The Four Rules of Pandemic Economics
A playbook that should govern America’s short-term reaction to the health crisis.
APRIL 2, 2020


Derek Thompson
Staff writer at The Atlantic

SIMOUL ALVA

WE CANNOT LET THE CURE BE WORSE THAN THE PROBLEM ITSELF.”

With this tweet, President Donald Trump summarized a disturbingly common reaction to social-distancing measures. Texas Lieutenant Governor Dan Patrick expressed the same sentiment when he told Americans to “get back to work,” even if doing so means more death. Fox News commentators, likewise, have argued that Americans should break free of the shackles of quarantine to reboot the economy.
Call it the gospel of growth: the notion that Americans cannot afford to save tens of thousands, even hundreds of thousands, of lives, if it means sacrificing a quarter or two of gross domestic product.

While this might sound like an economic argument, it enjoys little support among economists. In a recent University of Chicago survey of dozens of prominent economists, almost all of them agreed with the idea that the economy would suffer if the U.S. abandoned “severe lockdowns” while the infection risk remained high.
Still, the growth evangelists are right about one thing. Severe lockdowns produce a parallel human misery—with millions of unemployed Americans, thousands of looming bankruptcies, and extreme financial anguish.

What are the economic rules of this upside-down world, where opening the economy too soon produces mass death, but shutting it down for too long produces mass suffering?
Over the past few weeks, I’ve asked a version of this question to a dozen economists. What follows is an attempt to distill their thoughts into four rules that should govern our short-term reaction to the health crisis. It is not just a rebuke to the gospel of growth. It is a new playbook for pandemic economics.

Rule 1: “Save the economy or save lives” is a false choice.

Last week, a group of economists from the Federal Reserve and MIT published a paper on the 20th century’s most murderous flu, the 1918 outbreak. Because the federal government in 1918 offered little if any economic assistance to suffering Americans, the local response from city leaders varied widely. Some places, such as New York and St. Louis, quickly ordered social distancing and other interventions, while others, such as New Haven and Buffalo, allowed public gatherings even weeks after the flu reached crisis levels. This variance gave researchers the ability to see which cities recovered the fastest after the outbreak.

“We were expecting that the areas with more [social distancing] would have a worse economy but less mortality,” said Emil Verner, a co-author of the paper and a finance professor at MIT. But early and aggressive interventions both saved lives and triggered a faster rebound in several measures, such as job growth and banking assets.

The infamous trade-off between people and GDP? It doesn’t exist—or, at least, it didn’t in 1918. The reason, Verner told me, is that pandemics are “so, so disruptive that anything that you can do to mitigate that destructive impact of the pandemic itself is going to be useful.” Without a healthy population, there can be no healthy economy.

This simple idea has some weird implications. “In a normal recession, you want to boost demand,” said the Northwestern economist Martin Eichenbaum. “But we don’t really want to boost demand in the very short run at all, right now. We don’t want United to be flying full planes. We don’t want restaurants serving food to dine-in customers. We want everybody to stay in and hold on.”

It follows that we should—as incomprehensible as this may sound—hope for a deep, short recession, caused by a cliff dive in many forms of economic activity. That would be a clear signal that people have gone home and that the face-to-face economy has been shut down to limit the spread of disease.

“The question I would ask of our leaders is: What will you regret?” Eichenbaum said. “Will the government regret that it didn’t save money in early 2020? Or will it regret that we let a viral infection kill millions of people, which also, by the way, led to the death of a lot of great companies? It’s pretty obvious what the worst-case scenario is. You want to err on the side of saving lives.”

Rule 2: Pay people a living wage to stop working.

In a pandemic, public gatherings are a kind of social pollution, and asymptomatic individuals who violate social-distancing rules are like factories that spew invisible carbon. “We can’t ask people to internalize health risks on an individual basis any more than we can expect polluting factories to self-regulate,” Eichenbaum said. “So governments have to freeze the economy and order people to stay home.”

But asking millions of able-bodied workers to stop working creates a crisis of unemployment for which the word unprecedented does no justice. On Thursday, the government announced that 3.28 million people had applied for jobless benefits in the previous week. That’s not just the highest weekly figure in recorded history; it’s roughly five times larger than the highest-ever figure in recorded history. In seven days, unemployment benefits rose by as much as they did during the first six months of job losses in the Great Recession.
Once the government has put the economy into an artificial coma, it must keep the patient alive. The U.S. economic-relief package does so in a few ways. Washington will send to most households one-time payments of $1,200 per adult—plus $500 per child—and expand unemployment benefits, bumping up weekly payments for eligible workers, including independent contractors and the self-employed, by $600 for the next few months. The new law also delays tax filing, suspends wage garnishing among those who have defaulted on their student loans, and establishes a four-month eviction moratorium among landlords with mortgages from federal entities, such as Fannie Mae and Freddie Mac. This is a huge and kaleidoscopic response. But it still might not be enough.

Denmark and other northern-European countries are taking a different approach. Their governments are directly paying businesses to maintain their payrolls to avoid the sort of mass layoffs and furloughs that are already happening across the United States. The chief benefit of this approach is that restaurants, factories, and so on don’t have to go through the bureaucratic rigmarole of firing thousands of workers and then rehiring them all when the economy bounces back (and those workers don’t have to waste time applying for jobs, either). They’re putting their entire economy in the freezer for three months.

Rule 3: Build companies a time machine.

The U.S. has about 6 million companies, according to the census, and 99.7 percent of them employ fewer than 500 people. Many of these small- and medium-size companies face extinction during the pandemic shutdown. While their income has evaporated, they still owe wages to workers and rent to landlords. This is a recipe for cascading bankruptcies.

If America’s small businesses begin to fail en masse, the damage will spread quickly throughout the economy. Just imagine the closed wine bars in Manhattan. Without money from thirsty New Yorkers, they can’t afford to buy more bottles from family wineries. Without commercial buyers, those wineries can’t buy new fruit from local grape growers, who can’t pay tractor manufacturers for new equipment. One sector’s problem quickly becomes every sector’s problem.

Financial markets may experience a parallel domino effect. If thousands of restaurants suddenly can’t make rent, their property owners might default on mortgage payments. When their banks suffer catastrophic losses, the financial system will seize up because nobody wants to lend anybody money. This is how a pandemic recession could become the Great Depression of the 21st century.

How do we begin to solve this impossible problem? The Federal Reserve has said it will pull all available levers to keep the financial system alive, by buying up government debt, corporate debt, and a variety of asset-backed securities. But something more will be needed to save America’s businesses.

We have to build companies a time machine,” Justin Wolfers, an economist at the University of Michigan, told me. He isn’t talking about the H. G. Wells contraption. He’s referring to anything—including grants, cheap loans, and debt relief—that would allow companies to shift their expenses to the future.

“My local burrito shop, which used to be a thriving business, could go belly-up any day now,” Wolfers said. “But in the post-coronavirus world, it should be a thriving business again. What that burrito business needs is what every business needs right now—a time machine to go from the present pandemic to the future.”

In the U.S. economic-rescue package, that time machine looks like $370 billion in low-interest loans backed by the government. Many businesses won’t have to pay back a cent if they use the cash to make basic expenses, like payroll or rent, and don’t lay off workers. As Slate’s Jordan Weissmann explains, private banks will make the loans to local companies with whom they already have a relationship, and the Small Business Administration will guarantee those loans—at least, until they run out of the roughly $370 billion.

Most economists I spoke with had the same reaction to the economic-rescue plan: Nice idea, too late, and too small. “This should have been passed three weeks ago, and it should have been much larger,” said John Lettieri, CEO of the Economic Innovation Group, a think tank and an advocacy group. Steven Hamilton, an economist at George Washington University, wrote that if the bill is intended to cover 11 weeks of payroll for all companies with fewer than 500 employees, the right figure should be closer to $600 billion. When the U.S. Senate returns to draft follow-up legislation, small-business relief will have to be at the top of the list.

Rule 4: The business of America is now science.

The new rules of pandemic economics are meant to guide U.S. policy during a period of weeks or months—not quarters or years. A three- or four-month freeze is one thing, but a full year of isolation and economic inactivity is untenable.

That brings us to the $100 trillion question: How do we get out of this? A lot more science.
Our lack of knowledge about the virus is our greatest weakness in combatting it. Not knowing who has the virus, or who is most susceptible, contributes to higher infection rates. Not knowing who has recovered from, and built immunity to, the virus delays our ability to treat individuals, or release select individuals from isolation. The possibility that the virus is anywhere means that we have to shut down economic activity everywhere. The road back to normalcy is through more clear and public information.

First, we need more tests, which can tell us where the virus already is. As The Atlantic’s Ed Yong explains, that means we need more masks, more nasopharyngeal swabs for collecting samples, more extraction kits to retrieve the virus’s genetic material, and more trained people to administer the tests.

Second, we need sophisticated tracing technology to tell us where the virus is spreading. “Contact tracing” means reaching out immediately to people who came into contact with an infected person, testing them, and recommending isolation if they test positive. While some countries’ tracing methods draw on mobile data in a way that might make Americans uncomfortable, Germany is looking to deploy a national app that has (for now) won approval from its health minister and data-protection commissioner.

In addition to coordinating a test-and-trace strategy, Washington should train its prodigious energies toward defeating the disease as fast as possible, by establishing billion-dollar prizes for vaccine and antiviral breakthroughs and by relaxing regulations to accelerate the approval of new treatments. After weeks of delay, the administration is finally using the wartime Defense Production Act to force manufacturers to produce ventilators and surgical masks.

We need to get people money, or they will die. We need to get companies cash, or they will die. But if we don’t clear the way for health-care workers to treat the sick, or for scientists to treat the disease, people and companies are going to die, anyway. There is no such thing as a normal economy until we contain the virus. But if we can’t contain the virus quickly, we might not have anything normal to return to.

DEREK THOMPSON is a staff writer at The Atlantic, where he writes about economics, technology, and the media. He is the author of Hit Makers and the host of the podcast Crazy/Genius.

Internationalizing the Crisis
Apr 6, 2020 JOSEPH E. STIGLITZ

The public-health effects and economic impact of the COVID-19 pandemic in developing and emerging economies are only just becoming apparent, but it is already clear that the toll will be devastating. If the international community wants to avoid a wave of defaults, it must start developing a rescue plan immediately.

NEW YORK – As it spread from one country to another, the novel coronavirus paid no attention to national frontiers or “big, beautiful” border walls. Nor were the ensuing economic effects contained. As has been obvious since the outset, the COVID-19 pandemic is a global problem that demands a global solution.

In the world’s advanced economies, compassion should be sufficient motivation to support a multilateral response. But global action is also a matter of self-interest. As long as the pandemic is still raging anywhere, it will pose a threat – both epidemiological and economic – everywhere.

The impact of COVID-19 on developing and emerging economies has only begun to reveal itself. There are good reasons to believe that these countries will ravaged far more by the pandemic than the advanced economies have been. After all, people in lower-income countries tend to live in closer proximity to one another. A higher share of the population suffers from pre-existing health problems that render them more vulnerable to the disease. And these countries’ health systems are even less prepared to manage an epidemic than those of the advanced economies (which have hardly functioned smoothly).1

A March 30 report from the United Nations Conference on Trade and Development offers an early glimpse of what lies in store for emerging and developing economies. The most successful of them rely on export-led growth, which will now collapse as the global economy contracts. Not surprisingly, global investment flows are also plummeting, as are commodity prices, indicating a tough road ahead for natural-resource exporters.

These developments are already being reflected in the yield spreads on developing countries’ sovereign debt. Many governments will find it exceedingly difficult to roll over the debts coming due this year on reasonable terms, if at all.

Moreover, developing countries have fewer and harder choices about how to confront the pandemic. When people are living hand to mouth in the absence of adequate social protections, a loss of income could mean starvation. Yet these countries cannot replicate the US response, which features (so far) a $2 trillion economic package that will blow up the fiscal deficit by some 10% of GDP (on top of a pre-pandemic deficit of 5%).


Following a virtual emergency summit on March 26, G20 leaders issued a communiqué committing “to do whatever it takes and to use all available policy tools to minimize the economic and social damage from the pandemic, restore global growth, maintain market stability, and strengthen resilience.” To that end, at least two things can be done about the dire state of affairs in emerging and developing economies.

First, full use must be made of the International Monetary Fund’s Special Drawing Rights, a form of “global money” that the institution was authorized to create at its founding. The SDR is an essential ingredient in the international monetary order that John Maynard Keynes advocated during the Bretton Woods Conference of 1944. The idea is that, because all countries will obviously want to protect their own citizens and economies during crises, the international community should have a tool for assisting the neediest countries without requiring national budgets to take a hit.

A standard SDR issuance – with some 40% of the SDRs going to developing and emerging economies – would make an enormous difference. But it would be even better if advanced economies like the United States donated or lent (on concessionary terms) their SDRs to a trust fund dedicated to helping poorer countries. One might expect that the countries providing this assistance will attach conditions, in particular, that the money not go to bailing out creditors.

It’s also crucial that creditor countries help by announcing a stay on developing and emerging economies’ debt service. To understand why this is so important, consider the US economy. Last month, the US Department of Housing and Urban Development announced that there would be no foreclosures on federally insured mortgages for 60 days. In essence, this policy is part of a broader “stay” on the entire US economy as a response to the COVID-19 crisis. Workers are staying home, restaurants are staying closed, and airlines are all but shut down. Why should creditors be allowed to continue racking up returns, especially when the interest rates they charge should have already created a sufficient risk cushion? Unless creditors grant such a stay, many debtors will emerge from the crisis owing more than they can possibly repay.

Such stays are just as important internationally as they are domestically. Under current conditions, many countries simply cannot service their debts, which, in the absence of a global stay on repayment, could lead to massive, rolling defaults. In many developing and emerging economies, the government’s only choice is either to funnel more income to foreign creditors or allow more of its citizens to die. Obviously, the latter will be unacceptable to most countries, so the real choice for the international community, then, is between an orderly or a disorderly stay, with the latter scenario inevitably resulting in severe turbulence and far-reaching costs to the global economy.

Of course, it would be even better if we had an institutionalized mechanism for restructuring sovereign debt. The international community tried to achieve that in 2015, when the United Nations General Assembly adopted a set of shared principles with overwhelming support. Unfortunately, that framework lacked the necessary buy-in from key creditor countries. It is probably too late to establish such a system now for use in the current crisis. But there will inevitably be more crises down the line, which means that sovereign-debt restructuring should be high on the agenda for the post-pandemic reckoning.

In John Donne’s immortal words, “No man is an island …” Nor is any country – as the COVID-19 crisis has made abundantly clear. If only the international community would get its head out of the sand


JOSEPH E. STIGLITZ
Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute. His most recent book is People, Power, and Profits: Progressive Capitalism for an Age of Discontent.

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Will COVID-19 Make Modern Monetary Theory Mainstream?

https://soundcloud.com/projectsyndicate/will-covid-19-make-modern-monetary-theory-mainstream-pavlina-r-tcherneva

PODCASTS Apr 7, 2020 PAVLINA R. TCHERNEVA , ELMIRA BAYRASLI
From the ashes of the Great Depression, US President Franklin D. Roosevelt pushed through a raft of labor and social reforms that remade the American state and economy. We need FDR’s brand of “bold experimentation” to recover from the coronavirus pandemic.

PAVLINA R. TCHERNEVA
Pavlina R. Tcherneva, Associate Professor of Economics at Bard College, is a research scholar at the Levy Economics Institute and author of the forthcoming book, The Case for a Job Guarantee.

ELMIRA BAYRASLI
Elmira Bayrasli is the director of the Bard Globalization and International Affairs program and the co-founder and CEO of Foreign Policy Interrupted. She is the author of From The Other Side of The World: Extraordinary Entrepreneurs, Unlikely Places.

It may feel like 2008 all over again, but here's how the coronavirus crisis is different

Paul DavidsonNathan BomeyJessica Menton USA TODAY


A plunging stock market. The widening shadow of recession. Fed interest rate cuts and government stimulus.

It's beginning to feel a lot like 2008 again. And not in a good way.

For many Americans, the stomach-churning market drops and growing recession talk of the past few weeks – triggered by the global spread of the coronavirus – are reviving memories of the 2008 financial crisis and Great Recession.

Take a breath. While the toll the infection ultimately takes on the nation isn’t clear, the economic upheaval caused by the outbreak will likely not be nearly as damaging or long-lasting as the historic downturn of 2007-09.

“A recession is not inevitable,” says Gus Faucher, chief economist of PNC Financial Services Group. “If we do get a recession, it is likely to be brief and much less severe than the Great Recession.”

For one thing, the 2008 financial crisis and recession resulted from years of deeply rooted weak spots in the economy. That’s not the case now.

“What we’re seeing is caused by something external to the economy,” Faucher says.

“It’s closer to a natural disaster,” says Kathy Bostjancic, director of U.S. Macro Investors Services at Oxford Economics.


Partly as a result, the economy’s major players – consumers, businesses and lenders – are much better positioned to withstand the blows and bounce back.

Here’s a look at how the current crisis compares with the meltdown more than a decade ago.

The cause

The Great Recession. The bruising downturn was set off by an overheated housing market. Banks and other lenders approved mortgages – including many to buyers who weren’t qualified, driving up home prices to stratospheric levels. The banks bundled the mortgages into securities and sold them to other financial institutions.

When home prices began spiraling down, millions of Americans stopped making mortgage payments and lost their homes while the banks that held the securities were pushed to the brink of bankruptcy.

Widespread layoffs in real estate, construction and banking hammered consumer spending and led to deeper job losses throughout the economy. Bank lending was virtually frozen, grinding the gears of the economy to a near halt. The problems had been simmering in the housing market and banking system for years.

Current crisis. The coronavirus, which originated in China late last year, has sparked today’s economic hazard. There are now more than 100,000 cases worldwide, most of them in China, and the death toll has topped 4,000. In the U.S., more than 800 people have been infected and 28 have died.

Because far fewer people are affected than in 2007-2009, the economic toll has been limited so far. The travel and tourism industry has suffered the most, with businesses canceling conferences and trade shows and consumers scrapping vacation plans. Disruptions to deliveries of manufacturing parts and retail goods from China could temporarily shut down American factories and leave store shelves empty.

As Americans avoid more public places, the virus is likely to hurt sales at restaurants, malls and other venues. There are some signs retailers are already taking a hit. In the last week of February, foot traffic to Walmart stores fell 16.5% compared with the previous week, according to consumer data firm Cuebiq. In the same week, however, traffic to Costco stores rose 7.7%.

Household debt

Great Recession. Since banks freely doled out credit for mortgages, auto loans and credit cards, household debt climbed to a record 134% of gross domestic product, according to Oxford Economics and the Federal Reserve. Americans had been saving just 3.6% of their income at the end of 2007. As Americans worked down that debt, spending fell sharply.

Current crisis. Household debt is at a historically low 96% of GDP. Households are saving about 8% of their income. All of that means they can handle a brief slump and continue spending at a reduced level.

“Consumers are in good shape,” Faucher says.

Job losses

Great Recession. Nearly 9 million Americans lost their jobs in the downturn. Unemployment more than doubled to 10%.

Current crisis. Losses are likely to total in the thousands, with travel and tourism and manufacturing enduring much of them, Bostjancic says. The 3.5% unemployment rate, a 50-year low, could rise to 3.8% to 4.1%, says Diane Swonk, chief economist of Grant Thornton.
How long it lasts

Great Recession. With millions out of work and household and business spending decimated, the downturn lasted 18 months.

Current crisis. Assuming the number of cases peak in the next few months and abates by summer, Swonk says any downturn is likely to last six months or so.


The economy

Great Recession. The economy contracted in five of six quarters during the slump, falling as much as 8.4% in late 2008.

Current crisis. Most economists expect the virus to shave growth by one or two percentage points over the next couple of quarters.
The stock market

Great Recession: The stock market plummeted 57% during the crisis.

Current crisis. The stock market hasn’t seen the same sizable drop that the broader market suffered in the depths of the financial crisis. The Standard & Poor's 500 slid 14.9% from its Feb. 19 record through Tuesday, teetering on the brink of a bear market, or a drop of 20% from a peak.

Corporate health

Great Recession. Corporations had $5.8 trillion in rated debt as of March 31, 2009, according to S&P Global Ratings. Less than two-thirds, or about 65%, was investment grade, which ratings agencies determined was highly likely to be repaid.

A wide variety of companies, including financial institutions, automakers and retailers, collapsed as their revenues plunged.

In the automotive sector, for example, manufacturers cut about 278,400 jobs, or about 29% of their collective workforce from January 2008 to January 2010, automakers and suppliers, according to the Bureau of Labor Statistics.

Automotive companies are particularly vulnerable to economic downturns because people can often hold off on buying new vehicles until conditions improve. U.S. auto sales plunged during the Great Recession.

Current crisis. Corporations had $9.3 trillion in rated debt in 2019, according to S&P Global Ratings.

But a higher percentage of corporate debt today is considered to be investment grade at 72%.

That said, conditions for repayment are clearly deteriorating. “The stress has been very, very quickly accelerating,” said Sudeep Kesh, head of credit markets research for S&P Global Ratings, adding that “there’s a flight to quality” as investors pile into U.S. Treasurys and highly-rated corporate bonds.

The major sector most likely to fail to make payments on time, as of 2019, was the automotive industry, where about 4 in 5 companies have debt rated as speculative.

Another sector facing significant risk is the retail industry, where department stores, mall-based retailers and many other shops have already been struggling.

Though the oil-and-gas sector is expected to be hit hard by the sharp decline in oil prices, the industry is heading into this crisis in decent shape. Only 31% of oil-and-gas companies had debt rated as junk in 2019.

Banking regulations

Great Recession. Flaws in oversight and weak regulations at Wall Street's largest investment banks were other contributing factors to the financial crisis. Some experts point to the repeal of the Glass-Steagall Act, which once kept commercial and investment banking separate.

The financial regulation, which had helped mitigate risks posed by big banks, was passed in 1933 in the midst of the Great Depression and was later repealed in 1999. The move effectively allowed banks to become even larger, or "too big to fail."

Regulators including the Federal Reserve failed to crack down on questionable mortgage practices that didn't take into account a borrower's ability to repay a loan. The central bank had a looser set of rules for mortgage lenders and fewer protections for home buyers that some experts argue contributed to abusive lending.

Current crisis. The global financial crisis ushered in sweeping changes to how the U.S. government regulates the banking industry. The new era, which included the Dodd-Frank Act in 2010, required banks to have more cash in reserves to provide a cushion in case the financial system faced economic shocks.

In the U.S., banks with more than $100 billion in assets are required to take the Federal Reserve’s “stress tests,” a move that ensures financial firms have the capital necessary to continue operating during times of economic duress.

The magnitude of the challenges the economy faces aren’t as dire as the obstacles during the Great Recession, experts say.

“It’s a difference in severity,” says Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “Capital requirements have put banks in a much more comfortable position to be able withstand a major shock.”

To be sure, banks’ profitability could be threatened in the near term if they are forced to tighten lending standards. A historic drop in bond yields recently could pressure banks further because it tends to hurt their profitability.

Some financial institutions, typically regional banks, could face some obstacles over the coming months if they are lending money to energy companies. Those stocks have been pummeled recently following a precipitous drop in crude prices. But larger banks likely won’t face major risks since they are typically more diversified and aren’t concentrated in one sector, Ma says.

“This isn’t a financial crisis,” says Jonathan Corpina, senior managing partner at broker-dealer Meridian Equity Partners. “This is a global epidemic. This isn’t a flaw in the system that we’re uncovering like the subprime mortgage debacle.”

The Fed

Great Recession: The Federal Reserve’s key interest rate was at 5.25% in 2007 as worries about the housing meltdown grew. That gave the central bank plenty of room to slash the rate to near zero by late 2008. The Fed also launched unprecedented bond purchases to lower long-term rates, such as for mortgages.

Current crisis: The Fed’s benchmark rate is at a range of just 1% to 1.25%, giving officials little room to cut. And 10-year Treasury rates are already below 1%, raising questions about the effectiveness of a renewed bond-buying campaign.

The stimulus

Great Recession: The downturn inflicted pain throughout the economy, and so Congress passed a sweeping stimulus. The $787 billion American Recovery and Reinvestment Act doled out tax savings and credits to individuals and companies; provided funding for healthcare centers and schools; assisted low-income workers; and approved massive upgrades to transportation, energy and communications networks.

Current crisis: The damage this time is more contained and lawmakers are discussing more targeted measures, such as helping the beleaguered travel industry and offsetting income losses for hourly workers by expanding paid sick leave and unemployment insurance.

Housing

Great Recession: During the housing bubble that began in the 1990s, home prices more than doubled by 2006 before crashing, according to the National Association of Realtors. The housing market remained in the doldrums through 2012.

Current crisis: Although prices have risen steadily in recent years, they’re just 22% above their peak. Homes aren’t overpriced, Faucher says. That means with mortgage rates low, housing can help offset troubles in the rest of the economy.

Mapping the COVID-19 Recession
Until there is a better sense of when and how the COVID-19 public-health crisis will be resolved, economists cannot even begin to predict the end of the recession that is now underway. Still, there is every reason to anticipate that this downturn will be far deeper and longer than that of 2008.

Apr 7, 2020 KENNETH ROGOFF

CAMBRIDGE – With each passing day, the 2008 global financial crisis increasingly looks like a mere dry run for today’s economic catastrophe. The short-term collapse in global output now underway already seems likely to rival or exceed that of any recession in the last 150 years.


Even with all-out efforts by central banks and fiscal authorities to soften the blow, asset markets in advanced economies have cratered, and capital has been pouring out of emerging markets at a breathtaking pace. A deep economic slump and financial crisis are unavoidable. The key questions now are how bad the recession will be and how long it will last.

Until we know how quickly and thoroughly the public-health challenge will be met, it is virtually impossible for economists to predict the endgame of this crisis. At least as great as the scientific uncertainty about the coronavirus is the socioeconomic uncertainty about how people and policymakers will behave in the coming weeks and months.

After all, the world is experiencing something akin to an alien invasion. We know that human determination and creativity will prevail. But at what cost? As of this writing, markets seem to be cautiously hopeful that a recovery will be fast, perhaps starting in the fourth quarter of this year. Many commentators point to China’s experience as an encouraging harbinger of what awaits the rest of the world.

But is that perspective really justified? Employment in China has rebounded somewhat, but it is far from clear when it will return to anything close to pre-COVID-19 levels. And even if Chinese manufacturing does rebound fully, who is going to buy those goods when the rest of the global economy is sinking? As for the United States, returning to 70% or 80% of capacity seems like a distant dream.

Now that the US has failed miserably to contain the outbreak despite having the world’s most advanced health system, Americans will find it exceedingly difficult to return to economic normalcy until a vaccine becomes widely available, which could be a year or more away. There is even uncertainty about how the US will pull off its November 2020 presidential election.



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For now, markets seem to be comforted by massive US stimulus programs, which have been absolutely necessary to protect ordinary workers and prevent a market meltdown. Yet it is already clear that much more will need to be done.

If this were just a garden-variety financial panic, a massive injection of government demand stimulus would absolve a lot of sins. But the world is experiencing the most serious pandemic since the 1918-20 influenza outbreak. If another 2% of the global population were to die this time, the death toll would come to roughly 150 million people.

Fortunately, the outcome probably will not be that extreme, given the radical lockdowns and social-distancing measures that are being adopted worldwide. But until the health crisis is resolved, the economic situation will look exceedingly grim. And even after an economic restart, the damage to businesses and debt markets will have lingering effects, especially considering that global debt was already at record-breaking levels before the crisis began.

To be sure, governments and central banks have moved to backstop broad swaths of the financial sector in a fashion that seems almost Chinese in its thoroughness; and they have the firepower to do a lot more if necessary. The problem, however, is that we are experiencing not just a demand shock but also a massive supply shock. Propping up demand may contribute to flattening the contagion curve by helping people stay locked down, but there is a limit to how much it can help the economy if, say, 20-30% of the workforce is in self-isolation for much of the next two years.

I have not even touched on the profound political uncertainty that a global depression can spark. Given that the 2008 financial crisis produced deep political paralysis and nurtured a crop of anti-technocratic populist leaders, we can expect the COVID-19 crisis to lead to even more extreme disruptions. The US public-health response has been catastrophic, owing to a combination of incompetence and neglect at many levels of governance, including the highest. If things continue the way they are, the death toll in the New York City area alone could rival that of Northern Italy.

Of course, one can imagine more optimistic scenarios. With extensive testing, we could determine who is sick, who is healthy, and who is already immune and thus able to return to work. Such knowledge would be invaluable. But, again, owing to several layers of mismanagement and misplaced priorities stretching back many years, the US is woefully short of adequate testing capacity.

Even without a vaccine, the economy could return to normal relatively quickly if effective treatments can be swiftly implemented. But, absent widespread testing and a clear sense of what will constitute “normal” in a couple of years, it will be difficult to persuade businesses to invest and hire, especially when they are anticipating higher tax bills when it’s all over. And it is possible that stock-market losses so far have been less than those of 2008 only because everyone remembers how values shot back up during the recovery. But if that crisis does turn out to have been a mere dry run for this one, investors shouldn’t expect a quick rebound.

Scientists will know a lot more about our microscopic invader in a few months. With the virus now racing across the US, American researchers will have direct access to data and patients, rather than having to rely only on Chinese data from Hubei province. Only after the invasion is beaten back will it be possible to put a price tag on the economic cataclysm it left in its wake.


KENNETH ROGOFF
Writing for PS since 2002
Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in Financial Economics, was the chief economist of the International Monetary Fund from 2001 to 2003. He is co-author of This Time is Different: Eight Centuries of Financial Folly and author of The Curse of Cash.


Will ‘The Great Cessation’ be worse than the Great Recession? Here’s what we can tell so far

BY SHAWN TULLY March 25, 2020 FORTUNE

Which is moving faster: the spread of the coronavirus, or the damage to the U.S. economy?

That’s the question on the minds of tens of millions of American workers, small-business owners, managers, and investors. And as the economic effects pile up, many are wondering: Are we on the cusp of the kind of yearslong descent that began in 2008?

Never in recent decades has America suffered a deterioration in our economic outlook as swift and shocking as the tremors of the past five weeks caused by the coronavirus crisis. The 30% drop in the S&P 500 since its all-time high in mid-February is the fastest slide on that scale in its history; since Valentine’s Day, $10 trillion in shareholder wealth has vanished. The short-term funding that’s the lifeblood of corporations is freezing up as folks withdraw cash from money-market funds to pay for rent and groceries. An economy that was rebounding a few weeks ago after President Trump called a trade war truce is now universally viewed as heading for what could be the steepest one-quarter contraction in history.

Why 2008 was so terrifying

Americans are looking to crashes of the past for a prognosis on how sick the coronavirus will make our economy. And the one that’s top of mind is the most recent, the Great Recession, or what I'll simply call “2008.” The Great Recession is such a terrifying precedent because it was both extremely deep, and it was long—a full recovery took not a quarter or two, but years.

GDP shrank by 4% over six quarters, bottoming in mid-2009, and national income didn't rebound to late 2007 levels for 14 quarters, until mid-2011.

In the depths, unemployment spiked to nearly 10%. Yields on investment grade debt hit 9%, and junk bonds fetched 13.4%. The S&P 500 plunged 58% by the spring of 2009; it took five years, until the close of 2012, for equities to regain the summit of late 2007, the level first reached in 1999.

So far, it appears that the U.S. isn't threatened by a fundamental fissure that will crack and wrack the economy for years to come, like the housing bubble that caused the Great Recession. “This doesn’t seem to be another Great Depression or Great Recession,” economist and Nobel laureate Robert Shiller told Fortune. “The story isn’t the same. It seems to be a virus story and a stock market story, not like the housing story of 2008.”

But in some ways, this crisis is more serious than 2008. That’s because the early devastation hit much faster, and caused far more damage, than in 2008. To prevent an economic contagion that parallels the virus’s rampage, the federal government needs to provide emergency funding for beleaguered businesses at a speed, and size, never before achieved. The paramount threat isn't the kind of ticking time bomb—the subprime mortgage crash—that caused 2008. It’s the danger that America’s credit markets, already under severe stress, freeze up, sending cash-strapped companies into bankruptcy and causing cascading layoffs that deprive workers of cash, triggering more failures and layoffs. If the Fed, Treasury, and Congress don't deliver a gigantic package within days making the government the lender of last resort, America could experience another Great Recession even in the absence of a ticking time bomb like the subprime craze.

Mark Zandi, chief economist for Moody's Analytics, compares the current shock to a heart attack. “The heart of the economy is the credit markets, and it’s under attack because of the fear of lending,” he says. “We've got to do an angioplasty or valve surgery, or the heart will shut down.” He says that what makes this crisis so dire is the lack of time. “In 2008, it took months for the credit markets to dry up.” Now, he says, the U.S. has only days to act before the economy goes into cardiac arrest.

The Fed and Treasury have already taken important steps to bolster short-term funding. But the failed Senate vote on a $1.7 trillion package on March 22 undermined confidence and sent debt markets into a tailspin. We could be facing another onslaught of volatility in the quicksilver credit markets if Congress doesn't quickly pass the emergency funding measures in the augmented, $2 trillion bill agreed to by the Senate and White House on March 24.

That’s because America is experiencing a completely new phenomenon, the nearly total shutdown of large swaths of the economy. It’s as if the 9/11 attack that brought America to a standstill for a few days has morphed into a kind of Groundhog Day in which Americans awaken to the sight of empty streets and shuttered stores that shows no signs of ending. “In 2008, it wasn’t as if we didn’t go to restaurants and the gym,” says Jared Franz, an economist at asset management giant Capital Group. “People went about their daily lives. Now, businesses are completely shut down, or close to it.”

Franz notes that the virus is attacking the backbone of the U.S. economy, services that account for over two-thirds of GDP. He points out that around half of the 20% economic activity contributed by restaurants, airlines, in-store shopping, live entertainment, and hospitality is totally shuttered. “If you had to invent the perfect takedown of the U.S. economy, this would be it,” says Franz.

Delta Airlines predicts that its second-quarter revenues will drop by $10 billion, or 80%. JetBlue collected $4 million from customers in March, versus its average of $22 million. Marriott’s global hotel business has dropped 75% below normal, prompting CEO Arne Sorenson to label the current situation “worse than 9/11 and the financial crisis combined.” Analysts predict that Nike's sales will drop by one-third in its Q4 ending in May, and the suspension of the NBA and English Premier football league schedules is depriving the footwear colossus of crucial promotions. On March 19, GM and Ford shut down all production in the U.S., Canada, and Mexico until further notice.

The economy was already fragile when the coronavirus hit

To understand where we are now, you have to go back to the aftermath of the Great Recession, when the U.S. economy shifted into a slogging new normal, delivering slower growth and fewer new jobs than in the preceding decades. That trend reversed in Donald Trump’s first two years as President. Business confidence revived, and growth jumped to over 3% from mid-2017 to mid-2018. But although job growth remained robust and the stock market notched peak after peak, the economy entered 2020 back on its heels. The pandemic that would have weakened a strong economy is decimating a weak one.

To assess where the economy is headed, it’s crucial to review its more than yearlong downshift. Fearing that that overheating would stoke inflation, the Fed lowered its benchmark rate four times from December of 2017 through September of 2018. But a signature Trump onslaught was already tapping the brakes: the trade war. Starting in early 2018, Trump slapped tariffs on over $300 billion of U.S. imports from China, raising prices for consumers and businesses. “It was the trade war that was mainly responsible for sucking out growth,” says Zandi. Nevertheless, in December, the Fed made the mistake of imposing yet another rate increase, an ankle weight that further slowed the already halting jog.

Through much of 2019, big parts of the economy, notably farming, energy, and manufacturing, all hit by the trade conflict, sat mired in a downturn. By midyear, the U.S. seemed headed for recession. In July, the Fed reversed course, slashing its benchmark three times through October. “Then Trump connected the dots and called a truce,” says Zandi. Late last year, Trump announced a deal that would roll back some duties on Chinese goods and suspend other planned tariffs.

The gambit worked, at least in part. In January and February, business and consumer confidence was rising. The Fed forecast mediocre expansion of 2% for 2020, slowing to 1.8% by 2022, but no recession. The 10-year Treasury yield had fallen from 3% in mid-2018 to 1.5%, a signal that GDP could well wax more slowly than the Fed predicted. “If not for the pandemic, we might have muddled through,” says Zandi. “But it would have been a struggle. Manufacturing was still in recession. The economy was already fragile, and vulnerable to a shock that could send it into a tailspin.”
How deep will the next recession be?

Experts’ predictions on how deep this recession will go must be setting records given the distance from the depressing best to the previously unimaginable worst. What most economists at the banks, brokerages, and research firms have in common is that they’re positing that the shutdown lasts another nine to 12 weeks or so, and that a sharp recovery begins in the third quarter. Once again, that “this isn’t 2008” scenario hinges on heroic action to keep credit flowing.

According to most forecasts, the deep devastation hits in the second quarter. Just about the most optimistic outlook comes from Steven Blitz of TS Lombard, who foresees a fall of 8.4% in Q2. At the other extremes, Goldman Sachs sees a 24.5% drop in the three months from April through June, and Bank of America is just as pessimistic at 25%. Jim Bullard, president of the St. Louis Fed, warned GDP could crater by 50% without drastic emergency action from Congress, the Fed, and the Treasury. The contractions predicted by other notables: UBS at 10%, Oxford Economics at 12%, and JP Morgan Chase at 14%. Here’s a guide to how fast the numbers are deteriorating. On March 16, Goldman called for a decline of 5% in Q2 and four days later upped the number almost fivefold.

With the forecasts worsening so rapidly, it’s hard to find a middle range that could provide a reasonable view of how much the economy could shrink. Right now, the median appears to be around –15%, and that’s optimistic, since it’s been heading lower. Most banks also expect shrinkage in Q1 in single digits—a ballpark number would be 2%. Goldman is typical in projecting a strong rebound in the second half, foreseeing plus 12% in Q3 and 10% in Q4.

Where do those negative 3% and 15% predictions, followed by the Goldman-posited rebound, take us by year-end? By Fortune’s calculations, GDP for 2020 would shrink by over $1.3 trillion to $20 trillion, and decline 6.3%. As we’ll see, that’s more than half again the total shrinkage in the Great Recession. The difference is that the Q2 fall would be a passing hangover, since the economy would be recovering strongly moving into 2021.

The rolling lockdown of businesses, however, is already creating a job crisis. The week beginning March 3, 211,000 Americans filed unemployment claims. Just two weeks later, the number, by Goldman’s estimates, jumped to a staggering 2.25 million. Morgan Stanley predicts an average unemployment rate in the April to June period of 12.8%, more than triple today's 3.6%.

Aid to families and industry

On March 25, the Senate and the Trump Administration reached agreement on a colossal relief package providing $2 trillion in aid to businesses and families, and make as much as $4 trillion in emergency loans available for all types of large businesses from brokerages to automakers. Single adults making up to $75,000 a year would get a one-time payment of $1200, and couples making $150,000 or less would receive $2400, as well as $500 per child. Those amounts would be reduced for earnings above the $75,000 and $150,000 thresholds. On the business side, the bill earmarks $58 billion in aid for airlines. A crucial plank is a $367 billion infusion targeting America's 30 million small businesses that account for half our economy and employ 58 million workers.

The plan would provide “retention loans” available to all enterprises with 500 employees or fewer. Restaurants, flower shops, printing outfits, and the like would deploy the funds to pay their employees wages for the next two months. If they meet that test, the Treasury would forgive the loans. The program provides a crucial bridge so that small businesses can keep employees on the payroll so they’re ready to go when folks can finally get back to shopping. Right now, a long extension to prevent a cycle where wave after wave of workers lose their paychecks and clamp down on spending, causing big-company revenues and capital expenditures to keep shrinking, triggering still more layoffs that send us into another 2008.

Fortunately, the Senate and the White House also moved to forestall a credit crisis that would unleash armageddon. The Senate bill provides a $500 billion facility that would cover losses on loans provided by the Federal Reserve. The Treasury's backstop would enable the Fed to lend as much as $2 trillion to corporations that either can't obtain loans or refinance bonds in the private markets, or could only borrow at super-high rates.

Still, it's unclear when a final bill will pass so that the sorely needed cash will start flowing. In the House, Speaker Nancy Pelosi in championing a substantially different, $2.5 billion measure. It's unclear if she'll put the Senate version to a vote that would probably assure quick passage, or demand a compromise that would prolong getting that sorely needed cash to families and businesses. The stock market's 10% plus leap on March 24 was a reaction to the a huge infusion of liquidity was on the way. More days of squabbling in Congress could kill that show of confidence.
Growing risks in repos and commercial paper

What could turn a damaging but temporary storm into a hurricane requiring years of rebuilding is that aforementioned lockdown in credit. The danger lies in both of two distinct sectors of the credit markets. The first is the short-term financing provided by two types of vehicles: repurchase agreements, known as repos, and commercial paper. Repos aren't exactly a household name, but they constitute one of the world’s biggest debt markets; the average amount of repos outstanding stands at $3.9 trillion, one-fifth the size of the U.S. economy.

Repos are ultra-short-term loans, usually asset-backed, mainly provided by money-market mutual funds. The borrowers are financial institutions that aren’t funded by deposits like the big banks, nor do they rely on those banks for quick financing; the money market’s chief customers are brokers and hedge funds. The broker, say, sells the money-market fund, which has lots of cash to invest, a contract enabling it to borrow $100 million overnight, and the next day buys back the contract at a slight premium, giving the fund a fraction-of-a-basis point return. The brokerages use the cash to back equity and bond trading, and the hedge funds can deploy the funds to quickly acquire securities without selling parts of their portfolios.

As security, the hedge fund or broker furnishes Treasuries or Fannie Mae or Freddie Mac “agency” bonds. The major commercial banks do a thriving “clearing” business ferrying contracts, cash, and collateral between lenders and borrowers, and handling custody.

In almost all periods, repos are a supersafe vehicle for the money-market lenders. But in rare times of extreme volatility, they turn away borrowers, and the market seizes up. The money-market funds fear that hedge funds are taking big losses, are desperate for cash, and that the value of even the Treasuries supplied as collateral is fluctuating so fast that they may not get repaid. That’s what’s been happening intermittently for the past few weeks. In addition, money-market fund customers are taking out the cash, creating a shortage of funds available to borrowers.

If hedge funds and brokers face a liquidity crunch, the former will dump their Treasuries and other bonds to raise emergency cash, and the latter won’t have the funds to ensure a smoothly working fixed-income market. The freeze will send prices plummeting and yields soaring, further tightening the vise on credit.

A second critical source of funding is commercial paper, short-term IOUs that all kinds of companies obtain to finance inventories or receivables. That flow of ample, cheap cash enables the likes of automakers or restaurant chains to pay bills without liquidating their fixed-income holdings, and once again, the fear contagion virtually shut down the market briefly in mid-March.

It’s the Fed’s role to keep the repo and commercial paper markets liquid, and so far, it’s stepping up. In mid-March, the Fed stood in for the money-market funds and purchased $1 trillion a day in repos, averting a cash crunch for brokers and hedge funds. The Fed also is dusting off the Commercial Paper Funding facility from its 2008 playbook, agreeing to buy up to $1 trillion in the IOUs from corporations, bolstered by a big backstop from the U.S. Treasury, that can't get funding from money markets. Keep an eye on these two crucial funding sources. Only if the Fed continues to fill the role of the fleeing lenders, and only if the Fed pledges to keep doing so no matter how bad it gets, can America weather the crisis without a catastrophe.

Looming stress in corporate bonds and loans

In the recovery from the financial crisis, U.S. companies steeply increased their leverage and shrank their safety cushion. “For 11 years, everyone had a big appetite for risk,” says Alicia Levine, chief economist at BNY Mellon. “Companies gorged on debt. In 2008 the banks’ balance sheets were at risk. Now, corporate America’s balance sheets are threatened. We have a potential liquidity crisis not in the banks, but in the corporate sector.”

The jump in leverage was especially pronounced in such sectors as energy, notably fracking, utilities, and materials. Franz of Capital Group reckons that U.S. enterprises have borrowed a total of $5 trillion in high-yield, leveraged loans used in LBOs, and BBB-rated corporates, the lowest Moody's level above junk status. That’s an increase of well over 100% in the past decade, says Franz.

The junk bond market is already flashing red: Yields have catapulted from under 5% to around 6.1%. Companies are constantly refinancing the waves of maturing corporate debt. As the business lockdown raises the risk of defaults, yields could rise so high that companies can borrow only at ruinous rates, if private lending doesn’t shut down altogether.

To make matters worse, big asset managers are banned by their charters from holding bonds rated lower than BBB. So if those securities are downgraded to junk, mutual funds will dump them in bushels, once again, sending yields skyward.

It now appears that over the next few months, the shrinkage in cash flows will become so severe that private lenders retreat from the market or demand rates that drive corporate America to even deeper losses, causing a spillover into job losses and bankruptcies.

Once again, the government needs to provide credit that will bridge corporate America through the crisis. The Fed is barred from taking credit risk, so it’s the Treasury that must take the lead. Fortunately, the Senate bill allows Treasury to partner with the Fed to provide that $2 trillion in liquidity.

But that $2 trillion still isn't available. That's because the House has yet to pass the Senate bill, or a comparable measure, that includes that relief. Time is short. Any surge in bad news could spook the debt markets. More delays in Congress could provide just that disastrous shock.
The outlook beyond the crisis

Of course, it’s unknowable at this point whether the U.S. will emerge from this dark tunnel into the sunlight by spring or summer. Keep in mind that even the forecasts that get us to a shrinkage of 6% of GDP by year-end, a figure seldom seen, assume that folks will be back on the streets and offices by late spring or early summer.

Assuming we get to the other side, the outlook, frankly, isn’t great. Since stocks looked wildly overpriced prior to the crisis, it’s likely that a lot of the wealth families had in stocks isn’t returning. High tariffs that weren’t hurting us two years ago will probably be a permanent feature—no matter who’s elected President. That’s a major negative for growth. The exploding public deficits and debt can only be addressed with much higher taxes that would impose still another burden.

So the best bet is that we’d return to the same old, same sub-2% growth we were expecting before the crisis hit. It’s not the animal spirits of the early Trump days.

But it’s sure a lot better than 2008.

The Unlikely New Generation of Unabomber Acolytes

John Jacbi discovered Ted Kaczynski’s writing at an anarchists camp in Chapel Hill, North Carolina. 

THE UNABOMBER WAS AN ECO FASCIST NOT AN ANARCHIST


By John H. Richardson Photograph by Colby Katz 
NEW YORK MAGAZINE INTELLIGENCER 

Photo: Colby Katz


When John Jacobi stepped to the altar of his Pentecostal church and the gift of tongues seized him, his mother heard prophecies — just a child and already blessed, she said. Someday, surely, her angelic blond boy would bring a light to the world, and maybe she wasn’t wrong. His quest began early. When he was 5, the Alabama child-welfare workers decided that his mother’s boyfriend — a drug dealer named Rock who had a red carpet leading to his trailer and plaster lions standing guard at the door — wasn’t providing a suitable environment for John and his sisters and little brother. Before they knew it, they were living with their father, an Army officer stationed in Fayetteville, North Carolina. But two years later, when he was posted to Iraq, the social workers shipped the kids back to Alabama, where they stayed until their mother hanged herself from a tree in the yard. John was 14. In the tumultuous years that followed, he lost his faith, wrote mournful poems, took an interest in news reports about a lively new protest movement called Occupy Wall Street, and ran away from the home of the latest relative who’d taken him in — just for a night, but that was enough. As soon as he graduated from high school, he quit his job at McDonald’s, bought some camping gear, and set out in search of a better world.

When a young American lights out for the territories in the second decade of the 21st century, where does he go? For John Jacobi, the answer was Chapel Hill, North Carolina — Occupy had gotten him interested in anarchists, and he’d heard they were active there. He was camping out with the chickens in the backyard of their communal headquarters a few months later when a crusty old anarchist with dreadlocks and a piercing gaze handed him a dog-eared book called Industrial Society and Its Future. The author was FC, whoever that was. Jacobi glanced at the first line: “The Industrial Revolution and its consequences have been a disaster for the human race.”

This guy sure gets to the point, he thought. He skimmed down the paragraph. Industrial society has caused “widespread psychological suffering” and “severe damage to the natural world”? Made life more comfortable in rich countries but miserable in the Third World? That sounded right to him. He found a quiet nook and read on.

The book was written in 232 numbered sections, like an instruction manual for some immense tool. There were two main themes. First, we’ve become so dependent on technology that the real decisions about our lives are made by unseen forces like corporations and market flows. Our lives are “modified to fit the needs of this system,” and the diseases of modern life are the result: “Boredom, demoralization, low self-esteem, inferiority feelings, defeatism, depression, anxiety, guilt, frustration, hostility, spouse or child abuse, insatiable hedonism, abnormal sexual behavior, sleep disorders, eating disorders, etc.” Jacobi had experienced most of those himself.
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The second point was that technology’s dark momentum can’t be stopped. With each improvement, the graceful schooner that sails our shorelines becomes the hulking megatanker that takes our jobs. The car’s a blast bouncing along at the reckless speed of 20 mph, but pretty soon we’re buying insurance, producing our license and registration if we fail to obey posted signs, and cursing when one of those charming behavior-modification devices in orange envelopes shows up on our windshields. We doze off while exploring a fun new thing called social media and wake up to big data, fake news, and Total Information Awareness.

All true, Jacobi thought. Who the hell wrote this thing?

The clue arrived in section No. 96: “In order to get our message before the public with some chance of making a lasting impression, we’ve had to kill people,” the mystery author wrote.

Kaczynski at the time of his arrest, in 1996. Photo: Donaldson Collection/Getty Images

“Kill people” — Jacobi realized that he was reading the words of the Unabomber, Ted Kaczynski, the hermit who sent mail bombs to scientists, executives, and computer experts beginning in 1978. FC stood for Freedom Club, the pseudonym Kaczynski used to take credit for his attacks. He said he’d stop if the newspapers published his manifesto, and they did, which is how he got caught, in 1995 — his brother recognized his prose style and reported him to the FBI. Jacobi flipped back to the first page, section No. 4: “We therefore advocate a revolution against the industrial system.”

The first time he read that passage, Jacobi had just nodded along. Talking about revolution was the anarchist version of praising the baby Jesus, invoked so frequently it faded into background noise. But Kaczynski meant it. He was a genius who went to Harvard at 16 and made breakthroughs in something called “boundary functions” in his 20s. He joined the mathematics department at UC Berkeley when he was 25, the youngest hire in the university’s then-99-year history. And he did try to escape the world he could no longer bear by moving to Montana. He lived in peace without electricity or running water until the day when, maddened by the invasion of cars and chain saws and people, he hiked to his favorite wild place for some relief and found a road cut through it. “You just can’t imagine how upset I was,” he told an interviewer in 1999. “From that point on, I decided that, rather than trying to acquire further wilderness skills, I would work on getting back at the system. Revenge.” In the next 17 years, he killed three people and wounded 23 more.

Jacobi didn’t know most of those details yet, but he couldn’t find any holes in Kaczynski’s logic. He said straight-out that ordinary human beings would never charge the barricades, shouting, “Destroy our way of life! Plunge us into a desperate struggle for survival!” They’d probably just stagger along, patching holes and destroying the planet, which meant “a small core of deeply committed people” would have to do the job themselves (section No. 189). Kaczynski even offered tactical advice in an essay titled “Hit Where It Hurts,” published a few years after he began his life sentence in a federal “supermax” prison in Colorado: Forget the small targets and attack critical infrastructure like electric grids and communication networks. Take down a few of those at the right time and the ripples would spread rapidly, crashing the global economic system and giving the planet a breather: No more CO2 pumped into the atmosphere, no more iPhones tracking our every move, no more robots taking our jobs.

Kaczynski was just as unsentimental about the downsides. Sure, decades or centuries after the collapse, we might crawl out of the rubble and get back to a simpler, freer way of life, without money or debt, in harmony with nature instead of trying to fight it. But before that happened, there was likely to be “great suffering” — violent clashes over resources, mass starvation, the rise of warlords. The way Kaczynski saw it, though, the longer we go like we’re going, the worse things will get. At the time his manifesto was published, many people reading it probably hadn’t heard of global warming and most certainly weren’t worried about it. Reading it in 2014 was a very different experience.

The shock that went through Jacobi in that moment — you could call it his “Kaczynski Moment” — made the idea of destroying civilization real. And if Kaczynski was right, wouldn’t he have some responsibility to do something, to sabotage one of those electric grids?

His answer was yes, which was almost as alarming as discovering an unexpected kinship with a serial killer — even when you’re sure that morality is just a social construct that keeps us docile in our shearing pens, it turns out setting off a chain of events that could kill a lot of people can raise a few qualms.

“But by then,” Jacobi says, “I was already hooked.”


Jacobi in Chapel Hill, North Carolina. Photo: Colby Katz

Quietly, often secretly, whether they gather it from the air of this anxious era or directly from the source like Jacobi did, more and more people have been having Kaczynski Moments. Books and webzines with names like Against Civilization, FeralCulture, Unsettling America, and the Ludd-Kaczynski Institute of Technology have been spreading versions of his message across social-media forums from Reddit to Facebook for at least a decade, some attracting more than 100,000 followers. They cluster around a youthful nickname, “anti-civ,” some drawing their ideas directly from Kaczynski, others from movements like deep ecology, anarchy, primitivism, and nihilism, mixing them into new strains. Although they all believe industrial civilization is in a death spiral, most aren’t trying to hurry it along. One exception is Deep Green Resistance, an activist network inspired by a 2011 book of the same name that includes contributions from one of Kaczynski’s frequent correspondents, Derrick Jensen. The group’s openly stated goal, like Kaczynski’s, is the destruction of civilization and a return to preagricultural ways of life.

So far, most of the violence has happened outside of the United States. Although the FBI declined to comment on the topic, the 2017 report on domestic terrorism by the Congressional Research Service cited just a handful of minor attacks on “symbols of Western civilization” in the past ten years, a period of relative calm most credit to Operation Backfire, the FBI crackdown on radical environmental efforts in the mid-aughts. But in Latin America and Europe, terrorist groups with florid names like Conspiracy of Cells of Fire and Wild Indomitables have been bombing government buildings and assassinating technologists for almost a decade. The most ominous example is Individualidades Tendiendo a lo Salvaje, or ITS (usually translated as Individuals Tending Toward the Wild), a loose association of terrorist groups started by Mexican Kaczynski devotees who decided that his plan to take down the system was outdated because the environment was being decimated so fast and government surveillance technology had gotten so robust. Instead, ITS would return to its guru’s old modus operandi: revenge. The group set off bombs at the National Ecology Institute in Mexico, a Federal Electricity Commission office, two banks, and a university. It now claims cells across Latin America, and in January 2017, the Chilean offshoot delivered a gift-wrapped bomb to Oscar Landerretche, the chairman of the world’s largest copper mine, who suffered minor injuries. The group explained its motives in a defiant media release: “The pretentious Landerretche deserved to die for his offenses against Earth.”

In the larger world, where no respectable person would praise Kaczynski without denouncing his crimes, little Kaczynski Moments have been popping up in the most unexpected places — the Fox News website, for example, which ran a piece by Keith Ablow called “Was the Unabomber Correct?” in 2013. After summarizing some of Kaczynski’s dark predictions about the steady erosion of individual autonomy in a world where the tools and systems that create prosperity are too complex for any normal person to understand, Ablow — Fox’s “expert on psychiatry” — came to the conclusion that Kaczynski was “precisely correct in many of his ideas” and even something of a prophet. “Watching the development of Facebook heighten the narcissism of tens of millions of people, turning them into mini reality-TV versions of themselves,” he wrote. “I would bet he knows, with even more certainty, that he was onto something.”

That same year, in the leading environmentalist journal Orion, a “recovering environmentalist” named Paul Kingsnorth — who’d stunned his fellow activists in 2008 by announcing that he’d lost hope — published an essay about the disturbing experience of reading Kaczynski’s manifesto for the first time. If he ended up agreeing with Kaczynski, “I’m worried that it may change my life,” he confessed. “Not just in the ways I’ve already changed it (getting rid of my telly, not owning a credit card, avoiding smartphones and e-readers and sat-navs, growing at least some of my own food, learning practical skills, fleeing the city, etc.) but properly, deeply.”

By 2017, Kaczynski was making inroads with the conservative intelligentsia — in the journal First Things, home base for neocons like Midge Decter and theologians like Michael Novak, deputy editor Elliot Milco described his reaction to the manifesto in an article called “Searching for Ted Kaczynski”: “What I found in the text, and in letters written by Kaczynski since his incarceration, was a man with a large number of astute (even prophetic) insights into American political life and culture. Much of his thinking would be at home in the pages of First Things.” A year later, Foreign Policy published “The Next Wave of Extremism Will Be Green,” an editorial written by Jamie Bartlett, a British journalist who tracks the anti-civ movement. He estimated that a “few thousand” Americans were already prepared to commit acts of destruction. Citing examples such as the Standing Rock pipeline protests in 2017, Bartlett wrote, “The necessary conditions for the radicalization of climate activism are all in place. Some groups are already showing signs of making the transition.”

The fear of technology seems to grow every day. Tech tycoons build bug-out estates in New Zealand, smartphone executives refuse to let their kids use smartphones, data miners find ways to hide their own data. We entertain ourselves with I Am Legend, The Road, V for Vendetta, and Avatar while our kids watch Wall-E or FernGully: The Last Rainforest. An eight-part docudrama called Manhunt: The Unabomber was a hit when it premiered on the Discovery Channel in 2017 and a “super hit” when Netflix rereleased it last summer, says Elliott Halpern, the producer Netflix commissioned to make another film focusing on Kaczynski’s “ideas and legacy.” “Obviously,” Halpern says, “he predicted a lot of stuff.”

And wouldn’t you know it, Kaczynski’s papers have become one of the most popular attractions at the University of Michigan’s Labadie Collection, an archive of original documents from movements of “social unrest.” Kaczynski’s archivist, Julie Herrada, couldn’t say much about the people who visit — the archive has a policy against characterizing its clientele — but she did offer a word in their defense. “Nobody seems crazy.”

Two years ago, I started trading letters with Kaczynski. His responses are relentlessly methodical and laced with footnotes, but he seems to have a droll side, too. “Thank you for your undated letter postmarked 6/11/18, but you wrote the address so sloppily that I’m surprised the letter reached me …” “Thank you for your letter of 8/6/18, which I received on 8/16/18. It looks like a more elaborate and better developed, but otherwise typical, example of the type of brown-nosing that journalists send to a ‘mark’ to get him to cooperate.” Questions that revealed unfamiliarity with his work were poorly received. “It seems that most big-time journalists are incapable of understanding what they read and incapable of transmitting facts accurately. They are frustrated fiction-writers, not fact-oriented people.” I tried to warm him up with samples of my brilliant prose. “Dear John, Johnny, Jack, Mr. Richardson, or whatever,” he began, before informing me that my writing reminded him of something the editor of another magazine told the social critic Paul Goodman, as recounted in Goodman’s book Growing Up Absurd: “ ‘If you mean to tell me,” an editor said to me, “that Esquire tries to have articles on serious issues and treats them in such a way that nothing can come of it, who can deny it?’ ” (Kaczynski’s characteristically scrupulous footnote adds a caveat, “Quoted from memory.”) His response to a question about his political preferences was extra dry: “It’s certainly an oversimplification to say that the struggle between left & right in America today is a struggle between the neurotics and the sociopaths (left = neurotics, right = sociopaths = criminal types),” he said, “but there is nevertheless a good deal of truth in that statement.”

But the jokes came to an abrupt stop when I asked for his take on America’s descent into immobilizing partisan warfare. “The political situation is complex and could be discussed endlessly, but for now I will only say this,” he answered. “The current political turmoil provides an environment in which a revolutionary movement should be able to gain a foothold.” He returned to the point later with more enthusiasm: “Present situation looks a lot like situation (19th century) leading up to Russian Revolution, or (pre-1911) to Chinese Revolution. You have all these different factions, mostly goofy and unrealistic, and in disagreement if not in conflict with one another, but all agreeing that the situation is intolerable and that change of the most radical kind is necessary and inevitable. To this mix add one leader of genius.”

Kaczynski was Karl Marx in modern flesh, yearning for his Lenin. In my next letter, I asked if any candidates had approached him. His answer was an impatient no — obviously any revolutionary stupid enough to write to him would be too stupid to lead a revolution. “Wait, I just thought of an exception: John Jacobi. But he’s a screwball — bad judgment — unreliable — a problem rather than a help.”


The Kaczynski moment dislocates. Suddenly, everyone seems to be living in a dream world. Why are they talking about binge TV and the latest political outrage when we’re turning the goddamn atmosphere into a vast tanker of Zyklon B? Was he right? Were we all gelded and put in harnesses without even knowing it? Is this just a simulation of life, not life itself?

People have moments like that under normal conditions, of course. Sigmund Freud wrote a famous essay about them way back in 1929, Civilization and Its Discontents. A few unsettled souls will always quit that bank job and sail to Tahiti, and the stoic middle will always suck it up. But Jacobi couldn’t accept those options. Staggered by the shock of his Kaczynski Moment but intent on rising to the challenge, he began corresponding with the great man himself, hitchhiked the 644 miles from Chapel Hill to Ann Arbor to read the Kaczynski archives, tracked down his followers all around the world, and collected an impressive (and potentially incriminating) cache of material on ITS along the way. He even published essays about them in an alarmingly terror-friendly print journal named Atassa. But his biggest influence was a mysterious Spanish radical theorist known only by the pseudonym he used to translate Kaczynski’s manifesto into Spanish, Último Reducto. Recommended by Kaczynski himself, who even supplied an email address, Reducto gave Jacobi a daunting reading list and some editorial advice on his early essays, which inspired another series of TV-movie twists in Jacobi’s turbulent life. Frustrated by the limits of his knowledge, he applied to the University of North Carolina, Chapel Hill, to study some more, received a full scholarship and a small stipend, and buckled down for two years of intense scholarship. Then he quit and hit the road again. “I think the homeless are a better model than ecologically minded university students,” he told me. “They’re already living outside of the structures of society.”

Four years into this bizarre pilgrimage, Jacobi is something of an underground figure himself — the ubiquitous, eccentric, freakishly intellectual kid who became the Zelig of ecoextremism. Right now, he’s about to skin his first rat. Barefoot and shirtless, with an old wool blanket draped over his shoulders, long sun-streaked hair and gleaming blue eyes, he hurries down a rocky mountain trail toward a stone-age village of wattle-and-daub huts, softening his voice to finish his thought. “Ted was a good start. But Ted is not the endgame.”

He stops there. The village ahead is the home of a “primitive skills” school called Wild Roots. Blissfully untainted by modern conveniences like indoor toilets and hot showers, it’s also free of charge. It has just three rules, and only one that will get us kicked out. “I don’t want to be associated with that name,” Wild Roots’ de facto leader told us when I mentioned Kaczynski. “I don’t want my name associated with that name,” he added. “I really don’t want to be associated with that name.”

Jacobi arrives at the open-air workshop, covered by a tin roof, where the dirtiest Americans I’ve ever seen are learning how to weave cordage from bark, start friction fires, skin animals. The only surprise is the lives they led before: a computer analyst for a military-intelligence contractor, a Ph.D. candidate in engineering, a classical violinist, two schoolteachers, and a rotating cast of college students the older members call the “pre-postapocalypse generation.” Before he became the community blacksmith, the engineering student was testing batteries for ecofriendly cars. “It was a fucking hoax,” he says now. “It wasn’t going to make any difference.” At his coal-fired forge, pounding out simple tools with a hammer and anvil, he feels much more useful. “I can’t make my own axes yet, but I made most of the handles on those tools, I make all my own punches and chisels. I made an adze. I can make knives.”

Freshly killed this morning, five dead rats lie on a pine board. They’re for practice before trying to skin larger game. Jacobi bends down for a closer look, selects a rat, ties a string to its twiggy leg, and hangs it from a rafter. He picks up a razor. “You wanna leave the cartilage in the ear,” his teacher says. “Then cut just above the white line and you’ll get the eyes off.”

A few feet away, a young woman who fled an elite women’s college in Boston pounds a wooden staff into a bucket to pulverize hemlock bark to make tannin to tan the bear hide she has soaking in the stream — a mixture of mashed hemlock and brain tissue is best, she says, though eggs can substitute if you can’t get fresh brain.

Jacobi works the razor carefully. The eyes fall into the dirt.

“I’m surprised you haven’t skinned a rat before,” I say.

“Yeah, me too,” he replies.

He is, after all, the founder of The Wildernist and Hunter/Gatherer, two of the more radical web journals in the personal “rewilding” movement. The moderates at places like ReWild University talk of “rewilding your taste buds” and getting in “rockin’ fit shape.” “We don’t have to demonize our culture or attempt to hide from it,” ReWild University’s website enthuses. Jacobi has no interest in padding the walls of the cage — as he put it in an essay titled “Taking Rewilding Seriously,” “You can’t rewild an animal in a zoo.”

He’s not an idiot; he knows the zoo is pretty much everywhere at this point. He explained this in the philosophical book he wrote at 22, Repent to the Primitive: “My focus on the Hunter/Gatherer is based on a tradition in political philosophy that considers the natural state of man before moving on to an analysis of the civilized state of man. This is the tradition of Hobbes, Rousseau, Locke, Hume, Paine.” His plan is to ace his primitive skills, then test living wild for an extended time in the deepest forest he can find.

So why did it take him so long to get out of the zoo?

“I thought sabotage was more important,” he says.

But this isn’t the place to talk about that — he doesn’t want to break Wild Roots’ rules. Jacobi goes silent and works his razor down the rat’s body, pulling the skin down like a sock.

When he’s finished, he leads the way back into the woods, naming the plants: pokeberry, sourwood, rhododendron, dog hobble, tulip poplar, hemlock. The one with orange flowers is a lily that will garnish his dinner tonight. “If you want, I can get some for you,” he offers.

Then he returns to the forbidden topic. “I could never do anything like that,” he says firmly — unless he could, which is also a possibility. “I don’t have any moral qualms with violence,” he says. “I would go to jail, but for what?”

For what? The first time I talked to him, he told me he had dreams of being the leader Kaczynski wanted.

“I am being a little evasive,” he admits. His other reason for going to college, he says, was to plant the anti-civ seed in the future lawyers and scientists gathered there — “people who will defend you, people who have access to computer networks” — and also, speaking purely speculatively, who could serve as “the material for a terrorist criminal network.”

“Did you convince anybody?” I ask.

“I don’t know. I always told them not to tell me.”

“So you wanted to be the Lenin?”

“Yeah, I wanted to be Lenin.”

But let’s face it, he says, the revolution’s never going to happen. Probably. Maybe. That’s why he’s heading into the woods. “I want to come out in a few years and be like Jesus,” he jokes, “working miracles with plants.”

Isn’t he doing exactly what Lenin did during his exile in Europe, though? Honing his message, building a network, weighing tactical options, and creating a mystique. Is he practicing “security culture,” the activist term for covering your tracks? “Are you hiding the truth? Are you secretly plotting with your hard-core cadre?”

He smiles. “I wouldn’t be a very good revolutionary if I told you I was doing that.”


At the last minute, Abe Cabrera changed our rendezvous point from a restaurant in New Orleans to an alligator-filled swamp an hour away. This wasn’t a surprise. Jacobi had given me Cabrera’s email address, identifying him as the North American contact for ITS, which Cabrera immediately denied. His interest in ITS was purely academic, he insisted, an outgrowth of his studies in liberation theology. “However,” he added, “to say that I don’t have any contact with them may or may not be true.”

Now he’s leading me into the swamp, literally, talking about an ITS bomb attack on the head of the Department of Physical and Mathematical Sciences at the University of Chile in 2011. “Is that a fair target?” he asks. “For Uncle Ted, it would have been, so I guess that’s the standard.” He chuckles.

He’s short, round, bald, full of nervous energy, wild theories, and awkward tics — if “Terrorist Spokesman” doesn’t work out for him, he’s a shoo-in for “Mad Scientist in a B-Movie.” Giant ferns and carpets of moss appear and disappear as he leads the way into the swamp, where the elephantine roots of cypress trees stand in the eerie stillness of the water like dinosaurs.

He started checking out ITS after he heard some rumors about a new cell starting up in Torreón, his grandparents’ birthplace in Mexico, he says, but the group didn’t really catch his interest until it changed its name from Individuals Tending Toward the Wild to Wild Reaction. Why? Because healthy animals don’t have “tendencies” when they confront an enemy. As one Wild Reaction member put it in the inevitable postattack communiqué, another example of the purple prose poetry that has become the group’s signature: “I place the device, and it transforms me into a coyote thirsting for revenge.”

Cabrera calls this “radical animism,” a phrase that conjures the specter of nature itself rising up in revolt. Somehow that notion wove together all the dizzying twists his life had taken — the years as the child of migrant laborers in the vegetable fields of California’s Imperial Valley, his flirtation with “super-duper Marxism” at UC Berkeley, the leap of faith that put him in an “ultraconservative, ultra-Catholic” order, and the loss of faith that surprised him at the birth of his child. “Most people say, ‘I held my kid for the first time and I realized God exists.’ I held my kid the first time and I said, ‘You know what? God is bullshit.’ ” People were great in small doses but deadly in large ones, even the beautiful little girl cradled in his arms. There were no fundamental ethical values. It all came down to numbers. If that was God’s plan, the whole thing was about as spiritually “meaningful as a marshmallow,” Cabrera says.

John Jacobi is a big part of this story, he adds. They connected on Facebook after a search for examples of radical animism led him to Hunter/Gatherer. They both contributed to the journal Atassa, which was dedicated on the first page to the premise that “civilization should be fought” and that the example of Ted Kaczynski “is what that fighting looks like.” In the premier edition, Jacobi made the prudent decision to write in a detached tone. Cabrera’s essay bogs down in turgid scholarship before breaking free with a flourish of suspiciously familiar prose poetry: “Ecoextremists believe that this world is garbage. They understand progress as industrial slavery, and they fight like cornered wild animals since they know that there is no escape.”

Cabrera weaves in and out of corners like a prisoner looking for an escape route, so it’s hard to know why he chose a magazine reporter for his most incendiary confession: “Here’s the super-official version I haven’t told anybody — I am the unofficial voice-slash-theoretician of ecoextremism. I translated all 30 communiqués. I translated one last night.”

Abe Cabrera: Abracadabra.

Yes, he knows this puts him dangerously close to violating the laws against material contributions to terrorism. He read the Patriot Act. That’s why he leads a double life, even a triple life. Nobody at work knows, nobody from his past knows, even his wife doesn’t know. He certainly doesn’t want his kids to know. He doesn’t even want to tell them about climate change. Math homework, piano lessons, gymnastics, he’s “knee-deep in all that stuff.” He punches the clock. “What else am I gonna do? I love my kids,” he says. “I hope for their future, even though they have no future.”

His mood sinks, reminding me of Jacobi. Shifts in perspective seem to be part of this world. Puma hunted here before the Europeans came, Cabrera says, staring into the swamp. Bears and alligators, too, things that could kill you. The cypress used to be three times as thick. When you look around, you see how much everything has suffered.

But we’re not in this mess because of greed or nihilism; we’re in it because we love our children so much we made too many of them. And we’re just so good at dominating things, all that is left is to lash out in a “wild reaction,” Cabrera says. That’s why he sympathizes with ITS. “It’s like, ‘Be the psychopathic destruction you want to see in the world’, ” he says, tossing out one last mordant chuckle in place of a good-bye.


Kaczynski is annoyed with me. “Do not write me anything more about ITS,” he said. “You could get me in trouble that way.” He went on: “What is bad about an article like the one I expect you to write is that it may help make the anti-tech movement into another part of the spectacle (along with Trump, the ‘metoo movement,’ neo-Nazis, antifa, etc.) that keeps people entertained and therefore thoughtless.”

ITS, he says, is the very reason he cut Jacobi off. Even after Kaczynski told him the warden was dying for a reason to reduce his contacts with the outside world, the kid kept sending him news about them. He ended his letter to me with a controlled burst of fury. “A hypothesis: ITS is instigated by some country’s security services — probably Mexico. Their real task is to spread hopelessness, because where there is no hope there is no serious resistance.”

Wait … Ted Kaczynski is hopeful? The Ted Kaczynski who wants to destroy civilization? The idea seems ridiculous right up to the moment it spins around and becomes reasonable. What better evidence could you find than the unceasing stream of tactical and strategic advice that he’s sent from his prison cell for almost 20 years, after all. He’s hopeful that civilization can be taken down in time to save some of the planet. I guess I just couldn’t imagine how anyone could ever manage to rally a group of ecorevolutionaries large enough to do the job.

“If you’ve read my Anti-Tech Revolution, then you haven’t understood it,” he scolds. “All you have to do is disable some key components of the system so that the whole thing collapses.” I do remember the “small core of deeply committed people” and “Hit Where It Hurts,” but it’s still hard to fathom. “How long does it take to do that?” Kaczynski demands. “A year? A month? A week?”

On paper, Deep Green Resistance meets most of his requirements. The original core group spent five years holding conferences and private meetings to hone its message and build consensus, then publicized it effectively with its book, which speculates about tactical alternatives to stop the “planet from burning to a cinder”: “If selective disruption doesn’t work soon enough, some resisters may conclude that all-out disruption is needed” and launch “coordinated actions on a large scale” against key targets. DGR now has as many as 200,000 members, according to the group’s co-founder — a soft-spoken 30-year-old named Max Wilbert — who could shave off his Mephistophelian goatee and disappear into any crowd. Two hundred thousand may not sound like much when Beyoncé has 1 million-plus Instagram followers, but it’s not shabby in a world where lovers cry out pseudonyms during sex. And Fidel had only 19 in the jungles of Cuba, as Kaczynski likes to point out.

Jacobi says DGR was hobbled by a doctrinal war over “TERFs,” an acronym I had to look up — it’s short for “trans-exclusionary radical feminists” — so this summer they’re rallying the troops with a crash course in “resistance training” at a private retreat outside Yellowstone National Park in Montana. “This training is aimed at activists who are tired of ineffective actions,” the promotional flyer says. “Topics will include hard and soft blockades, hit-and-run tactics, police interactions, legal repercussions, operational security, terrain advantages and more.”

At the Avis counter at the Bozeman airport, my phone dings. It’s an email from the organizers of the event, saying a guy named Matt needs a ride. I find him standing by the curb. He’s in his early 30s, dressed in conventional clothes, short hair, no visible tattoos, the kind of person you’d send to check out a visitor from the media. When we get on the road and have a chance to talk, he says he’s a middle-school social-studies teacher. He’s sympathetic to the urge to escalate, but he’d prefer to destroy civilization by nonviolent means, possibly by “decoupling” from the modern world, town by town and state by state.

But if that’s true, why is he here?

“See for yourself,” he said.

We reach the camp in the late afternoon and set up our tents next to a big yurt. A mountain rises behind us, another mountain stands ahead; a narrow lake fills the canyon between them as the famous Big Sky, blushing at the advances of the night, justifies its association with the sublime. “Nature is the only place where you feel awe,” Jacobi told me after the leaves rustled at Wild Roots, and right now it feels true.

An hour later, the group gathers in the yurt outfitted with a plywood floor, sofas, and folding chairs: one student activist from UC Irvine, two Native American veterans of the Standing Rock pipeline protests, three radical lawyers, a shy working-class kid from Mississippi, a former abortion-clinic volunteer, and a few people who didn’t want to be identified or quoted in any way. The session starts with a warning about loose lips and a lecture on DGR’s “nonnegotiable guidelines” for men — hold back, listen, agree or disagree respectfully, avoid male-centered words, and follow the lead of women.

By that time, I’d already committed my first microaggression. The cook asked why I was standing in the kitchen doorway, and I answered, “Just supervising.” Her sex had nothing to do with it, I swear — I was waiting to wash my hands and, frankly, her question seemed a bit hostile. But the woman who followed me out the door to dress me down said that refusing to accept her criticism was another microaggression.

The first speaker turns the mood around. His name is Sakej Ward, and he did a tour in Afghanistan with the U.S. Joint Airborne and a few years in the Canadian military. He’s also a full-blooded member of the Wolf Clan of British Columbia and the Mi’kmaq of northern Maine with two degrees in political science, impressive muscles bulging through a T-shirt from some karate club, and one of those flat, wide Mohawks you see on outlaw bikers.
Unfortunately, he put his entire presentation off the record, so all I can tell you is that the theme was Native American warrior societies. Later he tells me the societies died out with the buffalo and the open range. They revived sporadically in the last quarter of the 20th century, but returned in earnest at events like Standing Rock. “It’s a question of ‘Are they there yet?’ We’ve been fighting this war for 500 years. But climate change is creating an atmosphere where it can happen.”

For the next two days, we get training in computer security and old activist techniques like using “lockboxes” to chain yourself to bulldozers and fences — given almost apologetically, like a class in 1950s home cooking. In another session, Ward takes us to a field and lines us up single file. Imagine you’re on a military patrol, he says, turning his back and holding his left hand out to the side, elbow at 90 degrees and palm forward. “Freeze!,” he barks.

We freeze.

“That’s the best way to conceal yourself from the enemy,” he tells us. He runs through basic Army-patrol semiotics. For “enemy,” you make a pistol with your hand and turn it thumbs-down. “Danger area” is a diagonal slash. After showing us a dozen signs, he stops. “Why am I making all the signs with my left hand?”

No one knows.

He turns around to face us with his finger pointed down the barrel of an invisible gun. “Because you always have to have a finger in control of your weapon,” he says.

The trainees are pumped afterward. “You can take out transformers with a .50 caliber,” one man says.

“But you don’t just want to do one,” says another. “You want four-man teams taking out ten transformers. That would bring the whole system to a halt.”

Kaczynski would be fairly pleased with this so far, I think. Ward is certainly a plausible contender for the Lenin role. Wilbert might be too. “We talk about ‘cascading catastrophic effects,’ ” he tells us in one of the last yurt meetings, summing up DGR’s grand strategy. “A large percent of the nation’s oil supply is processed in a facility in Louisiana, for example. If that was taken down, it would have cascading effects all over the world.”

But then the DGR women called us together for a lecture on patriarchy, which has to be destroyed at the same time as civilization. Also, men who voluntarily assume gendered aspects of female identity should never be allowed in female-sovereign spaces — and don’t call them TERFs unless you want a speech on microaggression.

Matt listens from the fringes in a hoodie and mirrored glasses, looking exactly like the famous police sketch of the Unabomber. I’m pretty sure he’s trolling them. Maybe he’s remembering the same Kaczynski quote I am: “Take measures to exclude all leftists, as well as the assorted neurotics, lazies, incompetents, charlatans, and persons deficient in self-control who are drawn to resistance movements in America today.”

At the farewell dinner, one of the more mysterious trainees finally speaks up. With long, wild hair, a floppy wilderness hat, pants tucked into waterproof boots, a wary expression, and an actual hermit’s cabin in Montana, he projects the anti-civ vibe with impressive authenticity. He was involved in some risky stuff during the Cove Mallard logging protests in Idaho in the mid-1990s, he says, but he retreated after the FBI brought him in for questioning. Lately, though, he’s been getting the feeling that things are starting to change, and now he’s sure of it. “I’ve been in a coma for 20 years,” he says. “I want to thank you guys for being here when I woke up.” One of the radical lawyers wraps up with a lyrical tribute to the leaders of Ireland’s legendary 1916 rebellion. He waxes about Thomas MacDonagh, the schoolteacher who led the Dublin brigade and whistled as he was led to the firing squad.

On the drive back to the airport, I ask Matt if he’s really a middle-school teacher. He answers with a question: What is your real interest in this thing?

I mention John Jacobi. “I know him,” he says. “We’ve traded a few emails.”

Of course he does. He’s another serious young man with gears turning behind his eyes.

“Can you imagine actually doing something like that?” I ask.

“Well,” he answers, drawing out the pause, “Thomas MacDonagh was a schoolteacher.”


The next time I talk to John Jacobi, he’s back in Chapel Hill living with a friend and feeling shaky. Things were getting strange at Wild Roots, he says — nobody could cooperate, there were personal conflicts. And, well, there was an incident with molly. It’s been a hard four years. First he lost Jesus and anarchy. Then Kaczynski and Último Reducto dumped him, which was really painful, though he understood why. “I’ve been unreliable,” he says woefully. To make matters worse, an ITS member called Los Hijos del Mencho denounced him by name online: The trouble with Jacobi was his “reluctance to support indiscriminate attacks” because of his sentimental attachment to humanity.

Jacobi is considering the possibility that his troubled past may have affected his judgment. He still believes in the revolution, he says, but he’s not sure what he’d do if somebody gave him a magic bottle of Civ-Away. He’d probably use it. Or maybe not.

I check in a couple of weeks later. He’s working in a fish store and thinking of going back to school. Maybe he can get a job in forest conservation. He’d like to have a kid someday.

He brings up Paul Kingsnorth, the “recovering environmentalist” who got rattled by Kaczynski’s manifesto in 2012. Kingsnorth’s answer to our global existential crisis was mourning, reflection, and the search for “the hope beyond hope.” The group he co-founded to help people with that task, a mixture of therapy group and think tank called Dark Mountain, now has more than 50 chapters worldwide. “I’m coming to terms with the fact that it might very well be true that there’s not much you can do,” Jacobi says, “but I’m having a real hard time just letting go with a hopeless sigh.”

In his Kaczynski essay, Kingsnorth, who has since moved to Ireland to homeschool his kids and write novels, put his finger on the problem. It was the hidden side effect of the Kaczynski Moment: paralysis. “I am still embedded, at least partly because I can’t work out where to jump, or what to land on, or whether you can ever get away by jumping, or simply because I’m frightened to close my eyes and walk over the edge.” To the people who end up in that suspended state now and then, lying in bed at four in the morning imagining the worst, here’s Kingsnorth’s advice: “You can’t think about it every day. I don’t. You’ll go mad!”

It’s winter now and Jacobi’s back on the road, sleeping in bushes and scavenging for food, looking for his place to land. Sometimes I wonder if he makes these journeys into the forest because of the way his mother ended her life — maybe he’s searching for the wild beasts and ministering angels she heard when he fell to his knees and spoke the language of God. Psychologists call that magical thinking. Medication and counseling are more effective treatments for trauma, they say. But maybe the dream of magic is the magic, the dream that makes the dream come true, and maybe grief is a gift too, a check on our human arrogance. Doesn’t every crisis summon the healers it needs?

In the poems Jacobi wrote after his mother hanged herself, she turned into a tree and sprouted leaves.

*This article appears in the December 10, 2018, issue of New York Magazine.

Inside the Unabomber's odd and furious online revival
A TV drama has rekindled interest in anti-technology terrorist Ted Kaczynski, also known as the Unabomber. Ironically enough, his followers now congregate online

THE UNABOMBER WAS AN ECO FASCIST NOT AN ANARCHIST

By JAKE HANRAHAN WIRED Wednesday 1 August 2018


The TV series Manhunt: Unabomber premiered on the Discovery Channel in the US before being picked up by Netflix for global distribution Tina Rowden/Discovery Communications

In 1978 Ted Kaczynski began building letter bombs designed to kill. They were made out of smokeless powder, match heads, nails, potassium nitrate, razor blades, and various other caustic substances. Kaczynski, a former academic and an alumnus of Harvard University, killed three people with these bombs and injured 23 others. His targets were airliners, university professors, and academics. Some of the bombs missed their targets and blew shrapnel into the bodies of postal workers and receptionists. The attacks were unscrupulous and vicious.

Kaczynski, dubbed the Unabomber by the FBI and the media, evaded capture for almost 18 years. He’d been hiding out in a self-contained wood cabin in the forests of Montana, writing a manifesto under the pseudonym “Freedom Club” (or FC) on a portable typewriter. After releasing his 35,000 word manifesto titled “Industrial Society and its Future” to the media in 1995, it became apparent that Kaczynski was fighting, in his mind at least, against the rise of technology and the perceived sickness it had infected the world with. The Unabomber was a militant neo-luddite.

Twenty-two years after Kaczynski’s bombing campaign and imprisonment, he now has a new following. Ironically enough, they all congregate on the internet.

Often characterised by putting pine tree emojis in their names on social media, the new Kaczynski inspired community of self-defined primitivists and neo-luddites is flourishing. They spend hours sharing memes that call for the destruction of modern civilisation, and discuss fringe politics in Twitter group chats or on messaging app Discord. This year they even sent Kaczynski a birthday card. On the face of it, Kaczynski’s new followers are angry, bored, and sick of the modern world.

By CHARLIE WINTER AND AMARNATH AMARASINGAM

It’s all been growing rapidly since a TV drama series called Manhunt: Unabomber aired in August 2017. The series tells a fictionalised version of the Unabomber investigation. In the process of catching the elusive felon, the main character, Agent Fitz, pores over Kaczynski’s manifesto until he develops an affinity with it. He comes to the conclusion that while the brutal bombing campaign was wrong, Kaczynski’s theories were actually right. The detective ends up moving into a log cabin in the woods. Kaczynski ends up moving into prison with eight life sentences.

Large parts of the series are factually inaccurate – for example the portrayal of Kaczynski as some kind of CIA experiment gone wrong, and the insinuation that he was mentally ill — but, overall, Manhunt: Unabomber seems to have provided an easily consumable entryway to Kaczynski’s politics for the pine tree community.


Like Agent Fitz in Manhunt, the new Kaczynski followers are drawn to his theories. In this sense, there is somewhat of a Freedom Club revival happening — hundreds of young men seeking to reconnect with nature, as an act of rebellion against the state of Western civilisation, all couched in Ted Kaczynski’s anti-tech ideas.

Terrorist Ted Kaczynski, aka the Unabomber, sits for an interview in a visiting room at the Federal ADX Supermax prison in Florence, Colorado in August 1999
Stephen J. Dubner/Getty Images

For a year now I’ve been chatting with various members of the pine tree community. They’re a mixed bag: some seem to actually want the total destruction of modern civilisation, and long for some kind of apocalyptic future; some are sick of the mainstream’s political correctness; some are, of course, just shit-posting. But all of them are disgusted with modernity. In an age of hyper-consumerism and ecological destruction, the pine trees don’t see a place for themselves anywhere within the current system. They long for something radical. “Modernity crushes your soul,” says Regi, who’s been part of the pine tree community from the beginning. “We see our jobs as soul crushing. Modern life is safe and boring and lacking cohesion. Many strive for a more simple and practical existence.”

By GIAN VOLPICELLI

Regi, 18, became aware of Kaczynski’s crimes and manifesto in December 2017 after seeing Manhunt: Unabomber memes posted online. He got hold of a copy of the manifesto and was immediately converted. “I read the manifesto and it blew my mind,” he said. “I thought it was a work of genius.”

In the six months I’ve been speaking to Regi, he’s gone from meme-posting daily about how much he wants the modern world to collapse, to actually going out and spending time immersed in nature, hiking through the forests where he lives in Canada. He’s seen online less and less.

But Kaczynski’s terrorism hasn’t influenced Regi. He doesn’t agree with his brutal murders and doesn’t believe that they were justified, as some pine trees do. “Killing innocents isn't a good thing and I find his justification for it shitty,” said Regi. “If he wanted to kill someone, why not assassinate like, Steve Jobs, or one of those corporate assholes?”

Like Regi, most of the new young Kaczynskites don’t actually want to set the world on fire. They’re probably not about to start building bombs in their kitchens or ditching their smartphones to live in the woods. But they do feel something is wrong. Between the memes you see these young men putting on their timelines – often anything that mocks “society” or a semi-ironic wish for a war they can die in — you’ll see a genuine fury at the seemingly endless cycle of nature being destroyed in pursuit of profit. That’s not to say they side with environmentalists though — in fact, they laugh in the face of organisations like Greenpeace and the World Wildlife Fund. Their argument is that these people all work within “the system”, so how can they really change anything? The pine trees feel it’s all a little too late.

To quote the Dark Mountain Project, a group of former ecologists who went rogue and came around to a similar way of thinking as Kaczynski, “We were disillusioned with the state of environmentalism. It seemed that sustainability had come to mean sustaining the Western way of living at all costs.” Through their crass shit-posting and memes about militant groups like the Animal Liberation Front, the pine trees are often trying to say the same thing, albeit through the haze of a 21st century internet subculture

But war and conflict are a constant presence on pine trees' timelines. They spread their message through tweeting things like “SHUT THE FUCK UP URBANITE!” at tech-bros, “normies”, or basically anyone who doesn’t agree with them. Instead of engaging others in public debate, they’d rather trash them. They don’t want allies. And the aesthetics of war plays a big part too. Photos of the Provisional IRA, the EZLN, and even Russian-backed separatists in east Ukraine are often posted alongside joking messages such as “I wish that were me”. One user, Ecoretard, recently tweeted: “Can I get [an] urban conflict with a faction I support so I can die for something I believe in?”

The glorification of war is perhaps another way of expressing their frustration at feeling trapped. As Regi says, “Modern life is safe and boring”. War, or at least the glorification of it, is not.

In September 1995, The Washington Post published Kaczynski's unedited, 35,000 word manifesto at the request of the US attorney general and the FBI in the hopes of ending his 17-year bombing campaign Evan Agostini/Liaison

Now, this community of Kaczynski adherents, misfits, and so-called political extremists, is less a cohesive movement than a loosely connected online subculture. For a while though, there was a pine tree leader of sorts. He was less concerned with the shit-posting and more seriously occupied with the Kaczynski worldview. His name is Rin. He wanted to build an “organisation” of “dedicated people”. He indexed Kaczynski’s prison letters, memorised paragraph numbers of the manifesto, and corralled the first new wave of Kaczynskites into a community. Rin, 24, also ran the most extensive online Kaczynski archive that has probably ever existed. That is until he pulled it all down in disgust last month.

“I decided to dedicate myself to the Ted Kaczynski project because everyone was talking about the Unabomber, but nobody was talking about Ted Kaczynski’s ideas,” Rin says.

Rin has been involved in post-leftist and green-anarchist politics since he was 18. He lives in “a Spanish speaking country”, considers himself a neo-luddite, and tries to follow the teachings of Kaczynski wherever possible. I’ve spent a lot of time in the last six months debating Rin and discussing his radical ideology with him. He’s intelligent and well-read. Despite his preoccupation with Kaczynski, I never got the impression that Rin is actually dangerous, although he can most definitely be considered a Kaczynski sympathiser. He used to run three different Twitter accounts, two of which were the Ted Kaczynski Archive and Ted Was Right. Kaczynski’s victims are never a focus of his discussion and simply shrugged off as a consequence of war.

When Rin noticed the emergence of a small online community of young men interested in all things Unabomber at the start of 2018, he began to round them up. He formed a group chat on Twitter and a radical book club where he would suggest new political literature for the pine trees. He and the rest of them embraced edgy irony and warlike aesthetics as a means to draw the youth in further. It was all very deliberate.

“Manhunt: Unabomber was the perfect breeding ground to introduce the ideology to suitable people,” Rin says. “The people attracted to the ideas began interacting with each other and formed themselves [into] a social base. They were able to form a community and slowly develop a culture. This is what eventually became Prim Twitter [Primitivist Twitter being another name for the pine tree community].”

Whilst the pine tree members were from a variety of different political milieus, they were all united by Rin under a popular front that “embraced collapse” and “loved nature”.

But Rin’s place at the head of the community didn’t last. His own creation began to morph into something unforgivably ugly, when some members began drifting from edgy luddite memes and the embrace of wild nature, to outright far-right ideologies. “Some in the community began flirting with fascism,” Rin says. “And not the left-wing type where everything they dislike is labelled ‘fascism’ — but actual genuine fascism. That was the final drop in the bucket for me. Totalitarian ideologies like fascism and communism are something I'm extremely hostile against.”

Rin is quick to emphasise that despite many on the left considering Kaczynski a fascist (mostly due to the fact he attacked them constantly in his manifesto), he actually describes fascism as “kook ideology” (“page 150 of his book Technological Slavery!”) and says Nazi ideology is “evil” in one of his letters. Rin also points out that Kaczynski has never tried to align himself with fascists, he was in favour of radical black liberation groups, and always saw green anarchist types as his natural comrades. This doesn’t change the fact that many fascist groups today use Kaczynski as an icon. Even Atomwaffen Division, the esoteric neo-Nazi militant group in the US, have made graphics using his face.



A birthday card the Pine Tree Community sent to Ted Kaczynski, the Unabomber. Their words have been blurred Pine Trees

Some of the pine tree community are now splintering off into different groups, deviating from Kaczynski’s work to that of Pentti Linkola, who is a self-described eco-fascist. This coincides with new ecologically-focused Neo-Nazi groups that are now cropping up. Green fringe politics is all very much in vogue on the internet, as is the resurgence of neo-fascism. The two are starting to merge.

Rin scrapped his online Kaczynski archive in June due to the creep of fascism amongst the pine trees. But he still believes that a new generation of neo-luddism is coming.

“There is very much an interest in Ted Kaczynski growing deep down,” he says. “It's in its infancy, but it seems Ted being in prison has finally paid off. He’s gotten some extremely dedicated neo-luddites ready to contribute to the collapse of technological society.”


Rin may sound militant, but the likelihood of a major neo-luddite terror attack remains pretty low. The Freedom Club revival is still mostly spreading via memes online, not via letter bombs. The idea that our interaction with technology has reached a crisis point, is spreading further than the pine tree fringe ideology though. This year the theme has been featured often in the press. Even Silicon Valley, which made tech junkies out of us all, is having a twinge of guilt. Some reformed tech-bros have created “humane tech” organisations such as the Time Well Spent movement, founded by former Google employee Tristan Harris.

The pine tree community is a radical response to what writer Grafton Tanner once called “the mall”: a digital hellscape where people are nostalgic for something that never existed, constantly “doped on consumer goods, energy drinks, and Apple products.”

In Rin’s opinion, it’s all falling down already. “Our technological civilisation is complex and unsustainable. Its breakdown is inevitable," he says. "It will be slow and boring, but technological civilisation has already signed its death warrant.”