In fact, it was the incoherence of Occupy’s demands that interested Coggan and Lucas, allowing them to invent some. Closing tax loopholes, lowering marginal rates, and moving ‘“to Basel 3 and higher capital requirements” is not a catchy slogan, but it would do far more to shrink bonuses on Wall Street than most of the ideas echoing across from Zuccotti Park.’ In his Buttonwood column, Coggan mooted reforms of this kind after 2008, urging readers dissatisfied with efficient market theory to look at Hayek and his teacher Ludwig von Mises – whose theories of the business cycle helped to explain the crisis as one of low interest rates leading to a credit boom, followed by misallocation of resources and a protracted slump.129 Paper Promises: Money, Debt, and the New World Order in 2011 suggested the Austrian school offered the best solutions as well: ‘there is nothing to be done except to let prices and wages fall to adjust to the new reality.’130 Coggan and Lucas were more extreme, or simply more rigorous, than their colleagues; but the goal of deepening austerity they had in common with them. If states must curb the power of bankers, it was so as to pare back what waged workers could expect too: for the US to ‘reduce its debt burden, it must tackle its cherished entitlement programs’, retirement, pensions, health care, social security.131
Beddoes, for her part, did not see a serious divide between Hayek and Keynes at the Economist in the years leading up to her appointment. ‘Ed Lucas may think my economic views are crazy. A few are sceptical of quantitative easing or fiscal stimulus. But not many’, she said in 2012. For her, the crisis simply required ‘pragmatic short-term acceptance of demand stimulus, without abandoning small state micro-economic policies, and with a path to balanced budgets’. The survey she wrote in October 2012, ‘True Progressivism’, was in fact a kind of synthesis of the two positions, incorporating the Coggan critique of finance within it. ‘That cover had a huge effect and met with almost no internal dissent.’132 It was also an intellectual manifesto, as important for making her case to be editor as books had been for Emmott and Micklethwait.
In it Beddoes acknowledged the problem of inequality, which had seen the richest 1 per cent in the US double their share of national income since 1980, while the top .01 per cent (around 16,000 families) had quadrupled their take. And that trend towards greater inequality was not confined to America; measured by Gini coefficients it had risen in China, India, Russia, Sweden and almost everywhere else that had chosen ‘openness’ and ‘reform’ in the last three decades. In addition to the populist dangers this bred, a growing body of literature suggested too large an underclass ‘slows growth, causes financial crises and weakens demand’.133 Up top, financiers should pay their share of income tax, and the ‘implicit subsidy’ to banks too big to fail (around $30 billion in lower borrowing costs) should end; ditto cronyism, in communist China as in the capitalist US, where private money flowed without legal limit into politics. Moving towards the middle, the state should stop subsidizing mortgages in the form of interest deductions. At the bottom, better access to health care and education was essential.
But the small print involved much the same entitlement cuts Coggan wanted. Sweden was the upmarket model cited for tax reform and budget discipline. It was true, she granted, that income inequality had leapt by 25 per cent there since 1980. But the Swedes were still among the most equal of peoples, in part because market reforms had boosted growth without sacrificing services (improved, in their turn, by charter schools and private health providers). Latin America, on the other hand, was a bargain option. Inequality was also falling in (most) countries there, thanks to ‘targeted’ spending on primary schools for the poor, while its conditional cash transfers offered a more ‘cost-effective’ welfare system (less than .4 per cent of GDP in Brazil) that also produced good behaviour in terms of school attendance and job hunting. Globalization had winners and losers, just as Micklethwait and Wooldridge had shown; but for Beddoes, at least, it was not enough to lament the has-beens this scattered on the roadside of progress. For the rich world to ‘live within its means’ while becoming fairer still involved trade-offs – which she preferred to see as ‘whether to invest in poorer kids or continue to pay generous pensions to richer older people’.134 Liberalism should aim for equality of opportunity, not outcome, which meant a new round of reforms based less on class conflict than the inter-generational kind.
New Offices, New Progressivism
After seven turbulent years, 2015 looked like a relatively auspicious time to take up the reins of the Economist. The global economy remained anaemic, but stability had returned to the developed bits of it, in part because of falling commodity prices. Beddoes started out on the same path as her predecessor. In Britain, she backed David Cameron’s Conservatives in April, citing their ‘energetic and promising reforms’ since 2010: government spending cut from 45.7 per cent of GDP to 40.7 per cent, even as ‘public satisfaction with the police and other public services has gone up’; a million public sector workers laid off, but unemployment at a record low.135 Labour, then under Ed Miliband, was a threat to all this progress – for, despite a commitment to carry on with austerity, it also had plans to raise the top rate of tax by 5 per cent, collect a ‘mansion tax’ on houses worth over £2 million, and cap rent rises, zero-hour contracts and household energy bills. Not only did these timid gestures ‘risk chasing away the most enterprising, particularly the footloose global talent that London attracts’, they betrayed an ‘ill-founded faith in the wisdom of government’.136 When a sincere leftist emerged to lead Labour after the defeat Miliband duly suffered at the polls, the Economist was caught between disbelief and disdain. Lost in a ‘political time-warp’, Jeremy Corbyn had ‘nothing to offer but the exhausted, hollow formulas which his predecessors abandoned for the very good reason that they failed’ – dooming Labour to ‘electoral oblivion’ until the day he quit, which was sure to be soon.137
Across the Atlantic, America looked more inspiring than ever – or at least its outgoing president did; in October 2016, Obama became the first one to contribute a signed piece to the Economist, showing how complete was the ideological marriage between them, in which he warned of the dangers of populism, declared capitalism ‘the greatest driver of prosperity and opportunity the world has ever known’, and pitched the upcoming election as a choice to ‘retreat into old, closed-off economies or press forward, acknowledging the inequality that can come with globalisation while committing ourselves to making the global economy work better for all people’.138 As the curtain descended on Obama’s time in office, the Economist signed off on his last military adventure abroad, the orchestration of Saudi Arabia’s assault on Yemen. Later – after Riyadh’s imposition of an economic blockade and two years of pummelling the country by land, sea, and air had provoked the worst humanitarian crisis anywhere in the world – the paper finally asked if a moral issue might be at stake: ‘How can the West denounce the carnage in Syria when its own ally is bombing civilians in Yemen?’ In fact, quite easily; the two wars were different. ‘The West should stay close to the Saudis, uncomfortable though this may be’, seeking only to ‘restrain the damage of their air campaign, and ultimately bring it to an end’.139 What its coverage downplayed was not just the suffering inflicted by the Saudi-led strikes, over 60 per cent of which hit non-military targets – weddings and funerals, farms and fisheries – but the direct culpability of the US in supplying the warplanes, bombs, intelligence, targeting and refuelling, to carry them out.140
Beddoes’s first year or so was less about controversy than tone. ‘Mind-stretching journalism’ was the order of the day, built on life-cycle issues and served up with lashings of new technology. The Economist peered into the future of autism, clones, drones, longevity, millennials, assisted suicide, viral resistance, microchips, robots, artificial intelligence, driverless cars, gene editing and quantum mechanics. ‘We don’t want to be the grandpa at the disco’, she told the Guardian in 2016, which pointed to the eight social media staffers she had hired, as well as the Twitter-stor
m of articles designed to convert millions of social media followers into paying subscribers, and with more resources devoted to Economist Radio, TV and now Film.141 Months after her elevation, the Economist itself changed hands, when Pearson decided to sell its 50 per cent stake in the company shortly after it offloaded the Financial Times in a deal with Japan’s financial news giant Nikkei. Here, because of its unusual charter, the Economist could put together its own all-cash offer for £469 million – with Exor Investments, the Agnelli family vehicle that controls entities as diverse as Fiat, Juventus and La Stampa, taking a 43.4 per cent stake in the Economist Group while accepting a 20 per cent voting cap. To finance the deal, the paper agreed to sell its historic tower in St James for around £130 million; at the end of 2017, about 200 staff moved into custom-built offices – fit for a ‘21st century media organization’, as Beddoes put it – close to the premises it had occupied in the late nineteenth century, on the bustling Strand.
This eBook is licensed to Karim Mamdani, [email protected] on 12/02/2019
Conclusion
Liberalism’s Progress
Any sense that ‘true progressivism’ had a clear path in front of it vanished in June 2016, as the first in a series of hammer blows struck the Economist. Brexit, which David Cameron had pledged to put to the British people as a simple in-out vote on remaining in the European Union, returned a shocking verdict when a majority opted to leave – against the advice of economists, all the major party leaders, and personal warnings from President Obama, the heads of the IMF, NATO and JP Morgan. In the rather more diverse and competitive media landscape in Britain, no outlet was more clearly pro-Remain than the Economist, with an anti-Brexit cover on the eve of the referendum its best performing in years, a newsstand sell-out.1
That edition warned against the ‘illusion’ promoted by ‘liberal Leavers’ that Britain could become a ‘Singapore on steroids’ outside the EU: half of all exports went to the European single market, which was also vital to the City, in the form of passporting rights for its foreign-owned banks. The last point loomed largest, as it had ever since the Economist first made the case for turning towards Europe and away from the sterling area: the American, Japanese, Swiss and other non-EU financial firms based in the City, gaining access to customers in all twenty-seven member states, had made London supreme – with 70 per cent of the market for euro-denominated interest-rate derivatives and 90 per cent of the prime brokerage market servicing hedge funds. Nor would free trade suddenly take a step forward, since ‘the slow, grinding history of trade liberalisation shows that mercantilists tend to have the upper hand’; besides, ‘obstacles to growth’ had less to do with Brussels bureaucrats than Britain, with ‘too few new houses, poor infrastructure and a skills gap’.2 A week on, the outcome was ‘a senseless, self-inflicted blow’ and ‘tragic split’ – ‘the tumbling of the pound’ presaging a recession, ‘a permanently less vibrant economy’, ‘extra austerity’, and the potential breakup of the EU as well as the UK. Stiffening its upper lip, the paper called for a second referendum to approve the terms of Brexit, preferably on the Norwegian model guaranteeing full single market access (which ‘might be easier to win than seems possible today’ as ‘the economy will suffer and immigration will fall of its own accord’). To contain a similar backlash elsewhere, the EU must boost growth by ‘completing the single market in, say, digital services and capital markets’ and creating a ‘proper banking union’.3
In the US, the ‘truly terrifying’ Donald Trump was quick to see the parallels between his own presidential bid and Brexit – hailing the latter as a ‘great thing’ on a visit to his golf course in Scotland that June. The Economist had asked Republicans to steer clear of the real estate mogul since the primaries in 2015 with little success. It did not warm to him afterwards: in one interview, a bewildered New York bureau chief surveyed Trump in his office, an ‘Aladdin’s cave of celebrity puff’, desk stacked with magazines like a ‘dentist’s waiting room’, a ‘mound of Trump-covered copies of The Economist’ and the assurance, ‘I put you up front’.4 Above all, it objected to his pessimism as unworthy of Reagan (a man he professed to admire) and a ‘caricature’ of America – which was neither as hateful nor as badly-off as he made out, ‘and on most measures is more prosperous, more peaceful and less racist than ever before’. The economic recovery was ‘now the fourth-longest on record, the stock market is at an all-time high, unemployment is below 5% and real median wages are at last starting to rise’.5
If race and economics were ruled out, what was wrong with America? Trump himself, ‘who has done most to stoke national rage’, with his Muslim ban, Mexican wall, anti-China tariffs, NATO-bashing – all to chants of ‘lock up’ Hillary Clinton.6 In a fulsome endorsement of her in November, the paper portrayed Clinton as a canny incrementalist, who could shepherd bills on parental leave or sentencing reform through congress and show ‘that ordinary politics works for ordinary people’; in foreign affairs, she had the right ‘judgment and experience’, as exemplified by her early support for US involvement in Syria. Trump, in contrast, was ‘horribly unsuited’ to lead ‘the nation that the rest of the democratic world looks to for leadership’, or to be ‘commander-in-chief of the world’s most powerful armed forces and the person who controls America’s nuclear deterrent’. With so much at stake, the ‘choice is not hard’, a point it drove home, declaring, ‘We would sooner have endorsed Richard Nixon – even had we known how he would later come to grief.’7 (In fact, it did support Nixon.) Chastened by the result, a week later the Economist wondered aloud if it had misunderstood the whole arc of history since the fall of the Berlin Wall. ‘The election of Mr Trump is a rebuff to all liberals, including this newspaper.’8
Despite this moment of introspection, however, the shocks continued for the Economist, which was no more far-seeing after Brexit and Trump than before. In Britain, it welcomed the 2017 snap election called by the new prime minister, Theresa May, to ‘strengthen her hand’ as savvy – freeing her to pursue a softer Brexit, and to annihilate Labour, which opinion polls showed her trouncing by over 20 points in April. In lockstep with the rest of the British media, it was certain that Jeremy Corbyn – ‘witless’, a ‘loony leftist’, ‘soft’ on Putin, Chávez and terrorism – would suffer a crushing defeat, making way for a sensible Labour leader in the mould of Tony Blair. That left it to guess at the scale of the impending rout: more like 1983, when Labour won only 209 seats under its leftwing leader Michael Foot, or 1935, when it held just 154?9 In fact, Corbyn steered his party to the biggest electoral swing in its favour since 1945, eliminating the Conservative majority, to deliver a hung parliament. To cling to power, May would have to rely on the tiny, far-right Democratic Unionist Party from Northern Ireland. Corbyn achieved this, moreover, on the back of a manifesto promising to renationalize the rail, water and postal services, raise the minimum wage, revive collective bargaining, increase taxes on wealthy individuals and businesses, and make university free again – each of which the Economist vehemently opposed as ‘backward-looking’ and ‘dangerous’.10
This latest assault on liberalism was the final straw, provoking unusual signs of fissiparity and fracture at the paper. As May’s ‘strong and stable leadership’ campaign faltered, the Economist switched horses in mid-stream, advising a vote for the Liberal Democrats that June as a ‘down-payment’ on a future ‘party of the radical centre’ – à la France, where Emmanuel Macron had demolished old left-right oppositions with En Marche, inspiring ‘France, Europe and centrists everywhere.’11 At one moment ‘Bagehot’ bitterly compared Britain’s political class to a second-rate cricket team whose best batter was ‘a crypto-communist who has never run anything but his own mouth’; the next, he paid Corbyn a compliment, saluting him as a disruptive innovator.12 Months earlier in Italy, a similar schizophrenia was on display. When Prime Minister Matteo Renzi, a devotee of Blair’s third way, submitted constitutional changes designed to entrench him in power, the Economist came ou
t against them. This provoked consternation from its own correspondent in Rome, who ventilated it off the record to La Repubblica. Fuming at this ‘brutal anti-Renzi affidavit’ and ‘slap in the face’, the liberal Italian daily ran it as a front-page story, reporting the decision had split the Economist staff, with Beddoes and younger editors against backing the constitution, the Europe section in favour. ‘We supported Remain and Hillary’, explained its unnamed source. To back Renzi’s referendum when it too risked going down in defeat, as it subsequently did, ‘could have been considered the kiss of death’. This at least was the view of John Hooper, the leaker of these tidbits, who then wrote in favour of Renzi’s reforms in The World in 2017.13
Observing these tergiversations, a former senior editor called it a moment of identity crisis for the paper. ‘The Economist believes in free trade capitalism, sure, but it also believes in America.’ What to do when both are stumbling? ‘Since Knight, the editor’s role has been to pull a center, or even center-left staff, to the right’ – think of Knight and Reagan, Pennant-Rea and the First Gulf War, Emmott and Iraq, Micklethwait and the neo-cons and religious right. That worked, so long as the paper was out in front of the neoliberal wave, coasting it, or on the offensive. But now, in the age of Trump? ‘In the past, the Economist would have tried to shock respectable opinion, to somehow support him … but it’s been forced to take the same line as the New York Times. For thirty years it captured the zeitgeist but the zeitgeist seems to have moved on.’ Another, old-guard editor still at the paper complained that meetings had descended into a millennial farce of trigger warnings, gender-neutral bathrooms and #MeToo.
Liberalism at Large Page 44