Scapegoats for Inequality

Inequality clearly exists and is even pronounced compared to other periods. AOC, Bernie Sanders, Robert Reich and others from the left have challenged the legitimacy of the very existence of billionaires, though I wonder if this includes Taylor Swift, Oprah, Steven Spielberg, and Tiger Woods.

The assumption that the existence of billionaires is the cause of the problems of the poor and middle class is zero sum thinking. The high price of gasoline, beef, housing, medical care, and higher ed is not the fault of the rich; it is caused by the very government they herald as the solution to the problem. Further these problems are more pronounced in the blue states that have had one party control for decades.

Billionaires are not conspiring to drive up the costs. Billionaires and the very wealthy are not a monolithic group; there are liberals and conservatives among them. While the wealthy are able to influence government policy, they also have the ability to champion positive changes to it. Fighting this influence is one of government policy more than a commentary on the morality of wealth.

Nor are the answers radical changes to the constitutional structure. The problem is not the electoral college, the structure of the Supreme Court, or the need to add Puerto Rico and DC as new states. The answer is policy to relieve the problems of the working and middle class.

There are changes that have merit and should be considered, but the government has little credibility and trust. Many of the wealthy are willing to pay more taxes but have little faith it will be spent to address the problems. The inability to bridge partisan divisions and enact meaningful reform has instead fueled class warfare, political pandering, and the search for convenient scapegoats.

Proper Bookkeeping for Tariffs

From Robert Graboyes’s excellent Bastiat’s Window, Trade Winds 2025-Seriously and Literally:

As seen in the accounting equations in the previous post (“Real-World Trade-Deficit Math-Magic,”), you can’t get rid of a trade deficit without also losing foreign investments in America. This insight was undiscovered in the age of mercantilism and unappreciated in the age of “anti-globalism.”

“Globalism” (a.k.a., free trade) is to those on the political right what “trickle-down economics” (a.k.a., free markets) is to those on the political left. Both are vacuous pejoratives that translate loosely into English as, “Somewhere on Earth, buyers and sellers are engaging in voluntary trade and minding their own business AND WE HAVE TO STOP THEM.”

“China says, ‘Our government will use sledgehammers to break the hands of 90% of China’s people to discourage them from buying American gloves.’ America responds with, ‘Oh YEAH??? Then OUR government will use sledgehammers to break the feet of 90% of AMERICANS to discourage them from buying Chinese shoes.’ China’s tariffs are self-destructive, and America’s retaliatory tariffs are equally self-destructive.”

By the way, this map also sheds light on the Great Depression. As I explained recently, the Roaring Twenties likely resulted from the desire of Warren Harding and Calvin Coolidge to keep their hands off of businesses to avoid destabilizing them; in contrast, Herbert Hoover and Franklin Roosevelt were both dealmaking busybodies who constantly interfered in markets, changing the rules of the game over and over until business crawled into a shell for more than a decade.

Several readers said I should take Trump seriously, but not literally—which was journalist Selena Zito’s famous take on candidate Trump in 2016. Zito’s perception was razor-sharp, but my responses were threefold:

“Seriously, but not literally” had its charms for an insurgent candidate but is untenable for a sitting president who has the nuclear codes and the power to vastly alter the conditions of world trade on whim—nation by nation, product by product, day by day.

World markets clearly take him literally, even if his supporters don’t.

Trump supporters who traffic today in this idea that the president does not mean what he says do no service to their world, country, president, party, or selves.

When Policy Meets Reality

In every election the voters teach the candidates a lesson that they never seem to learn. Every victory is not a mandate IN FAVOR of the victor; it can also be a mandate AGAINST the losing party. Maybe the only mandate you really got was not to be the other party. Policy is always subject to political reality. Trump in his radical reforms is making the same mistake his opponents made.

In the ‘woke’ world of the Democrats every 35-year-old white male listening to the indoctrination of systemic racism, toxic masculinity, and the disclaimer of meeting on native American soil from the overstaffed DEI department sat quietly to avoid losing their jobs or being sent to reeducation camps. They knew the absurdity of it all and while they may have been quiet, they were able to express themselves in the voting booth.

The same applied to the parents of female children sharing a locker room and competing with biological men, and the parents of boys who now had tampon dispensers in their bathrooms. No matter how moral or rational this may have been to advocates the vast majority of the voting public of both parties rejected it strongly.

Trump is taking his party down the same path. No matter how much the voters may have supported tariffs in theory they did not likely vote for the chaotic and reckless application. No matter how much or how little they understand the economics of trade, when the consequences fall on their bank accounts and 401ks, they will reject it. While Trump’s voters wanted to cut the size of government, many will react differently when the waiting line at the IRS or Social Security becomes unbearable. And all of the government workers fired with abandon and their friends and families will react in the voting booth just as the victims of the DEI department did.

If the Democrats tac to the center, the Republicans may be toast in the midterms. But that assumes they have learned something from their defeat. Even if Trump reversed everything on tariffs tomorrow the radical uncertainty he represents will stifle new investments as long as he is in office.

Trump’s biggest accomplishment may be turning Democrats into Milton Friedman free traders.

Expert Failure

From The Wrong Kind of Abundance by Kevin Williamson at The Dispatch.

Zweig intelligently catalogues a number of underlying factors that positioned the American expert class to make all the wrong decisions while trying to make the most of the crisis, putting it to the service of their political and social agendas and, not incidentally, their careers. Those problems include: over reliance on mathematical models that can be tweaked for ideological ends where empirical observation and measurement provide insufficient support for the preferred policy—or would militate against it if taken into account; the fetishization of technology in education, very nicely illustrated by Bill Clinton, ensorcelled by the apparent early promise of the classroom internet, repeating almost verbatim identical claims that had been made about radio in its infancy—and that were made about film and television as well; the moronizing effects of reflexive political tribalism—there was a time when the Trump campaign could complain, with some reason, that Joe Biden and Kamala Harris were working to “undermine the public’s confidence in the coming coronavirus vaccine,” ironic as that complaint is to read today with Marjorie Taylor Greene in the House and Robert F. Kennedy Jr. in the Cabinet; the related self-censorship of the media in the service of narrow partisan interests and dogmatic progressivism; and misalignment of incentives, with policymakers (disproportionately progressive-leaning) captured by special interests (notably Randi Weingarten and the teachers’ unions) and thence producing policy agendas that did not serve the public interest, a situation that would be familiar enough to anybody who had ever read a few pages of F. A. Hayek or James Buchanan.

(I mean the public-choice economist, not the 15^th president.)

About that final point: Reading An Abundance of Caution is a little bit like reading Ezra Klein in the past few years, as ladies and gentlemen of the sort who write for the New Yorker seem to discover phenomena that have been at the center of the liberal-libertarian critique of progressivism for a century or so. When it comes to housing supply, for example, Klein and Matt Yglesias have even discovered that regulation has unintended consequences! You won’t find Hayek’s essays or The Calculus of Consent in Zweig’s index, and, what’s worse, you won’t find very much evidence that the author has read such works—which he should have, given the light a century’s accumulation of economic and political literature might have shed on his subject. .

a great deal of our economic policy debate (as about minimum-wage laws) is shaped by mathematical modeling that cannot be empirically evaluated, because doing so would require a comparison between measurable outcomes and non-measurable counterfactuals.

“Everything that can be measured is not worth measuring, and everthing that is worth measuring can sometoimes not be measured.”

A Conservative Revolution

Some historians contend that the American Revolution was not a revolution readily compared to others in history. It can be distinguished as a War for Independence or as historian H.W Brands called it, Our First Civil War in his book by that title. Given its close proximity to our own experience The French Revolution offers insights that illuminate both. The French and the Americans both attributed their movements to Enlightenment philosophers; the French followed the words of Rousseau and the Americans followed the ideas of Locke and Montesquieu among others. The Enlightenment was a fork in the road and the French and Americans took very different paths.

In The Wrong Kind of Abundance Kevin Williamson at The Dispatch (firewalled) considered the American experience a conservative revolution:

Of course, the political group that we now call, broadly speaking, the American right has always been convulsed by irreconcilable contradictions because the American project itself is founded in a paradox: There is, strictly speaking, no such thing as a conservative revolution, but that is approximately what the Founding Fathers carried out. And from the New Deal through to the present, the right has been torn between its conservative tendencies and its revolutionary tendencies. Dwight Eisenhower called himself a “progressive conservative”; William F. Buckley Jr. called himself a ”radical conservative” and insisted that whatever it was his new movement was going to stand for, it was against Eisenhower.

Among the founders, there were plenty of wild-eyed utopians and radicals, but the revolution ended up being led by relatively conservative figures such as George Washington and John Adams (who had originally opposed separating from England) and others of similar temperament, who made the case that they were not so much overturning a legitimate political order as restoring and securing their ancient rights as Englishmen. The American project is a marriage between the forces of conservatism (property and religion) and the forces of radicalism (majoritarianism, disestablishmentarianism, etc.), and, to the extent that the American right acts as a conservator of the American tradition, it feels those contradictions deeply.