The Teapot Tempest Continues

Just in case you are not reading Kevin D. Williamson’s newsletter,The Tuesday,you should go do it right now.  You can skip the language part if you like.  Today he is covering the teapot tempest of a few conservative pundits debating the wisdom of how much of GOP should be destroyed because of The Donald.  There is also The Lincoln Project that appears to be a group of political consultants trying to create a winning record to get future gigs.

Kevin cuts right though the discussion with his usual balance of overstatement, insight, and acerbity.  Here are a great couple of sentences:

Everybody loves a good purge, but real progress means recruiting new allies and forming new alliances. And that is what the Trump movement in fact did, aligning the soft xenophobic tendency (anti-trade, anti-immigration) with the entitlement mentality (“Don’t touch my Social Security!”) and a whole Chalmun’s Cantina of social anxieties, while promising a salubrious purge (“Drain the swamp!”) of effete elitists who secretly run the world while being simultaneously entirely irrelevant.

There are three things to talk about in the quote.  First, does he really think that EVERYBODY loves a good purge?  And yet it is true that folks spend an inordinate amount of time trying to exclude other folks.  On the right, conservative is the premier designation.  Is The Donald a conservative?  No, of course not but some disagree.   Are his detractors on the right conservatives?  Sometimes.  On the left there is a whole host of preferred classifications based on race, sexual preferences, and so on that leads to the cancel culture of their purges.

Second, unlike everyone else in the kill the GOP discussion, he gives The Donald credit for creating a winning coalition.  At the same time he recognizes that excluding parts of that coalition is unlikely to be a winning strategy.

Sidebar: Kevin expects the reader to work.  Other than the articles he doesn’t use many links.  An example in the quote above is when he uses Chalmun’s Cantina rather than the more common Mos Eisley Cantina without any link.  End Sidebar.

We can infer the third part from the second.  What are these pundits going to do to build a coalition if they are busy with the purges?  Elections in the USA are much different from those in the USSR.  The Stalin approach won’t work here.

The question is: do you want The Donald or The Frontrunner as president?  We can accept either answer.  All the pundits that Kevin links to have really run out of interesting things to say.  Kevin, of course, is the exception.

The Orphanage Strikes Back

In our administrative duties at the university we often found it useful to have a third person in the room during contentious meetings.  The reputation of faculty members for nasty rhetoric is not unwarranted.  The faculty lounge was Twitter before it was invented.  The third person in the room would deflect the rhetoric because we would not be forced to respond directly to the rhetorical charges.

We felt that way about Ryan Streeter’s “The New Forgotten Man” in the National Review.  From the title on down it is, at best, a misleading criticism of capitalism and what us capitalistic orphans stand for.

Sidebar One: We know Ryan’s article was a long time ago pundit-wise.  It was in the 3/9/20 issue.  We wanted to try and be as calm as possible.  End Sidebar One.

Ryan’s title, of course, is from Amity Shlaes’ great book.  You should read it.  Amity is welcome at the orphanage.  Here is a summary from Wikipedia:

The book begins with an anecdote of the 1937 recession, eight years after the Depression began, when Roosevelt adopted budget-balancing policies indistinguishable from the stereotype of what Hoover supposedly did. Shlaes presents her arguments in part by telling stories of self-starters who showed what the free market could have accomplished without the New Deal.

A better title for Ryan would be forgetting the forgotten man.  Ryan starts out well when he is first describing the forgotten man as:

These are the shop owners, self-employed workers, small-scale entrepreneurs, and salaried employees who save their money and improve their credentials hoping to branch out and move up. They have long been at the heart of American economic growth, collectively creating massive numbers of jobs every year and keeping the American dream alive for themselves and others.

It is nice to see Ryan agree with us that  innovation and economic growth are important.  This clip would make him welcome at the orphanage.  Unfortunately, for us orphans, he soon reverses course and smears the orphanage by saying:

The aftermath of the Great Recession, followed by Trump’s 2016 election, produced a new group of pro-worker conservatives [let’s call them reform cons] who advocate a combination of protectionism and industrial policy, expanded wage subsidies, new forms of unionizing, and new family benefits such as paid parental leave and more generous child tax credits and cash allowances. They have arisen in opposition to those—let’s call them the “traditional Reaganite conservatives” [the capitalistic orphans]—who endorse low taxes, limited government, and other policies [we are unsure what these other policies are but the previous sentence suggests free markets and free trade] that favor CEOs and managerial elites ostensibly in the name of economic growth.  [Emphasis added]

This is the paragraph that took us weeks to get over.  We haven’t read every issue of the National Review but we doubt there was ever a paragraph quite this misleading in the history of that august journal.  And, yes, that is our reaction after calming down.

Sidebar Two: Reagan, like all politicians, is not a pure free marketer.  He is, however, fairly regarded as a free marketer despite his occasional lapses.  We think Ryan fairly identifies him and his followers as free market and free trade folks we call capitalistic orphans.  End Sidebar Two.

The third person we have invited into the room is Richard M. Reinsch II from National Affairs.  He sets the story straight in his published comments from debating another reform con,  Oren Cass:

We are all consumers, but we are not all manufacturing workers [or any other favored group]. The need to serve the consumer is key to the dynamism and creativity that epitomizes a market economy. While meeting this need can be challenging — and the price can be steep for those who fail — a market economy nonetheless provides the best jobs program on offer. After all, the choices of consumers determine which products or economic actions will work to our comparative advantage and which will not. Through this process of discovery, investors ultimately learn where to invest, workers learn where to work, and producers learn what resources they will need to bring goods and services to the market. This is how millions of new jobs are created — jobs in industries that previously did not even exist. This is not a neoliberal conspiracy or a degraded form of American consumerism, but a crucial feature of how trade increases the wealth of a country.

As Richard’s comments show, Ryan mischaracterizes both his group, reform cons, and the orphans in one short paragraph.  The reform cons are not pro-worker.  They are strongly supportive of a few workers while harming most of them.  They also have little to offer the entrepreneurs that Ryan extolls in the first quote.   Protection and industrial policy hurts most workers while helping some.  Contrary to what Ryan says protectionism and other market restrictions are exactly what the CEOs and managerial elite want.  That is one of the reasons they spend so much money trying to influence governmental policy.

Free markets and free trade is what consumers want.  CEO’s and the managerial elite fight against them both because they don’t want it.  Capitalistic orphans want free markets and free trade because it helps consumers.  Yes, it also leads to economic growth that Deirdre reminds us is crucial to our current well-being and that of our children and grandchildren.  We should see the reform cons like Ryan for what they are.  They are trying to build a majority by giving big benefits to some while hoping that the damages to the majority will go unnoticed.  It is an old formula and one that, unfortunately, often works.

 

 

 

Wealth Tax: Bombing The Rich

James Freeman at Best Of The Web on the WSJreports on a study by the Tax Foundation on proposed wealth taxes advocated by Liz and The Bernie.  Our access to the report was denied so we can only use what James reports:

Huaqun Li and Karl Smith of the Tax Foundation estimate today that Sen. Warren’s wealth tax would collect roughly $2.2 trillion and Sen. Sanders’ version would collect $2.6 trillion over the 10-year period from 2020-2029.

“Warren’s wealth tax would reduce long-run GDP by 0.37 percent, while Sanders’ plan would decrease it by 0.43 percent,” according to the Tax Foundation report.

Wealth taxes aren’t rational.  They hurt the economy and they don’t produce all that much money for the government.  And, of course, by punishing wealth they will produce less money in the future.  They are interesting to economists because of the opportunity to study the “unintended” consequences.  We used quotes because we are not sure exactly what Liz and The Bernie intend other than punishing wealthy people but it is a pretty indiscriminate method of bombing the rich.

Economists will be happy about the research opportunities.  Wealth taxes are great news for accountants too.  There will be lots of compliance work but even more avoidance work.  But almost everyone else will lose.

One of the things that James doesn’t bring up is that they will need to build a wall to keep the wealthy from leaving the USA.  This wall will actually be analogous to the one formerly in Berlin because it is designed to keep people in.

Another problem is that wealth tax will reduce the returns on assets.  That will reduce the value of those assets.  That will make retirement more difficult for the middle class who have either defined benefit plans or financial assets in IRAs or other vehicles.

Sidebar: Why will it hurt folks on defined benefit plans?  We will use the State of Wisconsin as an example.  Initial payments to retirees are a floor.  When the stock market goes up the payments goes up.  If it goes up and then down, the minimum payment is the floor established at retirement.  These defined benefit retirees would then be truly living on a fixed income.  End Sidebar.

It is hard to imagine folks near to or in retirement would support a wealth tax.  They may not hit the minimum for the wealth tax but they will be hard hit when the value of financial assets goes down.  They will just be collateral damage in bombing the rich.

Electability

Jim Geraghty at the Morning Jolt and Neo have some thoughts on “electable”.  The Jolt comes as an email so I don’t have a link but Jim says:

A Trump rival — in either party, really — could make a completely different argument. The argument would focus upon promising to deliver the same results that people like from this presidency without all of the endless circus, controversy, erratic decision-making, chaotic staff turnover and gleeful antagonism that comes with this president.

We are with Jim that we would love such a person.  But Neo reminds us that we don’t know what electable really is.  She discusses some previous candidates and then goes to 2016 and The Donald:

I can’t even characterize where he seemed to stand politically prior to the 2016 election, but I don’t think there’s anything especially “moderate” about him as a personality, and his presidency has played out in a way that’s further to the right than most people expected. [Emphasis added]

We are not convinced on the bold statement.  He ran on tax reform, tariffs, and serious judges.  Perhaps he has been more effective than people expected but he has not veered to the right like his predecessor veered to the left.  The Donald had a mixture of left (no entitlement reform) and right in his campaign and has stuck to it.

So are we looking for a moderate personality or a moderate candidate?  We think The Donald is a moderate candidate but not, as both Jim and Neo say, a moderate personality.  We think that given The Donald and the 44th president that the electorate is looking for a moderate candidate without a moderate personality.  We wish it were otherwise but that is how we see it.

Details On Common Good Capitalism

Us capitalistic orphans are, as we discussed in a previous post, a small faction.  We are unwelcome among the Democrats and rarely a priority with the GOP.  Over the last forty years the GOP had capitalism as a goal although action was less regular.  Now that is changing as contenders for the 2024 GOP presidential nomination like Marco Rubio and Josh Hawley are disavowing capitalism.  Marco’s speech on what he calls Common Good Capitalism has been a lightening rod.  Some folks like it while others, including MWG, don’t.  In the last post we discussed the principle.  Today we take up Ramesh’s nine questions about Marco’s proposal.

First: Should government intervene in markets to advance the common good?

We have a hard time believing it but Ramesh seems to have made an article error. We wish we had a sidekick to confirm this because somebody at NRO should have noticed.  It would be like confusing a doctor with The Doctor.  Ramesh gives highways as an example of an indefinite common good.  We can debate if the government should build highways but that is not what Marco is talking about.  From Marco:

What we need to do is restore common-good capitalism – a system of free enterprise in which workers fulfill their obligation to work and enjoy the benefits of their work, and where businesses enjoy their right to make a profit and reinvest enough of those profits to create dignified work for Americans.  [Emphasis added.]

We don’t see why Marco is worried about reinvestment.  When money is distributed to stockholders it is not lost.  Those humans are unlikely to bury it in their backyard.  They will invest it or spend it.

Marco says The common good requires firms to reinvest profits to create dignified work for Americans. We have been a laurel picker (you don’t pick it when it is flowering), newspaper deliverer, egg collector, and live chicken handler as well as a professor  We are not sure if any of those jobs are dignified work.

We vote no on the first question.

Second: How badly has our economy been performing?

We think Ramesh’s answer is about right but we think he misses something although he gets at it in question four.

This question isn’t decisive: Even if the economy has enabled many blessings, it might be possible to undertake reforms that would yield more of them; and even if our performance has been as bad as Rubio suggests, it does not mean he is on the right track in fixing it. But an accurate assessment of the economy is necessary to get a sense of the scale and nature of our problems, and Rubio’s is too pessimistic.

What Ramesh misses is the title of Jonah’s article, Opponents of “Unfettered Capitalism” Are Fighting a Phantom.  We are, as Heritage says, a mostly free economy. The bigger question is what direction should we go.

Our answer is that the economy has done well in the long term and OK recently.  We think it is likely that The Donald’s more (nowhere near entirely) capitalistic approach has helped.

Third: How important is economic growth anyway?

We can answer this one by ourselves.  It is crucial.  It doesn’t fix all the problems but it provides the resources to fix them.

Fourth: To the extent the economy has been unsatisfactory, how many of our dissatisfactions are the result of trusting free markets too much?

This is related to the second question.  Our first answer is none.  It is possible that there is a specific exception but we would need evidence.

Fifth: Should companies be run for their shareholders?

Yes.  The fact that there is lots of evidence that shareholders worry about a variety of things doesn’t change this.  It is their choice.  They might be trying to con us or they might be trying to help.  It is still their shares.

Sixth: How should economic policies change to promote the common good better than they currently do?

Well, that and the related what is an economic policy, is the question.  Some Marco’s items like the child credit and timing Social Security benefits are transfer schemes. The economic impact is uncertain and perhaps none.  Writing off the cost of investment (we think they mean the cost of plant and equipment) immediately suggests that economic growth improves the common good.  Nurturing a domestic rare-earth (or any other) industry is a bad idea.

The problem is that defining the common good is troublesome.  Finding priorities within the common good is even more daunting.

Seventh: Assuming that in principle the federal government has a broad role in pursuing the common good, is it prudent to grant it that role?

No.  Ramesh notes that Kevin D. Williamson scorches Marco for his previous behavior on sugar quotas (Ramesh doesn’t offer a link so we won’t but scorch is a fair description).  Ramesh puts the problem for conservatives:

But notably absent from [Marco]’s speech is the notion that what we know about government should make us cautious and restrained with respect to government power.

If we agree with Marco in principle then all is lost? Perhaps.

Eighth: How many of our problems are economic to begin with?

We agree that there are economic aspects to problems like opioid abuse but these problems are not primarily economic.

Ninth: Is this really the future of the Republican party? Republican voters have never been the dogmatic free-market fundamentalists of caricature — which is why all those previous attempts to redefine the party were conceivable and sometimes partially successful.

We have included the sentence after the question because it summarizes our thoughts.    We know that we will be conservative orphans.  We have never controlled the GOP and it is unlikely that we ever will.  We doubt Marco will change his mind before 2024. We hope there is a market champion out there that we can support.  Otherwise we will confront the dilemma that led folks to decide Never Trump.  We haven’t gone Never Marco yet and we hope we don’t need to consider it.

 

Crony Capitalism As A Principle

It seems Ramesh Ponnuru was a Never Trump person.  He wrote an article back in 2016 entitled “Never Trump.”  It ends:

In the end, though, the most important reason to back a conservative third-party run if Trump gets the nomination is not to affect the outcome of the November elections. It’s to demonstrate that conservatism stands for something better than Trump. Which is also a reason to strive to keep him from getting the nomination in the first place. [Emphasis added]

Well, it is a muted trumpet but everyone has their own writing style.  Because of Ramesh’s history we were interested to read his take on Marco Rubio call for crony capitalism (called Common Good) at NRO titled “Common Ground on Common Good.

Sidebar: We didn’t see any reference to Never Trump in Common Ground.  We wonder if he has changed his mind against Never in general or Never Trump?  We don’t know but we are curious.  End Sidebar.

Ramesh sets up to play the peacemaker.  He reminds us (we already knew) that us capitalistic orphans (people with a priority for free markets, free trade, and rule of law) are really orphans.  The left hates us and the right tolerates us but, as Ramesh details, doesn’t take us seriously so we don’t have much of a choice and rarely get what we want.  The Donald is far from perfect on economics but he has exceeded our expectations by reducing corporate tax rates and easing regulations.

Ramesh is telling us that Marco is just a little worse than previous GOP presidential nominees.  He is looking to find a majority because capitalistic orphans are a small group.  There is also a chance that we orphans might convince Marco to be more sensible over time.  The 2024 nomination is a long way away.

We shall see if Marco moves in a sensible direction.  Currently, we are considering Never Marco because he is opposed to us in principle.  He is against capitalism and we are for it.  It is going to be hard to split the difference.

In 2016 we voted for The Donald in the general election because he was a dominant choice.  He had positions rather than principles.  We didn’t like his behavior or position on trade but we would say the same of his opponent.  We did like his positions on corporate taxes, regulation, and judges.  And after clearing away all the hyperbole, we were closer to him on immigration.  So, for us, voting for The Donald did not involve any soul searching.  Pulling the lever for Marco looks to be a problem.  We think, to paraphrase Ramesh, that conservatism stands for something much better than Marco’s proposed economic policies. Making a decision to vote for either Marco or Josh in the general will be a tough decision because we would rather have the Democrat make those mistakes.

Next time we will talk about Ramesh’s nine questions.

 

What Us Worry?

We do not have the same pronouns as Alfred E. Neuman.  We like to go plural.  We have also had a couple of sick days so we are even more behind than usual.

We have said, we think, that Kamala Harris will be be the next president.  Were we worried that she has dropped out of the 2020 race for the Democrat nomination?  No, we just said that she would be the next president.  As you know, there currently is a president who is eligible for re-election.  In addition, the Democrats rarely nominate the runner up from last time.  What do you think the odds are on The Bernie as the 2020 nominee?  We don’t think he is a likely outcome.  So the Democrats nominate somebody other than Kamala in 2020 and The Donald wins.  That is both our hope and prediction for the next year.  That makes Kamala well placed for 2024 Democratic nomination because she left the race early.

We are starting to understand how climate predictions work.

The Joy And Dangers Of Procrastination

We blog for the joy of it.  We don’t have an editor or deadlines.  We don’t have any financial skin in the game so with have nothing to try to maximize.  Thus we can say what we want when we want.  Marco Rubio and Josh Hawley’s attempts to set themselves up for the GOP presidential nomination in 2024 are of great interest to us.  We are not fans of either senator.

The dangers of procrastination include that you won’t get to it or somebody else will get to it first.  The joy is that somebody will do it so well that you just need to say here is the link.  In this case, Kevin D. Williamson is on duty at the NRO Corner.  Of course you should read the whole thing.  Reading it twice would be better.

Sidebar: Jim Geraghty’s new book is great fun.  The fact that one of the heroes is an accountant with a heart as big as Connecticut has us all in.  He (the accountant) says, “NRO is the best.” It is on page 161 in case you missed it.  Of course, he is right but he happens to be talking about the National Reconnaissance Office rather than where Kevin is writing.  End Sidebar.

Kevin is writing about his disagreements with Oren Cass and uses the examples of Marco and Elizabeth Warren.  We think Josh fits in nicely with Marco and Elizabeth.  We agree with Kevin’s summary of what he wants and doesn’t want:

The question is not whether we shall have policy in our . . . public policy . . . but what our policies are to be. I advocate generally applicable rules oriented toward the security of property rights and freedom to work and to trade in a stable and predictable policy environment, as opposed to special-pleading advocacy for this or that politically influential business interest (steel, corn, sugar, “green energy,” AIG, subprime-mortgage lenders, take your pick) based on a model of discretion that empowers politicians, giving them a whip hand over the lives and livings of workers and firms. I do not believe that the best alternative to a left-wing Elizabeth Warren is a right-wing Elizabeth Warren.

Wow! We are glad we waited.   Now there are challenges to creating these generally applicable rules.  For example, would Kevin support a modest carbon tax or not?  But this would give us a framework to debate such issues.

We agree with Kevin that there is a connection among The Donald, Marco, and Josh.  The latter two are trying to find a method of expanding the coalition of the former.  We are not in agreement with Kevin that this problem can be laid at The Donald’s doorstep.  Beyond the judges that Kevin mentions, part of The Donald’s appeal for us was the promise of reduction of corporate taxes and regulation that is very much consistent with the quoted paragraph.  Corporate taxes have been reduced substantially.  Unfortunately they have not been eliminated but beyond MWG and Kevin there is a very small group that supports that.  The Donald has had some success with deregulation.   Yes, the net effect might only be a slowing of regulation but slowing is better than anything we can expect from Elizabeth, Josh, or Marco.

For the Capitalistic Orphans like Kevin and MWG, The Donald has been a mixed blessing but surely a big improvement over his immediate predecessor or the alternative in the general election.  We will vote for him again because he has kept some of the promises that were important to us.  On the other hand, we are considering joining Never-Josh-or-Marco club for 2024 because they have offered us nothing.  Just like Elizabeth.

Considering Never

We are not a fan of Never-The-Donald and the folks of that ilk.  Recent events have led us to a better understanding of them even though we still support The Donald.  Jim Geraghty was trying to explain it at NRO.  We are sure there are folks that support The Donald that meet his description:

And then one day in 2015, this outlandish celebrity came along who seems to agree with you most of the time. He’s a bit of a jerk, but you kind of like that; he treats everybody who disagrees with him with contempt, the same way the other side treats you with contempt. As time goes by, you realize he’s perhaps more than a bit of a jerk, he’s a raging narcissist and maybe a maniac, but you still like the way he responds to everyone you don’t like — the mainstream media, Democratic politicians — with this constantly erupting volcano of scorn. You feel like you’ve been mistreated for decades; now turnabout is fair play.

It is not us.  We suspect there are fewer folks like us than like the ones Jim describes but we are not sure.  We think it is a reasonably accurate description of The Donald but it is not why we support him.  We supported him because he dominated his opponent in 2016.  The things that we didn’t like about The Donald like tariffs and bad behavior but those were points of agreement between Herself and The Donald.  The Donald had no philosophy and, as Jim points out, he acts like a Democrat but he promised to do things like reduce taxes and regulation and nominate serious judges that were at odds with his opponent.  By and large he has kept his promises and the next Democrat nominee seems unlikely to be much of an improvement over Herself so we plan to support The Donald in 2020.

On the other hand, the two senators making noises for 2024 GOP nomination fill us with dread for 2024.  If Marco or Josh is nominated we will need to consider joining the never folks.  Why?  We will explain more in the coming weeks but it may take some time with Thanksgiving and all the family birthdays coming up.  A summary is that The Donald is an ad hoc guy.  We buy many of the things on his list with no serious unifying theme or philosophy.  Marco and Josh claim to have a philosophy.  We don’t buy it.  Thus, we can’t agree with them and don’t trust them.  We don’t know if we can get to never on either one because the opponent is part of our decision process.  Marco and Josh help us understand Never-The-Donald folks because we can see choosing to lose to the left rather than have either one of those as president.

Finding Friends at the Orphanage

We have been feeling left out.  As Josh Hawley and Marco Rubio have been making headlines about creating a more intrusive and authoritarian right in order to match up with the left, us market oriented folks that feel a kinship with the growth fairy have felt left out.  Matthew’s and David’s critiques of Marco are reasonable but neither made us felt like we had much overlap in our Venn diagrams.

Kevin D. Williamson (all of these are at NRO) has helped us feel like less of an orphan with Marco Rubio’s Half-Baked Political Philosophy.  You should read all the links to see what is going on but do make sure to read Kevin.  Here is a  great paragraph that explains why Marco is on the wrong path:

Men such as Senator Rubio desire for themselves the power to overrule markets — to limit trade and property rights, enterprise and exchange — in the service of what Senator Rubio describes as the “common good.” The problems with that are several. For one thing, Senator Rubio does not know what the common good is and has no way of knowing. For another thing, we know quite well, from long experience, how such vague and plastic notions of the “common good” interact with the discrete good. [Emphasis added]

We agree with Kevin why it is a problem.  As Kevin kindly puts it, there are at least several reasons why any modifier to capitalism really become crony as in crony capitalism.  We also agree on the solution:

Capitalism is what happens when government respects property rights, which include the rights to trade and to work. What we need from men in government is not the quasi-metaphysical project of reinventing capitalism in the name of the “common good.” What we need from government is — government.

It is nice to be in the orphanage with Kevin.  We could be a category like Capitalistic Orphans.  We wonder if Dave Barry would like that as a band name?  The problem is that voters (or at the very least political advisors) seem to like quasi-metaphysical projects for the economy and society, e.g., MAGA.  Thus, for Capitalistic Orphans is option is not finding a majority but finding enough support to become a faction on the right.  We hope you will join us.