At the start of June 2013, the European Union’s General Data Protection Regulation (GDPR) appeared to be dead in the water. It was almost 18 months since the then European commissioner for justice, Viviane Reding, had originally presented the draft GDPR bill to the European Parliament. During that time, Facebook, Amazon, Google and friends had lobbied relentlessly to hold up, defang or (preferably) kill GDPR. There was no way privacy campaigners could match the resources deployed by big tech. On 2nd June that year, Jan Philipp Albrecht, the bill’s rapporteur in the European Parliament, told Le Monde, despairingly, that more than 3,000 amendments had been submitted—80 per cent of which originated from outside the EU, “primarily from Silicon Valley giants”.
Four days later, the first stories about the Edward Snowden leaks appeared in the Guardian and Washington Post. The United States’ National Security Agency, the world learned, had been accessing ordinary people’s data and big tech firms were entirely complicit. Suddenly, GDPR was back from the dead. Reding leapt into action, promoting it as Europe’s answer to the scandal Snowden had revealed. The following March, the European Parliament voted overwhelmingly to pass the GDPR—just 10 MEPs voted against it—and the European Council finally approved it in June 2015. The version of GDPR that came into effect in May 2018 did not contain everything that privacy campaigners had hoped for, but it was a far sight better than what had seemed possible on the eve of the Snowden leaks.
For political scientists Pepper Culpepper and Taeku Lee, this story is emblematic of the way that corporate scandals can trigger positive change. Most of the time, public opinion is no match for corporate lobbying. But scandals can cause “latent opinion” to harden into outrage, making it too embarrassing, at least temporarily, for the lobbyists’ pet legislators to stand in the way of action. “Corporate scandals are one of the few forces capable of upsetting the comfortable capture of government by large corporations,” they write in Billionaire Backlash. Scandals “open a window of opportunity for policy entrepreneurs”—people like Reding—to get laws passed that, in normal times, would never see the light of day.
Culpepper and Lee first spotted this dynamic at play when studying the passage of the Dodd-Frank Act, the US package of financial regulation designed to prevent a repeat of the 2008 crash. Believe it or not, the financial crisis itself was not enough to make a robust regulatory response inevitable. In April 2010, the draft bill was stuck in the Senate, where Republicans were using the filibuster to try to extract concessions to weaken Dodd-Frank. Then, on 27th April, the Democratic senator Carl Levin, chair of the Permanent Subcommittee on Investigations, orchestrated a piece of political theatre that broke the deadlock. He led a marathon 11-hour interrogation of Goldman Sachs executives, in which he confronted them with excerpts from internal emails that made it clear the bank had knowingly screwed its own clients in the runup to the 2008 crash. Addressing Goldman’s then chief financial officer, David Viniar, Levin asked, “When you heard that your employees, in these emails, said, ‘God, what a shitty deal,’ ‘God, what a piece of crap’—when you hear your own employees or read about those in the emails, do you feel anything?” Viniar’s response: “I think that’s very unfortunate to have on email.”
The financial crisis itself was not enough to make a robust regulatory response inevitable
Levin’s intervention worked. Almost overnight, the filibuster collapsed, and within three months Dodd-Frank was on the statute books. “What is interesting about the collapse of the filibuster in April 2010, and the subsequent passage of the Dodd-Frank law,” observe Culpepper and Lee, “is that no-one in Congress changed their minds on the substance of Dodd-Frank… What changed was the political cost to Republicans of opposing the bill.” There are limits to even the most brazen politicians’ ability to brazen it out.
Unfortunately, not all corporate scandals have this kind of salutary effect. In 2015, Inside Climate News revealed that scientists working for ExxonMobil had developed sophisticated models as far back as the late 1970s showing that global warming was real and that burning fossil fuels was a major contributing factor. The company’s senior management was briefed at the time, yet Exxon subsequently spent decades sowing doubt about the certainty of climate science. Exxon knowingly misled the public, just as Goldman knowingly misled its clients. But the #ExxonKnew scandal “sank without leaving a visible trace on American climate policy”.
Why the discrepancy in outcomes? Culpepper and Lee put it down to the fact that financial regulation was a “hard” issue for most Americans in 2010, whereas by 2015, climate had become an “easy” issue. “Hard issues require cognitive work for voters to puzzle through conflicting considerations about how the choices before them relate to their own personal interests.” On the eve of the Levin hearings, most voters didn’t know enough about the details of Dodd-Frank to have a strong opinion for or against. Crucially, they knew they didn’t know enough. This made them open to persuasion. By the time the story about Exxon’s decades of duplicity broke, on the other hand, most Americans had long since made up their minds about the desirability of tackling climate change.
In 2023, Culpepper and Lee surveyed 36,000 people from four countries—the UK, France, Germany and the US—about their views on climate change. What they found is that “Americans are not exceptional in what they think about climate change and the environment. But they are exceptional in how certain they are that they understand the issue well enough to have an opinion about it.” When public opinion is as calcified as it is in the US on climate, scandals lose their capacity to provoke change.
Climate policy is not the only issue where the transformative potential of a good corporate scandal has been defused by extreme polarisation, disinformation and a fragmented media environment. Cryptocurrency regulation is another case in point. FTX founder Sam Bankman-Fried’s fall from grace in 2022 could have been the spark for action to make the crypto world less of a Wild West, Culpepper and Lee suggest. But Americans never arrived at a shared interpretation of the scandal. Republicans and Democrats both interpreted events “through the lens of a pre-existing, well-formed set of beliefs”. Despite the trickiness of the subject matter, they fell back on old certainties.
Crudely, Republicans’ individualist worldview—coupled with the fact that Bankman-Fried was a prominent donor to the Democrats—led them to conclude that he was a bad apple. Democrats, meanwhile, blamed a rotten system for enabling him. In a survey conducted shortly after the scandal broke, 31 per cent of Democrats agreed that lack of sufficient regulation caused the crisis; only 14 per cent of Republicans agreed. Partisan media exacerbated this divide: among Democrats who first heard about the FTX scandal via a left-leaning source such as MSNBC, the proportion blaming lack of regulation was 42 per cent; for Republicans who got their news from a right-wing source such as Fox News, the proportion dropped to 12 per cent.
At this point, it is worth contemplating a question that Culpepper and Lee fail to address: what if the phenomenon they are describing—the ability of a corporate scandal to catalyse unified public outrage and a widely shared view of what needs to happen next—is, in fact, already a historical artefact? Their argument that corporate scandals matter is itself based on the observation that political scandals have largely lost the power “to create shared understandings in public opinion”. In the US, the causal link between political scandals and political consequences was broken somewhere in the quarter century between Watergate and the Monica Lewinsky affair. Not coincidentally, in between these two events, the Federal Communications Commission repealed the so-called “Fairness Doctrine”, which had required broadcasters to give adequate airtime to different viewpoints on controversial issues, ushering in an era of extreme partisanship in news media.
What if the phenomenon Culpepper and Lee are describing is, in fact, already a historical artefact?
Have corporate scandals now also been rendered harmless to those in power? It is notable that the most compelling examples given by Culpepper and Lee in support of their thesis are all at least 10 years’ old. In the intervening decade, the forces undermining the capacity of societies to arrive at a shared interpretation of any event—media fragmentation, entrenched partisan identities, deliberate disinformation—have become stronger. “With democratic publics ever more siloed in the information to which they are exposed,” Culpepper and Lee admit in the book’s final chapter, “[billionaires] can now sow immediate doubt about the scandals that once would have reined them in.”
The authors have a decidedly technocratic proposal for dealing with this: “Require major networks and news websites to develop their own classification scheme for news outlets themselves, including a ‘deliberate distortions of the truth’ scheme.” An independent regulator would then assess news sites according to this scheme, giving them a monthly grade for truthfulness, which they would be required to post prominently on their homepage. This proposal forms part of what the authors label a “good populist” agenda (though “technocratic centrist tinkering” would be more accurate).
Along with their truthfulness ratings for news sites, Culpepper and Lee’s other flagship policy proposal is enhanced disclosure requirements for large private companies. They would like the awarding of vast government contracts to Elon Musk’s SpaceX to be made conditional on the company opening its books to public scrutiny. In other words, they would like SpaceX to be subject to the same financial reporting requirements as its publicly listed rivals Boeing and Lockheed Martin. Fair enough, but calling this a “populist” demand is surely a stretch.
To be fair, Culpepper and Lee acknowledge that, as “two professors from elite universities” (Culpepper is based at Oxford, Lee at Harvard), it is not for them to dictate the content of a “good populist” policy programme. But, even if offered tentatively, their ideas about what “good” looks like reveal a blind faith that the problems of plutocracy can be solved through better regulation. That faith permeates every story in the book. They are adamant that interventions like Dodd-Frank and GDPR have made the world a safer, better place.
Sure, regulatory breakthroughs are often followed by “periods in which governments move back in a deregulatory direction”—a strikingly anodyne allusion to the men who love chainsaws—but they are optimistic the pendulum will swing back when the next scandal breaks. That assumes we are still capable of arriving at a shared interpretation of events, though—alas, an increasingly shaky proposition.
