Can American democracy survive the current MAGA onslaught? The FT’s Chief Economics Correspondent Martin Wolf was based in Washington DC during Watergate, so has had a front row seat on that constitutional crisis. The political turmoil of the Seventies, he remembers, actually reinforced his faith in American institutions. But fast forwarding half a century, Wolf expresses concern with the health of contemporary American democracy, particularly when contrasted with the resilience of the constitutional system during the Nixon impeachment. Wolf, the author of the 2023 hit The Crisis of Democratic Capitalism, nonetheless remains cautiously hopeful about America's future, citing both its innovative culture and the hope that today’s political extremism will eventually fade.
Five Key Takeaways
Wolf worked at the World Bank in Washington DC from 1971-1981, experiencing America during a turbulent political period that included Watergate, stagflation, and the oil crisis.
He was impressed by America's constitutional process during Watergate, when bipartisan action held Nixon accountable, contrasting with today's political environment.
Wolf observes a decline in the "project of modernity" with increasing polarization between left and right extremes, leaving moderate positions marginalized.
Western democracies, including America and Britain, struggle to build infrastructure and implement major projects due to regulatory barriers, unlike China.
Despite his disappointment with America's current state, Wolf maintains hope based on America's continued innovation capacity and his belief that the MAGA movement will eventually be discredited.
Full Transcript
Andrew Keen: Hello everyone we are still in London I'm with I'm not sure I would call him an old friend but it's someone I've known for a while an acquaintance and as it happens we grew up on the same street in northwest London Thornton Way in Hampstead Garden suburb Martin Wolf is one of The world's most famous economist is certainly the most famous economist ever to grow up on Thornton Way in Hampstead Garden suburb. And Martin, you have a funny story about how you went from North London to South London.
Martin Wolf: I do. For anybody who's not a Londoner, this would seem rather an obvious thing to do. You move from one part of your city to another. But in London, the Thames is sort of an absolute psychological barrier. North and South should never meet. So the idea that someone would move from North to South seemed completely outlandish. And so it would have been for me, except that I moved after I was at University at Oxford to Washington, where worked for 10 years at the World Bank. I was there with my wife and we had to decide where to go back to when we came back to London. And we decided that South London, Dulwich where we live, was perfect because above all the houses were cheaper and it gave my wife a decent distance from my much-loved mother who could possibly be a bit interfering. And so we managed it and it was no great difficulty at all to us.
Andrew Keen: In terms of this conversation, I don't want to make it about London, I want to make it the middle of that sandwich between North and South London, which is Washington DC. You went to Washington DC, as you noted, after university and you didn't stay, Martin. You're very unusual in that sense. Most English people like myself, in fact, go to America and stay. Why didn't you stay? Well...
Martin Wolf: I never intended to. The World Bank is a strange sort of place. To work at because it is an international organization and you work on foreign countries on developing countries So while I was in Washington, I wasn't really of Washington and nearly all my friends were not Americans There were a few Americans in the World Bank, of course, but there were People India Africa everything else. My wife was English. We had two children while we were there and I was coming up into my thirties and we both had to decide where did we want our children to grow up and where do we feel most at home and the answer to both questions was London and England so I found it very easy. I never wanted to stay in America, I respected and admired it in many ways but I never felt truly at home. What he is is I was in Washington from 1971 to 1981 and this coincided perfectly, almost perfectly with the presidency of the World Bank of a very famous American.
Andrew Keen: Magna Mara. Who of course was also very famous for his management or perhaps mismanagement of the Vietnam War. Yes indeed and some
Martin Wolf: said that he went to the World Bank to, as it were, launder or improve his reputation. I got to know him reasonably well, considering I was very junior, because I was the senior economist for a while on India, which was then, before China rejoined, the most important member of the World bank. And I realized that he was a truly remarkable man with a truly, remarkable American can-do Spirit. But his judgment was not impeccable and he had some pretty obvious mental flaws which I think were rather similar to those, or probably essentially the same as those which he displayed when he was Secretary of Defense during the Vietnam War, in particular the idea that quantitative measures and limitless resources would achieve anything. And I discovered while I was in the World Bank that
Andrew Keen: But neither was true. Martin, you were in D.C. In a kind of global bubble. What was America like in the 70s? This was the period of stagflation. You were an up-and-coming economist. Surely this was fascinating for you.
Martin Wolf: Different point and I think that is very important indeed I've written about that very recently in a column to try to explain to myself what I see as the collapse of American civilization and particularly its political civilization so apart from working at the World Bank which was seminal and it is how I began to understand the world economy in a way that I could never have done otherwise. But of course this was the time of Nixon, Watergate, wage price controls. Inflation, the oil price shock and going through Gerald Ford after the impeachment or the near impeachment or resignation of Nixon, then Gerald Ford, then Jimmy Carter and I basically left as Ronald Reagan was coming into power. So it was a period of enormous political and economic geopolitical upheaval, in many ways the period of my entire life most similar to what we are seen today. The big difference, which is what I commented about in my column, was that when it became obvious that Richard Nixon had really been very naughty and broken the law and had people break the law on his behalf, I saw, I actually bought a television, the first television I ever owned, to watch the House Judiciary hearings on what had happened. And what impressed me most about this is that they were actually looking at the evidence. They were all looking at evidence and the Republicans, Nixon after all was a Republican president, were very clear that, well, if he'd actually broken the law, this was an impeachable offense and they would bring the case. Before the Senate and they did and it became obvious to everybody that he was going to be convicted which meant of course a bipartisan process genuinely bipartisan and he went and so to me that demonstrated that despite all the difficulties and pressures and his immense position as president one two terms that they believed in the Constitution, that was bipartisan, and they carried it through, and they got rid of him. And that was, to me, incredibly uplifting and inspiring. So I didn't stay in America, but I thought, well, at bottom, this is a pretty solid constitutional set-up with a solid set of values to back it. And I took away with that.
Andrew Keen: And I don't think it's true anymore. I want to get to that in a second, but the solid constitutionality of the US, of course, is a manifestation, perhaps, of its modernity, always a model for many other developing and developed democracies. What about in economic, cultural, and social terms? You spent 10 years in America. I assume you escaped D.C. Occasionally. Was America at that point in your mind, when you think back the model of modernity. Very interesting question.
Martin Wolf: First of all, it was completely obvious to me. At that point that race was a very profound divisive issue. I came there more or less at the same time as the great race riots of the late 60s and early 70s. Washington was a deeply racially divided society with a very, very high murder rate, mostly black on black. It was obvious as soon as you went into the South how racially divided the country was. What also struck me as I went around the country is that though there was obviously enormous wealth, there was also quite striking poverty, which I found quite a shock, particularly once you got away from the richer parts of the richer cities. I was struck in addition by the entrepreneurship, the innovation, which you could see everywhere, though this was a pretty difficult period for the United States, nonetheless, this was there. And of course, you couldn't get away from this sense of the immense power of the United States. Washington was clearly, in the obvious way, the capital of everything, despite the difficulties of the United States at the moment, one could almost feel the power around one, so I got it, but it never felt like home. And that's probably because America is so new and so obviously abrasive and I rather like the old and the less abrasive which is Europe and so I feel more at home here that's very much personal it's nothing nothing else than that but America has always meant a great deal my father admired it enormously as a refugee from Europe and I've always admired it until relatively recently.
Andrew Keen: I want to get to that in a second, Martin, but what most surprised you about America? You noted race. I assume you grew up with some knowledge of the U.S., television, radio, history books. Were you surprised by the racial inequalities and tensions in the U S of the seventies? I've always been.
Martin Wolf: Said this many times, I read a lot, obviously, in my sort of life. There's a huge difference between what one knows from reading and experience, something that one's actually experienced. So no, I wasn't surprised in the sense I knew American history, I knew about the Civil War, I knew, about Jim Crow and of course the Civil Rights Movement and just happened. So it was very, very live. I've already talked about the race riots. So I knew this intellectually, but just to experience when I walked sometimes into areas which were overwhelmingly black in Washington. Washington at that stage had one of the highest motor rates in the country. I could feel the tension. I could feel people looking at me who didn't feel very friendly towards me. This was... Pretty obvious, and I learned from my wife who actually worked in the American government that people who work with her, black people who worked with her in her office got very nervous when they crossed the bridge to Virginia. They were sensed insecurity, so it became personal in that sense. But of course my world was entirely of middle and upper middle class professionals of the World Bank, but they were also outsiders and I think they probably all felt much the same in different ways.
Andrew Keen: You've noted a couple of times already in this conversation Martin that you've fallen out of love with America. Maybe you weren't quite in love but you had a deep affection for it in your first term in the 70s at the World Bank and now something has changed. What's changed? I think that's a very good question.
Martin Wolf: Question, and I must stress, this is probably, perhaps falling out of love is the wrong phrase. It's disappointment. It's that, you know, this one of your great loves and you decide, It's she's at because it were not quite what I thought she was so which by the way in my personal life has never happened having been married forever to one person whom I met when I was very young but in this yes because for us as liberal very passionately democratically orientated Europeans. My parents, both refugees, survivors of the Holocaust, most of their families were killed. America was the shining city on the hill in the sense that it was the country that had saved them. Ultimately, it had liberated Europe, not just from the Nazis, but also from the threat of Soviet communism, which then was quite real, particularly to my father who was a Viennese. So this was a country loved, and in the post-war period, we all knew they made mistakes, but up to the mid-60s and the entanglement with Vietnam, it seemed that they made all the right decisions to save Europe, and we were very, very grateful and admiring of its commitment to democracy, commitment to freedom, and its support for those values across Europe. So, it was deeply emotional, as I think it is for many Europeans even today, and what's happened since then, particularly more recently, looks like a sort of a betrayal of these values, of the basic constitutional values, of commitment to fundamental principles of the rules of and constitutional order, to being the leader of the free world. All these ideas which now seem terribly naive, almost ridiculous, but they were real to people of my generation after I was born in 1946. So yes, there is a profound disappointment and that's, I told you, that strangely the 70s precisely because it was such a mess but the Americans got through it in the end quite well sort of reinforce that belief in America, very widely shared, as I said. And that's made subsequent development.
Andrew Keen: I want to get to that in a second, but let's try and have an American ending or at least a traditional happy American ending. Is there any reason, do you have any hope left in America reinventing itself and once again becoming a model for post-modernity or the network society of the 21st century, whatever term we want to use for this period after the 20th century? I've always felt that one has to hope.
Martin Wolf: It's sort of an obligation and I have two reasons for having some significant hope. There are huge parts of America that clearly remain very dynamic particularly its tech sector. As long as it continues to allow in bright young people from all over the world the basic structure of law continues to operate. Innovation will continue in America. New things will happen. And I also think that there must be a very good chance that the complete chaos and incompetence, I mean radical incompetence of the present administration will, I hope, it certainly should, completely discredit the MAGA movement for the reactionary, nostalgic nonsense it is. Offer any future for a sophisticated civilized free society. It's obviously about going back to something completely imagined under the leadership of a man who has... Absolutely no knowledge or capacity for rule in line with what is needed in a constitutional republic. If people learn from this, and we're fortunate that it's so bad so quickly, and they should learn, this will just be an episode, and 20 years from now people will look back on this rather like the Nixon period when he went crazy, and will say, oh Trump, we got rid of him, and now we're back to something more normal. And if these two things come together, maybe both parties will find a way to marry modernity with the pressures of today. And America will be reborn as it has been in the past. I have to believe that because I do think America is essential if the sort of values that come out of the Enlightenment, broadly defined, are to continue to have the power I want them to.
Andrew Keen: To have in our world. Well, Martin Wolfe, the man who went to America and came back half in love, perhaps less half in loved today, but still with some faith in the future. As always, Martin, real pleasure to have you on the show, thank you so much.
Martin Wolf CBE (born 1946) is Chief Economics Commentator at the Financial Times, a position he's held since 1996. Previously, he worked as a senior economist at the World Bank (1971-1981) and directed studies at the Trade Policy Research Centre in London before joining the FT in 1987. Author of influential books including "Why Globalization Works" and "The Crisis of Democratic Capitalism" (2023), Wolf is widely regarded as one of the world's most influential economic journalists. He was awarded the CBE in 2000 for services to financial journalism and has received numerous honorary doctorates and prestigious awards, including the Gerald Loeb Lifetime Achievement Award in 2019.
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