Over the past 20 years, financier and philanthropist George Soros has become an influential and controversial force in finance, international development and, more recently, in American politics.
On Tuesday, Soros comes to Louisville as part of the Kentucky Author Forum. He’ll be interviewed by John Podesta, president of the Center for American Progress, a progressive policy think tank established in 2003.
Soros was born in Budapest, Hungary, in 1930, and survived the Nazi occupation of his birthplace. He went to England in 1947 and graduated from the London School of Economics. There he became fascinated with the work of Karl Popper, the Austrian-born philosopher who worked in England.
After moving to the United States 40 years ago, Soros built a large fortune through an international investment fund that he founded and still manages. It’s that wealth that let him start the Open Society Institute, along with the Soros Foundation Network, which reports spending more than $400 million annually in its work with civic and governmental organizations in more than 50 countries, on projects focusing on education, media, public health, human rights and economic reform.
Podesta met Soros while working for the Clinton administration. Soros was not active in domestic politics at that time, but he became quite active during the 2003-04 U.S. election cycle when he contributed more than $23.5 million to so-called 527 organizations, including America Coming Together and MoveOn.org. His contributions also included $3 million to the Center for American Progress, which still receives money from Soros’ philanthropic organizations.
In a phone interview, Podesta promised that next week’s event won’t be a mere conversation between two liberal-thinking political insiders. Instead, Podesta wants to push the conversation and create a lively discussion of ideas from the left and the right. The conversation comes at time when “the country’s highly skeptical about the direction that the president is taking the country,” Podesta says.
Soros’ appearance is tied to the publication of his latest book, “The Age of Fallibility: The Consequences of the War on Terror” (Perseus Books Group, 2006), in which he argues that U.S. leaders are basing policies, most notably the war on terror, on fallible ideas that the American public has ignored in its pursuit of a feel-good society.
All told, Soros has written eight books. In his first, 1987’s “The Alchemy of Finance,” the man whom Business Week called “the man who moves markets” discussed his views on and practices in investment. In that book, Soros expounded on his theory of reflexivity, which involves analysis of how individual assumptions about reality are often wrong, and that dealing with reality requires a compilation of ideas before taking action. Soros also waxes philosophical in his new book, and couples his views with criticism of policies pursued by the Bush administration, most notably the war on terror. Soros also took the time to answer questions by telephone.
LEO: I just went to Google News and saw some interesting headlines: “Hilary Clinton and George Soros Must be Stopped.” “Who is More Dangerous: Capitalism or George Soros?” And another, “George Soros and the Shadow Democratic Party.” What do you make of these kinds of headlines?
George Soros: Well, there is a right-wing propaganda machine that is targeting me. And as matter of fact, the charges that they are making are so outlandish that it’s worth studying how they can actually get any traction with those charges.
LEO: What are some of the most outlandish charges you’ve heard?
GS: I’m rather interested in the techniques that they use. I mean, they basically claim that I am the
Lenin of a shadow party, and that in looking into my character that I was collaborating with the Nazis in 1944 when I was 14 years old. And what else? And I set up, spent a very large amount of money in my foundations in order to raid the Russian economy. So, I don’t mind repeating these charges because they are so outlandish, and I’m not a politician so it doesn’t hurt me. These are total fabrications, and the interesting thing is how they are able to get some traction for it.
LEO: What effects do you want the book to have?
GS: The main point of my view of history is how important misconceptions are, how they shape historical events. The best demonstration is the war on terror, because here is the United States, the most powerful nation on earth, that no other power or combination of powers could endanger. But the way that we responded to it — with a false idea, namely waging war on an abstraction called terror — led to a decline in our power and influence that actually exceeds even my own expectations.
LEO: Does that make this book different than your previous books?
GS: In the previous book, the thesis was that the war on terror is a temporary aberration, and by multi-electing President Bush, we can write it off as a temporary aberration and get back on the straight and narrow. But President Bush was reelected, and so the misconception is much deeper than just some leaders misleading the country. There’s something wrong with the followership as well as the leadership. That is what I explored in the idea of the feel-good society and the problem we have in dealing with the truth.
LEO: You devote a large portion of the book to philosophy, how people think about reality and that their ideas are often wrong. You then propose mitigating that with a concept you call reflexivity. But how do you explain this to people who haven’t read the book?
GS: If I could, I would have not written the book. I would have just encapsulated it.
LEO: You criticize the strong role that self-interest plays in American society and in the country’s foreign policy. How can that role be lessened when pursuing self-interest seems to be human nature, and much of U.S. values and infrastructure focus on individual freedoms?
GS: We have a self-interest to take a larger view of the common human interests because we have been and we ought to be leaders of the world. To be leaders, we can’t just use military power to impose our will on the rest of the world. We have to actually bear in mind the common human interests. Take some of the common problems, like, global warming. Maybe Exxon finds it in its corporate interests to question the concept, but it is actually happening and unless we do something about it, all of us are going to suffer from it. To deal with it does require American participation.
LEO: How can a feel-good society based on consumerism change?
GS: Well, I honestly don’t know the answer to that, except that when reality rears its ugly head we may have to learn to deal with unpleasant realities as well as just feeling good. Even the Bush administration has modified its policies because reality forces them to. If you misinterpret reality, reality punishes us.
LEO: What is the media’s role, if the public doesn’t care about complicated issues and take the time to understand them?
GS: People want to be entertained and not informed. Basically, the public gets its information from TV comedians, which is not such a bad source. So, you can’t really blame the media because the media is serving the public.
LEO: About the concept of an open society, which has been the basis of much of your writing and is part of the name of your foundation — how would you describe “open society” in a sound bite?
GS: I define it as an imperfect society that holds itself open to improvement. But in fact, it is really a description of liberal democracy. Now, liberal in domestic terms has a bad connotation, but in talking about international affairs, liberal democracy is the same thing as an open society.
LEO: What are the best examples of an open society and where are they?
GS: There’s a very important point about open society. When we generally think of democracy and free elections and President Bush emphasizes free elections as the be-all-and-end-all of democracy, the fact is that that’s only half the story. We also need institutions that constrain the powers of government and maintain the rule of law. If you don’t have those institutions and you have free elections, you may actually get an illiberal democracy — religious fanatics coming to power or corrupt rulers. The efforts of the Open Society Institute and the foundation
have been to build the institutions.
LEO: You write about the consequences of misunderstanding history.
GS: America is an open society that actually doesn’t fully understand the concept of open society. The Declaration of Independence and the Constitution was a product of the Enlightenment, where we put faith in reason. It’s only since we’ve had 200 years of experience with the Enlightenment that we have to recognize that reason is not that powerful. That’s why we need democracy, critical thinking and so on. That’s part of the argument of the book: We need to understand our fallibility.
LEO: Your background is in finance coupled with your involvement with the Open Society Institute and social causes. You write that the market is not governed by moral considerations, and in the social sphere morality plays a role. Some people argue that moral considerations should play a role in the market.
GS: A perfect market by definition is one where no single participant can influence the price. Therefore, the actions of an individual investor have no noticeable effect on the real world — on the price of the stocks and therefore on the fortunes of the companies. Therefore there’s no moral effect.
LEO: How do you align that with your idea of reality, and that perfection does not exist because our perceptions of reality are skewed and not perfect? If we are participants in markets, then markets aren’t perfect?
GS: Look. It is true. Let’s say, as an anonymous investor, I didn’t face any moral dilemmas, but when I became a guru whom people actually paid attention to, I did face moral dilemmas because what I said could influence markets.
LEO: Do you find there is more discussion in the finance world about the role of morality?
GS: Yes, there is, and it’s very healthy because by acting in unison or cooperating with each other it is possible to impose certain standards. While individual investors can’t influence the markets, investors acting as a group or corporations acting as a group can set standards which bring about improvement. For instance, the Internet companies are going to China. As long as they compete with each other, the Chinese government can impose its conditions and force the companies to censor the information that they make available. But if they got together, established certain standards and decided to abide by those standards, then they could actually get their standards accepted. We have been supporting a movement called Publish What You Pay
, which is to induce oil and mining companies to disclose the monies they spend, in particular to governments in particular countries. That then leads to the next step where the public, the civil society, can hold the governments accountable for how they spend the money.
LEO: What are you doing during this election season to help Democrats gain control of Congress?
GS: I’m rather critical of the policies that are advocated by the Democratic Party, but nevertheless I think it’s important for them to gain control of one of the houses. And so, I do what I can to help.
LEO: Are you targeting specific races?
GS: Mainly I’m supporting an organization called America Votes
, and that is sort of a cooperative of various single-issue advocacy groups cooperating to get their points of view accepted.
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