The American Prospect #322

ROBERT KUTTNER: BIDEN’S CHINA CHALLENGE

GABRIELLE GURLEY: RECONNECTING BLACK WASHINGTON

ALEXANDER SAMMON: INSURANCE BIZ VS. CLIMATE

I D E A S, P O L I T I C S & P O W E R

Racial Justice Under Fire

Randall Kennedy on the censors of critical race theory SEP/OCT 2021 $8.95 PROSPECT.ORG

BONUS ISSUE, 2020 THE AMERICAN PROSPECT 35

AMERICAN DE MO C R AT IC SOCIALISM

H I S T O R Y, P O L I T I C S , R ELIGION,

AND

THEORY

G A R Y D O R R IE N “Gary Dorrien is the greatest theological ethicist of the twenty-first century, our most compelling political theologian, and one of the most gifted historians of ideas in the world. His American Democratic Socialism is a work of astonishing erudition. Best of all, Dorrien is not only a searing chronicler of prophetic thought, but also a bold Christian participant in the historic quest for social justice.”

MICHAEL ERIC DYSON, author of Entertaining Race: Performing Blackness in America

ON SALE 9.14.21

“American Democratic Socialism is a brilliant and timely book. Dorrien offers a big, ambitious, synthetic political and intellectual history of the whole American democratic socialist tradition, giving particular attention to religious socialists, the centrality of race in American politics, and the intellectual contributions of women.”

GEOFFREY KURTZ,

author of Jean Jaurès: The Inner Life of Social Democracy

yalebooks.com

SEP/OCT 2021 VOL 32 #5

Features 16 The Right-Wing Attack on Racial Justice Talk

40

How critical race theory has become a handy target for an old-fashioned assault on civil rights. By Randall Kennedy

22 The China Challenge

Biden’s aggressive push against Chinese mercantilism has been marred by turf battles and cross-pressures. Here’s what needs to be done. By Robert Kuttner

60

32 The Oil Merchant in the Gray Flannel Suit

Why aren’t insurance companies aggressively fighting climate change, and minimizing catastrophes? Look at their balance sheets. By Alexander Sammon

40 Unfinished Business East of the River

The collapse of a pedestrian bridge in Washington reignites debates about reconnecting communities, racial equity, and what comes next. By Gabrielle Gurley

48 The Corporate State of Delaware

The tiny state has long been a hotbed for corporations.

Can mounting public pressure push the state to change its centuries-old ways? By Amelia Pollard

Prospects 04 Liberalism and Time By Harold Meyerson

Notebook 07 A Flood of Risk By Lee Harris 10 We Can Go Back By Felicia Kornbluh 13 The End of Forced Arbitration? By Susan Antilla

Culture 55 David Dayen on books about WeWork and Tesla 60 Michael Rezendes on The Truth at the Heart of the Lie 62 J ake Blumgart and Adam Tooze discuss Shutdown: How Covid Shook the World’s Economy Cover art by Daniel Zender

32 SEP/OCT 2021 THE AMERICAN PROSPECT 1

On the Web

Visit prospect.org/ontheweb to read the following stories:

The End in Afghanistan Prospect writers look at the close of a 20-year campaign in Afghanistan, including contributor Emran Feroz on how the war was whitewashed for American audiences.

HITPARADE MOST-CLICKED ARTICLES IN SEPTEMBER 1. The Vanishing Case for Liberal Inaction 2. Joe Manchin’s Symphony of Disingenuousness 3. We Can Go Back

The Eviction Crisis Is a Rental Assistance Crisis Executive Editor David Dayen explains how a law designed not to work has put millions at risk of losing their homes.

4. America’s Acute Governance Problem 5. New GOP Election Ploy: Challenge ALL Democratic Victories Prospect staff and contributors break down the Biden administration’s physical infrastructure and social spending agenda, with deep dives into the policies.

Building a Just Economy: Insights from Worker Center Leaders A virtual event on the past and future of workers’ rights, featuring Ai-jen Poo, Saket Soni, Saru Jayaraman, and Editor at Large Harold Meyerson

9/11, Twenty Years Later

The Prospect looks back at the September 11 attacks and the war on terror. Featuring reflections from Prospect alumni and links to their best foreign-policy writing, and contributor Kouross Esmaeli on how 9/11 transformed his identity in the eyes of Americans.

2 PROSPECT.ORG SEP/OCT 2021

America’s factory workers keep us connected.

Infrastructure isn’t just roads and bridges. It’s also the broadband cables that provide high-speed Internet to big cities and small towns alike, allowing Americans to work remotely, attend digital school or connect with far-away loved ones.

But not everyone can log on. The American Society of Civil Engineers estimates 1 in 5 schoolchildren lack a high-speed Internet connection, and 65% of counties have connection speeds lower than the FCC’s definition of broadband.

It’s time to invest in our broadband infrastructure, and American factory workers stand ready and willing to supply America with the cables needed to strengthen our connections.

TAKE ACTION: bit.ly/2021Infrastructure

S T C E P PROS HAROLD MEYERSON

Liberalism and Time When Congress or a

city or state allocates funds to build something, they generally focus on three-dimensional objects: roads, bridges, wind turbines, reservoirs, airports, rails, lead pipe replacements. They neglect the all-important fourth dimension: time. Though Einstein demonstrated that time alters space, time is often a missing element when governments set out to build things. Government projects, in short, are too Newtonian.

You’d think more politicians would realize this, as they all have a kind of performance deadline of their own to meet: going before voters every two or four or six years. Life being unfair, these deadlines pose a greater challenge for liberals (like those who’ve pledged to build back better) than they do for right-wingers, whose pledge to stand athwart history hollering “Stop!” doesn’t obligate them to build anything more than diversionary public anger.

As I write, Democrats in Congress and the White House are still crafting and negotiating over landmark infrastructure and social welfare legislation. Their electoral prospects hinge not merely on passing these bills, but on getting these projects and programs visibly up and running before the 2022 and 2024 elections.

Unfortunately, the Democrats’ record over the past several decades is mixed, and in the early jousting over the Build Back Better agenda, that legacy continues.

4 PROSPECT.ORG SEP/OCT 2021

Extending Medicare to cover dental care— a popular-vote winner if ever there was one— may take until 2028, we’re told, though the administration is pushing for an earlier activation date. Child care subsidies are set to phase in over six years. Medicare negotiation with pharmaceutical companies over prescription drug prices won’t begin until 2025.

As to the bipartisan infrastructure legislation, one admittedly conservative estimate has it that no more than $20 billion will be spent by the end of 2022.

This means that Democrats won’t have a lot they can point to before the midterm elections.

For context, when the Democrats originally enacted Medicare in 1965—a much bigger undertaking than any of these programs—it was up and running within one year.

There’s no mystery why major infrastructure projects and policy expansions take time, of course. The expansion of child care and creation of universal pre-K in the reconciliation legislation, for example, will require the recruitment and training of a new workforce and the upskilling of many in the existing workforce. The recruitment part requires setting pay and benefits at a level commensurate with the needs and expectations of millions of workers, which is certainly not the case today.

The training and upskilling of workers also requires a significant expansion of the teacher training workforce and facilities.

As for infrastructure, progressives need to grapple with their own handiwork. The expansion of government frequently collides headon with the procedures of clean government that hears out the concerns of stakeholders.

This was not the case during the New Deal, when Franklin Roosevelt’s administration managed to put millions to work on public projects in a matter of weeks.

In 2010, reporting on why President Obama’s 2009 $787 billion stimulus was taking so long to roll out, I spoke with Laura Chick, the Democratic former Los Angeles city controller, whom Gov. Arnold Schwarzenegger (a Republican) had appointed to oversee how the $85 billion allotted to California was being spent. It was being spent, she said, slowly. “You can’t just build a new bridge,” Chick said. “Environmental-impact reviews, historic-preservation safeguards, unionization of government workers—these are good things, but they’ve changed the way government can operate. You have to open up the decision to community input. It [all] makes it harder to deal with an economic crisis,” which the nation was still experiencing in the wake of the 2008 financial meltdown.

Not only federal projects are delayed by complexity. New York City’s Second Avenue subway line was first proposed in 1920; construction of the first phase (running from 65th Street to 105th Street) began in 1972, stopped in 1975 due to the city’s near bankruptcy, resumed in 2007, and was completed in 2017. In California, voters approved, by a 2-to-1 margin, a $7.1 billion bond measure in 2014 to build reservoirs and other water storage projects to help the state grapple with its ever more severe droughts. Three and a half years later, the state approved eight (now seven) projects, the first of which won’t be up and running until 2024, despite the state’s accelerating desertification. California’s high-speed rail system, approved by bond measure at the ballot in 2008, is slated to complete first-stage construction in 2023, and then only between the bustling metropolises of Bakersfield and Madera. The timeline for Los Angeles and San Francisco is indefinite.

The failure to factor in timeliness struck one Obama administration official to whom I spoke as a failure of liberal imagination. “I kept hearing that we had lots of projects that were shovel-ready,” he said. “But they weren’t.

We have think tanks that make a compelling case for Keynesian stimulus. What we need, it turns out, is a think tank that tells us

how to actually do a stimulus, how we can get the dollars out there now.”

Complexity is a delaying factor not only for infrastructure but for the implementation and distribution of social benefits. And in social policy, complexity usually takes the form of means-tested eligibility requirements. For example, existing federal child care subsidies are so narrowly targeted and underfunded that even most eligible families don’t receive them. According to a pre-pandemic report by the Center on Budget and Policy Priorities, only 1 in 6 eligible children actually receive assistance.

Though the Biden administration and virtually the entire Democratic congressional delegation want to enact more universal social benefits and put an end to such inefficient and scattershot programs, the handful of Democratic holdouts seem to prefer that inefficiency.

On a recent Sunday talk show, West Virginia Sen. Joe Manchin criticized the Child Tax Credit that Democrats had enacted for a oneyear period in pandemic relief legislation in March, proposing instead both means testing and work requirements to narrow eligibility.

Even without Manchin’s assistance, the nation recently hit a new low in inefficient distribution of desperately needed assistance in the failure of its renter relief program. Though the government appropriated $25 billion last winter and an additional $21.5 billion last March to enable renters who’d lost income due to the pandemic to pay their back rent, just 12 percent of those funds had been distributed by midsummer. In this case, the federal government delegated the task of reaching out to renters and landlords to state and local governments that had little to no capacity to do that. Most had to construct rental assistance programs from scratch, and some (read: red states) had no particular inclination to help out renters at all. Adding to the obstacles, the feds also required renters to fill out a long and bewildering application to establish eligibility, and landlords could even deny the funds.

The failure of rental relief highlights two systemic obstacles that public programs currently face. The first is federalism itself: In delegating to states and municipalities, the feds entrust their programs to governments that often lack the capacity and will to implement them. The resistance of Republican-run state governments to expand Medicaid eligibility despite the federal government’s cover-

ing at least 90 percent of the cost makes a clear case that when the feds want something done, they should do it themselves.

The second obstacle is simple outreach capacity. Just about the only organizations in American history that could have effectively located and reached out to tenants in need of assistance haven’t been governmental, they’ve been political. In the Irish precincts of Manhattan from 1870 through 1930, Tammany’s ward heelers, if they were doing their jobs conscientiously, could likely have identified those families in need. In the New York housing projects established by the clothing and garment unions in the 1930s and ’40s, left-wing party members could have performed analogous services. In some cities, this task has been taken up today by community groups that are underfunded and overburdened.

By contrast, we should take a quick look at social benefit programs that have succeeded splendidly. The most popular social program the United States has ever enacted is Social Security. Its success is due not only to addressing the individual needs of seniors, to bolstering the senior (and thus aggregate) purchasing power on which the economy depends, and to the fact that seniors have presumably earned it through a lifetime of work, but also to its absence of the kind of eligibility hurdles that have hamstrung so many means-tested programs. No one has to jump hurdles to establish eligibility; one only has to age sufficiently. For this reason, the administrative costs incurred

by Social Security are minuscule. Universality guarantees efficiency and timeliness.

Even though we still have no think tank specifically working on timely delivery of services and construction of infrastructure, as the Obama administration official wished for, the Biden administration (for which that official now works) is cognizant of how delayed delivery undercut Obama’s achievements and helped doom the Democrats’ political prospects. As the failure of rental relief demonstrates, they haven’t sidestepped all of the same pitfalls, but by moving closer to universality in a number of their proposals, and by shortening some infrastructure approval processes, they’re at

least striving to sidestep some of them. For example, the infrastructure bill amends the National Environmental Policy Act so that the average time an environmental review will take is reduced from 4.5 years to 2.5.

Most importantly, by mandating COVID vaccinations for most American workers, President Biden has demonstrated that the government can transcend its usual limitations with timely and as-universal-as-possible policy when conditions demand it. He’s also demonstrated that, as with Social Security, timely and universal programs can command wide public support.

The Democrats’ agenda is frequently being compared to the New Deal, and there’s a lesson from that period that Biden and his congressional allies should heed. To deal with the catastrophe of the Depression, President Roosevelt persuaded Congress to establish an unprecedented public-works program—the Public Works Administration (PWA)—that in time would build the Boulder and Bonne­ ville Dams, the Triborough and Oakland Bay Bridges, and two of the aircraft carriers that stopped the Japanese offensive in the Battle of Midway. All these projects took years to complete, however, and when his aide Harry Hopkins told Roosevelt that many thousands of Americans would starve in the winter of 1933–1934, Roosevelt took some PWA finds and diverted them to new labor-intensive work programs that didn’t require years to develop. Between mid-November of 1933 and the spring of 1934, the Civil Works Administration, under Hopkins’s leadership, put 4.3 million Americans (in what was then a nation of 125 million) to work on federal payrolls, paving roads, building schools and post offices and airports. For most of the workers, this was largely pick-and-shovel work, but it helped build the country and helped save lives.

Today’s infrastructure doesn’t require a whole lot of picks and shovels. But this twospeed approach to delivering programs provides a model for today’s Democrats, and a starting point for that as-yet-unborn think tank that will add the dimension of time to liberalism’s goals and metrics.

These are not new problems. In considering whether to be or not to be, Hamlet lists “the law’s delay” as one reason why life can become unbearable. Whatever infrastructure, services, and rights this generation of Democrats creates or augments, they should take care that once enacted, the law does not delay them. n SEP/OCT 2021 THE AMERICAN PROSPECT 5

EXECUTIVE EDITOR David Dayen FOUNDING CO-EDITORS Robert Kuttner,

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NOTEBOOK A Flood of Risk The federal flood insurance program has historically subsidized rich coastal homeowners. FEMA says they’re fixing that, but it could be false hope.

Damage from Hurricane Ida in Louisiana is part of a record-breaking year for losses from natural disasters.

GER ALD HERBERT / AP PHOTO

By Lee Harris This year has already been a blockbuster for natural-catastrophe damages. Payouts owed by insurers hit a ten-year high in the first half of 2021, according to insurance broker Aon. Winter Storm Uri, with $15 billion in damages, drove record losses. Hurricane Ida is also expected to cost insurers billions.

The record-breaking losses are partly due to more frequent severe weather events, but they’re worsened by maladaptation: People are moving toward, rather than away from, exposed areas.

For decades, FEMA has underwritten the boom in property and population around exposed coasts and the high-growth Sun

Belt. The agency’s National Flood Insurance Program (NFIP) has long been underpriced and regressive, artificially lowering premiums, masking flood risk, and directing bigger subsidies to richer homeowners.

As coastal populations get wealthier, property values have risen, and their political entrenchment deepens.

The program has required multibilliondollar bailouts just to keep up with current claims. For years, unlikely allies—environmentalists, fiscal conservatives, and ordinary taxpayers—have pressed to reform it.

Congress made an attempt with the Biggert-Waters Act of 2012, which brought premiums more in line with risk. But when real estate firms and coastal homeowners

stuck with higher premiums balked, those reforms were rolled back two years later.

Since then, Congress has only managed short-term reauthorizations.

In October, FEMA will implement a new pricing system called Risk Rating 2.0, the agency’s first effort to make premiums fairer since the gutted attempt a decade ago. (The entire program is due to be reauthorized September 30, when most likely lawmakers will kick the can down the road, but rate raises will go into effect either way.) Billed as “equity in action,” the rating system will raise premiums for most NFIP policyholders.

Lawmakers in coastal states like Sen. Bob Menendez (D-NJ) and Senate Majority Leader Chuck Schumer (D-NY) have already signaled SEP/OCT 2021 THE AMERICAN PROSPECT 7

NOTEBOOK FEMA has entered the insurance-linked securities market by issuing a catastrophe bond.

their opposition. Rep. Maxine Waters (D-CA), who chairs the House Financial Services Committee, has said she plans to “oppose any efforts to substantially raise premiums or to otherwise add to the affordability burdens.”

The point of accurately priced f lood insurance, though, is precisely to make dangerous homes unaffordable. Adequately high prices would be a proxy for current and future risk, helping home buyers make smarter decisions.

Risk Rating 2.0 is supposed to put the NFIP on track to solvency, and put individual homes on a path to pay their full risk. But annual rate raises are capped at 18 percent—meaning it will take years to price in that risk. And political opposition is just the first hurdle.

A deeper reckoning is just beginning to unfold over long-term flood risk, which current FEMA models don’t even claim to account for. Internalizing that vulnerability, however, would break the basic business model of the insurance industry.

And even as the agency argues that it is finally playing hardball with rich homeowners, FEMA has quietly developed a different strategy: transferring the biggest risks from taxpayers to private insurance and bond markets.

8 PROSPECT.ORG SEP/OCT 2021

FEMA advertises that its new risk rating program incorporates private-sector data sets, more dynamic modeling, and “evolving actuarial science.” But the agency buys its actuarial models from a handful of legacy catastrophe (“cat”) risk firms, such as AIR Worldwide and CoreLogic, which are being overtaken by a new crowd of climate risk modelers.

Jupiter Intelligence, a leading voice in the emergent climate risk services industry, was part of a research syndicate at FEMA that helped develop Risk Rating 2.0. As climate modelers, Jupiter were the black sheep in a room of more traditional “cat risk” experts.

They’re disappointed with the final product.

“I think most people inside FEMA would like to be moving much faster than they have the resources or permission to do,” Jupiter CEO Rich Sorkin told the Prospect.

“They know that they can’t get ahead of the political process.”

Cat risk modelers feed storm trends and geophysical data into computer algorithms to spit out disaster scenarios. In step with the insurance industry, they focus on expected losses in the next year, rather than the more uncertain long term, and have resisted incorporating climate change predictions, arguing that there are too many

unknowns to produce granular models.

Climate risk modelers like Jupiter argue that the uncertainties of future climate scenarios are precisely the reason rates should reflect a longer, more conservative time horizon. New perils may not only be more intense, but also freakishly different from past storms.

Tom Larsen, an actuary with CoreLogic, another firm that helped FEMA develop its new risk model, disputed the advisability of incorporating climate-modified risk into models, given current unknowns in how climate heating will play out. “The most appropriate risk for today is the risk for today, not the risk that’s going to be here in 30 years,” he said. “Climate change is a slow progression, and certainly the risk will change. They [the new rates] are appropriate for now.”

Trying to incorporate long-run projections would make modelers unduly cautious and drive up premiums, Larsen said. “Our job is to try to strip away any conservatism.”

Larsen and Sorkin’s disagreement is part of a brewing clash among modelers of natural catastrophes.

Under pressure, cat modelers have begun paying lip service to long-term risk. But they continue to work under the assumption that if severe weather patterns worsen dramati-

Ultimately, market price signals aren’t likely to be enough.

States will need to fund managed retreat from the riskiest areas. cally, that will become relevant only later in the century, not in the next several years.

That assumption is turning out to be wrong.

Sean Bourgeois is in the business of “bringing risk to capital.” Given the global search for yield and the uptick in natural disasters, the insurance trading executive with Tremor Technologies thinks there are many potential buyers for FEMA’s exposure to severe weather.

After purchasing billions in reinsurance, in 2018, FEMA entered the insurance-linked securities market, issuing its first catastrophe bond.

The reinsurance industry provides insurance to insurers, capping an individual company’s risk. Once a threshold is crossed—for example, if an insurance company owes an unusually high sum in payouts—the insurer no longer has to pay claims; it kicks them up to its reinsurer.

Reinsurance firms make this work by being global and extremely diversified, so that they can absorb losses even when a major event wipes out a whole area. But climate change has the effect of correlating risk around the world, making reinsurers’ job harder.

In that environment, cat bonds are encroaching on reinsurers’ turf. The instruments follow a similar logic to reinsurance, securitizing the risk of a peril, such as an earthquake or wildfire, and packaging it for sale to nonspecialist capital market investors. They were inspired by mortgagebacked securities (MBS), the pooled loans that set off the 2008 global financial crisis.

Increasingly, it’s not insurance institutions staffed by actuaries that are buying these bonds, but insurance-linked securities (ILS) funds, which raise large pools of capital from pension and sovereign wealth funds. Low-cost trading platforms help investors buy and sell ILS more quickly than they would be able to if they were investing directly in a reinsurer.

Bourgeois also envisions an increase in “live

cat” trading—real-time buying and selling of insurance-linked securities while a storm approaches. Eventually, he hopes Tremor will achieve enough liquidity to help traders adjust their portfolios “as a hurricane is in the water.”

In making their pitch to investors, ILS funds argue that since natural disasters occur randomly, cat bond risks are uncorrelated with swings in financial markets. Asset manager Neuberger Berman has pithily dubbed cat bonds “natural diversification.”

That calls to mind arguments for MBS, where the buffer was also supposed to be regional price differentiation. Neighborhoods might bust, but, the story went, you wouldn’t see the entire market blow up.

MBS turned out to be more linked than expected. Climate change, too, has the effect of tethering once-independent regional risks.

This doesn’t necessarily mean that cat bonds threaten another financial crisis.

FEMA’s heavier reliance on reinsurance and cat bonds does, however, help the program continue extending its “duration mismatch” problem: The short-term time horizon of the insurance industry does not match the multidecade duration of the assets being insured.

Most cat bonds have a maturity period of under five years, and can be rolled over, potentially creating the false impression that insurance costs will remain low. As a result, homeowners can insure buildings in high-risk areas by rolling over indefinitely. This could explain why real estate firms have lobbied FEMA for more cat bond issuances. Nothing in the system cautions against unsustainable development.

Cat bonds have a final, striking resemblance to MBS: their treatment by credit rating agencies. In selecting cat bonds, investors depend on rating agencies like Moody’s, Fitch, and AM Best, a ratings firm that specializes in the insurance industry.

But it’s notoriously tricky to assign credit ratings to cat bonds. Credit rating agencies mostly compare firms’ outcomes, rather than assessing the methodologies themselves.

“We are agnostic to risk models,” said Sridhar Manyem, research director at AM Best, who previously rated insurance companies for Standard & Poor’s. “We’re not telling insurance companies what they need to use.”

Rating agencies may make clear in fine print that they assess whether insurers have enough capital to pay claims, not their actuarial methodologies. But their rating nonetheless implies a level of trust and certainty. There has been some saber-rattling

from credit rating agencies after recent losses from storms, but the bonds haven’t been downgraded.

Chris Heidrick, an insurance agent on Sanibel, a Florida barrier island, is not too worried about expected rate raises for his clients, most of whom are wealthy enough to pay cash for their homes. What sets him at ease is the pace of change: Even as rates come up, premiums can’t jump by more than 18 percent per year.

Congress may even lower that cap, further slowing the rate at which homeowners feel new prices kick in.

Either way, the rates rich homeowners pay will take years to catch up to new sticker-price premiums. Some could never catch up, since the new rate is itself a moving target, likely to increase in future years.

FEMA has even included a “glide path,” so that the new buyer of a house can pick up on the same path to paying full price as the previous owner, rather than immediately paying full cost. That will keep FEMA subsidies to rich homeowners intact for some time.

Meanwhile, even modest rate raises are sure to make insurance harder to purchase for poorer families living in exposed areas.

When premiums become unpayable, lowincome households typically let flood insurance policies lapse, opting out altogether.

Where f lood insurance is mandatory, there is widespread noncompliance. Just 1 in 3 homes in the highest-risk areas have flood insurance coverage, according to the Wharton Risk Center. Compounding the problem, some of the highest-risk states, like New York, New Jersey, and Florida, have few or no requirements to disclose flood risk.

Ultimately, market price signals aren’t likely to be enough. States will need to fund managed retreat from the riskiest areas.

FEMA has some money to move whole poor communities up coastlines. But this, too, is stacked with political dilemmas.

Authorities want to give lower-income communities priority access to grant money for coastal retreat. But pressuring low-income neighborhoods has an ugly history. Done cheaply, it could look like slum clearance or failed “urban renewal” schemes.

Done well, managed retreat from blighted areas is an opportunity to address the housing crisis and build sustainable, beautiful neighborhoods. Instead, lawmakers have cynically deployed arguments for fairness to continue subsidizing the status quo. n SEP/OCT 2021 THE AMERICAN PROSPECT 9

We Can Go Back

Thoughts on the Supreme Court, Texas, and the End of Roe v. Wade

By Felicia Kornbluh The demonstration in Burlington, Vermont, days after the Supreme Court allowed Texas to forbid abortions after six weeks of pregnancy, was defiant but sad. We were a sparse mix of youngsters, gray-hairs, and elected Democrats carrying the usual signs, preprinted bright-pink for Planned Parenthood, yellow for the ACLU, plus a few battered, hand-lettered ones that looked like this was not their first demonstration: “We Won’t Go Back!” they pledged in smudgy magic marker.

10 PROSPECT.ORG SEP/OCT 2021

I hate to be a downer, or make facile comparisons between past and present, but we as a society have indeed “gone back” to the kind of legal situation that prevailed before the Supreme Court ruled in Roe v. Wade and its vital but oft-forgotten companion case, Doe v. Bolton (1973). In narrow terms, what the Court did then was affirm a constitutionally meaningful “zone of privacy” in the space of one’s own body and one’s deliberations with a health care provider, responding positively to a nationwide feminist and faith-based movement to change the abortion laws.

The more sweeping import of Roe is and always was its endorsement of pregnant people’s independent personhood, apart from the potential children they carry and from their romantic, sexual, and legal partners. This endorsement was partial, incomplete, and slantingly staked, like latesummer tomato plants in rocky soil, threatening collapse at the first hard wind. But it was there, thanks not just to the Court but to thousands of people who undid the old abortion regime by defying it quietly and loudly, individually and together.

A flame burned through Roe and Doe. I hesitate even to call that flame “respect for women’s citizenship.” (Nowadays, we know that nonbinary people and those who identify as male can also get pregnant, so it certainly included them.) Those decisions symbolized a temporary and imperfect victory over the raft of ways reproductive power has been placed in service of social

JOSE LUIS MAGANA / AP PHOTO

NOTEBOOK

Protesters march near Supreme Court Justice Brett Kavanaugh’s home in Chevy Chase, Maryland.

hierarchy. Although it has taken particular forms in our history, this kind of supremacy precedes and transcends the idea of “citizenship,” which arrived with the modern state.

(Think: U.S. slavery and all systems of caste.

Heritable inequalities are always the fruits of reproductive politics.)

On Thursday, the day after the latenight issuance of the Court’s decision, I was numb. Friday and Saturday, I couldn’t stop weeping. Why? This short, unsigned opinion by five justices isn’t a harbinger of something cataclysmic that might happen in the future; it’s the thing itself. An anonymous and yet fully authoritative Supreme Court majority, engorged by the Republican-led Senate’s refusal to seat any justice chosen

by President Barack Obama in 2016 and by the racist, nativist, anti-Semitic, and sexist chicanery of Donald Trumpism, treats the pregnant private zone as constitutionally unimportant. The elite Court’s majority

implies that it is important only to protect potential life, not to shield fully alive persons from the tyrannies, hypocrisies, and moralisms of their governments.

Worse yet, because the Texas law now being implemented gives private individuals the right to enforce penalties for performing or helping someone obtain an abortion, the Court fails to acknowledge the inevitable harms to pregnant people from nosy or nasty neighbors, and infuriated or abusive ex-lovers. While enforcement is supposed to target the abortion provider rather than the patient, because the statute is loosely written (anyone who “aids or abets” an abortion is liable), almost certainly abortion seekers will be put at risk. The five justices issued an abrogation, what feels like an attempted erasure of feminist psychoanalyst Juliet Mitchell’s “Longest Revolution”—a historic, global mass movement against the patterns, pieties, and power grabs we know as the sex and gender systems.

Here’s what I heard the Supreme Court say late-night September 1: Take that, exhausted activists! Did you really think you’d stem the tide against the tsunami of litigation unleashed by a conservative religious and political coalition with ceaseless monetary resources? Go cry, idealistic undergrads!! Don’t even imagine an adult life of dignity and respect. The most elite lawyers in the country don’t care if you get raped or molested; if you scream, they won’t hear you, and if you organize to change the law, they will nullify your work.

I am, perhaps, sentimentally attached to this one frail reminder of a time when feminism was ascendant, and compelled the most troglodytic of our political institutions to answer its demand. You may think I didn’t get the memo about the limitations of Roe, or missed the heap of writing on what the opinion should have done or said (as if the mass of activists, the abortion seekers, doctors, priests, rabbis who risked jail time defying the old state laws had any sway over that). Have I forgotten the unforgivable things some foes of criminal abortion laws said about Black people, immigrants, and disabled people? Or the ways access to abortion was already, direly, compromised before September 1, 2021, including in Texas?

No, I didn’t forget. As a historian, I’m in the remembering business. And yes, as many have argued, Justice Harry Blackmun’s opinions in the 1973 abortion cases were not everything we would wish them to be. Neither, of course, was the work of Jus-

tice Sandra Day O’Connor et al. in Planned Parenthood v. Casey (1992), which affirmed Roe’s central holding but offered a different analysis than Blackmun’s and permitted states to constrain the ability to abort more broadly than was allowed by Roe. Anyone who thinks that post-1973 Supreme Court jurisprudence has prevented devastating harms to pregnant people and those of us on the downside of gender and sexual hierarchies, especially those who are also disabled, Black, brown, or poor, hasn’t been paying attention. The Court’s willingness to backtrack on the pledges it made in Roe and Doe was evident as early as 1980, when a 5-4 majority ruled that the Hyde Amendment prohibiting states from using federal Medicaid funds for abortions was not even a little bit violative of the fundamental right to privacy affirmed less than a decade earlier.

The victories of the movement to decriminalize abortion were definitely products of what the great legal scholar Derrick Bell called “interest convergence,” alliances between people who believed in social progress for good reasons and those who supported it for creepy reasons. Many of the whites who fought in the 1960s and 1970s to undo a century and more of state-level abortion regulation believed that certain people, marked by race, class, physical and cognitive ability, and national origin, were better fitted to parenthood than others.

My research has revealed plenty of troubling claims advocates used on their way to achieving historic wins against the injustice of illegal abortion. Lawrence Lader, for example, the leading journalist advocating legal abortion in the 1960s and a founder of NARAL, pressed readers to “face the fact that” overpopulation made compulsion of some kind in the matter of birth control “not only healthy, but imperative.” Harriet Pilpel, attorney and advocate with the ACLU and Planned Parenthood, opposed involuntary sterilization but argued that voluntary sterilization should be made widely available “especially to the poor and underprivileged.”

I chronicle the finitude of the mid-20th-century movement for abortion decriminalization, the movement that ultimately birthed Roe. Most notably, it failed to demand that people have the wherewithal to bear and raise children, as well as to hold off from parenting, when they decide to.

In the middle and late 1970s, BIPOC (Black, Indigenous, and people of color) activists and white socialist feminists challenged mainstream women’s and SEP/OCT 2021 THE AMERICAN PROSPECT 11

NOTEBOOK even death. It became a feminist demand when NOW emerged in 1966 as a civil rights organization for women, and members such as radical Black attorney Florynce Kennedy insisted that access to abortion be understood as a gendered civil right. The radical, socialist, and BIPOC feminisms of the 1960s, ’70s, ’80s, and ’90s all embraced the cause of legal abortion. Their leaders didn’t want abortion rights only, but they certainly didn’t want to write abortion out of their politics.

I don’t know if the war against oppressive gendered and sexual authority is the longest that’s ever been waged. I do wonder if I’ll glimpse its resolution in my lifetime. How to fight despair? Join people and groups preparing for the skirmishes and battles ahead, including abortion providers, advocates, funds that help people cross state lines for care when they need to, and those who work for reproductive justice, expanding the scope and integrity of the movement for reproductive rights. Study and, when possible, undo the lapses of our predecessors. But remember their strengths and

The Court’s willingness to backtrack on the pledges it made in Roe was evident as early as 1980.

their victories, too. Cherish the flame that has burned through Roe and Doe, despite the Supreme Court more than because of it. By its light you may see something that inspires you to fight again. n Felicia Kornbluh is a professor of history and of gender, sexuality, and women’s studies at the University of Vermont. She is the author of the forthcoming How to Fight a War on Women: My Mother, Our Neighbor, and the History of Reproductive Rights and Justice in Modern America.

Justices Harry Blackmun (left) and Sandra Day O’Connor wrote the key rulings upholding the right to an abortion.

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ANONYMOUS , RON EDMONDS / AP IMAGES

reproductive rights organizations on this point directly. Thinking of the “Mississippi appendectomy” (involuntary hysterectomy) Fannie Lou Hamer and many other women experienced, they asked Planned Parenthood and the National Organization for Women to join their efforts to control sterilization abuse. New York City NOW joined, but national NOW and Planned Parenthood did not. I think the movement would have been politically stronger, and just a better movement, if it had learned from those challenges and expanded its membership and agenda dramatically.

These insights complement my grief and anger over the harsh refusal of my personhood that resounds in last week’s decision. They do not negate them. Abortion decriminalization was a desperately hardwon achievement. Its true authors were the hundreds of thousands of people who continued to seek and have abortions despite the consequences, which included financial debt, fear and distress, insult, sexual abuse, coerced sterilization, physical injury, and

In drab rooms like these, arbitrators handle cases that companies do not allow to be heard in courts.

The End of Forced Arbitration?

Persistent advocates and new strategies have led some companies to relent on blocking access to courts. But there’s a long way to go.

By Susan Antilla It sounds like a scene from an out-of-touch political miniseries, but over the summer, six lawmakers—from both parties and both houses of Congress—introduced a bill seeking to prevent companies from forcing arbitration of sexual harassment and assault claims.

It was the latest in a string of developments that has several veterans in the arbitration field wondering if the tide finally has turned in favor of Americans who have lost their rights to take employment, investment,

and consumer claims to court after they sign take-it-or-leave-it arbitration agreements.

With a newfound movement of sexual harassment and discrimination victims, advocates, and innovative legal experts forcing the issue, several high-profile tech companies have dropped their requirement that sexual harassment cases be heard behind closed doors. Amazon even ended arbitration for customer complaints. And numerous legislative and administrative efforts are pushing to go even further.

“I think we may be seeing the beginning of the end” of mandatory arbitration, said

George Friedman, who spent 37 years running dispute resolution programs at the American Arbitration Association and the Financial Industry Regulatory Authority (FINRA), which is Wall Street’s self-regulator.

These individual examples may be encouraging, but there remain formidable challenges for plaintiffs who are battling to get access to the courts.

American companies have fought long and hard for the power to hijack the public’s right to sue them. Not only do forced arbitration agreements bar individuals from filing their own court claim, they often forbid litigants from pursuing any group claims, whether in court or in a private arbitration forum. If you get fired because you’re Black, or you lose money at the hands of a corrupt stockbroker, you could wind up telling your sorry story to a couple of 60-something white arbitrators at the local Holiday Inn. And you’ll probably lose.

The bill introduced this summer was an important step in the right direction, said F. Paul Bland Jr., executive director of the public-interest advocacy group Public Justice.

But it was an easy call for elected officials.

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NOTEBOOK

Sexual assault and harassment cases are lowhanging fruit for arbitration reform, because the public has a visceral reaction to the idea of forcing those claims into closed-door forums.

Companies under fire for forcing arbitration of sexual harassment cases, like Uber and other tech companies, are trying to preserve a portion of the system, said Bland: “What you saw from Silicon Valley is them saying, ‘OK, here’s an issue that when people find out, they have a strong moral reaction, so let’s carve that out.’” In the meantime, most discrimination cases over unequal pay, racism, and other egregious practices continue to be filed confidentially and heard in private.

Still, there are signs of progress. As the Prospect wrote in early 2020, companies have been subject to “mass arbitration,” where workers and employees who have been cut off from access to class litigation in court file thousands of arbitrations at once. This triggers millions of dollars in unexpected filing fees for the companies— a jolt considering they set the system up to 14 PROSPECT.ORG SEP/OCT 2021

hear one case at a time. Sometimes they refuse to pay, but that doesn’t always fly.

Alerted to the actions of corporate deadbeats, California passed a law in January 2020 requiring companies to pay within 30 days of an arbitration forum’s due date or waive their right to compel arbitration.

Mass arbitration has been effective in cases where large numbers of consumers or employees face a similar issue, such as wage and hour claims that impact many workers in the same way. It can lead companies to consider changing their arbitration policies.

But it has not been a game-changer for class action cases where plaintiffs complain of race or gender discrimination. Even Warren Postman, a Washington, D.C., lawyer who says his firm has secured more than $375 million in mass arbitration settlements for more than 150,000 people, is cautious about the strategy’s reach. “I don’t think forced arbitration agreements are going away entirely or even that the majority of them is going away,” he said.

Vigilant business lobbyists aren’t taking any chances. The U.S. Chamber of Commerce, which keeps a running scorecard of lawmakers’ positions on business issues, said earlier this year that they’d issue leadership “credit” to members of Congress who declined to co-sponsor the Forced Arbitration Injustice Repeal Act, known as the FAIR Act. That more wide-ranging bill would prohibit forced arbitration of employment, consumer, antitrust, or civil rights disputes, as well as any agreements that prohibited class actions. The FAIR Act was also the motivation behind a bizarre email to a plaintiff’s lawyer last month that offered a $2,000 payment in return for finding a client who’d had a good experience in arbitration and was willing to sign a pro-arbitration op-ed, the Prospect reported in August.

Battles over arbitration have not lacked for drama over the past three decades, but the clashes thus far won’t hold a candle to the brouhaha that will unfold if Wall Street’s arbitration machine comes under threat.

EVELYN HOCKSTEIN / AP IMAGES

Securities and Exchange Commission chair Gary Gensler has endorsed banning forced arbitration for investors.

Amazon ended mandatory arbitration for customer complaints, but has kept it in place for disputes with its millions of third-party sellers. This is the largest employment-based class blocked from courts in America.

It was Wall Street that got the mandatory arbitration racket going in the first place, beginning in the 1980s after a suburban New York couple tried to sue the firm then known as Shearson/American Express, even though they’d signed an arbitration agreement. In 1987, Shearson won that case before the Supreme Court. Within four years, the industry was celebrating another Supreme Court decision when a Wall Street employee who’d signed a similar document tried to sue for age discrimination and also lost. The two cases ushered in a new era of opacity for securities professionals accused of wrongdoing.

The rest, as they say, is history, as other industries witnessed and copied Wall Street’s successful strategy to quiet embarrassing accusations.

Today, Wall Street faces arbitration challenges on several fronts. The Investor Choice Act would ban mandatory arbitration in brokerage and investment advisory contracts, and forbid public companies from forcing shareholder suits into arbitration.

Despite strong opposition from Wall Street trade groups, the backdrop of national populism offers a window of opportunity.

Defense lawyer Joseph L. Calabrese told the Prospect that it’s the first time he’s seen a proposal to get rid of investment arbitration “where I think there’s an appetite in Congress to consider it.”

A second threat is that the Securities and Exchange Commission (SEC) could simply pull the plug on forced arbitration. Eleven years ago, the Dodd-Frank Act gave the agency the power to limit or ban mandatory arbitration of securities industry disputes, although none of the chairs during the Obama and Trump administrations moved to use it. There’s speculation that under President Biden’s SEC chair, Gary Gensler, that could change. During his confirmation hearing earlier this year, Gensler told Sen. Elizabeth Warren (D-MA) that investors should have a way to “redress their claims in the courts.” That was a clue that Gensler might take the issue on, said Calabrese. “If anyone is gonna do it, it’s gonna be him.”

Lynn Turner, a former chief accountant at the SEC, said Gensler “is the type of person who I think will be willing to address the lack of fairness of arbitration,” but warns that the SEC chair is certain to get pushback. The agency may have the authority to eliminate mandatory arbitration, Turner said, “but that does not change that Congress will call Gary up and hold hearings and introduce legisla-

tion to kill that portion of Dodd-Frank.”

The SEC’s ombudsman, Tracey L. McNeil, said in a report over the summer that her office would be examining data on brokers who withhold information from their accusers during arbitration to help determine “whether the arbitration process is a beneficial alternative to litigation for retail investors.” Brokers can have an informational advantage over small investors in arbitration, the report said, and if they strategically withhold documents, investors may face “disproportionately negative outcomes.”

The industry is bracing for unwelcome change. In April, Goldman Sachs narrowly defeated a shareholder vote that would have required a study of the impact of mandatory arbitration on employees, then said it would conduct the study anyway, “in consideration of the feedback” it received. It was a critical moment showing financial firms’ emerging weakness on arbitration. Firms are “contemplating a day where mandatory arbitration won’t be allowed or customers will have a choice [between arbitration and court],” said Friedman.

Should investors get that choice, look for a big battle over how, exactly, that would work. FINRA operates the largest securities dispute resolution system in the U.S., and investor advocates who have successfully fought for reforms to its dispute system are concerned it could be replaced with something worse. “My concern is whether reform is going too far, especially where there are protections,” said Christine Lazaro, a board member of the Public Investors Advocate Bar Association and director of the Securities Arbitration Clinic at St. John’s University.

New York lawyer Timothy Dennin, who represents investors in securities arbitrations, argues that if investors were to get access to the courts, they should still be able to choose arbitration if they wish—even after a dispute arises.

It was Wall Street that got the mandatory arbitration racket going in the first place.

That would allow plaintiffs to decide when the procedural rules of one forum or the other worked best for them, said Wall Street defense lawyer Alan M. Wolper. He said he’d rather be in court for a weak case with a sympathetic victim, for example, because a judge might throw it out in summary judgment before he ever met the plaintiff. Summary judgment motions, though, are not allowed in FINRA arbitration, according to a FINRA spokeswoman.

And there are only narrow grounds to dismiss a case, such as evidence that the claim has already been settled. That means arbitrators are more likely than judges to hear a sympathetic case brought by a fragile investor who’d lost money.

So if investors wind up getting a choice, Wall Street wants them to make it when they sign a contract to open an account, not after they’ve decided to file a claim. To ensure that investors could not access FINRA arbitration after a conflict, though, would mean getting rid of a FINRA rule that says customers have the right to demand arbitration, a potential “battle royal,” in Friedman’s view.

Investors who gain access to the courts may be surprised by some of its downsides, said New York securities lawyer and law professor Seth Lipner. “There’s a lot of bad law out there that arbitrators don’t pay attention to,” Lipner said, which would be unavoidable in court. And, as Wolper explained, individual investors are likely to have many cases thrown out of court that would have been able to proceed at FINRA. That said, “we would have more huge wins than we see now” if investors could take claims to court, said Lisa Bragança, a former SEC lawyer who represents plaintiffs in investor arbitration cases. Settlements could also go up because Wall Street would want to avoid having its secrets exposed in open court, or having legal precedents set on its conduct, which don’t apply in arbitration.

But will any of this even happen? Calabrese said it could, but the people pushing to get rid of arbitration had better hurry up.

“The clock is ticking,” he said. “For the stars to align like this again is unlikely.” n Susan Antilla is an investigative journalist whose award-winning financial articles and columns have appeared in The New York Times, The Nation, The Intercept, and Bloomberg View. She is author of Tales From the Boom-Boom Room: The Landmark Legal Battles That Exposed Wall Street’s Shocking Culture of Sexual Harassment.

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16 PROSPECT.ORG SEP/OCT 2021

RACIAL JUSTICE TALK THE RIGHT-WING ATTACK ON

How critical race theory has become a handy target for an old-fashioned assault on civil rights.

Forces on the political right—Donald Trump and his epigones, Fox News, the Manhattan Institute, The Wall Street Journal, among others—have engaged in a fierce, concerted, and effective effort to vilify dissident thinkers who are trying to deepen, sharpen, and reframe ways in which racial matters are portrayed and discussed. Their strategy is sly. They have repurposed “critical race theory” and related thinking to demonize anyone who would challenge the right’s whitewashed fable of American exceptionalism. Much of what emanates from the embattled racial equity camp is an extravagant version of familiar left-liberal critiques of American racism. The right, however, has deployed that extravagance, along with some missteps and exaggerations, to fabricate a target useful to its aims, which include taking the country back to an earlier era of accepted white hegemony.

Among the prominent commentators whose ideas are under attack are Nikole Hannah-Jones, the journalist who was the main figure behind The New York Times’ 1619 Project; Kimberlé Crenshaw, the Columbia University and UCLA law professor who is the most sophisticated and articulate expositor and representative of critical race theory (CRT); and Ibram Kendi, director of the Center for Antiracist Research at Boston University. One of their key themes is that racism is deeply embedded in America (a point that has never been documented more fully than in Winthrop Jordan’s classic but now forgotten text from 1968, White Over Black: American Attitudes Toward the Negro, 1550–1812). In Hannah-Jones’s formulation: “Anti-black racism runs in the very DNA of this country.” Their

By Randall Kennedy

ILLUSTRATION BY DANIEL ZENDER

SEP/OCT 2021 THE AMERICAN PROSPECT 17

second big theme is that antidiscrimination measures (e.g., the Equal Protection Clause of the 14th Amendment to the federal Constitution, the Civil Rights Act of 1964, and the Voting Rights Act of 1965), while useful, inadequately address disabilities imposed by racial oppression in the past and ongoing, new, and more subtle forms of racial subordination. That was the central contention of the initial group of legal academics that coined the term “critical race theory” in the 1980s. That cadre, which included Crenshaw, Derrick Bell, Charles Lawrence III, Mari Matsuda, Richard Delgado, and Gary Peller, made a big impression within legal academia and succeeded in propelling their argument into other college and university precincts. Kendi echoes the argument that conventional antidiscrimination prohibitions are insufficiently demanding, insisting upon anti-racist interventions that produce measurable gains on the ground for African Americans. He and others of like mind propose remedies aimed at undoing racial hierarchy even at the cost of adopting ideas and policies that conflict with established commitments to competitive individualism and limited governmental powers.

The handiwork created by this loosely associated community of thinkers has given rise to a terminology that has resonated widely: “anti-racism,” “white privilege,” “systemic racism,” “intersectionality.” It has popularized 18 PROSPECT.ORG SEP/OCT 2021

the idea that well-intentioned white “allies” need to look more deeply into their own racism. It has indicted iconic figures and ideas: the Founding Fathers (denounced as racist enslavers) and “color blindness” (condemned as a mystification that inhibits race-conscious policies needed to undo racial unfairness). It has exhibited an impatience, indignation, and absence of gratitude for racial “progress” that admirers find exhilarating. Hannah-Jones, Crenshaw, and Kendi echo Malcolm X: “If you stick a knife in my back 9 inches and pull it out 6 inches, that’s not progress. If you pull it all the way out, that’s not progress. Progress is healing the wound that the blow made.”

Despite cussing out the white establishment and insisting that it do more to repair damage long in the making, racial justice activist-intellectuals have found favor not only at Black Lives Matter rallies but in big philanthropy, diversity, equity, and inclusion networks; large swaths of private and public education bureaucracies; and other predominantly white venues. Hannah-Jones won a Pulitzer Prize. When the trustees of the University of North Carolina initially denied her a tenured faculty position recently, the controversy was frontpage news and an outcry prompted the trustees to reverse themselves (though she subsequently rejected their offer in favor of a still better one from Howard University).

Kendi’s Stamped From the Beginning: The

Definitive History of Racist Ideas in America was awarded the National Book Award in 2016, and his book How to Be an Antiracist became a best-seller in 2020. Crenshaw is a much-in-demand pundit who also directs the increasingly influential African American Policy Forum. These dissidents have obtained traction locally and nationally, at the popular level and in elite circles.

Their successes, the militance of their rhetoric, and the heterodox character of some of their proposals has provided a convenient target for the right to demonize.

On Fox, the likes of Tucker Carlson, Will Cain, Newt Gingrich, and Miranda Devine assert that CRT is “a cult,” that it is “modern-day Jim Crow” propagated by “people who want to brainwash your child,” and that, unless erased, it will “warp the minds of American children” leading to “social upheaval and mental illness.” In the farright commentariat, “critical race theory” has become a catchall phrase that refers not so much to a discrete body of thought as a bogeyman onto which those who invoke it negatively can cast fears, resentments, and prejudices. Chris Rufo of the Manhattan Institute admitted as much when he declared that “The goal is to have the public read something crazy in the newspaper and immediately think ‘critical race theory.’”

He remarked similarly that “We have successfully frozen their brand—“critical race

JOHN MINCHILLO / AP PHOTO

Nikole Hannah-Jones, the main journalist behind The New York Times’ 1619 Project, is one of the prime figures under attack by the right.

Today’s right-wing

will to amnesia, hostility to racial justice, and coercive patriotism are by no means new. theory”—into the public conversation and are steadily driving up negative perceptions.

We will eventually turn it toxic, as we put all of the various cultural insanities under that brand category.” According to Rufo, “critical race theory is the perfect villain.”

He ought to know: The “critical race theory” that he attacks incessantly is, in large part, a figment of his creation.

Donald Trump declared that “Critical race theory, the 1619 Project, and the crusade against American history is toxic propaganda, ideological poison, that, if not removed, will dissolve the civic bonds that tie us together [and] destroy our country.” In September 2020, in the waning days of his presidency, he issued an executive order directing federal agencies to end sensitivity trainings and related activities that in any way affirmed or used racial equity literature that was denounced as “offensive and anti-American race … stereotyping and scapegoating.” The order was intended, it said, to combat “the pernicious and false belief that America is an irredeemably racist and sexist country; that some people, simply on account of their race … are oppressors; and that racial … identities are more important than our common status as human beings and Americans.”

According to Sen. Ted Cruz, the anti-CRT campaign is an uprising by ordinary, patriotic Americans who are learning belatedly that their local schools, infiltrated by CRT thinking, are teaching that “America is fundamentally racist, that all white people are racists … [and] that whites and blacks hate each other and have to hate each other.” Just to clarify things, Cruz asserted on another occasion that critical race theory is “every bit as racist as Klansmen in white sheets.”

According to Sen. Josh Hawley, “Critical Race Theory has no business being taught in Missouri [or presumably any other] classrooms.” To effectuate that view, Hawley has proposed the Love America Act, which

would make any school ineligible for federal funding if it permitted instruction teaching that the Declaration of Independence, the Constitution, or the Pledge of Allegiance are the product of white supremacy or racism.

At the state and local level, officials have not only denounced “critical race theory”; they have proposed legislation to banish or chill broad and potentially valuable bodies of knowledge and categories of discussion.

Some of these proposals have been blocked or narrowed. But a few have been enacted into law.

Tennessee, for example, has passed a law prohibiting teachers from using “instructional materials that include or promote” certain concepts, including the proposition that “This state or the United States is fundamentally or irredeemably racist.” It passed no such law, of course, when schools taught that slavery was a beneficent school of civilization for savage Africans, that Reconstruction was a dangerous travesty in that it enfranchised Black men, and that the Jim Crow regime was sensible and virtuous in that it confined African Americans to their natural, lowly place beneath white Americans. Never do the right-wing partisans of historical accuracy take up their cudgels against educators who belittle atrocious acts of racism or demean Blacks, Indians, Asian Americans, or other nonwhite peoples. Their sensibilities are finely attuned only to perceived slights against whites.

Does this new statute mean that in Tennessee it is unlawful for a teacher to share with students her belief that Thomas Jefferson, Alexis de Tocqueville, and Abraham Lincoln were correct in forecasting that success in creating racial equality in America was highly unlikely, indeed probably impossible? In Tennessee, is it illegal for a teacher to share with her students a belief that, as a matter of tragic realism, Chief Justice Taney was correct when he maintained in Dred Scott v. Sandford that the Founding Fathers did not mean to include Blacks in the political family of the United States? Many teachers will not want to take the risk of finding out and will avoid racial subjects altogether, leaving undisturbed the mythologies of innocence that nourish the ignorance and resentments that flare in reaction against just about any policy perceived as especially benefiting African Americans.

Today’s right-wing will to amnesia, hostility to racial justice, and coercive patriotism are

by no means new. Nor is its attempted suppression of free inquiry and teaching. During the 1950s and 1960s, educators championing racial justice were constantly being smeared as “communists” regardless of whether there was any plausible evidence of their actually being associated with the communist movement. Why? Because “communism” was widely feared and thus labeling opponents as communist was an effective way to put them on the defensive. Racial reactionaries such as Federal Bureau of Investigation (FBI) Director J. Edgar Hoover, South Carolina United States Sen. Strom Thurmond, and North Carolina United States Sen. Jesse Helms painted as “red” or “pink” virtually anyone who forcefully challenged the racial status quo. The National Association for the Advancement of Colored People (NAACP), Bayard Rustin, and Martin Luther King Jr. were among the victims. But targets of reaction included more than activists engaged in direct action in the streets. Writings by buttoned-down moderates were also assailed by those hyper-allergic to any serious criticism of racism. Professor Jonathan Zimmerman recalls in Whose America?: Culture Wars in the Public Schools that in 1966 a proposed junior high school textbook, Land of the Free: A History of the United States, by the distinguished historian John Hope Franklin and two colleagues prompted a bitter negative reaction on the part of Californians who perceived the book to be intolerably subversive. Franklin and his co-authors had written that “American practice has not always measured up to the ideal of ‘government by the people,’” noting invidious racial and gender discriminations. Applauding the protesters, Franklin and his co-authors maintained that “actual rule by the people has become more and more of a reality,” and that “[m]ost Americans agree that this trend should continue.” Yet even that mild, reformist critique generated indignation that presaged current right-wing vituperation. Letters to state officials ran nearly 2 to 1 against adoption of the Franklin text, with detractors asserting that it fomented “agitation” among Black students and “self-loathing” among whites.

The authors of one disapproving letter wrote: “We do not believe that you can improve race relations by continued emphasis on injustices of the past. Neither do we believe that a generation of white students should be made to feel guilty.” While Franklin’s textbook was eventually adopted after he diluted it a bit more to make it acceptable, many other texts then and subsequently have received no such SEP/OCT 2021 THE AMERICAN PROSPECT 19

reprieves. The history of American education at every level is full of examples of textbooks blocked, library books pulled, and instructors fired on account of right-wing objections to teachings about racial injustice.

The right-wing attack against efforts to educate the public realistically about the history and current role of anti-Black racism should be answered by a redoubled commitment to disseminating accurate information undergirded by anti-racist values. Public understanding matters.

Histories and other commentaries that whitewash the reality of the American past and present are the ground from which spring the mischievous notion that there is no longer a need for special protections against racial disfranchisement (a predicate for the Supreme Court’s recent evisceration of the Voting Rights Act), the misimpression that in terms of wealth and income Blacks are generally on par with whites (a predicate for resistance to redistributive and reparative policies such as affirmative action), and the erroneous surmise that whites are as likely as Blacks to be victims of invidious racial discrimination (a predicate for white racial resentment). These myths, alas, are believed by millions of voters and 20 PROSPECT.ORG SEP/OCT 2021

their representatives at all levels and in all branches of government.

There needs to be a strong response, too, in light of the disturbing encroachments upon freedom of speech, listening, reading, expression, and instruction that continuingly menace schools, museums, and libraries. Incursions on these essential freedoms sometimes come from the left. Determined to confront what they see as threats to racial minorities, some racial justice activists have engaged in wrongful silencing of speakers they abhorred (e.g., the infamous shouting down of Charles Murray at Middlebury College), wrongful censoring of art they disliked (e.g., insisting upon covering purportedly racist murals such as those at issue at the George Washington High School in San Francisco), and wrongful policing of pedagogical choices they oppose (e.g., demanding the firing of white teachers who dare to read out loud passages from literature that contains the notorious N-word). The rightwing campaign against racial equity discussion, however, eclipses by several degrees of magnitude left-wing censoriousness. The power that the latter is able to mobilize is dramatically overborne by the power of the former, especially its demonstrated capacity to mobilize governmental authority in furtherance of its aims. But no matter what the

source, the chilling or banishment of educational, journalistic, and artistic activity is a serious matter that should arrest the attention of all who care about the intellectual, ethical, and artistic health of our polity.

When members of one’s own ideological camp act badly, there is a heightened responsibility to speak out. It is thus praiseworthy that a few conservatives—I think here of Princeton professors Robert George and Keith Whittington—have spoken up vigorously against conservative censors.

Disgraceful is the silence of so many other conservatives. The sentinels on the editorial page of The Wall Street Journal are keenly sensitive to left-wing cancel culture. By contrast, they are deplorably complacent in the face of right-wing abusiveness.

The fact of the matter is that the episodes of overreaching by excessively “woke” educators that the right wing eagerly seizes upon and weaponizes are mainly props in the campaign against racial equity instruction in schools. For the right-wing campaign is not really concerned with improving education. It is, for the most part, a race-baiting ruse to gin up the Trumpian base, to vent the status anxieties of aggrieved whites, and to bait progressives into saying and doing things that alienate potential allies.

Some of the racial equity literature vili-

ANDY BARRON / AP PHOTO

Numerous states have proposed and passed legislation to banish critical race theory and chill broad categories of discussion.

There ought to be

no airbrushing of the racial equity thinking under rightwing attack. Some of that thinking is radical. So? fied by the right wing does contain errors or misjudgments deserving of criticism and has inspired “sensitivity trainings” and related initiatives that can be tendentious, overbearing, and even coercive. It is a mistake to refrain from publicly criticizing any aspect of the racial equity camp out of a sense of solidarity with those being targeted by the right-wing campaign. Adopting that posture entails accepting indefinite inhibition since the prospect of right-wing attack is always present. It is important for at least two reasons to be willing to share candidly criticism of the racial equity camp even as it faces vilification from the right. The racial crisis is a large, complex, difficult problem that will require for clarification, much less resolution, knowledge and insight coming from all sorts of different vantages. Developing useful thought will almost inevitably entail disagreements. Avoiding friction for the sake of displaying a putative solidarity will come at the price of evading disputes that are essential to confront.

No strain of thought is free of error, weaknesses, missteps. Contrary to what the 1619 Project initially posited, protecting slavery was not a substantial motivation behind the American colonists’ move to secede from the British Empire. And, yes, some of the ideas propounded by those who march under the banner of CRT ought to be rejected. The notion that there has been no appreciable advancement by Black people since 1950 is ridiculous. The idea that Black people cannot be racist because they lack power to effectuate their prejudice is misguided for a number of reasons including the obvious empirical point that there are Black people who, as police chiefs, mayors, Cabinet officials, members of Congress, professors, directors of human resources offices, chief executive officers, prison war-

dens, and president and vice president of the United States, do exercise decisive, often unreviewable, power over whites and others. Another bad idea, popular among some proponents of CRT, is that “racist” speech is a readily identifiable species of worthless expression that individuals and institutions should not hesitate to censor. The irony, of course, is that the right wing, replicating that logic, has now labeled critical race theory as “racist’ and demanded that it be suppressed. One hopes that this experience will drive home a point made recently in Dissent magazine by Katha Pollitt in “The Left Needs Free Speech.” What gives protesters such as critical race theorists the space to promote unpopular positions in unfriendly places, she observed, “is the respect most Americans give to free speech”—at least for now. (She also archly remarked that while many progressive dissidents spend a lot of time attacking liberalism, they also rely on liberalism to protect them “like children who assume they can say awful things to their parents [but that] their parents will still be there for them.”)

There ought to be no airbrushing of the racial equity thinking under right-wing attack. Some of that thinking is radical.

So? Some of that thinking is misguided.

Again: so? Even if flawed, even if objectionable, even if disturbing, that thinking should nonetheless be allowed to be considered and debated in age-appropriate settings under the superintendence of teachers who are presumably competent. Radical and misguided writings can contain useful information and provide excellent platforms from which to inculcate tastes for complexity, skepticism, and questioning.

The arguments of Nikole Hannah-Jones and Kimberlé Crenshaw and Ibram Kendi are part of the cultural inheritance of the country and should be carefully understood, vigorously debated, and conscientiously included in school curriculums without ideological censorship—just as the proslavery sentiments of John C. Calhoun, the anti-slavery secessionism of William Lloyd Garrison, the socialist advocacy of Eugene Victor Debs, the patriotic imagery of Martin Luther King, Jr., and the reactionary ramblings of Donald Trump ought to be made available for study and discussion.

No significant idea that sheds light on the development of the American experiment should be banished in the way that the right wing is seeking to banish CRT and kindred communities of thought.

Preserving credibility is another reason for declining to withhold sincerely held criticism of racial justice talk even when it is under right-wing attack. Good-faith sharing of candid impressions deduced from disciplined study is imperative in an environment in which falsity has been unleashed on a grand scale, in which adherence to principle is scoffed at as sentimental, and in which reason itself is under siege. It is essential to emphasize, moreover, that whatever one’s ultimate judgement of the thinking in question—whether one agrees with it or not—a well-organized polity should put firm boundaries around the capacity of people, especially governmental officials, to banish ideas, thereby depriving prospective audiences, including precollegiate pupils, of an opportunity to consider for themselves what guardians have repressed.

Going forward, resistance to right-wing censoriousness should include redoubled efforts to tell the truth about the American story, its triumphs and defeats, its heroes and villains, its complicated mixture of good and bad. It should include standing up for the rights of racial equity commentators and educators whether or not one agrees with them and indeed while criticizing them. It should include enhanced support for the network of organizations dedicated to protecting liberty of speech, academic freedom, and artistic independence. Some of these organizations have been around for decades—the venerable American Civil Liberties Union (ACLU) and the scrappy National Coalition Against Censorship (NCAC, on whose board I am privileged to sit). Recently, moreover, there have arisen organizational newcomers that have spoken up against right-wing (and left-wing) encroachments on intellectual freedom and deserve increased support from a public that ought to be more grateful for their efforts. I think here in particular of the Academic Freedom Alliance (AFA) and the Faculty Legal Defense Fund (FLDF) established under the auspices of the Foundation for Individual Rights in Education (FIRE). Resistance to the rightwing assault on freedom of thought should include a recognition that while ideological struggle is unavoidable, indeed often productive in a democracy, the means by which protagonists assert their values must be limited to protect against the incipient tyrannies so disturbingly present all around us. n SEP/OCT 2021 THE AMERICAN PROSPECT 21

The China Biden’s aggressive push against Chinese mercantilism has been marred by turf battles and cross-pressures.

Here’s what needs to be done.

BY ROBERT KUTTNER

22 PROSPECT.ORG SEP/OCT 2021

Challenge

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T

The Chinese economic model starts with state-directed and -­subsidized capital.

Imports are either blocked or conditioned on technology transfer and “partnerships” with Chinese state-owned or -­allied companies whose eventual goal is to displace imports. Western companies are incentivized by cheap labor and capital subsidies to produce in China, but only for export back to the West (Apple), or locally but subject to sharing trade secrets (GE). Whatever China does not get through negotiated technology transfer, it gets through industrial espionage.

Exports, meanwhile, are subsidized, with the objective of making China the worldwide low-cost producer. China also manipulates the value of its currency, to keep export prices artificially low. Wages are suppressed, and of course there are no labor rights.

This model has produced growth rates of 7 to 10 percent per year for more than three decades. It has driven U.S. producers out of industry after industry, making those remaining heavily reliant on Chinese supply chains. It has enriched U.S. financiers and upended America’s domestic middleclass labor market, while trying to mollify consumers with cheap goods. The Chinese state, directed by its Communist Party, is pursuing nothing less than global political and economic hegemony. Undeniably, the U.S. has facilitated this advance.

American Enablers American elites have been blind to the nature of this threat for two basic reasons. First, China’s success defies orthodox assumptions. A state-led economic system with managed capitalist elements, run by a ruling party that prohibits dissent, is not supposed to work. Second, China has astutely given U.S. multinational corporations and investment banks a huge piece of the action. America’s most powerful economic players are part of the domestic China lobby, and resist a more assertive U.S. policy. In global geopolitics, we have never had to deal with such a Trojan horse.

It’s instructive to compare U.S.-China relations with America’s 40-year Cold War

24 PROSPECT.ORG SEP/OCT 2021

with Soviet Russia. The USSR posed a clear geopolitical and military threat to the democratic capitalist West. Both the West and the Soviets had global alliances, making the lines of conflict even clearer. But Russia posed no economic threat. On the contrary, as a clumsy bureaucratic economy the Soviet Union was a useful and instructive failure. Economics, geopolitics, and ideology thus aligned.

China today has no formal alliances comparable to NATO or the Warsaw Pact. But its economic entanglements divide loyalties, making it a far more insidious threat.

There were no American capitalists working behind enemy lines, as it were, because Russia offered no investment opportunities. The Russians had pathetic American domestic allies, in the form of a U.S. Communist Party riddled with FBI informers.

The Chinese have Apple, Intel, GE, Tesla, and Goldman Sachs.

In 2000, Bill Clinton allowed China into the World Trade Organization with no enforceable quid pro quos other than access for U.S. investment bankers. The policy was called “constructive engagement.” A key architect was Clinton’s economic-policy chief, Robert Rubin, late of Goldman Sachs and later of Citigroup. One political leader after another, seconded by the media and corporate echo chamber, assured Congress and the public that two benign consequences were sure to ensue: America’s trade imbalance would shrink, and China would become more open, democratic, and conventionally capitalistic.

On the latter point, Clinton himself contended: “By joining the WTO, China is not simply agreeing to import more of our products.

It is agreeing to import one of democracy’s most cherished values, economic freedom.

The more China liberalizes its economy, the more fully it will liberate the potential of its people … The Chinese government will no longer be everyone’s employer, landlord, shopkeeper and nanny all rolled into one. It will have fewer instruments, therefore, with which to control people’s lives.”

Seldom has a projection proven more

wishful. The regime has only become more totalitarian. Our trade deficit has quintupled. When China formally joined the WTO in December 2001, its annual trade surplus with the U.S. was $80 billion. In 2018, it hit $400 billion.

China simply did not carry out its WTO commitments to end its illegal subsidies, coercive partnership agreements, barriers to imports, and thefts of intellectual property. Yet for the better part of another two decades, U.S. policy under George W. Bush and Barack Obama resisted pushing back in any serious way. To the shame of Democratic presidencies, it took Donald Trump to reverse course.

The money made by investment bankers in particular since China selectively opened is staggering. The regime wanted Western capital to invest in state-owned enterprises, to link them with the West’s financial system, and to give them international legitimacy. According to Clyde Prestowitz, a prophetic China policy dissenter and author of the indispensable 2021 book The World Turned Upside Down, between 1993 and 2010 Chinese state-owned enterprises raised some $600 billion in U.S. capital markets, with underwriting fees and markups flowing to large brokers like Goldman. Unlike industrial and tech corporations subjected to rigid terms if they wanted to operate in or export to China, the big financial firms were given a free hand. They became investment bankers to the Chinese Communist Party.

China also needed U.S. financial expertise in mergers and consolidations. For example, before the mid-1990s China’s phone service was fragmented and inefficient. Goldman helped China create a single national carrier, called China Mobile. At the time, China Mobile existed only on paper, but with Goldman’s help, the company was taken public in New York and Hong Kong, and quickly raised $4.5 billion. Today, China Mobile is the largest mobile phone company in the world. Despite Beijing’s WTO commitments to open its markets, none of the Western carriers are able to operate in China.

PREVIOUS: FANG DONGXU / AP PHOTO OPPOSITE: XIE ZHENGY / AP HOTO

There has never been a threat to U.S. well-being comparable to China. Its rapid global expansion challenges America’s economic and geopolitical security, as well as basic democratic values and the rule of law. Joe Biden, taking advantage of a door crudely blasted open by Donald Trump, has reversed the traditional course on China policy. The question is whether Biden’s administration will do so coherently, comprehensively, and effectively.

The undertow against changing course on China remains fierce. Multinationals and big banks profit handsomely from the status quo, and hold enormous influence in domestic politics. Career policymakers are invested in the old model. Most economists and their echo chamber in the media still preach free trade and condemn protectionism and the sin of government “picking winners” when it comes to the U.S., but not on the part of China. The apostles of constructive engagement are loath to admit that they got China wrong.

The New Silk Road It’s not as if U.S. intelligence had to ferret out China’s grand designs. They were publicly and proudly broadcast by the regime, and documented with great specificity in the reports of the U.S.-China Commission and in the work of China scholars.

For example, the One Belt One Road initiative, launched in 2013, is a decadelong, multitrillion-dollar worldwide infrastructure program that will link some 70 countries to Beijing, economically and geopolitically. Chinese state-owned com-

panies are buying, modernizing, or building from scratch massive projects in Africa, Asia, Latin America, and Europe. The EU’s neoliberal austerity policies help China by creating financial shortfalls and inviting fire-sale transfers of national assets to Beijing’s state-owned enterprises.

Belt and Road projects include rail lines from Nairobi to Mombasa in Kenya, from Addis Ababa in Ethiopia to Djibouti, from Budapest to Belgrade in Eastern Europe, and three different routes linking Singapore, Thailand, Laos, Cambodia, and Vietnam with the Chinese rail hub of Kunming.

Chinese interests have bought all or part of the ports in countries that are American military allies, such as Haifa, Piraeus, Trieste, Antwerp, Bilbao, and, appropriately enough, Dunkirk. They have bought European airports, such as Frankfurt’s, as well as entire national electrical systems, such as Portugal’s previously state-owned REN. In these deals, China provides the upfront capital, controls the development and construction, and secures the project through extensive debt. All of this gives

China extensive economic intelligence as well as commercial and diplomatic influence. Key components are of course made in China, adding to Beijing’s trade surplus and technical leadership. The West offers nothing that comes close.

To complement One Belt One Road, in 2015 Beijing launched a rival to the World Bank and U.S.-sponsored regional development banks. The Asian Infrastructure Investment Bank launched with $100 billion in capital from China, its dominant shareholder. To the shock of Washington, the bank enlisted as members not just most Asian countries, but Britain, France, and Italy, as well as America’s most dependent Asian protectorate, South Korea.

Compared to the World Bank, which tends to be slow, bureaucratic, and inclined to impose conditions, Communist China paradoxically knows how to cut red tape.

Separately, the Made in China 2025 initiative, also created in 2015, is a ten-year plan to leverage mercantilism and achieve supremacy in every significant advanced technology, from artificial intelligence

Chinese companies are heavily subsidized by the state, with the objective of making China the worldwide low-cost producer.

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WTO. Beijing’s economic threat and climate change also come together in that China seeks to dominate the green technologies of the future, while still building coal plants domestically and in other countries.

There is one other analogy between the twin existential threats of climate catastrophe and death by China. Both were the result of preposterous assumptions about the efficiency of markets. In the case of climate, markets priced carbon disastrously wrong. In the case of China, elites insisted that markets had to be more efficient than state-led economies; thus China would have to become more market-like. This was not primarily an unfortunate error of economic theory. These catastrophic actions were driven by the raw economic and political power of corporate capitalists.

Biden’s Work in Progress Joe Biden has thankfully broken with prior Democratic orthodoxy on China. He has resisted pressure to reverse Trump’s constructive policies, most importantly the imposition of across-the-board tariffs on Chinese imports. But though Biden’s approach is directionally encouraging, he has yet to fashion a coherent master policy or sort out a hierarchy of sometimes competing goals on industrial, trade, environmental, and foreign policy. What’s occurred so far is a patchwork—a mix of bold but narrow measures, temporizing, and even some backsliding, all reinforced by crosspressures and turf rivalries.

Biden has hired mostly dissenters from the previous China consensus. The best is Katherine Tai, his U.S. trade representative, who is fluent in Mandarin and a wellinformed critic of China’s mercantilism.

Looking at China as a longterm threat, the closest analogy is global climate change.

She previously worked as the senior Democratic House staffer on trade and before that as a China negotiator at USTR. But Tai tends to be undercut on some issues by the old guard, including career USTR staff and senior White House officials, most notably Steve Ricchetti, the most corporate of Biden’s inner circle. In addition, Treasury Secretary Janet Yellen did Tai no favors by publicly describing the China tariffs as a tax on American consumers and expressing concern about their impact on inflation.

John Kerry, Biden’s climate chief, is famously naïve in thinking that a climate bargain with China might lead to warmer relations generally. He has met 18 times with his Chinese counterpart, hoping to broker a grand entente built around climate collaboration.

Kurt Campbell, who runs China policy at the NSC, is intermittently hawkish, but very turf-conscious, and has sparred with Tai on some policies. Under Obama, when he served as assistant secretary of state for Far Eastern affairs, Campbell was oldschool. He was a champion of the proposed Trans-Pacific Partnership, a traditional

SUSAN WALSH, MANUEL BALCE , PATRICK SEMANSKY / AP IMAGES

and robotics to advanced manufacturing with synthetic materials.

Meanwhile, China has become more territorially aggressive. The Chinese military already has more ships than the U.S. Navy.

It has increased pressure on Taiwan and asserted regional supremacy in the South China Sea, using dredging operations to create artificial islands claimed as Chinese territory, many with airstrips. Beijing has also destroyed democratic Hong Kong, unilaterally breaking the terms of its 1997 “one country, two systems” treaty with Britain.

But military muscle isn’t the prime locus of Chinese aggression. Rather, appropriately enough, the Chinese Communist Party relies on silken threads such as One Belt One Road, complemented by strategic purchases of entire Western corporations. This strategy flummoxes traditional U.S. assumptions about how geopolitics works. It is the economic equivalent of guerrilla warfare.

Between 2008 and 2019, Chinese stateowned enterprises purchased some 360 European companies, in deals valued at about $255 billion. The U.S. and its allies, committed to open markets, have no strategy for blocking such strategic purchases (which they might do on the reasonable ground that China is not a market economy), except in special cases on narrow national-security grounds.

Looking at China as a long-term threat, the closest analogy is global climate change.

The time to get serious about global warming was 40 years ago, before the current selfreinforcing cycle of worsening catastrophic weather events. The time to alter China policy was at least 30 years ago, after the outrage of Tiananmen, when China was far weaker and more isolated, and before it was in the

SALVATORE LAPORTA , SHIZUO K AMBAYASHI / AP IMAGES

Key players in the Biden administration on China (L–R): U.S. Trade Representative Katherine Tai, White House adviser Steve Ricchetti, Treasury Secretary Janet Yellen, Special Presidential Envoy for Climate John Kerry, and National Security Council Coordinator for the Indo-Pacific Kurt Campbell pro-corporate trade deal that would have done nothing to seriously contain China.

By contrast, Campbell’s writings in 2018 and 2019 read like rebuttals of his own previous views. Campbell also hired one of the best-informed China hawks, Rush Doshi, author of the superb book The Long Game, as his deputy. Yet Campbell has also been promoting a dubious Asian digital trade deal, a kind of cousin to the TPP. It would mainly improve access for American companies to other Asian markets, but would not address China’s flagrant “Great Firewall” suppression of free speech. Campbell has less institutional clout as China coordinator than his Trump counterpart, NSC principal deputy Matt Pottinger. Campbell is one level below Biden’s five deputy national-security advisers.

These contradictory Biden advisers have produced inconsistent and ad hoc China policies. In April, Biden reversed a November 2020 Trump order that exempted some 300 medicines and medical devices from the World Trade Organization’s Government Procurement Agreement, as part of the effort to secure supply chains. The Trump order allowed the U.S. to give preferential treatment to supplies made in the United States. The big drug companies pushed back in meetings with Ricchetti. When Biden reversed Trump’s order, it was news to Tai. According to my sources, a senior senator got wind of this and asked USTR what happened. The senator was told, “We got rolled.”

In another skirmish that combined turf and ideology, Yellen demanded that Biden

shift management of a key blacklist of Chinese military companies from the more hawkish Pentagon to the more dovish Treasury. An executive order in June approved the shift. The blacklist was created in 1999 as a quid pro quo for permanent normal trade relations. Treasury Departments under four presidents blocked its implementation. Only with a Trump executive order in 2020 did the Pentagon actually create the blacklist.

The tangle of Biden appointees echoes the limits of available policy leverage. The conventional tool kit of policies to resist unfair trade practices simply was not designed for a powerhouse nation like China that flagrantly and proudly defies the entire system.

So if America is serious, we need a much more potent tool kit, as well as more resolve.

The usual tools include: Countervailing Duties and Tariffs. The default premise of the trading system is that nations must not directly or indirectly subsidize exports, or sell them in foreign markets below their true cost of production (this is known as dumping). The two often overlap, but are not identical. An exporter seeking to gain market share might dump exports, whether or not they have been subsidized by the state. And when a nation like China, with suppressed labor and subsidized capital, enters a market where there is already worldwide oversupply, dumping is inevitable.

When countries do subsidize or dump, there are remedies both under domestic law and via the WTO. In the case of countries with market economies and rules of law, the

mechanisms are creaky but serviceable. But the remedies are simply swamped when an entire economic system is one grand case of illegal subsidy and pricing. Making a case against China’s predatory exports individually is all the more difficult because the system is non-transparent, and subsidies and pricing decisions are well hidden.

The remedy for illegal subsidy or dumping is selective tariffs, known as countervailing duties, which are supposed to offset the value of the subsidy or the damage caused by the dumping. The process of proving illegal subsidy or dumping is Kafkaesque. Basically, you file a petition with the Commerce Department. Your complaint gets a preliminary investigation. If it’s found to have initial merit, it is referred to a quasi-judicial body called the U.S. International Trade Commission for further investigation and eventually a ruling. For those with morbid curiosity or insomnia, the government has prepared a helpful 117-page handbook: www.usitc.gov/ trade_remedy/documents/handbook.pdf The process typically drags on for years and incurs costly legal fees. By the time a domestic company files a subsidy or antidumping complaint (much less wins it), the company has already suffered grave economic injury. “These cases have to be brought after the damage is done,” says Lori Wallach of Public Citizen’s Global Trade Watch. “By the time you get relief, you are on a ventilator and you may well die anyway.” Prestowitz cites the case of SolarWorld, a pioneering U.S. solar panel company that was the victim of Chinese subsidies and pricing below market. By the time SolarWorld won its case, it had been so weakened that it was forced out of business. Since 1995, there have been only 35 such cases filed under Section 301 of the Trade Act, a reflection of its inadequacy.

The genius of the several rounds of tariffs directed by Trump’s U.S. trade rep, Robert Lighthizer, was that they cut the Gordian knot and in effect levied one grand countervailing duty on the entire Chinese system, affecting nearly all of the $540 billion worth of Chinese goods that come into America annually. The tariffs, as high as 30 percent and in one case 50 percent, were not a precise, sector-by-sector offset to the Chinese subsidies and the damage to U.S. producers, but the overall countervail was ballpark accurate.

These tariffs began on solar panels, steel, and aluminum produced anywhere outside the U.S., but were gradually modified over the next three years to mainly target China on a more comprehensive basis. At one SEP/OCT 2021 THE AMERICAN PROSPECT 27

point, in January 2020, China promised to reform the abuses that it committed to ending as part of its WTO accession agreement 20 years earlier, in exchange for tariff relief.

But no progress ensued and some China tariffs were reinstated. Today, tariffs are imposed on Chinese goods with an annual value of some $340 billion.

The value of the tariff strategy was economic, political, and ideological. For starters, the tariffs provide some respite to several U.S. industries—like steel, aluminum, solar, and auto parts—that were on the verge of being destroyed by Chinese and other dumping. Secondly, the tariffs created a new status quo, to be used as leverage in any future U.S.-China grand bargain for drastically revised terms of engagement. And though the initial reaction to the tariffs was a gasp of horror from the trade establishment, editorial scolding for “China-bashing,” and predictions of dire economic consequences, not much else happened. Many of the price increases were absorbed by sellers. “The Earth did not fall off its axis,” Lori Wallach says. The tariffs gave U.S. China policy strategists permission to think way outside the box.

However, the relentless pushback continues. Industry groups keep lobbying Biden to rescind the tariffs. A provision rolling the tariffs back for a year and refunding the money to business made it into an omnibus bill sponsored by Senate Majority Leader Chuck Schumer (D-NY) that is otherwise intended to counter the Chinese threat.

Even climate groups are divided between those that want the U.S. to rebuild capacity, and promoters of solar who want cheap imports from China to lower its cost and hasten its deployment.

Press coverage echoes the industry line. A September 2 feature piece in The New York Times reads like a U.S. Chamber of Commerce handout: “American businesses say they are growing increasingly frustrated by the White House’s approach to China …

Mr. Biden has amplified some of the Trump administration’s punitive moves.” The piece did not contain word one about China’s predatory strategies that belatedly prompted these moves. Other “news” pieces insist, in the words of this headline, that “American consumers, not China, are paying for Trump’s tariffs.” These analyses myopically focus on short-term prices, not the long-term damage to the U.S. economy from unabated Chinese mercantilism. Had the Chinese leadership taken its advice from these econo28 PROSPECT.ORG SEP/OCT 2021

mists and pundits in the 1990s, China would have simply purchased goods from the lowcost producer of the time (the U.S. or Japan), and would never have made the state investments to become an industrial powerhouse.

National-Security Restrictions and Export Controls. Restrictions on trade based on national-security considerations have traditionally been fairly narrow, except in the case of well-established military enemies and terrorists. The U.S. has proven it can engage in comprehensive economic warfare.

The sanctions against Iran have done grave damage, and Washington has enforced a general embargo against Cuba since the 1960s. Those vintage Chevys and Fords driving around Havana are not there because Cubans have a nostalgic fondness for ’50s cars. But in the case of China, and its tight interlocks with U.S. corporations and investment bankers, national-security restrictions are treated as isolated special cases. They are also scattered among several agencies, making a coherent strategy more difficult.

Since 1988, under the Exon-Florio Amendment, the president has been granted the authority to block a commercial transaction deemed harmful to national security, with investigative powers delegated to the Committee on Foreign Investment in the United States (CFIUS), chaired by the Treasury secretary and with participation from 16 federal agencies. China-watchers have long complained that the criteria CFIUS uses are far too limited. In 2018, the Republican Congress passed legislation written by Lighthizer, the Foreign Investment Risk Review Modernization Act, toughening these standards. That legislation added to CFIUS review foreign investments in any company that deals with “critical technology,” “critical infrastructure,” or “sensitive personal data of United States citizens that may be exploited in a manner that threatens national security,” and expanded jurisdiction to cover the purchase of minority stakes. Trump also issued several executive orders. Even so, China has had no difficulty purchasing most kinds of advanced technologies and companies that do not have explicit national-security bans.

In addition, the Commerce Department maintains an “entity list” of companies owned or directed by foreign governments or otherwise deemed harmful to the national interest. Any U.S. dealings with such companies require a special export license, which is seldom granted. There are some 260 Chinese companies currently on

the list, most famously Huawei, which is a leading-edge company in 5G technology with multiple links to the Chinese state and Communist Party and spying opportunities.

In July, the Commerce Department added 19 Chinese companies to the list, as enablers of either human rights violations or military modernization. China was explicitly targeted under the Uyghur Human Rights Policy Act, signed into law by President Trump in June 2020. In late August, U.S. Customs seized a shipment of solar panels, on the ground that they had been manufactured partly with Uyghur forced labor. Hoshine, the world’s largest producer of metallurgical-grade silicon, has three facilities in Xinjiang, home to Uyghur concentration camps. A tougher law increasing sanctions on China based on human rights violations has passed both houses of Congress in slightly different versions.

All of this sounds impressive, and the system of controls does block some of the most flagrant cases. But it does not add up to either a comprehensive industrial policy or a China containment policy. For one thing, crown-jewel U.S. companies such as GE have long been doing business directly with the Chinese state, helping Chinese stateowned or -­directed companies acquire advanced technologies such as avionics that clearly have both military and commercial uses. This helps China in its quest to displace the U.S. as the world’s leading producer of aircraft, both civilian and military.

Even under Trump, GE got an export license to sell engines for China’s new C919 jetliner. This was part of a deal between China hawks such as Pottinger and Light­

China has had no difficulty purchasing most kinds of advanced technologies that do not have explicit nationalsecurity bans.

WIKTOR SZYMANOWICZ / AP PHOTO

In late August, U.S. Customs seized a shipment of solar panels suspected to be manufactured partly with Uyghur forced labor. hizer, and China enablers like ex–Wall Streeter Treasury Secretary Steve Mnuchin and Trump son-in-law Jared Kushner.

Under the deal, GE would not be permitted to sell engines to China’s next-generation wide-body jets. It remains to be seen whether Biden will retain the prohibition.

(The fault lines within the Trump and Biden administrations are uncannily similar, with the hawks at the NSC and the USTR, and China’s enablers at Treasury and Commerce.)

Other multinationals seeking the same relationships as GE often win reversals or work-arounds to export controls. In September 2020, Qualcomm, a leading U.S. maker of advanced semiconductors, was initially barred from selling chips to key Chinese companies, most notably Huawei.

By November, Qualcomm had lobbied furiously and got approval to sell Huawei 4G but not 5G microprocessors. More recently, Qualcomm was cleared by the U.S. government in August to sell its most advanced mobile chips to a phone company called China’s Honor, which is a Huawei spin-off that is technically no longer part of Huawei.

Ironically, Qualcomm was previously protected by a CFIUS recommendation

that resulted in a Trump executive order in 2018, blocking an attempted takeover of Qualcomm by a Singapore-based firm, Broadcom, on national-security grounds.

Broadcom, the creation of a Malaysian Chinese named Hock Tan, had a business strategy of acquiring companies, cutting back their R&D outlays, and making money from licensing deals. Yet, having been saved from Broadcom, Qualcomm pursued its own China ties. America’s tech companies are all too eager to do business with China and are a potent lobby for weak controls.

Buy America and Its Loopholes. In principle, the U.S. government can use procurement policies to require that all materials used in projects financed by taxpayer money be made in the United States. The problem is that our government has tied its hands by being a party to the World Trade Organization’s Government Procurement Agreement.

The exports of all 60 countries that have signed the agreement must be given “national treatment,” another term for a blanket waiver from Buy America. In return, U.S. companies are able to compete for foreign government procurement contracts.

That sounds reasonable, but trade is so lopsided today that the GPA denies the U.S. a major tool of economic development and reshoring of production and jobs. One can also make a good case that, if U.S. taxpayer money and U.S. debt financing are used in public projects, their materials should be made domestically.

Just to confuse things further, there are actually two relevant laws and concepts here. One is called Buy America; the other is called Buy American. The older of the two, the Buy American Act, dates to 1933.

Under that law and its successors, projects underwritten with the roughly $600 billion in annual federal procurement dollars must use goods made in America. That figure will only increase with expanded infrastructure spending. But due to definitions specified by executive orders, a product with as little as 55 percent domestic content is considered U.S.-made for purposes of the law. A recent Biden order gradually increases that to 75 percent. But even so, due to the Government Procurement Agreement, the exports of some 60 countries are considered domestic.

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shore producer nations that are GPA members, so that China-made products qualify as made in U.S.A. So the GPA doesn’t even give member countries refuge from China flooding the zone with subsidized exports.

The president has authority to withdraw from the GPA on 60 days’ notice. Biden has shown no interest in doing this. Instead, details and definitions are being tweaked.

Buy America, without the “n,” refers to requirements of the Transportation Department and its Federal Highway Administration, covering concrete, steel, and other construction materials. These requirements are not subject to the constraints of the GPA, though major projects such as the rebuilding of the San Francisco Bay Bridge were nonetheless done with Chinese steel, thanks to other loopholes.

Capital Markets. The aforementioned loopholes are trivial compared to the biggest loophole of all. Despite a few limited recent restrictions, China’s state-affiliated companies are free to raise money by listing themselves on U.S. stock exchanges, or on other exchanges such as Hong Kong’s, where American citizens make investments.

Exchange-traded funds (ETFs) invest in Chinese companies, giving Americans yet another avenue to underwrite the growth and expansion of Communist China. George Soros, in a recent piece in the Financial Times, noted that “In BlackRock’s ESG Aware emerging market exchange-traded fund, Chinese companies represent a third of total investments.” Soros added that such passive investments “have effectively forced hundreds of billions of dollars belonging to US investors into Chinese companies whose corporate governance does not meet the required standard.”

The few restrictions on Chinese access to U.S. capital markets are instructive.

Once again, most are the work of Trump’s trade and national-security officials. The most far-reaching is a law signed by Trump in December 2020, the Holding Foreign Companies Accountable Act. This requires foreign companies to comply with the transparent accounting requirements of the Sarbanes-Oxley Act, or be delisted from U.S. stock exchanges. It also requires listed companies to certify that they are not controlled by a foreign government. The law potentially covers all 248 Chinese companies listed on U.S. stock exchanges, with a market capitalization well in excess of $2 trillion.

Chinese-owned companies that sell stock in the U.S., such as Alibaba and the 30 PROSPECT.ORG SEP/OCT 2021

The U.S. has had bits and pieces of an industrial policy, but the Biden administration has embraced domestic manufacturing. oil giant PetroChina, routinely ignore U.S. securities law disclosures as enhanced by Sarbanes-Oxley, and neither the SEC nor the stock exchanges have required compliance.

China has taken the position that this was confidential or classified information, itself quite an admission.

Open Secrets reported that 133 separate lobbyists representing every corner of Wall Street got involved on this law, including at least 28 on behalf of the U.S. Chamber of Commerce alone. The lobbying succeeded in watering down the law, so that a company can be delisted only if it is not in compliance with accounting disclosures for three years in a row. There is no such loophole for U.S.owned companies. This creates few obstacles for Chinese companies, other than the small number that are formally blacklisted for being tools of the Chinese People’s Liberation Army, to raising money in U.S. capital markets or soliciting U.S.-based investors to put money into China via offshore exchanges or ETFs. Getting Serious About Industrial Policy The U.S. has bits and pieces of a de facto industrial policy: Pentagon procurement, targeted investments in new technologies and companies, R&D incubators like the

Defense Advanced Research Projects Agency (DARPA) and its Energy Department clone, ARPA-E, and episodic strategies to save vital industries such as semiconductors, dating to the SEMATECH research consortium funded with an initial $500 million from the Defense and Commerce Departments in 1987 under President Reagan. Federal investment in biotech, such as the Human Genome Project, also amounted to a tacit industrial policy. Likewise federal support for research universities and the National Labs. Indeed, if you look at any U.S. export leader that relies on advanced technology, behind it is the invisible hand of the federal government. Yet because of its self-defined role as world leader of the free-trade crusade, the U.S. has been loath to describe these as industrial policies or to embrace industrial policy as good and necessary.

This has changed under the Biden administration, a significant advance over both previous Democratic administrations and Trump’s China policy, which got tough with China on tariffs and talked a good game on rebuilding America but did nothing to advance domestic industry. The most comprehensive and far-reaching Biden blueprint to date is a book-length White House

A comprehensive industrial strategy, pursued in combination with tough measures to resist China’s predatory behavior, would amount to full-on economic nationalism. report released in June with the disarming title “Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth.” The blueprint was the work of four Cabinet departments and was written jointly by the NSC and the National Economic Council (NEC). A principal final author was Elisabeth Reynolds, former director of MIT’s Industrial Performance Center, who works for NEC director Brian Deese.

The report is one of the most comprehensive national economic-planning documents since the World War II era. It looks in detail at four vital sectors (semiconductors, large-capacity electric storage batteries, pharmaceuticals and active pharmaceutical ingredients, and materials critical to the national defense) and asks what it would take for the U.S. to regain leadership, both in supply chains and in final products. The report is not shy about targeting China, which “stands out for its aggressive use of measures—many of which are well outside globally accepted fair trading practices—to stimulate domestic production and capture global market share in critical supply chains.”

In the case of semiconductors, the report points out that the U.S. share has declined from 37 percent in 1990 to just 12 percent today. It recommends a $50 billion minimum investment to support domestic manufacturing and R&D, “to ensure the next generation of semiconductors is developed and produced in the United States.”

There are other crucial industries, technologies, and supply chains; but this report, pulled together in 100 days in response to a Biden executive order, can be read as a serious template. The overall strategy unapologetically defies the norms of the WTO. A more extensive report that addresses America’s entire industrial base, including energy and communications technology, will be prepared and delivered in February 2022.

A comprehensive industrial strategy, pursued in combination with tough measures to resist China’s predatory behavior, would amount to full-on economic nationalism.

The world, however, is not just comprised of the U.S. and China. A much tougher China policy will need to be coordinated with America’s allies. This will require some delicate diplomacy.

Keeping China out of U.S. capital markets for violating American securities laws is one key strategy because it need not sanction or alienate other countries that follow the rule of law and have compatible financial-disclosure regimes. The same is true of national-security restrictions, which don’t target nations that are no threat to the United States, except in the case of the most sensitive military technologies. But industrial policy is trickier. If the U.S. moves more in the direction of industrial planning, targeting, and technology subsidy, it must allow trading partners that are democratic nations the same rights. This seems a drastic shift, yet it is reminiscent of the pre-neoliberal era after World War II, when all our democratic allies engaged to a greater or lesser degree in state subsidy and economic planning.

The larger point here is that a successful China strategy is not just about China.

It will require the greatest government involvement in the economy since World War II, as well as a fundamental rejection of free-market ideology. This will be fiercely opposed, not only by China’s fifth columnists of U.S. companies with lucrative China deals, but by corporate America generally,

by Wall Street, and corporate Democrats.

That’s why China policy to date has been limited to half measures.

Under Trump, there were fierce divisions between the China hawks and the Wall Street contingent led by Mnuchin. Lighthizer and Pottinger were able to get tougher trade and export control policies; Mnuchin

made sure there would be no restriction on China’s access to U.S. capital markets. The same splits are evident among Democrats.

Chuck Schumer managed to get a tough bipartisan China bill through the Senate, the U.S. Innovation and Competition Act. It did a great deal on the industrial policy and export control front, but nothing on capital markets.

The reaction to the intermittent toughening of Biden’s China policies has been fierce.

Since August, Chinese President Xi Jinping has delivered even clearer warnings to Chinese capitalists that they exist at his pleasure.

The screws have been tightened on Hong Kong. Ultranationalist language is now common on official pronouncements. A blogger close to the regime posted an essay that was widely quoted in official media. It warned of the “savage and ferocious attacks that the United States has begun to launch against China,” adding that “It is necessary not only to destroy the decadent forces but also to scrape the bones and heal the wounds.”

In a September 1 speech to the National Committee on U.S.-China Relations, China’s new ambassador to the U.S. Qin Gang scrapped the conciliatory tone and warned of “disastrous consequences” if the U.S. uses a “Cold War playbook.” He explicitly excoriated U.S. support for Taiwan’s independence and its blacklisting of Huawei.

As the Biden administration responds, there’s a risk of foreign-policy concerns crowding out economic ones. China will press the U.S. to relent on its economic moves, in exchange for easing military tensions. And as the big November climate meetings approach, China will be offering a deal for climate collaboration in exchange for keeping the economic status quo. When Vice President Kamala Harris made her muchtouted Asia trip in late August, the one truculent remark she made regarding China was a warning that the U.S. would defend the freedom of the South China Sea. Astonishingly, there was not word one about China’s economic predation. The speech must have been reviewed a dozen times by multiple players.

Critics of Trump’s China policy, and now Biden’s, warn of a new cold war. The fact is that we are in one. George Kennan’s strategy of containment is not a bad model. If we can slow China’s rush to global and domestic domination, the internal contradictions in its model just might become more evident and problematic. What remains to be seen is whether Biden will be able to be radical enough. n SEP/OCT 2021 THE AMERICAN PROSPECT 31

THE OIL MERCHANT IN THE GRAY FLANNEL SUIT Why aren’t insurance companies aggressively fighting climate change, and minimizing catastrophes? Look at their balance sheets.

By Alexander Sammon

O

ILLUSTRATION BY ZOHAR LAZAR

On paper, Kevin McComber was not what you would call a typical insurance man.

He had hard-science chops, holding physics and materials science and engineering degrees at the bachelor’s and doctorate level, all earned at the Massachusetts Institute of Technology, as well as technical privatesector experience. Out of MIT, McComber had decamped for Chandler, Arizona, where he worked in manufacturing, doing process engineering for Intel.

But after a few years in the desert, McComber wanted back in Boston, and he ended up applying for, and getting, a job at insurance giant Liberty Mutual, working out of the company’s flagship building on Berkeley Street. “I never pictured working in insurance, having done a hardcore engineering

32 PROSPECT.ORG SEP/OCT 2021

degree,” McComber told me, but the Special Projects team he ended up on wasn’t terribly unfamiliar. “The processing was actually similar to what I was doing at Intel.”

And yet, while the fit was fine, there was one thing that bothered him: the trash in the cafeteria. Every day at the end of lunch, the cans would be stuffed or overflowing with single-use Styrofoam packaging. He, along with a co-worker, reached out to human resources to see if a more sustainable alternative could be identified.

Leadership signaled enthusiasm, but their response was sluggish. After a while, McComber decided to formalize their effort, and created a group on the company’s internal social networking page called Sustainability@Liberty, to see if

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any other employees were interested. He couldn’t be the only one.

These things have a way of snowballing.

After doing some research, McComber found that it wasn’t just cafeteria tableware where the company was lagging. At that point, Liberty Mutual was the only one of the top ten global property and casualty insurers that had not put out any public statement on sustainability. McComber made an infographic, showing Liberty compared to its big-budget peers—AXA, State Farm—and posted that in the group, which had grown large enough to get the formal attention of management, to whom McComber relayed his findings.

Again, the company’s higher-ups seemed initially receptive to the group’s suggestions to enhance the company’s sustainability.

And why wouldn’t they be? Liberty Mutual’s financial well-being was directly affected by the onrushing effects of climate change; 2017’s Hurricane Harvey, and its subsequent flooding in Texas, took a huge chunk out of their bottom line, and evaporated their annual bonuses. This was less a crusade than the scientific application of best business practices.

“I was never a tree hugger. I’m not, you know, funding Greenpeace or something,” said McComber. “I was just, like, a guy who was pissed off that we were using so much Styrofoam.”

The sustainability group got a board and bylaws, its membership breaking triple digits, and began pushing harder on the company’s policies beyond the four walls of its home office. McComber, now in a management consulting role, began meeting with people in the investments department to talk about fossil fuel assets Liberty Mutual held. He developed a communications strategy and conferred regularly with superiors.

He joined an internal consulting group initiative, which he bemusedly described as a “pre-project project to look at whether Liberty should start a project to create a statement.” The focus changed from a “bring your own cup to work program” to “let’s talk about how we’re investing our shareholders’ and our policyholders’ money.”

It was at that point that the company’s tolerance wore thin, particularly after McComber began to learn about the firm’s immediate involvement in coal, oil, and gas projects. “There were some awkward conversations with my management about, you know, what I was saying in this group,” he told me. Eventually, the management discouraged him from posting in the sustain34 PROSPECT.ORG SEP/OCT 2021

ability group at all. Finally, he said, he was on the receiving end of “a very direct call with my manager’s manager saying if you continue doing this, I can no longer protect your job at Liberty Mutual.”

McComber only lasted a handful of months after that, exiting less than two years after founding the group. “I left not because of that, but it definitely helped the decision to leave,” he explained.

Not long after, at the end of 2019, Liberty appointed its first chief sustainability officer, and came out with its first environmental, social, and corporate governance (ESG) review. It pledged to no longer underwrite companies with more than 25 percent exposure to the extraction and/or production of energy from thermal coal; not to make new investments in debt or equity of companies that make more than 25 percent of their revenue from coal mining or utility companies that generate more than 25 percent of their electricity production from coal; and to phase out existing investments in violation of those standards by 2023. Meanwhile, Sustainability@Liberty, now called SEA, counts over 800 members and was officially recognized by the corporate sustainability office.

Those changes, insufficient though they may seem, were enough to move Liberty Mutual to 16th place among the top 30 international insurers of fossil fuel underwriting, and 12th in fossil fuel divestment, according to a 2020 environmental report card published by the activist group Insure Our Future. It put Liberty Mutual squarely in the middle of an industry that lags perilously behind on climate commitments, when its existence as an industry seemingly depends on minimizing the catastrophes caused by climate-fueled disasters.

Which begs the question: Why? Let’s start with the obvious: Climate change is causing bigger, more damaging, and crucially, more expensive storms. Every dollar we don’t spend on preemption, decarbonization, and preparation turns into multiple dollars in damage, remediation, and reconstruction. Thus, with every major storm, we have death tolls and damage estimates that daunt. This summer alone has seen recordshattering damage, one after another: from fires, floods, and hurricanes.

For insurers whose business is property damage and casualties, those aren’t just abstract numbers; they’re checks that they have to cut. For months, the business press has been full of headlines announcing huge, surpassing losses. “Insurers such as All-

Outside of the fossil fuel industry itself, there may be no industry more tied to the climate crisis than the insurance industry. state, Chubb and AIG could see significant losses from Hurricane Ida. Our early view is insured losses may surpass the roughly $10 billion of 2020’s Hurricane Laura and could approach $30 billion,” reads one Bloomberg story. “The floods last month in central Europe caused about 6.5 billion euros ($7.6 billion) of damage,” reads another.

That’s not headline froth. From 2000 to 2009, insurance payouts for climate change–related weather events averaged $19 billion annually. From 2010 to 2019, it was over 50 percent higher, $31 billion, according to Grist. Last year more than doubled that, with insurers paying out $60 billion in 2020 in the U.S. alone.

Swiss Reinsurance, the world’s second-largest reinsurer (which insures the insurance industry, covering the most catastrophic losses), found that last year was the fifth-costliest for the industry in five decades, with global losses amounting to $83 billion, driven by a record number of severe storms and wildfires in the U.S. This year is setting up to be even worse, as those natural disasters have only continued.

But insurers are not as helpless as flood victims in the Louisiana bayou. They control vast sums of money, and lobby shops to boot.

Nearly every major construction and development project on the globe, home prices, a nontrivial chunk of the stock market, and various other things are at their mercy.

One would think, then, that the insurance industry would be among the most forceful advocates for large-scale intervention on climate change, based on, if nothing else, that good old market homily that is self-interest.

The losses keep mounting in the absence of aggressive measures. Either the federal government, in tandem with private investment, pays for a major decarbonization program, or the insurance companies pay for the cleanup. That shouldn’t be a tough deci-

McComber’s crusade for sustainability in the insurance industry began with too much Styrofoam in the Liberty Mutual cafeteria.

sion for a bunch of fund managers to make.

Furthermore, because of their clout and institutional power, one would also assume that if insurers put their mind to it, they could be unusually effective advocates for a green transition. Just about the only time anything gets done in Washington is in those rare moments when a corporation or industry decides they want it to happen.

That could be the legacy of insurance companies and climate change.

And yet insurers have not been terribly vocal about the climate crisis. In fact, they’ve been highly resistant to even small-bore climate solutions, instead opting for tepid statements about environmental sustainability.

At the same time, outside of the fossil fuel industry itself, there may be no industry more actively and intimately tied to the climate crisis than the insurance industry.

“Insurance companies are a crucial but really misunderstood piece of the fossil

fuel production ecosystem. You can’t have a coal mine or oil pipeline or anything,” said Yevgeny Shrago, policy counsel for Public Citizen’s Climate Program.

But by loading up on stocks of oil and gas companies and energy utilities, purchasing corporate debt of coal and other fossil fuel firms, and underwriting the development of new infrastructure like pipelines and plants, much of which is being done at record rates, the insurance industry is currently propping up the industry that is expediting its own demise. Insurance companies are financially vulnerable to the ravages of climate change, but they also happen to be profiting off of its acceleration.

Partly, this is a function of the expansive nature of an insurance company. The biggest ones insure, invest, underwrite, reinsure, and lobby; they have policyholders, investors, and investment holdings. What’s more, they’re in the business of risk: If the increased riskiness of new fossil fuel production makes it a riskier investment, that pays a higher return, as long as it doesn’t go bust.

No human better embodies the strange SEP/OCT 2021 THE AMERICAN PROSPECT 35

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of millions of Americans, across multiple decades, sum to trillions of dollars in total, all governed by the simple inequality that the profit on the investment must exceed the claim damage, sometimes by enough to make a certain Nebraska businessman unspeakably rich. This is our society’s major risk management apparatus.

Investment teams at insurance companies certainly have the option of channeling float away from carbon-reliant investments.

Seeing whether they are making that choice, though, is easier said than done. “The biggest insurance companies have no real federal oversight whatsoever. They’re very, very hard to see,” said Shrago. Indeed, insurers are one of the only major financial entities not meaningfully regulated at the federal level.

At best, by cobbling together SEC filings, state-level regulatory reports from climatecommitted states like California and New York, and major industry research projects, “we know about 70 percent of the market, how they’re invested,” Shrago explained.

But that 70 percent paints a grim picture.

Take, as an example, Allstate, the fourth-

If the increased riskiness of new fossil fuel production makes it a riskier investment, that pays a higher return, as long as it doesn’t go bust. largest American property and casualty insurer by premiums as of 2019. Because Allstate is publicly traded (not all major insurers are), it’s forced to regularly file its investment holdings with the SEC in the form of 13-F disclosures, one of the few federally mandated windows into the company’s activity. According to the most recent report in August, Allstate holds 34,642 shares of

JAE C. HONG / AP PHOTO

and contradictory organization of an insurance giant, or its potential as a cash cow, than Warren Buffett. His conglomerate Berkshire Hathaway, which was built out of his initial insurance holdings, is simultaneously the second-largest property and casualty insurer in the country, an auto insurer (through Geico, which it owns), and a reinsurer. But Berkshire Hathaway is also a massive institutional investor, seller of climate-vulnerable residential real estate, controller of multiple private-sector utility companies, owner of BNSF (the largest coal-transporting railway in the country), shareholder of Chevron, underwriter of oil and gas projects, and source of the fortune of America’s most avuncular billionaire.

How did one of the nation’s most massive fortunes spring from the relatively drab field of insurance? It boils down, in essence, to this: Insurance companies take in money as premiums (called “float”) and invest it, with the hope that they make more money on the investments than they have to pay out in claims. All the insurance premiums you’ve paid in your life, multiplied by hundreds

MEAD GRUVER / AP PHOTO

Insurers remain overinvested in oil and coal companies and under­ invested in renewables.

Chevron, 70,157 shares of ExxonMobil, 13,236 shares of Marathon Petroleum, 12,989 shares of ConocoPhillips, 21,133 shares of Occidental Petroleum, 6,300 shares of Whiting Petroleum, and 5,087 shares of Valero. It maintains holdings in Duke Energy, Dominion Energy, and Diamondback Energy, and that’s just the letter D. The full list would overwhelm this article.

But 13-F filings only cover stocks and equities. They don’t catalogue holdings in debt, which can be even more troubling.

The New York State Department of Financial Services 2 Degrees Investing report, published in June, gives perhaps the most exhaustive review of the state’s insurers, many of which are also major national insurers, based on their holdings in both debt and equities. With this report, we can see not only that the investment mix in the Allstate portfolio is common industrywide, but that insurance companies are actually even heavier into fossil fuels than other investment sectors. They fare worse than the broader market average and worse than large institutional investors, which

can hardly be said to be an exceptionally progressive force. While similarly large groups like banks, university endowments, and asset managers have shown a willingness to exit coal entirely, and wean off oil and gas, insurance companies have shown no such propensity, holding not only stocks of oil and gas but debt and bonds even of coal companies.

“The five-year forward-looking capital plans of most insurers’ investee companies in these sectors were not Paris-aligned,” the report notes, referring to the Paris climate accord’s thresholds, which are widely known to be insufficient. “In many cases, insurers’ portfolios were less Paris-aligned than market benchmarks.” The report estimated that about 11 percent of insurance company holdings in equities and fixedincome assets were in carbon-intensive sectors; for equities and corporate bonds, the number was 17.2 percent. It was even larger for life insurers, whose corporate bond exposure to these sectors was a stunning 20 percent; some firms were as high as 30 percent or more.

“Insurers were overinvested in coal and oil-fired power generation and underinvested in renewables,” the report continues, while “the size of coal-fired power generation relative to other forms of power generation was too large to be Paris-aligned.” While coal has broadly fallen out of market favor nearly everywhere, with insurers, it holds on.

How is that possible? Shrago postulated that it was yet another example of insurer appetite for risk. “Fossil fuels are risky, [and] risky assets give better returns when they don’t fail,” he told me. It’s a perverse cycle: As payouts after natural disasters increase, insurers need higher returns on their investments to make up the difference, so they turn to the sector that is driving the higher frequency of natural disasters.

“Insurers are heavily basically gambling on the better returns,” Shrago said. “And of course, when fossil fuels inevitably collapse, as a result of the coming clean-energy transition, they’re gonna be screwed.”

But it’s already known to be a losing gamble. According to a report from the investment bank Société Générale, there’s SEP/OCT 2021 THE AMERICAN PROSPECT 37

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Sen. Sheldon Whitehouse (D-RI) is one of the more vocal climate hawks in Congress. that are driven by catastrophic weather events that in turn are being driven by climate change to understand the enormity of the exposure that insurers have,” said Dave Jones, former California insurance commissioner, in a June 16 address for S&P Global.

Meanwhile, the insurance premiums they’re bringing in from insuring new projects are triflingly small, nowhere near enough to offset the mounting costs of climate change. Premiums from insuring new oil and gas projects amounted to $1.7 billion in 2018, which equals just one-tenth of 1 percent of all property and casualty premiums. Sustainable investing and rational, market-based solutions have long been preached as an asset in the climate fight— and yet: There is no financial incentive, short-, medium-, or long-term, that can explain the industry’s enduring and exceptional commitment to fossil fuel. In this most essential industry, the profit-seeking mechanism seems to be broken.

Why insurers remain so loyal to fossil fuel companies in the face of gale-force economic headwinds can only be hypothesized. The problem is the result of a handful of factors: financial, regulatory, and cultural.

The annual time scale on which financial years are assessed and bonuses are paid out discourages long-term planning; the backward-looking risk forecasting model is predicated on a world that isn’t our current one. More important, executives at insurance companies rely on the continued burning of carbon for their livelihoods.

“Their relationship managers have good relationships with their fossil fuel companies,” said Shrago. “Their individual bonuses depend on continuing that business.”

Elana Sulakshana, a campaigner with the Rainforest Action Network, added that the risk specialists who might be disinclined to continue working with the fossil fuel sector aren’t as high on the totem pole within insurance companies as the executives who are intertwined with the industry.

Meanwhile, regulation of the insurance industry is left to the states, which means that there isn’t an overarching national authority to compel transparency, action, or a change in behavior. Some insurance commissioners around the country, like Jones, have been focused on the climate issue, but others, particularly in oil and gas extraction states, are more captured.

Finally, there’s good old-fashioned culture war. Insurance companies are afraid of backlash or retribution for severing ties with fossil fuel companies, many of which are staffed by friends and colleagues. After the 2016 elections, according to McComber, Liberty Mutual “was worried about getting Trump tweeted, about Trump saying something bad about Liberty. At the time, they had a pretty strong presence with conservatives, they advertised on Fox News.”

Sen. Sheldon Whitehouse (D-RI), one of the more vocal climate hawks in Congress, concurred with this viewpoint. “The other thing that I’ve heard repeatedly from companies and trade associations is that the fossil fuel industry has its claws into the

TOM WILLIAMS / AP PHOTO

a big financial premium to not investing in coal; indeed, insurance companies that have withdrawn from coal do better. Similarly, withdrawing from oil and gas often pays what’s called a “green valuation premium.”

According to a workup by the investing service S&P Global published at the end of August, American insurer holdings in poorly performing oil and gas companies remain at record rates. At the end of 2019, “the U.S. insurance industry had $582 billion invested in some combination of oil, gas, coal, utilities and other fossil fuel-related activities,” an increase over the $519 billion held the year prior. That number was higher still than the $459 billion in 2014, indicating a steady upward trajectory despite years of accelerating climate-fueled catastrophes and miserable returns.

The extreme downside of the bet, the potential collapse of carbon-sensitive assets, has already begun. “Fossil fuel investments … they’re awful from a client perspective, just from a fiduciary perspective,” said Steven Rothstein, managing director of Ceres Accelerator for Sustainable Capital Markets, a nonprofit focused on environmental issues and capital markets. “In 2020, the oil companies wrote off $145 billion of assets.

That’s pipes and flanges and pipelines and things like that, that they couldn’t recover.”

Despite the fact that the Federal Reserve used lending programs established under the 2020 CARES Act to direct massive financial support to bail out flailing oil and gas companies, the sector still saw a significant number of firms go under. As those supports fall away and as governments continue to pass laws supporting a green transition, the market will look even worse.

If investing is murky, the underwriting aspect of the insurance industry is fully opaque. Building fossil fuel infrastructure projects is incredibly expensive and risky, something that gets more capital-intensive as coastal installations—plants, pipelines, etc.—get bludgeoned by storms, flooding, and rising sea levels. It’s here, on what’s referred to as the “product side,” that the insurance industry is uniquely powerful.

If they chose not to insure these projects, they simply wouldn’t exist, while any existing project would have to cease operations if its insurance got pulled. That includes all of the most controversial extraction sites: tar sands, Arctic drilling, shale oil, offshore and deep-sea exploration.

“On the underwriting side, one has only to look at both regional and global losses

Activists have trained the bulk of their energies toward ending the insurance under-writing of oil and gas.

Republican Party in Congress so deeply that other trade associations fear repercussions,” Whitehouse told me in an interview. “The fossil fuel industry will tell Republican operatives in the House or in the Senate to punish the industry that crosses them.”

All that has resulted in an industry in the U.S. that lags far behind comparable industries on its climate commitments, and far behind its European and Canadian counterparts as well. Despite all the sustainability pledges and corporate press releases, the financial activity of the industry shows an industry uniquely in denial about climate change, and uniquely exposed to its ravages.

What is the way out?

While divestment has been a popular talking point among activists for decades, its track record is, to put it generously, mixed. And while insurers have major financial holdings, their power in the equities markets is actually dwarfed by their influence elsewhere.

Underwriting isn’t where the bulk of the money goes, but it is where insurers wield the most power. And on certain projects, they’ve shown willingness to use it. According to a report from the activist group Unfriend Coal (now called Insure Our Future), the number of insurance companies withdrawing coverage for the coal sector doubled in 2019, with 37 percent of the industry’s global assets in coal now earmarked for future divestment, and about 46 percent of the reinsurance market on the same trajectory. Accordingly, coal companies have seen rate increases of nearly 40 percent, making new and old projects even less attractive and financially viable.

European insurers far outpace their American counterparts on the strength of these commitments, though. Swiss Re and Zurich Insurance Group have made the most robust pledges to refuse insurance for new mines and power plants; France’s AXA has pledged a complete exit of coal insur-

ance within the EU by 2030, and the world by 2040. Swiss Re also signed a ten-year, $10 million deal with a startup working on technology to capture carbon dioxide and inject it underground, part of its pledge to hit net-zero emissions by 2030.

All told, some 23 major companies in Europe have moved to break with coal.

Meanwhile, in America, AIG is still without a coal policy (something that caused Legal & General Investment Management, one of Europe’s largest asset managers, to pull its investments from AIG in June).

Furthermore, that movement on coal has not been mirrored in the oil and gas sector, where insurers remain stubbornly committed to underwriting projects. Just one major firm—Australia’s Suncorp—has pledged to take “significant action” in no longer underwriting any new oil and gas projects, according to an analysis from Société Générale. Part of this can be explained in dollars and cents. Premiums for oil and gas projects summed to over $17 billion in 2018, compared to just $6 billion for coal. Though neither is an especially substantial figure, oil and gas is a significantly larger part of the insurance business.

The oil and gas side of the insurance market is also highly concentrated. Just a handful of firms dominate the space, including American companies AIG and Travelers, and the European Zurich Insurance Group.

Ten companies account for about 70 percent of total underwriting, according to research done by the environmental coalition Insure Our Future.

That’s why, in recent years, activists have trained the bulk of their energies toward ending the underwriting of oil and gas. But in the underregulated American market, companies are not required to disclose any information on underwriting projects, which makes it nearly impossible to figure out who’s behind new pipelines, fracking installations, and processing plants, even in the case of controversial, headline-grabbing projects like the Line 3 pipeline in Minnesota.

But that’s not the case in Canada, where the Trans Mountain Pipeline, a tar sands pipeline that will carry oil from Alberta to Vancouver, is receiving major opposition from activists. “Due to Canadian regulation, they have to file their insurance [provider],” said Sulakshana, of the Rainforest Action Network. “With the information of who’s insuring the company, we’ve been able to launch a campaign pressuring those insur-

ers and other potential insurers to not cover the project.”

So far, that pressure campaign has found some traction, with 15 insurance companies in Canada ruling out involvement with Trans Mountain. The other place this tactic has proven successful is in Australia, with the Carmichael Coal Mine, once referred to

by Rolling Stone as “the world’s most insane energy project,” an open-pit thermal coal mine expected to produce ten million tons of coal annually. Activists both locally and worldwide have pushed to prevent the project from going live. Targeting insurers has proven the most effective route.

“There we now have more than 40 insurance companies and brokers that said they won’t get involved with the project,” said Sulakshana. One of the mine’s contractors recently revealed that they “have not been able to secure adequate insurance coverage for construction of the mine. Its policies are set to expire soon, and it may not be able to move forward because it doesn’t have insurance.”

Even if pulling out of fossil fuel investments, or refusing to insure fossil fuel projects, were impossible, there is one more forum in which insurers could enact meaningful environmental changes that would benefit the planet and, coincidentally, their own bottom line: lobbying. The industry is a force in Washington, D.C. “You’ve got the American Insurance Association, got the Property Casualty Insurance Association, the reinsurers have their own association, they’ve got several trade associations. And none of them are activated on any serious climate legislation,” said Sen. Whitehouse.

As the 2008 mortgage crisis showed, a misaligned insurance industry is not just the concern of the sector’s CEOs and shareholders; it’s everyone’s. Their steadfast refusal to react to the realities of climate change at a reasonable scale leaves them vulnerable to any number of existential shocks, like the devaluation of fossil fuel holdings or the collapse of coastal property values due to sea level rise. These problems cannot be remedied by merely raising rates or denying coverage. And as climate change worsens, the past becomes a weaker and weaker predictor of the future, which makes the very act of insuring more difficult.

“God knows, there’s a certain satisfaction in watching people who have done something extremely stupid pay the price,” said Sen. Whitehouse. “The problem is the price the insurance industry will pay for its fecklessness is one that we will be obliged to pay as well.” n SEP/OCT 2021 THE AMERICAN PROSPECT 39

UN UUNFINISHED NFFIN INIISH SHED J

ohn Lennon’s “Imagine” wafted over the approach to the new Frederick Douglass Memorial Bridge, spanning the capital’s Anacostia River, as a small crowd gathered on a warm September day for a ribbon-cutting ceremony.

With the bridge’s undulating white arches perfectly staged against a blue sky, “iconic” was the word of the day from the speakers’ podium. In a few days, the replacement to a 70-year-old span would be open to all, and Washington Mayor Muriel Bowser raved about the difference it would make for drivers, cyclists, and pedestrians.

Eleanor Holmes Norton, the District of Columbia’s nonvoting congressional delegate, had “squirreled away,” as she put it, the federal funds to build the nearly half-billion-dollar bridge, getting a major assist from Maryland’s Steny Hoyer, the House majority leader. The crossing links the city’s gentrifying Capitol Hill and Waterfront neighborhoods to the low-income, Black, and also gentrifying areas east of the river.

It’s jarring, then, to leave the grand celebration for a midday subway ride to the far northeast corner of Washington to survey two very rusty, crumbling pedestrian bridges spanning D.C. Route 295. The freeway traffic is heavy but flowing in both directions, and a COVID-19 face mask does double duty against the heavy vehicle exhaust. Until recently, a third

40 PROSPECT.ORG SEP/OCT 2021

pedestrian bridge had spanned the freeway as well. Around noon on June 23, one day before the Surfside condo building collapse in Florida, a truck’s boom hit that bridge, sending it crashing onto the freeway at Lane Place NE, a pretty, tree-canopied street of detached homes near the Kenilworth Aquatic Gardens, a national park. Fortunately, there were no deaths or life-threatening injuries.

Without the pedestrian bridges, there’s no safe way for residents of the Far Northeast Washington neighborhoods to get across this end of the north-south freeway that funnels Maryland-bound commuters home and summer tourists to the sights in downtown Washington. After the accident, the District Department of Transportation (DDOT) announced that the bridge would likely not be replaced, since only 11 people used it daily, a number that turned out to be almost a decade old.

A high-profile African American Democratic mayor declining to rebuild a pedestrian bridge in an overwhelmingly African American neighborhood? This on the heels of a Federal Highway Administration offer of emergency funds and the Senate’s passage of the infrastructure bill, heavily promoted by President Biden and his transportation secretary, Pete Buttigieg, who had joined Bowser on a tour of the state-of-the-art bridge in May. The day before a mid-July city council hearing, a full two weeks after the accident, the mayor announced that the city would expedite the reconstruction of the bridge. “They live on an island, they’re trapped behind a highway,” Anthony Lorenzo Green, a nonpartisan elected representative for the

BUSINESS BU SIN ESS ED D BUSINESS East of the River

The collapse of a pedestrian bridge in Washington reignites debates about reconnecting communities, racial equity, and what comes next. By Gabrielle Gurley

the District, the federal government authorized the construction of the D.C. Route 295 freeway, cutting a Black neighborhood in two and displacing residents with the bad fortune to live in the freeway’s path. Some 70 years later, the consequences of that decision still wreak havoc with Black lives—only now, the principal decision-makers are African American.

So the debate around the bridge raises the deeper issue of long-existing transportation inequities rooted in race and class in Washington. The top echelons of the local political class are Black and have been for some decades, but there is deep distrust of many of those actors in less-affluent Black neighborhoods in the eastern section of the city. The collapse of the Lane Place Bridge magnifies a legacy of injury.

The local residents can now imagine reuniting a community that systemic racism displaced. But can they make it happen?

OPPOSITE LEFT: ANNA MONEYMAKER / GET TY

Accidents spur municipal leaders to confront long-avoided decisions. The 1989 Loma Prieto earthquake that damaged the local residents most affected by the collapse, told the city council. “The only way that you really can get over there is you drive over there, or, you know, roll the dice, apparently, to go over one of the pedestrian bridges.”

After decades of demanding real repairs, neighborhood residents now want more than a few bridge replacements. They want better connections to the rest of Northeast Washington for their isolated area and better links to the city center. They want protection from the displacement pressures that the Black communities abutting the Frederick Douglass Memorial Bridge and elsewhere in the District have faced. And they want D.C. Route 295 transformed from a freeway into an accessible, climate-ready boulevard that is a holistic fit for a residential area—rather than the functional equivalent of a border wall.

Today, one quest for racial justice focuses on the transportation sector, and has centered on highways that were built during the interstate highway system expansion in the 1950s and usually foisted on politically powerless Black neighborhoods. In SEP/OCT 2021 THE AMERICAN PROSPECT 41

The decaying Douglas Street NE pedestrian bridge crosses over DC295, which in the 1950s split up an emerging middle-class Black neighborhood in Far Northeast D.C.

Embarcadero Freeway enabled San Francisco officials to remove a road that the public wanted to keep open. The feared traffic nightmares did not materialize. Buffalo residents’ demands for traffic calming on the Scajaquada Expressway were finally met after a driver veered off the road and killed a toddler.

Anthony Foxx, Barack Obama’s second transportation secretary, was one of the first transportation leaders to agitate for federal strategies to reverse the purposeful destruction of African American neighborhoods during the mid-century’s interstate highway system construction and urban-renewal projects.

His signature effort involved a competitive grant program that incentivized cities to reconnect underserved communities of color and piece back together neighborhoods that had been undone by highways now nearing the end of their useful lives.

The program was a predecessor to the revitalization push that culminated in the “Reconnecting Communities” plank in President Biden’s infrastructure program. The Biden plan initially proposed $20 billion to find ways of reversing the damage. What the plan had envisioned as a substantive five42 PROSPECT.ORG SEP/OCT 2021

year grant program, however, got whacked down in the Senate to $1 billion, which is often the starting price for a single highway removal project. (The price tag for a New York project to cover a portion of I-81 in Syracuse is $2 billion.)

The major challenge for reconnecting communities is how to persuade community residents and commuters to think differently about the ways they get to a destination with the least amount of invasive infrastructure. One project that’s been teed up for major alteration is Buffalo’s Kensington Expressway, which the Congress for the New Urbanism, a transportation and economic development policy group, has designated as one of the worst urban highways in the country (along with the nearby Scajaquada Expressway, also slated for reconfiguration).

The artery has a similar history to DC-295. In the 1960s, middle-class African Americans started moving into the Hamlin Park neighborhood on the east side of Buffalo; white flight ensued, and the new residents weren’t able to fight the construction that cut them off from Frederick Law Olmsted– designed parks. The project destroyed thousands of homes,

ferent options would be instructive, according to Hal Morse, a project manager for the Greater Buffalo-Niagara Regional Transportation Council, which is overseeing the project. “It’s strange in this city that people perceive the freeway as the only way to get there,” he says. “[Commuters] never heard about different ways of moving around, they know one way to get there, and you’re going to take it away. Tell me about where you want to be and I can tell you about options to get there.”

PHOTOGR APHS BY BY GABRIELLE GURLEY

The racial dynamics of Washington, tightly woven into the daily lives of native and longtime residents, are largely invisible to outsiders. cratered their value (still the city’s lowest), ruined local businesses, and cut the community off from the rest of the city.

The neighborhood now has embraced a plan by the New York State Department of Transportation to cover one mile of the expressway, divert the traffic underground, and replace the expressway with a boulevard, freeing up 14 acres of land that would revert to the neighborhood. The nearly $600 million project is estimated to provide $2.8 million in new property tax revenue over a 30-year period, and $76.7 million in household wealth. The project is now in an environmental impact review. “[For] any highway removal project that’s been completed, the cost of removal has always been less than the cost of rebuilding the highway,” says Ben Crowther of the Congress for the New Urbanism.

Reframing the discussion based on destinations and dif-

The racial dynamics of Washington, tightly woven into the daily lives of native and longtime residents both Black and white, are largely invisible to outsiders. Over the past decade, Washington’s population has increased from about 602,000 to about 700,000, and most of the transplants have given no thought to how forces beyond the control of Black Washingtonians have shaped the ways neighborhoods have been structured over time.

The District’s Black communities were collateral damage in the mid-century in the frenzy to capitalize on free-flowing federal money to build interstates. Planners and engineers looked for areas that were cheap to build in, and this quest for cost savings steered these white power brokers to the redlined areas where African Americans had been hemmed in—frequently next to a dump or a factory or a utility plant— by whites. “The process of redlining devalued homes that belonged to homeowners of color [and] essentially propped up the routes that highways took,” says Crowther.

If African Americans had negligible political power in the United States during the 1950s, they had even less in the District of Columbia. A three-member board of commissioners controlled the decision-making in the city. (The president nominated two men, subject to Senate approval. The Army Corps of Engineers selected the third.) District residents did not elect their own mayor and city councilmembers until 1973.

Far Northeast Washington was a predominantly “up-andcoming white suburb” in the late 19th century. As racial housing covenants disappeared, Black residents began to move in and, by the 1950s, whites were speeding out, which just happened to coincide with the coming of the freeway. The highway that the federal government duly ordained began construction in 1954.

The construction of DC-295 (also known as the Kenilworth Avenue Freeway and the Anacostia Freeway) ripped up and spit out the emerging middle-class Black neighborhoods, creating islands of leafy isolation. To give Marylanders that straight shot into the city, 35 homes, stores, a nightclub, a community center, and a Presbyterian church that had just been rebuilt were demolished. The streetcars that had run in the area were replaced by buses. Since there were no intersections for pedestrians, the residents in the northern end of DC-295 got footbridges, which included the Lane Place pedestrian bridge, erected in 1956.

Throughout the 1950s, Black Washingtonians did not have the power or resources to fight on the multiple fronts of school segregation, freeway construction, and the massive razing of homes in city’s southwestern areas on the banks of the Potomac. While white policymakers celebrated “urban renewal,” African Americans, wise to the ways of white perfidy, called it “Negro removal.”

“Especially in the ’40s and ’50s, business decisions are SEP/OCT 2021 THE AMERICAN PROSPECT 43

In September, local politicians dedicated the Frederick Douglass Memorial Bridge, linking gentrifying Capitol Hill and Waterfront areas to predominantly Black Southeast D.C.

being made painting African American neighborhoods as by definition ‘poor,’ a bad neighborhood, undesirable,” says Chris Myers Asch, a co-author of Chocolate City: A History of Race and Democracy in the Nation’s Capital. “A place like Deanwood [in Far Northeast Washington] has a history of being a middle-class community, but that’s not necessarily something that [white] policymakers would have appreciated.

They don’t necessarily see that difference, whereas African Americans certainly do.”

In the 1960s, the plans to build a web of highways galvanized opposition by white and Black neighborhoods in northwestern Washington and adjacent Maryland suburbs, sparking the creation of the Emergency Committee on the Transportation Crisis (ECTC).

It remains the first and one of the most successful crossracial, cross-class anti-highway groups in American history.

Its supporters’ clarion call was “No white man’s roads through black men’s homes.” Students and environmentalists joined the highway opponents. They called for rapid-transit solutions and took their fight to the courts and to the public. Their victories included saving Cleveland Park, a white upper-class neighborhood, and Shaw, a Black middle-class area, among others.

Georgetown University students led the occupation of construction staging sites for the Three Sisters Bridge project on the Potomac River islands of the same name. A frustrated Kentucky 44 PROSPECT.ORG SEP/OCT 2021

Class is more of a powerful marker for African Americans than race in a city that has only had African American mayors.

Democratic congressman, William Natcher, blocked Washington subway funding in response to the highway activism, a fight that finally ended in the early ’70s. Metro opened in 1976. “[Highway expansion] didn’t happen because citizens basically put their foot down and said, ‘No, we’re not going to let it happen,’” says Myers Asch. “‘We can’t vote, but we’re going to file every lawsuit possible and we’re going to beat you in the end, because these are our neighborhoods that you are destroying.’

“A lot of these neighborhoods that are gentrifying [today]

neighborhoods of Kenilworth, Eastland Gardens, Mayfair, Parkside, River Terrace, and across the freeway, Deanwood, had complained about the crossings for years. The Lane Place Bridge was “janky,” one person tweeted after the crash. A city inspection earlier this year rated the bridge “poor” before the crash, surprising exactly no one. The loss of the bridge means walking several more blocks to the two remaining bridges. None of the bridges comply with Americans With Disabilities Act regulations. Streets off the freeway flood during rainstorms.

The attractive homes in this area, pockmarked here and there by neighborhood eyesores common to major cities, are hemmed in by acres of parkland and the Anacostia River on one side, and the freeway on the other. There are two Metro stops and a coming-soon streetcar hub and a new pedestrian bridge (both south of the two bridges still standing). But the few and inconvenient buses make the scarcity of supermarkets, hardware stores, drugstores, and other necessities of urban life a major inconvenience and a powerful insult.

The commercial area near the pedestrian bridges is mostly devoted to American car culture: auto body shops, gas stations, and a Department of Motor Vehicles location.

It’s a hard place to navigate on foot, which makes a car a necessity—if you can afford one. The median household income in Ward 7, which is 91 percent Black and encompasses these neighborhoods, is $38,767 (for whites, it is $120,308), and 40 percent of residents do not own cars.

There are plans for new food stores, but there are only two full-service supermarkets in Ward 7 and one in Ward 8 to the southeast for about 160,000 people, a situation that has persisted for decades.

Ward 7 has the third-highest rate of asthma among adults 18 and older and the highest level of particulate matter pollution (which includes vehicle exhaust and smokestack emissions) in the District. Eboni-Rose Thompson, a Ward 7 State Board of Education member, helped organize a walking tour TOWARDS MARYLAND

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At the July city council hearing, the District’s director of transportation, Everett Lott, “encouraged” residents to use a pedestrian bridge less than 1,000 feet north of the Lane Place Bridge. But for people with children in strollers and carrying grocery bags, for a senior on a cane, or a student recovering from a sports injury, all accustomed to using the closest option, 1,000 feet is a lot of steps.

The residents of the Far Northeast “island”

NASH STREET NE

LANE PLACE NE

Mayfair

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Eastern Gardens

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are desirable precisely because there are no ten-lane highways going through the middle of them,” Myers Asch adds.

Class is more of a powerful marker for African Americans than race in a city that has only had African American mayors, and while some city officials live in white or upper-middleclass African American neighborhoods, many Black Washingtonians still revere the late Marion Barry, a native son of Black and largely poor Ward 8. An ECTC leader who went on to become mayor in the ’80s and ’90s, he courted controversy, but steered new development to the long-ignored area and continued to live there. Recent leaders like Bowser, however, have been castigated for being too cozy with white developers (and attached to their campaign contributions), and too gung ho about their projects—glass-encased luxury condos and apartments, and amenities like the Wharf, an upscale riverside restaurant and entertainment complex on the Southwest Waterfront that has only a handful of places that people who live down the street can afford. Such project approvals have been favored over the supermarkets and other retail spaces that middle- and low-income people need in Far Northeast.

Bowser won her second term easily, but is not as popular in the Black neighborhoods east of the Anacostia River, the physical and psychological boundary between predominantly Black and white Washington. However, her fearlessness during the pandemic, renaming 16th Street where it abuts Lafayette Square and the White House as Black Lives Matter Plaza, and standing up to President Trump during the insurrection, put the wind at her back after the dark days of 2020. She has yet to declare her intentions for a possible third term.

City leaders insist that “affordable housing” for city residents who do not qualify for subsidies “is coming.” But many Washingtonians remain dubious about when that might be and who will actually get to live there. While the mayor has proposed to invest $400 million in fiscal 2022 to construct and invest in affordable housing, she rebuffed a proposal from a neighborhood group in a wealthy and white Northwest neighborhood to buy and convert an enormous former Marriott hotel property into a mixed-use affordable-housing development.

“It’s a Southern city, in a number of ways, and most clearly in the way our political system works,” says Ron Thompson, a policy officer with Greater Greater Washington, a regional public-policy group and a resident of Southeast Washington. “In most cities that were majority-Black in Southern states, we have these white overseers. The Black elected class has always kind of been responsive to that.”

E

Deanwood Metro Station

Deanwood SITE OF ACCIDENT

Parkside Minnesota Ave. Metro Station

River Terrace

SEP/OCT 2021 THE AMERICAN PROSPECT 45

Sherice Muhammad, a former neighborhood commissioner from Ward 7, calls DC-295 “mismanaged chaos.” of the pedestrian bridges for city councilmembers after the accident. One of the participating neighborhood commissioners had to bow out after a few minutes. The exhaust fumes had aggravated her asthma.

The bridge hearing and the walking tour may well have aided Ward 7’s cause. After the tour, Christina Henderson, an at-large city councilmember who at the time was eight months pregnant, said that “to spur economic development in that part of the District we have to consider a more drastic approach like burying 295 to bring more connectivity to the area.”

Buried in a 116-page 2007 Kenilworth Avenue Corridor study is a clue that city planning officials once were thinking about ways to address the 1950s injustices. “Depressing Kenilworth Avenue and constructing a new crossing establishes a logical connection between the residential neighborhoods to the west and the transit station and potential development to the east,” it reads. Price tag in 2007: $72.5 million, roughly $85.5 million in 2021 dollars. The report was blunt about the area’s other problems: “inconsistent land [usage]” and “minimal” landscape maintenance. The study designated the rehabilitation or replacement of the three pedestrian bridges a “medium priority.” Nearly a quarter of a century later, the Lane Place Bridge removal took place by accident.

“People in Ward 7 and 8 always got to beg DDOT and the council for basic things within our community,” said Rebecca Morris, a neighborhood commissioner, at the July hearing.

“This begging porn should not be a thing. Yet here we are, always begging for you guys just to do the basic minimum job 46 PROSPECT.ORG SEP/OCT 2021

for the things I know you’re supposed to do.” Residents want $250,000 allocated to a new study that looks at transforming the route into an avenue or boulevard.

But the current District planning process sends alarming signals that city leaders do not understand or appreciate the importance of confronting the major transportation inequities, or seizing the opportunities, that reimagining the Far Northeast presents. The city recently amended its 20-year Comprehensive Plan, which details legal guidance to the District’s zoning board for land use changes sought by developers and other organizations. While the document purports to “explicitly address [racial] equity,” the History section for Far Northeast/Southeast omits the construction of DC-295, the root cause of the decline of the Far Northeast neighborhoods.

From the online “Enrolled Original” version of the plan: “Rapid development continued through the 1950s, as sewers, paved streets, and sidewalks were provided to most areas … Following the removal of restrictive housing covenants in the late 1940s, the racial composition of the community shifted. By 1960, a majority of the area’s residents were Black … Despite the loss of residents, many vibrant neighborhoods remain in Far Northeast and Southeast, and today, there are signs of reinvestment in nearly all parts of the community.”

Whitewashing Washington’s history, a move worthy of 1984’s Winston Smith’s toil in the Ministry of Truth, was a bold stroke that did not go unnoticed. The District’s Council Office of Racial Equity report on the plan found, “It appears that racial equity was neither a guiding principle in the preparation of the Comprehensive Plan … process failures laid the groundwork for deficiencies in policy: proposals are ahistori-

In Washington, the current planning process sends alarming signals that city leaders do not understand or appreciate the importance of confronting the major transportation inequities. cal, solutions are not proportionate to racial inequities, and directives are concerningly weak or vague.”

The report described racial equity in Washington as the worst in the country, the Far Northeast is likely are looking with knowing smirks across the Anacostia to the resurrection of two ideas in the District’s Georgetown neighborhood. The wealthy Georgetown enclave is very much like a coddled child throwing tantrums after her siblings gobbled up the tasty goodies she refused to eat. In the 1960s and ’70s, the Washington Metropolitan Area Transit Authority had proposed building a subway stop in Georgetown. Controversial from the start, the limitations of mid-century engineering technology ultimately halted any plans for a Metro station. But Georgetowners’ fears that Metrorail would bring African Americans into their shops and onto their doorsteps dampened any enthusiasm that might have existed in the neighborhood for the line. Today, as a rainbow coalition of drivers, shoppers, and restaurant-goers crowd the streets and sidewalks, Georgetown now seeks a Metro station as part of a multi-decade, multibillion-dollar realignment of an existing line.

Should that plan fail (and it’s nowhere near a done deal), Georgetown has brought back to life an idea that was the object of much derision when it first surfaced about five years ago: a gondola across the Potomac River to the Rosslyn, Virginia, Metro station. The District has already authorized $10 million to secure land that could serve as either a Metro station or a gondola stop.

While Georgetown vacuums up District dollars, Sherice Muhammad, a Ward 7 resident and former neighborhood commissioner, isn’t confident that her neighborhood can stave off losing its moderately priced homes. Any corridor improvements to DC-295 must address residents’ suspicions that the improvements will displace the families that live there now. “[Ward] 7 is the absolute last frontier; it’s the last place for the cranes to go,” she says. As the Black population starts to decline, according to Muhammad, more whites will feel more comfortable moving in and the infrastructure upgrades will follow or be accelerated to ensure that outcome.

Solving a problem like DC-295, which is jammed with about 130,000 daily commuters, in a way that will improve life

without displacing its current residents will require unprecedented local activism, political will, and funding. “Right now, [DC-295] is mismanaged chaos,” says Muhammad.

For now, a window to more humane and equitable DC-295 reconnections has opened—a bit. More than at any time since the Washington freeway revolts, the summer 2020 uprisings have advanced the interest in funding initiatives to reverse transportation inequities. It would take some significant federal dollars to revitalize DC-295, given the sums involved in places like Buffalo and Syracuse, but the new federal commitment to both infrastructure and racial equity has come at a propitious time—if the crucial legislation can be turned into law.

There is a nascent consensus that something more than a few new footbridges is necessary to transform the freeway into “a boulevard for the people,” as one councilmember has put it. Jonathan Bush, an urban planner who has studied the corridor, agrees that a “neighborhood boulevard with green amenities” and depressing the highway below street level or underground would provide numerous health and safety, transit, housing, and commercial benefits. A number of neighborhood groups elsewhere in Washington have also expressed interest in the idea, but to succeed, a push for a new DC-295 would need a diverse coalition like the 1960s’ ECTC. Environmental groups that have been involved in the reclamation of the Anacostia River as well as young homeowners could be natural allies, according to Bush.

Local organizations like the nonprofit Douglass Community Land Trust have responded to the loss of moderately priced housing stock in Washington by purchasing properties to ensure that they remain affordable in perpetuity.

The group is actively working to identify new investments in Ward 7. “What the activist-militant side of me will say is that if you’re not intentionally planning to fight displacement, then you’re intentionally acting to displace people,” says Sheldon Clark, the land trust’s executive director. “I don’t believe that there is that maliciousness on the part of the city over consecutive administrations [to displace people]. But if we don’t do it any better, people are left to believe that it was intentional.”

The late-summer sun rays that illuminated the Frederick Douglass Bridge can wear out a pedestrian trudging up and down sidewalks in the heat, pollution, and the roaring traffic on DC-295. The remains of the pedestrian bridge have long since been cleared away from Lane Place NE. Construction crews have put the finishing touches on a day’s worth of new concrete curbs and curb cuts around sidewalks near the pedestrian bridge at Nash Street. But this closed-off span means walking several more blocks to the Douglas Street Bridge, climbing up the steep ramp to the patched walkway under the corroding chain-link arch, and down the next ramp to Deanwood Metro station.

As we stood on the new Frederick Douglass Memorial Bridge, DDOT chief Lott assured me that the department would assess the condition of the remaining pedestrian bridges. “If there are improvements that need to be made, then we’ll definitely have the work done,” he said. Far Northeast Washington may have to fire up the wayback machine to get District leaders to understand that the bruises of the white man’s road through the Black man’s home have yet to heal. n SEP/OCT 2021 THE AMERICAN PROSPECT 47

In early July, President Biden issued a ground-

breaking executive order designed to promote competition in the U.S. economy. It was seen as the greatest challenge to the dominance of concentrated power in a generation. During the announcement in the White House’s ornate State Dining Room, Biden sought to inoculate himself from criticism that he was bent on tearing down executive suites and ushering in an age of Marxism in America. “Now, look, I’m a proud capitalist,” he told reporters. “I spent most of my career representing

The Corporate State of Delaware.”

By Amelia Pollard 48 PROSPECT.ORG SEP/OCT 2021

What does that corporate state look like?

Not much, from the vantage point of its largest city, Wilmington. Driving along Lancaster Avenue toward downtown, row after row of red-brick buildings subtly shift from low-income townhouses to corporate offices. There’s a waterfront skyline, but it’s modest, making Wilmington look like Philadelphia’s baby sister. (Before the pandemic forced a front-porch campaign, Biden initially chose Philadelphia for his campaign headquarters, instead of his hometown, a few minutes south on I-95.)

Several local headquarters and offices of large financial institutions dot the landscape, like PNC Bank, JPMorgan Chase, HSBC, Wells Fargo, and M&T Bank (formerly Wilmington Trust), located in historic Rodney Square.

Student loan giant Navient, top pharma-

ceutical firm AstraZeneca, and chemical conglomerate DuPont also have offices here.

But though it’s invisible to the naked eye, most of the Fortune 500 call Delaware home. They make their domiciles in post office boxes and on paper gathering dust in the filing cabinets of state offices. According to both critics and proponents, Delaware’s largest industry is a legal and political ecosystem designed to grease the wheels for business dealings, what some call an “incorporation industry.” As of 2020, there were over 1.6 million incorporated companies in Delaware, with a quarter-million new businesses registered in the past year alone.

There are more businesses than people here.

This deep-rooted history permeates almost every facet of Delaware’s politics.

Bipartisanship is a driving force, and cor-

There are over 1.6 million incorporated companies in Delaware, most with no physical presence in the state other than a post office box, if that.

SEP/OCT 2021 THE AMERICAN PROSPECT 49

porations are the glue that holds Democrats and Republicans together. Politicians and corporate lawyers alike bend over backwards to accommodate big business with whatever benefits they desire.

Sometimes, that comes at a cost. “There’s like a code of silence around the problems,” said Chuck Collins, a senior scholar at the Institute for Policy Studies and author of the new book The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions. “It’s just a lot of reflexive defending the status quo.”

With the incorporation industry making up 25 percent of the state’s budget, Delaware has come to depend on firms flocking to the state. As other states threaten to compete with this corporate friendliness, a darker side to Delaware’s politics has emerged. As jobs have left the state, there has been a spike in so-called “economic development” subsidies, using taxpayer dollars, to attract new businesses. It usually results in large corporations walking away with millions, with little to show for ordinary residents.

A handful of individuals want to put a stop to this, rejecting Delaware’s role as a place with only handouts available to offer the business community, rather than a friendly atmosphere and an educated workforce. But once you become a corporate state, it’s hard to go back.

“The Delaware Way” is an expression that floats around the state a lot, usually referring to the unique nature of the First State, a point of pride for its residents. This is a place where, for centuries, winning and losing candidates have ridden together in the “Return Day” parade two days after each election, closing the ceremony in Georgetown, the seat of Sussex County, by literally “burying the hatchet” in a box of sand. Then everybody eats a barbecued ox-roast sandwich.

Depending on whom you ask, the Delaware Way can mean different things. One political organizer told me it’s about having a small group of people who know each other, and who get along, making decisions behind closed doors, in the proverbial smoke-filled room. And from my short stay in Delaware, that seems about right.

Everyone does seem to know one another.

Unlike in Washington, however, the connections are not merely professional. The state’s minuscule size means that politicians, corporate lawyers, and progressive activists’ kids go to school together; they work out at the same gyms, and all get coffee at Brew HaHa!, a Delawarean staple with 50 PROSPECT.ORG SEP/OCT 2021

a handful of outposts around Wilmington.

Karl Stomberg, an organizer with the state’s Working Families Party, told me he regularly sees U.S. Sen. Tom Carper, who has represented the state in one office or another since 1976, at the gym. And while talking over coffee with the former head of the Chancery Court, Leo Strine, we ran into someone he had previously worked with on the bench.

Both Stomberg and Strine said this wasn’t unusual: Bumping into major politicians and former colleagues happens all the time.

To critics, the Delaware Way is something much more nefarious. Rep. John Kowalko, a state representative seen as a political pariah for his progressive politics, called it “an excuse for politicians to band together with corporations to create a guise of prosperity when those who are prospering the least are the residents of Delaware.”

Kowalko is often a stand-alone vote against bills that weaken the state’s corporate tax laws. For 35 years before running for office, he worked a union job at a refinery.

“My entire philosophy has been as a former labor official coming from a working-family background,” he said. “My instincts were that the people and the people’s ability to be comfortable economically should come before all else. And most governments are not ensuring that.”

Whatever the interpretation, the Delaware Way got its start early. As a small state without much agricultural opportunity on its marshy peninsula, Delaware was historically forced to think outside the box. It looked no further than its neighbor to the north. In an article from the American Law Review published in the late 1800s, Delaware is depicted as New Jersey’s fitful little sibling, “gangreen with envy” of its neighbor’s business of granting franchises. Both states had similar job opportunities—primarily “truck-farmers and clam-diggers”— but New Jersey was getting “all the money in the country into her coffers” while Delaware received nothing. The state was “determined to get her little tiny, sweet, round, baby hand into the grab-bag of sweet things before it is too late.”

And so it did. In 1899, Delaware rewrote its corporate law. At the time, New Jersey’s incorporation law didn’t even require a business to officially headquarter there—all it had to do was file the proper paperwork to establish the company inside the state borders. Delaware wrote the same basic statute, but made its incorporation taxes a bit lower than New Jersey’s across the board.

With the incorporation industry making up 25 percent of the state’s budget, Delaware has come to depend on firms flocking to the state.

The race to the bottom had begun.

There are a few reasons companies are drawn to Delaware. First off, the state makes incorporation really simple. A limited liability company (LLC), the state’s most popular offering, is a business structure where money is held in a way that exempts its owner from legal responsibility. The annual fee for LLCs in the state is a flat $300, whether the entity has assets of $10 or $10 billion. And all revenue from an LLC is taxed as a partnership at the individual tax rate, rather than as a corporation.

It takes almost no time or effort to set up an LLC: In 2016, a Fusion TV correspondent created an LLC for their cat within five minutes. The person setting up the LLC doesn’t have to ever set foot in Delaware; they can register the company over the phone, online, or via email. Delaware is crawling with registered agents willing and happy to handle the relatively painless paperwork for virtually anyone.

Most important, for decades, the LLC client never had to reveal the beneficial owner of the corporation. Most states have included this feature in their own incorporation laws.

But combined with all of Delaware’s other attributes, it served as a license for anyone to create shell companies that can be used to hide or launder money, evade taxes, or keep secret any kind of financial transaction.

As a result, a litany of bad actors have made headlines in the last decade for funneling cash through Delaware. Backpage, a site purportedly used for child sex trafficking, registered its LLC in the state. So did Trump’s former campaign chairman Paul Manafort, who used nine Delaware LLCs, along with another campaign official, Rick Gates, to hide millions of dollars coming in from Ukraine. International drug kingpin El Chapo has even made a cameo: He also supposedly had a Delaware shell company before being arrested in 2016.

Despite this facilitation of secrecy and

J DEACON HT TP:// WWW.COURTHOUSES.CO

Delaware’s Chancery Court, which dates back to 1792, serves as a full-service judicial structure for corporations.

even crime, as a business model for Delaware, it’s attractive. In 2020, revenue from LLCs alone yielded $345 million, a princely sum for a small state. The incorporation fees the state collects make up a quarter of the state budget, allowing it to curb other taxes for Delawareans; there is no sales tax and very low income taxes, with the state’s tax brackets maxing out at the $60,000+ level.

Delaware also keeps incorporation fees low, as the millions of companies taking advantage of the rules allow the state to make up the difference through volume.

Through his press secretary, Delaware Secretary of State Jeffrey Bullock declined to speak for this story, citing that he has received 10 to 15 phone calls in the last decade from journalists looking to write stories about Delaware’s “corporate friendliness.” And they always end the same way: charging Delaware as an onshore tax haven.

But Delaware is clearly more than that.

After all, over two-thirds of the Fortune 500 is incorporated here. Even Nick Wasileski, the president of the Delaware Coalition for Open Government, a nonprofit organization that has advocated for greater transparency, told me that he would opt for a Delaware LLC if he ever opened a business.

One major lure for corporations to Delaware is the Chancery Court, which even Delaware’s greatest critics described to me as “world-renowned.” Dating back to 1792,

the court, modeled on the now-defunct High Court of Chancery in Great Britain, serves as a full-service judicial structure for corporations, almost entirely devoted to business disputes. There’s no appellate court as a go-between, meaning that if a firm appeals a decision, it gets bumped straight to the state Supreme Court. “Being able to take an appeal right to the Supreme Court takes out a whole year,” said Strine, the court’s former chancellor.

This streamlined certainty is important for businesses. But they also like the makeup of the court itself. According to professor Lawrence Hamermesh, the executive director for the Institute for Law & Economics at the University of Pennsylvania Carey Law School, the court’s seven judges (with no more than four of the state’s majority party) are experts on business law. “[The judges] see the stuff regularly that businesses care about, and business advisers know that when they go into the Court of Chancery they’re going to have a judge that already knows what’s going on,” he told me over the phone.

Like its Chancery Court, Delaware’s government isn’t shy about its corporate ways.

The state’s Division of Corporations, the state agency through which all fees and taxes flow, boasts just how welcoming it is on its website. The site describes Delaware as having “flexible corporate laws” and a “business-friendly government.”

That carries over beyond incorporation.

For example, in 1978 the U.S. Supreme Court ruled in Marquette National Bank v. First of Omaha Corp. that banks could operate across state lines without permission, and would only have to honor the interest rates and regulations of their home state.

Delaware took advantage of this in 1981, passing the Financial Center Development Act on a bipartisan basis.

The law allowed out-of-state banks the right to do business in Delaware as long as they employed a minimum of 100 state residents. In return, the state offered almost nonexistent rules on credit cards: no cap on interest rates, several legalized fees (as long as there was disclosure), and changes to terms at any time. This combined with Delaware’s existing business-friendly incorporation laws and a handful of tax breaks to provide a powerful incentive to get banks in the door.

Within three years, 11 major banks opened subsidiaries in Delaware, which was close enough to New York City to make the location convenient. To this day, half of the nation’s credit cards originate in Delaware, and about 46,600 state residents are employed in the financial services industry, roughly onetenth of the entire employed workforce.

While serving as Delaware’s senior senator in 2005, Joe Biden led the effort to change the nation’s bankruptcy laws, in part on behalf of this homegrown credit card industry. But SEP/OCT 2021 THE AMERICAN PROSPECT 51

a more consequential element of that law prevented student loan borrowers from using bankruptcy to discharge their debt. This was extremely beneficial to what was at the time the largest student loan provider in America, Sallie Mae. In 2011, the company moved its headquarters to Delaware.

In interviews with longtime Delaware residents and political experts, corporate friendliness is referred to repeatedly as the “third rail” of state politics. Lawmakers seldom suggest that anything about the situation should be changed.

Instead, the majority-Democratic legislature focuses on other issues: its long history of economic inequality, racism, faltering public education, and public-housing system. (There have been notable successes there; this July, Delaware passed an increase of the minimum wage to $15 an hour by 2025.)

National and even international tax advocates have been far less quiet. A few years ago, in 2017, a delegation of representatives from the European Union flew to Delaware with the sole purpose of advocating for the state to adopt stronger tax policies. In the wake of the Panama Papers, a damning investigation that revealed an international tax evasion scheme, the EU established the PANA Committee. The group focused on curbing tax evasion, corruption, and money laundering globally. Delaware was on the committee’s radar.

In a review of the Panama Papers and the addresses used by corporations to secretly move money, Delaware is mentioned 67 times. That’s not a lot in comparison to other countries. (Bermuda, for instance, is mentioned 332 times.) As Leo Strine, the former chancellor of the Chancery Court, emphatically told me over coffee, there’s a reason it’s called the Panama Papers and not the Delaware Papers.

Nonetheless, the PANA Committee came to Delaware to appeal to state senators.

Madinah Wilson-Anton was in the room.

At the time, Wilson-Anton was a legislative aide, working for the Senate after recently graduating from the University of Delaware. But last year, she was elected to the 52 PROSPECT.ORG SEP/OCT 2021

Rep. John Kowalko, one of Delaware’s most progressive members, has tried to pass legislation to curb handouts to big business. state’s General Assembly, representing the state’s 26th District, where she grew up. In a phone call, she told me that watching the EU delegation appeal to local politicians stuck with her.

“To be honest, I was pretty embarrassed by our legislature’s responses to the EU delegates,” she told me.

Now, in the legislative off-season, Wilson-Anton says she’s taking the opportunity to study up on how corporate taxes—and loopholes—work in Delaware. She says that at times, it feels like the system is designed for only a rarefied group of people to understand. Those within the Chancery Court, and the state’s bastion of corporate lawyers, are the chosen few.

The Delaware Bar and its fleet of lawyers wield a lot of influence in the state, starting with their sway over the legislature. Nick Wasileski says that state representatives will often just defer to corporate lawyers testifying as expert witnesses. These guardians of the state’s business laws can point to what they’ve done for the state. As Wasileski told me, “success builds on success.” Delaware’s role as a hot spot for incorporating is in part propelled by inertia.

In 2017, Rep. Kowalko, the state representative who has tried to curb corporations’ overreach in the state, introduced a

bill that seemed like a no-brainer. The proposed legislation would bar corporations from setting up LLCs in Delaware if their owners had been identified by federal agencies as a threat to the United States. It was all about criminality—preventing money laundering, sex trafficking, narcotics. It was by no means targeting the Fortune 500.

But even that couldn’t pass. Two corporate attorneys spoke out against the bill while it was still in committee, with one of them calling it “flawed.” Another said it didn’t go through the standard procedure of having the proposed legislation reviewed by the Delaware State Bar Association, which of course strengthens the power of corporate attorneys in the state.

Wasileski, whose nonprofit supported the bill, told me there’s one foolproof way of blocking legislation that might alter the state’s corporate law: write “keep Delaware competitive” in the bill’s synopsis. “Who cares what’s in the bill,” he told me over the phone.

“It’s all to keep Delaware competitive.”

The fear of rocking the boat is so great that no one will vote for a bill that might threaten Delaware’s competitive edge.

Except Kowalko.

In the last decade, Kowalko has become concerned about other aspects of Delaware’s

Delaware has discovered that even its neverending largesse isn’t always enough to influence corporate decision-making. corporate friendliness. Like many other states, Delaware has bent to major corporations’ demands for lavish tax subsidies and grants to set up production in the state.

These have grown as the rest of the nation recognizes that they can use their laws to attract businesses, too. Delaware state representatives and corporate lawyers are keenly aware that other states, like Wyoming, Nevada, and South Dakota, have also tried to get in on the “grab-bag of sweet things” that incorporation regimes have to offer. In 2008, Nevada even launched a subcommittee to investigate the benefits of forming a chancery court. (Instead, it opted to strengthen its existing district courts.)

Meanwhile, Delaware has discovered that even its never-ending largesse isn’t always enough to influence corporate decision-making. For example, DuPont used to dominate the state workforce. Stomberg, the organizer for the Delaware Working Families Party, whose clipped beard gives him a lumberjack look, says that “so many people here are DuPont families.” And for decades, DuPont built trust with the community not only through good-paying jobs, but by funding local attractions, like the DuPont Environmental Education Center (the irony of one of the country’s greatest polluters funding a nature preserve did not escape me).

“We knew what it meant to this community when [DuPont’s] leadership actually cared about the community,” Strine said.

“I gotta tell you, in Delaware, they walk the talk. How they treat their employees, the investments they make in the community—that’s what you want from a company.”

But in 2015, DuPont merged with Dow Chemical Co., which changed everything.

Though the merged company still incorporates in Delaware, the vast majority of those high-paying jobs migrated to Michigan, and 1,700 workers were laid off, despite the fact that DuPont’s CEO at the time, Ellen Kullman, was born and raised in Wilmington.

“That was gutting,” Strine told me. This was after Delaware had given DuPont multimil-

lion-dollar grants to keep jobs in the state.

The DuPont debacle hasn’t stopped the flow of money to corporations making big promises. Last year, Amazon courted Delaware for a $4.5 million taxpayer-funded grant to open up a fulfillment warehouse in Wilmington. And the retail giant succeeded.

Kowalko has tried to pass legislation to curb these direct handouts to big businesses, which he calls “corporate welfare.” When he was first starting out in politics, Kowalko said the state’s corporate friendliness made him uneasy, but he felt it was a trade-off. The Chancery Court legitimately attracted corporations through its illustrious status, and residents benefited by having the state’s budget buoyed by incorporating fees. But these cash payments aren’t designed to improve the business climate or balance the budget.

“It’s corporate extortion and we respond by giving away taxpayer money to these corporate welfare cases,” he ardently told me over the phone. “It’s not justified in any way, shape, or form.” In this sense, Delaware’s business-friendly ways have started to cross a line. The state, given to think of itself as tiny and inferior, cannot imagine any other way to survive than passing out money to corporations. Even if it hurts its own residents.

Will Delaware change its propensity for nestling up to big business? As of now, there isn’t a critical mass of state representatives who are willing to “kill the goose that lays the golden egg,” as John Flaherty, a director for the Delaware Coalition for Open Government, put it to me. Despite mounting public pressure for the United States to shore up tax loopholes, and an international bid to raise the corporate tax rate, it’s unclear whether change will come anytime soon.

The Working Families Party (WFP) is a fledgling force in the state. Its start dates back to Eugene Young’s Wilmington mayoral bid in 2016; he lost the Democratic primary by only 234 votes. Young’s supporters then migrated to backing Kerri Harris, a progressive challenger to Sen. Tom Carper, in 2018.

Though unsuccessful, “that race brought a lot of new people in,” said Stomberg. The WFP backed several campaigns in 2020, four of which were successful, including Madinah Wilson-Anton’s and one in the state Senate. Those progressive winners now continue to work with the WFP on policy issues.

As those new members reflect on their first legislative session, curbing corporate handouts has become a larger part of

the conversation. Wilson-Anton says that understanding the numerous ways Delaware attracts businesses is “pretty complicated.” But that’s not stopping her or her colleagues from pushing back against giveaways. “I will say there’s an appetite in the legislature that’s been growing,” she told me. “I know that quite a few of our newer members are supportive of it.”

In the last few years, there has been some movement. Weeks before President Trump left office, on New Year’s Day 2021, one major piece of federal legislation slipped into the National Defense Authorization Act: the Corporate Transparency Act. Under the act, all companies will have to disclose their true owners to the federal government. Although all states keep beneficial owners of their incorporated companies secret, Delaware has driven the largest PR campaign.

Gary Kalman, the former executive director of the FACT Coalition, which played a large role in advocating for the Corporate Transparency Act, says that for years, the United States was the best place in the world to hide money. The Corporate Transparency Act should curb most nefarious actors from incorporating in Delaware or anywhere else in the U.S. However, Kalman wasn’t optimistic that this would lead to an overall difference in the state. “My belief on this is that there are other reasons why Delaware has advantages for businesses being based there that have nothing to do with corporate secrecy,” he said.

One thing reformers have going for them is that the national winds are shifting away from Delaware-style governance. The benefits of business-friendly policies are waning.

Corporations aren’t staying loyal despite the state’s perks, and handouts are being doled out at residents’ expense. Nationally, the public has expressed a strong desire for corporations to pay their fair share. Both parties are growing more skeptical of big business. Has the corporate state become an anachronism?

Defenders would argue that Delaware’s puny stature demands a business-friendly environment. But what if that becomes the very feature that forces them to try something new? “We are a very small state,” said Kowalko. “So no matter how much we decide to ante up, we’re going to be at the short end of any active bidding structure. We don’t have the resources to compete.” n Amelia Pollard is a contributing writer at The American Prospect.

SEP/OCT 2021 THE AMERICAN PROSPECT 53

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“The affirmative and affirming vision of School Choice and the Betrayal of Democracy is one that rejects the ‘neutrality’ of ‘the market,’ and the habit of ignoring problems such as economic coercion, in favor of a world of interconnection.”

—patricia roberts-miller, author of Demagoguery and Democracy

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“School Choice and the Betrayal of Democracy deals deftly with the pressing question of how well democratic practices and public advocacy hold up against the structures of neoliberalism and its valorization of market logics. ” —catherine j. chaput, author of Inside the Teaching Machine: Rhetoric and the Globalization of the U.S. Public Research University

CULTURE

Hucksters on Parade Today’s CEOs are essentially carnival barkers, induced to yell louder by a corroded business culture.

The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion

By Eliot Brown and Maureen Farrell Crown

Former WeWork CEO Adam Neumann

Power Play: Tesla, Elon Musk, and the Bet of the Century

By Tim Higgins Doubleday

MARK LENNIHAN / AP PHOTO

By David Dayen It was late, and you couldn’t sleep. You stumbled into the den and warmed up the television set. You could almost hear the smile of the man in front of you, and in the coldness of the night he sounded like the most rational person you’d ever encountered. You were not entirely sure why anyone would require a device that scrambled eggs inside the shell, but the man was so compelling, so funny, so forthright, so real, so loud, that you rang up one of his operators, who were standing by.

Millions of Americans had the same experience at some point in the past 50 years, convinced by the infomercials of Ron Popeil, who died this summer. Throughout his career, at state fairs or on your TV screen, Popeil demonstrated products that fell somewhere between slightly labor-saving and completely unnecessary, and sold them to a waiting Books public as the essential gateways to a more bearable existence. You weren’t just buying a Ronco Food Dehydrator, you were being given the blessings of time and comfort and possibility. You became the person you always wanted to be, for two easy installments of $19.95, plus a free gift.

Today’s titans of industry, the men—and they mostly are men—who have shaped modern business, are essentially Ron Popeil, minus his integrity. They are known as founders, a combination of inventor, CEO, SEP/OCT 2021 THE AMERICAN PROSPECT 55

CULTURE showman, and cultural symbol. They sell the same dreams of a better life, although somehow, their lives are the only ones that materially improve.

But their audience is different from Popeil’s. Instead of insomniacs seeking refuge, today’s founders aim their pitches at investors, even while their products are ultimately consumed by the masses. If you can persuade a handful of people to part with billions of dollars, rather than getting millions of people to part with a few bucks, your product doesn’t have to be good or novel or even healthy.

How founders are depicted in their biographies depends on the relative success of the enterprise. The standard business tycoon profile has a trajectory, following the earliest stirrings of the founder through the on-the-precipice phase that exposes their pettiness, selfishness, and recklessness. This is where the books take a key turn. If the business implodes, the founders are scolded, denounced as liars and grifters, condemned for conning so many wealthy and important people. If the business thrives, however, the tone is respectful, with authors shaking their heads about the “wild ride” of a corporate savant, who’s only crazy in that way that visionaries are crazy.

And yet all these founders are the same.

Their biographers’ value judgments hinge entirely on whether they get to keep running their companies, not whether they’ve hurt everyone close to them and have rav-

aged society. By hewing to this narrative, the authors pen the equivalent of tributes to serial killers.

I don’t think that’s overstated. The rockstar protagonists of three recent books— Tesla’s Elon Musk, Amazon’s Jeff Bezos, and Facebook’s Mark Zuckerberg—routinely preside over physical and emotional damage and even death. Their injurious behavior toward rivals, partners, customers, innocent bystanders, and democracy itself suggests that founders invariably border on sociopathy to be successful. Yet, as Brad Stone writes at the end of Amazon Unbound, his second book about the company, “it simply no longer makes sense to ask” whether the world is better off with Amazon in it. Its ubiquity, and that of the other corporate winners, justifies the ruthlessness.

Adam Neumann, protagonist of The Cult of We by Wall Street Journal scribes Eliot Brown and Maureen Farrell, is every bit as egotistical, hypocritical, and unlikable as his billionaire counterparts. The WeWork founder’s major sin was to rip off a similarly arrogant con artist, SoftBank’s Masayoshi Son, and promote the ridiculous notion that he could build a global empire with an office subleasing company. Neumann wasted other people’s money and showed cruelty to colleagues, but nobody died from WeWork, and nobody involved really suffered very much.

Yet Neumann is rebuked, because he failed. And if the implicit idea behind the rebuke is to teach a lesson about the prof-

ligate, mendacious ways of the modern economy, it’s hard to find anyone in corporate America taking it to heart.

The Cult of We, like so many of these business books, opens at the paradigmatic founder’s event: a theater stage where the founder (Adam Neumann) gets to act out his Steve Jobs fantasy of touting his creation to adoring fans and employees. At the time (2019), WeWork was losing $3,000 a minute, and would soon join the trash heap of other overhyped laughingstock startups.

As the camera pulls back, Brown and Farrell bring into focus Neumann the man.

It turns out he’s a boring narcissist, wholly unworthy of book-length treatment. The penny-ante grifting, ostentatious wealth, pseudo-spirituality, desire for crowds of worshippers, hazy tequila and marijuana parties, and overwrought sense of self (at one point, Neumann, an Israeli, pronounces himself the right person to broker Middle East peace) are pure clichés. Maybe it’s his Kabbalahobsessed failed actress wife Rebekah (Gwyneth Paltrow’s cousin), whose father created a nonexistent cancer charity and made off with all the donations, who has just enough off-the-charts amorality and self-regard (she claimed to be the secret to WeWork’s success because she picked the coffee in the offices) to merit a profile. Adam’s just a bro.

He’s also a bad businessman; his first company, which sold baby clothes with knee pads to protect crawlers, was a

JAE C. HONG / AP PHOTO

Tesla’s Elon Musk and WeWork’s Neumann share many similarities; the main difference is that Musk got to keep running his company.

56 PROSPECT.ORG SEP/OCT 2021

Other books mentioned in this review

Popeil-like solution to a non-problem, which quickly fizzled. His only discernible talent is as a human divining rod, able to locate himself next to big pots of money and cajole the owners into parting with them. And even that isn’t so much a talent as it is the dumb luck to come of age in a deeply perverse time for American business. Investors today, fearful of letting the next Uber slip through their fingers, openly hunt for carnival barkers with a “near-messianic attitude” to trust with their fortunes.

They value ambition over numbers, narrative over facts, fantasy over reality.

Leasing space in an office building for slightly more than the mortgage payment is a solid but unremarkable concept. Neumann instead framed it as a way to connect young professionals and build community, a Facebook in real life. It would take about three minutes to see through this absurdity; indeed, an internal study of WeWork members showed that they rarely socialized or even knew each others’ names. But founders were induced to “think big,” a euphemism for deceiving themselves about their investment’s impact.

Brown and Farrell capture well how every institutional investor has styled itself a venture capitalist these days, from big banks like Goldman Sachs and JPMorgan Chase to mutual funds like T. Rowe Price and Fidelity. This has created a cycle that inflates founders’ instincts to scale up and ignore economic sustainability. Feeding Neumann even more was Masayoshi Son of SoftBank, a guy who made one good deal in his life (with Alibaba) and parlayed it into a self-image as ludicrous as those he funded.

Son invested over $4.4 billion in WeWork after a 12-minute tour of its headquarters in New York, and constantly pushed for faster growth to build up valuation.

“Being crazy is how you win,” Son told Neumann. Nobody needed that advice less than the hulking Israeli.

Neumann embarked on a high-level Ponzi scheme, losing money on each round of investment but renting enough new offices to attract more investors. The ancillary businesses that were supposed to yield techunicorn profit margins for Neumann were just wild lunges in every direction. WeWork bought a wave pool company, opened a gym and an elementary school, pitched a Shark Tank–type television show, and invested heavily in a nondairy coffee creamer company founded by Neumann’s friend Laird

Hamilton, the famous surfer.

He also used much of the investor loot to tend to his true passion: being impossibly rich. He repeatedly cashed out shares at higher valuations, borrowed from banks that sought business with WeWork for his personal use, and even made the company buy trademarks related to the word “We” from him for $5.9 million. He bought several stakes in WeWork buildings, becoming owner and renter simultaneously. This personal enrichment funded numerous cars and homes, including one with a recording studio shaped like a guitar.

All along, Neumann preached the concept of togetherness while zealously preferencing his own enrichment. This communitarian had a special exit designed for his office so he didn’t have to see anyone while leaving.

It all blew up when SoftBank suffered an ill-timed stock dive, obliterating a $20 billion buyout proposal. WeWork would have to go public to find capital, which quickly turned disastrous as the unviability of its business model, and the hypocrisy and self-dealing of its founder, were exposed.

Neumann was forced to step down, but not before negotiating a $1 billion payout, effectively a ransom to stop hurting WeWork. SoftBank stiffed Neumann on the cash, and after a lawsuit he got about half. There are no heroes here.

Brown and Farrell, who covered WeWork for the Journal, are part of the story. They broke several damaging scoops during the time when WeWork floated its IPO; the negative coverage crushed Neumann’s effort.

Similarly, John Carreyrou’s reporting, also for the Journal, revealed the fictions behind blood-testing juggernaut Theranos, and his excellent book Bad Blood cannot help but place himself at the center. While Brown and Farrell are more restrained than Carreyrou, they tinge The Cult of We with healthy doses of morality, highlighting Neumann’s “chaotic approach” and railing against a business culture that would elevate such a hot mess. “Optimism supplanted critical thinking,” they conclude. “As this recipe of poor corporate governance spread virally, it made a WeWork-style disaster inevitable.”

But because they drove the narrative in real time, their conclusions infect its retelling.

Every characteristic the authors decry in Neumann, and the business culture around him, can also be discerned in the breakout successes of the 21st century. In Power Play,

Tim Higgins (yet another Journal reporter) paints a portrait of Tesla’s Elon Musk that has disturbing resemblances to Neumann’s.

For example, WeWork wasn’t really Neumann’s idea; he took it from a college classmate’s co-working company. And Tesla wasn’t Musk’s idea; he was brought in because he had cash from eBay’s acquisition of PayPal, where he’d been thrown out as CEO. Miguel McKelvey, WeWork’s co-founder, did most of the company’s early work; J.B. Straubel, an engineer whose genius shines in Power Play, really created Tesla by figuring out how to organize the lithium-ion battery drive train so it wouldn’t constantly catch fire.

Before its IPO, WeWork suffered from dodgy accounting and a lack of budgetary control. So did Tesla, which for a long time didn’t track the costs of the parts that comprised the car, and mixed in customer deposits on vehicles with operating cash. Musk, like Neumann, constantly overhyped his product, lying to investors about production numbers, profits, and available cash, missing goal after goal.

Musk, like Neumann, got personal loans from the banks that did Tesla’s IPO to fund his lifestyle. Musk, like Neumann, would announce new initiatives that his company was wholly unprepared to pull off, micromanage the slightest details, scream at subordinates, and fume at employees and the media for problems caused by his spur-of-the-moment whims. Musk, like Neumann, would jet around the world for parties and indulgences, leaving the actual work to underlings.

A rare crossover moment in The Cult of We has Neumann meeting Musk in 2017 to pitch him on building community on Mars, which Musk dreamed of colonizing. Both embody a startup founder’s archetype of the audacious, lunatic-fringe leader who “doesn’t need sleep” and pushes staff to their limits. A major plot point in The Cult of We concerns Neumann leaving a bag of pot on a private jet parked in Israel; in Power Play, it’s Musk smoking a joint on Joe Rogan’s podcast. Ultimately, what they shared was a self-centeredness masquerading as vision.

It’s also not hard to envision a world where Neumann is triumphant and Musk is looking for his next gig. If the tech slump had hit SoftBank just a little bit later, Neumann would have secured his $20 billion deal and would never have needed to go public. He might SEP/OCT 2021 THE AMERICAN PROSPECT 57

CULTURE have ridden the pandemic-era tech company wave to become even stronger. For its part, Tesla was on its deathbed multiple times in Higgins’s narrative. It blew through four CEOs in a year during the 2008 financial crisis, and at one point had less than a week of payroll on hand. It had dwindling reserves in 2012, and its stock lost half its value at the beginning of 2019. Even today, demand is falling in China, a key market for sales growth, as domestic automakers undercut Tesla’s sales.

Any one of these moments could have sent Tesla into cardiac arrest. It was bailed out by Musk’s success at creating the first meme stock, inspiring such evangelical fervor among supporters that he could guarantee retail investor support no matter what—and by the company’s ability to sell emissions credits to rivals, thus turning losses into profits. In other words, Tesla survived thanks to the state of California’s clean-air regulatory policy, which, considering Musk’s Randian libertarianism, brings a chuckle.

Yet Higgins never calls Tesla a cult or a delusion, which is how Brown and Farrell term WeWork. At every peak of the Tesla roller coaster, Higgins notes its “massive achievement.” But there’s nothing separating Tesla’s fate from WeWork’s, other than a few strokes of luck. A classic example of the tonal bias involves a solar roof demonstration at Universal Studios in October 2016, which Musk intended to save his struggling SolarCity business. “None of the solar panels actually worked, but that was beside the point,” Higgins writes. “Musk promised to make roofs sexy.”

Amazon Unbound and An Ugly Truth, profiles of Jeff Bezos and Mark Zuckerberg, respectively, find those founders at a different part of the business life cycle, once they’ve broken free of competition and scaled an unassailable mountain. The books do address how Amazon and Facebook react to this new reality, where their missteps are magnified and their impact on the world debated. Even so, the similarities between these founders and their scrappier counterparts predominate in these narratives.

All four of these CEOs, at one point or another, structured shares to give themselves greater control of their companies.

Even after becoming the world’s richest man, Bezos had his legal department quietly 58 PROSPECT.ORG SEP/OCT 2021

In modern business, snake oil peddlers fail and succeed at random.

ask shareholders in 2019 if they would support a dual-class stock arrangement that would concentrate his voting power, weeks before he announced his divorce from his wife MacKenzie. This enabled him to retain control even as the split diluted his corporate stake. Despite preaching openness as much as Neumann, Zuckerberg limited access to his own Facebook account. The pettiness between Musk and Bezos over their respective rocket ship companies is palpable, and Bezos’s plan for a trillion people living on space stations is every bit as deranged as Neumann’s thinking he could build a $10 trillion company out of subleasing.

Despite being armed with limitless riches, Amazon’s major innovations in the past several years were either failures (the 3D Fire Phone, an insane idea for a desk lamp that projected holograms) or outright purchases like Whole Foods and Alexa (the latter was only realized after Amazon bought a speech translation and an AI company). Amazon Go stores with their smartphone checkouts were a perfect Ron Popeil product; exactly how taxing is a two-minute line at a convenience store? And that sounds like the Model T compared to Zuckerberg’s virtual reality headset for business meetings, because who hasn’t longed to replicate the worst part of the workday while wearing an oversized helmet and interacting with a cartoon version of Ken from accounting?

Reading the travails of two of the most successful companies in the world, you get the distinct impression that they’re just throwing darts at a board, sustained only by their prodigious wealth, their ability to muscle out competitors, and their deceptions, be it Facebook lying about its reach to advertisers or Amazon lying about ripping off data from third-party sellers to boost its own products.

Facebook almost died when Zuckerberg rejected a buyout from Yahoo in 2006, and Amazon had a near-croak experience after the 2001 dot-com crash, rescued only by an infu-

sion of cash from AOL. Otherwise, they might have joined WeWork as footnotes. Unfortunately for the world, Bezos and Zuckerberg’s companies survived and, like Musk’s, grew big enough for their inventions to kill people.

Musk’s bravado carried over into Autopilot, a driver assistance mechanism which the founder had to admit recently is “not great,” seven years after rolling it out.

Unfortunately, Teslas on Autopilot have a bad habit of slamming into emergency vehicles that are assisting other crashes.

Yet for years, Musk obstinately refused to walk back his claims for his self-driving robot taxis, even as his fans were careening to their deaths. As for Amazon, pedestrians have long been at risk from the company’s onrushing, overworked delivery drivers late for getting soda and toilet paper into front yards. During the pandemic, Amazon warehouses became coronavirus contraction factories, with over 20,000 cases as of last October. And two years earlier, ethnic Rohingyas in Myanmar were wiped out by foes directing their genocide through Facebook posts.

But Bezos and Zuckerberg made it, and dug their moats to ensure nobody can catch them. Musk is on the way. Neumann, a garden-variety thief, only took from investors who knew the risks. Yet he’s a bad person, which is another word for someone whose con didn’t work.

A fast-growing company collapsing to Earth amid the hubris of its founder can be depicted as an updated Greek tragedy. But in modern business, snake oil peddlers fail and succeed at random. The system that keeps lionizing fraud for profit needs the scrutiny, but instead we get locked into myopic narratives. What’s more, the cautionary tales don’t come close to dislodging the business world’s longing for the next big idea.

As Elizabeth Holmes faces trial for fraud, investments in health care startups have jumped, with venture capitalists making a frenzied search for the next medical savior.

Meanwhile, the guy who founded Diapers. com wants to build his own utopian fivemillion-person city named Telosa (from the Greek for “highest purpose”) somewhere in the American scrub brush. Even WeWork, sans Neumann, is back, latching onto the newest form of financial engineering, a special purpose acquisition company (SPAC), to go public two years after its IPO failed.

Somewhere, Ron Popeil weeps. At least he made a half-decent knife. n

CULTURE

How the Church Stymies Even Pope Francis The pope has embraced greater social justice— except when it comes to women and sexuality.

The Truth at the Heart of the Lie

By James Carroll Random House

By Michael Rezendes For Catholics and others repulsed by the continuing tragedy of sexual abuse in the Roman Catholic Church, James Carroll’s The Truth at the Heart of the Lie arrives as a welcome, trenchant, and highly readable dissection of a global humanitarian crisis, though not all will embrace his surprise prescription for reform.

As a former Catholic priest, best-selling author, and an op-ed columnist covering Catholic themes for The Boston Globe for more than 20 years, Carroll is ideally suited to delve into an issue that has vexed the U.S. Conference of Catholic Bishops and roiled the Vatican while undermining the Church’s moral authority for more than two decades.

Told as “A Memoir of Faith,” it offers an intimate, frequently anguished first-person account of Carroll’s journey from a boy who felt the presence of Jesus Christ at a young age, through his restless questioning of his vocation, and Books finally to his alienation from an institution he still loves.

His final turn is triggered by the Church’s failure to stop powerful priests from sexually molesting children, its refusal to address the root causes of the phenomenon, and, most pointedly, by his disillusionment with Pope Francis, a beacon of hope for Carroll and millions of other Catholics when he was elected nearly a decade ago.

The specific moment of Carroll’s alienation flares during the pope’s 2018 papal visitation to Ireland, the scene of some of Carroll’s most memorable writing. Francis 60 PROSPECT.ORG SEP/OCT 2021

arrived following a decade of horrific clergy abuse revelations in the once devoutly Catholic nation, including the highly publicized scandal of the Magdalene laundries, where unwed mothers were forced to live in servitude and where, at one location, more than

sulated the institutional denial that has allowed the clergy sexual abuse scandal to continue unabated. “I had never heard of these mothers, they call it the laundromat of women where an unwed woman is pregnant and goes in these hospitals,” the hapless Francis said. “I don’t know what they call them.”

When he learned of those remarks, Carroll’s immediate thought was, “A lie. Pope Francis is lying.” How could he not have heard of the infamous Magdalene laundries, at that point the subject of several documentaries and the roundly praised Philomena, the 2013 movie starring Judi Dench? But even if Francis weren’t lying, Carroll says, ignorance was just as bad. “A taut wire in me snapped,” he recalls. “Pope Francis’s Magdalene denial did it, and in an instant my core belief was called into question and my entire life changed.”

Carroll, who previously analyzed Church

Pope Francis claimed to know nothing of the Magdalene laundries before arriving in Ireland, a sign of institutional denial.

800 infant corpses were discovered, many of them victims of malnourishment and neglect.

Yet the pope said he knew nothing about the laundries before arriving in Ireland, a comment that, for Carroll, perfectly encap-

doctrine and history in the award-winning Constantine’s Sword, attributes the endless clergy abuse crisis to clericalism, the uniquely Catholic culture surrounding the Church’s all-male priesthood and hierarchy—an ancient, secret society accountable only to

NIALL CARSON / AP PHOTO

itself with headquarters in the city-state of Vatican City.

Although Francis has repeatedly denounced clericalism, Carroll rightly accuses him of doing everything possible to support its “twin pillars.” Namely, the “inhuman” celibacy requirement for priests and the exclusion of women from the clergy.

Catholic priests were permitted to marry and father children for more than a thousand years, until the First Lateran Council in 1123. With the passage of that draconian requirement, Carroll writes, priests’ wives and children were driven into poverty, prostitution, and slavery, “a massive crime against thousands of innocent Catholics— especially women.”

Carroll’s profound disappointment with Francis and what he repeatedly calls the Church’s “misogyny” will strike a responsive chord with Catholic women who saw the new pope as a means of expanding on the liberal reforms of the 1960s and Vatican II, only to see him affirm the efforts of Popes John Paul II and Benedict XVI to permanently ban women from the Catholic clergy, saying theirs was “the last word” on the subject.

As the Francis papacy draws to a close— he is 84 and recently underwent surgery for diverticulitis—Carroll’s pointed disillusionment is sure to figure in history’s assessment of Francis’s tenure as leader of the world’s 1.3 billion Catholics, as well as his attempts to thwart the conservative currents set loose during the 35-year reign of his predecessors, John Paul and Benedict.

Without question, Francis has shaken up Church conservatives by downplaying their anti-abortion crusade and attempting to reposition Catholicism as a “church for the poor,” specifically the swelling ranks of the world’s migrants and refugees. He unveiled his attempt to reset Church priorities almost immediately after his election, in 2013, when he met with Fr. Gustavo Gutiérrez, a Peruvian theologian and founder of liberation theology, which seeks to realign the Church with the world’s dispossessed by urging Catholics to take political action to correct social injustice, a school of thought condemned by Benedict when he was head of the Vatican office that enforces Church orthodoxy.

Francis notably affirmed his allegiance to the poor and social justice movements within the Church two years later when he declared Salvadoran Archbishop Oscar

Romero a martyr and later presided over the process that led to his canonization, or sainthood. Romero, a staunch advocate for the poor in poverty-stricken El Salvador during the 1970s, was assassinated by a right-wing death squad while saying Mass.

Since then, Francis has continued to lead the Church in a liberal direction with statements underscoring the dangers of unfettered capitalism, warnings about global warming, and the obligation of Catholics to act to protect the environment. “Living our vocation to be protectors of God’s handiwork is essential to a life of virtue,” he says in a papal encyclical. “[I]t is not an optional or a secondary aspect of our Christian experience.”

But Francis has failed to address or to even acknowledge a range of urgent contemporary concerns that, as Carroll notes, all fit under the rubric of human sexuality. In addition to his failure to consider permitting women to become priests, and the halfway measures he has taken to prevent clergy sexual abuse, he has dodged celibacy, birth control, and gay marriage. Francis famously signaled tolerance for LGBTQ Catholics when he was asked how he might act as the confessor of a gay person and replied, “Who am I to judge?” But the Church continues to view homosexuality as “an intrinsic moral evil,” as Benedict has said, and gay marriage is not permitted.

Francis has also struggled when it comes to backing up his liberal pronouncements and personal assurances with lasting action, a fact underscored by his effort to rein in conservatives who control the U.S. Conference of Catholic Bishops, especially those seeking a mandate to prevent President Joe Biden from receiving Holy Communion unless he renounces his support for abortion rights. Following a June vote to create a “teaching document” on the meaning of the Eucharist, the USCCB said, “There will be no national policy on withholding Communion from politicians.” But the document is unlikely to be considered for approval until a November bishops’ conference, leaving plenty of time for the internally riven American bishops to amend their statement. It’s as if Francis, who prefers a conciliatory approach to the ideological warfare raging within the global Church, has never understood that the Church is a political institution, and that lasting reform and meaningful spiritual advances can only come after consolidating political power.

Carroll’s assessment of Francis and his overall indictment of the Church for its inability to effectively address the clergy sexual abuse crisis has all the markings of an airtight case, and it may well be that. But he makes a surprise shift in his concluding chapters and epilogue—“A Catholic Manifesto”—when calling for change.

Rather than leave the Church, Carroll calls on dissenting Catholics to stage a rebellion from within by establishing a beachhead for anti-clericalism and a more humane Church “on the ecclesial inner margin,” even if that means giving up Sunday Mass, as Carroll has. Harking back to his days as a Catholic priest counseling young draftees seeking to avoid the Vietnam War, he says, “Think of us as the Church’s conscientious objectors. We are not deserters.”

In part, Carroll’s argument is practical: The Church is a worldwide community of more than a billion people, including thousands caring for the poor and healing the sick, that “is not going away” anytime soon.

As such, it is an institution with the potential to make great humanitarian strides.

Indeed, Carroll goes so far as to say that “a reformed, enlightened, hopeful Catholic Church is essential to the thriving—even the survival—of the human species.”

His argument is also spiritual, as he looks back to the early days of Christendom, before the Church ruled that only priests may deliver the Eucharist, before the celibacy requirement, before the era of empire, when so much of the Catholic dogma Carroll finds objectionable was codified into church law. In particular, he looks to the Book of Matthew, where Jesus says, “For where two or three are gathered in my name, there am I in the midst of them.”

Many Catholics will be grateful for the hope Carroll offers. “Hope is a choice,” he writes. Others, perhaps the survivors of clergy sexual abuse and their friends and families, may be appalled by a spirit of appeasement, or simply saddened by the vision of a Catholic Brigadoon that will never return. n Michael Rezendes is a senior investigative reporter for the Associated Press. He was a member of the Boston Globe Spotlight Team that won a Pulitzer Prize for revealing the cover-up of sexual abuse in the Catholic Church and was played by Mark Ruffalo in the Academy Award–winning movie, Spotlight.

SEP/OCT 2021 THE AMERICAN PROSPECT 61

CULTURE

The Great Pandemic and the Global Response A Q&A with Adam Tooze about his new book on the economics of COVID

By Jake Blumgart Adam Tooze is everywhere these days. The Columbia University professor of history is a constant presence on Twitter, published in an array of publications on both sides of the Atlantic, and a frequent guest on podcasts from Bloomberg’s Odd Lots to Jacobin’s The Dig. But Tooze is principally known for his nightstand-crushing histories based on primary documents and years of research, like 2006’s The Wages of Destruction: The Making and Breaking of the Nazi Economy and 2018’s Crashed: How a Decade of Financial Crises Changed the World. Perhaps reflecting his recent interest in the day-to-day, his newest work breaks with this habit. Instead, Shutdown: How Covid Shook the World’s Economy is a history of last year. Tooze studies how the pandemic and government responses to it played out in China, the United States, the European Union, and the rest of the world.

Tooze carefully chose the title—he did not call it Lockdown, because the economy began shuddering to a halt before policymakers acted—and he emphasizes repeatedly how unprecedented so many things were in 2020. There had never been anything like the near-universal halt to economic activity last spring, no comparably rapid spike in unemployment, and nothing like the massive economic supports put in place by world governments.

The American Prospect talked with Tooze about the fiscal responses around the world, the Chinese state’s epic capacity for risk management, and the role of central banks in economic management. An edited transcript follows; for the full interview, visit prospect.org/tooze

62 PROSPECT.ORG SEP/OCT 2021

If the West had promptly learned the lessons from China in February and taken actions accordingly, this could have been the Chernobyl of the Chinese regime. But they must have just watched with amazement at what then proceeded to happen in the rest of the world. It’s staggering. It flips from being something that was a very profound shock to the regime to being a spectacular propaganda coup.

Why did the Chinese state, in its efforts to counterbalance the economic effects of COVID, not focus much on individual supports for income or employment? You would think a communist state might support workers first.

It’s a deep bias in the Chinese state apparatus. It’s a clear weakness in their ability to manage both society and economic stresses going forward. The default mode for stimulus in China is to channel money through the credit system to the big corporations. That gets your investment function going, that gets your infrastructure-building going. That cranks up the heavy industrial complex, which is what we see in the second half of 2020. They do not have the welfare state mechanisms in place. Quite contrary to what you would expect, the benefits of the prosperity of the last 30 to 40 years in China have not exactly trickled down, they have rained down on the population through the market mechanism—not through an extraordinarily generous welfare state.

Your book is divided between the U.S., the U.K., and the EU, China, and the rest of the world. Let’s start where the pandemic appears to have started. Western pundits were saying this could be the Chinese Communists’ Chernobyl moment. That’s not what happened. How did COVID highlight the strengths and the weaknesses of the Chinese state?

The first thing you have to realize about China is it’s just absolutely gigantic. Hubei province is the size of the largest European nation-state (only Germany has a significantly higher population). The Chinese try and operate a reporting system in which diseases across this giant country are reported upwards in a linear fashion towards an agency in Beijing. There is a command-and-control system with considerable sanctions if you screw up. That a system like that should not work well is perhaps indicative of the weaknesses of During the pandemic too, Xi Jinping Chinese governance, the difficulty within announced that he would make the counan authoritarian regime of admitting try carbon-neutral by 2060. Given the mistakes and so on. But I’m not at all confident that if the disease had broken out state of politics in the U.S., does that somewhere in the West that it would have mean that in the fight against climate percolated upwards to the global health change China could be a more reliable ally agencies much more quickly than it did. than America?

But it certainly did fail. The Chinese America has zero credibility on the climate issue. I mean that in the techregime had made a promise to nical sense: There’s no way in which itself and its population that any interpreter of the American SARS would not happen again. situation could conclude that there This is a promise that the regime was a stable coalition of interests in takes extremely seriously because the United States that would make 2003 was a huge shock. It should you believe that any entirely sincere have been a crippling blow to the Shutdown: promise made by the Biden adminregime’s authority. This is the How Covid istration would stick. largest economic shock that the China is not just more credible than country has suffered. It was clear- Shook the World’s ly the responsibility of local party Economy the United States, but it is the probofficials, and there maybe was a

By Adam Tooze lem. China is 28 percent of the global emissions problem, and America’s matter of delay in Beijing too.

Viking

The coronavirus pandemic led to the largest economic shock that modern China has suffered.

AP PHOTO

The default mode for stimulus in China is to channel money through the credit system to the big corporations. share is closer to 14 percent and falling. So China’s actions really dictate the entire climate political scene, and I think the West is only slowly waking up to the significance of this. We’re still caught in a guilt trip of the 1990s, where we are the major emitters and we have the largest historical responsibility. The situation that we’re in now is, regardless of what we do about it, the decision is going to be made in Beijing, and then,

subsequently, in other large Asian capitals.

Furthermore, the impact of climate change will be felt far and away more intensely there than in the West.

Xi Jinping making an announcement like that has to be taken more seriously than the equivalent announcement by a democratic politician. Not because he doesn’t engage in propaganda, or he isn’t manipulative, but because his word is law in a way that is not true for anyone in the West. His words will become operative tokens in the game played within the Chinese bureaucracy.

But that has to be pushed through against the resistance of the largest coal sector in the world. There’s nothing in the West equivalent to the giant power complex the Chinese have built. And the increasing tension with the West on security issues makes China more disposed to lurch back into dependence on that, because they can mine the

coal domestically and other sources of energy are imported.

Let’s pivot to Europe, and pick up where your last book left off. Italy and Spain were hit hardest by the pandemic and were also among the European nations hit hardest after 2008. You note that Italy’s GDP was 10 percent lower in 2020 than it was in 2008. How did that earlier crisis set them up to face the pressures of 2020 and 2021?

The hospitals are the front line of the system and it prejudiced their ability to cope with the crisis quite severely, because their health systems in both cases had been operating under very tight budgets for the last ten years. Whether that was a critical difference is not plausible to argue because once an exponentially growing pandemic gets out of control there’s no SEP/OCT 2021 THE AMERICAN PROSPECT 63

CULTURE

You argue the fiscal interventions of the pandemic were essentially conservative, in the Bismarckian sense, preserving the social order through the welfare state. But there was really substantial new ground broken. We are seeing politicians in both parties embracing redistributive or welfare policies that would have been radical even ten years ago. That seems like a fundamental shift.

I would agree and I think there’s an element of learning here. The package had to be more equitable than it was in 2008–2009. This is particularly true of the American Rescue Plan, the package passed by the Congress under the Biden administration, which was very well targeted at middle- and low-income families and has relatively little pork and few tax giveaways.

We should distinguish between innovative measures, which have a significant effect in alleviating the suffering and uncertainty suffered by the most vulnerable Americans and anything you could call structural change. The measures taken in America, as enormous as they were, have about them the quality of a sticking plaster. It’s far larger 64 PROSPECT.ORG SEP/OCT 2021

Adam Tooze

than ever delivered before, but it is not a change in the labor market system, it is not the introduction of a nationwide unemployment insurance system. It’s a very generous add-on provided by Congress and the federal government, but America has to do things like this in crises because the underlying system is so broken.

It is true that governments around the world gave out money to working families.

But it’s also true that they gave out extraordinary handouts to businesses around the world. We have various ways of dressing that up to disguise that fact. We’ve allowed special allowances for small to medium-sized businesses, which is a cuddly way of describing a large part of the most affluent groups in society: the owners of small and mediumsized businesses. The effect absolutely is to underwrite the status quo.

You write that the central bankers seem to be the one area of Western government in which the authorities have begun to grasp the scale of the challenges we face. You also say there appears to be no fundamental macroeconomic limit to what they can do, and that their limits are not financial but political and social. Can you expand on that?

I’m broadly sympathetic to the MMT [Modern Monetary Theory] vision, especially in its classic Keynesian versions. In

other words, monetary constraints, budget balances, debt levels really are not a binding constraint on us in the current situation. We have extraordinary agency in one area, which is intimately tied up also with one of the great flywheels of inequality, which is central banks atop the global financial system.

But the main constraints are actually the technical, social, political ability to organize ourselves collectively to actually do the things that need doing. If we simply just spin the monetary wheels continuously, we know what happens; we saw it last year, we saw it in the aftermath of 2008. Those with a stake in the apparatus of financial assets benefit massively and large parts of the rest of society, let alone the rest of the world, are left behind.

This is a theme that runs across the whole book. A Brazil can manage its financial problems, but that doesn’t mean that it’s going to escape a truly epic pandemic.

A Peru can borrow for 100 years at the end of last year, and that’s not going to solve its political problems or the fact that Lima is a pressure cooker of pandemic risk. It turns out that money is not the center of your problems, because that is actually something that can be managed. n Jake Blumgart is a senior reporter at Governing.

COURTESY OF ADAM TOOZE

pre-existing level of hospital capacity that will save you. But it certainly didn’t help.

The issue that was most pressing was the debt level. The concern was that the elevated debt levels, notably of the Italians, would crimp their ability to respond adequately in terms of fiscal policy to the crisis. Those were the stakes of the extraordinary argument that went on between March and June, when the future of Europe was in the balance. I’ve not witnessed anything like the level of anxiety and fear in Europe in April since, well, I wasn’t in touch with decision-makers in 2011, but writing about that period, the stress was reminiscent of that. Things were on a knife’s edge. If that had persisted, it would have been disastrous for the ability of the weaker eurozone countries to mount an effective fiscal policy response.

As then there was the change in attitude of the EU towards a common fiscal response, and the uninhibited support given by the ECB [European Central Bank]. The combination of those two things, the prospect of a long-term fiscal deal, and the immediate support by the ECB really changes the game for Italy and Spain.

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Back to School forsafe, All: Schools must be Return, Recover and Reimagine welcoming—and open

By Randi Randi Weingarten, Weingarten, President President By AMERICAN FEDERATION FEDERATION OF OF TEACHERS TEACHERS AMERICAN

S

not that children’s go and 7. stretched Increase so thethin emphasis on civics,needs science unmet.

We need more community schools, where project-based learning, to nurture critical thinking students their families andand bring learning to can life. access medical and health services, social supports, foodto fill 8. mental Use funds from the American Rescue Plan assistance and other urgent counselors, supports sopsychologists students shortages of teachers, can focus on learning—and on just being kids. and nurses.

9. Launch a federal task force to rethink account-

and safety measures as well as curriculum. At its Here are 10 ideas to move us toward those goals: core, the recent attempt to recall California Gov. Gavin Newsom a referendum on precautions 1. Launch thewas AFT’s “Back to School for Everyone” against the coronavirus, voters chose national campaign and to underscore thesafety. importance

tudents are settling into the third straight

chools must open this fall. In person. school year disrupted by the coronavirus panFive days a week. With the space and demic. Since Aug. 1, I have been on the road health safeguards to do so. And my visiting public schools in 30 communities union, the American Federation of in 14 states, Washington, D.C., and Puerto Rico. I’ve Teachers, is committed to making it happen.

Our need to bewill in not school and to stayuntil in school.

The kids United States be fully back we are As I have since the daysisof the pandemic, fully backsaid in school.

Andearliest my union all-in.

I recently safety are not barriers to necessary in-person to return gave aprotocols speech detailing the steps learning—they are the learning, way back.including Schools have no the safely to full in-person building higher than protecting the recover lives of socially, students supportpriority systems to help students and staff. Theand AFTacademically, has consistently forthe emotionally andadvocated overcoming safe in-person schooling layered concerns and fears somewith parents havemitigation about sending measures thatback include masking, physical distancing, their children to school. surveillance testing, ventilation upgrades and—the We must address those fears. The AFT, with the most effective way to protect lives—vaccination.

NAACP and others, recently polled parents of public Educators are leading the way with one of the highest school students. Only 73 percent of parents—and vaccination rates of any profession; prior to any only 59 percent of Black parents—said they are mandates, 90 percent of AFT educator members were comfortable with in-person learning for their child this fully vaccinated to protect themselves and others.

community partners—to ensure funds in the

Teachers are focused on students’ academic recovery 2. Form school-based committees of staff, parents and acceleration. We are using approaches like projectand, where appropriate, students to plan for and based learning, which engages students in solving a respond to safety issues and to conduct safety real-world problem or answering a complex question, “walk-throughs” in school buildings. rather than fixating on testing. We are emphasizing 3. Align health and pedagogical best practices by literacy, which unlocks all other learning. We know reducing class sizes to reflect the Centers for students need art, music, movement and other Disease Control and Prevention’s 3-feet social opportunities that ignite their creativity. And, after a distancing guidance. Eliminate simultaneous pandemic that has been hard on everyone, and really in-person and remote instruction. hard for many children, they need to connect—with 4. Offer “office hours” and clinics for AFT their peers and with adults who care deeply for them.

American Rescue and other I won’t gloss over how Plan challenging thisfederal year (orfunds for schools are spent andvariant effectively. longer) of recovery will equitably be. The delta has thrown us a curveball, and there are too many places We are all yearning to move forward after this difficult where adults are simply not doing what they can to year. For our young people, that means being back in keep students and the school community safe. Our school, with their peers and caring adults, with all the students are returning with immense needs—social, supports they need. emotional, academic and physical. The Biden administration led efforts get additional Despite all thehas divisions in ourtocountry, there isstaffing a and supportaround to schools, but it’s impossible to public overstate consensus the importance of strong how great theisneeds are. Teachers school schools.

That especially vital now,and when we staff need our have justtobeen through thetosecond-hardest year schools provide access a great, well-rounded of their professional lives.passion What’s for the learning hardest?and help education to spark kids’ The school yearsocially that has gotten underway. them recover andjust emotionally.

Educators are also focused on their students’ social technical support. and needs,and knowing that stress and 5. emotional Roll out camps summer programs that isolation during the pandemic to a surge provide academic support,have helpled students get back in depression and anxiety.

But teachers into routines and encourage kids tocan’t havedofun. this We community need social schools workers,tocounselors 6. alone.

Promote build trust and and nurses—and enough of themkids so they’re remove obstacles to getting and families the

We during to thisseed pandemic that oneinthing We have havelearned a rare chance a renaissance most Americans on is the of safe, American publicagree education.

It’s aimportance once-in-a-lifetime strong, supported public schools.and I can assurebut youtothat opportunity not only to reopen recover, America’s areindoing theymakes can toevery meet reimagineeducators our schools a wayallthat the challenges to helpparents our children public school aahead, place where want recover to send and and educators to help them joy instaff eachwant day. to theirgrow, children, andfind support

of in-school learning.

sensed the trepidation students, parents and school staff feel; how could theylearn not, with deltathey variant School is where children best,the where play surging? even more is their It’s together,But formwhat’s relationships andapparent learn resilience. excitement—and educators’ dedication to making where many children who otherwise might go hungry in-person schooling safe, Parents welcoming joyful. That’s eat breakfast and lunch. rely and on schools not why all the more only it’s to educate theirfrustrating kids but sothat theypreventable can work. An outbreaks are leading to widespread astoundingof3COVID-19 million mothers dropped out of the school closures, quarantines, illness and even death. workforce during the pandemic.

That is the promise and purpose of our public ability—how we assess student learning and schools; as a community of educators, we are how to measure what really counts. helping all our students thrive, one by one. And, 10. Engage stakeholders—families, educators and in so doing, we can help heal our nation.

affiliates and others to discuss ideas and get

support and services they need.

work and students thrive.

Safety protocols are not barriers Thein-person United States will not beare fully back to learning—they untilway we back. are fully back in school. the

fall. But if the safety and education measures the AFT

The AFT’s for Back campaign is calling aretoinSchool place,for theAllcomfort levelhas jumps to provided $5ofmillion in grants to more than 1,800 94 percent parents, including 87 percent of Black of our local in both red states and blue parents.

It’sunions clear that mitigation measures to prevent states that together educate more than 20 as million the spread of the coronavirus create trust, does students.

Thesebetween grants are funding clinics, collaboration schools andvaccination families. COVID-19 billboards and been radio real ads. game-changers, Many local unions vaccines have andareit’s great hosting community with has freebeen books, food, games, news that the Pfizerfairs vaccine approved for and opportunities for parents to talk with teachers 12- to 15-year-olds. and ask questions. Many others have canvassed My union is all-in. We are pressing for those safety door to door and participated in phone-banking and education measures in schools across the country. this summer and fall to encourage families to send And we are dedicating $5 million to a “Back to School their children back to school, with a special focus on for Everyone” national campaign to connect not just students who attended little or no school last year.

opportunities that give them the freedom to thrive.

Photo: Brett Brett Sherman Sherman Photo:

with teachers and school staff but also with families

This a moment totobuild and iscommunities, buildsafe trustand andwelcoming confidence in environments in every school particularly so we can help children returning to school, those who kids onlylearning recoverremotely. from the disruptions of the havenot been past 18 months but thrive. The places doing this But we must do more than physically return to schools, most successfully are where educators and school as important as that is to create the normalcy we leaders are working together, creating trust and crave. We must also put in place the supports to help transparency. Conversely, governors trying to score students recover—socially, emotionally and ideological points by banning mask mandates academically. And we must reimagine teaching and and bullying school leaders for implementing learning to focus on what sparks students’ passion, safety protocols are stoking hostile and unsafe builds confidence, nurtures critical thinking and brings climates. You see it in the disruptions and violence learning to life—so all children have access to the at schools and school board meetings over health

Weingarten speaking atat AFT headquarters in Washington, May 17.

13.

Weingarten, center, with students PS/MS 5 Port Morris in the BronxD.C., on Aug. Follow FollowAFT AFT President President Randi RandiWeingarten: Weingarten: twitter.com/RWeingarten twitter.com/RWeingarten Read ReadWeingarten’s Weingarten’s speech: speech: aft.org/renaissance aft.org/renaissance

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