← New Books Network
New Books Network
Pepper Culpepper and Taeku Lee, "Billionaire Backlash: The Age of Corporate Scandal and How it Could Save Democracy" (Bloomsbury, 2026)
01:07:36
Loading summary
Transcript82 lines
- [00:00]
Blinds.com Narrator
At blinds.com, it's not just about window treatments. It's about you. Your style, your space, your way. Whether you DIY or want the pros to handle it all, you'll have the confidence of knowing it's done right. From free expert design help to our 100% satisfaction guarantee, everything we do is made to fit your life and your windows. Because@blinds.com, the only thing we treat better than windows is you. Visit blinds.com now for up to 50% off with minimum purchase plus a professional measure at no cost. Rules and restrictions apply.
- [00:30]
Alfred Marcus
I was groomed to become one of
- [00:32]
Pepper Culpepper
his wives this week on Disorder, the podcast that orders the disorder, an Epstein survivor tells me her story and what justice looks like for her. I want to see action, and I am demanding action.
- [00:46]
Alfred Marcus
Do not just talk the talk. You need to start walking the walk now.
- [00:50]
Pepper Culpepper
It's one of the most powerful interviews I've ever done in over 20 years as a journalist. Search Disorder in your podcast app to listen right now. Welcome to the New Books Network
- [01:05]
Alfred Marcus
welcome to the New Books Network. I'm Alfred Marcus and this is on the Cusp between strategy and ethics, where we explore how organizations navigate the tensions between performance, innovation, and responsibility. Today I'm speaking with Pepper Culpepper, a political scientist whose work has reshaped how we think about corporate power, quiet politics, and regulation, and who now, together with Taeku Lee, has written Billionaire the Age of Corporate Scandal and How It Could Save Democracy, published by Bloomsbury in 2026. The book argues that corporate scandals such as Dieselgate, Cambridge Analytica, Exxon, New ftx, and others are not just episodes of wrongdoing, but potential catalysts for democratic renewal, moments when public anger, information and activism can push back against entrenched business power. It's very optimistic and I hope it continues to happen. So, Pepper, thank you for joining me. You opened the book with a striking contrast between Upton and Sinclair's the Jungle and early 20th century muckrackers. On the one hand, in today's wave of corporate scandals, From Enron and WorldCom to Volkswagen, Dieselgate and Facebook's privacy crisis on the other, what first led Yu and Teaku Lee to see these episodes not just as isolated abuses, but as a recurring political mechanism that can actually strengthen democracy.
- [02:46]
Pepper Culpepper
Well, first, thank you for having me on the show. I'm really happy to talk about the book. So so Tegu and I started out looking at what was going on in the wake of the financial crisis and and part of what inspired this book is that Tegu is an individual behaviorist who looks at individual opinion. And I'm someone who studies the play of political economy, interest group politics. And we were having a disagreement about what was going on in society because I was saying, tegu, if you look post crisis, you're seeing a lot of anger and it's sort of spilling. He's saying, well, if I look at the data, you don't see attitudes on redistribution changing. You don't see attitudes on general market regulation changing. So we started to think about how we could study what the political crisis did and did not do. And we latched on to scandals as the sort of recurring mechanism that we could see. I mean, if you like the financial crisis, if a scandal is an act of corporate malfeasance that is somehow revealed and then popularized in the press with sort of a negative, a negative moral freighting. The great financial crisis of 2008 was a mega scandal. Lots of individual acts of corporate malfeasance that were wrapped up in some sort of systematic abuses that was covered for months that had huge consequences in terms of the economy in the us, In Europe, around the world. So we began to look at that particular instance and it's Carl Levin and his hearings, which we write about in the book, where he managed to. He had the thorny problem of explaining to Americans how it is that Goldman Sachs had a systematic conflict of interest. And even when you begin to think about the issue of conflict of interest, people begin to, you know, roll their eyes or at least shut down cognitively, because it's a hard problem. And so what Levin did, as you'll know from reading the book, is, is he went through the sort of millions of emails that Goldman Sachs turned over when they were subpoenaed because they thought these guys in Congress won't read the emails. But. But they did. His staff read the emails and they found this recurring reference to, as this shitty deal, which they, which they described selling to their client. And then he puts Goldman, Goldman's senior leadership team and traders on the stand and says, you know, what did you think about selling this shitty deal to clients? And the cfo, David Vinier comes up and Levin repeats the question, you know, so how do you feel when your employees are talking about selling this shitty deal? And Vineyard says, that's a really unfortunate thing to have on email. And that was the moment when Levin had won, Goldman Sachs lost. And the filibuster against the Dodd Frank, what became the Dodd Frank law collapsed because there was simply too much overwhelming pressure. And people realized wow, this is really amazing what was going on.
- [05:30]
Alfred Marcus
It's really matters of public understanding.
- [05:34]
Pepper Culpepper
Absolutely. That's what scandals are. They're moments for the public to understand things that are pretty complicated, that they're kind of suspicious about and worry about, but they may not necessarily understand and they may not be top of mind,
- [05:44]
Alfred Marcus
otherwise they might not care. If they don't understand, they have to really understand it in a very stark way. Can you explain to listeners what the shitty deal actually was?
- [05:55]
Pepper Culpepper
So, of course, so the, the deal was referring to, you know, these mezzanine CDOs. So, so timber Timberwolf was the name of the particular mezzanine CDO we're talking about. And mezzanine, you're on the ground floor in terms of credit worthiness. And what happened in the financial crisis, as as many people will remember, at least listen to this show, if not generally, is that Goldman Sachs realized earlier than many other players on the market that they had a lot of this subprime risk on their balance sheet and the subprime market was going south and they needed to figure out a way to unload it and to make a bet on, on the market, you know, turning against it. And so they packaged into deals and then sold it to, so, so packaging the subprime, the various subprime mortgage products into a deal and then said, you know, you want to spread out your, your, your credit risk. How much do you want to put in subprime? They didn't say to their clients that they were meanwhile betting that that subprime was massively going to fail. So they were, they were doing the two things simultaneously. It's like, if I tell you all, oh, we're never gonna go invade Venezuela, but then I go bet on polymarket that we're gonna invade Venezuela in a week and I have, you know, information suggesting that's gonna happen. That, that's an imperfect analogy for what Goldman Sachs was doing. But with the, with this, the kind of shitty deal talking about it, it made clear that Goldman really understood it was selling something that was a toxic product it was trying to get rid of and it was simultaneously betting against.
- [07:26]
Alfred Marcus
They knew that they were ripping off their clients. And so therefore there should be outrage because they knew the loaded gun, essentially
- [07:36]
Pepper Culpepper
they found it so, so as not to be sued by Goldman Sachs. I should say that they, they would say they were not ripping off their clients. Their clients were mature adults trying to allocate risk. But they had an, there was an information asymmetry of which they took advantage.
- [07:48]
Alfred Marcus
Yes, yes, of course. Okay. A core conceptual move in the book is your distinction between mass activated and latent public opinion. Building on VL Keith's idea about latent opinion is the iceberg politicians really fear for listeners who are not political scientists. How do these different layers of opinion work? And why are corporate scandals so effective at turning latent discontent about big business into politically consequential pressure?
- [08:18]
Pepper Culpepper
So mass opinion. I think we all know what mass opinion is. It's what we read about when we say, the New York Times runs a survey. We polled 1100 people and here's their approval rating of Trump. Here's what they think about the invasion of Iran. Here's what they think about the way that we're regulating cryptocurrency. Whatever happens to be surveyed at the time, and largely it's about the political horse race. How is the leadership doing? How is the leadership in Congress doing? Should they be doing more? What do we think about the Supreme Court activated opinion? That's sort of elite opinion in interest groups and social movements where people are paying attention on particular issues and have more refined views. And latent opinion is this third category where people have sort of back of mind considerations about what's going on with individual companies or a collection of companies. And they say, we may be worried about this, but it's not a sort of fully formed view that I'm worried about. And it's certainly not a view that if I go to the polling station tomorrow, I'm going to vote on the basis of. And the reason we talk about latent opinion is so VO key, a famous political scientist who sort of brought this notion forward, he said, latent opinion is the only opinion that political elites really care about because they're worried about if latent opinion gets activated and suddenly mass opinion is influenced by what's previously been latent. And that's what happens with scandals.
- [09:48]
Alfred Marcus
They're all related, but it doesn't always happen because many times what will happen is that it simply remains latent and it remains unactivated. And it's just mass opinion where people don't really care. And that's the distinction you're trying to get at in your book, is that right?
- [10:09]
Pepper Culpepper
Well, that's right. Except I would say that where there is this sort of bubbling concern, whether it's in the case of data privacy, in the case of what became the sort of Facebook Cambridge Analytica SC handle, whether it's in the case of accounting irregularities with Enron and then WorldCom, whether it's in the case of maybe Exxon, you know, has, has known about the state of climate change. Even though it's telling us the science is really uncertain, that view may be out there and it's a little more likely to catch fire if that view is out there. So when there's, when the public is not really concerned about something or when the public says yeah, we think that company's a pretty good company on average, it's much harder for a scandal to catch fire. So scandals are not neutral. It's not a random thing whether they take off.
- [10:56]
Alfred Marcus
So what you're trying to really explain is when something latent will actually become activated and become part of mass opinion and then the politicians may take notice under those circumstances.
- [11:09]
Pepper Culpepper
That's exactly right because, because you know, think about what happened during Enron. You have, you know, corporate governance is a topic that generally languishes on, you know, it's deep in the business section of the newspaper if at and you'd had debates on corporate governance regulation in the United States Congress. And then you have, the Enron scandal breaks out and suddenly people see a mass failure where pensions of many employees are suddenly rendered worthless and this, this company that was said to be so innovative suddenly collapses. And people say I was worried that some of these companies whose valuations were constantly going up were fudging the numbers. And now it's, now I see it happen that. So that happens. Then the WorldCom scandal happens and the legislation in Congress suddenly goes through almost unanimously in what becomes the Sarbanes Oxley.
- [12:02]
Alfred Marcus
That's what we should hope happens and that's how politicians get activated is that the latent public opinion becomes activated and then becomes mass. And you line up these three elements, anger, clear and comprehensible information and pre existing public suspicion about corporations as elements I guess that move the issues up from being latent to becoming activated en masse. Could you walk us through let's say some of the cases you've already referred to them. Let's say it's up to you. You could take Diesel Case, Dieselgate or the Enron WorldCom accounting scale, any one that you want. And I just mention those because I've written about them in the past and show all these three ingredients come together to produce real regulatory or legal change.
- [12:52]
Pepper Culpepper
Sure. So yeah, the Enron example I gave is, is one another that I'll take. Where is Facebook and Cambridge Analytica? Where.
- [13:01]
Alfred Marcus
That's a good one. Yeah, I like that one. I like Enron too because I've written about it.
- [13:08]
Pepper Culpepper
You know, Enron, Enron's a classic. Yeah.
- [13:11]
Alfred Marcus
And it's amazing how students today don't even know anything about it. It's like 20 years ago. Okay. But that's a whole other issue.
- [13:19]
Pepper Culpepper
Well, so that's because new scandals push it off the headlines is what I was saying.
- [13:22]
Alfred Marcus
Yeah, that's also interesting.
- [13:25]
Pepper Culpepper
So Enron was of its time in that there was a concern about what was going on with the accounting of certain companies. And probably the biggest, and we may talk about this later, the biggest kind of risk is are these large AI companies who are doing circular investments. Is there. No. There, there. In terms of. Even though we think AI is going to be dramatically transformative. Um, so that. Yeah, so that might be something that, you know, is Sam Altman selling us a bag of goods or is it really going to be some sort of brave new world? We, we could talk about that. But just to sort of walk through something, a scandal we have experienced where Cambridge Analytica, the political consulting company, takes the Data of almost 90 million Facebook users and is able to get access through it through a little app, which is really a personality app, you know, so it says, you know what, you know your digital life. And so you ask these questions and answer the questions, but it's not the answers to the questions that are important. What's happened is your digital life is scraping all the data as soon as you click on the app. And so it's going through all of the information of all of your contacts in Facebook. So 300,000 people open that app, and only not almost 90 million people's data gets scraped by this sort of mathematical thing. Because it's every, every Facebook contact that you have. So, so that happens with Cambridge Analytica. It breaks in 2018 and suddenly you have people who. So, and here's the latent part, right? Latent opinion is we're worried about privacy. We, we're worried that, that we're heavily reliant on all of these companies. We've seen the occasional a flare up of issues. You know, we first saw it, for example, in the PRISM scandal revealed by Snowden that we had by Edward Snowden, that there are all of these thing, this information that's being passed directly to the NSA and to gchq, the two sort of super secret communications agencies of the US and UK governments, respectively. So there's that concern about that information. And then we say, so we're worried about privacy. That's the latent part, right? And then a scandal suddenly draws huge attention to it. The fact that 9 million people, most of whom never even clicked on this app, had their data taken by Cambridge Analytica. And Cambridge Analytica, by the way, went around and said, this data allows us to sell micro targeted ads and we can really shift elections. We kind of put it out there in the bloodstream of the body politic, and it influences elections. It's not clear that their empirical claims about being effective are right, but that's certainly how they were marketing themselves. They, you know, they claimed to be behind the Trump vote in 2016, the vote for President Trump, as well as having influenced the Brexit election. And that's been disputed empirically whether they had any impact or not. But that was their plan, and that got a lot of salience in the public. And so what happens then is this nebulous problem of privacy gets a very concrete instantiation. And what happens is that journalists explain that to us, they write about it, and that's the clear information. Journalists become our teachers at these moments. And that information, together with this kind of latent opinion. I was always concerned that these companies were spying on me. They know more than the FBI does. Suddenly, that leads to a lot of anger, and that anger seeks a sort of political response. So that's how you get the anger, the information, and the latent opinion leading to a kind of push. And you may say, well, nothing happened in the United States. I can explain why nothing happened at the national level through the case of the Utah Senator Orrin Hatch. But in the United States, you did actually have a change in privacy regulation. It happened at the state level. It happened in California, where a group led by a person named Alistair McTaggart, who's simply a property developer who got concerned about privacy. They pushed through a private initiative on privacy regulation. And, you know, they've got all kinds of money flowing in against them. They're sure they're going to lose. Cambridge Analytica happens, and suddenly everyone's willing to sign their petition. People in California want to cut a deal with McTaggart, and they pass a law, and they pass a law. But then the tech companies, so that's in 2018, they passed the law. The tech companies began lobbying immediately in 2019 to undercut the law. MacTaggart puts another initiative on the ballot in 2020, which he passes, and he inserts a measure. This, this measure cannot be weakened by amendment. It can only be strengthened because given the sort of fighting with the tech companies, he'd realized he couldn't keep up unless he put in some sort of ratchet like that. So that's the US regulatory side in the European Union, you get much stricter regulation both on the competition side with the Digital Markets act and online safety with the Digital Services act, which are downstream consequences of the Cambridge Analytical Scandal and the utter taint that was associated with Facebook. An all new season of the Secret Lives of Mormon Wives is now streaming on Hulu and Hulu on Disney. Mom talk has just been blowing up. Whitney and Jen are on Dancing with the Stars. Taylor is a bachelorette. Saying that out loud is crazy. Like that is huge. But all the cool opportunities could pull us apart. It's causing issues in everyone's marriage. My whole world is falling apart right now.
- [18:36]
Alfred Marcus
It's chaos.
- [18:37]
Pepper Culpepper
Watch the whole Hulu original series, the Secret Lives of Mormon Wives now streaming on Hulu and Hulu on Disney plus for bundle subscribers terms apply is.
- [18:47]
Alfred Marcus
Well, I mean, probably all of this. The data was collected about you and me too. I mean, it's likely that a very high percentage of people's data, even if you don't use Facebook frequently, was collected and disseminated. But has Meta really suffered as a result? It seems Meta is able to get away, continues to get able to get away with nearly everything.
- [19:13]
Pepper Culpepper
Yeah. So we've got this pushback a lot. Does Meta suffer? I mean, I can tell you that the fact that it had to call itself Meta is sort of a reflection of suffering. It's not just the fact that Mark Zuckerberg made an ill fated bet on the Metaverse, it's that Facebook became a really toxic brand because of that scandal and he wanted to sort of shift that to an underlying part of the company and not the whole company. But you know, Meta is still a huge company. They have high stock valuation. But the question is Meta has had a lot of legislation passed that it wished weren't passed. And I think instead of thinking about the valuations of these companies, which is going to go up and down for a lot of reasons and public opinion is not the most important of those, we have to think about what's happening on the regulatory front. And is the regulation actually getting at what people are concerned about? And so that's the metric we use. And on privacy, we had none before and we have some now. Could one ask for more? Sure. But you know, regulation also induces distortions and so you have to balance.
- [20:15]
Alfred Marcus
Has it really though affected the way Meta operates in any way or people's use of Facebook? Are people. Is there a decline in that usage? That's been documented.
- [20:27]
Pepper Culpepper
So I have not seen any study that sort of links decline of of the use of Facebook or the use of Meta products more broadly. Because Meta, you know, owns Instagram and WhatsApp. That is related to privacy regulation. What it changes is the way the control that individuals have over their data, rights about data. And so in the European Union, you own the data, and in California you can say, you know, do not share or sell my data. And so those little screens which you may click right through, or many people may click right through, especially in younger generations, those are the property rights that have been created. Now what we do with them, we the consumers, that's sort of on us. But, and so, you know, if we continue, if we continue to use the dictive products and continue to hand over our data, it's on us. But the regulatory tools are starting to be created.
- [21:24]
Alfred Marcus
Personally, I try not to use Facebook, but too many of my friends do. So I do look at their.
- [21:32]
Pepper Culpepper
Yeah, so I, I don't use Facebook. But, you know, it's, it's, it's WhatsApp that kills me because I, you know, all of my communication network is tied up that way. And so I, I've written a separate article with Kathy Thielen on this, which we call platform power. It's that consumers really had interests that are sharply, if tacitly aligned with a lot of these big tech companies because they make our lives so convenient. I mean, Amazon prime is incredible. And so we may think as consumers about, I want that product tonight, right? I want my copy of Billionaire Backlash tonight. As opposed to how is this sort of affecting the fact that they're making people work, you know, filmed for eight to ten hours a day and they get to go to the bathroom once. Maybe that's not a society we want to live in. It makes us think differently about it.
- [22:14]
Alfred Marcus
And I don't make much of a difference. What about hate speech? Did this have any impact on their attempt to control hate speech on Facebook?
- [22:26]
Pepper Culpepper
So it certainly did in the dsa, the Digital Services act, in the European Union, where it requires very large on provider VLOP platforms that have a monopoly status to sort of do audits of the kind of information that they're releasing now, it's clear that Facebook was doing more monitoring at a certain point than it is now. And because, you know, the oversight they get from the US Government, which is the government they really fear, has dropped away. Where Trump has suggested he's in a very deregulatory mode and he doesn't want them censoring, but in the European Union, they're required to do certain things and if there were ever a law to pass in the United States, either at state level about online safety or at the federal level, that would impose big, big changes. But it, but so in Europe it has happened. But because these companies are generally based in the United States, the European authority doesn't scare them as much as Washington scares them.
- [23:29]
Alfred Marcus
And they're not considered news organizations, so they don't have any. There's no real commitment to unbiased or fairness doctrines as I understand it.
- [23:39]
Pepper Culpepper
Well, I mean, they're not responsible for their content because they say we're simply platformed and it's being put up. And that's been one of the articles that has allowed them to grow so much. And it's heavily debated about whether that article is still useful for Internet growth or it's pernicious in terms of its effects. You'll get people arguing on both sides.
- [23:55]
Alfred Marcus
I think that would be the real hammer that would affect them in a much more major way if they were required to abide by the same kind of standards as typical news organizations, at least were in the past.
- [24:11]
Pepper Culpepper
I can assure you they're spending a lot of money on Capitol Hill to make sure that doesn't happen.
- [24:15]
Alfred Marcus
I know I can. That's so one of your book's central claims is that corporate scandals and democracies often succeed where scandals and autocracies fail. As you illustrate with the Chinese San Lu baby formula case versus the French Lectaculus scandal. What does this comparison tell us about the institutional preconditions or scandal driven reform and about the different ways democracies and autocracies manage or suppress public outrage?
- [24:46]
Pepper Culpepper
So let me first say what we mean by failure in that sense. We, we kind of, we, we mean a sort of societal failure. And let me tell you why we, we make that judgment about Sunlu vs Lava Sun Loo is a, a Chinese company and they, their milk, their infant formula was causing babies to get sick in the run up to the Beijing Olympics. The Chinese government suppressed that information because they wanted a great story for the banishing 2008 Olympics. The story emerges then in the fall, in the autumn after, after the Olympics. And it turns out that to make the protein content of the milk look higher, the company Sunlu has been certain actors within Sunlu have been lacing the infant formula with melamin, which is a, it's a product used to manufacture plastics. And what it does, it doesn't add protein, but it makes it look like you're adding protein by the way that they test by increasing the Nitrogen content. Because how you test protein in infant formula is you test the amount of nitrogen. So this has that effect. Melamin is toxic to human kidneys, and not only to human kidneys, as we write about in the book. There had been Chinese dog and cat food exported to the United States a couple of years prior to that, killed thousands of dogs and cats because they, they died, presumably of kidney failure. So that was the unfortunate, you know, precursor of this scandal. Anyway, so, so you, you, you get six babies that ultimately die. You get, you know, tens of thousands that get ill and that have to be hospitalized. And what happens is the Chinese government seeks to have a scapegoat, but you get parents of sick babies. They try to organize. And one in particular named Xiao Lianhai, he tries to organize and put out on Facebook, actually, as it happens online, how it is that you create information about this so parents can know what happened. And the government comes down hard on him, arrests him, eventually puts him in jail. And because they don't want what we call a policy entrepreneur to put pressure on government now in China, they actually wound up executing two people associated with the company. But there was no government accountability that happened at all. Nothing. And, and as a result of that, you know, that what was sort of this latent opinion becomes mass opinion. And the Chinese, you know, the, the Chinese don't trust their food supply. And so you get shortages on infant formula in Hong Kong, in Australia and New Zealand because the Chinese are sending people to other countries to import their infant formula because they don't believe that their food is safe, because they don't have the kind of scandal canary in the coal mine working for them. Fast forward to Lactalis happening later in the decade where you have a number of babies who get sick as a result of an infection at a plant in Caen in France. No babies die, but nevertheless, a number get sick because of this salmonella infection that happens through the plant. And there are 36 hearings that are held, and there are criminal proceedings that are launched against the chief executive of the company, or at least against executives of the company. And what you get there is a much more public airing and a challenge to public regulation saying, the public failed us on this, the companies failed us, and people should be held accountable. But it's the government's job to make sure that the companies are doing what they can. And so what happened with Lactalis is their share price went down, but you didn't have this mass loss of trust in French infant formula. And so this difference illustrates how democracies are better at saying, actually scandals let us know that we're able to draw attention to failings in our regulations so we can trust the products that we use, whether it's food, whether it's data, whether it's something else.
- [28:36]
Alfred Marcus
I mean, ultimately in China, the Chinese consumers understood what was going on and they, and they began to protect themselves. The word did get out. So it wasn't the government didn't help the government, but the consumers themselves in the end recognized where the danger lie and they, they took action. Is that correct?
- [28:56]
Pepper Culpepper
Totally. That's. That's entirely correct. And, and so what, what the Chinese government did when they, they jailed Xiao Lianhai is they were trying to keep at a failure of regulation. They wanted accountability to be only headed out by, by very stiff death penalties against a couple of actors in the company.
- [29:12]
Alfred Marcus
Interesting. So this is how you're getting at the distinction between when the latent issues become activated and they don't become activated. Democratic government is very critical. You also show that even within democratic, where there are democratic institutions, that scandals can feel like Exxon Nu, fdx, Sassel's environmental damage in Mossville, and even the British Post Office rising story, which took years and a TV drama to fully break through. What distinguishes the failed scandals from the politically effective ones in democracies? And what does this teach activists and policymakers about how to frame and leverage wrongdoing when it's exposed? Yes.
- [30:00]
Pepper Culpepper
Yeah, that's a big question. There are lots of reason that scandals fail. So if we take, for example, the FTX scandal, there was perfect agreement among, between Americans on the left and the right that Sam Bankman Fried was, was guilty, that he was guilty of some sort of fraud. You know, huge percentages, something like 77%, 78% of people thought in the wake of that scandal that he was guilty. But of course, cryptocurrency is one of those subjects. And we're looking now, you know, back at 2023, that, that people didn't understand very well. And so they're looking to the media to explain it to them. And what normally happens in scandals, what happened, for example, in the Cambridge Analytica scandal, what happened in the Goldman Sachs scandal, is that your media of the left and your media of the right. So on the one hand, the New York Times and cnn, on the other hand, Fox News and the Wall Street Journal, they're portraying stories of scandal that are relatively similar. Whereas if you look at their coverage of, say, a President Trump policy, the New York Times will say it's the worst thing that's ever been created. And, you know, Fox News will say that the President has finally taken care of this immigration problem. And so you get dramatically different lenses. But normally on corporate scandals, you get similar lenses, but with crypto, because you had a different kind of interpretation of where blame lay. As far as the New York Times was concerned, this was a classic failure of regulation. They talked about a wild west in crypto, that it desperately needed regulation. So people on the left tended to think, following the news coverage, that what was needed was more regulation. Whereas people on the right who watched Fox News or read the Wall Street Journal were getting a very different message. And that message was Sam Bankman Fried is just a bad, hypocritical actor. And moreover, he's a bad, hypocritical actor who donated a lot of money to the Democrats. So that political framing, because people didn't know what to think about crypto, that wound up influencing their interpretive lens for how they understood that scandal. And Democrats and Republicans, they think different things about crypto, and they still do today. And that started with the FTX scandal.
- [32:04]
Alfred Marcus
You really have to have unity among the left and the right about how a scandal is viewed and how they explain it to the public for effective action to be taken. Are there other conditions that are critical?
- [32:22]
Pepper Culpepper
Yeah, so, you know, there's the extent to which. So that's a sort of case of FTX is a case of where you have the public not understanding and the media explaining in a very partisan vein. You can have, for example, the issue already associated with partisanship long before. And I would illustrate this with talking about the Exxon news scandal, which, just to say very briefly, was the revelation that Exxon, since the late 1970s, had these excellent models of climate change. Excellent in terms of. Yeah. So in terms of predicting, you know, what carbon emissions were likely to do to carbon change, we're likely to do the sort of temperatures around the world. So they had this information, and Exxon, of course, led a lobbying campaign of several different oil companies based on the idea that the science is really uncertain. We don't know. And it's true, like all science, there are uncertainty intervals around what we know. But they did know. They did know what the dramatic tendency was likely to be, and they predicted it very well. And so this.
- [33:27]
Alfred Marcus
It's like Goldman. It's like Goldman in the sense that they knew and yet they lied to us.
- [33:33]
Pepper Culpepper
Yeah, exactly. And so this comes out in 2015, is revealed, and when we do our survey experiments, we show that when you have people read about this scandal in Britain, in France and Germany, it changes their opinion of climate change. It makes them want more climate change regulation. It makes them think the issue is more important in the United States. It only makes Democrats think the issue thinks that we need more climate change regulation. And it makes neither Democrats nor Republicans think the issue is more important. And part of that is because climate change has become a highly polarized issue that the mass public has different opinions on in the United States. And so when you're, when you're talking to left and right, it's not like financial regulation, it's not like cryptocurrency. People aren't easily open to change, so it's much harder to change them. And they associate views about climate change closely with whether they vote Republican or whether they vote Democrat, and that makes them very hard to move. And so the scandal we already talked didn't resonate at all.
- [34:30]
Alfred Marcus
Goldman Sachs and the Carl Levin hearings. Can you describe other complex issues that can be converted into easy issues that ordinary citizens can grasp and care about and where that actually made a difference in, let's say, the role of language and metaphor in media and turning highly technical corporate behavior into something democratically legible? Can you?
- [34:57]
Pepper Culpepper
Yeah, I really do think that Carl Levin is the best way to speak about that particular problem of. If you think about any regulatory problem, as scholars of regulation know, that's, you know, that's why we get jobs doing this, because regulation is hard and naughty and most people don't pay attention to it. Right. And so there are complexities involved on either side. But if you're, if there are complexities involved and people don't actively care about it, politicians have an incentive not to listen to you and me, the voters, they have an incentive to listen to the big corporations who really care about regulation because it affects their bottom line in a big way. And that's what my previous argument about quiet politics is, that government has real incentive to listen to business, and therefore business has a real political advantage. Under situations of quiet politics, when you have complex regulatory issues at hand, concentrated
- [35:50]
Alfred Marcus
versus diffuse interests, and it's the element of collective action, how do you achieve collective action when interests are very diffuse and mobilizingly.
- [36:01]
Pepper Culpepper
Yeah, so that's the classic Mansur Olson way of thinking about this same problem. But Mansur Olson just talks about concentrated versus diffuse interests as though they are somehow randomly distributed. But they're not randomly distributed. Companies often have concentrated interests, and that's why we get the common problem of regulatory capture. So Anyway, when the public pays attention, suddenly politicians are willing to listen to the public because ultimately they want to get reelected. That's the thing that motivates them. But the public has to understand, they don't have to understand the details of the issue, they won't understand the details of the issue. That's asking too much of the voter. But they have to understand what's fundamentally at stake. And so when scandals make a difference, that's when voters can understand what's fundamentally at stake. And so why Levin was so successful in using this shitty deal trope again and again and again was he communicated conflict of interest, which is already a complicated measure, and he made it very simple. It's simply a shitty deal. It's the deal that many people post in post financial crisis in the Occupy Wall street moment were thinking, that's the deal we're getting with the social contract. And it's not fair. It stinks. And so that I think is how you get this. The use of language to make something evocative so that people understand the core of an issue without understanding the details
- [37:23]
Alfred Marcus
down to outrage and emotion. You know, when you feel like you're being ripped off. Personal harm is an element in this as well. And if simple explanations stimulate those kinds of emotions and those feelings, that's how you read it, basically.
- [37:44]
Pepper Culpepper
So anger is very motivating. It motivates to action. And so we've done a lot of survey, experimental work on this, but we're not the only ones. There's. It's a widespread finding in political psychology that anger is very activating. And so scandals bring that anger together with information. And therefore suddenly politicians say, oh, I better respond to that because I want to get reelected.
- [38:06]
Alfred Marcus
Part of a book is that it doesn't just focus on the United States. And so you also have a very vivid story about the Shui Soon Seal scandal in the fall of a Samson Prince. In South Korea, where a corporate scandal is intertwined with presidential impeachment in Kaibal succession politics. What does that case reveal about how corporate scandals can both expose deep patterns of cronyism and at the same time open a window for institutional renovation in countries with tight business state linkages?
- [38:39]
Pepper Culpepper
Yeah, so Korea is really an interesting case for us because it's what we consider a super hard case. Because you have a latent opinion that at one time was very favorable to the chaebol, the large conglomerates, large family owned conglomerates focus on Samsung. But there are others, you know, Lotta, for example, that were what brought South Korea from An absolute backwater in the world economy to being a technological leader. Right. You probably have Samsung products in your house. I have a Samsung tv. And so these, these things are widespread. And so that, that's a very positive. You know, you remember how we used to say in the United States what's good for GM is good for the country. That's certainly what the Koreans for a long time, the Korean public opinion, if I could speak about mass opinion that way they felt about their large companies. And that continues to be the case that a job with Samsung is in some sense the golden ticket. Nevertheless, Samsung's been involved in a series of corruption events. And so you've had this buildup of opinion over time in Korea that actually it seems like things may be pretty rotten at some of these chaebol and they're getting unfair advantages. And the sort of society that we see depicted in the movie Parasite, for example, which is about inequality or the movie Squid Game, which is about, you know, the, the role that these companies can play and, and what people have to lose when they have, you know, so little. That's, that's very vivid and it's, and it's tied up with, with, with opinion about companies. So the choice from SEALS kind of gets wrapped around this advisor to the Korean president who is doing lots of deals with the big companies, including notably with Samsung. And this scandal reveals both that the president is corrupt and that the scion, the heir apparent to the Samsung fortune, is deeply wrapped up in this. And so you have your big business leader and your big presidential leader that. Right. So your highest political office both wrapped up in the same scandal. And it brings out in 2016 these sort of protests on the street for months of 2 million people showing up on the street at one time. And those are called the candlelight protests. And that kind of fusion of hatred of political corruption and concern about the corruption of the largest companies that comes together and both of them wind up going to prison for, for that the president, as you said, being impeached. And so that's a really a high bar for societies to push back. Right? These, these big companies that have been so important for them, but nevertheless that you get this big buildup of opinion and then it gets released in a sort of particularly juicy scandal, all of details of which I can't relate, but which involve the mistreatment of a puppy.
- [41:34]
Alfred Marcus
These scandals can play an important role in democratizing or further democratizing countries that are in the non democracy camp. Are there examples like in other parts of the world where I Mean at the point in time when this happened in Korea, Korea was already pretty democratic in its governance. But in other countries, so Korea was totally democratic. But in other countries can scandals actually lead to democratization? You know, countries that are more authoritarian in nature, can, can they open these countries up? Are there examples of that that you can think of?
- [42:20]
Pepper Culpepper
Well, so I would point to a big change in the, in Malaysia with the 1mdb scandal. So 1mdb really transformed Malaysian politics. I wouldn't say it went from being authoritarian to democratic, but it moved in that direction along the axis of the, you know, the way that indices like VDIM measure, the Varieties of Democracy Project, measure the democratization or not of a system. And one MDB was this scandal, you know, that involved fraudulence at the highest levels. And this kind of, you know, a very charismatic public figure who basically, you know, shows get, gets a lot of investment that involves, includes investment from the state and you get a, a, a turn on a dime of what Malaysian politics looks like. And so I wouldn't say that corporate scandals are typically democratizing events, but I would say that corporate scandals are politically influential events. And when they happen in non democracies, they can be quite destabilizing for governments. And I think that's why governments like in China will go out of their way to make sure that a corporate scandal doesn't impugn the ability of the government to do its job because it can be, it can lead to, I wouldn't say it can lead to regime change, but it can be destabilizing for government.
- [43:47]
Alfred Marcus
In a place like Russia, the expectation is it was just confirmed by scandal after scandal. The cynicism is probably so great that it makes no difference.
- [44:00]
Pepper Culpepper
Yeah, I don't think so. I mean, Russia is at this point a confirmed kleptocracy. And so it's hard to know what a scandal would look like in, in that respect line with, without knowledge. But you know, the thing is there, there are sort of latent issues that will be out there in the Russian public and I don't know what they are and I don't know what would trigger them, but I can assure you that Vladimir Putin spends a lot of his time thinking about what those issues are. You know, he is dramatically enriched himself and has allowed oligarchs to enrich themselves as long as they stay out of politics. Yeah, but he worries about what is it the public cares about what that I have to deliver on. So I think that you can, if you like, say he's worried about the scandal that could get away from him.
- [44:46]
Alfred Marcus
So you end with a call for what you call good populism, arguing that scandal driven backlash can be channeled into constructive reforms rather than sliding into oligarchic or nativist populism. What in your view distinguishes good populism from its darker cousins is a big question. And what kinds of policy entrepreneurs or coalitions are needed to harness scandal driven anger in healthier directions? Especially with all the misinformation that we're subject to constantly outright lies a lot of times. So in that context, how do you see this good populism, bad populism distinction?
- [45:29]
Pepper Culpepper
Well, yeah, there's a lot wrapped up in your question. So let me, let me start first in the good and bad populism. And so you might say good and bad, by what metric? Is it just what Pepper and Tegu like, or is there some sort of independent metric? And so we've done some additional empirical work beyond what's in the book, trying to establish what, how populism, which, you know, populism is ultimately defined by anti elite character or a splitting of the, you know, the views into there's the interests of the people, a true people and some sort of elite that is not responding to the interests of that, that true people. And when you do that, as we've done with sort of analyses in four countries with about, you know, 36,000 people, we can make a clear distinction between on the one hand, concerns about economic unfairness, which that's answering questions like, you know, the system is fundamentally rigged. The only way that you can get ahead is by, by having an unfair advantage. Elites got where they are because of an unfair advantage. Those sorts of questions that are targeted closely on the economic unfairness as it's perceived by voters of modern capitalism. That's one side of opinion. And that economic unfairness side we'll call good populism. And I'll come back to why in a second. The other side is sort of political failure and that's answering questions such as you can't believe what you read in the mainstream media. It doesn't matter which parties you elect, we're going to get the same policy regardless. And there's a small influential group of people who run the world. And that sort of political failure dimension is what we call bad populism. Why do we call it good and bad populism? Because we find that the economic unfairness dimension is associated with very positive views towards minorities, Jews and immigrants, whereas the bad populism is associated with strongly negative views towards Minorities, Jews and immigrants. And that even controlling for ideology, by the way, this is controlling for your ideology and partisan affiliation, partisan identification. So that character of political failure populism is about wanting to single out certain members of the out group or what we call marginalized groups as the other that we're trying to distinguish ourselves from. And that's bad for democracy because it undermines the pluralism that is foundational to democracy. Whereas people who are concerned about a rigged system, you know, they see these disadvantaged groups as having got a bad break. The people that they really don't like, they've got negative feelings towards. And this they differ from, those who talk about political unfairness is billionaires and large corporations. Right? So that's, it's a very distinct kind of set of views that holds together. And sometimes I should say good populist views and bad populist views coexist in the same person. But they, but the way that they hang together in mass data, you can see it very clearly. And so when we talk about good populism versus bad populism, we're talking about these two dimensions. If I had more time, I'd say this is different from left and right populism because we've, we've sort of explored this in an additional article. You know, it's not just about your, your leftness versus your rightness. You get views on the left that are associated with political failure, you get views on the right that are associated with economic unfairness. They're kind of cross cutting and just to end on you, you, you link to and, and in this current news environment, how can we, you know, ever sort of get the kind of understandings where something about good populism triumphs against bad populism? And what we're talking about in the book is we have to figure out a way because scandals ultimately run through our informational sphere. If our informational sphere is broken, it's hard for scandals to break out because, because billionaires can put forward the story they want now they don't have complete control because none of them controls all of the informational networks. But if people are so siloed that they're not hearing other than what they read about posted on X Elon Musk can really put his hand on the scale which, you know, so we have to think about how do we get back towards a truth based sphere such that Fox News and cnn, they're going to run different stories, but they're going to have sort of an underlying set of facts that they agree about. So so we think a policy problem, and this may make us technocrats, but, but, but we think a real policy problem that's got to be addressed now is thinking about how do we cure our public sphere. Such that at least we're having debates that are based around what's actually, you know, facticity as opposed to fantasy.
- [50:07]
Alfred Marcus
That's the only way you can really. Scandals can really be used to, in, in a positive light. If, if there's a. The latent public is mobilized around the right issues, if they're told something that's unfair and evil and it's the wrong thing they're being told, then the mobilization will actually be negative in the long run.
- [50:35]
Pepper Culpepper
And so you started out mentioning that we start with Upton Sinclair in the jungle and we do that very consciously to sort of draw back. People think that the sphere is broken, we can never fix it because of technology. I mean, things were much worse in 1900 in the United States in terms of the out of controlness, both of inequality, but of the control that very large corporations had on politics. They were huge corporations. They were richer as a percentage of GDP than even Elon Musk is now, though he's rapidly getting there. And so these big companies, they came under control because of the muckrakers, a sort of set of people who wrote about scandals and what was happening. And that's why we talk about the age of corporate scandal being now. It's not impossible that these things could push back. It's very possible. It's within our hands, if you like.
- [51:23]
Alfred Marcus
I can't resist asking about Trump himself, who seems to be scandal free. The scandals has like Teflon skin. The more the scandals occur where they're almost brushed off and he turns them against those who accuse him. Do you want to go in that
- [51:43]
Pepper Culpepper
direction and comment So I do, absolutely. Because it's a great question I think anyone who's listening is asking themselves, and we talk a little bit about this in the audiobook version. The thing about Trump is that he's so polarizing that any issue having to do with Trump is immediately seen through a right left lens. And so if there are people who are Trump voters who would normally be disheartened by seeing that the, the President of the United States is in bet has, has massive personal investments that create conflict of interest, including, you know, from Middle Eastern leaders with whom he's negotiating or, you know, that he takes a jet, you know, from a foreign country as a sort of a, a good faith effort or something from, from that country, they wouldn't see that in a non partisan sphere. But because that it's around Trump, we immediately assume it's a partisan question. And so we talk about how scandals, yeah, they, they essentially, they, political scandals don't have a disciplining effect anymore because the left and the right see them differently. And Trump is an Uber case of that. So I think if we're going to have a scandal redound against Trump, we're going to see it in the sort of circular deals around AI because he's aligned himself very closely with these tech companies or and especially in cryptocurrency. If there's a big cryptocurrency crash, it's been going down, but it hasn't been crashing. If there's a crash which winds up rendering a lot of people destitute, that's the sort of thing where the left, right lens through which we've been seeing these scandals might actually break and we might get a sort of common story about, wait, this doesn't seem right. So that's how I would understand the Trump issue.
- [53:33]
Alfred Marcus
What about the Epstein connection? Could that get him?
- [53:37]
Pepper Culpepper
You know, Epstein is a fascinating case and I would not say, I think it would be foolish to say that Epstein, the information that's in the Epstein files that hasn't yet come out could eventually bring him down. Because that's the one area where, at least to my knowledge, Donald Trump has really been unable to control the news agenda. I mean, he is of course attacked to. Well, he's kidnapped the leader of one country and decapitated the leader of another country just in order to distract information from what's going on in the Epstein files. You could make an argument. And so it's clear that he's concerned about them and it's clear that on his voting base, MAGA is really concerned about it. So people like Marjorie Taylor Greene are breaking with him. Will it bring him down? It's hard to say. I think that the Epstein files have revealed a degree of elite collusion that is worse than any populist voter even thought it was. And it goes from Noam Chomsky and Larry Summers all the way to people like Peter Thiel and Marc Andreessen. It cuts across the spectrum and I think people are appalled by it.
- [54:47]
Alfred Marcus
Yeah, I know to the left, the right, everybody, Epstein grabbed them all into his circle. But I mean, I think the public also with the case in Minnesota, there was a level beyond which he could actually push things. And I think he became aware of his own limits to some extent in that case because I think there was an intolerance on the part of the public. Would you agree with that? Or, you know, that he understands there are, there are very few, but there are some limits.
- [55:17]
Pepper Culpepper
So you're talking about the deaths of innocent civilians in Minnesota? Yeah, yeah, so absolutely. I mean, I think that at least as of now, you know, no president is completely beyond public opinion. And it's clear that public opinion felt aggressed by what had happened. That and the death of Nicole. Good people could interpret it differently. Why? Because she was in a car. And so I'm not someone who thinks that she was actually trying to cause aggression towards ice. You actually saw her saying, I don't mean ill will towards you. But nevertheless, one could make an argument that she was in a car and therefore was dangerous. But the other instance is where a man has his gun taken away, which he's legally allowed to, to carry, and then he shot 10 times. That is beyond the pale. And so that sort of flagrant violation of, you know, what we expect in terms of citizen rights in the United States, that's the kind of thing where people started to push back a little bit against Trump. But you know, it's a, it's a long process because he, he hasn't stopped the, what you could call the sort of isification of the big Democratic cities. And it continues to be an ongoing pushback. And you gotta look at his approval rating. How much is it sinking among Republicans? Right, so it's, you know, 40, 38%. But there's this, there's this hardcore that doesn't move away from him. And so it's an interesting political challenge in these polarized times. What breaks through?
- [56:53]
Alfred Marcus
It's down a little bit. So the book is really a warning to today's tyrants. Modern rotter, rebarans, tech founders, fossil fuel executives, financial titans, that scandals can challenge their political dominance even if they are not broken up or bankrupt. If you were speaking directly to corporate boards and CEOs, what would you say they most misunderstand about the long term political risks of operating at the edge of legality or ethics in a scandal saturated environment?
- [57:26]
Pepper Culpepper
What I would say to them is look out. People are upset with what you're doing. And then what I would say to the people who control those companies, because often in some of the very biggest companies you have controlling owners. I would say, you know, you've been really good at one thing, you know, you might be really good at capital allocation or you might have made a really smart bet on electric cars or you might have made a good bet in your dorm room about, you know, what people need in terms of social connections. And those are really amazing innovations, and people are grateful they've been created. But that doesn't mean you're good at everything. And your attempt to use the huge resources that have accrued to you to mess up politics is starting to turn people against you. And so what will eventually happen, I would predict, is that populism has for a long time been targeting mainly immigrants. And there are, if you like to schematize very crudely, two groups that can be schema, that can be made the out group here. This is sort of going back to good populism versus bad populism. It's immigrants or other minorities or it's billionaires. And I think it's been a lot about immigrants. But if democracy is going to survive, leaders in the center, both of the left and the right, are going to have to target much more the anger towards billionaires and regulate that way. And so if I'm talking to a board or to a controlling owner, I say you should get out ahead of that because you are going to be regulated. And those who have been most flagrant will, I think, at one point, be punished. And that's because the public will demand it.
- [59:00]
Alfred Marcus
Depressed and maybe I would call it propaganda wars here are very, very important because the information has to get out. That's the channel by which people become outraged in anger, and that's where we get change. That's your distinction, I guess, between good and bad populism, because the anger can be expressed towards the wrong groups, essentially because the information is distorted. So are you actually optimistic that we're entering a new age of corporate scandal that could be fueled by the social media, investigative journalism, and growing frustration with block politics that could lead to positive change? Are you optimistic that that could happen? And looking ahead, are there particular domains where this might happen, like AI platforms, climate data, something else? We expect the next wave of transformative scandals to arise. And what should citizens and leaders be prepared to do when they come? And to make this question even more accomplished, what about the role of the press, the media as a whole? We could talk, I guess, about what happened with Time Warner and so on. What are your final thoughts?
- [60:22]
Pepper Culpepper
Look, so I can't take. That's like a Merv question, right, with these multiple warheads on entry. And so let me just take part of the question that's true. I put everything in there, but I think sort of the core of the question is, you know, Are we optimistic and do we have reasons for being. And I think that it would be silly. Not. I mean, I think your position now can be guardedly optimistic, pessimistic, or very pessimistic. And we're on the guardedly optimistic side. We think there are real reasons for concern about what's happened in democracy, not just in the United States. As you say, this is not just a book about the United States, though it's got a lot of reference to the United States. But we do think that a little bit, particularly on the left, the pessimism story has been oversold in the sense that people keep making reference back to the 1930s, as though it's the most obvious historical comparison. And we do take a little bit of comfort from the real technological change situation. We look much more like what happened in the 1900s when you did get a bipartisan pushback about people wanted companies to be controlled by democracies, not run by democracies, not nationalizing companies. People don't want socialism in the United States. They never have, or most of them don't. Certainly it's not a median voter shared opinion. But you do want companies that are in some way restrained by the state. And the failure of the state to control them is something that makes voters on the left and indeed on the right very nervous. And so on the right, it comes out much more as concern about the tyranny of Big Tech, which is the name of a book by Josh Hawley, Republican Senator. So you had this concern on both sides, and we think that it depends, you know, it's all to play for in terms of what, what policy entrepreneurs do with that public opinion that's out there. But we've, we've looked at the public opinion. People are agitated about the role of companies, and there are big political gains to be made for politicians. You know, for example, like Ro Khanna with the billionaire tax in California, who try to seize them. Despite all the challenges involved in doing
- [62:34]
Alfred Marcus
that, this is really narrative. And how do you, how do you channel the anger? And there is, there is anger because people, I mean, people are suffering. We're not in an era where everybody is well off and many people are just getting by. What are you working on right now? What is your current project of most interest? Where's your passion lie?
- [62:56]
Pepper Culpepper
Well, so, I mean, we really think that the issue of looking at both good and bad populism. Tegu and I are working together on the idea for our next book, and it's about exactly trying to disentangle these things and understand where you get various points of rent seeking in the economy and how you can break through those. Because I mean, look, if I kind of pull back, the real problem here or a real problem here is the decline in trusting government. And if people don't believe that government can deliver, then democracies are in trouble. And so we have to rebuild that trust in government. And the only way to do that is an iterated process where governments start delivering a little more. So we look at each of the points of failure of government in terms of, you know, where is the failure and what's causing it and what might be solution. That's where we think you've got to go going forward.
- [63:49]
Alfred Marcus
The blockage, the inability to take action by Congress, I think has also led to a lot of declining credibility of our government.
- [63:59]
Pepper Culpepper
Yeah. So it's a complicated problem. There's no one group or institution to blame. But if we had to blame any particular group, we would say that vested interests, among whom the billionaires that are in this book really occupy a prominent place. And we need to think about what a fair society looks like, fair understood in the broadest sense of that, in the sense that it responds to what populism is telling us something important about what's wrong right now. And we need to answer.
- [64:25]
Alfred Marcus
Great. Pepper Culpepper, thank you for joining me on the cusp between strategy and ethics. The book is Billionaire the Age of Corporate Scandal and How It Could Save Democracy from from Bloomsbury Continuum. They're their publisher for listeners who care about how markets and political interests intersect and about whether democracies can still discipline corporate power. It offers a rich, empirically grounded framework for thinking about scandal, outrage and reform. Thank you all of you, for listening to on the Cusp on the New Books Network. If you have comments or suggestions, you can reach me at amarcusme@umn.edu.amarcusmn Eduardo.