How Right-Wing Billionaires and Business Propaganda Got Us Into the Economic Mess of the Century

Editor's note: This is an excerpt from Joshua Holland's book, The Fifteen Biggest Lies about the Economy (And Everything Else the Right Doesn't Want You to Know about Taxes, Jobs, and Corporate America). 

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The Great Recession that began in 2008 wiped out $13 trillion in Americans' household wealth —in home values and stocks and bonds—stoking the kind of anger we’ve seen from pissed off progressives and from the Tea Partiers who dominated the news in the summer of 2009.

But although a lot of people threw around some angry rhetoric—and even invoked the specter of armed revolution—the reality is that when the economy nosedived, we basically took it. We didn’t riot; we took the bailouts, tolerated our stagnant wages, and accepted that Washington wasn’t about to give struggling families any real relief.

Yet the meltdown was global in nature, and it’s worth noting that citizens of other wealthy countries weren’t so complacent. As the Telegraph, a British tabloid, reported, “A depression triggered in America is being played out in Europe with increasing violence, and other forms of social unrest are spreading. In Iceland, a government has fallen. Workers have marched in Zaragoza, as Spanish unemployment heads toward 20 percent. There have been riots and bloodshed in Greece, protests in Latvia, Lithuania, Hungary and Bulgaria. The police have suppressed public discontent in Russia.” Another British paper, the Guardian, reported scenes of “Burned-out cars, masked youths, smashed shop windows and more than a million striking workers” in France. French officials went so far as to delay the release of unemployment data, “apparently for fear of inflaming the protests.”

You might wonder why Americans are so docile compared to others in the face of such a brutal economic onslaught by a small and entitled elite. Any number of theories have been offered to explain the apparent disconnect. Thomas Frank argued eloquently in his book What’s the Matter with Kansas? that wedge social issues—“God, guns and gays”—that the American Right nurtures with such care, obscure the fundamental differences between rich and poor, the powerful and the disenfranchised. Class consciousness, common to other liberal democracies, has been trumped by social anxieties, according to Frank.

I would offer two additional explanations. First, the 90 percent of Americans who haven’t seen a raise in 35 years compensated for their stagnant incomes and kept on consuming, buying televisions and going out to dinner. How did they do it? First, by bringing women into the workforce in huge numbers, transforming the “typical” single-breadwinner family into a two-earner household. Between 1955 and 2002, the percentage of married women who had jobs outside the home almost doubled.  Workers’ salaries stayed pretty much the same, but the average family now had two paychecks instead of one.

After that, we started to finance our lifestyles through debt—mounds of it. Consumer debt blossomed; trade deficits (which are ultimately financed by debt) exploded, and the government started to run big budget deficits, year in and year out. In the period after World War II, while wages were still rising along with the overall economy, Americans socked away 7 to 12 percent of the nation’s income in savings annually (the data only go back as far as 1959). But in the 1980s, that began to decline—the savings rate fell from around 10 percent in the 1960s and the 1970s to about 7 percent in the 1980s, and by 2005, it stood at less than 1 percent (it’s rebounded somewhat since the crash—to 3.3 percent at the beginning of 2010).

The second reason Americans seem complacent in the face of this tectonic shift in their economic fortunes is more controversial: the “New Conservative Movement” built a highly influential message machine that’s helped obscure not only the economic history of the last four decades, but the very notion of class itself.

The Lies That Corporate America Tells Us

Let’s return to the early 1970s, when a rattled economic elite became determined to regain control of the U.S. economy. How do you go about achieving that in a democracy?

One way, of course, is to depose the government and replace it with one that’s more to your liking. In the 1930s, a group of businessmen contemplated just that—a military takeover of Washington, D.C., to stop Franklin Delano Roosevelt’s dreaded New Deal from being enacted. The plot fell apart when the decorated general the group had tapped to lead the coup turned in the conspirators.

A more subtle approach is to convince a majority of voters that your interests are, in fact, their own. Yet there’s a big problem with this: if you belong to a rarified group, then the notion of aligned interests doesn’t reflect objective reality. And in the early 1970s, the media and academia provided a neutral arbiter of that reality (of sorts).

We’ve all grown accustomed to conservatives’ conspiracy theories about the corporate media having a far-left bias and college professors indoctrinating American youths into Maoism. In the early 1970s, a group of very wealthy conservatives started to invest in what you might call “intellectual infrastructure” ostensibly designed to counter the liberal bias they saw all around them. They funded dozens of corporate-backed think tanks, endowed academic chairs, and created their own dedicated and distinctly conservative media outlets.

Families with names such as Olin, Coors, Scaife, Bradley, and Koch may not be familiar to most Americans, but their efforts have had a profound impact on our economic discourse. Having amassed huge fortunes in business, these families used their foundations to fund the movement that would culminate in the election of Ronald Reagan in 1980 and eventually bring about the coronation of George W. Bush in 2000.

In 1973, brewer Joseph Coors kicked in $250,000 for seed money to start the now highly influential Heritage Foundation (with the help of the Olin, Scaife, Bradley, and DeVos foundations). In 1977, Charles Koch, an oil billionaire, started the libertarian CATO Institute. Richard Mellon Scaife, a wealthy right-wing philanthropist who would later fund the shady “Arkansas Project” that almost brought down Bill Clinton’s presidency, bought the Pittsburgh Tribune-Review in 1970. The American Enterprise Institute, which was founded as the American Enterprise Association in the 1930s and remained relatively obscure through the 1960s, was transformed into an ideological powerhouse when it added a research faculty in 1972. The Hoover Institution, founded by Herbert himself in 1928, saw a huge increase in funding in the 1960s and would be transformed during the 1980s into the Washington advocacy organization that it is today.

In 1982, billionaire and right-wing messianic leader Sun Myung Moon started the Washington Times as an antidote to the “liberal” Washington Post. The paper, which promoted competition in the free market over all other human virtues, would be subsidized by the "Moonies” to a tune of $1.7 billion during the next 20 years. In 2000, United Press International, a venerable but declining newswire, was bought up by Moon’s media conglomerate, World News Communications.

With generous financing from that same group of conservative foundations, the Federalist Society was founded in 1982 by former attorney general Ed Meese, controversial Supreme Court nominee Robert Bork, and Ted Olsen—who years later would win the infamous Bush v. Gore case before the Supreme Court in 2000 and then go on to serve as Bush’s solicitor general. The Federalist Society continues to have a major impact on our legal community.

In 2005, one of the most influential right-wing funders, the John M. Olin Foundation, actually declared its “mission accomplished” and closed up shop. The New York Times reported that after “three decades financing the intellectual rise of the right,” the foundation’s services were no longer needed. The Times reported that the loss of Olin wasn’t terribly troubling for the movement, because whereas “a generation ago just three or four major foundations operated on the Right, today’s conservatism has no shortage of institutions, donors or brio.” And that’s not even mentioning Rupert Murdoch’s vast, and vastly dishonest, media empire.

The rise of the conservative “noise machine” has been discussed at length in a number of other works, and conservatives dismiss it as a conspiracy theory of sorts. In truth, it’s anything but—it’s simply a matter of people with ample resources engaging in some savvy politics in an age of highly effective mass communication. There’s nothing new about that; what’s changed is that the world of advertising and marketing has become increasingly sophisticated, and the Right has played the instrument of modern public relations like a maestro.

Taken as a whole, it’s difficult to overstate how profound an impact these ideological armies have had on our economic debates. Writing in the Washington Post, Kathleen Hall and Joseph Capella, two scholars with the Annenberg School of Communication, discussed the findings of a study in which they coded and analyzed the content broadcast across conservative media networks. They found a tendency to “enwrap [their audience] in a world in which facts supportive of Democratic claims are discredited and those consistent with conservative ones championed.” The scholars warned, “When one systematically misperceives the positions of those of a supposedly different ideology, one may decide to oppose legislation or vote against a candidate with whom, on some issues of importance, one actually agrees.”

A larger issue is that the corporate Right’s messaging doesn’t remain confined to the conservative media. The end of the Cold War brought about a sense of economic triumphalism, which infected the conventional wisdom that ultimately shapes the news stories we read—U.S.-style capitalism had slain the socialist beast, proving to many that in the words of Tom Paine, “government is best when it governs least.”

A wave of mergers also concentrated our media in the hands of a few highly influential corporations. In 2009, there was a rare (public) example of one such corporation nakedly exerting editorial control over the decisions of one of its news “assets.” During a meeting between the top management of General Electric, which owned NBC-Universal with its various news networks, and Rupert Murdoch’s News Corporation, GE executives agreed to force MSNBC’s firebrand host Keith Olbermann to cease fire in his long-standing feud with Fox News’s Bill O’Reilly.

As journalist Glenn Greenwald noted at the time, “The most striking aspect of this episode is that GE isn’t even bothering any longer to deny the fact that they exert control over MSNBC’s journalism.”

Most notably, the deal wasn’t engineered because of a perception that it was hurting either Olbermann or O’Reilly’s show, or even that it was hurting MSNBC. To the contrary, as Olbermann himself has acknowledged, his battles with O’Reilly have substantially boosted his ratings. The agreement of the corporate CEOs to cease criticizing each other was motivated by the belief that such criticism was hurting the unrelated corporate interests of GE and News Corp.

Five months previously, MSNBC host Joe Scarborough had been criticized for touting GE’s stock on his show, "Morning Joe," without disclosing that the company owned the network that employed him. “I never invest in the stock market because I think—I’ve always thought—that it’s just—it’s a crap shoot,” he said. “[But] GE goes down to five, six, or seven, and I’m thinking, ‘My god. I’m gonna invest for the first time, and I’m gonna send my kids to college through this.’“

A week after that, Scarborough invited Nancy Snyderman, a regular medical correspondent for NBC’s networks, onto the show to discuss the health care reform bill then moving through Congress. Snyderman, who was presented to the audience as an impartial medical expert, had lost the ABC News job she’d previously held for 17 years due to a conflict of interest. The Nashville Examiner reported that “she was briefly suspended for being paid to promote J & J’s product Tylenol. She later spent four years with Johnson & Johnson as Vice President of Consumer Education.”

In another ABC segment, Snyderman weighed in on congressional hearings about autism without disclosing that a Johnson & Johnson subsidiary was the target of litigation alleging that one of its vaccines may help cause the condition. It was a “blatant conflict of interest,” in the words of National Autism Association vice president Ann Brasher.

Snyderman is hardly unique. A months-long investigation in 2010 by the Nation’s Sebastian Jones revealed what he called a far-reaching “media-lobbying complex”—dozens of corporate hired guns who appear on network broadcasts without disclosing their ties to the firms they work for. Jones wrote of “the covert corporate influence peddling on cable news,” citing such appearances as former Homeland Security chief Tom Ridge, who went on MSNBC—which conservatives insist is the liberal antidote to Fox News—to urge the Obama administration to launch an ambitious energy program.

The first step [toward a green economy], Ridge explained, was to “create nuclear power plants.” Combined with some waste coal and natural gas extraction, you would have an “innovation setter” that would “create jobs, create exports.”

As Ridge counseled the administration to “put that package together,” he sure seemed like an objective commentator. But what viewers weren’t told was that since 2005, Ridge has pocketed $530,659 in executive compensation for serving on the board of Exelon, the nation’s largest nuclear power company. As of March 2009, he also held an estimated $248,299 in Exelon stock, according to SEC filings.

Jones found that during just the previous three years, “at least seventy-five registered lobbyists, public relations representatives and corporate officials—people paid by companies and trade groups to manage their public image and promote their financial and political interests”—had appeared on the major news channels. “Many have been regulars on more than one of the cable networks, turning in dozens—and in some cases hundreds—of appearances,” he wrote.

There’s a final piece of this puzzle that’s less insidious than what Jones unearthed but probably has a bigger impact on our discourse: the standard-issue “he-said/she-said” reporting that’s so instinctive to neutral, “unbiased” journalists. Reporters are expected to get “both sides” of every story, even if one of those sides is making factually dishonest arguments. And there are an untold number of consultants, corporate flacks, lobbyists, and right-wing think-tankers who are always good for a quick quote for a reporter working on deadline.

The economic perception that emerges from all of this simply doesn’t depict the economy in which most Americans live and work. Before the crash of 2008, most Americans saw news of a relatively robust economy, with solid growth and rising stock prices. But their own incomes had essentially stagnated for a generation. I’ve long thought that the disconnect may help explain why Americans suffer from depression at higher rates than do the citizens of most other advanced countries—if you think the economy’s solid, everyone else is prospering, and yet you still just can’t get ahead, isn’t it natural to conclude it must be the result of some fundamental flaw in yourself?

Maybe you do have flaws—sure, you do—but it’s important to understand how the economy helps shape one’s fortunes. In The 15 Biggest Lies, we’ll look at some of the Right’s most cherished rhetoric and try to burn off some of the fog that shrouds our economic discourse.