Memo 04.21.2020 14 minutes

End the Globalization Gravy Train

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Donor dollars shouldn’t be made in China.

In the present crisis, we find ourselves locked in an interminable debate about whether to “reopen” the economy. To put my cards on the table, I’ve found many of the orders issued by governments—allowing Michigan Home Depots to remain open while preventing them from selling garden supplies, harassing people for reading books in public parks—pretty dumb.

Yet evidence grows that short-term “lockdown” orders have far less effect than we imagine. Restaurants and movie theaters saw a collapse in customers well before any shelter-in-place orders. Data from Safe Graph, a company that tracks foot traffic using mobile phone data, reveals that millions of people had changed their daily routines before they were told to. Sweden is the case study that anti-lockdown advocates point to as a model. But its economy will tank in 2020, its unemployment rate is among the highest in Europe, and every indicator that exists suggests the Swedes have radically altered their daily lives.

Laissez-faire? Au contraire.

The point is not that government shelter-in-place orders are always perfect. Many are more annoying or economically destructive than they need to be. The point is that much of the economic damage predates the lockdowns, and reveals how fragile our economic life is in the face of pandemic. While we debate lockdowns, we spend precious time and political capital focused on something limited in both damage and duration. In this way, the lockdown debate is a bit like every debate we’ve had in this country for decades: an argument about a short-term policy that is far less important than our long-term decadence.

What the Virus Reveals

The Chinese state has unleashed a plague that, if we’re lucky, will merely be the worst in a decade rather than the worst in a generation. The CCP has lied and manipulated international institutions in a way that ensures the deaths of thousands of additional Americans.

The virus has revealed an American economy built on consumption, reliant for production on regimes either indifferent or actively hostile to our national interest. Production, where it still exists in our country, clusters in megacities, where “knowledge economy” workers live uptown from the low-wage servants (disproportionately immigrants) who clean their laundry, care for their children, and serve their food.

Perhaps we shouldn’t build our cities like that. Perhaps we should make things in America. And if not all things, then at least enough so that the next time China unleashes a plague, it can’t threaten us with a loss of medicines and protective equipment.

These are more important debates than whether we should end our lockdowns. Our economy is based on consumption, debt, financialization, and sloth. There is no end to the lockdown that returns our country to health or prosperity if it ignores these facts. The minute before COVID-19 hit, our stock market was at an all-time high, yet our middle class had only seen its net assets grow by 4 percent in over a decade. We have shut down health care facilities—even those far from overwhelmed by COVID-19—to preserve face masks and rubber gloves, because we don’t make enough in our own country for a time of crisis. Can we honestly say the most important question in our public life is whether we should be allowed to eat at restaurants that many would avoid anyways?

But debate the lockdowns we will, because they are more pressing to the people who fund our political distractions. And what’s more important to them than ending the lockdowns is not ending the globalization gravy train.

Peter Thiel recently observed that one of the best barometers of globalization is the share of corporate sector profits going to the financial sector. When you have an economy built on borrowing money from China and then buying the stuff it makes, you need a robust financial sector. Getting all that money from the U.S. to China, and then there and back again, takes, well, money. And for two decades, while America has consumed much and made little, there has been no better industry than moving fake currency from one location to another.  Even if you zoom out from the finance industry, it is hard to find an American tycoon who hasn’t benefitted, directly or indirectly, from the rise of Beijing.

And if you look at the boards of most of our big conservative institutions, you’ll find many of those people. Increasingly, they talk a big game about China. They’ll express concern for the Uighurs, who are undoubtedly an oppressed people. They may even encourage a satellite military conflict in the years to come, because it won’t be their children loading the magazines or firing the rifles.

But there will be precious few resources for those designing the policies to shift a substantial share of our manufacturing capacity back to the United States. There will be limited campaign dollars for politicians who advocate those policies. It is one thing to offer platitudes for the Uighurs, and I suspect we’ll hear many of them in the years to come. It is another thing entirely to tell Apple’s leadership that they can’t flog them half to death for failing to meet production deadlines, or to tell the S&P’s shareholders that they will no longer benefit from the labor arbitrage of China’s slave camps. It is one thing to whine at NBA owners and superstars for bending the knee to the Chinese Communist Party and another to make them pay for doing so.

Yet to make the real change would require that we come to grips with the fact that so much of Conservatism, Inc. depends on the status quo.

The Conservative Donor Problem

In 2015, I joined a small gathering of conservative writers and academics. The group—dubbed the “reformicons” by national media—advocated a more working-class friendly set of policies for the GOP.

In hindsight, the group contained all kinds of ideological fissures that would prevent it from exercising greater influence on national politics—most notably on immigration, with hardliners and doves about equally represented. Though intellectually enriching, it was also a bit awkward: I had, just weeks earlier, been invited to join Jeb Bush’s then-promising presidential campaign on one day, and then uninvited the very next. The problem? I had written in 2012 that an obsession with supply-side tax cuts was equal measures politically stupid and morally unjust, and someone on the campaign had uncovered my transgression.

There are many moments from the recent past that I reflect on in the age of Trump, but perhaps none has proved as prescient as a remark made by one of the leaders of this nascent movement. “Our project,” he said, “is comparable to the DLC”—Bill Clinton’s centrist Democratic Leadership Committee. “But it has a crucial difference. Bill Clinton was attempting to move his party closer to its donors. We mean to move ours further away.”

The specter of “the donors” hangs over many private conversations among conservative intellectuals these days. The donors who provide an overwhelming share of the capital to conservative campaigns and institutions have quite literally gotten rich off of the “Washington consensus” of neoliberalism and globalization. Accordingly, there are things you’re not allowed to say—about tax rates, the social value of financial engineering, and the size of government, especially—and things you must say—also about tax rates, the social value of financial engineering, and the size of government. Any departures from orthodoxy must be qualified—“this doesn’t mean we’re for big government”—if the check writers might see or hear.

In my experience, most people are aware of this pressure, even if they agree entirely with the priorities of Conservatism, Inc. Recently, after I publicly criticized donor influence on the conservative movement, one young conservative journalist told me privately that he’d like to join in, but “brutal self-awareness of my non-profit status prevents me.”

It has always been thus. Or at least, it has been thus for a very long time.

Much ink has been spilled on the post-war conservative intellectual movement. It has contained three broadly distinct groups: national security hawks, free market fans, and social conservatives. The non-cynical view of this movement is that these three groups shared a common enemy in the 1950s—the Soviet Union—and united in a conservative “fusionist” coalition to defeat it. The cynical view is that donors—motivated by genuine ideological fervor or self-interest—funded think tanks and YAF and a host of other organizations to push a market-obsessed version of conservatism.

An Incoherent Fusion

However this coalition formed, and however strategically necessary it might have been, its moral incoherence was obvious at the time. How could a vision of traditional virtue possibly map onto the hyper-individualism of people like Ayn Rand and Milton Friedman?

Frank Meyer famously tried to square the circle, arguing, in effect, that virtue required a lack of constraint. A man who remains loyal to his wife out of legal pressure is not nearly so virtuous—perhaps not virtuous at all—as the man who remains loyal to his wife purely out of individual moral willpower.

Brent Bozell dismantled this argument years ago: we are concerned with people behaving well, and if cultural (and legal) pressures encourage them to do it, that’s just fine. Research by Jonathan Gruber has found that state “blue laws”—laws that force businesses to close on Sunday—increase church attendance. Aside from spiritual benefits, Robert Putnam has chronicled how church attendance is actually a positive social good for many attendees.

While we might praise the meritorious worker who finds his way to church despite working a 12-hour shift on Sunday, the average traditionalist will (correctly) want to make a life of virtue easier, and not harder. So close the damn businesses on Sunday. Commercial freedom will suffer. Moral behavior will not, and our society will be much the better for it.

These sorts of tradeoffs—between the freedom of the commercial space and the values of traditionalists—are common, though we might not realize it because we so often defer to commerce.

Take another example: we have known for some time that members of unions are less likely to drink and more likely to maintain their familial commitments. We have also learned that these benefits appear independent of the (obviously important) wage benefits of union membership. Social capital, and the mediating institutions that cultivate it, really are useful. But in virtually every major campaign of recent decades, the donors have demanded the denouncement of unions and their pernicious commercial effects. And so denounce them we have.

The Right Was Wrong About China

There is perhaps no better example of the failure of this ideology than in the rise of China.

Almost certainly the most influential right-of-center thinker of the last fifty years was Milton Friedman, a brilliant monetary economist and quick-witted debater. Friedman’s ideas have influenced at least two generations of conservatives (including yours truly), but he missed a lot.

His view that commercial freedom would reduce “the area over which political power is exercised” motivated a lot of U.S. policymakers in their approach to China and has proven tremendously short-sighted. China is perhaps the most hypercapitalist regime in the world, but it has used its economic power to become even more politically authoritarian.

His views on trade similarly encouraged policy makers to ignore the costs of opening our markets to cheap consumer goods. “Can you think of a better deal,” Friedman wrote in 1970, to those then concerned about Japan, “than our getting fine textiles, shiny cars, and sophisticated T.V. sets for a bale of green printed paper?”

Well, a conservative in 2020 might reply to this nonsense that a better deal might include millions of men in the South and Midwest with jobs instead of pill bottles and iPhones. How about communities with more steady father figures than opioids?

Western Civilization was, in fact, built by figures—one in particular whose resurrection we just celebrated—who recognized that material consumption, while necessary and important, was hardly the only good worth pursuing.

Ignored Ideas

The tragedy is not that such responses didn’t exist in prior decades, but that they were ignored.

Recently, I observed on Twitter that the postwar conservative movement was dominated by donors who pushed an individualist obsession. Richard Reinsch got mad, and pointed to a number of thinkers who took a different tack: Chambers, Strauss, and—I’d add—Kristol, among others. Yes, these people existed, and yes their ideas were often interesting.

But a few days ago I decided to peruse the curriculum and book recommendations of well-known organizations that spread the gospel among our youth. And while I never came across Chambers or Kirk, I did find The Income Tax: Root of All Evil and Liberty and the Great Libertarians.

The question is not whether there are conservative ideas worth hearing (there are). The question is if a conservative idea falls in the woods, but there isn’t a libertarian dollar to fund it, does it even make a sound?

The recent history of the conservative movement almost answers this question. Virtually every conservative think tanker not only failed to support Donald Trump for president, but failed to even question the reaction against globalization his nomination and election personified.

Most of the interesting ideas on the Right—from Patrick Deneen’s critique of liberalism to Peter Thiel’s long efforts against globalization—unsurprisingly come from thinkers not subject to the financial pressures of Conservatism, Inc.

Though it’s still early, an anti-globalization agenda has began to take shape. We should tax the labor arbitrage so many “U.S. firms” depend on, while subsidizing—as Japanese Prime Minister Shinzo Abe has proposed—firms to move some of their manufacturing capacity back to the United States.  

Meanwhile, we can take direct aim at the institutions that stand at the nexus of elite credentialism and globalism: our prestigious universities. We’ve learned recently how financially dependent Ivy League universities are on donations from overseas oligarchs, and that they’ve apparently hidden that dependence from our own Department of Education. Penalize those donations and the endowments that have grown in their midst, and aggressively investigate and prosecute university professors—and their Chinese national graduate students—who conspire to steal our intellectual property.

These policies will form part of a broader pro-worker agenda on the American Right. But that agenda will struggle to be realized until at least some of the donor class supports it.

Knives Out

We should concern ourselves not with the failure of institutions past, but with the capacity of institutions present.

We are in the midst of our most important crisis in decades. The closest near-term competitor was 9/11. Our response then to those terrorist attacks was to borrow, cut taxes, buy stuff—”go shopping” as our president at the time advised—and blow shit up.

It is easy to think of those decisions as historically contingent—the mistakes of one man or group of them. But they are the necessary consequences of an institutional conservative movement that advised consumption as the solution to all our woes.

The problem with our donor base is not the commercial obsession of yesterday’s libertarians, but the complete lack of conservative antibodies in the modern body politic. In that body politic, everything is a battle between statists and limited-government conservatives.

When Oren Cass announced a new conservative organization (American Compass) to advocate what is, essentially, a neo-Hamiltonian approach to economics, Senator Pat Toomey took to the citadel of Conservatism, Inc.—the Heritage Foundation—to describe it as a “dagger thrust into the heart” of the neoliberal consensus that has dominated the American Right.

Let’s thrust more daggers into that heart. Otherwise, we may wake up in ten years to the realization that we wasted the political moment of COVID-19 because we were obsessed with distractions: reopening a broken economy and whining at the Chinese instead of reforming a system in a way that would do damage to Chinese leadership—and the American elites who profit from them.

The American Mind presents a range of perspectives. Views are writers’ own and do not necessarily represent those of The Claremont Institute.

The American Mind is a publication of the Claremont Institute, a non-profit 501(c)(3) organization, dedicated to restoring the principles of the American Founding to their rightful, preeminent authority in our national life. Interested in supporting our work? Gifts to the Claremont Institute are tax-deductible.

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