Matt Stoller: A Society Designed to Incentivize Criminal Behavior at the Highest Level

Lambert Strether: Invigorating and insightful discussion (though I’d slip the mutual self-congratulation with the interviewer at the very end).

Matt Stoller, Director of Research at the American Economic Liberties Project and author of Goliath: The 100-Year War Between Monopoly Power and Democracy, talks about the many ways in which the US economic system has become rigged to favor the richest.

Rob Johnson:

I’m here today with an old friend, Matt Stoller. I think we’ve known each other since longer than I can remember. Probably 2004, 2005, 2006 window. We worked together on a campaign with Ned Lamont and many, many things subsequently. And how would I say? I find you to be a guiding light in the realm between politics and economics and the wellbeing of society. Matt’s worked with Financial Services Committee on the House of Representatives. He’s worked with the Senate Budget Committee. And right now he’s the head of research at the American, I believe it’s called the American Economic Liberties Project and is the author of a very powerful book, Goliath: The 100-Year War Between Monopoly Power and Democracy. Matt has been, how would I call, an illuminator of the tensions as a society for many, many years. Maybe 15, 16 years now. And it’s really a delight to have you back and discuss where we are after 100 days plus of the Biden administration. What’s on the horizon? What haunts you? What do you cheer for? What do you applaud?

Matt Stoller:

Thank you so much for having me. Well, so I want to get into this in a little bit to talk about the big tech world, which is what I spend a lot of time focusing on and antitrust. There was a big antitrust suit filed against Amazon yesterday. It’s likely that Lina Khan, who is a great Brandeis in antitrust type is going to be confirmed to the Federal Trade Commission at some point in the next month. Things are, I think, looking much better than I assumed when I… If you had told me in October, how’s the Biden ministration going to work out? I would not have pegged them as being this aggressive. But I want to start with something different, which is, I guess, what haunts me. Let’s go there. So I’m reading this book, Empire of Pain, which is on the opioid crisis and it’s just a wonderfully written-

Rob Johnson:

This is Patrick Radden Keefe’s book?

Matt Stoller:

That’s right. And it’s a really fun read. It’s not just a good story, it’s actually fun. I mean, it’s this depressing topic, but it’s actually not a depressive book, which is very hard to do. But what is… I think it’s a really amazing story about modern America and how our economic order works. Because it’s basically the story of heroin dealers. The Sackler family, they made Oxycontin knowing that it was addictive, that it was very similar to heroin. And they induced a prescription drug and then heroin crisis. And they knowingly did it, but they didn’t do it alone. They did it by taking advantage of a corrupt political system. They hired corrupt actors and they also corrupted others. They corrupted the FDA. They hired Mary Jo White, who you and I know well as Obama’s SEC chair, but she was working for the Sacklers in the mid 2000s as was Rudy Giuliani, Eric Holder.

And they almost… There were some Virginia federal prosecutors who had the Sacklers dead to rights probably with felony charges, mail fraud, wire fraud, so on and so forth. And they were going to bring those charges against the executives at the firm and then they were going to flip to the Sackler family themselves. How you flip the mob, you start with the mid-level guys and then you go the way up. They were going to do that. And Mary Jo White actually went over their heads, went to the political people and got them off the case basically. And it’s just this really stunning… And just kind of at every stage, Mary Jo White has been helping really the bad guys here. But it’s a story, I mean, of… This happened in lots of different ways. McKinsey was helping them. I mean, we know this. They funded lots of think tanks in DC. We know why we have a heroin epidemic and it’s not because people just like drugs. It’s because we allowed the Sackler family to turn our doctors into pill pushers. And we did it by allowing them to corrupt our politics.

And these are people who should be in jail. And people like Mary Jo White should be in jail. And the McKinsey consultants who helped set up this heroin epidemic should be in jail, but they’re not. And it’s because we have a broad crisis with the rule of law as applied to the powerful. We also have one as applied to the powerless. You’re seeing a lot of protests around that. But we have one, I think, that’s unacknowledged that I think is more serious. Maybe not more serious, but is linked intimately with the way that we enforce the law against the powerless. The mirror image is how we don’t enforce it against the powerful. And I’m talking about corporate CEOs and billionaires and the legal elites like Mary Jo White. And that’s a crisis for our society. It’s something that you and I saw since the financial crisis. No one went to jail for the financial crisis.

I think it started a little bit before that. I think 2005 or ‘6 is when it kind of really got bad. In America you always had two systems of justice, but it’s particularly bad right now. So it’s just like if you commit fraud, if murder people, as long as you do it with a spreadsheet, you get a bonus instead of a jail sentence. And I think that’s a crisis. It is also the crisis that we’re dealing with, with big tech. It is the crisis… Mark Zuckerberg and Facebook, they have been caught for fraud multiple times, lying to advertisers, lying to publishers knowingly to induce more spending on Facebook. There are multiple consent decrees with the Federal Trade Commission. It’s similar with the other firms as well. They routinely lie, commit perjury and whatnot. And that’s kind of like a legacy of this policy framework and ideological framework that we inherited from the Bush administration and the Obama administration of simply not enforcing the rule of law against the powerful.

So that’s I think the dynamic that we’re dealing with today and it’s across every sector of the economy, right? It’s not just opioids, it’s not just big tech, it’s kind of everywhere. And what this does is two things. When you have effectively lawlessness for white collar elites, it both penalizes honest business people who cannot compete when they’re not willing to lie, steal and cheat. If the other guy’s allowed to lie, steal and cheat and you don’t want to do that, you lose, right? So it undermines honest business. And then it also creates a situation where criminals become the pinnacle of society. And I think we saw that with Trump, where Trump… Cy Vance who was the DA of Manhattan, a Democrat. He had them dead to rights on real estate fraud years ago, way before he was kind of in politics. And he just… Trump’s lawyer gave Cy Vance campaign money and Cy Vance didn’t bring the case.

And so if he had just brought that case, if he had said, this is a criminal act to defraud people of their money, Trump wouldn’t have been in politics, right? But because he didn’t, Trump was in politics. And I think what people saw in 2016 was, well, they’re all crooks. So I’m going to pick the guy that appeals to me. And the thing is, is that analysis, they’re all crooks, is right. They are all crooks. Not everyone obviously. But the structure of our elite society, if you look at it, it’s just designed to incentivize criminal behavior, lying, cheating, and stealing at the highest level. And that’s the reaction… We’re seeing a reaction to that and there are many different reactions to that. One of them is this sort of Trumpist reaction. Another one is kind of the Lina Khan and the FTC reaction. But that’s where our politics is right now.

And the Biden administration is kind of a transition moment, right? Just like the Trump administration was kind of a transition moment to a new kind of politics. We’re not totally sure what that’s going to be. I think that, that’s similar with the Biden ministration. It’s a transition moment to a new form of politics. And we’re a little bit unsure about whether we’re going to address this problem with the rule of law. It’s not just criminal law. It’s also antitrust law, insider trading, kind of all of finance. And you can look at SPACs, that’s just corporate behavior, insider dealing. Are we going to address that in a meaningful way? Are we going to restore equal political rights to all, or are we going to go and kind of transition sort of officially into an oligarchy and shed the vestiges of democracy that we have?

Rob Johnson:

Well, I think the fact that Donald Trump got elected in 2016 and his, if you will, bumper sticker, his credo was the system is rigid and people felt like they were hearing what they understood and it appealed to them out of their despair or their despondency related to where the system was. And I would say what’s perhaps hopeful now is after four years of Donald Trump and the January 6th insurrection, some of the people in power are afraid of going back to that, to a repeat performance. And while they may be under the same pressures, money and politics and enforcements and revolving doors for senior public officials enticed what you might call to not enforce or to enforce and subsidize powerful interests, all of this collectively frightens elected officials that they may be sending us in the direction of an authoritarian and perhaps violent person who does not abide by any rules.

So I think that your diagnosis is exactly right, and this place, this limbo you describe with the Biden administration is fascinating. They are at what that blues singer with my name, Robert Johnson, called the crossroads. They got to choose the path. But let’s talk a little bit about… You’d said with regard to Mark Zuckerberg or others, who’s going to call out the truth here? I mean, you do, but many think tanks are tax deductible, what would you call it? Marketing institutions for power. That’s where they get their source of funding. Many institutions in the media depend on advertising. Many universities depend upon donors and wealthy alumni. And even the arts now depend on big corporate power for structure of live shows, radio promotion, visibility that inspire sales. Where does the truth come from and where does the impetus for deep structural reform in response to the despair of a Trump like return? How do you see that?

Matt Stoller:

It’s a really good question. And I think that the truth, this is going to sound cheesy, but I think that the truth lies in the heart of the public. I think the public has views about how politics works and politicians respond to those views. And you have a bunch of elite institutions, which I think are corrupt across the board. But the public kind of creates the wind. Those elite institutions are kind of like the sailboat, right? And you can put the sail in lots of different ways, but ultimately if the wind is blowing in one direction or the other, that determines what you can do more than how amazing the boat is.

But the boat is something that you can control. So you’re kind of looking at… Elites like to look at the boat and decide, should we do this thing or should we use that sail or this other mechanism? But the wind is what really matters. And I think one thing that I’ve noticed, and I think people don’t really… Particularly Democrats, they don’t want to admit it but Obama was a really bad president and it matters that he was a really bad president. That his policies-

… That he was a really bad president. He pursued policies that concentrated wealth and power into the hands of corrupt actors. Not necessarily for bad reasons. He might’ve been doing it in good faith. It’s not a personal comment on him. But the consequences of his policies were horrific, and they made us a weaker country, an angrier country, a more frustrated country. The opioid crisis exploded on his watch. And it wasn’t that the Republicans were mean to him. He had bad ideas. And he used his political power to pursue those bad ideas. He put people in like Geithner and Michael Froman and a whole bunch of others to do bad things, to offshore jobs. And they did it because they thought to bail out Wall Street, to enact a foreclosure crisis, to essentially grant amnesty for white collar executives for crime.

And they did it because they felt they had to. They did it because they had an ideology that said, “This is what you do. Corporations and banks are technical, neutral institutions. You don’t touch the experts of our society.” AKA what I would call the white collar crooks. And that was catastrophic. And Biden isn’t doing that. What happened the last four years is that the Democrats basically acknowledge that every policy that Obama touched was bad, and we should do the opposite of what he did. He was great. The Democrats are still like, “Ah, he’s wonderful. But let’s just do the opposite of everything that we did policy-wise.” So they’ve sort of separated out politics and policy in this very strange way.

And that’s really helpful because it actually offers a real sense of hope. If what we did, was… Okay. It’s like, if Obama tried his best and was trying to do awesome things, and yet it was catastrophic, that’s one problem. And it means: What do you do? I mean, if you use all your political power to try to do great things and it doesn’t work out, that’s a really hard problem. But if Obama was actually working hard to impoverish the middle-class and destroyed stability in American society. He thought he was doing the right thing, but he wasn’t. Then that’s actually not hard to figure out what to do. You just don’t do the same policies. You just do different policies. Right? And so that’s why I’m actually pretty hopeful, because what Biden is doing is, he’s just not doing what Obama did. He’s trying to actually help people using spending and government power. And he’s screwing a bunch of things up to, but he’s not actively malevolent in his policy outlook. And that’s so much better.

And it’s hard for Democrats to see that because they can’t admit that Obama was just really as bad as he actually was. They have all sorts of excuses to pull the wool over their eyes about what he was trying to do. Just like the Republicans have excuses for why Trump was amazing, and was America first, even though he didn’t actually bring back jobs and all the rest of it. It’s like, people have their delusions. So that’s one thing that gives me significant amounts of hope.

The reason that people have shifted so aggressively is because we have dropped the ideology of neo-liberalism. That ideology was so fundamentally strong in 2008, and it was really hard for political leaders to break from that. Not just because the elite institutions and all the money was there, but because the public kind of believed in it. Right? And they didn’t strongly believe in it, but they were easily persuaded that it was true on any particular issue area.

And I think that that’s really changed. People don’t look at banks as neutral technical institutions. They don’t trust bankers anymore. They don’t trust executives. They don’t trust the powerful. It’s not that they trust the right people, but they’ve lost their faith in that ideology. And so I think you can fundamentally make a different pitch and you can pursue different policies. And that’s what Trump did in many cases. It’s what Biden is doing. And just kind of ignoring a lot of the conventional wisdom economists and sort of wise oracles who have been really problematic. And so you’re seeing changes. It’s not just the Lina Khan’s of the world. It’s also, they hit big pharma badly and they said, “We’re going to force you to license the patents and product design and copyrights that you have that we paid for. You can make money off of them, but we’re going to force you to share that expertise with firms in other countries so that we can actually take care of the pandemic. And you’ll get royalties and whatnot.” But that was a huge deal.

And it was just because the Biden Administration has agency and power and they’ve thought through what the Obama Administration did, and they said, “We’re not going to handle it like that. We’re going to try to build out something for the public good.” I think part of it is fear. I think they saw what Trump did and they were afraid that that would come back. But I think a lot of it is just an intellectual and ideological change where they’re just like, “Wait a second. All those priors we have from the 1980s until the 2000, and teens, were just wrong, let’s do it differently.”

Rob Johnson:

Yeah. Well, you can go back as far as the Reagan years, the formation of the Democratic Leadership Council in response, Tom Ferguson and Joel Rogers book, Right Turn, really tells the story of the fear within the Democratic party of being drowned by a stampede of fundraising to the Republican side. And then the neoliberal ideology and all kinds of things emerged during Bill Clinton’s administration, and continued on. Perhaps, I guess, in listening to your narrative, the… How would I say it? The contradictions had become so fiercely painful and evident at the time Obama ran in 2008 as they are now. And I understand there was a book coming out by a man name and Edward-Isaac Dovere called Battle for the Soul: Inside the Democratic Campaign to Defeat Trump. And apparently it’s very critical of the Obama presidency as a, how would I say, catalyst to the despair that produced Trump. I haven’t seen the book yet, but I’ve been reading a lot of… My friend Guy Saperstein suggested I pre-order it. And I’ve read about it.

Matt Stoller:

Yeah. I’ve seen some segments from it, but I haven’t read it. And, I mean, I think, personally, being critical of the like character of Obama is really not going to get you anywhere in Democratic politics. But what I think that book shows… Let me see. He’s just a rich guy that likes to play golf and make money. I mean, that’s who Obama is. And he doesn’t really care about anyone else. And I think that’s what’s so remarkable about how badly we got fooled by this… What he really is, is he’s good at branding.

Yeah. And I think that’s going to kind of come out. It’s increasingly coming out because that’s who he is. He wants to be a billionaire. And he just sort of feels like that’s what he’s entitled to. Basically, he was saying, “I’ll do some political events for Democrats in 2018, but make sure it doesn’t get in the way of any of my golf games or my paid speaking gigs. And keep those paid speaking gigs out of the press.” And it’s like, the guy is going all over the world, making a ton of money speaking. Not anymore, I guess, because it’s COVID. But he was speaking at business to business software conferences next to Ashton Kutcher to make, whatever, $500,000. Why do you need that? That’s so lame, right?

I mean, the character of… I mean their political judgment of Obama and a lot of his people was just terrible and really hostile, really anti-democratic too. So I think that’s like what the Democrats are really wrestling with, which is: How do you admit that? And I think that there’s there’s this kind of awakening. And Isaac’s book, I guess, is going to sort of bring that and tell that story. But I mean, it’s important to recognize that, if you look at Biden, he’s not some amazing guy. He’s just a political operator. But he’s doing so much better than what we’ve seen.

Rob Johnson:

Well, a lot of people say, because in his own personal life, he’s suffered some very acute crises, that he has the kind of empathy that Franklin Roosevelt was sensitive to after having a battle with polio himself. So that you can be elite, you can be in a power structure, but you still have, what you might call, a different sensibility within yourself. That’s what his allies are suggesting now.

Matt Stoller:

Well, that might be true. And I mean, I can go into what I think of Biden. But I think that it’s just, on a very, more basic level. You don’t have to boost up Biden. The comparison is Obama, and Obama was terrible. You can literally be a ham sandwich and be so much better than Obama just by not trying to sign the TPP, and by not doing all of the bailouts in the foreclosure crises. That’s what I think is hard to get across, is you don’t have to say Biden’s amazing. You don’t have to puff this guy up. You just look at his straight policies and say, “He did this. He did that. He didn’t do this. He didn’t do that.” And because of the comparison, the baseline is so bad. I mean that…

America has a lot of strengths, and the American culture and the American people are basically a very democratic people. We don’t like concentrated power. We’re generally pretty tolerant. It is a remarkable culture. You have to put a lot of effort into destroying it. And since Reagan, and the Democrats and the Republicans, Clinton, Bush, Obama, they really worked hard. And our elites have really worked hard to destroy this country. And you have to work hard because this country has immense regenerative force. So all Biden is doing is stopping that aggressive attempt to destroy this country. I mean, I don’t know if he’s doing it enough. I don’t know if he’s being aggressive enough. I don’t know if he’s making decisions fast enough. But certainly the baseline is really low.

Rob Johnson:

Yeah. Some people would tell the story, that Obama by becoming the first black president was addressing one of the, what you might call, original sin and crimes against the founding principles of our country. And that he was viewed as becoming finance tech elite, seduce and abandon. Then Trump comes in, the system is rigged, and people are sensitive and rebelling against that despondency.

But then what he does is turn around and supports the fossil fuel industry and cuts taxes for the very wealthy. And he seduces and abandons the people. What I sense now is that the, what you might call the cynicism or the elite condescension in both parties about how you can hoodwink the public has, you might call confidence in the ability to hoodwink the public is way down. And now I think the recovery of confidence, to quote John W. Gardner’s famous book, he and Bill Moyers founded Common Cause together. But how we rebuild that confidence when the citizens of the nation are wounded, and the crisis is so deep, and with climate change on the horizon, I think it’s a formidable challenge. And I don’t think they can… How would I say? Do a third act of hoodwinking right now and see any constructive results.

I think that’s right. And, it’s weird because the Democratic party, the Biden Administration, they’re on a pretty even keel. And I think they’re making some smart decisions. But if you look at our cultural institutions, our universities, the media, a lot of our corporations, they’ve gotten insane. I mean, totally insane, and really, crazy, out of touch in ways that I think they’re trying to distract from power, right? From discussions about power. And I think the best example that I can think of is that, back before the pandemic hit in this country, I was paying attention to it, the left completely missed the pandemic coming. That’s something we forget about. But I was one of the few people saying, “Hey, this is a really big problem.” And call me on it, back in January and February, I was like, “Oh, this is going to be huge. We have to pay attention to it.” And the reason is because I pay attention to China. And the news out of China was…

… Because I pay attention to China. And the news out of China was the country is shutting down because of this virus that is contagious. And you don’t have to be a rocket scientist or a public health expert to know that that virus is going to come here. But we all ignored it. Our elites ignored it, including Fauci, for example. Including the Public Health Institute. They all ignored it. They all missed it. And I’m some rando on the internet who understood it because I read a book about avian flu once and pay attention to China. And a bunch of right-wingers saw it coming too. Well, one of the main arguments in January, February from the left was, “Don’t be racist against people of Asian descent. Eat in Chinese restaurants because this is just the flu. It’s not a big deal. The problem we have is is Chinese restaurants are having trouble attracting customers.”

Yes, there was racism because of the disease. Yes, there were problems in January and February. But I think if you go back and you say, “Is the number one problem related to COVID that people are not eating in Chinese restaurants enough?” I think you’d have to say, “No, that wasn’t the main problem. We were just missing that we were going to have a society wrenching change.” And I think that is coming from these kind of cultural centers which are really distinct from Biden. They’re really distinct from the democratic party. Though they influence the democratic party, they are very much associated with the democratic party in the minds of, say, rural voters. Tucker Carlson every night is talking about these kinds of cultural centers, but they’re distinct from the actual choices that democratic policy makers are making.

And so these weird cultural disputes, which generally I fall on the left side of these disputes, but they are designed to distract us from thinking about power and substance and reality. Things like diseases and supply chains and money. So I don’t know how you attack the problem of these cultural institutions, but the only ones who are doing it are on the right. And they’re doing it in bad faith. Tom Cotton has a bill to tax Ivy league endowment funds, which is a great idea. But why is Tom Cotton the one coming out and doing that? And the Democrats would never touch the Ivy leagues. The Democrats are like, “We want to give a bunch of money to universities because they’re so great.”

And universities, they’re really badly managed right now. The same thing’s true with hospitals. At the beginning of the pandemic, the Democrats were like, “We have to give a lot of money to hospitals because hospitals are going to treat people for COVID.” And it’s like, “Okay, but they’re really corrupt and they’re going to use this money for M&A, and they’re going to shut down treatment. They’re not going to treat people because they’re corrupt.” And the Democrats didn’t pay attention and gave this money to hospitals. And then sure enough, that’s what they did. And it’s because these cultural centers are so powerful and they overwhelm us being able to think about the institutional details of commerce and society and ultimately political philosophy.

Rob Johnson:

Yeah. Well, I do a lot of work myself in and around China, going back to 1990 when I was in the private sector. And as I watch these manifestations, and I’m going to call a man that I think you know, Dean Baker, to the table. Because what he says, and I’ve heard this, how would I say, on both sides of the Pacific. Is that when globalization happened, China is very large scale population and so forth and their per capita income was about one 40th of that in the United States. So the adjustment process of globalization, foreign direct investment, companies like Walmart and Nike, et cetera, led to a great deal of distress in America. Which the Chinese will tell you they had no control over what you might call the adjustment assistance, transformation assistance, that should have taken place in America. And as wealth became more concentrated and accumulated in the United States, it was used to lobby to allow what used to be tax evasion now to be tax avoidance and kept off shore.

Or one other thing is when they talked about China as a currency manipulator, American corporations were lobbying against it because having a depreciated Renminbi increased their profit margin. Well, what Dean takes all of that widening of inequality and distress for large portions of American society, is he said, particularly under Trump is when he said this they’re now fighting about intellectual property rights, pharmaceutical entertainment industry, financial access to the Chinese markets, and it’s essentially now the very concentrated, powerful sectors, some of which you write about and criticize that are becoming anti-Chinese.

And the cultural institutions, I think, were a little bit attuned to the fact that what you might call the echoes of an American failure in political economy is now being used to demonize China as a nation. And while I’m not at all advocating for some of the things they do internally to their citizens or their structure of governance, I can see the case that Chinese… And this doesn’t excuse at all not taking the pandemic seriously, but that ritual started amidst another process which places like the Council on Foreign Relations had all kinds of reports starting in 2014 and 2015, mobilizing the elites for a national US-China confrontation.

Matt Stoller:

So I think there’s the basic argument that the most dangerous relationship in the ’90s and 2000s was the relationship between the Chinese communist party and Wall Street. The fact that the US sent 74,000 factories to China from 2000 to 2012 was not an adjustment process, it was a choice. It was a policy choice. And it was a policy choice by our multinationals and Wall Street and the Chinese government moving those factories over for their own reasons. And that relationship is still very strong. You’ve got Blackstone, which takes huge amounts of money from China, has massive influence in the US, and it was really harmful to the US and it was pretty beneficial to the Chinese government and the Chinese state and the Chinese people. And it did help concentrate wealth and power over here, but it also reduced our capacity to do things like produce personal protective equipment when we needed it, and it’s related to consolidation in this country.

Rob Johnson:

Yeah, that’s the goal supply chain notion-

Matt Stoller:

Yeah, and so if you form a monopoly based economic order, your policies incentivize monopoly power, which is what we’ve done with weakening antitrust law and changes of rules and regulations and trade law. We changed trade law. We essentially consolidated power domestically and then we allowed China to consolidate manufacturing monopoly power in shipping and power over a whole bunch of different areas. The thing is that now we are where we are, and China does have dominant market power in a whole bunch of different sectors. And China is a fascist country and it is like Nazi Germany. So this is not a mobilization of American elites against China, this is actually the Chinese being incredibly aggressive and hostile to Americans, but also to people all over the world. And bullying other countries, threatening military action on a routine basis and censoring people in this country, there is an ideological conflict here. It’s not coming from the US. The U S didn’t want this and American elites and Wall Street didn’t want this.

They want to continue with what China was doing. They want to continue offshoring. They did not want a cold war. The hostility is coming from China. The lab leak hypothesis where China hid and won’t let people look at where COVID came from, likely they got an NIH grant to fund the Wuhan lab, where they were doing certain, very dangerous forms of virus research. And they won’t let anyone look at it because they didn’t want it to seem like the Chinese government might be responsible for COVID, even though increasingly it looks like they are. I think we have a really serious problem with China and I think that we helped create it just like we helped create a really serious problem with Russia. But fundamentally, It’s not in our control anymore and the Chinese communist party is an incredibly dangerous totalitarian force and we’re going to have to figure out a way to defend ourselves against it.

Obviously a war would be catastrophic, but ignoring it and pretending that this is some sort of ruse by American elites, which is I think what Dean Baker kind of gets to, I think is really foolish and not true and it’s one of the reasons that the left is totally marginalized in this debate. And it’s one of the reasons why it’s really hard to get the US elites to actually mobilize to address the market power problems and the corruption problems that are leading to the Chinese government actively making the case that a totalitarian surveillance state is better than a democracy. Because they say, “Look at America. Do you really want to be like them?” And it’s a pretty hard case to make that the democratic system is better if you can’t actually run your democracy to address social problems.

So the way to address the problem with China is to run our system better, but also recognize that China really does want to destroy American democracy. They want to destroy democracy everywhere because a working democracy is a fundamental threat to the ideology of the Chinese communist party. And I know this sounds very cold war-y and crazy, but they are Marxists. They really are. And it’s not an insult, They really do believe in a specific Leninist framework for how to organize. And it’s incredibly corrupt. It’s incredibly dishonest. It’s incredibly dangerous and it is an attempt to replace democratic states with… We could still be ornamental democratic, but ultimately like weakened and at the beck and call of the Chinese government. And that’s why they’re increasingly getting aggressive all over the world. And the other way that you know this isn’t just American elites is it’s not like the rest of the world is happy with China.

Rob Johnson:

Yeah, I know.

Matt Stoller:

Everyone’s getting upset with China.

Rob Johnson:

They’re railing to the United States side, whether it’s Australia or India or the European Union, you’re right about that. And I think at some level, the disillusion that something like the WTO did not create a convergence in a multilateral system because China went another direction, they find very disheartening.

Matt Stoller:

Well, we have traditionally, the way that we did globalization after World War II up until the ’90s is we said, “We are going to transfer technology and productive capacity to fellow democracies, basically. We are going to say, “Japan, South Korea, Taiwan, you are military allies. We’re going to transfer a bunch of technology. We’re going to let you into our markets. We’re going to educate your scientists and students and we’re going to trade with you and vice versa.” And same with Western Europe, rebuilding all of that.” And we did a bunch of really terrible things in Africa and Latin America, it wasn’t an unvarnished story of success. But just strategically, we did not share technology. We did not place factories in the Soviet Union, for example. We didn’t say, “Sure, you can make all of our vitamin C and all of our essential chemicals for medicine.”

We just didn’t do that because we understood we are strategic enemies, competitors, whatever. The shift in the 1990s is we stopped linking military alliances and democratic structures with our trading arrangements, which was just probably the most strategically inept thing that we’ve done in American history. Not just in recent memory, it’s probably one of the worst things. America has always been able to produce enough for itself. That’s one of the things that, right after the Revolutionary War, that is effectively what our strategies were in the 1790s and early 1800s. And we gave all that away in the 1990s and 2000s. That is a crazy thing to do, and we did that because Wall Street said, “Well, we don’t really care what the Chinese political order is.” And the more it became obvious that the Chinese political order that they were like, “We’re not democratic, we saw what happened with Tiananmen Square and we’re not going to allow that, and we’re gonna-“

We saw what happened with Tiananmen Square. We’re not going to allow that, and we’re going to move from just straight up Marxism to a kind of weird nationalism with Marxist overtones. We didn’t change our strategy, even though they were ripping off our businesses and getting more impressive internally. And now we’re at a point where they’re starting to push against us, starting to push against people all over the world. And we don’t really have a choice about whether to change our strategy because it’s really dangerous what they’re doing.

Rob Johnson:

Yeah. And it’s very dangerous in multiple rooms. I’ve gotten to know in the last year, Daniel Ellsberg, and his concerns about essentially what he calls the nuclear winter, where if a large scale nuclear conflict takes place more than just people in the cities on both sides are dying, the upper atmosphere is destroyed and creates equivalent of an ice age and destroys the food supply on earth. And so there are all kinds of facets of vulnerability here, and climate as well.

Matt Stoller:

The best way to prevent war is to recognize the threat and actually prepare for it. And I think that a lot of the head in the sand dynamic where people are like, “Oh, it’s just the US that’s creating this cold war,” is actually encouraging China to get more aggressive. And that then leads to what I think annoying strategists called kinetic solutions, AKA violence, which then leads to nuclear war. So my view is, we have to disentangle our economies and really just as best we can, stop trading with them and figure out how to co-exist on this planet with just different systems, and try to deal with climate change together. And that’s basically where we have to get to.

Rob Johnson:

Yeah. Well, I’ll always cite my friend Orville Schell years ago when John Dory wrote a book called Wealth and Power, and he could see some of this coming. His wife, Baifang, who passed away recently, was Chinese. And what Orville used to say is, the woundedness of the Chinese national pride from the opium war and the Japanese invasion was going to meet with the willfulness of America as the head of the world system. And that this conflict, the emotional intensity of this conflict was going to be very, very strong. And it’s not, how do you say? In light of the scar tissue, particularly that the Chinese have felt in relation to their history. It would not be easy to reestablish cooperation if it broke down.

Matt Stoller:

I guess, it’s an interesting argument. I think there’s a split among China scholars. Orville was kind of the leading guy of that old era of thinkers of China strategy, who grew up with China as like a rural impoverished country and then saw it getting wealthier, but never imagined that China would be where it is today and actually an active threat to the American order. And they strongly encourage cooperation. And then you have a younger generation that grew up and saw China as a strategic competitor and like factories moving off shore and the rest of it. And they don’t look at China in that way at all.

I would say that I think of the opium war narrative as kind of a falsified stab in the back narrative that was explicitly created by the Chinese government to ward off Tiananmen Square, because in the 1980s and ’90s, what the Chinese people wanted was Western style democracy. It’s what the Russians wanted to. And the way that the Chinese government addressed that is, first of all, they crushed the protesters at Tiananmen Square, banned everyone from talking about it and then implemented a new educational regime that didn’t focus on international Lenin, Marxism, but on national grievance. And I don’t think that any… Every country, every ethnic group, there’s a story you can tell about grievance, if you want. You can look for it. I was just having this argument with my parents. They’re like, this was about Israel. They’re like, “Jews have always been victimized.” And I was like, “Not in my lifetime.” Like, the last 70 years, the Jews haven’t been victimized. We’ve been the ones with power, both in the US and in Israel.

So that story of grievance led them to certain conclusions. And my view is that story of grievance is at best incomplete, but either way, these are artificially created narratives that have a political objective. I don’t, in other words, accept the idea that China is hurting from the opium war. I think that’s an orientalist and racist way to look at what happened in China. And I think that the older generation of China scholars really have that, they didn’t look… And I think this is still a problem. They don’t look at the Chinese government as a powerful group with political agency and strategic objectives and an ability to achieve those strategic objectives without permission from the United States. And I think some of the reasons for that are psychological and about experience and whatnot. But I think that we have to start looking at the Chinese government as a powerful group with strategic objectives, the ability to put a Rover on Mars and the ability to achieve things, important things, powerful things, without American permission.

And as an empire. They are an empire. They are growing their empire. And I just think we should look at it that way. This is a superpower. So that’s how I see that. And that debate is really interesting because I think you see that split between the older China scholars and the… And I think Hong Kong was like a moment when that debate flipped, but yeah, that debate’s going to play out and hopefully we won’t-

Rob Johnson:

Some of the older scholars like Michael Pillsbury’s, he wrote this book, The Hundred Year Marathon, China’s Secret Strategy to Replace America. How would I say, he always argued from that side.

Matt Stoller:

There’s a right wing angle to it too. This is really frustrating. Again, like Tom Cotton was the guy saying there was a leak and move on and people made fun of him. And now it turns out, people are like, “Well, there’s more and more evidence that, that might be true. We’re not sure.” And it’s like, the right wing was on this, not necessarily for good faith reasons, maybe for nationalistic reasons that I think are dangerous, but where is the reality based thinking that isn’t right wing, that acknowledges questions of power and deception and problems? Where is that framework? And I think that’s where… It’s where I am. And I think it’s where a lot of the Democrats are, but I’m not sure that they’re overt about it, but it’s certainly a debate, I think, on both sides of the aisle.

Rob Johnson:

And I think, like you said, the left discredits itself by not engaging with the possibility of a threat or a dangerous challenge forthcoming. And I think that’s important to consider. But we’ve talked today about the pharmaceutical industry, the money and the politics. We’ve talked about the tech sector. We’ve talked about the failure of universities and media and so forth. How are we going to put Humpty Dumpty back together again, my friend?

Matt Stoller:

Well, I think you’re seeing, the pace setters of our ideology right now, of this dominant centers of power and ignoring that power to just sort of focus on other questions, which matter, but are that don’t touch power directly, that don’t touch concentrated commercial power, it’s big tech. It’s Amazon, it’s Facebook, it’s Google, it’s Apple, it’s Microsoft. These are the pacesetters of our economic quarter. And I think that we’re going to be taking those apart. And as we take those apart, because they are too powerful and the right and left have both kind of come to that conclusion. There are going to be so many other consequences of that choice. To take apart the most powerful firms in your economy means that you’re really restructuring how you think about political philosophy and political economy.

And it’s going to have lots of consequences across the board in every industry, and you’re already kind of seeing it. And I think it’s also going to have huge consequences in terms of trade and national security. It’s a change in political philosophy. I think towards a much healthier, more democratic, more populist framework. And I hope we can kind of find a way to integrate that with a new view of racial tolerance and diversity, and these are all complex challenges we’ve never really been able to do that in America. There’s always been systemic racism, but we have another opportunity. Every generation gets their opportunity to do this. And maybe we can get it right this time.

Rob Johnson:

Well, I had a dear friend who pass away a couple of years ago, but he was a baker. And he used to say, we’ve got to change from associating someone’s right to accumulate billions of dollars is tantamount to freedom, that there is a common good that has to be taken care of before we can talk about what you might call the extravagance of that type of freedom. And I think this, how to say, at the core of this political philosophy change, I read books like E.P Thompson’s old book, Customs and Commons, and various things that suggest as Muhammad Ali said, “We matters. Not just me.” And I really think that that rethinking about what’s… The nature of education. Are we just trying to create vocational skills so I can survive in this economy or are we educating citizens to be active participants in the shaping of something that doesn’t create unnecessary losses for the economy, but creates broad-based prosperity?

I think there are a whole lot of challenges on the scene and on the frontier. And I must say that I think you are one of the people who is most vigilant, deep down with principles, fierce willpower and intellect, exploring these things on our behalf, and I want to thank you for that.

Matt Stoller:

And I want to thank you because you’ve always been right there, trying to lead on an intellectual level, on a political level. Ever since I’ve known you, that’s what you’ve done and you’ve tried to change the tectonic plates of our society and our intellectual world. And so I want to thank you for that. It’s been an honor to know you for so long and-

Rob Johnson:

And vice versa.

Matt Stoller:

Thank you for having this conversation with me. I really appreciate it.

Rob Johnson:

And when I have children, I have one grandchild and another on the way, I smile a little bit more knowing that people like you are going to be around here in the leadership after I’m gone.

Matt Stoller:

Wow.

Rob Johnson:

So it’s a beautiful thing to know you, Matt.

Matt Stoller:

It will be many years before… You have many years-

Rob Johnson:

Oh, I hope that’s true. I hope that’s true. But how would I say, I think about you and Tim Tagaris, David Sirota, and me riding around in cars and you were experimenting with social media, advocating for [inaudible 00:54:30] influencing the Connecticut local newspapers. And that was the beginning of what’s been a tremendous amount of fun and a tremendous amount of admiration has grown within me to see you continue on this path. So this is only our second chapter. I’m sure we’ll be back for several more, but thank you for today.

Matt Stoller:

Thanks. Thanks a lot.