I was on the warm-up panel once for an event headlined by a duo of ex-presidents, Bill Clinton and George W. Bush. They were speaking to a room of wealthy clients of a financial institution. The event was very benign—the two didn’t exactly share state secrets. They told funny stories about their time in office and their take on current events. The two had clearly become very friendly. They each had a Secret Service detail who made the whole thing much more cinematic with their crewcuts and headsets. Afterward, the assembled clients got in line for a photo-op with the two smiling ex-presidents.
There was a time not so long ago when this would have been unthinkable.
When Harry Truman left the office of the presidency in 1953, he was so poor that he moved into his mother-in-law’s house in Missouri. All he had to live on was his pension as a former army officer of $112 a month. He refused to trade on his celebrity, turning down lucrative consulting and business arrangements. “I could never lend myself to any transaction, however respectable, that would commercialize on the prestige and dignity of the office of the presidency,” he wrote. His only commercial gain from office was when he sold his memoirs to Life magazine.
For a long time, former presidents tended to recede from public and commercial life. This practice started changing with Gerald Ford joining the boards of American Express and 20th Century Fox after leaving office in 1977, and it has mushroomed ever since. Bill Clinton has amassed $105 million in speaking fees since leaving office. George W. Bush has collected a relatively modest $15 million. The going rate for one of the former presidents is $150,000 to $200,000 for a speaking engagement plus various expenses.
The irony is that back in 1958, President Eisenhower and Congress felt so bad for Harry Truman that they passed the Former Presidents Act, which authorized a lifetime pension that today pays former presidents $250,000 a year and gives them a budget for staff, health insurance, and the like. The money-making activities of former presidents surged after we started taking care of them.
Is it possible that even a president might go easy on various parties because he or she might be getting paid $200,000 or even $400,000 to speak to them a few years later? One of the reasons why we’ve lost our way as a society is that the market has overrun our leaders.
And it’s not just presidents. Elites in general have gotten too cozy. We all went to the same colleges, have children in the same prep schools, live in the same neighborhoods, attend the same conferences and social functions, and often get paid by the same companies. There’s a very powerful set of incentives to get along.
In order for humanity to trump capital, the state must represent the public interest above all. The goal should be to create a leadership class that can welcome the hatred of others with no fear of getting frozen out of opportunities afterward.
We should start at the top. We should give presidents a raise from their current $400,000 to $4 million tax-free per year plus 10 million Social Credits. But there would be one condition—they would not be able to accept speaking fees or any board positions for any personal gain after leaving office. This would keep them free and clear of any need to make powerful people happy. We should do the same for members of the Cabinet and the heads of all regulatory agencies.
It’s tough working in DC. Most of the public servants I know are motivated by the right things. You go in hoping to make a difference. But you quickly get jaded by the system. You become quite influential in your own way, yet you interact with people who are making much more money than you at every turn. Many of them are classmates of yours. Your time in government runs out. Then what? Most government employees make about $100,000. Private industry may offer you 4 to 10 times as much. Industry implicitly becomes one of your most appealing options.
I have friends who have experienced versions of this. Government service can easily make you feel like a chump four years later. It’s highly irrational for any regulator to come after industry too hard, because industry is waiting with the big paycheck afterward. At least one friend of mine swore up and down to me that he’d never become a lobbyist, only to become a lobbyist several years later. I don’t blame him one bit—he’d spent years building up relationships and currency that people wanted to pay him for. And his options outside of DC were uncertain.
Sheila Bair, a former head of the Federal Deposit Insurance Corporation, lived through this conflict herself. She now advocates a lifetime ban on regulators working for the institutions they regulated in return for an increased government salary to $400,000. “It would change the regulatory mindset,” said Bair, and it would remove the “upside down” incentives for regulators to keep companies happy to command high salaries afterward.
For Human Capitalism to take hold, we need leaders who can truly ignore the market. That’s the first step.
The second step is to introduce a level of personal accountability for those who adopt practices that advantage capital over human interests. Recall the case of Purdue Pharma, the private company that was fined $635 million in 2007 by the Department of Justice for falsely promoting OxyContin as nonaddictive and tamper-proof. $635 million seems like a lot of money. But the company made $35 billion in revenue since releasing OxyContin in 1995, primarily from its signature product. The family that owns Purdue Pharma, the Sackler family, is now the 16th richest family in the country with a fortune of $14 billion—they have a museum at Harvard and a building at Yale named after them.
If you’re going to make $35 billion, paying $635 million—only about 2 percent—seems like a fine price to pay for success. Meanwhile, the rest of us will be dealing with hundreds of thousands of opioid addicts for years to come. They have given us a modern-day plague with no end in sight. Thousands of families, lives, and communities have been ruined and affected, arguably to enrich one family.
A similar dynamic played out during and after the financial crisis—most of the major banks issued and profited from mortgage-backed securities in the tens of billions over multiple years. Then the market discovered these securities were worthless, the financial crisis ensued, the economy went into a tailspin, and all of the major banks needed taxpayer-funded bailouts. The big banks eventually settled with the Department of Justice for billions of dollars—JPMorgan Chase agreed to pay $13 billion in 2013, and Bank of America agreed to pay $16.65 billion in 2014—but most everybody kept their jobs and senior executives escaped culpability, despite the havoc wreaked on the economy. Even the CEOs of the failed firms Lehman Brothers, Merrill Lynch, and Bear Stearns each walked away with hundreds of millions of dollars.
In the current system it pays financially for companies to be aggressive and abuse the public trust, make as much money as possible, and then pay some modest fines. Often, no criminal laws are broken, or if they are, violations are impossible to either prosecute or prove. It’s little wonder that our current version of institutional capitalism sits so poorly with young people who grew up during the recession. They were on the receiving end of a morality play that ended with the bad guys walking away with bags of cash and a lousy job market.
What could we do that would seriously mitigate this behavior and elevate the state and the public good above the interests of multibillion-dollar corporations?
Here’s an idea for a dramatic rule—for every $100 million a company is fined by the Department of Justice or bailed out by the federal government, both its CEO and its largest individual shareholder will spend one month in jail. Call the new law the Public Protection against Market Abuse Act. If it’s a foreign company, this would apply to the head of the U.S. operation and the largest American shareholder. There would be a legal tribunal and due process in each case. The president would have the ability to pardon, suspend, shorten, or otherwise modify the period or sentence. The president would also have the ability to claw back the assets of any such individual to repay the public.
Admittedly, this drastic approach would stretch the bounds of the powers of the state. But there’s a clear need for penalties with some teeth for executives and individuals who are being enriched by egregious behavior at public expense. If this rule had been in place during the financial crisis, we would have had the heads of the major banks all lined up for prison sentences. The Sacklers would have spent time behind bars. It would certainly set up a hierarchy where CEOs are not above the public good.
Effectively regulating technological innovations like self-driving cars and artificial intelligence will require a much more activated and invigorated state. Elon Musk in 2017 called for proactive regulation of AI, calling it “a fundamental risk to the existence of civilization.” Techies don’t often call for regulation of their own industries, so you know it must be serious.
Another major technology issue that will require government intervention is the effect of smartphones on human minds, particularly those of young children. Recent research indicates that the increase in smartphone use by teenagers coincides with an unprecedented surge in depression, anxiety, reduced sociability, and even higher suicide rates. Tristan Harris, a former design ethicist at Google, has written compellingly about how apps are designed to function like slot machines, vying for our attention and giving us variable unpredictable rewards to keep us engaged. As individuals trying to moderate our own behavior and that of our children, we’re outgunned by billion-dollar companies. Tristan wrote, “Imagine hundreds of engineers whose job every day is to invent new ways to keep you hooked.” Another technologist lamented that “the best minds of my generation are thinking about how to make people click ads.” And they’re succeeding.
In a better world, one can imagine smartphones with settings like “maximum stimulation,” “moderate engagement,” and “serenity” and apps modifying their notifications and home screens accordingly. A government regulator—call it the Department of the Attention Economy—could dig into the guts of social media, gaming, and chat apps and allow for both user and parental visibility and control. Maybe there could even be notifications that flag excessive screen time; for example, “You are now entering hour 4 of continuous smartphone use. You may want to go outside or look at another human being now.”
I have two little boys and am not eager to see them become antisocial homebody zombies trying to set new high gaming scores. Yet, in observing parents interact with their children, I can see how easily it happens. Parents know there are endless hours to fill. Change won’t happen without some regulation, because the gaming and social media companies, many of them publicly traded, have strong financial incentives to maximize engagement.
A renewal of citizenship and humanity will require a different experience at the user level of citizenship. What do I meant by that? The state has a few big responsibilities. Keeping people healthy and educating them are two of the main ones, which we’ll turn to shortly.
Another aspect of citizenship is a sense of belonging and commonality. Most Americans have less and less exposure to those in other walks of life as we increasingly diverge into rural and urban enclaves. This leads to increasingly fraught politics as gaps become harder to bridge. Many of my friends advocate service year opportunities to foster more of a sense of unity. One idea is instituting an American Exchange Program or Citizenship Trip, during which all graduating high school seniors go on a month-long trip to several different parts of the country, hosted by host families and paid for by the government. They would volunteer for a local organization and participate in programming with 24 other high school graduates from diverse regions and backgrounds. The 25 young people would get to know each other in structured yet personal ways. It could be run by the top-rated schoolteachers and professors in the region each August and take place at high schools or community colleges. There would be some required programming on the basics of citizenship and civic investment.
Afterward, everyone would have at least a few friends from vastly different backgrounds. Young people have the potential to develop significant relationships in short periods of time in the right context. It would permanently alter our politics by making it impossible to cast other Americans as anything other than fellow citizens who want better lives for themselves and their loved ones.
People can tell when you actually invest in them—it’s one reason all of the high-end companies conduct elaborate trainings. Done well, the American Exchange Program would give people more of a reason to explore other parts of the country and maybe even move someplace different if an opportunity calls for it. It would open minds and hearts.
In order for our society to prosper through the automation wave, the state must become a newly invigorated force. Citizenship must grow to mean something again. And we have to make clear that we value people intrinsically, independent of any qualities or qualifications.