The Commons

The Commons hosts commentary from contributing writers across the political spectrum, advancing American Compass’s mission through discussion that combines intellectual combat and personal civility.

Did Globalization Cause the Great Stagnation? Share This

| Apr 01, 2022 | Trade

Analyzing the effects of any long-run macroeconomic trend is admittedly a difficult affair. After all, typically more than one big trend is happening at a time, which means that isolating the impact of any particular force requires careful and thoughtful empirical analysis. It is somewhat troubling then, that “Where’s the Growth?” doesn’t appear to draw any clear causation between the alleged malign forces of globalization and the declines in productivity and economic dynamism.

Put more straightforwardly, it is true that American productivity growth and economic dynamism has been on the decline for decades. But these are much broader trends that reams of empirical work have connected to self-imposed housing scarcity, demographic headwinds, an overbearing regulatory environment, a general societal decadence, and the slow process of new ideas getting harder to find. Given what we know about these other factors, do we have strong evidence to suggest that globalization played a large (if any) role in the Great Stagnation?

Read More

Why the Free Trade Debate Needs the Real Adam Smith Share This

| Mar 31, 2022 | Trade

Oren Cass is right to note that modern economists largely misunderstand Adam Smith. But the misunderstanding runs deeper and traces even further back than editorializing in 20th-century textbooks. For more than two centuries, scholars have ignored the relationship between Smith’s political philosophy and economic analysis. It began with Smith’s own friend and biographer, Dugald Stewart, who, in an effort to preserve his legacy and make his ideas more politically acceptable, divided Smith’s views on economic freedom and political liberty. Scholars and economists today maintain this artificial divide, characterizing Smith as a conservative on economic issues like free trade and small government, while overlooking his political views on egalitarianism, toleration, anti-imperialism, and religious freedom.

Read More

It’s Time for a Neoclassical Economic Reckoning Share This

| Mar 31, 2022 | Trade

Oren Cass’s essay demonstrates how the advantages of industrial policy, apparent to some of the founders of economics and foundational to the success of the United States, were carefully airbrushed out by advocates of free trade in the 20th century. But he goes too easy on the neoclassical economists. Not only did their defenses of trade and attacks on industrial policy rely on intentional misrepresentations of economic theory, but the actual international trade system never met the bar required by their own theory to be considered beneficial.

Read More

Freer Trade Isn’t Always Better Share This

| Mar 30, 2022 | Trade

Oren Cass takes on the entrenched belief held by the U.S. economics profession that countries should always pursue a policy of free trade. He argues that Smith and Ricardo have been misunderstood for generations because their key assumptions around capital mobility were omitted as the arguments were passed down. The results have been disastrous. I won’t opine about the specific omissions for Smith and Ricardo’s work, but instead focus on a recent episode that interrogated what trade models say about the economic implications of globalization.

Read More

Just Say No to Rejoining TPP Share This

| Mar 30, 2022 | Trade

Economic theorists treat globalization as the free market’s natural end state. But trade practitioners know that the opposite is true—that efforts at stitching together the world’s economies are among the messiest sausage-making exercises in policymaking. The protracted process of establishing rules to “liberalize” trade suffers from all the same maladies that free traders warn would accompany protection of the domestic market. Their latest project, reviving the “Trans Pacific Partnership” (TPP), provides the latest and greatest case in point.

Read More

America Should Use Existing Tools, Not Fashion New Ones Share This

| Mar 29, 2022 | Trade

The debate over free trade versus protectionism has been around for hundreds of years, with a level of political prominence that has varied over time. After a relatively quiet period in the post-war era, the modern debate over trade and globalization’s rules and institutions has grown quite contentious. Regaining Our Balance is emblematic of this renewed debate. Unfortunately, as with much of today’s discourse, its essays ignore some of the domestic and international realities of the trading system. If the renewed trade debate is to be productive, there are three areas where a better understanding of the basic facts is required.

Read More

Modern Economics Is Not an Illuminati Conspiracy Share This

| Mar 29, 2022 | Trade

I read “Searching for Capitalism in the Wreckage of Globalization” with more frustration than surprise. Oren Cass’s argument consists, roughly speaking, of two parts. The substance of both parts unfortunately reflects a number of fundamental misunderstandings.

The first part of Mr. Cass’s argument is that the entire economics profession has either misread or misinterpreted a sentence in Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations, and that it has built the case for free trade from that alleged misreading or misrepresentation. This is simply and fundamentally not true.

Read More

The Upside of the Downward Trend in College Enrollment Share This

| Feb 22, 2022

The media have been full of reports of college students, almost a million strong, who have gone missing during the pandemic. Virtually every article quotes experts expressing alarm and dismay.

“A sharp and persistent decline in the number of Americans going to college…could alter American society for the worse, even as economic rival nations such as China vastly increase university enrollment,” wrote Jon Marcus in the Washington Post.

“It is a crisis, and I don’t think it’s widely recognized yet that it is,” Jason Lane, dean of Miami University’s College of Education, told Marcus. “Society is going to be less healthy,” he continued. “It’s going to be less economically successful. It’s going to be harder to find folks to fill the jobs of the future, and there will be lower tax revenues because there won’t be as many people in high-paying jobs.”

Monty Sullivan, president of Louisiana’s community college system, piled on: “We have a million adults in this country that have stepped off the path to the middle class. That’s the real headline.”

Read More

Coming Apart in the Hoosier State Share This

| Jan 06, 2022 | Working Class

American Made: What Happens to People When Work Disappears, by Farah Stockman (Random House, 432 pp., $28)

Farah Stockman’s new book, American Made: What Happens to People When Work Disappears, documents the closure and relocation of an Indianapolis Rexnord bearing plant to Mexico and Texas. Stockman, a New York Times reporter, was assigned to cover the Rexnord plant after then-candidate Trump tweeted about its pending closure and the scheduled relocation of a nearby Carrier plant to Mexico in 2016.

The story of the Rexnord plant is an all-too-familiar one. Link-Belt, the original firm that built the bearing plant, was a byword for quality. The plant’s unionized workers took tremendous pride in the quality of their bearings—even after years of underinvestment meant that they worked with outdated production equipment. The plant was eventually acquired by Rexnord, whose management adopted a strategy of quality reduction, followed by relocation to Mexico and Texas. Stockman describes how machines were packed up and shipped to Mexico and the plant’s workers suffered the indignity of training their replacements from south of the border.

The whole affair rightfully drew Trump’s ire and national attention to Indianapolis. But it merely forms the backdrop to Stockman’s human-centered story about the social costs of offshoring and deindustrialization. Read More

The Five Deadly Sins of the Left: An Update Share This

| Dec 17, 2021 | Politics

About a year ago I published an American Compass essay on “The Five Deadly Sins of the Left.” In that essay, I addressed the surprising fact that the left has not performed as well as one might expect, given the poor performance of free-market capitalism in the 21st century. Even the financial crisis of 2008–09 did not spur any real realignment of voters toward the left. Nor have—so far—the twin economic and health crises brought on by the COVID pandemic. What has gone wrong?

A year ago, I put forward a simple theory. The public just isn’t interested in buying what the left is selling. No matter how loudly the left hawks its wares or how heroically it organizes, it will not succeed. The left’s internal diagnoses lead it to believe that, in picking up the pieces from this global debacle, it can finally gain the elusive majority support it needs. But, I argued, durable mass support for the left will not emerge unless and until it radically revamps its offering, abandoning the unhealthy and unpopular obsessions that consume its attention and distract from actual solutions. In particular, it must find the strength to overcome its five deadly sins: identity politics; retro-socialism; catastrophism; growthphobia; and technopessimism.

Read More