On May 4th, American Compass was launched with “A Note of Introduction” declaring, “Our mission is to restore an economic consensus that emphasizes the importance of family, community, and industry to the nation’s liberty and prosperity.” What followed was a remarkably anodyne discussion of the desire to be a flagship, “creating and nurturing connections between people, facilitating communication among them, and shaping a common identity understandable to the outside world.”
There is very little in the introductory note that would signal that American Compass has an agenda. But, a couple of months back, American Compass announced itself over at National Review in an essay by Oren Cass with the curious title “The Return of Conservative Economics.” I’ll admit my first thought in seeing the title was to wonder if supply and demand curves are different in the world of conservative economics. But, of course that is not what the title meant. Instead, the project is “helping American conservatism recover from its chronic case of market fundamentalism.”
The enemy, it seems, is not “liberal economics” or “socialist economics,” but rather libertarians. Now I am not a libertarian, but I must admit that I have heretofore thought of the libertarians I know as broadly reasonable people with policy preferences slightly different from mine. Reading American Compass’s views of the libertarians was thus, to put it mildly, a bit jarring. Fusionism, the melding of social conservatives, libertarians, and Cold Warriors that, as George Nash has so well documented, created the modern American Conservative movement, is now passé, especially among younger conservatives.
Are Markets the Problem?
What sorts of issues concern American Compass? According to an interview with The Washington Post,
“When you zoom out, you can have a rising GDP, but if it’s in the context of collapsing families and people no longer getting married and declining fertility rates and so on and so forth, you haven’t necessarily enhanced well-being,” said Cass. “Likewise, if you are generating growth by trading off the non-market work that people historically performed within their households for a model where everyone goes to work and then they pay each other for the things they used to do in their own household, that’s not great either.”
Fundamentally, Cass is articulating the importance of recognizing the damage that “globalization” has done to “the value of belonging to a particular place.”
Are these problems caused by a failure to think about economic matters correctly? Everything in the American Compass argument assumes that these social ills arise because of some unspecified libertarian economic theory. What if “market fundamentalism” is not the source of the problems? Consider the collapse of marriage. Yes, economic systems have an effect on families, for good and for ill. But is it possible that marriage decline is due to the rise of no-fault divorce laws? Is it possible that as a generation grew up with the idea that marriage is not “until death do us part,” then marriages will dissolve more easily and people will wonder whether there is a point to becoming married in the first place? If that is so, it is not at all clear what change in economic policy will reverse that trend.
Similarly, what is the source of the displacement of non-market work for work in markets? Obviously American Compass is lamenting the rise of the labor force participation rate in the 1970s. The number of hours in a day hasn’t changed, so spending eight to twelve hours a day working for pay is necessarily forty to sixty hours less per week available to do things outside the market. Did the decision by large numbers of women to work outside the home arise because libertarians had too much influence on economic policy?
Finally, think about the value of living in one place. When a factory in a small town closes and employment opportunities vanish, then the ability to live in the same place is seriously curtailed. Is this an economic issue or a cultural issue? Consider the American story: People from all over the world leave the places in which their families had lived for centuries in order to come to America, the land of opportunity. Then the West is settled as people leave the towns in the East and go into the wilderness to build life anew. The American story itself is one of migration. The American story is also one of building a life in a town with neighbors and relatives. Those two stories are in obvious tension, and it has always been so. Dealing with that tension is also part of the American story. To reduce all the complexities of American life into a simple morality tale of bad libertarians against virtuous conservatives for the soul of the republic is thus to trivialize inherently complicated and fascinating issues.
The Bookstore Problem
While not all of the problems identified by American Compass are economic problems, some are. Restricting our attention to those issues, what do we find? To crystallize the issues, let’s start with a story. Mr. Botts owns a bookstore in a small town. Ever since he was young, he wanted to own a bookstore; he loves his bookstore; his customers love his bookstore. Everything is wonderful. Then one day a new person comes into town and opens a brand new bookstore. Let’s call him Mr. Bezos. This new bookstore has a larger variety of books for sale than Mr. Botts ever had. Also, this new bookstore sells every single book at a lower price than over at Mr. Botts’s store. And, to top it all off, Mr. Bezos will deliver every book you buy to your home within two days, with no delivery charge.
You live in this town. You like Mr. Botts and his bookstore. When Mr. Bezos opens his store, do you have a moral obligation to continue to pay the higher prices over at Mr. Botts’s store? Are you committing a moral wrong to decide to give your business to Mr. Bezos? Remember, if you and the other people in your town do not continue to shop at Mr. Botts’s store, it will close, and Mr. Botts will lose his job that he loves and that gave him purpose and meaning in his life. That is not an easy question to answer. It gets worse when you discover that Mr. Walton also came to town selling everything at a lower price than all the other little shops in town had been charging. What do you owe to all these people in your town who are about to lose the jobs they love? Suppose it would cost you an extra $20 a year to allow Mr. Botts to stay in business. Even a minimal charitable impulse would convince someone to spend that much to keep this friend and neighbor from losing the ability to work at the job that brings him so much pleasure.
But, what if it would cost you half of your income to keep Mr. Botts and the other small shop owners in business? It would take someone with the heart of St. Francis to reduce consumption to half of what it would be if you shopped in the new places. Actually, the heart of St. Francis wouldn’t do it either; if you could buy the same amount of material goods for half the cost, you could maintain your current consumption and donate half of your income to the charity of your choice. There is no reason to think the local shopkeepers are the people who are most deserving of your charitable efforts. The real cost of maintaining Mr. Botts and all the others like him in business is somewhere between $20 and half of your income. Surely, it is not a matter of indifference where in that range the cost would fall. A debate between someone who asserted that the fate of Mr. Botts should be of no concern at all to me, and someone who said that the fate of Mr. Botts should be the foremost concern to me, would be a terribly dull debate. And yet that is exactly how this debate is set out by American Compass.
Businesses Are People Too
The bookstore problem is easily masked under a veneer of economic terminology. The American Compass manifesto notes: “Conservative economics will also accord equal respect to the concerns of capital and labor, rather than claiming that whatever is best for shareholders in the short run will eventually prove best for workers as well.” The latter part of that sentence is odd; as was noted at the libertarian Café Hayek, it is also something that no libertarian thinker has ever claimed. But, it is the first part of the sentence that is crucial to the underlying debate.
What is this conflict between labor and capital that American Compass will help moderate? When did “Conservative Economics” become synonymous with Marxist class warfare? It is a pleasant historical trope to imagine economic activity as a battle over a fixed pie between the noble workers and the cold machines, but in the actual world what we have is one person hiring another person. Is there any reason to assume that one of these people is inherently less virtuous than the other? Surely we can agree that each person should show love to the other. What sacrifices does that love entail?
Ask the employment question in a way different from how it is typically phrased: Stephen has been employed by the same firm for a very long time. The owner of this firm has provided a stable salary and benefits, allowing Stephen to buy a house and raise a family. One day Stephen gets an offer to move to a different firm and receive higher pay. Would it be a moral failing for Stephen to leave the firm whose owner had been so good to him for so long? Few people would instinctively argue that the worker owes allegiance to the firm if a better offer comes along. Why not? In large part it is because we imagine the firm at which Stephen worked is owned by a mean and greedy Mr. Bounderby. But what if the firm was owned instead by an earnest and benevolent Mr. Cheeryble? Does that change things at all? Does it matter if Stephen is leaving in order to get an extra $20 a year or twice his current salary?
These are simply not questions that can be reasonably evaluated in the abstract. Is it morally acceptable for a firm to close a factory in a small town, eliminating the income of every single person in town who either worked in the factory or depended on the incomes of people who worked in the factory? If the factory is being closed because the owner realized that he could get a higher income by opening a factory in another town, is that a sufficient justification for disrupting so many lives? Do the benefits to the workers in the new town who will now be employed factor into the calculation at all? Does your answer change if the owner will get an extra $20 a year or double his income? Does it matter if the owner was receiving $20,000 or $500,000 a year in income before moving the factory?
The danger in a manifesto like that of American Compass is that it completely ignores these sorts of details. It certainly gives reason to pause when Cass blithely declares:
It [Conservative Economics] will favor collective worker representation that affords real influence in setting the terms and conditions of employment over the fiction that individual employees enjoy the freedom to each negotiate their own terms. It will be aware that cheerfully abandoning the world’s industrial supply chains to Asia, was, is, and always will be irresponsible.
Are these things even up for discussion in Conservative Economics? Does it matter whether or not labor unions help or hurt workers as a whole? Can we ask whether the costs to everyone else of trade restrictions that help a small number of workers are worth paying?
If American Compass wants to complain about doctrinaire libertarians who are thoughtless in evaluating the merits of their preferred policies, it would be very helpful to avoid simply flipping the sign on all the arguments from positive to negative. There is a large need for careful thinking about the societal and cultural implications of economic policies, but blanket declarations of war against “libertarian fundamentalists” or “market fundamentalism” are not going to help build thoughtful analysis.