We’ve embedded the text of the so-called Powell Memo, named for its author Lewis Powell, later a Nixon Administration Supreme Court appointment, It set forth a roadmap for an open ended war to roll back New Deal protections and make America more deferential to the pet needs of businesses. It’s been an astonishingly successful campaign. The corporate profit share of GDP has risen to a level nearly twice the level that Warren Buffett deemed to be unsustainable and has remained there. The Supreme Court has deemed corporations to be persons and has given corporate speech the same privileges in campaigns as personal speech. Class action lawyers, one of the important means for preventing big companies from engaging in small-ticket but large scale pilfering, have been neutered. Unions represent a much lower proportion of workers than they did in the 1960s and 1970s, and have vastly less respect and political clout.
One can go on, but you get the idea.
If you read the memo, you’ll see how lawyers like Ralph Nader and William Kunstler are held up as the sort of foe that must be cut down to size because they have the temerity to say bad things about the way businesses work.
Let me hoist the sections of ECONNED that discussed the impact of the Powell Memo and the conservative war against social safety nets:
Two loose but ideologically aligned efforts strove mightily to pursue a number of big business objectives, including reducing regulation. Starting in the early 1970s, some far right wingers began systematically to market their ideas and discredit the Left. While politics is a realm of hard-fought ideas, the ambition of these extremist conservatives was to reframe popular opinion to conform
to their line of thinking. To a remarkable degree, they succeeded.
For instance, wealthy conservative lawyer and later Supreme Court justice Lewis Powell wrote a memo to the U.S. Chamber of Commerce in 1971 that galvanized the right wing. He argued that corporations needed to launch a coordinated and sustained attack to discredit liberals. Among the key elements was the creation of a well-funded effort that looked like a “movement” to press its cause with the media. Generously financed “scholars, writers, and thinkers” would demand fair treatment and “equal time” as the wedge for forcing the press to treat them seriously. In turn, they would recast issues, with the aim of reshaping opinion from the elite to the mass level.
Another blueprint came from former Nixon Treasury Secretary William E. Simon, in his 1978 book, A Time for Truth. Disillusioned conservative journalist David Brock describes its program:
The ideology of Barry Goldwater and Phyllis Schlafly and William Buckley would now be dry cleaned for mass consumption, and along with it came a neolexicon— a language reinvented by conservative practitioners trained in the use of manipulative, often Orwellian, rhetoric. Agenda items like gutting Social Security, rolling back civil rights protection, and slashing taxes inequitably would be smoothed out with deceptive Madison-Avenue-type branding slogans of the type used to sell commercial products: “privatization,” “the new federalism,” the “flat tax” and so on . . . funds would go exclusively to right wing ideologues, with no capitulation to “soft-minded pleas for the support of ‘dissent’” . . . ensuring conservatives would have the unwavering message discipline, ideological uniformity, and seeming unity of purpose that seemed to go missing in liberalism. The work would carry an air of academic independence and authority, but it would be subject to no peer review or conflict-of-interest safeguards.48
Another conservative dismayed by the tactics of the New Right similarly described the new corporate lobbying efforts of the 1970s as “militant.”
In economics, the spear carriers were the think tanks such as the American Enterprise Institute (AEI), the Heritage Foundation, the Hoover Institution, and the Cato Institute. For instance, the AEI funded a series of publications, studies, and has endowed faculty chairs; Heritage prepared a 3,000-page blueprint for the incoming Reagan administration and then, a year in, scored its progress (61% of 1,270 recommendations implemented).
A not-well-recognized issue is that the think tanks moved into a vacuum created by the orientation of economics in the 1950s through the 1980s toward theoretical work. Papers in top academic journals were increasingly inaccessible to the laity. These institutes could thus pick those theories (or simply aspects of theories) that were congenial to their world view. They also provided highly paid employment to economists who did not have a future in academia. For instance, Arthur Laffer, a proponent of supply side economics, said, “I knew there was no way in God’s earth I could make it in the profession. So I went other routes— the press, the political press, consulting.”
What is troubling about these organizations is that their role is seldom evident to the public. Media reports often fail to disclose the affiliation of a researcher with a think tank that has as its sole purpose the promotion of a particular set of policies and ideas. And even when they do, many readers fail to recognize that the economists in the employ of these advocacy groups are lobbyists. Most people have learned not to trust industry-funded drug research. Why should ndustry-funded economic research be any different?
On the other side of the ledger is the cost of this “success”. Paul Krugman pointed out in the 2000s that Europeans didn’t much mind their higher taxes, apparently because they saw they were getting public services they valued. Krugman further posited that Europeans were better at running government bureaucracies than we were. That’s hardly a natural outcome. Starving government bodies makes them less competent, which then serves as an excuse for cutting budgets further. Look, for instance, at the decline of the SEC, once a respected and feared agency, which has been beaten back into not-very-aggressive regulation of retail products due to Congresscritters, particularly back in the day Joe Lieberman, threatening funding cuts if the SEC didn’t come to heel, as well as the appointment of corporate-friendly SEC chairs.
In other words, the neoliberal have succeeded both in making government unduly deferential to business and often incompetent. Even in the Reagan era, the government was interested in and capable of getting to the bottom of bad developments quickly. Ten days after the 1987 crash, Reagan established the so-called Brady Commission to investigate the its causes. It delivered an extensive, detailed report in less than two months (mind you, with the Thanksgiving and Christmas-New Year holidays intervening). I have a copy. It also recommended two reforms, one of which was implemented quickly, automated stock market circuit breakers when markets move rapidly, which have been widely copied in other financial markets. By contrast, as we and others have written, the Financial Crisis Inquiry Commission was a pathetic joke. From one of our many critical posts:
From the very outset, the Financial Crisis Inquiry Commission was set up to fail. Its leadership, particularly its chairman, Phil Angelides, was seen as insufficiently experienced in sophisticated finance. The timetable was unrealistic for a thorough investigation of a crisis this complex, let alone one international in scope. Its budget and staffing were too small. The investigations were further hampered by the requirement that subpoenas have bi-partisan approval along with Its decision to hold hearings with high profile individuals, including top Wall Street executives, before much in the way of lower-level investigation had been completed. The usual way to get meaningful disclosure from a top executive is to confront him with hard-to-defend material or actions; interrogations under bright lights, while a fun bit of theater, generally yield little in the absence of adequate prep.
So with expectations for the FCIC low, recent reports that the panel urged various prosecutors to launch criminal probes were a hopeful sign that the commission might nevertheless come out with some important findings. But correspondence from insiders in the last few days suggests otherwise. One, for instance, wrote, “I’m still in the process of getting the stink out of my clothes.”
In other words, the obsession with appearance management has resulted in seeing post mortems as a yet another means to spin-doctor, as opposed to trying to prevent the recurrence of disasters. And we’ve lurched from one to another: Iraq. Afghanistan. The 2008 crisis. The not-widely recognized knock-on crisis of mass foreclosures and legal fraud, which led to a second financial bailout via a “Get out of jail nearly free” liability waiver to banks. The opioid crisis. Student debt servitude. The gross mismanagement of the Covid pandemic. And our inaction in the face of global warming and mass species dieoff.
By design, neolibearlism has weakened community ties and social cohesion and left us even more poorly equipped to handle the problems bearing down on all of us. I wish I could be optimistic. And I wish even more the perps could be held to account.00 PowellMemorandumTypescript