American Compass Releases Conservative Economic Agenda for 118th Congress
Hayek’s Broken Promise
Comparative Disadvantage

The COVID-19 pandemic sent U.S. policymakers scurrying to their bookshelves, searching for responses to a public health catastrophe that threatened to plunge households, businesses, and governments into financial despair. Republicans on Capitol Hill and in the White House flipped frantically through their dog-eared playbooks from the 1980s to determine just the right tax cut for the moment. But the chapter on society-wide lockdowns was nowhere to be found.

Many Republicans shrugged and proposed a tax cut anyway. President Donald Trump called for reducing the capital gains rate and joined Senate Majority Leader Mitch McConnell in pushing for an expansion of the corporate meals-and-entertainment deduction. Stephen Moore, an economic adviser to Trump, argued for a payroll tax “deferral” that even the U.S. Chamber of Commerce dismissed as “unworkable.” Two months after the passage of the cares Act, as the novel coronavirus continued to rage, the Wall Street Journal editorial board questioned whether more relief was necessary, suggesting instead that “every private investment made for the rest of this year be exempt from any capital gains tax.” On the same morning that a six-column New York Times headline blared, “MARKETS SPIRAL AS GLOBE SHUDDERS OVER VIRUS,” Nikki Haley, the former South Carolina governor who served as U.S. ambassador to the un, displayed the familiar instincts of a future Republican presidential candidate by tweeting, “As we are dealing with changes in our economy, tax cuts are always a good idea.”

The pandemic’s distinctness made for a distinctly inept response, but this was only the latest iteration of a pattern that had imprinted itself across the right-of-center in recent years. Even in the face of new economic challenges—China’s aggressive mercantilism, the financial crisis, rising inequality—the Republican Party has hewed rigidly to an agenda of tax and spending cuts, deregulation, and free trade.

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Oren Cass
Oren Cass is the executive director at American Compass.
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American Compass Releases Conservative Economic Agenda for 118th Congress

Today, American Compass is releasing New Direction: Conservative Principles & Policies for the 118th Congress, an agenda for economic renewal, focused on the interests of worker, their families and communities, and the nation.

Hayek’s Broken Promise

It is a tragedy that Friedrich Hayek’s excesses, invested with the authority of his (deserved) reputation, became the unexamined default for right-of-center economic thinking in America.

The resulting orthodoxy too often combines a Panglossian insistence on defending market outcomes regardless of their quality with a reflexive belief that policy intervention can only be distortive for the worse.

But when it comes to international trade’s effect on the American economy, a knowing assertion that nothing should be done, followed by yet another “analysis” working backward to an argument that nothing needs doing, will no longer do.

Comparative Disadvantage

If comparative advantage is created rather than discovered, refusing to play the game has consequences.