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AEI’s Michael Strain on Projects Like Ours

| Jul 30, 2020 | Economics

Re: The Remnant with Jonah Goldberg

On the most recent episode of Jonah Goldberg’s podcast, The Remnant, AEI director of economic policy studies Michael Strain delivers a harsh assessment of projects like American Compass. According to Michael, “the arguments that they put forward just aren’t well developed,” “they aren’t supported by evidence, they aren’t convincing,” and “the work they’re doing just isn’t compelling enough to really gain an audience.” It’s worth reading in full (discussion begins around 44:00 in the recording):

Jonah Goldberg: …six reasons to use a donor-advised fund. That’s DonorsTrust.org/dingo. We thank our friends at Donors Trust for sponsoring today’s episode of The Remnant.

So, as I was saying before the ad, there is this crack up going on—the long-predicted crack-up of the right, I think, is legitimately happening now. It’s not as terrifying as the prophets of old told us it would be, there’s some fun to it. But, it seems to me that one of the disadvantages that people like you and me have in all of this is when we’re debating with the new nationalists, the new corporatists—first of all, they’ve got to figure out what their label is, for Pete’s sake, just for conversational purposes—the new skeptics of capitalism, of democratic capitalism, classical liberalism, Lockean… whatever… is that if you defend the free market, that is now making you a libertarian. And while defenders of the free market and libertarians, the Venn diagrams overlap considerably, there’s plenty of things the defenders of the free market are not libertarian about in terms of social stuff and all the other kind of things. But what they get to get away with is then saying that, as I believe Tucker Carlson said, that libertarians have been running Washington for the last 30 years.

Michael Strain: News to them.

Goldberg: I know, every time I bring it up to libertarians they’re like wait, what’s that now.

[cross-talk]

Goldberg: So where do you see that debate going among your guild? Are the true economics types on the right of center and the left of center, are they paying a lot of attention to the Patrick Deneen, Oren Cass stuff? Or is it a source of frustration? Or bemusement? How big an issue is it in your world?

Strain: I think it’s mostly a source of confusion. Five years ago, I was accused often by people on the political right of being a big-government liberal progressive type.

Goldberg: I used to shout it at you in the dining room.

Strain: That’s right. And now I’m frequently accused of being a libertarian free-market fundamentalist. That’s produced some whiplash. I think that the outlook for this is confused a lot by what’s going to happen with the election. And some of these new groups and some of the strategic choices that individuals in this world have made really make a lot more sense when Donald Trump is president. And the question is does it really make as much sense if Trump is out of office. And maybe it does. These groups and this work and this kind of project could continue for the next two-and-a-half years until the 2024 Republican primaries start and it could be very useful to a Josh Hawley or to Donald Trump Jr. the way things are going, or Tucker Carlson, depending on who runs, if somebody wants to kind of pick up the torch from President Trump.

What it actually does, in terms of the center-right heavyweight economic policy community I think is actually pretty little because the convincingness of the work that is done in this corner of the political right is just not very—it’s not changing minds. Nobody reads one of these papers or articles and says, “Oh gosh, yes, I guess I’ve been wrong about free trade this whole time.” Or, things of that nature. “Oh yes, I guess I’ve been wrong to support a lower corporate tax rate. Or I guess private equity really is this horrible industry.” Nobody does that.

The arguments that these economic nationalists or Trumpian populists or whatever you want to call them… The arguments that they put forward just aren’t well developed, they aren’t supported by evidence, they aren’t convincing. There’s a lot of debate among the center-right economics community and the community isn’t a monolith. I mean, there’s real debate about significant programs and real debate about how important is a corporate tax cut, these sorts of things. But the kind of economic nationalists don’t really engage in that debate because the work they’re doing just isn’t compelling enough to really gain an audience.

The concern, instead is, I think, does this group really affect politics in a way that will affect policy. Can a bunch of work about how terrible private equity is, that really isn’t well supported, isn’t well thought out, but does exist, can that convince Josh Hawley that private equity is bad and put that in his sights? So there is a little bit of a reaction to it in terms of trying to support some more longer-held views but there’s just not that kind of intellectual engagement that you might expect.

I’ll just offer four observations:

1. I love the phrase “center-right heavyweight economic policy community.” Great name for a ska punk band. We’ll try to use this more at American Compass.

2. I also appreciate that Michael’s example of a hotly debated topic in the center-right heavyweight economic policy community (see, doing it already!) is “how important is a corporate tax cut.” Not is it important, just how important. What are the choices here, “very” and “extremely”?

3. I’m disappointed that Michael alleges poor-quality arguments and a lack of evidence without offering any arguments or evidence of his own. Of course, he has many forums in which to put forward such arguments, but we would also be happy to publish them on The Commons, as we have done with other critiques. He seems particularly taken aback that we would question the value creation in the private equity and hedge fund industries, a topic which might lend itself especially well to the debate format we introduced for Patrick Deneen and Andy Puzder’s discussion of corporate obligation. At the core of that issue is the question of how to evaluate social value. Strain has argued previously that the value Jeff Bezos has created for the rest of society can be calculated by multiplying his net worth by 45. I don’t know whether he would apply that methodology to a hedge-fund manager or, if not, why not, but I would welcome the opportunity to discuss this with him further.

4. Michael says our work is not changing any minds, and especially that no one says, “Oh gosh, yes, I guess I’ve been wrong about free trade this whole time.” This is a surprising choice of example for him, given what I have perceived as the evolution of his own views. In 2014, Michael wrote:

[The standard economic model of trade] does not ignore the possibility of a prisoner’s dilemma but rather denies that it exists. After all, the classical case for free trade was developed in a mercantilist world, and it argued that free trade almost always benefits the country adopting it, regardless of the trade policies of other nations.

Last month he wrote:

Specific proposals to limit imports or promote domestic production have to be considered on their own merits. Their usefulness and cost-effectiveness cannot be ruled out in principle.

Likewise, in 2014 he wrote:

[The] portrait of a hapless United States too sunk in pacifism to respond to the gathering economic threat of China is also poorly timed. China’s currency has been appreciating for several years now … and the ratio of imports to exports in our trade with China has been shrinking as well.

But last month he wrote:

China has been growing in wealth and power while its regime remains repressive at home and assertive abroad: a combination that was bound to raise American concerns. … China’s rise in power and wealth, occurring as it has been under a brutal dictatorial regime, is indeed a threat to American interests and American values.

I find the more recent points encouraging. We will continue to work on persuading the center-right heavyweight economic policy community on this and many other questions.

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Oren Cass

Oren Cass is the executive director at American Compass.

@oren_cass

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