during, his tenure (not to mention several in Japanese translation). Acting together, Micklethwait and Wooldridge wrote even more, with five books on discoveries made in America – examining its business consultants in The Witch Doctors in 1996; leadership of globalization in A Future Perfect in 2000; spirited innovations in The Company in 2003; politics in The Right Nation in 2004 (accurately predicting Bush’s victory and helping to secure Micklethwait the editorship); and its peculiar religiosity in God Is Back in 2009.
This body of work, closely overlapping with their articles for the Economist, displayed levels of giddiness about American-style capitalism that surpassed Emmott’s.78 Nowhere was the breathless tone more apparent than in The Future Perfect, written after the East Asian financial crisis and WTO protests in 1998–99, ‘to make the intellectual case for globalization’. That case rested in large part on a group they dubbed the ‘cosmocrats’ – a perplexing neologism, evoking a Soviet-era space program, instead of the global race of yuppies they had in mind – ordering ‘loups de mer’ for dinner, while ‘forever eliminating barriers, overcoming limits, removing rigidities’. A ‘broadening class of people who have benefited from globalization’, cosmocrats might just be ‘the most meritocratic ruling class the world has ever seen’.79
The cosmocrats were everywhere, if you knew how to look. There were relative unknowns like Patrick Wang in Hong Kong, scion of an industrial family, ‘his suit exquisitely tailored, his thick black hair neatly combed, and he speaks impeccable Harvard Business School English’. Or Jang Ha-sung, economist and activist shareholder in Seoul, ‘preppie-looking in a blue blazer, club tie and button-down shirt, a former student of finance at the Wharton school’, feet up at home, as ‘opera burbles in the background’. Western countries also had some: in Bolton, England, Marcus de Ferranti, Eton graduate, electronics heir, fighter pilot, who emerged from aristocratic torpor to found a virtual telephone exchange; in Johannesburg, Lyn Van Haght, ‘tall, blond Californian’, who ran a heavily-fortified testing centre for private education company Sylvain, ‘creating the black middle class that the continent needs so desperately’.80
Some looked strange: Steven Hirsch, an LA pornography studio chief, ‘tanned and aerobicized’ but oddly ‘sounds as if he has graduated from a high-powered business school’ or Jackson Thubela in Soweto, a ‘gold toothed twenty year old who often wears an Adidas tracksuit’ and ran a phone stand. Others looked just as you might expect: Jack Welch, the legendary CEO of ‘boundaryless’ General Electric, or Bill Gates, who was not just a brilliant businessman but a daring philanthropist, ‘imaginative enough to solve problems that have flummoxed the public sector’ with a ‘relentlessly curious and competitive brain’.81
Wooldridge and Micklethwait brushed past some less appealing signposts of globalization along the way. An appointment with a toy wholesaler in downtown LA was punctuated by a shocking scene along Fifth Street, ‘dingy and dilapidated, host to denizens of the lowest rungs of the underclass’, among them ‘amputees delivering drug-crazed lectures to the sidewalk, beggars begging from each other’.82 Other ‘losers from globalization’ had a picaresque dignity, ranked and sorted as ‘has-beens’, ‘storm damage’, and ‘non-starters’. Dwight Bobo, a worker on strike at a GM stamping factory in Flint, Michigan, was a has-been. ‘Perhaps the saddest thing about Bobo is the fact that he is a decent man who must surrender to the inevitable.’ They added, ‘a bit like the deer that he hunts’, he ‘is simply being culled’.83 But this trailed off: ‘We must be careful not to take the hand-wringing too far.’ To show ‘the human race is, in genera
l, advancing’, they travelled to Brazil where ‘the crapshoot that Bobo resents is helping to change the life of Marcos Andrade’, machine operator at a stamping facility GE had built in Sao Caetano do Sul, who ‘whistles when he hears how much workers in Flint are paid’. The two authors marvelled with him as bathos for Bobo turned to Schumpeterian shrug: ‘the creative destruction continues’.84
Even Thomas Friedman got an earful for his naïve thesis in 1999’s Lexus and the Olive Tree, that globalization was as inevitable as the dawn. ‘Given the carnage it has caused’, they wrote, before adding, ‘(or is said to have caused)’, advancing it would require political leadership. Here was a mission for the cosmocrats, if only they chose to accept it. The very tawdriness of politics ‘seems to put them off’. If there is ever ‘a great battle about globalization, then the people one might have expected to form the heart of the defense will probably be on a plane somewhere’.85
In the meantime, Micklethwait and Wooldridge made the case for globalization on their behalf. In Future Perfect, the advance of industrial production was ‘surely not the root cause’ of pollution in places like China, ‘and may well prove part of the solution’.86 The Company celebrated a revolutionary idea gifted to posterity by two Victorian Liberals, who established that companies had the same legal rights as human beings, and that investors had limited liability on the capital placed in them. All efforts since then to put limits on companies was misguided: the 1991 US Civil Rights Act resulted in ‘more red tape and more lawsuits’ and the 2002 Sarbanes-Oxley legislation that set tougher rules on corporate auditing, accounting and reporting was an ‘overreaction’ to fraud at Enron, Tyco and WorldCom.87 They even decried calls for corporate social responsibility from corporations. For ‘in general, companies have become more ethical: more honest, more humane, more socially responsible’. From Quaker candy makers to Hewlett-Packard, from IBM to Johnson & Johnson, ‘they pillage the Third World less than they used to, and they offer more opportunities to women and minorities’, especially compared to before, ‘when the initials of the Royal African Company were branded on the chests of thousands of slaves’.88
The Right Nation and God Is Back were more substantial, unearthing positive elements for their cosmocratic liberalism, albeit from two unlikely sources. The first stemmed from a fascination with rightwing American intellectuals: William Buckley at National Review, Milton Friedman and the Chicago boys, and the neoconservatives, including Irving Kristol, Daniel Bell, Seymour Lipset and Nathan Glazer. Aside from the admirable ‘cutting edge’ they gave to US foreign policy, the neocons were also ‘muckrakers of the Right’, ‘discrediting government’ by exposing affirmative action and welfare dependency. In fact, they were quite close to the philosophical traditions of the Economist. ‘As they grew older, neocons embraced old-fashioned liberalism – the liberalism of meritocratic values, reverence for high culture and a vigorous mixed economy.’ Looking past the misleading label, ‘America’s conservatism is an exceptional conservatism: the conservatism of a forward-looking commercial republic rather than the reactionary Toryism of old Europe.’ They cited an exchange in which Max Beloff, a British peer, incredulously asked Irving Kristol how he dared call himself conservative, since without deference to tradition, including those threatened by ‘the abuses of capitalism, it is only the old Manchester School [of classical liberalism].’89
There remained a difference between the ‘old-fashioned liberalism’ of Europe and the ‘exceptional conservatism’ of America, however – though, on closer inspection, the latter turned out to be a great improvement. In alliance with the evangelical right, neocons not only showed great tactical nous. They demonstrated how religious observance went hand in hand with wealth creation, in a kind of generalized ethic of capitalism. Future Perfect opened in New York at a Bruderhof retreat, a community which embraced global supply chains and the internet for its toy business – proof that ‘if the modern marketplace can do the devil’s work, it can also do the Lord’s.’90 America was not just economically and militarily dominant (‘superpower is too weak a word’), crucially it was also the most devout state in the West. This explained the productivity gains of the New Economy. ‘Today the triumph of secularization in Europe seems to be going hand in hand with the decline of the work ethic, just as the survival of religion in the United States is going hand in hand with the survival of the work ethic.’
This went beyond Max Weber’s theory about the origins of capitalism in Protestant Europe. It hinted that industriousness was elastic, rising or falling with changes in the religious sentiment giving rise to it. Europeans ‘liked to think of themselves as rational heirs to the Enlightenment’, but they suffered from a consequent competitive disadvantage when it came to God.91 Later, in Shanghai, Micklethwait and Wooldridge sat in on a Bible study group composed of young professionals, all convinced that Christianity was behind American greatness. In full agreement, the authors pointed out that the US supplied not only missionaries to China, but also a ‘gospel of pluralism’ in the form of the first amendment – engineered by ‘the genius’ of the founding fathers as much to keep the state out of religion as the other way around.92
If spirituality increased material wellbeing, a great deal sprinkled over the earth would increase it by a large amount. ‘Religion is being driven by the same two things that have driven the success of market capitalism: competition and choice.’ The cosmocrats had found the ultimate consumer durable: God. The Shanghai Bible study group had ‘biotechnologists, a prominent academic, a Chinese-American doctor, successful entrepreneurs, two ballet dancers’ and ‘BMWs parked in front’. ‘In much of the world it is exactly the sort of upwardly mobile, educated middle classes that Marx and Weber presumed would shed such superstitions who are driving the explosion of faith.’ The millenarian element in the Economist’s free trade manifesto of 1843 had returned as a form of religious sociability. More than faith, this was a sign of US dominance ‘so omnipresent that everyone has, as it were, a virtual America buried inside their brains’.93
2008: Saving the System
On becoming editor in 2006, Micklethwait said his goal was to make the Economist ‘the user’s handbook for globalization’, tackling ‘the big issues’.94 ‘Whenever there is dissent within the office, argument always comes round to the question, “What would be the liberal approach?”’ A return to first principles – pivoting on economic freedom and suspicion of the Leviathan state – should not be confused with pro-business bias, he patiently explained. ‘We do not treat business people with slavish idolatry or put them on the cover playing golf.’ The stakes were far higher. ‘We’d rather be seen as pro-capitalism.’95 Just two years on, that stance was put to the test, as the biggest crisis since the Great Depression engulfed the global capitalist system.
The Economist did not see that crisis coming: indeed, its market analyses (suffused by efficient market theory) ruled it out. In 2006, as US real estate prices began to fall, setting off a reaction in the repo markets in housing debt – on which big banks and other financial institutions had come to rely for short term-funding – the horizon was cloudless, at least for the financial system. The Economist recognized that as housing prices ‘flatten off’, the US economy – driven by consumer spending and residential construction, abetted by low interest rates – would slow down. But that needn’t result in a crash. On 24 March 2007, ‘Cracks in the Façade’ considered what the rise in delinquencies and defaults on subprime mortgages, and the cost of insuring against these, might mean for markets and the wider economy; the ‘biggest risk’ was that ‘politicians rewrite the rules ham-fistedly’.96 By 2008, when this securitized, supposedly safe debt turned toxic, banks holding it as loan collateral rushed to cover their losses, and panic selling swept markets (even those unrelated to mortgages), exposing highly leveraged banks as illiquid, when not insolvent.97 Lehman Brothers collapsed in September, brought down by the credit squeeze, with state authorities everywhere stepping in to avert more failures.
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As Lehman sent shockwaves through world markets, the Economist – hurricanes, cliffs, ruins, free-falling globes on the cover – suddenly declared it ‘time to put dogma and politics to one side and concentrate on pragmatic answers’.98 There was no such thing as laissez-faire in a foxhole, for ‘when global finance stops only governments can start it again’, clearing banks of bad assets, guaranteeing their liabilities, dowsing them in liquidity. The Troubled Asset Relief Plan (TARP) was the first step to restoring confidence in the financial system, and the paper saluted former Goldman Sachs executive Hank Paulson at the US Treasury for pledging $700 billion to the effort (‘a number plucked out of thin air’, he later revealed).99
Still, the administration of George W. Bush had taken too long to summon this courage, and should never have let Lehman fail (especially after bailing out the mortgage lenders Fannie Mae and Freddie Mac). Lamenting that ‘Conservative America needs to recover its vim’, in November 2008 the Economist endorsed Democrat Barack Obama as the best man to restore ‘America’s self-confidence’ and re-1aunch its global brand – ‘reselling economic and political freedom to a world that too quickly associates American capitalism with Lehman Brothers and American justice with Guantanamo Bay’.100 In Britain, Gordon Brown’s ‘bold and comprehensive’ handling of the crisis earned him the belated approval of the Economist. As he recapitalized the banks, provided £1 trillion in guarantees, and the Bank of England pumped £200 billion into government bonds and kept interest rates at zero, Bagehot mused, ‘How did Britain’s hapless Prime Minister become saviour of the Universe?’101
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