Following Up: Vital Background on “Idea Laundering” — and Washington Corruption

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Bloomberg.com, conflicts of interest, corruption, hedge funds, idea laundering, Im-Politic, James K. Glassman, journalism, lobbying, Mainstream Media, Nick Confessore, special interests, The Washington Monthly, think tanks

Since I’m a great believer in giving credit where it’s due, I feel honor-bound to report that I just learned that a development I thought I first identified (along with a catchy name) wasn’t spotted first by me after all. At the same time, it’s also a pleasure to make this confession, because it creates a golden opportunity to recommend two excellent pieces of journalism that shine much needed additional light on this development – which has tremendously deepened corruption in American policymaking.

The development? “Idea laundering” – which I’ve defined as the now widespread practice of special interests (like corporations) using think tanks to issue materials that push the particular agendas of these funders while garbing them in quasi-academic raiment to create the impressions of objectivity and intellectual respectability. In other words, it’s become practically standard operating procedure in the policy world for outfits with scholarly-sounding names like “The Brookings Institution” to put out reports and articles that flack for the companies and other donors (now including foreign governments) that pay the rent without disclosing the hand that’s feeding them. Just as bad, journalists almost never reveal these conflicts of interest – or even ask about them.

I thought that I was the first to spotlight and name this deception, in 2006 testimony before Congress on Chinese influence-peddling operations in America. But yesterday, while reading a terrific piece on Bloomberg.com on how hedge funds have been using an especially insidious variant of the practice, I learned that it was first described in a 2003 Washington Monthly article by Nick Confessore, who is now a reporter for The New York Times. Interestingly, the individual at the center of both articles is James K. Glassman, a long-time fixture in the Washington, D.C. chattering class scene who Confessore credited with pioneering this deceitful new version of lobbying.

I do believe that I’ve been writing and warning about idea laundering more than anyone else. But I’m glad to acknowledge publicly that I was beaten to the punch when it comes to parenthood. It’s also great to see that more and more journalists are looking underneath the hood of the writings and Congressional and media appearances that so profoundly shape America’s approach to virtually all foreign and domestic issues.

Unfortunately, as made clear by this recent post, we’re a long way from the point at which reporters name the donors routinely, and when editors demand this vital information just as often. Until they do, the idea launderers and their paymasters will keep winning far too many victories at the expense of Main Street Americans.

Im-Politic: Why Washington’s Latest Think Tank Scandal Should Matter – but May Not

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corporations, corruption, democracy, Google, idea laundering, Im-Politic, Mainstream Media, New America Foundation, Silicon Valley, special interests, think tanks

Slowly, and not so surely, the American media is waking up to the pervasiveness of corporate corruption of the nation’s think tank complex. I say “slowly” because revelations of the way these special interests – which include foreign governments – have used these supposedly quasi-academic institutions to promote and defend their own selfish agendas has tended to drip out in individual exposes usually separated by years (literally). And I say “not so surely” because these reports rarely connect any of the important dots. Worse, it’s ever clearer that the Mainstream Media itself is a big part of the problem.

The latest example: the uproar set off by revelations that the New America Foundation (NAF) recently fired a team of analysts because it started goring the ox of one of the organization’s main funders, Google.

It’s been gratifying to see that nearly everyone who has commented on this incident considers NAF and Google to be in the wrong, and no one whose work I’ve seen has given the slightest credence to the organization’s insistence that the team was canned because he wasn’t sufficiently collegial in his work habits.

Much less gratifying has been the almost equally widespread tendency to interpret the incident as a sign that Google itself has become way too powerful on America’s policy and intellectual scenes, and in underhanded ways. Or that Silicon Valley itself is now exerting way too much of this power just as sneakily, and without adequate checks.

That’s all true, and important. What’s been almost completely missed, however, is that Google’s muscle-flexing is anything but limited to Google or to the tech sector or to the New America Foundation. It is now Standard Operating Procedure in the think tank world, which has become what I’ve called an idea-laundering racket. That is, donors use the tanks they support to dress up various self-serving ideas in respectable-looking scholarly raiment that can be sold to policy-makers as the products of disinterested truth-seeking.

Not that special interests lack the right to bring their concerns to official-dom. But they should be correspondingly obligated to display some transparency – and where they’re determined to be secretive, or to capitalize on the general public’s understandable unwillingness to investigate the information they do need to disclose, the press needs to step in. Sadly, it’s almost unheard of for journalists to link think tank staff quoted in news articles as scholarly experts to the donors that pay them and the agendas they’re pushing.

Indeed, as I’ve documented, there’s a strong tendency on the part even of news organizations that have reported on think tanks’ corporate and other special interest connections to ignore their own findings and permit idea laundering as usual.

One big reason that’s become clearer to me than ever as I’ve been looking into the NAF scandal is the remarkable extent that journalists have formally been part of its operations and structure. The informal connections between journalists and think tankers have always been important, however neglected. Think tank staff and establishment journalists tend to come from the same kinds of fairly affluent backgrounds, have attended the same kinds of schools, graduate with the same kinds of ideas, and – since so many are clustered in Washington, D.C. – live in the same kinds of neighborhoods, send their kids to the same schools, and generally move in the same social circles.

Moreover, it’s been routine for media figures to take sabbaticals at think tanks to write books or just get some relief from the day-to-day grind and study subjects in depth. How realistic is it to expect any of them to turn around and then bite the hand that literally fed them?

The inevitable result is downright scary if you believe (as you should) that a robustly functioning democracy depends in large measure on individuals and institutions playing distinct roles that enable them to function as balancers and watchdogs or simply reinforcers of needed degrees of political and social pluralism. When they interact too closely and especially too systematically, temptations to scratch each other’s backs inevitably mushroom.

But perhaps more subtly, and therefore more importantly, these actors (especially the individuals) just as inevitably begin to know and understand each other too well, to like and admire each other too much, to recognize each other’s wants and needs too willingly, to agree with their legitimacy too thoroughly, to avoid any potential awkwardness or unpleasantness, and to cut them considerable slack when any kinds of trouble arise. And as these patterns emerge and consolidate, the lines separating these actors blur, their independent outlooks start dissolving, and they begin to merge into a genuine establishment (or “swamp,” if you will) with a common mindset, a consequent tendency toward group-think, and an increasing dedication to promoting and protecting its position – which tends to be pretty privileged.

In this vein, NAF’s journalistic connections are truly eye-opening. Its first board chairman was The Atlantic‘s James Fallows. An early president was Steve Coll, formerly with the Washington Post and The New Yorker. One of its board chairs today is National Review Executive Editor Reihan Salam, and he’s joined on this body by Fallows (still with The Atlantic), Steven Rattner (a New York Times columnist and financier), David Brooks (another New York Times columnist), and Washington Post columnist and CNN host Fareed Zakaria.

NAF also has developed a network of “media partners” that regularly publish its material via syndication deals. These news organizations include The Atlantic, Quartz.com (which is owned by The Atlantic‘s parent company), Slate, National Review (Salam’s publication), and TIME.  

The organization’s governmental connections are extensive as well. Like more and more think tanks, NAF also gets funding from the U.S. and foreign governments and international organizations. These official donors include the U.S. State Department and Agency for International Development, the U.S. government-funded U.S. Institute of Peace, the European Union, the European Commission, Norway’s foreign ministry, the Organization for Economic Cooperation and Development, and Germany’s Embassy to the United States. (See NAF’s latest Annual Report for documentation of current Board members and donors.)

Again, it’s been encouraging to see NAF take its lumps. But real progress toward breaking up the Washington swamp won’t be made until journalists and policymakers start treating the think tanks with the skepticism they deserve, and if not ignoring the information they generate, at least considering the source much more exactingly before internalizing and further propagating it.

And all RealityChek readers will easily be able to tell whether the NAF scandal brings genuine change. Check your favorite news sources to see whether NAF staff keep appearing as founts of scholarly wisdom – and when they are used, if the reporters or anchors in question tell you whose signing their paychecks, and what stakes these donors have in the issue in question. And look for the same treatment for all the other major think tanks. Even better? Start giving them heck in their comment sections and on social media when they don’t.

Im-Politic: The Establishment Keeps Doubling Down Against Populism

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2016 election, American politics, Ben Domenech, Bernie Sanders, Brexit, Donald Trump, establishment, Im-Politic, Jonathan Rauch, Populism, special interests, The Atlantic, The Federalist, think tanks, United Kingdom

Brexit underscores the belief that I have expressed throughout this presidential campaign cycle that opponents of the populist wave breaking all over the high income world have two basic choices: They can demonize the populists and their champions, or they can propose policies capable of addressing constructively the legitimate grievances of these voters. A lengthy article just posted on The Atlantic‘s website adds to the evidence that the American political establishment has overwhelmingly opted for choice number one.

Author Jonathan Rauch makes clear in his title how he interprets the rise of anti-establishment candidates like presumptive Republican presidential nominee Donald Trump and unexpectedly strong Democratic challenger Bernie Sanders: “How American Politics Went Insane.” His explanation: Well-intentioned reformers across the nation’s ideological spectrum went way overboard in removing the flaws in the formal and informal political systems that on balance served the United States well for decades, and wound up proverbially throwing out the baby with the bath water.

Rauch is certainly correct in pointing out that various recent changes mandated in U.S. politics have backfired, or at the least had damaging unintended consequences. He’s also correct in noting that the results have too often strengthened extremist impulses and weakened their moderate counterparts.

But the author is completely off-base in claiming that all would be set right if the nation only recognized the dangers of the transparency and openness in government it’s insisted on, and resolved to return to the days when “institutions and brokers—political parties, career politicians, and congressional leaders and committees…historically held politicians accountable to one another and prevented everyone in the system from pursuing naked self-interest all the time.”

As these intermediaries’ influence fades,” Rauch continues, “politicians, activists, and voters all become more individualistic and unaccountable. The system atomizes. Chaos becomes the new normal—both in campaigns and in the government itself.”

Ben Domenech of The Federalist has written a wonderful takedown of Rauch’s establishmentarian bias. Especially devastating is his observation that the practitioners of “insider politics” – including “influence peddlers,” other types of “middle men,” and particularly the wealthy, entrenched special interests they served – used the system to enrich and empower themselves even further. In the process, of course, they left more and more of their compatriots on the outs.

Domenech could have gone even further, however, and pointed out that the author’s establishmentarian bias is actually self-serving. After all, Rauch is not only a regular contributor to establishment publications The Atlantic and National Journal. He’s a senior fellow at the Brookings Institution, a mainstay of a Washington, D.C. think tank world that, as I’ve written, has turned into a dedicated “idea laundering” machine – advancing the policy preferences of its corporate and other one-percent-er funders by cloaking them in quasi-academic, objective-looking garb.

But Domenech’s dispositive argument entails Rauch’s almost complete neglect of substance. Domenech calls Rauch’s thesis “bereft of data and thoroughly at odds with the data we have.” I’d emphasize the converse: Rauch is almost completely process-oriented – which of course reflects the establishment worldview that the major, strategic issues are all being handled just splendidly, and that the only remaining questions concern some mechanics.

Domenech does a nice job of listing the substantive establishment failures Rauch glosses over: in addition to Vietnam and Watergate, “Impeachment. 9/11. Iraq. Katrina. Congressional corruption. Financial meltdown….Stagnant wages.” (Domenech also includes Obamacare and the president’s “failed stimulus,” but in my view, those cases are far from screamingly obvious.)

It’s true that Rauch, and his defenders, can point out that for all those troubles and even crises, the United States is still chugging along, and that the vast majority of its citizens enjoy living standards that remain the envy of most of the rest of humanity. At the same time, it’s crucial to remember how many immense built-in advantages the United States has always enjoyed, including generally friendly and, more important, weak, neighbors; abundant natural resources; and a national creed that has encouraged wealth creation and equal opportunity (however often the latter has been absent for major groups).

That is, the United States remains immensely difficult to damage fatally both geopolitically and economically. In fact, given the record cited above – and the crucial policy mistakes were supported by mainstream Democrats and Republicans alike – the most important question raised by this year’s American political tumult arguably isn’t it’s reached such proportions. It’s what took so long.

Our So-Called Foreign Policy: Send in the Clowns

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2016 election, alliances, Bernie Sanders, China, Cold War, Donald Trump, economics, foreign policy establishment, free-riding, George W. Bush, Hillary Clinton, Iraq war, ISIS, Middle East, NATO, neoconservatives, Our So-Called Foreign Policy, Republicans, Russia, special interests, think tanks, Trade

You don’t need to have any regard for Donald Trump to appreciate the black humor of Washington’s Republican foreign policy establishment (or at least lots of it) launching a campaign to brand him an incompetent and a menace in international affairs.

Last Wednesday, about 100 “GOP national security leaders” released a letter they signed stating their “core objections” to the possibility that the Republican front-runner will win the White House. The first reaction that any reasonable person should have is “If these are the leaders, who are the followers?” I worked professionally in the foreign policy field for decades and still keep up with it actively. And many of the signatories are completely unknown even to me. Apparently even a glorified briefcase carrier for a fourth-level political appointee in George W. Bush’s administration qualifies.

The second reaction is much more obvious: Many come from the Republican party’s neoconservative wing. Based on its record, their credibility has fallen how deeply into the toilet? Nor is this question based solely on the second Iraq war. After all, I personally favored the effort to overthrow Saddam Hussein, and still believe that the invasion was justified – though of course the occupation was a (largely foreseeable disaster). But these ostensible experts and intellectuals have failed on numerous other major grounds as well.

As made clear by their indictment of Trump, their ranks include champions of the laudable but transparently looney idea that the United States can and should spend considerable amounts of time and effort spreading democracy to and engaging in nation-building in regions and countries (like Iraq) that have no tradition of accountable government and no experience with un-coerced cohesion. More recently, they’ve propounded the equally nutty notion that Middle Eastern countries can be turned into an effective anti-ISIS force that will handle most of the ground fighting to boot.

They’ve long supported U.S. trade and international economic policies whose effects have included enriching increasingly belligerent China and showering it with advanced, defense-related technologies. For nearly as long they’ve favored the expansion of the NATO alliance right up to Russia proper’s borders – which can’t have helped improve relations between Washington and Moscow over the last decade. In fact, even decades after the Cold War ended, they have remained tightly wed to U.S. defense commitments to flagrantly free-riding allies – which also often rip off Americans shamelessly on trade and other fronts. In fact, they have never displayed the slightest genuine inkling that domestic economic strength is the key to any successful American foreign policy strategy, however interventionist or restrained.

But there are two more fundamental problems with these figures, along with the non-neocons among them, that have translated directly into weaknesses and blunders that have plagued American diplomacy since the early post-World War II years. And please keep in mind: Many of these conclusions come straight from my first-hand experience working closely with these folks during my four-year stint as Associate Editor of FOREIGN POLICY magazine.

First, unlike the original Cold War U.S. foreign policymakers – who were certainly not beyond legitimate criticism – most of the current crowd lacks any meaningful experience in the private sector. Its members have never built or even run viable businesses, or invented anything worthwhile. As a result, they have never been judged by standards like successes that create tangible, enduring rewards and widespread benefits, or failures that exact painful, lasting costs.

Instead, most have brought themselves to the attention of decision-makers by rising through the ranks of academe or, worse, its ersatz Washington version – the think tank world. And the skills needed to stand out in these realms – turning a neat phrase or fashioning a catchy soundbite, identifying and courting prospective patrons, manipulating an all-too-gullible national media, and perhaps most important, creatively regurgitating stale dogma that promotes special interests – have nothing to do with keeping the nation as a whole secure and prosperous. They’re entirely about personal advancement in what I’ve called a Washington culture that coddles failure.

In other words, these figures are overwhelmingly foreign policy careerists. And since their working experiences as a rule have been so tightly confined to the bubble worlds of the Beltway or college campuses, they have almost never needed to encounter the obstacles continually erected by stubborn reality to the best laid plans of mice and men. Which is why they typically lack the wisdom and judgment best guaranteed to navigate them.

Not surprisingly, then, these 20^th and 21^st century version of renaissance courtiers deserve credit for no meaningful achievements whatever. Indeed, the degree of safety and prosperity that the nation has enjoyed during their tenures has been due almost entirely to the wealth and power it has amassed over the centuries, along with the inherent security created by favorable geography. If today’s foreign policy establishment can be said to have accomplished anything, it’s taking practically any opportunity available to squander the nation’s built-in advantages.

Not that I want to leave readers with the impression that out-of-control careerism is confined to the Republican wing of the foreign policy establishment. Its Democratic wing has been at least as unimpressive. And you can be sure you’ll be hearing from it if Vermont Senator Bernie Sanders starts posing a greater threat to Hillary Clinton’s presidential hopes.

Im-Politic: Trump’s On-Target – & Detailed – China Trade Plan

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2016 election, China, currency manipulation, Democrats, Donald Trump, environmental standards, exports, forced technology transfer, Hillary Clinton, Im-Politic, imports, intellectual property theft, labor standards, Mainstream Media, Obama, offshoring, political classes, Republicans, special interests, subsidies, think tanks, TPP, Trade, Trans-Pacific Partnership, World Trade Organization, WTO, yuan

Boy, it’s hard to keep Donald Trump and his campaign for the GOP presidential nomination from dominating my posting. That’s because he remains the only presidential candidate recognizing the need to overhaul both the U.S. trade and immigration policies that have long been gutting the truly productive sectors of the American economy, and kneecapping wages and living standards for the nation’s working and middle classes.

Trump’s on-target priorities have once again been displayed in the new position paper he’s released on handling China – which is key to getting overall American trade policy right as well as getting much of U.S. national security policy right. Also evident from this paper – despite endless claims by the establishment-coddling Mainstream Media that Trump’s campaign is all sizzle and no steak, he’s once again outlined a series of impressively detailed policy positions.

And Trump’s China policies boast strong potential to put Hillary Clinton and other progressives who claim to champion American workers squarely on the spot. The Democratic presidential front-runner has said or posted nothing comparably specific on trade issues other than (for now?) opposing President Obama’s Trans-Pacific Partnership (TPP). Unless she ups this part of her game, independent voters are sure to take note.

Trump’s China plan starts off by correctly identifying the crux of America’s China problems right away. In the process, he’s sharpened his rhetoric and message. Rather than blame U.S. policy failures on simple “stupidity” on the part of American leaders, he points out that the nation’s economic approach to China has served the interests of “Wall Street insiders that want to move U.S. manufacturing and investment offshore,” not American workers. I’d have broadened that indictment to include most of the nation’s multinational manufacturing companies, but Trump valuably reminds voters that the biggest immediate obstacles to improving their economic prospects are Americans, not “foreigners.”

Trump also understands that many of China’s most harmful trade practices have nothing to do with the kinds of tariffs and quotas that for centuries dominated country’s efforts to keep domestic closed. Moreover, he focuses on the vast array of non-tariff barriers used by Beijing “to keep American companies out of China and to tilt the playing field in [its] favor.” These range from currency manipulation to rampant intellectual property theft to exports subsidies that clash with global trade law to forced technology transfer to “lax labor and environmental standards” that enable China’s “sweatshops [and] pollution havens [to steal] jobs from American workers.”

In addition, the Republican presidential hopeful gets the vital point that the damage done to the American economy by these Chinese practices can’t be ended without forcing China to face some consequences – namely, lost access to a U.S. market that China desperately needs in order to sustain growth and employment rates that can help keep its rulers in power. Trump does express some hope that such threats can lead China to “join the 21^st century.” But he also indicates that, until and unless this goal is achieved, it makes no sense to permit China “to trade with America.”

Trump’s China plan will be slammed by the offshoring-happy, China-coddling Mainstream Media – and surely by nearly all of the policy hacks staffing America’s offshorer-funded think tanks. And let’s not forget many of his fellow Republican candidates, whose campaigns are largely financed by these special interests.

But it will be especially interesting to see the reactions of Trump’s Democratic opponents and the rest of the nation’s liberal and progressive establishment. For most of Trump’s positions mirror those of the party’s mainstream – and can be found in numerous bills their legislators have introduced into Congress and voted for. Will they continue dismissing Trump a charlatan – and worse?

In fact, if Trump’s positions deserve criticism on any score, it’s that they’re too mainstream – and accordingly timid. For example, since, as Trump sees, the United States does enjoy such decisive leverage over China by dint of serving as “the world’s most important economy and consumer of goods,” there’s relatively little need for Washington to negotiate more effectively with Beijing. His positions are better presented as take-it-or-leave-it propositions, with market access turned off, or at least curbed, until strong evidence of China’s compliance is available.

Similarly, Trump is far too deferential to the World Trade Organization (WTO), whose creation spearheaded by the mercantile U.S. trade competitors and American offshoring interests precisely in order to prevent the defense of  U.S. economic interests in a timely, effective – i.e., unilateral – manner. At one point, his China paper (rightly) suggests that U.S. policy need not rely so heavily on the deliberations of “an international body.”

But he also (wrongly) suggests that Washington should continue to rely heavily on using the WTO to resolve its trade problems with China – an approach that is not only pitifully piecemeal, but that keeps an anti-American international kangaroo court in charge of most American international economic interests. If he’s serious about defending these interests – and restoring full American sovereignty – Trump needs to support establishing the United States as judge, jury, and court of appeals over all trade disputes, as well as over whatever enforcement issues arise from existing or future trade agreements.

Further, Trump appears to place excessive emphasis on China’s current currency manipulation. To be sure, there’s still strong evidence that the yuan remains substantially undervalued. It’s also not legitimately deniable that anti-currency manipulation tariffs would be an especially effective response to China’s trade predation. After all, China’s exchange-rate protectionism artificially cheapens the cost of everything produced in and traded by China. Therefore, these Chinese products (and services) receive price advantages over foreign competitors that have nothing to do with free trade or free markets. 

But it’s also undeniable that China’s currency policies have gotten much more complicated in recent months, as Beijing has needed to move to support the yuan in order to stem unprecedented capital flight. So for both political and substantive reasons, Trump would have been much better advised to treat currency manipulation as threat that is all too likely to reemerge if China’s economy keeps slowing, not as today’s leading danger. (The same of course holds for the Asian countries who have just negotiated President Obama’s Pacific Rim trade agreement.)

Yet despite these flaws, Trump’s instincts on trade policy remain much sharper than those of the rest of the nation’s media/political establishment – not least of which entails his understanding that it won’t be possible to “make America great again” unless its trade policy becomes great again, too. And his new China trade blueprint shows that he grasps enough major policy details to make that goal reality.

Im-Politic: Why CNBC’s GOP Debate Performance Really was That Bad

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Bernie Sanders, CNBC, Donald Trump, economists, GOP, Im-Politic, Jeb Bush, Mainstream Media, Marco Rubio, Mike Huckabee, political class, presidential debates, Republicans, special interests

As both a former journalist and an analyst who has worked closely with them, I’ve long shed any illusions about the smarts, the energy, or the integrity of the vast majority of this profession’s members, and especially those that work for national, Mainstream Media outlets. Nor do I have any more doubts about the mounting danger to American democracy’s health posed by the combination of Big Journalism’s immense influence, its near perfect isolation from the lives and concerns of Main Street Americans, its fierce protectiveness of self-serving elitist groupthink, and its almost complete lack of accountability.

And for all this cynicism, I am still slackjawed over the appalling conduct of the three CNBC moderators of last night’s Republican presidential debate in Colorado. (Here’s the full transcript, if you’re a masochist.)

Make no mistake. This complaint isn’t about “tough questions” – or coddling thin-skinned politicians. This is about an unforgivably imperious effort to decree virtually an entire major political party to be devoid of presidential candidates remotely fit for office, and its rank and file to be all but subhuman in intellect. More troubling – because largely unwitting – this course reflected less deliberate partisanship than an instinctive protectiveness of the current political class and its excessive status and privileges.

If you think I’m being too harsh, consider the following questions:

For (still?) front-running businessman Donald Trump: “Is this a comic book version of a presidential campaign?”

For Florida Senator Marco Rubio: “You’ve been a young man in a hurry ever since you won your first election in your 20s….Why not slow down, get a few more things done first or least finish what you start?”

For former Florida Governor Jeb Bush: “Ben Bernanke, who was appointed Fed chairman by your brother, recently wrote a book in which he said he no longer considers himself a Republican because the Republican Party has given in to know- nothingism.”

For former Arkansas Governor Mike Huckabee: “As a preacher as well as a politician, you know that presidents need the moral authority to bring the entire country together. The leading Republican candidate, when you look at the average of national polls right now, is Donald Trump. When you look at him, do you see someone with the moral authority to unite the country?”

And then there was this question (to Trump) – less obviously insulting, but just as revealing of the “pull up the drawbridge” mentality: “I talked to economic advisers who have served presidents of both parties. They said that you have as chance of cutting taxes that much without increasing the deficit as you would of flying away from that podium by flapping your arms.”

Let’s leave aside how a Trump (or Ben Carson, or Democrat Bernie Sanders, for that matter) presidency would kneecap the access to power responsible for the livelihoods not only of establishment journalists but of the policy world’s politically ambitious economists. Let’s also therefore leave aside that the vast majority of the economists that national journalists would consult with are driven not only by such career considerations, but by agendas that are either hopelessly partisan or determined by the special interests that fund them.

Let’s focus instead on the operative assumption that anyone can forecast to any useful extent the impact of tax rate changes on a $16-plus trillion economy with some 142 million (nonfarm) workers, nearly 93 million working age Americans outside the workforce, 123.2 million households, and nearly 7.5 million businesses. Yes, it’s widely believed that the economics profession boasts these powers. But simply articulating this premise, as opposed to accepting it mindlessly, reveals how looney it is, even when it comes to intellectually honest analysts.

The CNBC moderators actually did ask some serious and therefore necessary questions that exposed inconsistencies, factually dubious claims, and unreasonable assumptions in some of the candidates’ proposals. But follow-up was limited – and many issues ignored completely – because it was obviously imperative to leave sufficient time for mudslinging and incitement.

Ironically, CNBC was hoping that last night’s broadcast would attract big new audiences to its daytime finance and economics coverage. If there’s any justice, most of these new viewers turned off their sets vowing, “Never again.”

(What’s Left of) Our Economy: A Blame-the-Victim Theory of Trade Policy

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consumers, free trade, free trade agreements, lobbying, Mancur Olson, manufacturing, multinational corporations, productivity, retailers, Robert Samuelson, special interests, trade policy, Wall Street

Nationally syndicated economics columnist Robert Samuelson deserves a nice hand for identifying a possible cause for America’s pronounced productivity slowdown that’s been generally overlooked: the relentlessly growing power in national politics and policy of special interest groups. In a column earlier this week, he drew on the ground-breaking analysis of the late Mancur Olson to argue that the numerous successes achieved by smallish but narrowly focused and highly motivated lobbies in securing specialized favors for themselves from government have encouraged countless other interests to pursue the same strategies. The net effect is to diminish the total resources expended by the economy on production, and to increase the resources used for winning and keeping economically unproductive privileges.

I have several big problems with Samuelson’s discussion, though – and in fact with some of the leading examples used by Olson – and they all involve trade policy.

As Samuelson explains it, companies and workers pressing for protection from imports show exactly how the system now functions – and malfunctions. A winning campaign “saves jobs and raises prices and profits. But consumers — who pay the higher prices — don’t create a counter-lobby, because it’s too much trouble and the higher prices are diluted among many individual consumers. Gains are concentrated, losses dispersed.”

The problem is that, however compelling this sounds in theory, at least when it comes to trade policy, it produces a picture that is simply unrecognizable to anyone with any real familiarity with the subject. Perhaps the most important flaw is the implicit assumption that the freest possible trade always results in the best possible outcomes for the greatest number of Americans – and indeed for the economy as a whole – while calls for interfering with such trade flows always result from special interest pleading.

That’s a tough argument to make when you consider that the relentlessly rising trade deficits generated by the standard free trade approach have slowed the growth of this already sluggish recovery considerably. It’s even tough to make given that the income losses that can be blamed on this trade strategy – which were extremely broad-based – spurred Washington to fill the gap with easy money and the mammoth debt it brought, helping to trigger the financial crisis.

The big-small actor aspect of Olson’s theory doesn’t hold up, either in the trade policy sphere. For decades, the biggest winners by far in the nation’s leading trade policy fights have been big, offshoring-oriented multinational corporations and the often bigger Big Box retailers and Wall Street banks with which they’ve worked fist in glove. The ranks of smaller manufacturers were split, but those opposed to free trade agreements and related decisions were most often defeated. And the smaller companies that did indeed seek to throw sand in the fears of trade liberalization in fact were actually the ones trying to promote broader economic and national interests.

And the smaller retailers and other small service companies not directly affected by trade liberalization generally sided with the corporate giants – in order to win a few easy brownie and lobbying log-rolling points with them (as in “You scratch my back and I’ll scratch yours.”) So they were acting first and foremost on their own narrow interests as well.

As for consumers, who supposedly benefited from those lower prices, they have indeed been pretty disengaged from trade policy disputes. But their apathy powerfully enabled decisions that wound up backfiring on tens of millions of them disastrously, as the crisis increasingly cost them their jobs and their homes. So the Olson theory holds up in the sense that the gains from winning trade positions were highly concentrated – they overwhelmingly benefited the limited constituencies that worked so energetically and effectively to prevail. And the losses were indeed dispersed – among workers and especially among apathetic consumers. The results, however, so damaged the entire economy that its ability to recover fully remains in doubt.

There’s an especially crucial productivity angle that needs to be recognized as well: Surely one of the most effective ways to undermine an economy’s productivity growth is to send much of its most historically productive sector – manufacturing – overseas. So in that sense, the political and lobbying dynamics highlighted by Olson have backfired against the broad national interest as well.

In addition, these trends fed on themselves in a widely unrecognized way: The smaller domestic manufacturing’s physical footprint became, in terms of its share of the workforce and of economic activity, the fewer Americans directly experienced the damage caused by its shrinkage – and the clearer the path to victory for the offshoring/trade liberalization lobby. The latter also benefited from the increased concentration of manufacturing in smaller cities and towns and semi-rural areas. So factories and their workers literally became harder for the rest of the population literally to see and interact with.

Since I’m much less familiar with the lobbying and politics of numerous other economic issues, I don’t feel comfortable commenting on how well the Olson theory describes their workings. But if its tenets are as off-base in these areas as they are in trade policy, it’s easy to see how these ideas would be prized by business, political, and media elites with such a strong stake in blaming the victims for their own grievous policy blunders.