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Nothing in his background seems to have brought him to this troubling point. Mr. Bechtolsheim was one of those who gave Silicon Valley its reputation as an engineer’s paradise, a place where getting rich was just something that happened by accident.

“He cared so much about making great technology that he would buy a house, not furnish it and sleep on a futon,” said Scott McNealy, who joined with Mr. Bechtolsheim four decades ago to create Sun Microsystems, a maker of computer workstations and servers that was a longtime tech powerhouse. “Money was not how he measured himself.”

researchers who analyze trading data say corporate executives broadly profit from confidential information. These executives try to avoid traditional insider trading restrictions by buying shares in economically linked firms, a phenomenon called “shadow trading.”

“There appears to be significant profits being made from shadow trading,” said Mihir N. Mehta, an assistant professor of accounting at the University of Michigan and an author of a 2021 study in The Accounting Review that found “robust evidence” of the behavior. “The people doing it have a sense of entitlement or maybe just think, ‘I’m invincible.’”

He went to Stanford as a Ph.D. student in the mid-1970s and got to know the then-small programming community around the university. In the early 1980s, he, along with Mr. McNealy, Vinod Khosla and Bill Joy, started Sun Microsystems as an outgrowth of a Stanford project. When Sun initially raised money, Mr. Bechtolsheim put his entire life savings — about $100,000 — into the company.

“You could end up losing all your money,” he was warned by the venture capitalists financing Sun. His response: “I see zero risk here.”

An impromptu demonstration was hastily arranged for 8 a.m., which Mr. Bechtolsheim cut short. He had seen enough, and besides, he had to get to the office. He gave them a check, and the deal was sealed, Mr. Levy wrote, “with as little fanfare as if he were grabbing a latte on the way to work.

Mr. Page and Mr. Brin couldn’t deposit Mr. Bechtolsheim’s check for a month because Google did not have a bank account. When Google went public in 2004, that $100,000 investment was worth at least $1 billion.

It wasn’t the money that made the story famous, however. It was the way it confirmed one of Silicon Valley’s most cherished beliefs about itself: that its genius is so blindingly obvious, questions are superfluous.

The dot-com boom was a disorienting period for longtime Valley leaders whose interest in money was muted. Mr. Bechtolsheim’s Sun colleague Mr. Joy left Silicon Valley.

“There’s so much money around, it’s clouding a lot of people’s ethics,” Mr. Joy said in a 1999 oral history

Mr. Bechtolsheim didn’t leave. In 2008, he co-founded Arista, a Silicon Valley computer networking company that went public and now has 4,000 employees and a stock market value of $100 billion.

Mr. Bechtolsheim was chair of Arista’s board when an executive from another company called in 2019, according to the S.E.C. Arista and the other company, which was not named in court documents, had a history of sharing confidential information under nondisclosure agreements.

immediately after hanging up, the government said, he bought Acacia option contracts in the accounts of a close relative and a colleague. The next day, the deal was announced. Acacia shares jumped 35 percent.

Arista’s code of conduct states that “employees who possess material, nonpublic information gained through their work at Arista may not trade in Arista securities or the securities of another company to which the information pertains.”

Mr. Levy, the “In the Plex” author, said there were plenty of legal ways to make money in Silicon Valley. “Someone who is regarded as an influential funder and is very well connected gets nearly unlimited opportunities to make very desirable early investments,”

In 1981, Huntington predicted that the next moral convulsion would hit America around the second or third decade of the 21st century—that is, right about now.

Trump is the final instrument of this crisis, but the conditions that brought him to power and make him so dangerous at this moment were decades in the making, and those conditions will not disappear if he is defeated.

Social trust is a measure of the moral quality of a society—of whether the people and institutions in it are trustworthy, whether they keep their promises and work for the common g

When people in a society lose faith or trust in their institutions and in each other, the nation collapses.

This is an account of how, over the past few decades, America became a more untrustworthy society

under the stresses of 2020, American institutions and the American social order crumbled and were revealed as more untrustworthy still

We had a chance, in crisis, to pull together as a nation and build trust. We did not. That has left us a broken, alienated society caught in a distrust doom loop.

The Baby Boomers grew up in the 1950s and ’60s, an era of family stability, widespread prosperity, and cultural cohesion. The mindset they embraced in the late ’60s and have embodied ever since was all about rebelling against authority, unshackling from institutions, and celebrating freedom, individualism, and liberation.

The emerging generations today enjoy none of that sense of security. They grew up in a world in which institutions failed, financial systems collapsed, and families were fragile. Children can now expect to have a lower quality of life than their parents, the pandemic rages, climate change looms, and social media is vicious. Their worldview is predicated on threat, not safety.

Thus the values of the Millennial and Gen Z generations that will dominate in the years ahead are the opposite of Boomer values: not liberation, but security; not freedom, but equality; not individualism, but the safety of the collective; not sink-or-swim meritocracy, but promotion on the basis of social justice

A new culture is dawning. The Age of Precarity is here.

I’ve spent my career rebutting the idea that America is in decline, but the events of these past six years, and especially of 2020, have made clear that we live in a broken nation. The cancer of distrust has spread to every vital organ.

Those were the days of triumphant globalization. Communism was falling. Apartheid was ending. The Arab-Israeli dispute was calming down. Europe was unifying. China was prospering. In the United States, a moderate Republican president, George H. W. Bush, gave way to the first Baby Boomer president, a moderate Democrat, Bill Clinton.

The stench of national decline is in the air. A political, social, and moral order is dissolving. America will only remain whole if we can build a new order in its place.

The American economy grew nicely. The racial wealth gap narrowed. All the great systems of society seemed to be working: capitalism, democracy, pluralism, diversity, globalization. It seemed, as Francis Fukuyama wrote in his famous “The End of History?” essay for The National Interest, “an unabashed victory for economic and political liberalism.”

Nations with low social trust—like Brazil, Morocco, and Zimbabwe—have struggling economies.

We think of the 1960s as the classic Boomer decade, but the false summer of the 1990s was the high-water mark of that ethos

The first great theme of that era was convergence. Walls were coming down. Everybody was coming together.

The second theme was the triumph of classical liberalism. Liberalism was not just a philosophy—it was a spirit and a zeitgeist, a faith that individual freedom would blossom in a loosely networked democratic capitalist world. Enterprise and creativity would be unleashed. America was the great embodiment and champion of this liberation.

The third theme was individualism. Society flourished when individuals were liberated from the shackles of society and the state, when they had the freedom to be true to themselves.

For his 2001 book, Moral Freedom, the political scientist Alan Wolfe interviewed a wide array of Americans. The moral culture he described was no longer based on mainline Protestantism, as it had been for generations

Instead, Americans, from urban bobos to suburban evangelicals, were living in a state of what he called moral freedom: the belief that life is best when each individual finds his or her own morality—inevitable in a society that insists on individual freedom.

moral freedom, like the other dominant values of the time, contained within it a core assumption: If everybody does their own thing, then everything will work out for everybody.

This was an ideology of maximum freedom and minimum sacrifice.

It all looks naive now. We were naive about what the globalized economy would do to the working class, naive to think the internet would bring us together, naive to think the global mixing of people would breed harmony, naive to think the privileged wouldn’t pull up the ladders of opportunity behind them

Over the 20 years after I sat with Kosieva, it all began to unravel. The global financial crisis had hit, the Middle East was being ripped apart by fanatics. On May 15, 2011, street revolts broke out in Spain, led by the self-declared Indignados—“the outraged.” “They don’t represent us!” they railed as an insult to the Spanish establishment. It would turn out to be the cry of a decade.

Millennials and members of Gen Z have grown up in the age of that disappointment, knowing nothing else. In the U.S. and elsewhere, this has produced a crisis of faith, across society but especially among the young. It has produced a crisis of trust.

Social trust is a generalized faith in the people of your community. It consists of smaller faiths. It begins with the assumption that we are interdependent, our destinies linked. It continues with the assumption that we share the same moral values. We share a sense of what is the right thing to do in different situations

gh-trust societies have what Fukuyama calls spontaneous sociability. People are able to organize more quickly, initiate action, and sacrifice for the common good.

When you look at research on social trust, you find all sorts of virtuous feedback loops. Trust produces good outcomes, which then produce more trust. In high-trust societies, corruption is lower and entrepreneurship is catalyzed.

Higher-trust nations have lower economic inequality, because people feel connected to each other and are willing to support a more generous welfare state.

People in high-trust societies are more civically engaged. Nations that score high in social trust—like the Netherlands, Sweden, China, and Australia—have rapidly growing or developed economies.

Renewal is hard to imagine. Destruction is everywhere, and construction difficult to see.

As the ethicist Sissela Bok once put it, “Whatever matters to human beings, trust is the atmosphere in which it thrives.”

During most of the 20th century, through depression and wars, Americans expressed high faith in their institutions

In 1964, for example, 77 percent of Americans said they trusted the federal government to do the right thing most or all of the time.

By 1994, only one in five Americans said they trusted government to do the right thing.

Then came the Iraq War and the financial crisis and the election of Donald Trump. Institutional trust levels remained pathetically low. What changed was the rise of a large group of people who were actively and poi

sonously alienated—who were not only distrustful but explosively distrustful. Explosive distrust is not just an absence of trust or a sense of detached alienation—it is an aggressive animosity and an urge to destroy. Explosive distrust is the belief that those who disagree with you are not just wrong but illegitimate

In 1997, 64 percent of Americans had a great or good deal of trust in the political competence of their fellow citizens; today only a third of Americans feel that way.

In most societies, interpersonal trust is stable over the decades. But for some—like Denmark, where about 75 percent say the people around them are trustworthy, and the Netherlands, where two-thirds say so—the numbers have actually risen.

In America, interpersonal trust is in catastrophic decline. In 2014, according to the General Social Survey conducted by NORC at the University of Chicago, only 30.3 percent of Americans agreed that “most people can be trusted,”

Today, a majority of Americans say they don’t trust other people when they first meet them.

There’s evidence to suggest that marital infidelity, academic cheating, and animal cruelty are all on the rise in America, but it’s hard to directly measure the overall moral condition of society—how honest people are, and how faithful.

Trust is the ratio between the number of people who betray you and the number of people who remain faithful to you. It’s not clear that there is more betrayal in America than there used to be—but there are certainly fewer faithful supports around people than there used to be.

Hundreds of books and studies on declining social capital and collapsing family structure demonstrate this. In the age of disappointment, people are less likely to be surrounded by faithful networks of people they can trust.

Black Americans have high trust in other Black Americans; it’s the wider society they don’t trust, for good and obvious reasons

As Vallier puts it, trust levels are a reflection of the moral condition of a nation at any given time.

high national trust is a collective moral achievement.

High national distrust is a sign that people have earned the right to be suspicious. Trust isn’t a virtue—it’s a measure of other people’s virtue.

Unsurprisingly, the groups with the lowest social trust in America are among the most marginalized.

Black Americans have been one of the most ill-treated groups in American history; their distrust is earned distrust

In 2018, 37.3 percent of white Americans felt that most people can be trusted, according to the General Social Survey, but only 15.3 percent of Black Americans felt the same.

People become trusting when the world around them is trustworthy. When they are surrounded by people who live up to their commitments. When they experience their country as a fair place.

In 2002, 43 percent of Black Americans were very or somewhat satisfied with the way Black people are treated in the U.S. By 2018, only 18 percent felt that way, according to Gallup.

The second disenfranchised low-trust group includes the lower-middle class and the working poor.

this group makes up about 40 percent of the country.

“They are driven by the insecurity of their place in society and in the economy,” he says. They are distrustful of technology and are much more likely to buy into conspiracy theories. “They’re often convinced by stories that someone is trying to trick them, that the world is against them,”

the third marginalized group that scores extremely high on social distrust: young adults. These are people who grew up in the age of disappointment. It’s the only world they know.

In 2012, 40 percent of Baby Boomers believed that most people can be trusted, as did 31 percent of members of Generation X. In contrast, only 19 percent of Millennials said most people can be trusted

Seventy-three percent of adults under 30 believe that “most of the time, people just look out for themselves,” according to a Pew survey from 2018. Seventy-one percent of those young adults say that most people “would try to take advantage of you if they got a chance.

A mere 10 percent of Gen Zers trust politicians to do the right thing.

Only 35 percent of young people, versus 67 percent of old people, believe that Americans respect the rights of people who are not like them.

Fewer than a third of Millennials say America is the greatest country in the world, compared to 64 percent of members of the Silent Generation.

“values and behavior are shaped by the degree to which survival is secure.” In the age of disappointment, our sense of safety went away

Some of this is physical insecurity: school shootings, terrorist attacks, police brutality, and overprotective parenting at home

the true insecurity is financial, social, and emotional.

By the time the Baby Boomers hit a median age of 35, their generation owned 21 percent of the nation’s wealth

First, financial insecurity

As of last year, Millennials—who will hit an average age of 35 in three years—owned just 3.2 percent of the nation’s wealth.

Next, emotional insecurity:

fewer children growing up in married two-parent households, more single-parent households, more depression, and higher suicide rates.

Then, identity insecurity.

All the traits that were once assigned to you by your community, you must now determine on your own: your identity, your morality, your gender, your vocation, your purpose, and the place of your belonging. Self-creation becomes a major anxiety-inducing act of young adulthood.

liquid modernity

Finally, social insecurity.

n the age of social media our “sociometers”—the antennae we use to measure how other people are seeing us—are up and on high alert all the time. Am I liked? Am I affirmed?

Danger is ever present. “For many people, it is impossible to think without simultaneously thinking about what other people would think about what you’re thinking,” the educator Fredrik deBoer has written. “This is exhausting and deeply unsatisfying. As long as your self-conception is tied up in your perception of other people’s conception of you, you will never be free to occupy a personality with confidence; you’re always at the mercy of the next person’s dim opinion of you and your whole deal.”

In this world, nothing seems safe; everything feels like chaos.

Distrust sows distrust. It produces the spiritual state that Emile Durkheim called anomie, a feeling of being disconnected from society, a feeling that the whole game is illegitimate, that you are invisible and not valued, a feeling that the only person you can really trust is yourself.

People plagued by distrust can start to see threats that aren’t there; they become risk averse

Americans take fewer risks and are much less entrepreneurial than they used to be. In 2014, the rate of business start-ups hit a nearly 40-year low. Since the early 1970s, the rate at which people move across state lines each year has dropped by 56 percent

People lose faith in experts. They lose faith in truth, in the flow of information that is the basis of modern society. “A world of truth is a world of trust, and vice versa,”

In periods of distrust, you get surges of populism; populism is the ideology of those who feel betrayed

People are drawn to leaders who use the language of menace and threat, who tell group-versus-group power narratives. You also get a lot more political extremism. People seek closed, rigid ideological systems that give them a sense of security.

fanaticism is a response to existential anxiety. When people feel naked and alone, they revert to tribe. Their radius of trust shrinks, and they only trust their own kind.

When many Americans see Trump’s distrust, they see a man who looks at the world as they do.

By February 2020, America was a land mired in distrust. Then the plague arrived.

From the start, the pandemic has hit the American mind with sledgehammer force. Anxiety and depression have spiked. In April, Gallup recorded a record drop in self-reported well-being, as the share of Americans who said they were thriving fell to the same low point as during the Great Recession

These kinds of drops tend to produce social upheavals. A similar drop was seen in Tunisian well-being just before the street protests that led to the Arab Spring.

The emotional crisis seems to have hit low-trust groups the hardest

“low trusters” were more nervous during the early months of the pandemic, more likely to have trouble sleeping, more likely to feel depressed, less likely to say the public authorities were responding well to the pandemic

Eighty-one percent of Americans under 30 reported feeling anxious, depressed, lonely, or hopeless at least one day in the previous week, compared to 48 percent of adults 60 and over.

Americans looked to their governing institutions to keep them safe. And nearly every one of their institutions betrayed them

The president downplayed the crisis, and his administration was a daily disaster area

The Centers for Disease Control and Prevention produced faulty tests, failed to provide up-to-date data on infections and deaths, and didn’t provide a trustworthy voice for a scared public.

The Food and Drug Administration wouldn’t allow private labs to produce their own tests without a lengthy approval process.

In nations that ranked high on the World Values Survey measure of interpersonal trust—like China, Australia, and most of the Nordic states—leaders were able to mobilize quickly, come up with a plan, and count on citizens to comply with the new rules.

In low-trust nations—like Mexico, Spain, and Brazil—there was less planning, less compliance, less collective action, and more death.

Countries that fell somewhere in the middle—including the U.S., Germany, and Japan—had a mixed record depending on the quality of their leadership.

South Korea, where more than 65 percent of people say they trust government when it comes to health care, was able to build a successful test-and-trace regime. In America, where only 31 percent of Republicans and 44 percent of Democrats say the government should be able to use cellphone data to track compliance with experts’ coronavirus social-contact guidelines, such a system was never really implemented.

For decades, researchers have been warning about institutional decay. Institutions get caught up in one of those negative feedback loops that are so common in a world of mistrust. They become ineffective and lose legitimacy. People who lose faith in them tend not to fund them. Talented people don’t go to work for them. They become more ineffective still.

On the right, this anti-institutional bias has manifested itself as hatred of government; an unwillingness to defer to expertise, authority, and basic science; and a reluctance to fund the civic infrastructure of society, such as a decent public health system

On the left, distrust of institutional authority has manifested as a series of checks on power that have given many small actors the power to stop common plans, producing what Fukuyama calls a vetocracy

In 2020, American institutions groaned and sputtered. Academics wrote up plan after plan and lobbed them onto the internet. Few of them went anywhere. America had lost the ability to build new civic structures to respond to ongoing crises like climate change, opioid addiction, and pandemics, or to reform existing ones.

In a lower-trust era like today, Levin told me, “there is a greater instinct to say, ‘They’re failing us.’ We see ourselves as outsiders to the systems—an outsider mentality that’s hard to get out of.”

Americans haven’t just lost faith in institutions; they’ve come to loathe them, even to think that they are evil

55 percent of Americans believe that the coronavirus that causes COVID-19 was created in a lab and 59 percent believe that the U.S. government is concealing the true number of deaths

Half of all Fox News viewers believe that Bill Gates is plotting a mass-vaccination campaign so he can track people.

This spring, nearly a third of Americans were convinced that it was probably or definitely true that a vaccine existed but was being withheld by the government.

institutions like the law, the government, the police, and even the family don’t merely serve social functions, Levin said; they form the individuals who work and live within them. The institutions provide rules to live by, standards of excellence to live up to, social roles to fulfill.

By 2020, people had stopped seeing institutions as places they entered to be morally formed,

Instead, they see institutions as stages on which they can perform, can display their splendid selves.

People run for Congress not so they can legislate, but so they can get on TV. People work in companies so they can build their personal brand.

The result is a world in which institutions not only fail to serve their social function and keep us safe, they also fail to form trustworthy people. The rot in our structures spreads to a rot in ourselves.

The Failure of Society

The coronavirus has confronted America with a social dilemma. A social dilemma, the University of Pennsylvania scholar Cristina Bicchieri notes, is “a situation in which each group member gets a higher outcome if she pursues her individual self-interest, but everyone in the group is better off if all group members further the common interest.”

Social distancing is a social dilemma. Many low-risk individuals have been asked to endure some large pain (unemployment, bankruptcy) and some small inconvenience (mask wearing) for the sake of the common good. If they could make and keep this moral commitment to each other in the short term, the curve would be crushed, and in the long run we’d all be better off. It is the ultimate test of American trustworthiness.

While pretending to be rigorous, people relaxed and started going out. It was like watching somebody gradually give up on a diet. There wasn’t a big moment of capitulation, just an extra chocolate bar here, a bagel there, a scoop of ice cream before bed

in reality this was a mass moral failure of Republicans and Democrats and independents alike. This was a failure of social solidarity, a failure to look out for each other.

Alexis de Tocqueville discussed a concept called the social body. Americans were clearly individualistic, he observed, but they shared common ideas and common values, and could, when needed, produce common action. They could form a social body.

Over time, those common values eroded, and were replaced by a value system that put personal freedom above every other value

When Americans were confronted with the extremely hard task of locking down for months without any of the collective resources that would have made it easier—habits of deference to group needs; a dense network of community bonds to help hold each other accountable; a history of trust that if you do the right thing, others will too; preexisting patterns of cooperation; a sense of shame if you deviate from the group—they couldn’t do it. America failed.

The Crack-up

This wasn’t just a political and social crisis, it was also an emotional trauma.

The week before George Floyd was killed, the National Center for Health Statistics released data showing that a third of all Americans were showing signs of clinical anxiety or depression. By early June, after Floyd’s death, the percentage of Black Americans showing clinical signs of depression and anxiety disorders had jumped from 36 to 41 percent

By late June, American national pride was lower than at any time since Gallup started measuring, in 2001

In another poll, 71 percent of Americans said they were angry about the state of the country, and just 17 percent said they were proud.

By late June, it was clear that America was enduring a full-bore crisis of legitimacy, an epidemic of alienation, and a loss of faith in the existing order.

The most alienated, anarchic actors in society—antifa, the Proud Boys, QAnon—seemed to be driving events. The distrust doom loop was now at hand.

The Age of Precarity

Cultures are collective responses to common problems. But when reality changes, culture takes a few years, and a moral convulsion, to completely shake off the old norms and values.

The culture that is emerging, and which will dominate American life over the next decades, is a response to a prevailing sense of threat.

This new culture values security over liberation, equality over freedom, the collective over the individual.

From risk to security.

we’ve entered an age of precarity in which every political or social movement has an opportunity pole and a risk pole. In the opportunity mentality, risk is embraced because of the upside possibilities. In the risk mindset, security is embraced because people need protection from downside dangers

In this period of convulsion, almost every party and movement has moved from its opportunity pole to its risk pole.

From achievement to equality

In the new culture we are entering, that meritocratic system looks more and more like a ruthless sorting system that excludes the vast majority of people, rendering their life precarious and second class, while pushing the “winners” into a relentless go-go lifestyle that leaves them exhausted and unhappy

Equality becomes the great social and political goal. Any disparity—racial, economic, meritocratic—comes to seem hateful.

From self to society

If we’ve lived through an age of the isolated self, people in the emerging culture see embedded selves. Socialists see individuals embedded in their class group. Right-wing populists see individuals as embedded pieces of a national identity group. Left-wing critical theorists see individuals embedded in their racial, ethnic, gender, or sexual-orientation identity group.

The cultural mantra shifts from “Don’t label me!” to “My label is who I am.”

From global to local

When there is massive distrust of central institutions, people shift power to local institutions, where trust is higher. Power flows away from Washington to cities and states.

From liberalism to activism

enlightenment liberalism, which was a long effort to reduce the role of passions in politics and increase the role of reason. Politics was seen as a competition between partial truths.

Liberalism is ill-suited for an age of precarity. It demands that we live with a lot of ambiguity, which is hard when the atmosphere already feels unsafe. Furthermore, it is thin. It offers an open-ended process of discovery when what people hunger for is justice and moral certainty.

liberalism’s niceties come to seem like a cover that oppressors use to mask and maintain their systems of oppression. Public life isn’t an exchange of ideas; it’s a conflict of groups engaged in a vicious death struggle

The cultural shifts we are witnessing offer more safety to the individual at the cost of clannishness within society. People are embedded more in communities and groups, but in an age of distrust, groups look at each other warily, angrily, viciously.

The shift toward a more communal viewpoint is potentially a wonderful thing, but it leads to cold civil war unless there is a renaissance of trust. There’s no avoiding the core problem. Unless we can find a way to rebuild trust, the nation does not function.

How to Rebuild Trust

Historians have more to offer, because they can cite examples of nations that have gone from pervasive social decay to relative social health. The two most germane to our situation are Great Britain between 1830 and 1848 and the United States between 1895 and 1914.

In both periods, a highly individualistic and amoral culture was replaced by a more communal and moralistic one.

But there was a crucial difference between those eras and our own, at least so far. In both cases, moral convulsion led to frenetic action.

As Robert Putnam and Shaylyn Romney Garrett note in their forthcoming book, The Upswing, the American civic revival that began in the 1870s produced a stunning array of new organizations: the United Way, the NAACP, the Boy Scouts, the Forest Service, the Federal Reserve System, 4-H clubs, the Sierra Club, the settlement-house movement, the compulsory-education movement, the American Bar Association, the American Legion, the ACLU, and on and on

After the civic revivals, both nations witnessed frenetic political reform. During the 1830s, Britain passed the Reform Act, which widened the franchise; the Factory Act, which regulated workplaces; and the Municipal Corporations Act, which reformed local government.

The Progressive Era in America saw an avalanche of reform: civil-service reform; food and drug regulation; the Sherman Act, which battled the trusts; the secret ballot; and so on. Civic life became profoundly moralistic, but political life became profoundly pragmatic and anti-ideological. Pragmatism and social-science expertise were valued.

Can America in the 2020s turn itself around the way the America of the 1890s, or the Britain of the 1830s, did? Can we create a civic renaissance and a legislative revolution?

I see no scenario in which we return to being the nation we were in 1965, with a cohesive national ethos, a clear national establishment, trusted central institutions, and a pop-culture landscape in which people overwhelmingly watch the same shows and talked about the same things.

The age of distrust has smashed the converging America and the converging globe—that great dream of the 1990s—and has left us with the reality that our only plausible future is decentralized pluralism.

The key to making decentralized pluralism work still comes down to one question: Do we have the energy to build new organizations that address our problems, the way the Brits did in the 1830s and Americans did in the 1890s?

social trust is built within organizations in which people are bound together to do joint work, in which they struggle together long enough for trust to gradually develop, in which they develop shared understandings of what is expected of each other, in which they are enmeshed in rules and standards of behavior that keep them trustworthy when their commitments might otherwise falter.

Over the past 60 years, we have given up on the Rotary Club and the American Legion and other civic organizations and replaced them with Twitter and Instagram. Ultimately, our ability to rebuild trust depends on our ability to join and stick to organizations.

Whether we emerge from this transition stronger depends on our ability, from the bottom up and the top down, to build organizations targeted at our many problems. If history is any guide, this will be the work not of months, but of one or two decades.

For centuries, America was the greatest success story on earth, a nation of steady progress, dazzling achievement, and growing international power. That story threatens to end on our watch, crushed by the collapse of our institutions and the implosion of social trust

But trust can be rebuilt through the accumulation of small heroic acts—by the outrageous gesture of extending vulnerability in a world that is mean, by proffering faith in other people when that faith may not be returned. Sometimes trust blooms when somebody holds you against all logic, when you expected to be dropped.

By David Brooks

No border divides the pain caused by drugs from the pain brought about in Latin America by the drug business and the narcotraficantes.  It’s one big continent of pain–and in the last several years the narcos have begun selling drugs in earnest in their own countries, creating new cultures of addiction and misery.  

Many talk about legalizing drugs, and there’s something to be said for changing the economic arrangements. But what about reducing their use by developing and promoting more interesting and productive ways of dealing with suffering? Or even getting directly at the causes of that suffering?

Here in the United States, there’s no room for sadness, but there are plenty of drugs for it, and now when people feel sad, even many doctors think they should take drugs. We undergo losses and ordeals and live in circumstances that would make any sane person sad, and then we say: the fault was yours and if you feel sad, you’re crazy or sick and should be medicated. Of course, now ever more Americans are addicted to prescription drugs, and there’s always the old anesthetic of choice, alcohol, but there is one difference: the economics of those substances are not causing mass decapitations in Mexico.

We give you money and guns, lots and lots of money. You give us drugs. The guns destroy. The money destroys. The drugs destroy. The pain migrates, a phantom presence crossing the border the other way from the crossings we hear so much about.The drugs are supposed to numb people out, but that momentary numbing effect causes so much pain elsewhere. There’s a pain economy, a suffering economy, a fear economy, and drugs fuel all of them rather than making them go away.

We’ve had movements to get people to stop buying clothes and shoes made in sweatshops, grapes picked by exploited farmworkers, fish species that are endangered, but no one’s thought to start a similar movement to get people to stop consuming the drugs that cause so much destruction abroad.

I have been trying to imagine the export economy of pain. What does it look like? I think it might look like air-conditioning. This is how an air conditioner works: it sucks the heat out of the room and pumps it into the air outside. You could say that air-conditioners don’t really cool things down so much as they relocate the heat. The way the transnational drug economy works is a little like that: people in the U.S. are not reducing the amount of pain in the world; they’re exporting it to Mexico and the rest of Latin America as surely as those places are exporting drugs to us.

Mexico, I am sorry.  I want to see it all change, for your sake and ours. I want to call pain by name and numbness by name and fear by name. I want people to connect the dots from the junk in their brain to the bullet holes in others’ heads. I want people to find better strategies for responding to pain and sadness. I want them to rebel against those parts of their unhappiness that are political, not metaphysical, and not run in fear from the metaphysical parts either.

A hundred years ago, your dictatorial president Porfiro Díaz supposedly remarked, “Poor Mexico, so far from God and so close to the United States,” which nowadays could be revised to, “Painful Mexico, so far from peace and so close to the numbness of the United States.”

The Koch brothers have put together a coalition that intends to spend almost $1 billion in 2016. Some donors complained after McCutcheon that they'd no longer be able to hide behind limits when they didn't want to give, but the overall landscape has clearly shifted toward those writing the checks.

Members of Congress get the shaft, too, spending up to 12 hours a day dialing for dollars. The simple drag of having to do all that seems like a potent reason for candidates to push back

even as it fails to rise to the top of most voters' agendas, majorities of Democrats, Republicans, and independents have voiced concern about the corrupting influence of money in polls, and the public generally supports spending caps.

The candidates who are doing best at fundraising, or for whom super PACs are likely to raise money effectively, are staying tactfully quiet on the issue.

she also called last week for a constitutional amendment to create limits or mandate transparency for campaign cash.

Peter Schweizer has excited the political world with allegations of quid pro quos, in which foreign governments gave to the Clinton Foundation and Hillary Clinton, then serving as secretary of state, did them favors—essentially alleging bribery in foreign affairs

Shadowy organizations funded by multimillionaires, many of which scrupulously cover up their sources of donations, are going to pour huge amounts of money into trying to sway the democratic process—all in an attempt to prove that huge, insufficiently transparent infusions of cash from wealthy donors can corrupt a public servant’s policy decisions. Is this irony lost on the donors and the candidates they back, or does it simply not bother them?

both Dell and EMC have struggled lately as new technology trends have largely passed them by (namely: the cloud).

Now, cloud companies like Amazon can store all of a company's stuff for cheaper. It's no longer in vogue for businesses to operate their own data centers.

Dell, the world's second-largest server maker, is facing the same conundrum. As businesses offload their file storage to Amazon (AMZN, Tech30), Google (GOOGL, Tech30) and Microsoft (MSFT, Tech30), many are letting those companies handle their email and Web serving too.

But the legal wrangling to just get the courts to treat crypto as a set of speculative instruments regulated under securities law made the law moot

In May of 2022, a year after Gensler began trying to do something about Terra/Luna, Kwon’s scheme blew up. In a comically-too-late-to-matter gesture, an appeals court then said that the SEC had the right to compel information from Kwon’s now-bankrupt scheme. It is absolute lunacy that well-settled law, like the ability for the SEC to investigate those in the securities business, is now being re-litigated.

many crypto ‘enthusiasts’ watching Gensler discuss regulation with his predecessor “called for their incarceration or worse.”

it wasn’t just the courts who were an impediment. Gensler wasn’t the only cop on the beat. Other regulators, like those at the Commodities Futures Trading Commission, the Federal Reserve, or the Office of Comptroller of the Currency, not only refused to take action, but actively defended their regulatory turf against an attempt from the SEC to stop the scams.

Behind this was the fist of political power. Everyone saw the incentives the Senate laid down when every single Republican, plus a smattering of Democrats, defeated the nomination of crypto-skeptic Saule Omarova in becoming the powerful bank regulator at the Comptroller of the Currency

Instead of strong figures like Omarova, we had a weakling acting Comptroller Michael Hsu at the OCC, put there by the excessively cautious Treasury Secretary Janet Yellen. Hsu refused to stop bank interactions with crypto or fintech because, as he told Congress in 2021, “These trends cannot be stopped.”

It’s not just these regulators; everyone wanted a piece of the bureaucratic pie. In March of 2022, before it all unraveled, the Biden administration issued an executive order on crypto. In it, Biden said that virtually every single government agency would have a hand in the space.

That’s… insane. If everyone’s in charge, no one is.

And behind all of these fights was the money and political prestige of some most powerful people in Silicon Valley, who were funding a large political fight to write the rules for crypto, with everyone from former Treasury Secretary Larry Summers to former SEC Chair Mary Jo White on the payroll.

(Even now, even after it was all revealed as a Ponzi scheme, Congress is still trying to write rules favorable to the industry. It’s like, guys, stop it. There’s no more bribe money!)

Moreover, the institution Gensler took over was deeply weakened. Since the Reagan administration, wave after wave of political leader at the SEC has gutted the place and dumbed down the enforcers. Courts have tied up the commission in knots, and Congress has defanged it

Under Trump crypto exploded, because his SEC chair Jay Clayton had no real policy on crypto (and then immediately went into the industry after leaving.) The SEC was so dormant that when Gensler came into office, some senior lawyers actually revolted over his attempt to make them do work.

In other words, the regulators were tied up in the courts, they were against an immensely powerful set of venture capitalists who have poured money into Congress and D.C., they had feeble legal levers, and they had to deal with ‘crypto enthusiasts' who thought they should be jailed or harmed for trying to impose basic rules around market manipulation.

The bottom line is, Gensler is just one regulator, up against a lot of massed power, money, and bad institutional habits. And we as a society simply made the choice through our elected leaders to have little meaningful law enforcement in financial markets, which first became blindingly obvious in 2008 during the financial crisis, and then became comical ten years later when a sector whose only real use cases were money laundering

, Ponzi scheming or buying drugs on the internet, managed to rack up enough political power to bring Tony Blair and Bill Clinton to a conference held in a tax haven billed as ‘the future.’

It took a few years, but New Dealers finally implemented a workable set of securities rules, with the courts agreeing on basic definitions of what was a security. By the 1950s, SEC investigators could raise an eyebrow and change market behavior, and the amount of cheating in finance had dropped dramatically.

By 1935, the New Dealers had set up a new agency, the Securities and Exchange Commission, and cleaned out the FTC. Yet there was still immense concern that Roosevelt had not been able to tame Wall Street. The Supreme Court didn’t really ratify the SEC as a constitutional body until 1938, and nearly struck it down in 1935 when a conservative Supreme Court made it harder for the SEC to investigate cases.

Institutional change, in other words, takes time.

It’s a lesson to remember as we watch the crypto space melt down, with ex-billionaire Sam Bankman-Fried

It’s not like perfidy in crypto was some hidden secret. At the top of the market, back in December 2021, I wrote a piece very explicitly saying that crypto was a set of Ponzi schemes. It went viral, and I got a huge amount of hate mail from crypto types

one of the more bizarre aspects of the crypto meltdown is the deep anger not just at those who perpetrated it, but at those who were trying to stop the scam from going on. For instance, here’s crypto exchange Coinbase CEO Brian Armstrong, who just a year ago was fighting regulators vehemently, blaming the cops for allowing gambling in the casino he helps run.

FTX.com was an offshore exchange not regulated by the SEC. The problem is that the SEC failed to create regulatory clarity here in the US, so many American investors (and 95% of trading activity) went offshore. Punishing US companies for this makes no sense.

Rather than provide housing for the homeless, cities offer showers, day care centers and bag checks.

We have decided to live with the fact that some of our fellow Americans will die on the streets.

“There’s a cruelty here that I don’t think I’ve seen,” Leilani Farha, then the United Nations special rapporteur on adequate housing, said after a 2018 visit to Northern California.

“I’ve never seen anything like it, and I’ve done outreach on every continent,” Dame Louise Casey, who directed homeless policy for several British prime ministers, said after touring homeless encampments in San Francisco, Los Angeles and other American cities.

almost 40 percent of workers in households making less than $40,000 a year have lost work. Women in Need NYC, which runs shelters, warned this week that New York faces a “mass increase” in homelessness

Countries confronting homelessness with greater success than the United States, including Finland and Japan, begin by treating housing as a human right

the first law of real estate applies to homelessness, too: Location, location, location. The nation’s homeless population is concentrated in New York, the cities of coastal California and a few other islands of prosperity.

Well-educated, well-paid professionals have flocked to those places, driving up housing prices. And crucially, those cities and their suburbs have made it virtually impossible to build enough housing to keep up.

The government calculates $600 is the most a family living at the poverty line can afford to pay in monthly rent while still having enough money for food, health care and other needs. From 1990 to 2017, the number of housing units available below that price shrank by four million.

While there are roughly 80,000 homeless people in New York on any given night, more than 800,000 New Yorkers — more than 10 times as many people — are scraping by, spending more than half their income on rent.

According to one analysis, a $100 increase in the average monthly rent in a large metro area is associated with a 15 percent increase in homelessness.

In 2018, eight out of every 10,000 Michigan residents were homeless. In California, it was 33 per 10,000. In New York, it was 46 per 10,000.

in recent decades, wealth and homelessness have both increased — a stark illustration of the inequalities that pervade American life.

Having failed to address homelessness during the longest economic expansion in American history, the nation now faces a greater challenge under more difficult circumstances

The federal government already provides housing vouchers to help some lower-income families. The families pay 30 percent of their monthly income toward rent; the government pays the rest. But instead of giving vouchers to every needy family, the government imposes an arbitrary cap. Three in four eligible families don’t get vouchers.

The program costs about $19 billion a year. Vouchers for all eligible households would cost another $41 billion a year

Where to get the money? Well, the government annually provides more than $70 billion in tax breaks to homeowners, including a deduction for mortgage interest payments and a free pass on some capital gains from home sales. Let’s end homelessness instead of subsidizing mansions.

Without a significant expansion in the supply of housing, adding vouchers would be like adding players to a game of musical chairs without increasing the number of chairs.

Market-rate construction can help: More housing would slow the upward march of housing prices. New York and San Francisco are the nation’s most tightly regulated markets for housing construction,

Tokyo, often cited as an international model for its permissive development policies, has expanded its supply of homes by roughly 2 percent a year in recent years, while New York’s housing supply has expanded by roughly 0.5 percent a year. Over the last two decades, housing prices in Tokyo held steady as New York prices soared.

In California, for example, construction of a five-story apartment building that meets minimum standards costs an average of $425,000 per unit,

Without public aid, the apartments would need to be rented for several times more than the $600 a month affordable to a family living at the poverty line.

Proposals for a big increase in affordable housing construction inevitably call to mind the troubled public housing projects of the mid-20th century. They offer one clear lesson: Avoid housing that concentrates poverty

there is a solution — to build subsidized housing as part of mixed-income developments and to spread the developments out, putting them not just in cities but also in the surrounding suburbs.

Helsinki, Finland, a city of just 600,000 people, builds about 7,000 units of mixed-income housing a year. That’s a big reason Finland is the rare European country where homelessness is in decline.

Extending this approach to the entire homeless population would be expensive. To take one example, King County, which encompasses Seattle, would need to increase annual spending on homelessness to roughly $410 million from $196 million to help each of the county’s 22,000 homeless families, according to a study by McKinsey. That’s about $19,000 per family.

Even if the cost per person were twice as high, the nation’s homeless population could be housed for $10 billion a year — less than the price of one aircraft carrier.

there is worse to come. Homelessness rises during recessions, the federal funding is temporary and state and local governments face huge drops in tax revenue.

Reframing the debate — asking what is necessary to end homelessness — is an important first step for New York and for other places that are failing this basic test of civic responsibility.

Americans must decide whether we are willing to let elementary school students spend nights in guarded parking lots

We must decide whether it’s worth spending just a little of this nation’s vast wealth to ensure that no 60-year-old woman needs to sleep on the same bench in downtown Santa Monica

In the course of his five-and-a-half-year presidency, beginning in 1969, Nixon launched and managed five successive and overlapping wars — against the anti-Vietnam War movement, the news media, the Democrats, the justice system and, finally, against history itself.

All reflected a mind-set and a pattern of behavior that were uniquely and pervasively Nixon’s: a willingness to disregard the law for political advantage, and a quest for dirt and secrets about his opponents as an organizing principle of his presidency.

Long before the Watergate break-in, gumshoeing, burglary, wiretapping and political sabotage had become a way of life in the Nixon White House.

What was Watergate? It was Nixon’s five wars.

In 1970, he approved the top-secret Huston Plan, authorizing the CIA, the FBI and military intelligence units to intensify electronic surveillance of individuals identified as “domestic security threats.” The plan called for, among other things, intercepting mail and lifting restrictions on “surreptitious entry” — that is, break-ins or “black bag jobs.”

On June 17, 1971 — exactly one year before the Watergate break-in — Nixon met in the Oval Office with his chief of staff, H.R. “Bob” Haldeman, and national security adviser Henry Kissinger. At issue was a file about former president Lyndon Johnson’s handling of the 1968 bombing halt in Vietnam.

“You can blackmail Johnson on this stuff, and it might be worth doing,” Haldeman said, according to the tape of the meeting. “Yeah,” Kissinger said, “but Bob and I have been trying to put the damn thing together for three years.” They wanted the complete story of Johnson’s actions.

“Huston swears to God there’s a file on it at Brookings,” Haldeman said. “Bob,” Nixon said, “now you remember Huston’s plan? Implement it. . . . I mean, I want it implemented on a thievery basis. God damn it, get in and get those files. Blow the safe and get it.”

Though Ellsberg was already under indictment and charged with espionage, the team headed by Hunt and Liddy broke into the office of his psychiatrist, seeking information that might smear Ellsberg and undermine his credibility in the antiwar movement.

“You can’t drop it, Bob,” Nixon told Haldeman on June 29, 1971. “You can’t let the Jew steal that stuff and get away with it. You understand?”

In a July 3, 1971, conversation with Haldeman, he said: “The government is full of Jews. Second, most Jews are disloyal. You know what I mean? You have a Garment [White House counsel Leonard Garment] and a Kissinger and, frankly, a Safire [presidential speechwriter William Safire], and, by God, they’re exceptions. But Bob, generally speaking, you can’t trust the bastards. They turn on you.”

In a tape from the Oval Office on Feb. 22, 1971, Nixon said, “In the short run, it would be so much easier, wouldn’t it, to run this war in a dictatorial way, kill all the reporters and carry on the war.”

John N. Mitchell, Nixon’s campaign manager and confidante, met with Liddy at the Justice Department in early 1972, when Mitchell was attorney general. Liddy presented a $1 million plan, code-named “Gemstone,” for spying and sabotage during the upcoming presidential campaign.

In Nixon’s third war, he took the weapons in place — the Plumbers, wiretapping and burglary — and deployed them against the Democrats challenging his reelection.

Operation Diamond would neutralize antiwar protesters with mugging squads and kidnapping teams; Operation Coal would funnel cash to Rep. Shirley Chisholm, a black congresswoman from Brooklyn seeking the Democratic presidential nomination, in an effort to sow racial and gender discord in the party;

Operation Opal would use electronic surveillance against various targets, including the headquarters of Democratic presidential candidates Edmund Muskie and George McGovern; Operation Sapphire would station prostitutes on a yacht, wired for sound, off Miami Beach during the Democratic National Convention.

Mitchell approved a $250,000 version, according to Jeb Magruder, the deputy campaign manager. It included intelligence-gathering on the Democrats through wiretaps and burglaries.

They discussed a secret $350,000 stash of cash kept in the White House, the possibility of using priests to help hide payments to the burglars, “washing” the money though Las Vegas or New York bookmakers, and empaneling a new grand jury so everyone could plead the Fifth Amendment or claim memory failure. Finally, they decided to send Mitchell on an emergency fundraising mission.

On Oct. 10, 1972, we wrote a story in The Post outlining the extensive sabotage and spying operations of the Nixon campaign and White House, particularly against Muskie, and stating that the Watergate burglary was not an isolated event. The story said that at least 50 operatives had been involved in the espionage and sabotage, many of them under the direction of a young California lawyer named Donald Segretti; several days later, we reported that Segretti had been hired by Dwight Chapin, Nixon’s appointments secretary. (The Senate Watergate committee later found more than 50 saboteurs, including 22 who were paid by Segretti.)

A favored dirty trick that caused havoc at campaign stops involved sweeping up the shoes that Muskie aides left in hotel hallways to be polished, and then depositing them in a dumpster.

In a memo to Haldeman and Mitchell dated April 12, 1972, Patrick Buchanan and another Nixon aide wrote: “Our primary objective, to prevent Senator Muskie from sweeping the early primaries, locking up the convention in April, and uniting the Democratic Party behind him for the fall, has been achieved.”

“I’d really like to get Kennedy taped,” Nixon told Haldeman in April 1971. According to Haldeman’s 1994 book, “The Haldeman Diaries,” the president also wanted to have Kennedy photographed in compromising situations and leak the images to the press.

On Sept. 8, 1971, Nixon ordered Ehrlichman to direct the Internal Revenue Service to investigate the tax returns of all the likely Democratic presidential candidates, as well as Kennedy. “Are we going after their tax returns?” Nixon asked. “You know what I mean? There’s a lot of gold in them thar hills.”

The arrest of the Watergate burglars set in motion Nixon’s fourth war, against the American system of justice. It was a war of lies and hush money, a conspiracy that became necessary to conceal the roles of top officials and to hide the president’s campaign of illegal espionage and political sabotage, including the covert operations that Mitchell described as “the White House horrors” during the Watergate hearings: the Huston Plan, the Plumbers, the Ellsberg break-in, Liddy’s Gemstone plan and the proposed break-in at Brookings.

In a June 23, 1972, tape recording, six days after the arrests at the Watergate, Haldeman warned Nixon that “on the investigation, you know, the Democratic break-in thing, we’re back in the problem area, because the FBI is not under control . . . their investigation is now leading into some productive areas, because they’ve been able to trace the money.”

Haldeman said Mitchell had come up with a plan for the CIA to claim that national security secrets would be compromised if the FBI did not halt its Watergate investigation.

Nixon approved the scheme and ordered Haldeman to call in CIA Director Richard Helms and his deputy Vernon Walters. “Play it tough,” the president directed. “That’s the way they play it, and that’s the way we are going to play it.”

On March 21, 1973, in one of the most memorable Watergate exchanges caught on tape, Nixon met with his counsel, John W. Dean, who since the break-in had been tasked with coordinating the coverup. “We’re being blackmailed” by Hunt and the burglars, Dean reported, and more people “are going to start perjuring themselves.” “How much money do you need?” Nixon asked.

“I would say these people are going to cost a million dollars over the next two years,” Dean replied. “And you could get it in cash,” the president said. “I, I know where it could be gotten. I mean, it’s not easy, but it could be done.”

Mitchell later denied approving the plan. He testified that he told Magruder: “We don’t need this. I’m tired of hearing it.” By his own account, he did not object on the grounds that the plan was illegal.

Nixon’s final war, waged even to this day by some former aides and historical revisionists, aims to play down the significance of Watergate and present it as a blip on the president’s record. Nixon lived for 20 years after his resignation and worked tirelessly to minimize the scandal.

In his 1978 memoir “RN,” Nixon addressed his role in Watergate: “My actions and omissions, while regrettable and possibly indefensible, were not impeachable.” Twelve years later, in his book “In the Arena,” he decried a dozen “myths” about Watergate and claimed that he was innocent of many of the charges made against him. One myth, he said, was that he ordered the payment of hush money to Hunt and others. Yet, the March 21, 1973, tape shows that he ordered Dean to get the money 12 times.

Even now, there are old Nixon hands and defenders who dismiss the importance of Watergate or claim that key questions remain unanswered.

By August, Nixon’s impending impeachment in the House was a certainty, and a group of Republicans led by Sen. Barry Goldwater banded together to declare his presidency over. “Too many lies, too many crimes,” Goldwater said. On Aug. 7, the group visited Nixon at the White House. How many votes would he have in a Senate trial? the president asked. “I took kind of a nose count today,” Goldwater replied, “and I couldn’t find more than four very firm votes, and those would be from older Southerners. Some are very worried about what’s been going on, and are undecided, and I’m one of them.”

In his last remarks about Watergate as a senator, 77-year-old Sam Ervin, a revered constitutionalist respected by both parties, posed a final question: “Why was Watergate?” The president and his aides, Ervin answered, had “a lust for political power.” That lust, he explained, “blinded them to ethical considerations and legal requirements; to Aristotle’s aphorism that the good of man must be the end of politics.”

Nixon had lost his moral authority as president. His secret tapes — and what they reveal — will probably be his most lasting legacy. On them, he is heard talking almost endlessly about what would be good for him, his place in history and, above all, his grudges, animosities and schemes for revenge. The dog that never seems to bark is any discussion of what is good and necessary for the well-being of the nation.

By the time he was forced to resign, Nixon had turned his White House, to a remarkable extent, into a criminal enterprise.

“Always remember,” he said, “others may hate you, but those who hate you don’t win unless you hate them, and then you destroy yourself.” His hatred had brought about his downfall. Nixon apparently grasped this insight, but it was too late. He had already destroyed himself.

Acemoglu and Robinson outline a theory of how economic and political institutions shape the fate of human societies. They reinterpret the rise and fall of civilizations throughout history, showing how differences in institutions interact with changing circumstances to produce development or stagnation.

It also has implications for the contemporary United States, where increasing inequality and the growing influence of money in politics threaten to reshape our political institutions.

In more fortunate countries, pluralistic political institutions prevent any one group from monopolizing resources for itself, while free markets empower a large class of people with an interest in defending the current system against absolutism. This virtuous circle, which first took form in seventeenth-century England, is the secret to economic growth.

Economic institutions are themselves the products of political processes, which depend on political institutions. These can also be extractive, if they enable an elite to maintain its dominance over society, or inclusive, if many groups have access to the political process. Poverty is not an accident: "[P]oor countries are poor because those who have power make choices that create poverty." Therefore, Acemoglu and Robinson argue, it is ultimately politics that matters.

The logic of extractive and inclusive institutions explains why growth is not foreordained. Where a cohesive elite can use its political dominance to get rich at the expense of ordinary people, it has no need for markets and free enterprise, which can create political competitors. In addition, because control of the state can be highly lucrative, infighting among contenders for power produces instability and violence. This vicious circle keeps societies poor

Countries differ in their economic success because of their different institutions, the rules influencing how the economy works, and the incentives that motivate people," write Acemoglu and Robinson. Extractive institutions, whether feudalism in medieval Europe or the use of schoolchildren to harvest cotton in contemporary Uzbekistan, transfer wealth from the masses to elites. In contrast, inclusive institutions -- based on property rights, the rule of law, equal provision of public services, and free economic choices -- create incentives for citizens to gain skills, make capital investments, and pursue technological innovation, all of which increase productivity and generate wealth.

Acemoglu and Robinson differentiate their account from alternatives that they label the "culture," "geography," and "ignorance" hypotheses.

An example of the first is Max Weber's famous argument that Calvinism lay at the roots of capitalist development

the best-known recent example of the second is Jared Diamond's explanation of the Spanish Conquest as the inevitable outcome of geographic differences between Eurasia and the Americas.

Most economists, Acemoglu and Robinson assert, subscribe to the ignorance hypothesis, according to which "poor countries are poor because they have a lot of market failures and because economists and policymakers do not know how to get rid of them." According to this view, development can be engineered through technocratic policies administered by enlightened experts.

this focus on policy obscures the fundamental importance of politics.

Their perspective is informed by New Institutional Economics, an approach developed in the last quarter of the twentieth century, and associated with prominent economists such as Douglass North and Oliver Williamson, that focuses on how economic forces are mediated by institutions such as political systems and legal codes

A state based on extractive institutions, whether the Kuba Kingdom of seventeenth-century Central Africa or more recently the Soviet Union, can generate growth, especially when starting from low levels of development. But in most of these cases, the ruling elite is unwilling to allow inclusive economic institutions because they would threaten its political supremacy; the inevitable result is economic stagnation.

This leaves open the question of why some societies end up with inclusive rather than extractive institutions -- why some are rich and some are poor. The answer, according to Acemoglu and Robinson, is that institutions evolve -- and that history is messy.

Institutions change in subtle ways over time, allowing societies to drift apart. When major shocks occur, small differences in institutions can send societies down vastly different historical paths.

Early modern England, France, and Spain were all feudal societies with power-hungry monarchs. But the English Parliament had slightly more power than its continental relatives; as a result, the crown was unable to monopolize trade with the Americas, which made many merchants rich instead; in turn, this new commercial class became an important part of the coalition that overthrew James II in 1688, successfully fighting off absolutism. In Spain, by contrast, the monarchy controlled overseas trade, quashed internal challenges to its authority, and maintained extractive economic institutions -- and the country went into long-term decline. Crucially, Acemoglu and Robinson remind us that these outcomes were not preordained. James II might have suppressed the Glorious Revolution, or the Spanish Armada might have succeeded a century earlier. History is like that.

In this light, the material prosperity of the modern world, unevenly distributed though it is, is a fortunate historical accident.

But inclusive institutions can also break down. In the late thirteenth and early fourteenth centuries, a small group of families transformed Venice's semi-democratic institutions into a hereditary aristocracy and then monopolized long-distance trade, spelling the end of the city-state's economic expansion

Acemoglu and Robinson, by contrast, examine why nations fail. Societies, in their telling, are like Tolstoy's families: The success stories are similar -- pluralist democracies with regulated capitalist economies -- but failure comes in different forms. There are many ways in which elites can impose extractive institutions that cripple economic development.

The United States is one of the happy families of Why Nations Fail. Although our institutions have often been deeply flawed, Acemoglu and Robinson show how crucial moments in history, from Jamestown to the Progressive Era to the civil-rights movement, have led to the expansion of political democracy and economic opportunity.

Rather than as a series of inevitable triumphs, however, this history can also be seen as a warning -- that our institutions are fragile, always at risk of being subverted by elites seeking to exploit political power for their narrow economic ends. That risk has reappeared today.

The power of the financial sector is only one example of the broader threat to our inclusive political institutions: namely, the ability of the economic elite to translate their enormous fortunes directly into political power. In the wake of the Supreme Court's 2010 decision in Citizens United, super PACs can mobilize unlimited amounts of money--and can accept contributions from 501(c)4 organizations, which do not have to identify their donors.

This may seem like a level playing field. But money is not distributed evenly. American Crossroads, for example, has consistently raised more than 90 percent of its funds from billionaires (with a "b"). The recent, breathtaking rise in inequality has put unprecedented resources at the disposal of the super-rich. With the ability to secretly invest unlimited sums in political activities, they now have the opportunity to swamp all other participants in American politics.

Rising inequality and deregulation of political spending have made possible a new kind of class warfare. The 1 percent can blanket the airwaves, install their chosen representatives, and sway public policy in their favor.

The most direct way to translate political power into cold, hard cash is to advocate for lower taxes. Republican presidential candidates spent the past year competing to offer the most bountiful tax cuts to the super-rich

Showering goodies on the rich would require draconian cuts to Social Security and Medicare -- programs that are popular among the Tea Party rank and file. Republicans' current anti-tax orthodoxy reflects the interests of their wealthy funders rather than their middle-income base.

As Warren Buffett observed, "there's been class warfare going on for the last twenty years, and my class has won." This should be little surprise: "My side has had the nuclear bomb. We've got K Street, we've got lobbyists, we've got money on our side."

Supreme Court justices appointed by Republican presidents were instrumental in unleashing unlimited corporate political spending in Citizens United, accelerating the concentration of political power in the hands of the super-rich.

The most potent bulwark of inclusive institutions is probably the rich variety of influential interest groups that all have the ability to participate in politics. Still, the accumulation of huge fortunes and their deployment for political ends has changed the nature of our political institutions. Funding by the economic elite is a major reason why Republicans advocate transfers from ordinary people to the rich in the form of tax cuts and reductions in government services -- and why Democrats have been dragged to the right along with the GOP

Acemoglu recently said, "We need noisy grassroots movements to deliver a shock to the political system," citing both the Tea Party and Occupy Wall Street as potentially helpful developments. As he recognized, however, the one with more staying power -- the Tea Party -- has been co-opted by well-funded, elite-dominated groups (including Americans for Prosperity). If a popular movement can be bankrolled as easily as an attack ad, it is hard to see what money can't buy in politics. The next test for America will be whether our political system can fend off the power of money and remain something resembling a real democracy -- or whether it will become a playground where a privileged elite works out its internal squabbles.

Eight of the 10 most expensive Senate races ever are unfolding in 2020

Up and down the ballot, Democrats have the financial upper hand this year.

Small-dollar donors, who have lifted Democratic Senate candidates and Mr. Biden in particular, are growing in importance, accounting for 22 percent of the total money raised in the 2020 cycle. These donors, who gave less than $200 to a candidate or cause, contributed 15 percent of the funds raised in the 2016 election.

So-called dark money continues to flood into American political campaigns through entities like nonprofits that do not fully disclose their donors.

More women than ever are giving to federal races, accounting for 44 percent of donors, up from 37 percent in 2016, according to the analysis by the Center for Responsive Politics.

Women have favored Democrats in the voting booth

Separately, the role of traditional political action committees, often used by corporations to bundle donations to incumbent politicians, has been shrinking as a share of political cash, hitting a record low of 5 percent, according to the center.

The top industry for campaign cash remains Wall Street, totaling more than $255 million from the securities and investment world, according to the center’s research. That money heavily favored Democrats: $161.7 million to $94.5 million.

The nonprofit Democratic online donation platform, ActBlue, has processed more than $3.3 billion so far this year.

The total cost of the races for the White House, the Senate and the House is expected to hit nearly $14 billion.

he biggest driver of political spending this year has been — no surprise — the presidential race, as enormous sums have, in particular, poured into supporting Joseph R. Biden Jr.’s bid to oust President Trump.

6.6 billion

Editors’ PicksHow the Trump Era

That is one of four Senate races to have crossed the $200 million mark this year — the others are in Iowa, South Carolina and Arizona — something that had never before happened in a contest without a self-funding candidate.

Democratic candidates and allied groups have spent $5.5 billion this cycle, compared with $3.8 billion in spending by Republicans — the largest advantage ever, according to the analysis by the nonpartisan Center for Responsive Politics.

Both parties are taking advantage of disclosure loopholes. One dark money Democratic group, the Sixteen Thirty Fund, has reported more than $51 million in giving to a wide array of other federal PACs, federal records show.

The United States, Europe and China are, in different ways, all speeding up the transition to a green economy.

The first to go is the era of easy money. This isn’t a short-term response to President Biden’s much-needed post-pandemic fiscal stimulus. (In fact, that stimulus is exactly what kept the U.S. economy resilient while peers flagged, according to a recent New York Fed report.

This is a return to an economy that is more rational and hardheaded. Not all companies, or stocks, are created equal. Many have too much debt on their books.

Years of easy money propped up everything. A higher cost of capital will be painful temporarily, but it will give markets what they’ve needed for years — a reason for investors to sort out risky investments

Cheap energy is over, too. One outcome of Russia’s invasion of Ukraine is the realization (especially in Europe) that getting crucial commodities from autocrats is never a good idea

At home, that means more wind and solar farms, more electric cars and more diverse supply chains to build it all. This will be inflationary in the short term, as it means manufacturing new products and investing in new technologies

The bond market won’t like it, and there will be calls to return to the old ways, particularly if inflation continues to bite.

But it will be strongly deflationary if we can make the shift.

Finally, the era of cheap labor has ended

Wages are rising, and we’ve seen more labor activity, including strikes, this year than in the past four decades. More will follow. This is an appropriate response to decades of wage stagnation amid record corporate profits

Unions, but also non-union workers in many areas of the economy including construction and manufacturing, have been buoyed by the largest infrastructure investment since the 1950s — which has given them negotiating power that they haven’t had in years

Meanwhile, companies in the service sector are reconsidering their usual hire-and-fire-fast approach, having been trained by the pandemic to hang onto employees as long as possible.

Yes, artificial intelligence could throw a spammer in all this. CEOs are looking to use it to bring down labor costs. But workers today are becoming more proactive about demanding more control of both trade and technology;

The end of cheap is a huge shift. It means Main Street rather than Wall Street will drive the economy. It will make for a more balanced and resilient economy.

All of that is going away or gone. A decade and a half of go-go speculation is finished. The era of cheap is kaput.

cheap isn’t really cheap. It’s just putting your troubles on layaway.

Continued hype is necessary for the industry, because so much money flowing in essentially allows the big players, like OpenAI, to operate free of economic worry and considerations

The money involved is staggering—Anthropic announced they would compete with OpenAI and raised 2 billion dollars to train their next-gen model, a European counterpart just raised 500 million, etc. Venture capitalists are eager to throw as much money as humanely possible into AI, as it looks so revolutionary, so manifesto-worthy, so lucrative.

While I have no idea what the downloads are going to be for the GPT Store next year, my suspicion is it does not live up to the hyped Apple-esque expectation.

given their test scores, I’m willing to say GPT-4 or Gemini is smarter along many dimensions than a lot of actual humans, at least in the breadth of their abstract knowledge—all while noting even leading models still have around a 3% hallucination rate, which stacks up in a complex task.

A more interesting “bear case” for AI is that, if you look at the list of industries that leading AIs like GPT-4 are capable of disrupting—and therefore making money off of—the list is lackluster from a return-on-investment perspective, because the industries themselves are not very lucrative.

What are AIs of the GPT-4 generation best at? It’s things like:writing essays or short fictionsdigital artchattingprogramming assistance

While I personally wouldn’t go so far as to describe current LLMs as “a solution in search of a problem” like cryptocurrency has famously been described as, I do think the description rings true in an overall economic/business sense so fa

The issue is that taking the job of a human illustrator just. . . doesn’t make you much money. Because human illustrators don’t make much money

While you can easily use Dall-E to make art for a blog, or a comic book, or a fantasy portrait to play an RPG, the market for those things is vanishingly small, almost nonexistent

As of this writing, the compute cost to create an image using a large image model is roughly $.001 and it takes around 1 second. Doing a similar task with a designer or a photographer would cost hundreds of dollars (minimum) and many hours or days (accounting for work time, as well as schedules). Even if, for simplicity’s sake, we underestimate the cost to be $100 and the time to be 1 hour, generative AI is 100,000 times cheaper and 3,600 times faster than the human alternative.

Like, wow, an AI that can write a Reddit comment! Well, there are millions of Reddit comments, which is precisely why we now have AIs good at writing them. Wow, an AI that can generate music! Well, there are millions of songs, which is precisely why we now have AIs good at creating them.

Search is the most obvious large market for AI companies, but Bing has had effectively GPT-4-level AI on offer now for almost a year, and there’s been no huge steal from Google’s market share.

What about programming? It’s actually a great expression of the issue, because AI isn’t replacing programming—it’s replacing Stack Overflow, a programming advice website (after all, you can’t just hire GPT-4 to code something for you, you have to hire a programmer who uses GPT-4

Even if OpenAI drove Stack Overflow out of business entirely and cornered the market on “helping with programming” they would gain, what? Stack Overflow is worth about 1.8 billion, according to its last sale in 2022. OpenAI already dwarfs it in valuation by an order of magnitude.

The more one thinks about this, one notices a tension in the very pitch itself: don’t worry, AI isn’t going to take all our jobs, just make us better at them, but at the same time, the upside of AI as an industry is the total combined worth of the industries its replacing, er, disrupting, and this justifies the massive investments and endless economic optimism.

It makes me worried about the worst of all possible worlds: generative AI manages to pollute the internet with cheap synthetic data, manages to make being a human artist / creator harder, manages to provide the basis of agential AIs that still pose some sort of existential risk if they get intelligent enough—all without ushering in some massive GDP boost that takes us into utopia

If the AI industry ever goes through an economic bust sometime in the next decade I think it’ll be because there are fewer ways than first thought to squeeze substantial profits out of tasks that are relatively commonplace already

We can just look around for equivalencies. The payment for humans working as “mechanical turks” on Amazon are shockingly low. If a human pretending to be an AI (which is essentially what a mechanical turk worker is doing) only makes a buck an hour, how much will an AI make doing the same thing?

, is it just a quirk of the current state of technology, or something more general?

What’s written on the internet is a huge “high quality” training set (at least in that it is all legible and collectable and easy to parse) so AIs are very good at writing the kind of things you read on the internet

But data with a high supply usually means its production is easy or commonplace, which, ceteris paribus, means it’s cheap to sell in turn. The result is a highly-intelligent AI merely adding to an already-massive supply of the stuff it’s trained on.

Was there really a great crying need for new ways to cheat on academic essays? Probably not. Will chatting with the History Buff AI app (it was is in the background of Sam Altman’s presentation) be significantly different than chatting with posters on /r/history on Reddit? Probably not