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

Once upon a time, a conservative must have greatly offended a powerful sorcerer. How else to explain the curse afflicting American politics, which condemns each generation to toil anew under the mistaken belief that fighting poverty is merely a matter of sending money to the poor? Twenty-five years after welfare reform, we seem to be back where we started, with Democrats crowing that the $1.9 trillion Covid-19 relief bill, which sends cash to every family for each of their children, will “cut child poverty in half.”

Perhaps, as a matter of government statistical reporting, child poverty will plunge in 2021. Give people cash, count it as income that lifts them above the poverty line, and—voilà—poverty “solved.” Lyndon Johnson’s Great Society similarly reduced the poverty rate for households with children from 16 percent in 1965 to 11 percent in 1969. Unfortunately, even as anti-poverty spending proceeded to triple from 1970 to 1995, the poverty rate for households with children stubbornly climbed back to 16 percent.

What went wrong? By one measure, the flood of resources accomplished its goal: the poverty rate for households headed by a single mother dropped from 52 percent in 1965 to 45 percent in 1969 and then fell a bit further, to 42 percent by 1995. But at the same time, the number of single-mother households exploded.

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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.