State-Based Conservatism­­­­­­­­: A Response to Daniel McCarthy's "New Conservative Agenda"

In the midst of the best job market in the last 50 years, led by a renegade Republican President who has governed mostly as a conventional conservative, comes increasing calls for a sort of “woke” conservatism. A recent essay by Daniel McCarthy titled “A New Conservative Agenda” outlines what will likely be an increasing aspect of American conservatism: using the powers of the federal government to achieve conservative nationalist ends. As stated, this does not necessarily have to be a dramatic shift. It has roots going back to Alexander Hamilton.

Indeed, since the construction of the “rational state” (John Marini’s term), both Democratic and Republican Presidents have employed its power to achieve various conservative ends. Allan C. Carlson argues in The “American Way (2003) that the de facto one income family policy in the postwar era was implemented by the “maternalists” inside FDR’s administration. Their goal was two-parent families with a wife in the home, the man in the shop or office, as the case may be, and large families raised in economic security. They succeeded until economic, social, and legal realities upended the policy board. In short, we’ve been here before. Did we ever leave?

But there is an urgency now for conservatism in America to move in a comprehensively statist direction. Students of centralization of power, as most American conservatives are, must ask, though, where precisely has this ever worked to change things in a positive direction? As McCarthy notes, the rise of both Donald Trump and “invigorated socialism in the Democratic party, are signs that conventional politics had failed” because its underlying “economic order” had ended, but elites of all stripes failed to note it.

There’s also an argument in the essay along the lines that the Guelphs and Ghibellines of our American order are already duking it out for control of the government and with it the ability to shape political economy and punish foes. The refusal of conservatives to engage in this contest out of a fealty to limited government or a distaste for using administrative power to build their constituencies and win future elections is really a suicide pact.

I’ll try to blunt the power of this argument while acknowledging that our politics desperately wants to drive things in this direction.

McCarthy argues, “From the Great Recession and loss of manufacturing jobs to perpetual war in the Islamic world and intensifying culture war at home, conservatism as the GOP understood it over the last few decades was not only not the answer to our woes but was in many cases their cause.” I think that’s right, in many respects. President Bush responded to Islamist terror with grand wars that have ended in failure. Bush never began with the basic questions: What is our war? What are the means we have to achieve it? Victory of the concrete kind over this threat was never defined to begin with.

The culture war escalated and conservatives either wanted to ignore it, as Mitt Romney did in his 2012 presidential campaign, or were overwhelmed by the social change that had occurred in the last two decades. The Great Recession had several causes; sussing them out continues to be fodder for the publishing and conference mill. I’m not exactly sure which ones can be attributed to conservative economic thought as opposed to government interventions in the housing market that made it much worse. President Obama’s post-recession policies were not designed for growth but for managing economic stasis, if not decline, and division of the spoils.

The loss of manufacturing jobs seems to be more than just an artifact of decline, though. As Pierre Lemieux states, “Physical things continue to be produced” in the United States, “but production occurs more efficiently.” That’s the result of technological changes and the fact that America’s competitive advantage lies, Lemieux points out, in “the most advanced manufacturing activities.” There has indeed been a decline in the overall number of U.S. manufacturing jobs.  Lemieux himself underscores that American manufacturing jobs decreased from about 19 million in 1979 to 12 million in 2016. But in the same period, he notes, employment in the country’s civilian sector grew from 99 million to 151 million jobs. They’re just different jobs. Why, we might ask, would we encourage Americans to work in economic sectors in which their country has long ceased to compete efficiently with the rest of the world?

Policy analysts who spend careers weighing income growth, inequality, labor-force participation rates, and the like disagree with one another endlessly, it seems, not only on the relevant facts, variables, and factors of getting the right data, but also on what follows policy-wise from the data. The claim of declining work opportunities—labor that can support a family and give confidence that you are a productive member of a community—is inherently bound up in  a series of further claims about not only joblessness, but labor-force participation, declining economic mobility, and falling or stagnant wages depending on who you read. Reading the debate at National Review centered around Oren Cass, author of The Once and Future Worker (the 2018 book reviewed in this space by Greg Weiner and in National Review by Scott Winship) gives me some pause about prescribing a nationalist industrial policy that McCarthy seemingly supports.

For instance, what to make of the large number of men, the “inactives,” who seem to have given up on work because of so few work opportunities. Among male “inactives,” Winship notes, only 10 percent are truly not looking for work. Most are students, homemakers, caregivers, or disabled. And there’s also culture—in this instance, a culture change that makes it no longer as shameful and unthinkable for a man not to be working. Such men were once seen as putting burdens on the community and were scorned. Divorced parents were also once shamed for the same reason. We obviously have gotten over that. I remember such men being referred to as the “corner men” when I was a kid. They hung out at the end of the city street, drinking beer, living aimlessly. Now they are on a couch with Netflix and screen diversions to intoxicate them. Someone else picks up their tab.

To be sure, a fair amount of evidence cuts in the other direction. Cass puts it all together: 45 years of economic decline for high school-educated men have led to declining real wages, falling labor force participation, and a decline in economic mobility and this has produced social and public health crises. If we focus only on men, things are stagnant. For women, it’s a different story entirely. Median hourly wages for women from 1973 through 2017 increased by about 50 percent, Winship notes. The median hourly wage for men, though, rose only by 10 percent in that period, and it actually fell between 1973 and 1997. For men at the 20th percentile of hourly income, wages were the same in 2017 as they were in 1973. Winship notes that white men in this income category actually saw their pay rise 6 percent during this period and that black and Latino men experienced a 16 percent increase. The overall number is flat, Winship thinks, probably because of immigration.

Still another element is international competition. According to the “China Shock” studies by economists David Autor, David Dorn, and Gordon H. Hanson, in American labor markets that competed directly with Chinese imports from 1999 to 2011, 2.4 million net jobs were destroyed. Those job losses also hurt families and negatively impacted neighborhoods, towns, and regions. But that unpleasantness also has to be weighed against the constant churn in job markets in America where millions of jobs are created and destroyed every year.

What to do?

McCarthy’s broader claim is that conservatives must use the state to shore up, if not expand, the middle class to forestall America becoming something that resembles a failed Latin American country: middle class outmigration, a gated and guarded elite, and passive, when they aren’t restive, populations who work in service jobs for the elite or the government. It’s a haunting specter, and one that you almost see the rudiments of beginning to take shape in California. This reality of an America bereft of widely shared middle class prosperity is the imperative that leads McCarthy to call for a program of state action. But how will the state do this? Some might say that here the arguments are void for vagueness. I would note that in my native state of Tennessee and the Southeastern region, many manufacturing jobs have been created. Much of this can be attributed, though, to good old-fashioned policies like right-to-work, low taxes, and a favorable regulatory environment. But that’s old-time religion. On to the state.

In a follow-up piece in the Spectator USA, McCarthy says that typical Hayekian and libertarian objections to his plan (you know, the knowledge problem, agency capture, price distortion through clumsy central action) are beside the point. We’ve got a country to save. That concern, he says, is far more central than any classical liberal or libertarian concerns about crony capitalism, rent-seeking, or the typical problems created by the broad use of state power on behalf of economic nationalism. We need to fortify the middle class or we’ll all be gardeners or delivery boys for Bezos. But I embellish. Amazon will have robots delivering its packages.

Who will make the robots? Unspoken but hovering in McCarthy’s analysis are static economic assumptions, I think. He says, “What factories remain in the emerging America will be ever more automated, while the American workforce will be further channeled into the service sector.” There’s no sense of what has been true in American economic life: that jobs will be created that we aren’t even aware of yet. Put differently, how many Americans will be engaged in jobs whose scope, skills, and worth do not even exist. How many currently hold jobs that did not exist in type when they graduated from high school or college, or first started working?

McCarthy sees “an America broken into three relatively immobile classes: a credentialed and knowledge-based elite, a large service class that prepares the first’s food and tends to its children (also the class of the urban Uber driver and suburban Amazon warehouse worker), and a vast economically unneeded population in what used be the commercial and industrial heartland.” And this postmodern Downton Abbey order will be shored up by “palliative liberalism” or the aim to “euthanize, as humanely as possible, millions of economically unneeded and politically retrograde Americans.” Think a basic minimum income, wage subsidies, tax credits, and other tools to keep Americans in housing and shoes, but without much in the way of work. As Tyler Cowen notes in Average Is Over (2013), for this bunch, there will be endless porn and sports, cheap Mexican food, and affordable housing, if you move to Texas. Buck up.

McCarthy’s indictment of certain tendencies of our ruling class does strike a chord. My reference to Downton Abbey doesn’t really work. Our elites fully believe they have earned and are entitled to their privileges. That is not true of Lord and Lady Grantham. Silicon Valley elites, in particular, see themselves as having few concrete obligations to America. As others have noted, they seem to lack any notion of patriotism. Their philanthropy differs remarkably from our old oil, cattle, shipping, and manufacturing elites whose largesse built schools, universities, libraries, and parks in real places in America. Bill Gates wants to make the world’s thinnest condom. Cool. The Gates Foundation is well known for its delivery of vaccines internationally. But this do-gooding is mostly beyond the shores of the USA. Charity is local, philanthropy loses the individual in favor of humanity.

Our elites are, however, willing to supply an endless number of theories and dollars to support diversity, identity, and expressiveness, that keep primarily student and urban populations stirred and angry— not at corporate elites (cough, them), of course. Rather, their fire is directed at the past and today’s embodiments of that past. These persons, symbols, and ideas must go because they are hateful and antidemocratic. Politics in a can, packed with care by progressive academic and media symbol-mongers.

I will confess to searching in vain for what, specifically, McCarthy wants to do. Economic nationalism can’t just be a euphemism for nothing left to lose. He mentions support for Reihan Salam’s idea of tilting immigration policy toward high-skilled workers, similar to Canada’s or Australia’s policy. Yes, but what will this do to stem the tide if things are really this bad?

Specifically, we must support high-end manufacturing work. How should we? We should drive bargains to open markets and give access to our market but on terms that benefit Americans in full: as producers and consumers. What does that mean, policy-wise? And how short is the distance from such a slate of policies to the import-substitution policies that implemented dependency theory in Latin American countries in the last half of the 20th century? That didn’t work. Countries that went that direction remain economically underdeveloped. Chile is the big success story there, but Chileans built on their (cover the children’s ears) comparative advantage in natural resource extraction. I realize there isn’t a straight line connecting an American conservative nationalism with dependency theory, but what is the distinction? And how quickly intervention begets mistakes, problems, and inefficiencies that lead to further problems is the great fear here.

Do we do our own version of Chinese or German industrial policy? Would that even work here? Maybe the synthesis is to find a pragmatic American solution to a postindustrial problem. And that solution might pick up where David Goldman says we have left off, failure at innovation and the production of technologies beyond Facebooking and tweeting. To the extent government is brought in, Goldman argues, it’s in research and experimentation projects with corporations that could benefit the country in military prowess, which private corporate labs could then develop into manifold market uses. We did this in the past regarding microchips, sensors, and lasers.

What concern is it to us if China wants to subsidize to the hilt its software and high-value manufacturing companies (which they have done) if we are constantly improving our own IT capabilities both militarily and for market uses? But we haven’t done this comprehensively, Goldman notes, for almost three decades. According to the Congressional Budget Office, by 2017, the United States had spent $2.4 trillion on wars in Iraq and Afghanistan. Time and money wasted. Research and Development is one crucial piece that’s been left behind.

I think McCarthy’s essay puts our thinking in the right direction. Many institutions at home are quite shaky. Their strengthening is needed. But a meat-cleaver economic nationalism will probably lead us down a path we’ll wish we hadn’t taken.