Evil Geniuses

Evil Geniuses Plot Summary

Introduction

America's economic landscape has undergone a profound transformation since 1970, marking one of the most significant shifts in the nation's history. Before this pivotal decade, the United States experienced what economists call "the Great Compression" - a period when prosperity was broadly shared, income inequality decreased, and the middle class flourished. Workers without college degrees could secure stable jobs with good wages, buy homes, support families, and retire comfortably. But something changed dramatically in the 1970s, setting the nation on a different path. This transformation didn't happen by accident or through inevitable economic forces. It resulted from deliberate policy choices, intellectual movements, and power shifts that rewrote the rules of American capitalism. The story involves the rise of supply-side economics, the weakening of labor unions, financial deregulation, and the triumph of shareholder capitalism over stakeholder capitalism. Understanding this history is essential for anyone seeking to comprehend why American prosperity has become increasingly concentrated at the top while economic insecurity has grown for millions of others. Whether you're interested in economics, politics, or simply wondering how we arrived at today's levels of inequality, this exploration of America's economic divergence provides crucial insights into our present challenges.

Chapter 1: The Postwar Consensus: Shared Prosperity (1945-1970)

The quarter-century following World War II represented a unique period in American economic history - a time of unprecedented shared prosperity that economists now refer to as the "Golden Age" of American capitalism. From 1945 to 1970, the U.S. economy grew at a robust average annual rate of nearly 4%, with productivity increasing around 3% annually. Unlike today, these gains were distributed remarkably evenly across income groups, with wages rising in tandem with productivity across all sectors. This era saw the dramatic expansion of the American middle class. Manufacturing jobs, often unionized, provided good wages and benefits to workers without college degrees. A typical family could support itself on one income, buy a home, afford healthcare, and send children to college without accumulating crushing debt. Corporate executives earned reasonable multiples of their employees' salaries rather than the astronomical differences seen today. The top marginal tax rate remained above 70%, funding infrastructure investments and social programs while preventing extreme wealth concentration. Several key institutions underpinned this shared prosperity. Labor unions represented more than a third of private-sector workers, giving employees collective bargaining power that ensured they received a fair share of economic growth. Financial regulations established during the New Deal prevented excessive risk-taking by banks and maintained stability. Antitrust enforcement limited corporate concentration and preserved competitive markets. These guardrails didn't eliminate capitalism but rather shaped it to produce broadly shared benefits. The postwar consensus wasn't perfect - women and minorities remained economically marginalized, and environmental concerns were largely ignored. Yet it demonstrated that prosperity and relative equality could coexist. As economist John Kenneth Galbraith observed at the time, America had seemingly solved the ancient problem of production and scarcity, creating a society of unprecedented abundance. The challenge now was ensuring this abundance was properly distributed and used for public as well as private benefit. This period established a template for what a well-functioning political economy might look like - one that balanced the dynamism of markets with protections for workers and constraints on concentrated economic power. Americans across the political spectrum largely accepted this model. Even Republican President Dwight Eisenhower acknowledged that attempting to abolish New Deal programs would be politically impossible and economically unwise. This consensus would begin to unravel in the 1970s, setting the stage for a fundamental transformation of American capitalism.

Chapter 2: Seeds of Change: Economic Turbulence and Conservative Revival (1970-1980)

The 1970s marked a critical turning point in American economic history - the moment when the postwar consensus began to fracture amid unprecedented economic challenges. The decade opened with the lingering costs of the Vietnam War straining government finances and closed with the Iranian Revolution triggering another oil shock. In between, Americans experienced a bewildering combination of problems that economists had previously thought impossible: high inflation coinciding with high unemployment, dubbed "stagflation." Several key events defined this turbulent period. President Nixon's 1971 decision to abandon the gold standard ended the Bretton Woods system of fixed exchange rates that had provided international economic stability since World War II. The 1973 OPEC oil embargo quadrupled energy prices virtually overnight, sending shockwaves through an economy dependent on cheap oil. By 1979, inflation reached 13.3%, interest rates approached 20%, and gas lines stretched for blocks as Americans faced an unfamiliar sense of economic vulnerability and limitation. Against this backdrop, a network of conservative intellectuals, business leaders, and wealthy donors began constructing an alternative vision for America's political economy. This movement had been developing since the 1950s in institutions like the University of Chicago's economics department, where Milton Friedman championed free-market ideas that challenged the Keynesian consensus. Their critique gained traction as the economic troubles of the 1970s seemed to discredit government-managed capitalism. As Friedman famously argued: "Inflation is always and everywhere a monetary phenomenon" - placing blame squarely on government policy rather than structural economic changes. The movement gained institutional heft through new think tanks and advocacy organizations. The Heritage Foundation, founded in 1973, provided a platform for conservative policy development. The American Enterprise Institute expanded dramatically. The Business Roundtable, formed in 1972, gave CEOs unprecedented coordination in lobbying efforts. A confidential memo by future Supreme Court Justice Lewis Powell in 1971 provided something of a blueprint, urging business leaders to mount a coordinated campaign to reshape public opinion and policy. By the end of the decade, this conservative movement had gained significant political influence. The California tax revolt, culminating in 1978's Proposition 13, signaled growing anti-tax sentiment. Even Democratic President Jimmy Carter embraced deregulation of airlines, trucking, and banking. The appointment of Paul Volcker as Federal Reserve chairman in 1979 prioritized inflation-fighting over full employment, regardless of the short-term economic pain this would cause. These developments set the stage for the Reagan Revolution that would follow, transforming what had been a fringe economic philosophy into the new orthodoxy. The economic turbulence of the 1970s didn't make this transformation inevitable, but it created conditions where Americans became receptive to dramatic changes in how their economy was organized and regulated - changes that would fundamentally alter the distribution of economic power and rewards for decades to come.

Chapter 3: The Reagan Revolution: Rewriting Economic Rules (1980-1988)

Ronald Reagan's election in 1980 represented far more than a change in administration - it marked the triumph of a fundamentally different vision of political economy that would permanently alter the relationship between government, business, and citizens. Reagan entered the White House with a clear mandate to transform America's economic landscape, famously declaring in his inaugural address: "Government is not the solution to our problem, government is the problem." The cornerstone of Reagan's economic program was the Economic Recovery Tax Act of 1981, which slashed the top marginal income tax rate from 70% to 50% (and later to 28% in the 1986 tax reform). Corporate taxes were also significantly reduced. These tax cuts were justified by "supply-side economics" - the theory that reducing tax rates would stimulate so much economic growth that government revenues would actually increase. As Reagan's budget director David Stockman later admitted in a candid interview: "The supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory." Deregulation accelerated across multiple industries under Reagan's administration. Environmental regulations, labor laws, and antitrust provisions all saw weakened enforcement. Financial deregulation proved particularly consequential, with the relaxation of banking rules enabling new forms of speculation and risk-taking. The Garn-St. Germain Act of 1982 deregulated savings and loan institutions, leading to a boom-bust cycle that eventually required a taxpayer bailout. Meanwhile, antitrust enforcement was fundamentally reoriented under the influence of the "Chicago School" of economics, which argued that consumer prices, not market concentration, should be the primary concern of regulators. The labor movement suffered devastating setbacks during this period. When air traffic controllers went on strike in 1981, Reagan fired them all - sending a powerful signal about the changed relationship between government and organized labor. Companies increasingly adopted aggressive anti-union strategies, often closing unionized facilities and relocating to regions or countries with lower labor costs. Manufacturing employment declined precipitously, with the steel industry losing 350,000 jobs and the auto industry shedding 200,000 positions. By decade's end, union membership had fallen from 23% to 16% of the workforce. A new corporate culture emerged that prioritized shareholder value above all else. Companies that had once balanced the interests of workers, communities, and shareholders increasingly focused exclusively on stock prices and quarterly earnings. Corporate raiders used leveraged buyouts to take over companies, often dismantling them for short-term profit. CEO compensation skyrocketed, with the ratio of CEO-to-worker pay rising from 30:1 in 1978 to nearly 60:1 by 1989. The Reagan Revolution's legacy extended far beyond his presidency. Subsequent administrations, both Republican and Democratic, largely accepted the new economic framework. The idea that markets should be left largely unregulated, that unions represented an impediment to economic efficiency, and that tax cuts for the wealthy would benefit the entire economy became the new consensus. This ideological shift fundamentally altered how economic gains would be distributed for decades to come, setting the stage for the dramatic increase in inequality that would follow.

Chapter 4: Financialization and Corporate Power: Wall Street's Ascendance (1990-2008)

The 1990s and early 2000s witnessed the full flowering of the economic transformation that began in the previous decade - the rise of finance from a supporting player to the dominant force in the American economy. This period of financialization fundamentally altered how businesses operate, how wealth is created and distributed, and how economic policy is made, with Wall Street's influence expanding far beyond traditional banking into virtually every aspect of economic life. The deregulation of financial markets provided the essential foundation for this transformation. The dismantling of New Deal-era financial regulations began gradually but accelerated dramatically in the 1990s. The Clinton administration, with Treasury Secretary Robert Rubin (formerly of Goldman Sachs) and his deputy Larry Summers leading the charge, supported the repeal of the Glass-Steagall Act in 1999, eliminating the Depression-era separation between commercial and investment banking. The Commodity Futures Modernization Act of 2000 exempted derivatives from regulation. These changes unleashed a wave of financial innovation and consolidation, creating "too big to fail" institutions that combined traditional banking with high-risk trading activities. Financial innovation created powerful new instruments that transformed how money flowed through the economy. Mortgage-backed securities, collateralized debt obligations, credit default swaps, and other derivatives allowed financial institutions to package, slice, and trade risk in unprecedented ways. While these innovations ostensibly improved market efficiency, they also introduced new forms of systemic risk that few regulators fully understood. The volume of financial transactions exploded - by 2007, the notional value of all derivatives worldwide reached $596 trillion, more than ten times global GDP. Wall Street's growing power reshaped corporate America. The "shareholder value" revolution pressured companies to prioritize short-term stock prices over long-term investments or worker welfare. Corporations increasingly viewed themselves as financial entities rather than producers of goods and services. General Electric, once America's premier industrial company, derived more than half its profits from its financial arm, GE Capital, by the early 2000s. Companies spent growing portions of their cash on stock buybacks rather than research and development or worker compensation. Between 2003 and 2012, S&P 500 companies spent 54% of their earnings on stock repurchases. The financial sector's share of the economy grew dramatically. Finance's contribution to GDP rose from about 15% in the early 1970s to nearly 25% by 2007. The industry's share of corporate profits increased even more dramatically, from about 15% to over 40% during the same period. Wall Street compensation soared, with financial professionals earning substantial premiums over similarly educated workers in other sectors. By 2007, the average securities industry employee in New York earned over $400,000 annually - more than five times the average private sector wage. This financialization ultimately led to the 2008 financial crisis, when the housing bubble burst and revealed the fragility of a system built increasingly on debt and financial engineering. When the system crashed, the government rescued financial institutions while millions of ordinary Americans lost homes and jobs. The crisis revealed how financialization had transformed even something as fundamental as homeownership into a vehicle for speculation and wealth extraction, with devastating consequences for many communities. Despite the severity of the crisis, the fundamental power of finance in the American economy remained largely intact in its aftermath.

Chapter 5: The Great Uncoupling: How Workers Lost Their Share

For most of the 20th century, Americans shared proportionately in national prosperity. When the economy grew, everyone's income grew at roughly the same rate. Workers' wages increased in tandem with productivity gains, ensuring that the benefits of economic growth were widely distributed. But around 1980, this fundamental economic relationship shattered in what economists call "The Great Uncoupling." While the economy continued to grow and productivity increased, most Americans' incomes essentially flatlined for forty years. Only the fortunate top fifth continued seeing their incomes rise as they had in the past. This transformation wasn't entirely due to impersonal economic forces. Some changes were global and difficult to stop - automation and globalization were reducing the need for manufacturing workers in all developed countries. The collapse of the steel industry around 1980 was particularly dramatic, as it had seemed secure with its well-paid union jobs. In just three years, almost 3 million U.S. manufacturing jobs disappeared. By the end of the century, U.S. factories were producing two-thirds more goods than in 1980, but with a third fewer workers. However, the specific American response to these challenges was shaped by deliberate policy decisions that favored business and the wealthy. The disempowerment of workers relative to employers was perhaps the most significant change. As British journalist Paul Mason observed, the destruction of labor's bargaining power became "the essence of the entire [conservative] project." After the Depression, New Deal, and World War II, more than a third of U.S. private sector workers had been unionized. This unionization had helped ensure that prosperity was widely shared. Reagan's firing of the air traffic controllers in 1981 was the turning point. When 13,000 controllers went on strike, Reagan gave them two days to return to work. The 90% who didn't were fired and prohibited from ever holding a federal job again. This action emboldened private employers to take similar approaches. Companies across the country began hiring permanent replacements for striking workers, a practice that had been considered unacceptable for decades. As a result, strikes rapidly became obsolete. Between World War II and 1980, there had been at least 200 major strikes every year; since 1981, there have never been 100 in any year. Beyond breaking unions, employers found other ways to reduce workers' power and pay. They increasingly outsourced work to contractors who paid lower wages and used nonunion workers. Companies also became extremely large, giving them more power as employers in local labor markets. Meanwhile, the federal government instituted structural tilts favoring business - for instance, by freezing the minimum wage and overtime thresholds, allowing inflation to effectively cut workers' pay over time. The results were dramatic. The share of national income going to labor rather than capital became smaller. Until 1980, America's split of "gross domestic income" was around 60-40 in favor of workers, but then it began dropping toward 50-50. That change amounts to almost $1 trillion a year, an annual average of around $5,000 that each employed person isn't being paid. This represents perhaps the largest and fastest upward redistribution of wealth in history, fundamentally altering the economic landscape for most Americans.

Chapter 6: The New Gilded Age: Inequality, Insecurity and Declining Mobility

The decades since 1980 have witnessed the emergence of a New Gilded Age in America - a period of stunning wealth concentration at the top, stagnation for the middle class, and declining economic security and mobility for most Americans. This transformation represents a fundamental reversal of the more egalitarian economic order that prevailed from the 1940s through the 1970s, creating levels of inequality not seen since the original Gilded Age of the late 19th century. The statistics tell a stark story. Between 1980 and 2018, the income share of the top 1% more than doubled, from around 10% to over 20% of national income. Meanwhile, the bottom 50% saw their share fall from about 20% to just 12%. Wealth concentration is even more extreme - the richest 1% now own more wealth than the bottom 90% combined. CEO compensation has skyrocketed, with the CEO-to-worker pay ratio increasing from 30:1 in 1978 to over 300:1 today. As Warren Buffett candidly admitted, "There's class warfare, all right, and it's my class, the rich class, that's making war, and we're winning." For middle and working-class Americans, economic insecurity has become the new normal. Wages for the typical worker have barely kept pace with inflation since the late 1970s, despite substantial productivity growth. The manufacturing jobs that once provided stable, well-paying employment for workers without college degrees have largely disappeared, replaced by service sector jobs that typically offer lower pay, fewer benefits, and less security. Traditional defined-benefit pension plans have been replaced by 401(k)s that shift investment risk onto individual workers. Healthcare costs have risen dramatically, with more expenses shifted to employees through higher deductibles and co-payments. The changing nature of work has further increased economic precarity. Temporary, part-time, and contract arrangements have proliferated, creating what some call the "gig economy." While offering flexibility for some, these arrangements typically provide little stability or protection for workers. Companies increasingly treat labor as a variable cost to be minimized rather than a valuable asset to be developed. As one economist observed: "The implicit contract between employers and workers that characterized the postwar era - offering job security, regular raises, and benefits in exchange for loyalty and hard work - has effectively been nullified." Perhaps most troubling is the decline in economic mobility - the ability to improve one's economic position over time. Studies show that children born in the 1980s had only a 50% chance of earning more than their parents, compared to 90% for children born in the 1940s. The United States now has lower intergenerational mobility than most other developed nations, contradicting the cherished American belief that anyone can rise through hard work regardless of their starting point. Zip code has become increasingly determinative of economic destiny, with children from poor neighborhoods facing dramatically worse prospects than those from affluent areas. These economic trends have profound social and political consequences. Communities that once thrived on manufacturing have experienced devastating declines, leading to increased substance abuse, family breakdown, and "deaths of despair." Political polarization has intensified as Americans increasingly sort themselves into different economic realities with divergent worldviews. Trust in institutions has eroded as many Americans conclude the system is rigged against them. The New Gilded Age represents not just an economic transformation but a fundamental shift in America's social contract.

Chapter 7: Alternative Models: Nordic Capitalism and Social Democratic Solutions

As America's experiment with laissez-faire capitalism produced growing inequality and insecurity, alternative models in other developed nations demonstrated that different approaches were possible. The Nordic countries - Denmark, Sweden, Norway, and Finland - have been particularly successful at combining economic dynamism with social solidarity, offering potential lessons for addressing America's economic challenges. The Nordic model combines several key elements that distinguish it from American capitalism. These countries maintain robust social safety nets, including universal healthcare, free or low-cost higher education, generous parental leave, affordable childcare, and strong unemployment benefits. These programs are funded through relatively high taxation, with total tax revenues typically around 40-45% of GDP compared to about 25% in the United States. However, contrary to American stereotypes, these economies are not socialist - they feature strong private sectors, open trade, and flexible labor markets that in some ways are more dynamic than America's. Labor relations in Nordic countries follow a "flexicurity" model that balances flexibility for employers with security for workers. Union membership remains high (around 70% in Denmark and Sweden), but unions work cooperatively with employers on training, productivity, and adaptation to technological change. Collective bargaining occurs primarily at the industry level rather than company by company, establishing baseline standards while allowing for local flexibility. This approach has helped these countries maintain manufacturing sectors while adapting to globalization. These societies invest heavily in human capital development. Education systems focus on developing both technical skills and critical thinking abilities. Lifelong learning is supported through adult education programs and retraining opportunities for displaced workers. Rather than protecting specific jobs, Nordic policies aim to protect workers through transitions, maintaining their incomes and helping them develop new skills when industries change. As one Danish labor leader explained: "We don't protect jobs; we protect people." The results of these policies have been impressive. The Nordic countries consistently rank among the world's leaders in innovation, productivity, and competitiveness despite their comprehensive welfare states. Income inequality is much lower than in the United States, with stronger social mobility - children's economic outcomes are less determined by their parents' status. These societies also report higher levels of happiness and life satisfaction according to international surveys. Other developed nations offer additional models. Germany's system of "co-determination" gives workers representation on corporate boards, encouraging long-term thinking and investment in employee skills. Canada maintains stronger financial regulations and a more comprehensive healthcare system than its southern neighbor while still fostering a dynamic economy. Japan and South Korea achieved rapid development through industrial policies that guided market forces toward strategic national priorities. These alternative approaches suggest that many of America's economic problems are not inevitable results of globalization or technological change but rather consequences of specific policy choices. Higher minimum wages need not cause massive unemployment. Universal healthcare need not stifle innovation. Strong labor protections need not undermine competitiveness. Progressive taxation need not destroy incentives for entrepreneurship. These international examples demonstrate that market economies can be structured in ways that produce broadly shared prosperity rather than concentrated wealth and power.

Summary

The transformation of America's political economy since 1970 represents one of the most consequential shifts in the nation's history. What began as a reaction to the economic turbulence of the 1970s evolved into a fundamental rewriting of the rules governing capitalism, with profound effects on inequality, corporate power, and economic security. The intellectual foundations laid by conservative economists and legal scholars, the policy changes implemented by the Reagan administration and its successors, the reshaping of the judiciary, and the financialization of the economy all contributed to a system that has produced spectacular gains for those at the top while leaving many Americans struggling with stagnant wages and diminished opportunities. This historical transformation offers crucial lessons for our current moment. First, economic outcomes are not simply the result of impersonal market forces but are shaped by deliberate policy choices and power relationships. The rules governing taxation, corporate governance, labor relations, and market competition are not natural laws but human constructions that can be changed. Second, ideas matter profoundly in shaping these rules - the patient investment in building an intellectual counter-establishment paid enormous dividends for conservative economic interests. Finally, alternative models exist and thrive around the world, demonstrating that societies can combine economic dynamism with greater equality and security when they choose to do so. As Americans confront growing economic challenges and technological disruption, these lessons suggest both the possibility and necessity of once again transforming our political economy to create prosperity that is truly shared.

About Author

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Kurt Andersen

Kurt Andersen is the author of the novels Turn of the Century, Heyday, and True Believers, and and, with Alec Baldwin of You Can't Spell America Without Me. His non-fiction books include Fantasyland, Reset and The Real Thing.He is also host of the Peabody Award-winning weekly public radio program Studio 360,.Previously, Kurt was a co-founder and editor-in-chief of the satirical magazine Spy, editor-in-chief of New York magazine, a columnist for New York, staff writer at The New Yorker, and design and architecture critic for Time.

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