As publishers gather at the 2019 Frankfurt Book Fair, perhaps the most challenging market factor facing American publishers is uncertainty. Amid increasing political and economic anxiety, rising nationalism, widening inequality, and a troubling loss of faith in some of the key institutions that have sustained us, understanding the challenges America and the world faces is the key to navigating them.
Lenny Picker recently caught up with New Yorker staff writer Nicholas Lemann, whose brilliant new book, Transaction Man: The Rise of the Deal and the Decline of the American Dream, examines a century of American political and economic history, retracing steps that led to today’s inequities and uncertainty, while sounding an optimistic note that things can change for the better.
How would you summarize the state of affairs today?
What we're seeing is stubbornly rising economic inequality—and not just in America, but globally. There’s a sense of economic insecurity that is being expressed both culturally and in the tremendous political dissatisfaction that has effectively blown up the political center throughout the Western world, evidently. What I focus on in the book, is how, in America, we went from having faith—perhaps too much faith—in big institutions as the carriers of a good society, to looking to transactional values—fluidity, markets, change, and efficiency—as the things that will bring us a not just a better business environment, but a better society.
For example, I tell the story of how over the last quarter of the 20th Century, Wall Street went from being small and disempowered to being in the driver's seat economically, culturally, and politically all over the world—including establishing its dominion over large corporations. But when that happened, a bunch of social functions that had been loaded onto corporations—healthcare, job security, pensions, for example—started to be taken away, because they weren't market-oriented enough. It’s my view that this is the source of a lot of the negative, angry, dislocated feelings among the parts of the middle class.
What surprised you the most as you researched and wrote the book?
I was surprised by how much the economic structure of the United States has changed, and how big a role government played in those changes. I tended to believe, like a lot of people, that these changes were the inevitable result of various things happening in the world, being pushed by larger forces. But these changes were also the result of fairly specific decisions that people in power had made, that I could research and track down.
In the book, you refer to the “too big to jail” phenomenon identified after the 2008 financial collapse, when no high-ranking executives at major financial institutions were held accountable for their roles in the collapse. Do you think things today would look different had that some of these people been held accountable?
So, I'm not a big believer in that. There’s an old saying: “the real scandal isn't what's illegal, it's what's legal.” So, in the book, I really trying to draw people's attention, not to the fact that nobody went to jail—even though nobody went to jail and there's clearly some cases where people could have gone to jail—but instead, to the fact that the great majority of the activity that caused the financial crisis and the economic and political disaster that followed was legal. And it was legal because it had been made legal in stages through the 1970s, '80s, and '90s.
To me, that's the real story. Much more than individuals, this is a book about systems. It has individuals in it, yes. But the argument of the book isn't that if you get the quirks out, and punish the crooks, you'll fix the system—it’s that you have to fix the system. In my view, the economy wasn’t brought down by a few bad apples, it was brought down by political choices and activities that had only been made legal fairly recently, and had previously been forbidden. That's why I believe the economy needs to be sort of remade at the systemic level.
Do you think that can that happen? We're a year out from the presidential election in the U.S., and with the deterioration of so many public institutions and the income inequity that's resulted, is there any basis for optimism going forward?
Yeah, I think so. First of all, there is a widespread feeling, globally, that the political economic order that prevailed between the 20th and 21st centuries just is not working. It's not producing a good life for enough people. It's not producing enough political consensus. Something's really wrong. So that's a huge step forward from the conventional wisdom of 20 years ago, and that is a kind of precondition to change. I think that is very encouraging—although very messy.
The other thing is, what I hope will happen—and if my book plays a part, I'd be thrilled—is for people to understand how important institutions are to a good society, and to lose the assumption that if you tear down existing institutions the world will kind of automatically get better, or that you have to tear down institutions to make progress. I believe that having more respect for institutions and community life as a kind of basis for giving people a good society would be a big step forward. And I am optimistic that can happen because I think the needle moved so far the other way, that you can just feel it moving back.
At the end of the book, you write about the importance of reviving pluralism. Can you talk about that?
I explore three, big sweeping ideas from three different eras. One is a kind of corporation, institution-based society with big government as a check on big corporations. The second is the fluid, transactional, market-based Wall Street-dominated society. And the third is an Internet network-dominated society. In all of these cases, part of the problem is that there's this one perfect-sounding idea that's supposed to solve everything, but which always leaves things out, to great peril.
What attracts me about pluralism is that it assumes a messier society that honors the processes of democracy—like voting, and organizing—but doesn't have a big, reigning idea for how society should be structured. Pluralism imagines a society where power is more distributed, and where difference is honored, and where the process of leading the society is kind of messy and political instead of neat and orderly. Pluralism is built to honor essentially minority views and things that are outside the consensus. I think that’s important and attractive. If you're being left out, if you're not part of the consensus, in a pluralistic society, you organize and change the system.