Big week, lots to talk about, Oren has some thoughts to get us started:
Moving between financial and political circles, I’ve been struck by how far behind the curve the business community is lagging. One can still attend a dinner of investment bankers who believe globalization is unstoppable and further integration of the American and Chinese markets inevitable. On Wednesday, I participated in a debate on tariffs at Harvard Business School, teamed up with former U.S. Trade Representative Katherine Tai and opposed by Harvard economists Larry Summers and Robert Lawrence (the audience voted; we won). The organizers found it challenging to frame the question and notable that such a topic was even being addressed on campus.
Unfortunately, business leaders are as bubbled as anyone else, relying for their news and analysis on a set of sources—the Wall Street Journal’s editorial page, CNBC, whatever inane briefings the Business Roundtable sends around—carefully tailored to flatter their sensibilities and retain them as an audience. CNBC’s “SquawkBox” is my favorite example, as they talk about American Compass from their own point of view regularly, but show no interest in having me participate in the discussion.
The charade reached absurd proportions on Wednesday, in an interview that host (and rock-ribbed Reaganite) Joe Kernen conducted with Rockbridge Network founder Chris Buskirk. Most of the questions were about me, what I think, and why I’m wrong. Chris is a friend and did a great job, I just wish he’d been able to spend the segment talking about his work, and that Kernen would have been willing to talk to me about mine.
But here at Understanding America I can do what I want, and what I want to do today is participate in the interview to which I was not invited. So here are Joe’s actual questions, and the answers he could have gotten from me.
Joe Kernen: We’ve had Oren Cass on a couple of times...
Thanks, Joe. Haven’t seen you this year, good to be back.
JK: The overlap between differing philosophies is apparent to me, and whenever we had Oren Cass on it was always apparent to me. Isn’t there a slippery slope when conservatives start talking about raising corporate taxes, start talking about, I mean, the worker class is helped when companies succeed using time-tested conservative, free market principles. Not adopting a lot of socialist principles or left-wing principles and sort of trying to dress them up as something different because you’re a Republican.
I’m not quite sure what principles you’re talking about, Joe. I agree that the working class can benefit when companies succeed, especially if they do so within the constraints of time-tested conservative principles. But one of those principles is protection of the domestic market, which was the American tradition through most of its history and a core plank in the Republican Party’s platform. Another is fiscal responsibility, which fosters more productive investment. Another is worker power, which ensures that workers and employers meet in the market on a level playing field.
You know, in The Wealth of Nations, Adam Smith emphasized that the invisible hand works because “every individual endeavours to employ his capital as near home as possible as he can, and consequently as much as he can in the support of domestic industry, … and to give revenue and employment to the greatest number of people of his own country.” John Stuart Mill warned that “the laborer in an isolated condition, unable to hold out even against a single employer…will, as a rule, find his wages kept down.” He condemned those who did not “wish that the laborers may prevail, and that the highest limit [for wages], whatever it be, may be attained.”
So I don’t think it’s left-wing or socialist to advocate for those kinds of things. It’s commonsense, conservative, and also entirely necessary if we want capitalism to succeed and the free market to deliver for workers.
JK: When I had... what’s Cass’s organization?
American Compass.
JK: That’s it, American Compass. I’ve asked whether the Vice President really does adopt a lot of those principles whole-heartedly because I know that President Trump doesn’t. Do you? Which of the basic tenets of Oren Cass and American Compass do you adhere to?
Well I guess I adhere to all of them, but the point is not to have everyone adhering to the exact same ideas. What’s needed on the right-of-center is a robust debate about how to apply conservative principles to the challenges of the 2020s, instead of just flipping through a dusty 1980s playbook to find another tax cut.
JK: That sounds like Mamdani. And then you can say, OK so how do we affect that for people to get there? Do you think raising corporate taxes is the way to effect that?
You certainly are obsessed with the corporate tax rate. I wonder how much you’ve really thought about public policy and the prerequisites of a healthy market economy? But that’s fine, we can talk about the corporate tax rate. No, I don’t think raising it is an end unto itself.
JK: That’s not what Cass says.
I promise you, it is what I say. It’s not an end unto itself. Other things equal, I’d love to have tax rates be as low as possible. But we have a federal government that will spend 19 to 20% of GDP under any plausible plan of conservative spending cuts, including entitlement reforms, which means that we are going to have to collect about that much in revenue. That used to be Paul Ryan’s plan, by the way. And so we are going to have to increase some taxes, and I would include the corporate tax in that discussion, bringing it at least back up to 25%. That also used to be Paul Ryan’s plan, by the way. “Corporate rates go lower, no matter how much we have to borrow,” may get you through a five-minute segment on cable TV, but it is not going to get our country where we need to go. [end scene]
Kernen concluded with a spectacular comment, “supply side trickle down is all we got, you grow the pie and hope for the best,” that I wish we could have discussed in more depth. Maybe someday soon.—Oren
In Case You Missed It: Oren had a great conversation on the School of War podcast with Aaron MacLean about his recent Foreign Affairs essay, “A Grand Strategy of Reciprocity.” If you’re in the Boston area, he’ll be discussing the essay on November 18 at the Harvard Kennedy School with former Biden national security adviser Jake Sullivan.
ON TO THE MIDTERMS
Democrats are riding high after decisive wins in, checks notes, blue cities and states that Democrats were expected to win. Up next, the midterms; just over the horizon, 2028—where Politico reports that Kamala Harris leads among possible Democratic presidential candidates and is also the only Democrat in double digits on the question: “Who do you consider to be the leader of the Democratic Party?” (The ticket of Don’t Know and Nobody has her beat 2-to-1, though.)
At Unherd, Ryan Zickgraf has a particularly incisive breakdown of the various factions vying for influence within the party, each backed by white papers and institutes. That debate is not translating to the political realm, where prospective leaders are competing primarily on personality and mean tweets. Usually a party resolves its dispute among factions and then the personality contest for leadership begins within the victorious one. Choosing on soft skills absent any concern for ideas may work less well.
Speaking of challenges for the coalition, the Wall Street Journal reports on “The Growing Divide in the Rainbow Coalition.” “More gay people are speaking out against the gender ideology of trans and queer activists.”
And: Congressman Jared Golden, a standout moderate Democrat in a conservative Maine district, has announced he won’t seek reelection. His explanation of why is worth reading in full.
IN TRADE NEWS
Those of you still waiting for China to embrace market democracy, as was foretold by the economic prophets of the new millennium, will be disheartened to hear from the Wall Street Journal: “The Trade War Couldn’t Change China’s Economy. American hopes for political reform in China faded years ago, and now hopes for economic liberalization are fading too.”
Instead, reports the New York Times, “China’s Export Juggernaut Marches On.” Some nice graphics here, helpfully underscoring the point that U.S. policy is forcing ever-larger surpluses elsewhere, putting other countries to the question of whether they will let their industrial bases fall to China Shock 2.0 or join the U.S. in opposition. The calculus is different for developing countries without an industrial base to lose, to whom China can make a more appealing offer:
The rest of the world is caught between the two superpowers. Some countries, including Vietnam and members of the European Union, are deeply concerned about the risk posed by China’s exports to their own industries, and China faces a backlash in the form of tariffs in regions like Europe. Other nations, like Argentina and Nigeria, are buying low-cost Chinese technology to modernize their economies but running up wider trade imbalances with China.
But, some developing countries also seem interested in the American offer. The deals with Cambodia and Malaysia include a number of striking, “China Out” provisions—including “poison pills … inserted by Washington into tariff deals with Cambodia and Malaysia seen as ‘loyalty test’” (Financial Times).
And, the Europeans may still not get it. “VW to build its own AI chips in China in autonomous driving push” (New Straits Times). Seriously, guys? Maybe they have a good reason, like…
By designing and developing the System-on-Chip here in China, we are taking control of a key technology that will define the future of intelligent driving,” chief executive Oliver Blume said.
Who is the “we” that will be “taking control” here? Makes more sense in the original Mandarin.
At least Trump didn’t offer Xi any advanced AI chips. The Wall Street Journal reports that “as they prepared to meet Xi, top officials including Secretary of State Marco Rubio told Trump the sales would threaten national security, saying they would boost China’s AI data-center capabilities and backfire on the U.S….Others against the approval, the officials said, included U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick, who helped lead trade talks….Faced with nearly unified opposition from his top advisers, Trump decided not to discuss the advanced Nvidia chips during his Oct. 30 meeting with Xi.”
How did Jensen Huang respond? By telling the Financial Times, “China is going to win the AI race.” We’d beg the Nvidia PR team to take away his microphone, but honestly this is way more fun. Of course, the cleanup statement came hours later, with Huang clarifying: “As I have long said, China is nanoseconds behind America in AI. It’s vital that America wins by racing ahead and winning developers worldwide.”
But wait a minute… that’s not a cleanup at all. It doesn’t contradict the claim that China is going to win. Though it does contradict another recent Jensen Special, “Does it really matter who gets there first? I think in the final analysis, I don’t think it does.” So if you’re following along. It doesn’t matter who is going to win, but China is going to win, and that’s why our focus should be on selling Nvidia chips to China and winning developers there. Love this guy.
SPEAKING OF ARTIFICIAL INTELLIGENCE
The Bad. Why Even Basic A.I. Use Is So Bad for Students (New York Times).
The Ridiculous. OpenAI Wants Federal Backstop for New Investments (Wall Street Journal).
And the Ugly. Here’s How the AI Crash Happens (The Atlantic).
WRAPPING UP WITH SOME FEMINISM DISCOURSE…
Ross Douthat hosted a fascinating conversation with Helen Andrews and Leah Libresco Sargent on the question, “Did Liberal Feminism Ruin the Workplace?” They discuss Andrews’s recent essay in Compact, “The Great Feminization” (featured recently in Understanding America!), and Sargent’s new book, The Dignity of Dependence (reviewed recently by Evie Solheim for Commonplace!). The Atlantic has a new essay discussing Sargent’s book as well, “A Conservative Rejoinder to the Manosphere.”
Finally, at the New York Times as well, read “What Women Really Want: To Not Answer Work Emails at 10 p.m.,” but ignore the headline, which is not the point of the article. It’s not necessarily about women, and it’s not about late night email: “It’s not a matter of working remotely, during which personal life and work life can seep into each other, nor of simple flexibility. It’s about a clear delineation between work and every other aspect of life.”
Enjoy the weekend!
Good essay--I wish Oren had the chance to debate Joe Kernen on CNBC. Kernen is starting to lose it as evidenced by how many times he puts Speaker Mike Johnson on his show and turns into his cheerleader. He can't understand how the K-shaped economy and affordability crisis is playing against the talking points he loves to push.
“supply side trickle down is all we got, you grow the pie and hope for the best,”
This reminds me of something Bill Ford, Jr. said many years ago at the Detroit auto show in the early days of EV excitement. This is pretty much an exact quote (It has stuck in my head as I was an engineer at Ford), "We're going all-in on electrification and we hope the consumer does, too."
I remember thinking, upon watching him say that in an interview, the word 'hope' should never be part of a business plan. I still think that is true, despite what Mr. Kernen thinks.