October 16, 2017, Issue
How Many Palm Beach Mansions Does a Wall Street Tycoon Need?
As many as destroying America’s hometown newspapers can buy him.
By Julie Reynolds
September 27, 2017
In 2013, a reclusive New York tycoon and his wife began buying up expensive Palm Beach real estate—lots of it. First they bought seven mansions for a total of $23 million. Then another four “moderately priced” homes for $8.4 million. Then five more for $23 million. None of them were purchased in the tycoon’s name. They weren’t purchased in his wife’s name, either. Instead, the homes were deeded to limited-liability companies, including L. Jakes LLC and 124 Coconut Row LLC.
Think of those luxury homes as the shuttered offices and fired workers of hometown newspapers across the United States, because gutting those newspapers helped make spending $57.2 million on 16 Palm Beach mansions a trifling expense for the tycoon.
His spending spree began after the tycoon acquired two firms, the Journal-Register and MediaNews Group, which would merge into one of America’s largest newspaper chains, Digital First Media. It continued under the veil of yet more limited-liability companies that likewise owned luxury homes. The only thing linking all these purchases was the same postal address in Manhattan’s glamorous Lipstick Building. There, within the tycoon’s privately held investment firm, his personal real-estate deals were commingled with the sales of scores of newsrooms, printing plants, and office buildings that previously belonged to small hometown newspapers across the United States.
The tycoon continued to finance his lavish lifestyle by purchasing and then destroying newspapers. His henchmen—young executives in expensive suits with no experience in the news business—laid off hundreds of journalists and other news workers. They ultimately closed or radically downsized such venerable papers as the Oakland Tribune, the San Jose Mercury News, the St. Paul Pioneer Press, and The Denver Post. At the Mercury News, the newspaper’s printing press was literally dismantled and carted away, which one staff reporter likened to “watching a heart being ripped out.”
The tycoon behind all this private profit and public destruction is Randall D. Smith, a seasoned Wall Street operator in his mid-70s who shuns publicity. Smith is the founder and chief of investments at Alden Global Capital, which manages $2 billion worth of assets. He has no experience with actually managing a newspaper, and his professional history reflects no interest in journalism beyond profiteering. Rather, he is what is known on Wall Street as a “vulture capitalist.” Or, as he prefers to phrase it in one of the company’s brochures, Smith invests in “distress.”
“Distress” is an apt word for the current state of America’s newspapers, and Smith isn’t the only financial mogul gobbling them up. On September 4, the New York Daily News was purchased by Tronc, the media conglomerate whose majority shareholder is Michael W. Ferro, the business magnate who founded the investment firm Merrick Ventures.
Don’t just blame the Internet for journalism’s decline. Old-fashioned capitalist greed also strangles newspapers.
The shrinking and disappearing of hometown newspapers has done incalculable damage to Americans’ knowledge of the world around them. Democratic self-governance presumes an informed public, but the -hollowing-out of America’s newspapers, in both their online and print versions, leaves citizens increasingly ignorant of vital public matters. It also undermines the press’s ability to hold elected officials and powerful interests to account. When vulture capitalism eliminates reporters and closes hometown papers, where can citizens turn for in-depth local news? Who will cover City Council meetings, school-board decisions, election campaigns, and other staples of civic life? And who will call out corruption and incompetence on the part of local officials or private companies?
The most commonly cited culprit for the decline of America’s newspapers is the Internet and the assumption that no one needs to pay for news anymore. But simple capitalist greed is also to blame. Since 2004, speculators have bought and sucked dry an estimated 679 hometown newspapers that reached a combined audience of 12.8 million people.
Unlike large corporate owners in the past, the stated goal of the investment firms is not to keep struggling newspapers alive; it is to siphon off the assets and profits, then dispose of what little remains. Under this strategy, America’s newsrooms shriveled from 46,700 full-time journalists in 2009 to 32,900 in 2015—a loss of roughly one journalist out of every three. The American Society of Newspaper Editors stopped trying to estimate the number of working journalists in 2016 because “layoffs, buyouts, and restructuring are a norm.”
Over the past six years, Digital First Media has become America’s second-largest newspaper chain in terms of circulation. Even as Digital First has downsized or closed its papers, it has held its edge in circulation by continually buying up more publications, such as last year’s acquisition of The Orange County Register. Digital First’s annual profits have averaged a handsome 10 to 12 percent under Alden Global Capital’s management, according to industry analysts, with its smaller publications yielding more than 20 percent. (Because Alden Global Capital is privately held, its financial statements are not publicly available.) Since 2015, the company has intensified its cost-cutting to the point that it imposes budget cuts and layoffs at twice the average rate for US newspapers.
Alden Global Capital’s strategy appears to have worked, at least for its investors: A memo that CEO Steve Rossi sent to employees in July stated that the company was “solidly profitable” in fiscal year 2017, and that “The company’s performance in advertising revenue has been significantly better than that of our publicly traded industry peers over the past couple of years.” Rossi’s memo did not mention the new round of layoffs he had overseen just a week earlier.
Neither Smith nor Rossi responded to The Nation’s repeated requests for comment.
There’s a reason that hedge funds like Smith’s are known in Wall Street parlance as “vulture funds”: They seek out struggling, bankrupt companies—or countries—to invest in at rock-bottom prices. Then they find ways to squeeze out maximum profit, from cutting costs to collecting debt repayments at high interest rates. When the investors sense that profits are drying up, they leave the bones behind as they fly off in search of the next opportunity.
Often these funds are shrouded in secrecy. Originally incorporated in the Bailiwick of Jersey, Alden Global Capital bases many of its funds in the Cayman Islands, another location known as a tax haven. Other Alden funds are based in Delaware, whose tax-privacy laws are more generous than New York’s.
Like Donald Trump’s myriad firms, Alden’s investments are difficult to track through the maze of limited-liability companies. Alden’s few Securities and Exchange Commission filings show that in March 2017, its primary company, Alden Global Capital LLC, managed $2.1 billion in assets for 10 unnamed clients. The minimum investment is $2 million.
Is There a Business Model for Serious Journalism in the Age of Trump?
This lack of transparency, along with investors’ devotion to maximizing profits no matter the social cost, troubles critics. “These private-equity firms, their first obligation is to their shareholders,” says Penelope Muse Abernathy, a former Wall Street Journal and New York Times executive and the author of The Rise of a New Media Baron and the Emerging Threat of News Deserts. Community service is not part of the media barons’ vision, Abernathy notes: “Hedge funds and private-equity companies have a very short time horizon.”
In less than a decade, newspaper ownership in the United States has changed at a dizzying pace; these days, it rests increasingly in the hands of a few largely anonymous investment funds. Of the 10 largest newspaper owners in the country, six are now investment firms, Abernathy reports. In addition to Alden Global Capital, the major players include New Media/GateHouse, Community Newspaper Holdings Inc. (CNHI), Tronc (formerly Tribune Publishing, owner of the Chicago Tribune and the Los Angeles Times), and Warren Buffett’s Berkshire Hathaway. Another large chain, Gannett, is publicly traded, but nearly 95 percent of its stock is owned by investment firms, according to the financial website Post Analyst.
While some may shrug off this development as irrelevant in the era of Facebook news, a December 2016 Nielsen Scarborough study found that newspapers and their websites still reach 69 percent of the US population every month. And it’s not just old folks clinging to their old-media ways: “Younger readers now account for a greater percentage of newspaper readers,” the ratings agency reported. “Notably, Millennials 21–34 make up 25% of the US population and now represent 24% of the total monthly newspaper readership” (a total that includes online readers).
Little-known investment firms like Civitas Media have bought up newspapers in “the poorest and most rural” communities, Abernathy notes, where those outlets are often the only source for local news. These companies then “pursue a harvesting strategy in which they ‘manage the decline’ of the assets in their portfolio. If their newspapers fail, and viable alternatives do not arise, many communities across the country are in danger of becoming news deserts.”
In the San Francisco Bay Area, for example, Smith’s Digital First Media has shut down many of its small-town papers, including the Alameda Times-Star, the Fremont Argus, and the Hayward Daily Review. In 2016, it also closed the 142-year-old Oakland Tribune, folding it and the former Contra Costa Times of Walnut Creek, California, into brief sections of a new daily named the East Bay Times.
Even in areas that aren’t complete news deserts, the decrease in coverage is having dramatic effects. “It’s not just the towns without a paper, but the places where you’ve lost coverage,” Abernathy says. “Reporters barely have time to even fact-check. They end up covering nothing but events or meetings—and then they have to cut back on the meetings.”
According to a study by Patrick Sims, a former research associate at the University of North Carolina’s School of Media and Journalism, the state’s “investment-owned” newspapers scored the worst when it came to coverage of Hurricane Matthew, which devastated parts of North Carolina in 2016. The stories in investment-owned papers on Matthew’s aftermath “tended to be less in-depth—and provide less context—than the stories that appeared in the independently owned [newspapers],” Sims wrote. The investment-owned papers also scored poorly for their coverage of the local elections in 2016; only a locally owned paper, The Pilot of Southern Pines, published important voter information well in advance of Election Day, an important service in an era when more citizens vote early by mail.
Vulture capitalism’s longer-term impact on newspapers is, paradoxically, to drive away the business’s customers. When news-business analyst Ken Doctor gives presentations, he likes to show a picture of two Coke bottles. One is a two-liter bottle that used to sell for a buck; next to it is a one-liter bottle that is now being offered for $2. That’s exactly what downsized newspapers are pitching to their readers today, Doctor says, so it’s no wonder that circulation, subscriptions, and advertising are tanking: “Tell me another industry that’s been able to halve the product and sell it for twice as much.”
Pete Carey is a two-time Pulitzer Prize winner and investigative reporter who left the San Jose Mercury News last year in a round of buyouts that included the departure of Harvard Nieman fellow Joe Rodriguez and longtime editor David Early. Carey was there when the Merc swelled to 100 daily pages and a newsroom of 400, bolstered by Silicon Valley help-wanted ads. “Then Silicon Valley took the money back—and how,” he says, referring to the abrupt shift of classified advertising to the Internet. After revenues sank and the 2009 recession hit, Alden Global Capital seized the opportunity, scooping up the Merc’s bankrupt parent company, MediaNews, in 2011.
The sharp young men at Alden first sold off the building that had housed the Mercury News since 1967, Carey recalls. “Then they sold off the real estate. I watched the presses being dismantled…. The guy who installed the presses was back there with tears in his eyes.”
Six of the 10 largest US newspaper owners are now investment firms.
Thomas Peele is another prize-winning investigative reporter at the Merc. He won a Pulitzer for leading and writing a series of investigative stories following the Ghost Ship warehouse fire in Oakland, a prize shared by several others in the Merc and East Bay Times newsrooms. Days after the prize was announced, Digital First Media proceeded with another round of layoffs, gutting the staff by 20 percent. It was all part of meeting a preordained profit margin set by the higher-ups at Alden.
Doctor believes it doesn’t have to be this way, and he’s trying to make the case for reinvestment in newspapers—facing head-on the disruption that new technology brings while exploring ways to innovate and survive. That usually means putting cash back into a business, not siphoning it away.
One encouraging example is blossoming in Doctor’s home state of Minnesota. In 2014, Glen Taylor, the owner of the Minnesota Timberwolves, purchased the Minneapolis Star-Tribune from the investment firm Avista Capital Partners. Taylor charted a long-term course for the paper that didn’t require it to reach large profit margins every year in order to be sustainable.
On a recent visit, Doctor was thrilled to see how thick the Star-Tribune was—“like an old-fashioned Sunday paper!” The management team “are very good business-people,” Doctor says. “They’ve added another DC correspondent and another at the Statehouse. They understand what keeps people reading, because they have a long-term vision. They know that at the root of it is their service to the community.”
Abernathy cites another success story, The Pilot in Southern Pines, North Carolina, whose circulation of 14,000 is roughly equal to the town’s entire population. With a newsroom of 12, The Pilot publishes twice weekly in print and frequently online. It provides the staples of local news—high-school sports scores, town-council election results—but it also publishes five arts-and-culture magazines, a statewide business journal, and a few telephone directories. And it operates a cozy storefront called the Country Bookshop. “We felt this community would be less without a local bookstore,” says Pilot editor John Nagy. “So we went out and bought it. And it’s finally making a profit.
“What all that’s done is diversify our revenues, diversify our outlook, and diversify our business skills,” Nagy adds. “Part of the print industry’s problem today is, they don’t believe in themselves. Publishers like GateHouse, Gannett, McClatchy, Berkshire Hathaway, they’re managing margins. They’re not looking for real, aggressive growth strategies that have a little risk attached.”
Some will argue that only a nonprofit model can keep local news safe from the clutches of the vultures. It’s an experiment being played out in Philadelphia, where, in January 2016, philanthropist H.F. Lenfest donated the Inquirer, Daily News, and Philly.com to the Philadelphia Foundation. In August, Britain’s The Guardian announced that it had formed a nonprofit US adjunct to produce the kind of important journalism that investors see as too costly.
Ultimately, it may be a mix of altruistic investors, nonprofits, involved local owners, and citizen demand that keeps local news alive. Whether that news is printed on paper or pushed to a smartphone isn’t nearly as important as society’s willingness to invest in the act of reporting itself—an act central to our founders’ vision of democracy.
Julie Reynolds is an investigative journalist and the author of Blood in the Fields. She has written for NPR, PBS, and the NewsGuild, which represents unionized media workers, including at Digital First Media.
How Citizen Action Saved the New York Public Library
Grassroots activists thwarted a costly and destructive renovation scheme—but the NYPL still lacks effective governance.
By Scott Sherman
One morning in the spring of 2010, while standing in line in the New York Public Library’s majestic Rose Reading Room, I was approached by a middle-aged librarian, a man I had known for years; we had common interests and would frequently chat while he was on duty. He read The Nation and knew I wrote for it. On this particular morning, he leaned over and whispered into my ear: “Our trustees are planning to sell the library across the street”—by which he meant the Mid-Manhattan Library, a decrepit facility on 40th Street and Fifth Avenue. “It stinks,” he continued. “You should look into it.”
I was busy with other projects and let his tip go. But a year later, I received an assignment from this magazine to profile Anthony Marx, the New York Public Library’s incoming president. Early in my research, I quickly grasped what the librarian had tried to tell me a year earlier: The NYPL’s leadership—aided by the consulting firm Booz Allen Hamilton—had conceived a wildly ambitious transformation plan. The grand library at 42nd Street and Fifth Avenue would undergo a massive renovation in which 3 million books would be removed from the historic stacks in the center of the building and sent to an off-site storage facility; the stacks would then be demolished, and a new, modern library (designed by the celebrated British architect Norman Foster) would be built in the space that, for a century, had held the books. Foster would create a library within a library, one that carried a heavy price tag: $300 million. To pay for this Central Library Plan (CLP), two nearby libraries that occupied prime real estate—the Mid-Manhattan Library and the Science, Industry, and Business Library on 34th Street and Madison Avenue—would be sold. In a soaring Manhattan real-estate market, the NYPL (which is the subject of Frederick Wiseman’s latest film, Ex Libris) would not be excluded from its share of the spoils.
But the CLP was a castle in the sky, developed—in absolute secrecy—in the heady, freewheeling years before the crash of 2008, when many American libraries and museums were hastily expanding their facilities. The NYPL, whose finances have been precarious since the late 1950s, had virtually no money of its own to invest in this real-estate and construction scheme; moreover, the sale of the two midtown libraries would not generate enough funds to cover the cost of the $300 million renovation project at 42nd Street. Taxpayer money would be required, and then-Mayor Michael Bloomberg was ready to give it: $150 million in city funds. The library’s most powerful trustee, Stephen Schwarzman—chairman of the investment firm Blackstone, and now an adviser to President Trump—was also firmly committed to Foster’s renovation and was prepared to help pay for it.
This is a slightly revised afterword to the paperback edition of Patience and Fortitude: Power, Real Estate, and the Fight to Save a Public Library, just published by Melville House.
When the public learned about a plan that Sam Roberts, the urban-affairs correspondent for The New York Times, called “radical,” dismay and fury ensued. Two thousand scholars and writers signed a petition urging its cancellation; two prominent architecture critics (the late Ada Louise Huxtable of The Wall Street Journal and Michael Kimmelman of the Times) published devastating critiques; and a small but determined group of activists began to coalesce, with the aim of saving both the 42nd Street and Mid-Manhattan libraries.
These citizens—bookworms, retired librarians, grassroots organizers, historic preservationists—worked indefatigably for nearly two years. They used innovative protest tactics and built a wide-ranging coalition against the NYPL. They also convinced Bill de Blasio, then campaigning for mayor, to oppose the CLP. When de Blasio took office, he honored his campaign promise and told the NYPL that it could not sell the Mid-Manhattan Library; he also put a stop to Foster’s plan for the 42nd Street building.
Days later, the NYPL admitted that its estimate of $300 million for Foster’s renovation was far too low. The real price tag was $500 million—a sum, according to library staff members, that might have bankrupted the fragile NYPL, which operates nearly 100 branch libraries in the city, many of them in need of extensive repairs. The aborted CLP had cost the library, by its estimate, $18 million; my own estimate is much higher. Foster kept $9 million for a renovation that was never undertaken.
A calamity was averted: The activists and Mayor de Blasio had saved one of the world’s greatest libraries. I narrated these events in my 2015 book, Patience and Fortitude: Power, Real Estate, and the Fight to Save a Public Library.
Three and a half years after de Blasio’s intervention, and two years after the publication of my book, there are reasons for both optimism and concern about the overall direction of the NYPL.
The damage wrought by the CLP is strikingly evident on 53rd Street. Here, across from the Museum of Modern Art, at the base of a luxury hotel and apartment complex, is a new NYPL facility—compact, modern, soulless, cramped. For more than five decades, this was the site of the Donnell Library, adored by generations of New Yorkers for its wide-ranging collections, its congeniality, its quirkiness, and its community spirit. In 2007, during the first salvo of the CLP—undertaken four years before the full details of the plan were revealed—then–NYPL president Paul LeClerc sold the land beneath the Donnell to a hotel and travel company, Orient-Express Ltd. But the crash of 2008 wounded Orient-Express, and the Donnell Library sat empty for years. A new buyer, who was quick to see the property’s potential, was eventually found. The NYPL was paid $59 million for the land, just steps from MoMA. When the luxury tower was built, after the demolition of the Donnell, the penthouse apartment alone was advertised for $60 million, leading many observers to conclude that the NYPL had undersold the property.
The new library, which cost the NYPL $20 million to build, opened in June 2016. “Finally! After eight bookless years,” wrote Justin Davidson, the architecture critic for New York magazine, “53rd Street has its library back—if that’s the right word for a sleek but shrunken pit fitted out with bleachers, bar stools, and a megascreen, plus a smattering of circulating volumes.” Davidson’s conclusion: “Neither architects nor librarians shaped this branch; a real-estate deal did, one that reserved the cream of the square footage for the hotel and condo above, and sloughed off the leftovers on the public.”
Nicole Gelinas of City Journal, one of the few journalists in New York who monitors public libraries, was dismayed by the absence of natural light and the limited number of books on the premises: just 20,000, “a mere 7 percent of the previous holdings.” For Gelinas, the Donnell debacle is “one of the worst decisions made by a local public institution in decades.”
Following the CLP’s cancellation in 2014, the library’s leadership has been substantially altered. Despite a stormy tenure, Marx remains as president, but two key internal strategists for the plan have departed. The Manhattan real-estate developer Marshall Rose, who did so much to conceive and execute the scheme, is no longer an active trustee; and David Offensend, the swaggering chief operating officer (and former investment banker) who was Rose’s principal staff collaborator, quietly resigned in early 2014, just as the controversy over the Foster plan was reaching its crescendo. Offensend’s replacement was Iris Weinshall, a former high-ranking administrator at the City University of New York (CUNY) and the wife of Senator Chuck Schumer.
The renovation plan was a castle in the sky, developed in absolute secrecy in the years before the crash of 2008.
A shrewd move by Marx and the trustees was the hiring of William Kelly, a literary scholar and former interim chancellor of CUNY, as the director of the research division in late 2015. Kelly is now the NYPL’s liaison to its critics, who have welcomed his arrival. Says the historian David Nasaw, who was a plaintiff in a lawsuit to halt the CLP: “Kelly has highlighted the importance of the research collections—and their maintenance, expansion, and accessibility—to the NYPL’s mission and, I think, convinced many of the trustees of his point of view.” (Some trustees view the research division as a money pit.) Kelly invited two vocal critics, the historian Joan Scott—who, with the Princeton historian Stanley Katz, ignited the NYPL wars with an online petition in 2012—and the Pulitzer Prize–winning biographer Annalyn Swan, to join a research advisory council devoted to the needs of writers and scholars. Scott and Swan have found Kelly a capable, open-minded interlocutor. “His appointment was one of our victories,” says Scott. “Of that I’m sure.”
The retention of the mid-Manhattan Library was a major victory for the critics, and a triumph for all New Yorkers who value public space in the heart of Manhattan. In late 2016, the library’s trustees approved a $200 million renovation plan for that decaying facility. Marx, who from 2011 to 2014 labored tirelessly to sell the Mid-Manhattan Library to real-estate developers, did a somersault and is now the principal booster for its new iteration: “We can finally give New York the central branch library it deserves,” he told The New York Times in November 2016. He promised to retain its substantial book collection, while also providing meeting spaces, a cafe, and a rooftop terrace. It will be, in his words, the “largest renovation” in the NYPL’s history; construction will begin soon. (When the Mid-Manhattan reopens in 2020, it will be renamed the Stavros Niarchos Foundation Library.)
Following a difficult period, the 42nd Street Library has been revitalized. I left the United States in 2014, a few weeks after finishing the reporting for Patience and Fortitude. On a visit this past April, I found the building humming with energy: The Rose Reading Room, closed for two and a half years’ worth of ceiling repairs, looked magnificent; small rooms that were vacant from 2011 to 2014 had become quiet study areas; attractive new signage was added; the sleepy Periodicals Room had been enlivened; and the exhibitions on display (“Latin America in Photographs,” “Love in Venice”) were captivating. Even the restrooms were clean, properly maintained, and well lit.
Still, troubles remain at 42nd Street. Says Charles Warren, the president of the Committee to Save the New York Public Library (CSNYPL), whose members recently spearheaded a successful grassroots campaign to landmark the Rose Reading Room: “The real problem there is invisible. It is the uncertainty and delay in the delivery of books. Lately, this has improved some, and I know there are real efforts being made to address the problem, but it persists.” Marx, to his credit, has greatly expanded the space for books beneath Bryant Park, which has a capacious underground storage facility, but actually retrieving a volume from the NYPL’s collection can be a time-consuming, mystifying ordeal, as many researchers can attest.
Much of the drama surrounding Foster’s abandoned renovation plan concerned the fate of the old stacks at 42nd Street. When the CLP was canceled in 2014, Marx announced that the space would remain empty, prompting the Pulitzer Prize–winning historian David Levering Lewis to remark to The Wall Street Journal: “Stacks without books. Isn’t this pretty Kafkaesque?” But lately the NYPL, to a very limited extent, has been using the stacks to house books and other materials from the Mid-Manhattan Library, as staff members prepare that building for its overhaul.
A few months ago, City Councilman Daniel Garodnick questioned Marx about the future of the stacks at 42nd Street. Marx replied: “We have not ruled out any uses and will soon begin a process to examine several possibilities.” For some of the critics, it’s not a lost cause. “The stacks are still mostly empty,” says Nasaw. “But, though I have no concrete evidence, I don’t think this will be the case forever. This piece of midtown real estate is too valuable to stay empty.”
The NYPL has stepped up its efforts to renovate the branch libraries in Manhattan, Staten Island, and the Bronx. (Brooklyn and Queens have their own library systems.) Marx has raised money to that end, and the de Blasio administration has allocated more resources than the previous mayor did. An NYPL spokesman told me that the library is working assiduously to rebuild and renovate facilities in “high-needs” neighborhoods: Hunts Point in the Bronx, and Port Richmond on Staten Island.
One afternoon in April, I went to see a few neighborhood libraries in Manhattan, starting with the Washington Heights branch on West 160th Street. I had visited this library with Marx in 2011; at that time, the entire facility was lackluster, and I was surprised to find, on the top floor, a large vacant apartment full of cobwebs, dust, and debris. In the first half of the 20th century, a custodian had lived there with his family, but the money was never found to renovate it. The apartment had been empty for half a century—wasted space above a bustling library in a densely populated neighborhood.
Today, the library has been transformed by a gut renovation. There’s a gleaming new elevator, new restrooms, comfortable seating areas, and a modest but well-chosen collection of books. There were six computers in 2011; now there are 72. Most strikingly, the old custodian’s apartment is now a bright and airy young-adult room, with attractive blue-and-gray carpeting, plenty of books on sturdy shelves, and new furniture.
My next stop was the Seward Park Library on the Lower East Side, which, for a long time, was a gloomy and dilapidated place. But here, too, change is apparent: I noticed new computers and work spaces, a tidy public-meeting room in the basement, and a wide selection of magazines, journals, and newspapers. Every seat was occupied. This library is also thriving.
My final destination was the Tompkins Square Library on East 10th Street. It was a joyless visit. The -building—which evokes the 1970s, when the NYPL nearly went bankrupt—feels cramped, neglected, and forgotten. I was struck by the frayed, dismal black carpet and the shabby tables and chairs. The lighting is poor, which makes reading difficult, and with only three desktop computers, the Tompkins Square Library can hardly meet the needs of the digital age. Staff members told me that conditions at the NYPL’s branch libraries in the Bronx are far worse. Some lack proper heat in winter.
Apropos of transparency at the NYPL, there has been some movement in the right direction. Weinshall, the current chief operating officer, is less enamored of secrecy than was her predecessor. Under pressure from library activists, Weinshall released to the public, in early 2016, a trove of planning documents pertaining to the renovation of the Mid-Manhattan Library. (She declined to be interviewed for this article.)
The retention of the Mid-Manhattan Library was a major victory for the critics and a triumph for all New Yorkers.
A revealing case study of the NYPL’s post-CLP openness concerns the Inwood branch in Upper Manhattan, where a controversy is under way. The de Blasio administration, the NYPL, and the Robin Hood Foundation—“Wall Street’s favorite charity,” according to philanthropy expert David Callahan—have quietly forged a plan to demolish the library, after which a developer will erect a new tower in its place. A new library will be built on the ground floor, beneath units of affordable housing. But activists are skeptical. Says Jeffrey Wollock, a historian and longtime Inwood resident, “The process has been undemocratic, unduly rushed and pressurized, misleading and vague, with no consideration of possible alternatives.”
The NYPL needs effective government regulation, but oversight seems unlikely. Shortly after the CLP was canceled, in May 2014, top city officials had an opportunity to appoint astute, sharp-eyed watchdogs to the library’s board of trustees, but they failed to do so. The mayor, the comptroller, and the speaker of the City Council are ex-officio trustees, and each appoints a representative to the board. (Mayor Bloomberg had appointed his sister, Marjorie Tiven.) The comptroller, Scott Stringer, and the Council speaker, Melissa Mark-Viverito, appointed weak, undistinguished representatives. Mayor de Blasio, who decisively halted the CLP, allowed his appointment to go unfilled for three and a half years; such are the vagaries of political power. Finally, in May of this year, de Blasio selected Jill Bright, who spent most of her career as an executive at Condé Nast. (Bright also declined to be interviewed for this article.)
The message is dishearteningly clear: Despite the fiascoes and failures at the NYPL between 2007 and 2014, the political leadership of New York City is allowing the library, which is partly funded by taxpayers, to regulate itself.
If the city won’t provide adequate oversight of the NYPL, then citizens will have to do it themselves. It won’t be a short-term project, nor will it be effortless. “The promise of greater openness in this institution,” says the CSNYPL’s Warren, “runs counter to a deeply embedded corporate culture.” I asked Princeton’s Katz, a leader of the coalition to save the NYPL, to reflect on his activism. “The governance of the NYPL needs to be changed,” he told me, “but there is little chance that any significant change is being contemplated. It was incompetence and arrogance that created the CLP crisis, and the underlying circumstances which permitted that near-debacle have not been eliminated.”
But Katz is far from dispirited. “We saved the stacks for the moment; we preserved the primary function—research—for the 42nd Street building; and we got the renovation of the Mid-Manhattan Library that we advocated for,” he says. “That is a lot, and it shows what citizen power can do, even in the New York City of the mega-wealthy. I feel good and proud every time I walk into the Rose Reading Room.”
Scott Sherman is a contributing writer to The Nation and the author of Patience and Fortitude: Power, Real Estate, and the Fight to Save a Public Library (Melville House, 2015).
The Rage of White Folk
How the silent majority became a loud and angry minority.
By Steven Hahn
September 27, 2017
Long banished from the political lexicon and long marginalized in analyses of American life (unless modified by the term “middle”), class has been thrust back into the mainstream of public discourse. Although the country’s growing inequalities in wealth are partly responsible for this turn, the apparent attraction of the white working class to an assortment of politicians on the right—Donald Trump chief among them—is clearly a driving force. Which is to say that, for many political observers, “class” seems to be most appealing when it can be attached to what is regarded as bad or irrational behavior or, perhaps, to some notion of “false consciousness.”
The attention isn’t entirely misplaced. As early as the Democratic presidential primaries in 1964, George Wallace showed strength among ethnic working-class voters in Northern states like Wisconsin, and, running as the candidate of the American Independent Party in 1968, he won votes among unionized industrial workers as well as rural and small-town white Southerners. The defection of white working-class ethnics from the Democratic Party was one of the keys to Ronald Reagan’s victories in 1980 and 1984, and many of the defectors—“Reagan Democrats,” as they’ve come to be known—refused to return to the Democratic fold even after Reagan left office.
By the time Donald Trump entered the presidential campaign, the frustrations and hostility of white voters across the Rust Belt and outside major metropolitan areas seemed to be boiling over; many readily embraced Trump’s economic nationalism and aggressive posture toward a range of perceived enemies at home and abroad. It was these white voters, pollsters and political professionals tell us, who enabled Trump to eke out his electoral-vote victories in Wisconsin, Michigan, and Pennsylvania and, with them, the presidency.
The apparent political muscle of white working-class voters in the United States has been further validated by the rise of the radical right across Europe, and especially by the surprising victory of the Brexit vote last summer and the formidable run that Marine Le Pen of the National Front made for the French presidency this spring. In both cases, it seemed that older white voters from declining industrial districts, many of whom had once voted for the Labour Party in Britain or the Socialists and Communists in France, moved to the right, venting their discontent at the consequences of globalization and immigration—a so-called populist wave, as many media outlets described it.
Scholars and writers haven’t been slow to sink their teeth, both descriptively and analytically, into this phenomenon. In fact, over the course of Trump’s campaign, a burst of new works of memoir, history, and sociology—-including J.D. Vance’s Hillbilly Elegy, Nancy Isenberg’s White Trash, Carol Anderson’s White Rage, and Justin Gest’s The New Minority—appeared to have anticipated the emergence of the white working class as a significant political actor. Each of these books offers a different vantage point from which to view the discontent of white working-class people; taken together, they provide us with a look into the travails, anxieties, and developing rage of a constituency that is often depicted as helping to fuel this period of political reaction. With the exception of Gest’s book, they illustrate some of the limits that emerge when the phrase “white working class” is invoked and, as a result, remind us of the dangers of homogenizing white workers politically. They also serve as a reminder of just how little we still know about the moment we are in.
None of the books has received more attention or commanded a larger audience than Vance’s Hillbilly Elegy, a memoir about growing up and finding a way out of the dysfunctional family and community life created by de-industrialization in America. At the ripe age of 31, having just earned a law degree at Yale, Vance decided to write a book to help people understand, in very human terms, what happens when “the industrial economy goes south.”
Vance was born and raised in Middletown, Ohio, a once-thriving steel town on the I-75 corridor between Dayton and Cincinnati, but his family roots are in eastern Jackson, Kentucky, a coal-mining district that his grandparents left in the 1940s. Indeed, as Vance tells it, the cultural arc connecting the two worlds—what he both proudly and disdainfully calls “hillbilly”—was and remains central to his own sense of identity.
Vance recognizes that his family’s history resembles that of thousands of other whites and blacks who left the South during and after the Second World War. But he is mostly interested in relating a morality tale: how proud, hardworking folk can lose their way and descend into a miasma of depression, substance abuse, and hopelessness when the familiar means of earning a living evaporate—and how the loving and resilient among them can come to the rescue.
Hillbilly Elegy has, in fact, the feel of a college or professional-school application essay, one that simultaneously acknowledges the helping hands that Vance was offered and trades in the very caricatures that readers might expect to find. Although Vance contrasts the white working-class world of his grandparents, in which old-fashioned values like hard work, faith, and self-reliance ruled, with that of his mother, in which consumerism, anger, isolation, addiction, and distrust now do, we see very little of the former and plenty of the latter.
Women like Vance’s mother either left home early or failed to go to college because they became pregnant, got married, and quickly divorced; many, also like his mother, went on to revolving-door relationships, antisocial behavior, and perhaps drug dependency. In the case of Vance’s mother, the very turbulent and abusive relationship between her parents contributed significantly to her downward spiral. As for the hillbilly men in Vance’s world, they are a muddle of familiar contradictions: proud, independent, touchy on matters of personal honor, and, of course, prone to violence, sexism, laziness, and ignorance, which Vance is happy to put on full display. Hillbilly Elegy’s popularity may well grow out of the cultural voyeurism (class porn) that it encourages, enabling readers and reviewers to define their own experiences in relation to the mess that seems to envelop the white working class. It also allows Vance to make the most of his own redemption.
Without a doubt, Vance’s was a narrow escape, at least by his own telling. Shuttling between households while growing up, he watched his mother succumb to drug and alcohol addiction, as well as get arrested for domestic violence. His schooling suffered, and he seemed headed down the same bleak hillbilly trail that he depicts in his book when his grandparents, and especially his grandmother, “saved” him: taking him in, imposing rules they expected him to obey, insisting that he get good grades, pushing him to get a job as a grocery cashier, telling him to “get off your ass.” It worked, though a stint in the Marines during which he was deployed to Iraq probably assured his escape. An undergraduate education at Ohio State and then law school at Yale followed.
It’s an impressive story, a testament to commitment and determination of many sorts. But Vance tells it for specific reasons: He wants to reveal why hillbillies are so angry at the political establishment—and, in particular, at Barack Obama—and why hillbilly culture (including a version of living on the dole) convinced him that the policies of the Democratic Party “weren’t all they were cracked up to be.” The anger, in his judgment, isn’t because of race, but because Obama’s elite pedigree, like that of many other Democrats, played to their deepest insecurities and sense of cultural inferiority. For these very reasons, Vance’s grandfather couldn’t bring himself to vote for Walter Mondale in 1984—but his grandfather was also a lifelong Democrat who never again voted Republican after Reagan. As for Vance’s grandmother, she ricocheted between radical conservatism and social democracy. And both claimed roots in the coal districts of eastern Kentucky that now swing Republican, but that also have long histories of labor militancy.
Vance isn’t interested in exploring or confronting the explanatory challenges that his family’s political stories present. Neither is he interested in discussing what the phrase “white working class” means (there’s virtually nothing in the book on the actual work that anyone does, either in Kentucky or Ohio), or in reflecting on the wider implications of his own intellectual development, which says much about the political complexities of Ohio and Kentucky alike. Instead, Vance concludes his book by telling us that he has comfortably embraced “modern conservatism,” which, he believes, allows him to maintain his ties to what he values in hillbilly culture while offering him a perspective from which to criticize it. Undoubtedly, this position has also been fortified by the wealth he began accumulating in Silicon Valley after graduating from Yale. The talk is that Vance may now be headed back home to explore financial prospects there.
Nancy Isenberg is interested in providing the history that Vance overlooks, and although three generations of social and labor historians will be surprised to learn that she is offering the “untold” 400-year history of class in the United States, general readers will find White Trash to be a sobering and unsettling story. Isenberg ambitiously begins in the world of Elizabethan England and ends in the contemporary world of Duck Dynasty. Along the way, we are introduced to vagrants, indentured servants, poor freemen, squatters, crackers, rednecks, sharecroppers, hillbillies, and moonshiners; they populate chapters that deal with the Americas of Ben Franklin, Thomas Jefferson, Andrew Jackson, the Civil War, the Great Depression, and the recent past. But there are two themes that encapsulate the chronological span and define the self-satisfied ways in which many Americans—especially those who have never had to worry about making ends meet—dismiss the relevance of class. The first is the notion that “the poor are always with us.” The second is the fact that the poor have long been likened to “waste” and “rubbish”—thus the “white trash” we have come to recognize and name.
A work of social and political analysis, this book is not. Readers interested in discovering how many poor white people there were at any point, how poor whites behaved politically, or what it means to be poor and white in America will be disappointed by White Trash. But that’s because Isenberg has set her sights on something else: to offer a cultural history of the representation of poor whites, mostly by their betters, who feared, scorned, or were simply disgusted by them.
Isenberg’s research here is impressive, and she has an engaging writing style. But for all the chronological sweep of White Trash, there is something fundamentally ahistorical about it. The poor have certainly always been with us, and Isenberg demonstrates that the metaphors of waste and rubbish have continually been invoked to describe them. So then what makes the 20th century different from the 16th, or the 19th century different from the 18th? In part, these are questions of social history and political economy, and Isenberg doesn’t really go there. Yet they are central to understanding how and why social groups become impoverished, how poverty is transmitted, and how class and class relations—yes, class is a relationship, not just a state of being or a cultural perception—take shape.
Since White Trash explores the cultural representation of the poor and claims to chronicle the long history of class, it is especially odd that Isenberg never addresses what she thinks class is, or how her perspective on it may be more useful compared with others’. Nowhere does she seem to recognize that the crass epithets of “waste,” “rubbish,” and “trash” reflect perceptions that poor whites have no class position, that they are truly déclassé; and nowhere in the book do the poor white folk get to speak for themselves—they are simply the objects of representation. But can class be created solely by those who seek to describe another group? And can poor white people constitute a class if they don’t see themselves as such and are often regarded as something less by others?
What’s more, although Isenberg focuses on poor whites who are Anglo-American and, for the most part, Southerners, she gives us no sense of how they should be seen in relation to other poor and working-class Americans—those who are black or immigrants from other parts of Europe, Asia, or Latin America, and who have made up the bulk of the working class and déclassé poor for most of our history. Are these different class experiences with different vocabularies of denigration and discrimination? Or are they all versions of the same process?
In truth, White Trash is less a book about class than it is about race. (Not incidentally, it may have been black slaves who were most important in devising and popularizing the term “poor white trash,” as the many volumes of the Works Progress Administration’s slave-narrative collections suggest.) Although Isenberg assumes that the cultural assaults on poor white folk are solely manifestations of class divisions and attitudes, what she really presents is a history of the racialization of certain white people (much as other social groups can be and are racialized)—the construction of categories of inferiority, cultural degradation, genetic deformity, and ignorance that, in turn, place limits on opportunity and social mobility. It is just the sort of thing that Vance shows us about “hillbillies”: their identification and denigration, and how they then use those cultural markers to redefine themselves.
Unlike Vance and Isenberg, Carol Anderson makes it clear in White Rage that she has no doubts about the centrality of race to the political dispositions and class resentments of white Americans. Indeed, she begins her book by describing an epiphany that came as she tracked the media’s obsession with black rage in the protests against the police murders of African Americans: “What was really at work here,” she realized, “was white rage.” It wasn’t so much the white rage manifest in violence, but rather the white rage that “works its way through the courts, the legislatures, and a range of government bureaucracies.” And the trigger for this rage, as she sees it, is “black advancement.”
White Rage is a riveting and disturbing history that begins with Reconstruction and lays bare the efforts of whites in the South and North alike to prevent emancipated black people from achieving economic independence, civil and political rights, personal safety, and economic opportunity. Even after the Reconstruction amendments established a foundation for black citizenship and political equality, their effects were steadily hedged in, whittled down, observed in the breach, or barely enforced. Onetime Republican allies soon abandoned African Americans to the mercies of their onetime masters; the Supreme Court narrowed the reach of the 13th, 14th, and 15th amendments and then validated the Jim Crow segregation and disenfranchisement that swept the South in the late 19th and early 20th centuries. This meant that vigilantes and lynch mobs got the green light to execute thousands of blacks who dared to challenge the abject submission that whites demanded of them. Indeed, African Americans seemingly had no white allies they could count on for protection or support.
Little changed as African Americans migrated north during the 20th century. The combination of government policy, real-estate covenants, and white hostility left them in growing ghettos that offered dreadful housing, substandard education, and few prospects for escape. The civil-rights movement, Anderson argues, provoked massive resistance in the South and relatively slow responses in the North. And the many impressive gains that the movement made in the face of formidable social and political obstacles were soon rolled back by policy-makers—from both parties—-who worried about black militancy, court-ordered desegregation, and what they saw as a rising tide of drug-related crime. Obama’s election in 2008, while appearing to signal a new orientation and ease about race, quickly catalyzed a level of rage not seen for decades, together with concerted attacks on minority voting rights.
Anderson doesn’t blame racist rage on any particular group of white people; whites of all backgrounds are effectively homogenized as a social and political force. But however unsatisfying and misleading this might be, Anderson does make a deeper point that we must confront about white rage against black Americans and racialized others: It is by no means a new phenomenon. Instead, this rage has a history as long as the country’s, and although it presents itself in myriad ways (in what some distinguish as “soft,” “hard,” and lethal forms), it has always been close to the surface, ready to be summoned in times of crisis and distress, however much the forms of expression may have changed. And, as Anderson suggests, it’s the potential power and authority of African Americans and other racialized minorities that strike terror in the hearts of many whites.
Of all the books under review, only Justin Gest’s The New Minority has failed to win much popular notice: It didn’t make the best-seller lists, nor was it reviewed in mainstream publications. This is unfortunate, because The New Minority has a depth and range missing in the other books. Gest is a professor of public policy at George Mason University and the author of a previous book about Muslim communities in Western democracies. The New Minority blends historical, sociological, and ethnographic analysis into a comparative study of working-class politics in two declining industrial towns: East London, England, and Youngstown, Ohio.
The comparative nature of his study enables Gest to depict a transatlantic working—class political culture with similar dynamics despite the regional differences. For Youngstown and the American side, The New Minority adds ballast to the picture of the social and cultural consequences of deindustrialization. Youngstown was once a booming steel town—Republic Steel, US Steel, and Youngstown Sheet & Tube were all there—with a multiethnic working class that achieved a high level of home ownership and economic stability. But while census officials would define the population as somewhere between 70 and 80 percent white in Youngstown’s heyday, “white” was a broad rubric that included many immigrant groups from Europe and the Middle East and that therefore elided a great deal of cultural and ethnic differentiation.
The bottom fell out of the Youngstown steel industry in the late 1970s. Within six years, 50,000 steel-related jobs were lost (worth $1.3 billion in wages), and the population began a steady decline, with white residents more likely to leave and black ones more likely to stay. These days, Youngstown has about one-third the population of its midcentury peak, and it is strewn with empty lots and abandoned houses that are often taken over by drug or prostitution rings. Corruption seems to have infected most corners of political life: In the past three decades, the city has seen a sheriff, judge, prosecutor, and US congressman (James Traficant) indicted, and a prosecutor nearly assassinated by the mob. Like any number of Rust Belt cities—Toledo, Erie, Gary, Michigan City, Flint—Gest calls Youngstown’s condition “post-traumatic.”
Gest’s study thereby reveals a narrative that resonates with Vance’s and others like his. The collapse of the steel industry left those working-class whites who stayed in Youngstown in precarious circumstances: few jobs with decent pay and benefits, limited horizons for themselves and their children, low expectations for what government could do, and high levels of isolation and impoverishment. (Of course, African Americans presumably faced similar challenges.) Gest uses the concept of “deprivation”—of political power, economic well-being, and social stability—to account for what he calls a sense of “minoritization” among Youngstown’s white residents. By this, he means a perception of decline in their numbers, a dramatic loss in their status, and a feeling that other ethnic and racial groups are gaining social advantages at their expense. And those who experience “deprivation” most profoundly are also most likely to veer toward the radical right, which offers them a heritage-based identity and an antiestablishment alternative.
Readers may call some of Gest’s correlations into question (though he presents impressive statistical evidence), but there are several things about The New Minority that are especially helpful in explaining the current moment. One is that Gest refuses to put all working-class whites into the same political box, recognizing that they evince a range of responses to the traumas of recent decades. After all, Youngstown’s Mahoning County voted for Hillary Clinton rather than Trump, unlike its county neighbors.
Gest also shows how important the political context of Youngstown (and, by extension, similar towns) is to working-class political culture, especially the power of a triumvirate of unions, steel companies, and organized crime that either bypassed or compromised the official political structure. Finally, he implicitly draws into question the social and political usefulness of the very notion of a “white working class.” The New Minority demonstrates that class formation in Youngstown was a lengthy and complex process that involved both collective struggles and significant ethnic and racial divisions.
Since so many liberal pundits and political observers were quick to blame Trump’s election on white working-class rage, all of these books are helpful in raising some questions and doubts. They suggest that what has been assumed about American class politics may not really capture the dynamics at play—or even provide a meaningful description of who was angry and for what reasons.
It will be some time before the results of the 2016 election are fully analyzed, but it already seems plain that the base of Trump’s support defies early assumptions. Both in the primaries and in the general election, the majority of Trump’s supporters were not white working-class swing voters, but, rather, hailed from the ardently Republican middle and upper classes (especially small-business owners and their commercial allies). Trump also bested previous Republican presidential candidates among evangelical voters, and he outpolled the party’s 2012 candidate, former Massachusetts governor Mitt Romney, in suburban areas. In fact, only about a third of Trump’s voters might be regarded as working class (as is the case in the US population as a whole), whether by income (households below the national median of $50,000), occupation, or education (no more than a high-school degree, a dubious marker in any event).
To be sure, a number of Rust Belt counties that had voted for Obama in 2008 and 2012 shifted to Trump in 2016, helping him to break what was thought to be a “blue wall” in Michigan, Wisconsin, and Pennsylvania. Yet the enthusiasm for Trump in these places may have been limited, and some of their swing to Republican candidates related to recent plant closings or the inordinate casualties they’d suffered in recent wars, which they blamed on Democrats. Then, too, recent election cycles in both the United States and Europe suggest not so much a right-wing populist “wave” as an extreme volatility among voters discontented with the establishment parties and deeply distressed by the growing inequalities in wealth, and who therefore seek candidates from outside the political mainstream, whether on the left or right. Bernie Sanders startled the Democratic Party with his remarkable run as an avowed socialist; the far right in France and the Netherlands faltered in recent elections; and Jeremy Corbyn-—running on an explicitly socialist platform—stunned the overconfident Conservatives this summer in Britain, nearly driving them from power.
What we must recognize is that, in many ways, the configuration of the white working class, like that of the populism often associated with it, is very much the product of a particular political moment, one made possible by the transformation of the global economy over the past half- century. Declining industrial employment, stagnating wages, the dramatic weakening of large private-sector unions—all results of new economic forces and a relentless offensive on the part of manufacturers and financiers—ended the historic compromise that industrial workers struck after World War II. At the same time, the Democratic Party, like its Labour counterpart in Britain, moved to the center and also helped to undermine the material conditions and political leverage these workers had achieved. The “white working class” and contemporary “populism,” then, are expressions less of an emerging social and political landscape than of the contempt with which leaders in both center-right and center-left parties regard those who have lost ground in the last several decades and are now seeking outlets for their anger. (This is where Isenberg’s book has much to teach us.)
Angry whites have certainly earned some of that contempt. The far right has played to their fantasies of a world restored and to their fears of those who could be blamed for destroying it, and many white Americans have bought into this explanation, sometimes becoming shock troops of reaction, particularly when alternative options have been marginalized. But as was true with Vance’s grandmother, the political dispositions of those who have taken it on the chin in the new global economy are by no means set or easily shoehorned into the category of right-wing or left-wing populism. They can, as Gest shows, make any one of several political moves: They can take their fight into the established parties; they can withdraw from active participation in politics; or they can veer to the right, aiming to disrupt the political system they believe has failed them. “Populism” is meant to stand in for the last of these choices, when anger among the humbled and poorly educated threatens to rupture the political sphere. This populism has no program—indeed, it rarely even calls itself “populist”—but is instead the embodied rage, often awash in conspiracy theories, of those who detest the establishment and their clients and who imagine they can retrieve a world they have already lost.
Yet it is worth recalling that in the late 19th century, amid the extravagances of the Gilded Age, there was a different sort of populism that emerged: a Populist movement and party that challenged the rule of those they called “robber barons” in order to readjust the balance of economic and political power to the benefit of “producers”—workers and small farmers. The Populists of this era—and they were willing to call themselves “populists”—had their share of warts; some traded in racism and xenophobia. But they had an analysis of how political power and the distribution of wealth reinforced each other, and they developed a program—based on public control of the money supply, the nationalization of the means of transportation and communication, and cooperative exchanges—that aimed to rein in competition, exploitation, and corruption, and to make the industrial transformation of American society more democratic. Some also sought to extend their hands to potential allies across the lines of race, ethnicity, and region—at times with impressive results.
In the embers of their defeat, these Populists left a legacy of social-democratic thinking and activity that would influence the left wing of American progressivism, early 20th-century socialism (which was particularly robust in many Populist hotbeds like Oklahoma, Texas, Louisiana, and Arkansas), and the New Deal era of the 1930s. How we got from there to the populism of today, and from the producers of the Gilded Age to the white working class of the moment, holds the key to understanding our current dilemma. It might also allow us to better navigate our future and devise the social policies that can energize a new popular movement.
Steven Hahn teaches history at New York University and is the author, most recently, of A Nation Without Borders.
Puerto Rico Needs Massive Emergency Aid Now—and an End to Austerity
The island has become a target not only for rapacious vulture funds but also for exponents of Katrina-style “disaster capitalism.”
By Ed Morales
September 27, 2017
Hurricane Maria has created a humanitarian crisis in Puerto Rico. Much of the capital city of San Juan is flooded; there is contaminated water in the streets, shortages of gasoline and water, and looming crises for senior citizens in fragile health, reports Mayor Carmen Yulín Cruz. Maria destroyed what Hurricane Irma, which struck earlier in September, did not: Virtually the entire island is without electricity, and cell-phone service and other communications are severely strained. Municipalities like Guayama, Cataño, and Toa Baja have reported massive floods and unthinkable devastation. (My mother and other family members live in a remote mountain town near the rain forest, and while I know they’re safe, their food, water, and medications will only last so long.) A damaged dam at Lake Guajataca, near the northwestern town of Isabela, is threatening thousands of residents in nearby areas. As we go to press, 16 fatalities have been reported, but thousands of citizens have lost their homes, and those figures could increase substantially when the final numbers come in. Representative Nydia Velázquez estimates that Puerto Rico will need $10 billion for a full recovery.
The US government has declared Puerto Rico a disaster area, making it eligible for funding by the Federal Emergency Management Agency (FEMA). And the Trump administration suspended the usual matching-fund requirement (currently 25 percent of the federal amount). But it denied a request from several members of Congress to lift restrictions in the 1920 Jones Act, which require that all goods transported between mainland US ports and those in Puerto Rico be carried on US-flagged ships constructed, owned, and crewed by US citizens.
With conditions worsening, the Trump administration reacted laconically on September 25 through press spokeswoman Sarah Huckabee Sanders, who insisted that Tom Bossert of the Department of Homeland Security and Brock Long of FEMA needed time to conduct “a more thorough and deeper assessment of what needs there are,” to make sure “we’re actually funding the correct things.” A senior congressional aide suggested the decision would take until “the first or second week of October.” That evening, Trump himself tweeted that while “much of the island was destroyed,” Puerto Rico’s billions of dollars of debt “owed to Wall Street…sadly, must be dealt with.”
While immediate aid is desperately needed, the Trump administration, unsurprisingly, is missing the point: It is time for Washington to abandon its austerity approach to Puerto Rico. As a result of the PROMESA bill passed by Congress last year, a Financial Oversight and Management Board has been imposed to restructure the island’s $68 billion debt, address an additional $49 billion in pension obligations, and promote economic development. To its credit, the FOMB announced on September 21 that it would allow Governor Ricardo Rosselló to redistribute up to $1 billion of the territory’s budget as an emergency fund for hurricane damages. But this is the proverbial drop in the bucket for a weary populace ravaged not only by today’s bankruptcy and storms worsened by climate change, but by decades of colonial neglect.
The FOMB—or La Junta, as it is known in Puerto Rico—never made sense, at least as a way to kindle economic development. Its primary purpose is to allow the collection of debt by bondholders, thus preventing disruption of the municipal-bond market, a crucial area of speculation for America’s financial industry. La Junta’s austerity measures would have caused a contraction of the economy, not growth—indeed, before the storms, islanders had already seen a deterioration in their daily lives. Hurricane Maria has moved all of this into fast-forward, and the always fallacious promise of PROMESA has become a cruel joke.
Puerto Rico is now the target not only for rapacious vulture funds trying to collect on debt, but also for exponents of Katrina—style “disaster capitalism.” A recent Washington Post op-ed suggested that companies like Home Depot would profit immensely from a major hurricane by cornering the market on home—reconstruction materials. In fact, Ken Langone, who helped finance Home Depot for its founders, is one of President Trump’s closest allies. So is the billionaire hedge—funder John Paulson, whose Hotel Vanderbilt—accused of turning away island residents hoping to cool off in its air—conditioned lobby—is currently a FEMA—approved bunker. And, of course, the notoriously unreliable electrical grid—administered by a power authority $9 billion in debt and already being primed for privatization—might not be restored for months. The power grid also affects water distribution, which depends on electric pumps. Privatization has been touted as a way to create greater efficiency, but Puerto Ricans have already experienced the negative effects of the partial privatization of the Aqueduct and Sewer Authority, which resulted in increased rates and poorer service. What’s more, the goal of making utilities profitable can inhibit badly needed modernization. The island’s grid must be switched from outmoded electrical lines on poles—most of which were toppled by Maria—to underground lines, but such an investment is not profitable, at least in the short term.
What Puerto Rico needs is the kind of massive public investment that Washington provided in the days of Franklin Roosevelt. Reacting to the deadly hurricanes that struck the island in 1928 and 1932, Roosevelt established the Puerto Rico Reconstruction Administration, which created jobs, built schools and medical facilities, expanded the university, and enhanced the electrical infrastructure. Today’s monumental debt, an outgrowth of neoliberal excess, should be resolved with some version of the plan proposed by Bernie Sanders in his 2016 campaign: The Federal Reserve should buy back the debt from bondholders and deny the vulture funds a profit, imposing the kind of severe “haircuts” that the current Title III bankruptcy proceedings are unlikely to require.
Puerto Rico has been hit by the double whammy of irresponsible policy driven by a lust for profit. The reckless speculation in bonds ignored not only the fact that its economy was failing, but that the island itself is vulnerable to extreme weather events resulting from climate change, caused by the irrational addiction to fossil fuels. Maria is the third Category 4 storm to hit US territory in a month, a record in modern meteorological history.
Maria’s terrible blow reveals how Puerto Rico could be the mirror for a dystopian American future. As a recent report by the Action Center on Race and the Economy suggests, the hard-line austerity planned for Puerto Rico is a version of the strictures already imposed in Detroit’s bankruptcy, and will likely be used for troubled municipalities like Chicago and states like Illinois. On the other hand, Puerto Rico’s misery can be a wake-up call for the United States—which, ever since the New York City fiscal crisis of the 1970s, has gradually abandoned its commitment to the common good. Terminating PROMESA and investing billions in infrastructure, health, and education—humanely assuming responsibility for over a century of colonialism—will not only save tens of thousands of lives. It can also set a precedent and help reverse the slow descent of Trump’s America into political, economic, and social disaster.
Editor’s update: On Thursday, September 28, the Trump administration announced that it was temporarily waiving the Jones Act shipping restrictions in response to a request from Puerto Rican Governor Ricardo Rosselló. The waiver will last for 10 days.
Ed Morales, a freelance writer based in New York, teaches at Columbia University’s Center for the Study of Ethnicity and Race. He co-directed a documentary, Whose Barrio?, about the gentrification of East Harlem.
Is Trump Following a ‘Japan First’ Policy Against Kim Jong-un?
Prime Minister Shinzo Abe has emerged as a major influence on Trump’s North Korea policy.
By Tim Shorrock
In a speech that will long be remembered for its ugly belligerence, President Trump told the UN General Assembly last week that “if it is forced to defend itself,” the United States was prepared to “totally destroy” North Korea: not just its military, or its leaders, but the entire population. To many heads of state, a threat evoking the destruction of both World War II and the Korean War violated the very idea of the UN as a body dedicated to resolving global tensions with peaceful means.
“This was a bombastic, nationalist speech,” declared Margot Wallstrom, the foreign minister of Sweden, who grimly watched Trump’s outburst with folded arms. “I must say that we consider any type of military solution absolutely inappropriate,” German Chancellor Angela Merkel told a German newspaper. Experts on North Korea, meanwhile, argued that the speech played right into Kim Jong-un’s hands by proving his claim that the United States is North Korea’s mortal enemy.
“President Trump has handed the North Koreans the sound bite of the century,” wrote Marcus Noland, an economist at the Peterson Institute for International Economics who is well-known for his critical analyses of North Korea. “That footage will be used time and time and time again on North Korea’s state television channel.”
Sure enough, Kim followed Trump’s speech with what might be called the insult of the century. In an unprecedented move that sent the Internet into a miasma of laughter and shock, he responded personally to Trump’s threat by calling him a “dotard” and a “frightened dog” that “has rendered the world restless through threats and blackmail against all countries in the world.”
“I will make the man holding the prerogative of the supreme command in the U.S. pay dearly for his speech.” —North Korean leader Kim Jong-un
“On behalf of the dignity and honor of my state and people and on my own,” Kim said, “I will make the man holding the prerogative of the supreme command in the U.S. pay dearly for his speech.” He told Trump to expect “the highest level of hard-line countermeasure in history.” Later, his foreign minister, Ri Yong-ho, suggested that might include a hydrogen bomb test over the Pacific Ocean—and then upped the ante by accusing Trump of making a unilateral “declaration of war” against North Korea.
Clearly, Trump’s threat to obliterate a country with 25 million people, many of them with family and relatives in South Korea, had struck a chord. Trump, naturally, struck back on Twitter by calling Kim a “madman,” and announced at the UN that the United States, South Korea, and Japan had agreed on a new set of US sanctions aimed at punishing any company or country that does business with the North Korean regime. Then, as if tensions weren’t high enough, on the night of September 23 the Pentagon sent B-1B Lancer bombers, nicknamed “the swan of death,” to fly over international airspace just off the coast of North Korea—“the first time since the Korean War that a U.S. bomber flew over North Korea’s east coast,” according to the Kyunghyang Shinmun, a major daily in Seoul.
Two days later, after Trump tweeted that if Ri and Kim kept up their threats, they “may not be around much longer,” the foreign minister called his bluff. Standing before television cameras in front of his New York hotel, Foreign Minister Ri said that if a state of war existed, North Korea reserved the right to “make countermeasures, including the right to shoot down United States strategic bombers even when they are not inside the airspace border of our country.” That worried longtime US negotiators with North Korea.
“That’s not the Ri Yong-ho I know,” Joseph DeTrani, a former CIA proliferation expert who met with Ri many times as a special envoy to the Six-Party Talks, told The Nation on Monday. But the escalating rhetoric did not meet the approval of the US public: That afternoon, CBS News put out a new poll showing that 53 percent of Americans were concerned that Trump might act too quickly “and start an unneeded war in Korea.”
This week, as pundits debated what the next step would be in this global spectacle, few were asking how the standoff got to this point. Nor was it clear why the Trump administration abandoned the path of diplomacy that its top officials, led by Secretary of State Rex Tillerson, have defined for months as their objective, one strongly embraced by South Korean President Moon Jae-in.
The “military option” has eclipsed negotiations as the US strategy of choice—and a key influence in this hawkish direction may be Japanese Prime Minister Shinzo Abe.
Amazingly, on Monday the administration continued to insist this was the case, with a State Department spokesperson telling reporters (despite the president’s words at the UN) that the “United States has not ‘declared war’ on North Korea,” and that “We continue to seek a peaceful denuclearization of the Korean Peninsula.”
But a review of recent events and US government statements shows, in fact, that the “military option” against North Korea has eclipsed negotiations as the strategy of choice and become almost conventional thinking in Washington. More darkly, it suggests that the key influence on US policy during this period may have been Japanese Prime Minister Shinzo Abe, one of the most obsequious, pro-American leaders in modern Asian history.
Just a month ago, things seemed to be looking up in Korea. In mid-August, Kim—derisively dubbed “Rocket Man” in Trump’s UN speech—canceled plans to shoot missiles toward the US military base on Guam, where the B1-Bs that would lead a military attack on North Korea are based. Possibly in response, the Pentagon quietly reduced the number of US troops involved in the upcoming US-South Korean “Ulchi Freedom Guardian” war games, from 25,000 in 2016 to 17,500 this year. They lasted from August 21 to 31.
But the key elements of the exercises so feared by the North, including training in nuclear warfare and “decapitation strikes,” remained. That apparently triggered its decisions to go ahead with another series of missile tests, including two shots fired over the Japanese island of Hokkaido. Then, on September 3, Pyongyang tested its sixth—and largest—nuclear bomb. Even before that, H.R. McMaster, Trump’s national security adviser, had signaled a shift in US policy by speaking openly of a “preventive war” aimed at stopping North Korea’s weapons programs.
In the weeks that followed Pyongyang’s early September test, Trump and his advisers launched a campaign to convince the American public that such a war might succeed. From Secretary of Defense Jim Mattis to UN ambassador Nikki Haley, the idea of a “military option” that could “annihilate” the North became a mantra. Mattis even suggested that the Pentagon was seriously considering an option that could avoid damage to South Korea and other US allies—a claim scoffed at by many analysts, who believe that any US attack on the North would be met with catastrophic retaliation by the North.
For Trump personally, Pyongyang’s latest nuclear test appeared to be the final straw. A few hours after he learned of the explosion, he insulted President Moon by tweeting that South Korea’s “talk of appeasement with North Korea will not work,” and declaring that “talking is not the answer!” Mattis escalated the rhetoric by saying that any “aggression” from North Korea would end with its “total annihilation.” Although the United States is “not looking” for that, he added, “we have many options to do so.”
Since Trump took office, Abe has become his closest confidant on North Korea and the man he inevitably calls first during every crisis.
But North Korea’s actions alone don’t account for this new hard-line posture. Rather, it appears to be the result of the influence of Japan’s Abe, who has become Trump’s most faithful fan and ally on the world stage.
Two years ago in this magazine, I chronicled Abe’s imperialist heritage and his attempts to “transform Japan—with its surprisingly large, tech-driven military-industrial complex—into America’s new proxy army.” Since Trump took office, Abe has become his closest confidant on North Korea and the man he inevitably calls first during every crisis. Their alliance has deepened since the North Korean missile shots over Japan. Frightened by the possibility of a strike on their island nation, Abe and his supporters have rallied behind Trump’s militant policy toward Pyongyang.
On September 17, right before Trump’s UN speech, Abe published an unusual op-ed in The New York Times endorsing the idea of a military attack if sanctions fail to dissuade North Korea. “I firmly support the United States position that all options are on the table,” he wrote. As Abe well knows, a key element in any US attack, along with the B1 bombers in Guam, would be the advanced stealth F-35 fighter jets stationed at the US Marine base in Iwakuni, Japan.
Japanese speakers made similar assertions the following day at a forum in Washington on “past diplomacy with North Korea.” Although it took place at the Carnegie Endowment for International Peace, it was conceived and sponsored by the US-Japan Research Institute, a Tokyo think tank sponsored by several major universities and financed by Nissan, Toyota, Sony, and other large Japanese multinationals. The basic message was that Japan’s interests must be front and center in any US negotiations with Pyongyang.
Mitoji Yabunaka, the former Japanese negotiator at the Six-Party Talks with North Korea, noted that he has heard many Americans argue that it’s “not realistic” to think North Korea will denuclearize, and that Washington should thus concentrate on managing Pyongyang’s arsenal. That “might suffice US interests,” but it is unacceptable to Japan, he said. “We are already being [threatened], so that doesn’t work for Japan.” The objective of any negotiations “must be clear—denuclearization,” Yabunaka said. “In that sense, I’m encouraged that Trump is sticking to that.”
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On September 20, Abe followed Trump’s speech with an aggressive call for a naval blockade on North Korea that would block its access to “the goods, funds, people and technology” necessary for its military programs. Abe also repeated arguments that past negotiations with the North had failed because they had allowed Pyongyang to “deceive” the global community, and said the time for diplomacy was over. What’s needed to force North Korea’s denuclearization is “not dialogue, but pressure,” he said.
To many South Koreans, Abe’s intervention has effectively sidelined President Moon Jae-in.
On September 22, Japan’s Maritime Self-Defense Force joined the US Navy in drills designed to counter the North Korean threat. Finally, on Monday the 25th, Abe made his intentions clear: He was dissolving Japan’s powerful lower house and calling for a snap election in late October. “By holding an election at a time like this, I would like to test our public mandate on actions against North Korea,” he said.
To many South Koreans, Abe’s intervention has effectively sidelined President Moon. While he tacitly endorsed Trump’s rhetoric in a meeting with the US delegation during the UN session, Moon laid out a very different approach in his address to the General Assembly.
“We do not desire the collapse of North Korea,” he said. “If North Korea makes a decision even now to stand on the right side of history, we are ready to assist North Korea together with the international community.” Korean media have also reported that Abe’s government opposed Moon’s recent decision to provide $8 million in humanitarian aid to the North despite its missile and weapons tests.
Japan’s growing influence on Trump was noted last week by Choe Sang-hun, The New York Times’s Seoul bureau chief. The day of Moon’s speech, he reported that the South Korean president is viewed by Koreans as “the odd man out,” and quoted Lee Won-deog, an academic expert on Korean-Japan relations. “There is a suspicion that Prime Minister Abe is using his close personal chemistry with President Trump to help shape the American leader’s views on South Korea.” Abe’s loyalty to Trump was also noted last month by The Wall Street Journal. “The Japanese leader’s refusal to let any daylight come between him and Mr. Trump contrasts with other leaders who have hinted at unease with Mr. Trump’s language, including his [recent] threat to bring ‘fire and fury’ on North Korea,” it reported from Tokyo.
Moon himself has downplayed the idea of any splits, telling reporters on his plane back to Seoul, “I do not think the international community has any other option but to pressure North Korea with one voice.” But the tension between the Abe government and Moon’s was palpable upon the latter’s return from New York. In an unusual public display of anger reported by The Hankyoreh, senior South Korea officials complained bitterly to the White House that Japanese reporters, apparently with the support of their government, had “repeatedly printed distorted reports about South Korea-US-Japan summit remarks” last week as a way to weaken Moon’s position with Trump.
Outside of the obvious attempt to sideline Moon, one of the problems with the Abe-Trump alliance, according to some peace activists, is that Japan and the United States are by far the largest financial contributors to the UN and could use that clout to pressure other nations into supporting military action against North Korea. In any case, peace groups hope to persuade the UN to intervene and press for a stronger diplomatic approach.
Last Friday, Women Cross DMZ, a coalition of dozens of women’s organizations that made a peace vigil to North and South Korea in 2015, in a letter signed by nearly 300 women and over 40 major women’s organizations, wrote to UN Secretary General António Guterres urging him to “immediately appoint a Special Envoy” to de-escalate the conflict and “encourage dialogue, compromise and the peaceful resolution of tensions.” And after Trump’s appearance at the UN, three US peace organizations—CREDO Action, Win Without War, and MoveOn—condemned his threats and issued an urgent call for action. “We need to stop this slow roll toward a catastrophic war, and work towards defusing the North Korean crisis diplomatically,” they asserted.
But there might be light at the end of the tunnel. At some point during the tumultuous week, a reporter asked Trump if negotiations were still an option. “Why not?” he shot back. That’s a good sign, said DeTrani, the former intelligence officer. “Negotiations are the only way out.”
Tim Shorrock is a Washington, DC–based journalist and the author of Spies for Hire: The Secret World of Intelligence Outsourcing.
Why Should Your Credit History Cost You a Job?
In most states, an employer can require a credit report as part of your job application. Elizabeth Warren wants to stop that.
By Michelle Chen
September 27, 2017
When the credit—reporting agency Equifax announced in early September that a data breach had compromised the sensitive personal information of 143 million people, it showed just how vulnerable our personal financial records are to tampering and abuse. A single hack has now imperiled the Social Security numbers and credit scores of nearly half the US population.
But the breach doesn’t merely show how vulnerable our identities are to theft. It also reveals just how central credit reports have become to our ability to find housing, to take out loans on fair terms (and avoid being targeted for predatory financial products), and even to secure employment.
The majority of states still allow prospective employers to require that job-seekers submit to a credit check. This means that companies big and small can use your credit history to judge your qualifications as a worker based on financial circumstances that are increasingly beyond anyone’s control: A chronic health problem, unexpected layoff, or bad loan could stain your credit report and ultimately cost you a job.
To combat the scarlet letter of bad credit, Senator Elizabeth Warren (D-MA) has introduced the Equal Employment for All Act, which would bar employers from either requesting a potential employee’s credit rating or querying that information through a credit investigation. The legislation would not only respect the privacy of job—seekers; it would also help safeguard against hidden bias in hiring.
Even before the Equifax breach, the integrity of credit reports was murky at best. A Federal Trade Commission report found that as many as one in five consumers had a credit error from one of the top reporting agencies (Equifax, Experian, and TransUnion). But the fundamental problem isn’t data integrity—it’s economic justice. According to a survey by the think tank Demos, declining credit was associated more with misfortunes and unforeseeable crises than with a lack of financial responsibility. Suffering an unexpected bout of unemployment or a medical bankruptcy, living with a psychological disability, or being a survivor of intimate-partner abuse can all mar your credit—as can being a person of color (in surveys, whites are more than twice as likely to describe their credit as “excellent”). The factors driving a poor credit rating vary, but they too often include circumstances that should never be a pretext for judging your character or job qualifications.
Despite the lack of evidence showing that employability can be judged by credit history, about one in seven people with poor credit recalled being “advised that they were not being hired because of their credit,” and about 10 percent of the unemployed said their credit had excluded them from a job, according to Demos’s survey research.
Bad credit can then lead to worse credit, as people lose job opportunities and their financial resources are further eroded. And when employers can use credit reports as a proxy for eliminating the poor and people of color from an applicant pool, businesses are indirectly reproducing structural discrimination.
There is ample evidence that banning the use of credit reports to assess potential employees can significantly improve job opportunities for both individuals and their communities. A study by Harvard researchers on the outcomes of credit-check bans revealed that they “raised employment in low—credit areas.” And the gains in hiring were skewed toward higher—paying jobs, especially in the public sector and in-home services and logistics. It’s a virtuous cycle that can help offset the downward spiral of metastasizing poor credit.
State lawmakers are pushing back against the credit-check plague as well. So far, 11 states—including California, Connecticut, and Maryland—have implemented restrictions on the use of credit reports on job applications. But these rules are inconsistent, with several states carving out exemptions for “managerial positions” or jobs in the financial sector.
Warren’s bill would set a broad national standard for protection, with exemptions only for positions requiring a national-security clearance. This would allow private-sector job applicants to be assessed on their overall merits, not their student-debt load. Eliminating credit discrimination will also help individuals overcome the burden of a blemished financial history and empower everyone to start with a clean slate.
Michelle Chen is a contributing writer for The Nation.