'People will forgive you for being wrong, but they will never forgive you for being right - especially if events prove you right while proving them wrong.' Thomas Sowell
It's not only the range of strokes that has dramatically evolved in short-format batting but also the mental approach. Contrast the somnambulistic approach of Essex's Brian Ward in a 1969 40-over game with England's record-breaking assault on the Australian bowling at Trent Bridge recently.
Ward decided that Somerset offspinner Brian Langford was the danger man in the opposition attack, and eight consecutive maidens resulted, handing the bowler the never-to-be-repeated figures of 8-8-0-0. On the other hand England's batsmen this year displayed no such inhibitions in rattling up 481 off 50 overs, and Australia's bowlers, headed by Andrew Tye, with 9-0-100-0, were pummelled.
Nevertheless one thing has remained constant in the short formats: a wariness around spin bowling, although currently it's more likely to be the wrist variety than fingerspin.
The list of successful wristspinners in short-format cricket is growing rapidly and there have been some outstanding recent performances. Afghanistan's Rashid Khan was the joint leading wicket-taker in the BBL; England's Adil Rashid (along with spin-bowling companion Moeen Ali), took the most wicketsin the recent whitewash of Australia; and in successive T20Is against England, India's duo of Yuzvendra Chahal and Kuldeep Yadav have claimed the rare distinction of a five-wicket haul. It's a trail of destruction that have would gladdened the heart of Bill "Tiger" O'Reilly, a great wristspinner himself and the most insistent promoter of the art there has ever been.
Wristspinners are extremely successful in the shorter formats and are being eagerly sought after for the many T20 leagues. Their enormous success is mostly down to the deception they provide, since they are able to turn it from both leg and off with only a minimal change of action. Kuldeep provided a perfect example when he bamboozled both Jonny Bairstow and Joe Root with successive wrong'uns in the opening T20 at Old Trafford.
The fact that Bairstow - a wicketkeeper by trade - was deceived by the wrong'un is symptomatic of a malaise that is sweeping international batting - a general inability to read wristspinners. This failing is not only the root cause of wicket loss from mishits but also contributes to a desirable bowling economy rate for the bowlers, as batsmen are hesitant to attack a delivery they are unsure about. This inability to read wristspinners is mystifying.
If a batsman watches the ball out of the hand, the early warning signals are available. A legbreak is delivered with the back of the hand turned towards the bowler's face, while with the wrong'un, it's facing the batsman. As a further indicator, the wrong'un, because it's bowled out of the back of the hand, has a slightly loftier trajectory. Final confirmation is provided by the seam position, which is tilted towards first slip for the legspinner, and leg slip for the wrong'un. Any batsman waiting to pick the delivery off the pitch is depriving himself of scoring opportunities and putting his wicket in danger.
When Shane Warne was at his devastating peak, fans marvelled at his repertoire and said it was the main reason for his success. "Picking him is the easy part," I explained, "it's playing him that's difficult."
Richie Benaud, another master of the art, summed up spin bowling best: "It's the subtle variations," he proffered, "that bring the most success."
O'Reilly was not only an aggressive leggie but also a wily one, and he bent his back leg when he wanted to vary his pace. This action altered his release point without slowing his arm speed, and consequently it was difficult for the batsman to detect the subtle variation.
This type of information is crucial to successful batsmanship, but following Kuldeep's demolition job, Jos Buttler said it might take one or two games for English batsmen to get used to the left-armer. This is an indictment of the current system for developing young batsmen, where you send them into international battle minus a few important tools.
Meghnad Desai in The FT India is now one of the world’s economic hotspots. Stock images of starving children, miserable peasants and cheating shop owners have been augmented with those of high-tech development and booming cities. India is now the world’s fastest-growing economy. It is about to become the third-largest economy — at least in terms of purchasing power dollars if not yet real ones. Foreign investors are rushing in. In The Billionaire Raj, James Crabtree has written a compelling guide to what awaits them. To make India more accessible to the western investor, Crabtree draws an analogy between America’s Gilded Age at the end of the 19th century — that plutocratic moment of the Vanderbilts, Goulds, Rockefellers — and the newest of India’s billionaires. Did you know that India now has more billionaires than Russia? This sudden enrichment was the result of the long boom of globalisation from 1991-2008. India had initiated reforms to escape from four decades of conservative socialism, initiated by Jawaharlal Nehru, which did not trust private business and put the state in command. The Indian state is inefficient as it is, but disastrous in running business. Its airline Air India has racked up billions in losses; its banks are mired in non-performing loans. In 1991, Manmohan Singh, then finance minister, bit the bullet and began to liberalise the economy. Tariffs were cut, import licensing was removed, and the rupee was devalued twice within a week. He had little choice because India had run out of foreign exchange reserves and had to pawn its gold to secure a loan from the International Monetary Fund. The reforms took time to work but, from 1998 onwards, the economy secured high single-digit growth rates, triple the so-called “Hindu growth rate” of 3 per cent per year that prevailed during the first 30 years of independence. With a decade-long growth spurt from 1998 to 2008 came the vast fortunes generated in a crony-capitalist relationship between the ruling Congress party and its private sector clients and financiers. Crabtree, a former FT Mumbai correspondent, gives us a detailed treatment of the links between the politicians needing money to finance elections that were both costly and cheap. (The 2014 elections cost $5bn — or $6 per voter.) Crabtree gives entertaining portraits of some billionaires. The opening chapters cover Mukesh Ambani and his towering residential extravaganza Antilla, the most expensive house ever built in India, which now dominates the Mumbai skyline; the fugitive Vijay Mallya, a drinks tycoon who was once known as the King of Good Times; the reticent Gautam Adani, an infrastructure entrepreneur who owns ports, mines and refineries. Dhirubhai Ambani, the patriarch of the Reliance group, figured out how to negotiate government regulations and expand his business while keeping the ruling party on his side. Mallya went so far as to be voted into a seat in the Rajya Sabha, the upper house of parliament, after a reported donation of 550m rupees ($10m in those days). Adani prospered in Gujarat with the reported blessings of Narendra Modi while he was chief minister of the state in India’s north-west, where the politician enjoyed both a clean reputation and business-friendly credentials. Crabtree shows both how deep corruption reaches into electoral politics — but also how functional it is Beyond the personalities lies another part of the puzzle. Corruption has gone deep in the system. Elections cannot be financed with just legally declared donations. The donors want to escape attention of the tax man, as do the party leaders. It is a symbiotic relationship. Not even Prime Minister Modi, as he has been since 2014, is about to change it, though he has moved against crony capitalism. Armed with an electoral majority, he has set about breaking the political mould, ending the near 70-year hegemony of Congress. He has sundered the crony ties that the top echelon of government enjoyed with the “promoters” of infrastructure projects during the Congress years. Back then the nationalised banks had to lend money to a favoured few and it was understood that the money would not be repaid. No more. Insolvency procedures have been toughened. Debtors can no longer shield their assets from creditors. It was this that sent Mallya abroad. This book was written before these drastic changes. But whether he wins or loses the next elections, Modi has made revival of crony capitalism difficult. There are also other concerns. Crabtree worries over Modi’s dual persona as a development enthusiast as well as a Hindu nationalist. The fear is that this may increase intolerance towards minorities — Muslims and Christians — and disrupt peaceful economic progress. Crabtree’s vivid portrayal of the corruption of politics is very informative, and thought-provoking. He travels the country to show both how deep corruption reaches into electoral politics — but also how functional it is. When an economy is regulated, riddled with permits needed to do business, a few palms may need to be greased. A payment — or rent, as economists call it — may be required. But the rewards are considerable. The corruption market works. It may be immoral but it is not inefficient. It would be better if India became less corrupt. Crabtree thinks so. That would require a lot of courage and an ability to pursue radical reform. The leader who embarks upon it risks unpopularity — as Modi is now finding out. These are matters that cannot be settled in a single book. Crabtree has given us the most comprehensive and eminently readable tour of economic India, which, as he shows, cannot be understood without a knowledge of how political India works.
In matters of industrial strategy and international competition, there’s no contrast starker than that between the hapless resignation of Europe and the steely determination of China. Unsurprisingly, it has been China – not Europe – that has proposed, with little success, forming a common front against Donald Trump’s trade tantrums. Even Washington’s bullying cannot awaken European policymakers from their slumber – or, as seems more likely, their moderately lubricated afternoon nap.
Hardly a week passes without a new alarming announcement that Beijing has managed to outmanoeuvre Brussels in yet another domain. Last week brought three such developments.
First, China Merchants Group, a state-owned company, joined forces with SPF Group and Centricus – asset managers based in Beijing and London respectively – to form a $15bn fund to compete with SoftBank’s $100bn Vision Fund, launched to invest in the most promising technology firms worldwide. This comes weeks after Sequoia Capital, America’s finest venture capital firm, closed the first round of fundraising on its $8bn Vision Fund alternative.
Second, Contemporary Amperex Technology, one of the largest manufacturers of lithium-ion batteries in China and a major beneficiary of its government’s efforts to steer this industry towards world leadership, signed a €1bn deal with BMW, with the intention of building its own factory in Europe to satisfy soaring demand for its batteries.
Daimler, another crown jewel of the German car industry, is now reportedly considering placing a similar order.
Third, Bolloré Group, one of France’s most important conglomerates, with activities spanning paper, energy and logistics businesses, entered a deal with Chinese technology giant Alibaba. Bolloré is hoping to use Alibaba’s sprawling cloud-computing empire across its operations, including in its battery-making division.
There is a neutral, even positive, interpretation of these developments. European capital – British in the first case, German in the second, French in the third – is taking advantage of lucrative opportunities. China just happens to offer more of them at the moment.
And yet, each of the three developments reveals major gaps in Europe’s industrial strategy. It’s one thing for European capital to be passively invested into most promising robotics or AI projects worldwide: Daimler, for example, is one of the few European backers of the Vision Fund. It’s quite another thing to be doing it with the goal of creating Europe’s own champions in these fields.
The European Commission’s strategy on artificial intelligence, published in April 2018, rests on the untested assumption that Brussels will succeed in mobilising nearly €18bn of private capital to complement a couple of billions that will be found in existing European programs. This, however, will require convincing the likes of Daimler – whose biggest shareholder today is China’s Geely – that their investments should go to some European tech fund, rather than to SoftBank or China Merchants Group.
It’s a challenge similar to Europe’s efforts, unsuccessful so far, to push European industry towards creating a European manufacturer of batteries for electric cars, if only to minimise its reliance on China and South Korea (the European Battery Alliance, an industry-wide initiative championed by the European commission, was launched last year, but has not borne much fruit yet).
European leaders seem to recognise the battery challenge – and so do Germany’s powerful trade unions – but it’s hard to see how it will be solved when the likes of BMW and Daimler keep placing billion dollar-orders with Chinese battery manufacturers.
The story on cloud computing, increasingly bundled with artificial intelligence services, is not much different: even if the European industry wanted to turn away from Amazon or Microsoft and use a European provider, it just does not have much choice. It is essentially hemmed in by American and Chinese giants.
This dependence was easier to justify when global trade was running smoothly and all industries looked alike (looked equally unimportant from the perspective of national or regional interests). Now that the European car industry finds itself under heavy fire from Trump, Brussels is severely constrained in its response.
Artificial intelligence: €20bn investment call from EU commission
When Trump threatens Europe’s most important industry, the logical thing to do would be to threaten retaliation against America’s own most important industry, which, whatever Trump himself believes, is actually based in Silicon Valley and Seattle, not Detroit.
This, however, is not an option: no one is going to believe that Europe, which has inserted services from Alphabet, IBM, Microsoft and Amazon deep into the infrastructure of its hospitals, energy grids, transportation systems, and universities is going to shut them off.
The best it can hope for, at this point, is to diversify its reliance on the US giants by doing some business with the Chinese ones.
None of this bodes well for Europe’s ability to remain at the centre of the global economy. Its industrial giants will not fade away but they will be increasingly dominated by foreign owners and foreign technology. While, in the rosier days of globalisation, this might even have been hailed as laudable, under today’s new normal this strategy borders on the suicidal. Those afternoon naps of European policymakers increasingly look like a coma.
In late May, the same day she got fired by the US TV network ABC for her racist tweet about Obama adviser Valerie Jarrett, Roseanne Barr accused Chelsea Clinton of being married to George Soros’s nephew. “Chelsea Soros Clinton,” Barr tweeted, knowing that the combination of names was enough to provoke a reaction. In the desultory exchange that followed, the youngest Clinton responded to Roseanne by praising Soros’s philanthropic work with his Open Society Foundations. To which Barr responded in the most depressing way possible, repeating false claims earlier proferred by rightwing media personalities: “Sorry to have tweeted incorrect info about you! Please forgive me! By the way, George Soros is a nazi who turned in his fellow Jews 2 be murdered in German concentration camps & stole their wealth – were you aware of that? But, we all make mistakes, right Chelsea?”
Barr’s tweet was quickly retweeted by conservatives, including Donald Trump Jr. This shouldn’t have surprised anyone. On the radical right, Soros is as hated as the Clintons. He is a verbal tic, a key that fits every hole. Soros’s name evokes “an emotional outcry from the red-meat crowds”, one former Republican congressman recently told the Washington Post. They view him as a “sort of sinister [person who] plays in the shadows”. This antisemitic caricature of Soros has dogged the philanthropist for decades. But in recent years the caricature has evolved into something that more closely resembles a James Bond villain. Even to conservatives who reject the darkest fringes of the far right, Breitbart’s description of Soros as a “globalist billionaire” dedicated to making America a liberal wasteland is uncontroversial common sense.
In spite of the obsession with Soros, there has been surprisingly little interest in what he actually thinks. Yet unlike most of the members of the billionaire class, who speak in platitudes and remain withdrawn from serious engagement with civic life, Soros is an intellectual. And the person who emerges from his books and many articles is not an out-of-touch plutocrat, but a provocative and consistent thinker committed to pushing the world in a cosmopolitan direction in which racism, income inequality, American empire, and the alienations of contemporary capitalism would be things of the past. He is extremely perceptive about the limits of markets and US power in both domestic and international contexts. He is, in short, among the best the meritocracy has produced.
It is for this reason that Soros’s failures are so telling; they are the failures not merely of one man, but of an entire class – and an entire way of understanding the world. From his earliest days as a banker in postwar London, Soros believed in a necessary connection between capitalism and cosmopolitanism. For him, as for most of the members of his cohort and the majority of the Democratic party’s leadership, a free society depends on free (albeit regulated) markets. But this assumed connection has proven to be a false one. The decades since the end of the cold war have demonstrated that, without a perceived existential enemy, capitalism tends to undermine the very culture of trust, compassion and empathy upon which Soros’s “open society” depends, by concentrating wealth in the hands of the very few.
Instead of the global capitalist utopia predicted in the halcyon 1990s by those who proclaimed an end to history, the US is presently ruled by an oafish heir who enriches his family as he dismantles the “liberal international order” that was supposed to govern a peaceful, prosperous and united world. While Soros recognised earlier than most the limits of hypercapitalism, his class position made him unable to advocate the root-and-branch reforms necessary to bring about the world he desires. The system that allows George Soros to accrue the wealth that he has done has proven to be one in which cosmopolitanism will never find a stable home.
The highlights of Soros’s biography are well known. Born to middle-class Jewish parents in Budapest in 1930 as György Schwartz, Soros – his father changed the family name in 1936 to avoid antisemitic discrimination – had a tranquil childhood until the second world war, when after the Nazi invasion of Hungary he and his family were forced to assume Christian identities and live under false names. Miraculously, Soros and his family survived the war, escaping the fate suffered by more than two-thirds of Hungary’s Jews. Feeling stifled in newly communist Hungary, in 1947 Soros immigrated to the UK, where he studied at the London School of Economics and got to know the Austrian-born philosopher Karl Popper, who became his greatest interlocutor and central intellectual influence.
In 1956, Soros moved to New York to pursue a career in finance. After spending over a decade working in various Wall Street positions, in the late 1960s he founded the Quantum Fund, which became one of the most successful hedge funds of all time. As his fund amassed staggering profits, Soros personally emerged as a legendary trader; most famously, in November 1992 he earned more than $1bn and “broke the Bank of England” by betting that the pound was priced too highly against the Deutschmark.
Karl Popper, whose writings were a key influence on Soros’s thinking about the ‘open society’. Photograph: Popperfoto
Today, Soros is one of the richest men in the world and, along with Bill Gates and Mark Zuckerberg, one of the US’s most politically influential philanthropists. But unlike Gates and Zuckerberg, Soros has long pointed to academic philosophy as his source of inspiration. Soros’s thought and philanthropic career are organised around the idea of the “open society,” a term developed and popularised by Popper in his classic work The Open Society and Its Enemies. According to Popper, open societies guarantee and protect rational exchange, while closed societies force people to submit to authority, whether that authority is religious, political or economic.
Since 1987, Soros has published 14 books and a number of pieces in the New York Review of Books, New York Times and elsewhere. These texts make it clear that, like many on the centre-left who rose to prominence in the 1990s, Soros’s defining intellectual principle is his internationalism. For Soros, the goal of contemporary human existence is to establish a world defined not by sovereign states, but by a global community whose constituents understand that everyone shares an interest in freedom, equality and prosperity. In his opinion, the creation of such a global open society is the only way to ensure that humanity overcomes the existential challenges of climate change and nuclear proliferation. Unlike Gates, whose philanthropy focuses mostly on ameliorative projects such as eradicating malaria, Soros truly wants to transform national and international politics and society. Whether or not his vision can survive the wave of antisemitic, Islamophobic and xenophobic rightwing nationalism ascendant in the US and Europe remains to be seen. What is certain is that Soros will spend the remainder of his life attempting to make sure it does.
Soros began his philanthropic activities in 1979, when he “determined after some reflection that I had enough money” and could therefore devote himself to making the world a better place. To do so, he established the Open Society Fund, which quickly became a transnational network of foundations. Though he made some effort at funding academic scholarships for black students in apartheid South Africa, Soros’s primary concern was the communist bloc in eastern Europe; by the end of the 80s, he had opened foundation offices in Hungary, Poland, Czechoslovakia, Bulgaria and the Soviet Union itself. Like Popper before him, Soros considered the countries of communist eastern Europe to be the ultimate models of closed societies. If he were able to open these regimes, he could demonstrate to the world that money could – in some instances, at least – peacefully overcome oppression without necessitating military intervention or political subversion, the favoured tools of cold war leaders.
Soros set up his first foreign foundation in Hungary in 1984, and his efforts there serve as a model of his activities during this period. Over the course of the decade, he awarded scholarships to Hungarian intellectuals to bring them to the US; provided Xerox machines to libraries and universities; and offered grants to theatres, libraries, intellectuals, artists and experimental schools. In his 1990 book Opening the Soviet System, Soros wrote that he believed his foundation had helped “demolish the monopoly of dogma [in Hungary] by making an alternate source of financing available for cultural and social activities”, which, in his estimation, played a crucial role in producing the internal collapse of communism.
Soros’s use of the word dogma points to two critical elements of his thought: his fierce belief that ideas, more than economics, shape life, and his confidence in humanity’s capacity for progress. According to Soros, the dogmatic mode of thinking that characterised closed societies made it impossible for them to accommodate to the changing vicissitudes of history. Instead, “as actual conditions change”, people in closed societies were forced to abide by an atavistic ideology that was increasingly unpersuasive. When this dogma finally became too obviously disconnected from reality, Soros claimed, a revolution that overturned the closed society usually occurred. By contrast, open societies were dynamic and able to correct course whenever their dogmas strayed too far from reality.
As he witnessed the Soviet empire’s downfall between 1989 and 1991, Soros needed to answer a crucial strategic question: now that the closed societies of eastern Europe were opening, what was his foundation to do? On the eve of the Soviet Union’s dissolution, Soros published an updated version of Opening the Soviet System, titled Underwriting Democracy, which revealed his new strategy: he would dedicate himself to building permanent institutions that would sustain the ideas that motivated anticommunist revolutions, while modelling the practices of open society for the liberated peoples of eastern Europe. The most important of these was Central European University (CEU), which opened in Budapest in 1991. Funded by Soros, CEU was intended to serve as the wellspring for a new, transnational, European world – and the training ground for a new, transnational, European elite.
An activist removing an anti-Soros poster in Budapest, Hungary. Photograph: Bernadett Szabo/Reuters
How could Soros ensure that newly opened societies would remain free? Soros had come of age in the era of the Marshall Plan, and experienced American largesse firsthand in postwar London. To him, this experience showed that weakened and exhausted societies could not be rehabilitated without a substantial investment of foreign aid, which would alleviate extreme conditions and provide the minimum material base that would enable the right ideas about democracy and capitalism to flourish.
For this reason, in the late 80s and early 90s Soros repeatedly argued that “only the deus ex machina of western assistance” could make the eastern bloc permanently democratic. “People who have been living in a totalitarian system all their lives,” he claimed, “need outside assistance to turn their aspirations into reality.” Soros insisted that the US and western Europe give the countries of eastern Europe a substantial amount of pecuniary aid, provide them with access to the European Common Market, and promote cultural and educational ties between the west and the east “that befit a pluralistic society”. Once accomplished, Soros avowed, western Europe must welcome eastern Europe into the European community, which would prevent the continent’s future repartitioning.
Soros’s prescient pleas went unheeded. From the 1990s on, he has attributed the emergence of kleptocracy and hypernationalism in the former eastern bloc to the west’s lack of vision and political will during this crucial moment. “Democracies,” he lamented in 1995, seem to “suffer from a deficiency of values … [and] are notoriously unwilling to take any pain when their vital self-interests are not directly threatened.” For Soros, the west had failed in an epochal task, and in so doing had revealed its shortsightedness and fecklessness.
But it was more than a lack of political will that constrained the west during this moment. In the era of “shock therapy”, western capital did flock to eastern Europe – but this capital was invested mostly in private industry, as opposed to democratic institutions or grassroots community-building, which helped the kleptocrats and anti-democrats seize and maintain power. Soros had identified a key problem but was unable to appreciate how the very logic of capitalism, which stressed profit above all, would necessarily undermine his democratic project. He remained too wedded to the system he had conquered.
In the wake of the cold war, Soros dedicated himself to exploring the international problems that prevented the realisation of a global open society. After the 1997 Asian financial crisis, in which a currency collapse in south-east Asia engendered a world economic downturn, Soros wrote books addressing the two major threats he believed beset open society: hyperglobalisation and market fundamentalism, both of which had become hegemonic after communism’s collapse.
Soros argued that the history of the post-cold war world, as well as his personal experiences as one of international finance’s most successful traders, demonstrated that unregulated global capitalism undermined open society in three distinct ways. First, because capital could move anywhere to avoid taxation, western nations were deprived of the finances they needed to provide citizens with public goods. Second, because international lenders were not subject to much regulation, they often engaged in “unsound lending practices” that threatened financial stability. Finally, because these realities increased domestic and international inequality, Soros feared they would encourage people to commit unspecified “acts of desperation” that could damage the global system’s viability.
Soros saw, far earlier than most of his fellow centre-leftists, the problems at the heart of the financialised and deregulated “new economy” of the 1990s and 2000s. More than any of his liberal peers, he recognised that embracing the most extreme forms of its capitalist ideology might lead the US to promote policies and practices that undermined its democracy and threatened stability both at home and abroad.
In Soros’s opinion, the only way to save capitalism from itself was to establish a “global system of political decision-making” that heavily regulated international finance. Yet as early as 1998, Soros acknowledged that the US was the primary opponent of global institutions; by this point in time, Americans had refused to join the International Court of Justice; had declined to sign the Ottawa treaty on banning landmines; and had unilaterally imposed economic sanctions when and where they saw fit. Still, Soros hoped that, somehow, American policymakers would accept that, for their own best interests, they needed to lead a coalition of democracies dedicated to “promoting the development of open societies [and] strengthening international law and the institutions needed for a global open society”.
But Soros had no programme for how to modify American elites’ increasing hostility to forms of internationalism that did not serve their own military might or provide them with direct and visible economic benefits. This was a significant gap in Soros’s thought, especially given his insistence on the primacy of ideas in engendering historical change. Instead of thinking through this problem, however, he simply declared that “change would have to begin with a change of attitudes, which would be gradually translated into a change of policies”. Soros’s status as a member of the hyper-elite and his belief that, for all its hiccups, history was headed in the right direction made him unable to consider fully the ideological obstacles that stood in the way of his internationalism.
The George W Bush administration’s militarist response to the attacks of September 11 compelled Soros to shift his attention from economics to politics. Everything about the Bush administration’s ideology was anathema to Soros. As Soros declared in his 2004 The Bubble of American Supremacy, Bush and his coterie embraced “a crude form of social Darwinism” that assumed that “life is a struggle for survival, and we must rely mainly on the use of force to survive”. Whereas before September 11, “the excesses of [this] false ideology were kept within bounds by the normal functioning of our democracy”, after it Bush “deliberately fostered the fear that has gripped the country” to silence opposition and win support for a counterproductive policy of militaristic unilateralism. To Soros, assertions such as “either you are with us, or you are with the terrorists” eerily echoed the rhetoric of the Nazis and Soviets, which he hoped to have left behind in Europe. Soros worried, wisely, that Bush would lead the nation into “a permanent state of war” characterised by foreign intervention and domestic oppression. The president was thus not only a threat to world peace, but also to the very idea of open society.
Nevertheless, Soros was confident that Bush’s “extremist ideology” did not correspond “to the beliefs and values of the majority of Americans”, and he expected that John Kerry would win the 2004 presidential election. Kerry’s victory, Soros anticipated, would spur “a profound reconsideration of America’s role in the world” that would lead citizens to reject unilateralism and embrace international cooperation.
But Kerry did not win, which forced the philanthropist to question, for the first time, ordinary Americans’ political acumen. After the 2004 election, Soros underwent something like a crisis of faith. In his 2006 book The Age of Fallibility, Soros attributed Bush’s re-election to the fact that the US was “a ‘feel-good’ society unwilling to face unpleasant reality”. Americans, Soros avowed, would rather be “grievously misled by the Bush administration” than confront the failures of Afghanistan, Iraq and the war on terror head-on. Because they were influenced by market fundamentalism and its obsession with “success”, Soros continued, Americans were eager to accept politicians’ claims that the nation could win something as absurd as a war on terror.
Bush’s victory convinced Soros that the US would survive as an open society only if Americans began to acknowledge “that the truth matters”; otherwise, they would continue to support the war on terror and its concomitant horrors. How Soros could change American minds, though, remained unclear.
The financial crisis of 2007-2008 encouraged Soros to refocus on economics. The collapse did not surprise him; he considered it the predictable consequence of market fundamentalism. Rather, it convinced him that the world was about to witness, as he declared in his 2008 book The New Paradigm for Financial Markets, “the end of a long period of relative stability based on the US as the dominant power and the dollar as the main international reserve currency”.
Anticipating American decline, Soros started to place his hopes for a global open society on the European Union, despite his earlier anger at the union’s members for failing to fully welcome eastern Europe in the 90s. Though he admitted that the EU had serious problems, it was nevertheless an organisation in which nations voluntarily “agreed to a limited delegation of sovereignty” for the common European good. It thus provided a regional model for a world order based on the principles of open society.
Soros’s hopes in the EU, however, were quickly dashed by three crises that undercut the union’s stability: the ever-deepening international recession, the refugee crisis, and Vladimir Putin’s revanchist assault on norms and international law. While Soros believed western nations could theoretically mitigate these crises, he concluded that, in a repetition of the failures of the post-Soviet period, they were unlikely to band together to do so. In the last 10 years, Soros has been disappointed by the facts that the west refused to forgive Greece’s debt; failed to develop a common refugee policy; and would not consider augmenting sanctions on Russia with the material and financial support Ukraine required to defend itself after Putin’s 2014 annexation of Crimea. He was further disturbed that many nations in the EU, from the UK to Poland, witnessed the re-emergence of a rightwing ethnonationalism thought lost to history. Once Britain voted to leave the union in 2016, he became convinced that “the disintegration of the EU [was] practically irreversible”. The EU did not serve as the model Soros hoped it would.
Hungarian prime minister Viktor Orban in parliament for a vote on the ‘Stop Soros’ anti-immigration laws that he introduced. Photograph: Tamas Kaszas/Reuters
Soros experienced firsthand the racialised authoritarianism that in the last decade has threatened not only the EU, but democracy in Europe generally. Since 2010, the philanthropist has repeatedly sparred with Viktor Orbán, the authoritarian, anti-immigrant prime minister of Hungary. Recently, Soros accused Orbán of “trying to re-establish the kind of sham democracy that prevailed [in Hungary] in the period between the first and second world wars”. In his successful re-election campaign earlier this year, Orbán spent much of his time on the campaign trail demonising Soros, playing on antisemitic tropes and claiming that Soros was secretly plotting to send millions of immigrants to Hungary. Orbán has also threatened the Central European University – which his government derisively refers to as “the Soros university” – with closure, and last month parliament passed new anti-immigration legislation known as the “Stop Soros” laws.
But while Orbán threatens Hungary’s open society, it is Donald Trump who threatens the open society writ large. Soros has attributed Trump’s victory to the deleterious effects market fundamentalism and the Great Recession had on American society. In a December 2016 op-ed, Soros argued that Americans voted for Trump, “a con artist and would-be dictator”, because “elected leaders failed to meet voters’ legitimate expectations and aspirations [and] this failure led electorates to become disenchanted with the prevailing versions of democracy and capitalism”.
Instead of fairly distributing the wealth created by globalisation, Soros argued, capitalism’s “winners” failed to “compensate the losers”, which led to a drastic increase in domestic inequality – and anger. Though Soros believed that the US’s “Constitution and institutions … are strong enough to resist the excesses of the executive branch”, he worried that Trump would form alliances with Putin, Orbán and other authoritarians, which would make it near-impossible to build a global open society. In Hungary, the US and many of the parts of the world that have attracted Soros’s attention and investment, it is clear that his project has stalled.
Soros’s path ahead is unclear. On one hand, some of Soros’s latest actions suggest he has moved in a left-wing direction, particularly in the areas of criminal justice reform and refugee aid. He recently created a fund to assist the campaign of Larry Krasner, the radical Philadelphia district attorney, and backed three California district-attorney candidates similarly devoted to prosecutorial reform. He has also invested $500m to alleviate the global refugee crisis.
On the other hand, some of his behaviour indicates that Soros remains committed to a traditional Democratic party ill-equipped to address the problems that define our moment of crisis. During the 2016 Democratic primary race, he was an avowed supporter of Hillary Clinton. And recently, he lambasted potential Democratic presidential candidate Kirsten Gillibrand for urging Al Franken to resign due to his sexual harassment of the radio host Leeann Tweeden. If Soros continues to fund truly progressive projects, he will make a substantial contribution to the open society; but if he decides to defend banal Democrats, he will contribute to the ongoing degradation of American public life.
Throughout his career, Soros has made a number of wise and exciting interventions. From a democratic perspective, though, this single wealthy person’s ability to shape public affairs is catastrophic. Soros himself has recognised that “the connection between capitalism and democracy is tenuous at best”. The problem for billionaires like him is what they do with this information. The open society envisions a world in which everyone recognises each other’s humanity and engages each other as equals. If most people are scraping for the last pieces of an ever-shrinking pie, however, it is difficult to imagine how we can build the world in which Soros – and, indeed, many of us – would wish to live. Presently, Soros’s cosmopolitan dreams remain exactly that. The question is why, and the answer might very well be that the open society is only possible in a world where no one – whether Soros, or Gates, or DeVos, or Zuckerberg, or Buffett, or Musk, or Bezos – is allowed to become as rich as he has.
In the libel suit he brought in 1878 against John Ruskin, the Victorian painter James McNeill Whistler was asked under cross-examination how he justified charging 200 guineas for a painting of a London firework display that took him two days to finish. “I ask it for the knowledge of a lifetime,” Whistler declared.
Investment bankers explain their bonuses in the same manner, although the rewards for mergers and acquisitions advisers are rather greater than for most painters. Goldman Sachs will be paid $58m by 21st Century Fox for its advice on Fox’s planned $71bn asset sale to Walt Disney (and the bank stands to gain another $47m for financing the remainder of Fox).
They are remarkable paydays — today’s dealmaking boom is the most rewarding time in history to be a global M&A banker. It is especially lucrative for those in the top league of advisers who run many auctions. An individual with the ability to shepherd nervous boards of directors past the pitfalls and a reputation for squeezing the best prices can name his or her fee.
But what exactly do they do for the money? When asked this question, they turn sheepish and talk vaguely about the art of persuasion rather than the science of valuation. The secret to a bulging “success fee” is less to obtain the best possible deal than to make the chief executive and the board believe they got it. That is not the same thing, particularly in the long term.
The M&A adviser’s job has three qualities that put its practitioners in a powerful bargaining position over their own pay. First, the stakes are very high. One former banker compares it to a surgeon explaining his or her charges as a patient is being wheeled into the operating theatre. The latter needs to have the best possible professional and is in no position to quibble.
Going through an M&A auction can feel like being operated upon for directors who have not experienced it before. Shareholders and the media lurk, ready to condemn any slip-up (the latter risk is why public relations consultants get paid so much as well). There is plenty of subterfuge and bargaining over details, any of which could unexpectedly prove fatal to the outcome.
Second, advisers are paid with other people’s money. That is especially true when a company is being sold — the overall price including the fees is going to be picked up by the acquirer, so what difference does a few million make? Even when the client is an acquirer, boards of directors whose personal reputations are at stake are not digging into their own pockets to pay.
Through one end of the telescope, the fees even look small. The average fee for selling a company worth between $10bn and $25bn is about 0.3 per cent, and can cover years of unpaid work. Bankers claim they are cheap compared with property brokers, who may charge several percentage points for selling a house. As ever, the best way to make money is to be around a lot of it.
Third, M&A advice is a black box. There is plenty of technical skill in structuring a transaction such as using acquisitions to change tax domiciles. That is bundled with access to the bank’s contacts with potential bidders in various countries and presented as a whole by one adviser to the board. The senior banker’s tone of voice conveys a mixture of financial advice, human judgment and comfort.
The last is the most valuable. In theory, M&A advice could be unbundled into different tasks, and more of the technical work done by machines, but boardrooms only have space for a few people. They are crowded enough by companies’ baffling habit of hiring several banks to advise on big deals and paying them $20m each, which one adviser calls “ludicrous”.
The fee rises exponentially for an adviser in the room where a deal happens. This accounts for the prosperity of advisory boutiques such as Centerview Partners and Evercore, founded by corporate financiers who built their reputations at banks including UBS and Lehman Brothers. The power of a global advisory elite is exemplified by tiny and highly rewarded banking “kiosks” such as Robey Warshaw.
Global investment banks sniff at the ability of a few experienced individuals to charge similar fees to them, without bearing the same costs. “The boutiques are full of guys cashing in at the end of their careers and they get a bit of a free ride,” says one adviser at a big bank. In the M&A business, relationships have enduring value.
But hiring the best cosmetic surgeon in the world does not make cosmetic surgery a good idea. Deals can be brilliantly executed at the time without adding to a company’s long-term value and many are unwound — often with the help of the same advisers — when a chief executive leaves. “Companies pay far too much to advisers. It’s really not worth it,” says Peter Zink Secher, co-author of The M&A Formula.
The success fees of advisers should be more closely tied to whether the deal succeeds long after it has closed and they have moved on to the next one. Whistler won his libel suit against Ruskin for having accused him of “flinging a pot of paint in the public’s face”, but was only awarded damages of a farthing. Even artists can push their luck.
