Reading the New Conservatives – Richard M. Reinsch II

We are now months into the second Trump presidency, one that is markedly different, with significant changes not only from how past Republican presidents have governed, but also from Trump’s first term. Trump’s first administration enacted sweeping tax cuts built on growth ideas that had been circulated and refined for decades in conservative circles. There was also a significant deregulatory component to this agenda. Tariffs were imposed on Chinese goods, but they were not applied globally. Today, things have changed, and in some cases, remarkably. There has been no shortage of justifications and defenses for the new policy changes, many of which the readers of Law & Liberty can no doubt recite on demand.

It is essential to consider the arguments of policy scholars who are advocating for a shift to a conservatism that advocates for government intervention. The New Conservatives, a book recently published by American Compass, the think tank headed by political economist and lawyer Oren Cass, comprises previously published essays by its scholars, with the lion’s share written by Cass. The book is decidedly protectionist, pro-industrial policy, pro-labor union, pro-family policy, and proposes a more robust alliance between Silicon Valley and the government. The message is clear: entitlements shouldn’t be cut, nor should current tax rates on any labor or activity be reduced. In fact, Cass has indicated that he favors increasing taxes on wealthy Americans.

Central ideas these “new conservatives” share guide the essays in the inevitable direction of greater government involvement in almost every policy area. Most importantly, they argue we shouldn’t focus on the consumer but on the worker, especially workers engaged in the manufacturing sector. From this shift in focus from the sovereignty of the consumer to the sovereignty of the worker emerges a policy platform that launches America into the throes of a conservative social democracy, twenty-first-century style. An increased focus on the family in the form of transfer payments also joins the focus on the worker.

We live in the shade of a false account of trade and economics, Cass says. The free trade period in American life is largely an aberration, a detour from the real American success story of Alexander Hamilton and Henry Clay, who championed the “American System” of tariffs, industrial policy, and internal improvements. This system launched the young nation into the roaring success it achieved by the beginning of the twentieth century. In short, young America greatly benefited from a protectionist American economy, and it should become so again under the circumstances we now inhabit. Cass further contends that economic luminaries David Ricardo and Adam Smith recognized the necessity of “bounded” economic markets that concentrated on the domestic front. Trade that moved beyond borders needed to be balanced and limited to goods for goods. Yet much of this account conflicts with economist Douglas Irwin’s magisterial history of American trade policy, Clashing Over Commerce, which surveys trade policy throughout America’s history and concludes that the country has alternated among revenue, restriction, and reciprocity as bases for trade policy. We have reentered a period of renewed trade restrictions. And we will learn its errors again, Irwin warns.

Building on his crabbed historical account of free trade, Cass announces in the book’s opening, “This is what elite failure looks like.” And he is here to lead us to a better tomorrow, one focused on manufacturing, with stronger worker policies, better supported families, improved economic security, along with growth and stability. We need it, according to Cass, because the underlying premise is that America, in the second decade of the twenty-first century, is in a dire state that has been worsening for decades. The only way out is a revival of economic policies closely associated with past episodes of American progressivism. As Cass states:

An important point of departure for the new conservative thinking is a turn away from a single-minded focus on maximizing consumption, which has traditionally been the focus of economists and policymakers. People are workers as well as consumers, and their own health, the health of their families and communities, and ultimately the security and the prosperity of the nation depend as much on what they contribute through their production as on what they enjoy in consumption.

The focus on consumption and on what consumers want, in Cass’s mind, is a shortcut, allowing us to look away from the harrowing plight of the American worker.

We should ask why we focus on consumption in the first place, though. Has it been a false understanding of economists? Or is it a giant capitalist macroaggression against the American worker? Younger New Right acolytes have said outright to me that the focus on consumption is a hedonistic plot, evidence of a decadent society.

Why do we work? We indeed find meaning and frustration in our work, fellowship, and rivalries, as well as opportunities and disappointments. But through all of that, we work to consume because we need to consume; that is, we must satisfy our needs and wants, and through work, we acquire the means to engage in exchanges with others. Economically speaking, that is the point of work. Would you continue to do your job if your wages were cut by 10 percent, 15 percent, or entirely? No. You’d look for other work.

Our problems in education, family, patriotism, and work rates are undeniable, and many of them the New Right identifies correctly, but rooting them primarily in an economy built on the betrayal and deceit of hard-working Americans is simply false.

The purpose of an economy is to meet the needs of consumers, since consumption is the ultimate reason why we work. Conclusions follow this truth. One is that consumers don’t have the responsibility to keep certain workers employed. The producer must serve the consumer. Should we be required to buy things that are redundant or that we don’t need or want, to keep existing businesses alive? That is the absurd logic of Cass’s inversion of the consumption-production relationship. Moreover, feeding, housing, and clothing one’s family are essential expenses. How is making these consumption expenses more expensive pro-family?

We are all consumers, and redefining the economy around manufacturing workers inevitably leads to a cronyism framework in which the government supports special interests. In serving the consumer, by contrast, we best unlock the dynamism and creativity that crowns a market economy. Consumer choices determine which products or economic actions will best locate our comparative advantage and which will not. Through this process of discovery, investors gain a better understanding of where to invest, workers learn where to work, and producers determine the resources they need to bring goods and services to the market. How does the process appear when we focus on workers and government policies that attempt to engineer wages and economic sectors, while inherently favoring some sectors over others? What knowledge is relied upon? Where does it come from? How will it be deployed? Who are the decision makers? But rather than one more Massachusetts liberal or DC economic nationalist attempting to run our lives, the better part of wisdom remains the singular standard of consumer choice and how this choice is calculated, which inherently relies on core economic concepts that will always shape economic reasoning and best conduce to an economy of plenty.

Oren Cass is not alone in his nearly apocalyptic view of the economy’s plight and the workers within it. He is joined in this perspective by the president of the Heritage Foundation, Kevin Roberts, author of Dawn’s Early Light: Taking Back Washington to Save America. The original subtitle of Roberts’ book was “Burning Down Washington to Save America.” The image on the cover was a match being struck. But that subtitle and image were swapped out in the summer of 2024 because of their association with violence. There was an attempted assassination of Trump, and Roberts had also called during that summer for “a second American revolution.” The book’s publication was then delayed to the fall after the Trump campaign distanced itself from both Heritage and Roberts amidst the Project 2025 meshugas. But it’s the original presentation that seems more fitting for a book whose animating insight comes from the mouth of fictional sociopathic assassin, Anton Chigurh, from Cormac McCarthy’s No Country for Old Men. Before killing another assassin, Chigurh asks him of his “rule in life,” and “if the rule you followed brought you to this, of what use was the rule?” To Roberts, this is the question to be asked of conservatives.

In the following paragraph, Roberts explains that Chigurh’s question bears immediate relevance, “After all, if what the old conservative coalition understood to be its foundational principles [it’s rule in life] led us to this—the total domination of the Uniparty [i.e., the conglomeration of Republicans and Democrats], the demise of the American working class, and the erosion of the institutions that defined American life—of what use are those principles?” And what were those “foundational principles” of conservatism that ruined the working class and destroyed American institutions, Roberts asks. “The old conservative movement held that if you just got government out of the way, the free market, civil society, individual liberty, the nuclear family, and more would take care of themselves.”

What Roberts really describes is a caricature of libertarianism. Few conservatives of any kind will recognize themselves in it, of course. But then again, populists are more interested in caricatures than reality. And Roberts doesn’t stop there; there’s more: “a conservative movement that limits itself to this stale program is cosigning the Uniparty’s euthanasia of the American nation.” Roberts then refers to conservatives who disagree with his categorical dismissal of their position as “wax-museum conservatives” who “don’t know what time it is.” They are at a “dead-end” because “their principles presume that a healthy American society exists.” They continue to listen to “the abstract economic pronouncements of some long-dead Austrian aristocrat.” That childish insult is hurled at Nobel Prize-winning economist Friedrich von Hayek, one of the foremost economic, institutional, and legal thinkers of the twentieth century. Such immature attempts to marginalize thoughtful people and institutions, many of whom agree with the author on issues more than they disagree, fill the book’s pages. But that’s strange when you consider the federal government never really shrank such that conservatives could pronounce that American society was “healthy.”

Today’s conservatives in Washington stand on the shoulders of ideas, research, and statesmanship that took decades to build. They would do well to improve it, not denigrate it.

For Roberts as for Cass, economic reasoning does not possess universal qualities. It’s time-bound, historical, and embedded in circumstances. In many respects, their position reproduces that of the nineteenth-century German Historical School in its debates with the nascent Austrian Economics School. German historical thinkers relied on inductive reasoning, data, and historical episodes, reasoning from a constellation of facts to various social and national purposes for the economy. They castigated the Austrians for relying on methods of economic inquiry that were predicated on subjective individual knowledge regarding value and prices. There were universal economic principles, the Austrians demonstrated, rooted in economic truths knowable by reason, such as marginal utility, scarcity, price theory, comparative advantage, and opportunity costs; the disregard of these principles leads to economic decay as much as it leads to state aggrandizement. Yet, Roberts correctly concludes that housing prices are too high, and, in substantial part, this owes to government intervention. But he fails to draw the necessary conclusion that increasing supply in this consumption good relies on the economic principles mentioned above, principles that are operative throughout the whole economy.

As most readers are aware, one of Hayek’s key principles is that the human person best acquires knowledge through local interactions and exchanges with others. The knowledge possessed by investors, workers, consumers, and managers is accumulated through pieces of information, which actors use in the economy in their own inherently self-interested ways. It’s a key principle that spells the ultimate self-defeating nature of centralizing economic activity in political institutions. Both Roberts and Cass, though, have tied themselves to the mast of reindustrialization and increasing manufacturing jobs. And that requires industrial policy, which means the federal government, in this context, will engage in policy choices on behalf of one economic sector to boost employment within it, which inherently will come at the expense of other workers in other economic sectors. Contemporary American historicists will also lose the reincarnation of this debate just as their German intellectual forebearers did, regardless of the short-term political opportunism currently carrying them. The “abstract economic pronouncements” of a certain Austrian aristocrat are inconvenient truths for those favoring various types of government control over the economy.

We are all consumers, and redefining the economy around manufacturing workers inevitably leads to a cronyism framework in which the government supports special interests.

One is fully entitled to one’s own rhetoric, if not hyperbole, but economic truths are stubborn things. Conservatism in the postwar conservative period did not proceed on the premise that American society is fundamentally healthy, as Roberts states. The principles of the Declaration of Independence and the Constitution are fundamentally good, and there was always an assumption, as noted by Willmoore Kendall, that enough Americans still lived the American tradition of freedom “in their hips.” At the same time, there was also tremendous fomentation from progressive sources. The conservative movement itself came together, grew together, because of the New Deal Revolution of 1932, the new constitution declared by the Supreme Court in 1937, the soft-pedaling of communism in the 1930s and 1940s, the emergence of anti-religious forces in the 1950s and 1960s, the augmentation of the welfare state in the Great Society, the marginalization of family and motherhood in the sexual revolution, and the liberal defeatism of the 1970s. Conservatives have always been at war with progressives.

We should consider another set of economic truths. Did the working class meet its demise at the hands of free trade, NAFTA, and the WTO as Cass and Roberts insist? No. As AEI economist Michael Strain and investor Clifford Asness observe: “The wages of nonsupervisory workers—roughly the bottom 80 percent of workers by pay, including manufacturing workers and service-sector workers who are not managers—have grown by around 60 percent over the past two generations. Over the past three decades, inflation-adjusted wages for typical workers have grown by 44 percent.”

Strain and Asness cite a different finding on overall wealth accumulation, observing that data from the Congressional Budget Office (CBO) notes that “families in the 51st to 90th percentiles of the wealth distribution had an average wealth of $1.3 million in 2022, the most recent year data are available. That’s up from around $500,000 in 1990, after adjusting for inflation.”

What about those with low incomes, Strain and Asness inquire? “The CBO’s income data show that inflation-adjusted post-tax-and-transfer income for the bottom 20 percent of households more than doubled from 1990 to 2021.” And “these families saw their average real wealth triple from 1990 to 2022.” Poverty rates have declined using the government’s official measure from above 20 percent in 1960 to 11 percent today. The standard is relative, so some poverty will always be found.

What about the boys down at the plant? Are we overlooking them?

In their famous paper describing the “China Shock,” David Autor, David Dorn, and Gordon Hanson observed a 13-year period from 1999 to 2011, concluding that imports from China resulted in a 21 percent decline in manufacturing employment, or a net loss of 2.4 million jobs. Numerous scholars have since questioned these findings of such job losses, reducing the number by half or even more. We should note the number of jobs created in America by imports, which economists also point to in evaluating China Shock. I don’t diminish job losses or the psychological toll they exert. It is a natural part of any freely functioning economy, however, and an inherent aspect of capitalism and America’s economic history. Six million jobs were also created during this same period in other sectors of the economy. Economist Jeremy Horpedahl has recently tested the jobs and incomes of the 10 cities most negatively affected by the China Shock. His findings indicate that most of them currently boast more jobs than they did in 2001. Moreover, these same cities have higher real wages for workers at every income level. Amidst the current push for reindustrializing America, we might wonder who will fill the already 450,000 open manufacturing jobs? Declinist narrative and DC opportunity mill meet economic reality.

In meeting the needs of consumers, the American manufacturing sector has increased productivity since 1994, the year NAFTA was implemented, by between 70-80 percent. As George Mason University economist Don Boudreaux has noted in this space, “the productivity of American manufacturing workers steadily increased from the end of WWII until 2012; it neither stopped nor even slowed when America’s run of annual trade deficits started in 1976.” This productivity increase came at a time when this same sector began to shed jobs in earnest towards the end of the 1970s. This would be evidence of a robust sector, and yet virtually every Western country has watched its manufacturing sector decline during this period. America differs in that its manufacturing sector’s productivity is almost unmatched. Besides, as Harvard Kennedy School, NBER, and Peterson Institute economist Robert Lawrence has noted, productivity growth is the “dominant force behind the declining share of employment in manufacturing in the United States and other industrial economies.”

We can quibble with why manufacturing productivity has not continued to increase since 2012, but we might consider consumers again, who, as they grow richer and live in more prosperous economies, choose to devote fewer resources to manufacturing goods. America is now a service-based economy, and if we are going to speak the language of trade deficit and surplus, it’s one in which we have a definite surplus. One can feel the collective shudder from the economic nationalists, but these are facts that can only be changed with economically suboptimal government interventions.

With data like this, Americans should wonder why they are consistently being misled by leaders on the populist left and right. Such doomsaying about the demise of the working class and the decline of the industrial heartland serves as a dangerous introduction to a politics of grievance, providing a powerful platform to those pushing these views. Our problems in education, family, patriotism, and work rates are undeniable, and many of them Roberts identifies correctly, but rooting them primarily in an economy built on the betrayal and deceit of hard-working Americans is simply false.

Moreover, the attribution of blame to the conservative movement as it existed before Trump famously came down the escalator in 2015 to announce his presidential candidacy is another falsehood. There were certainly problems, when are there not? But the ideas that drove Trump’s first term to success were built on decades of right-of-center policy work, and it’s that first term that voters approved of in the 2024 election and want to see re-created in his second term. The notion that one can seemingly reinvent American conservatism from scratch, as if 70 years of history can be dismissed or disregarded, underscores the surreal nature of the project, one that views history more like Thomas Paine rather than Edmund Burke.

Today’s conservatives in Washington stand on the shoulders of ideas, research, and statesmanship that took decades to build. They would do well to improve it, not denigrate it. Besides, the economic populist program that Roberts and Cass endorse is not endorsed by most GOP voters, who continue to want traditional objectives of economic growth, limited and competent government, low crime, lower prices, and economic opportunity, plus an end to the ideological revolutionary nostrums of the Left. No significant constituency has emerged in favor of the tariffs. If tariffs, industrial policy, labor union alliances, progressive antitrust, a family policy welfare state, and other left-of-the-right populist notions prevent these voters from getting what they want and they return Democrats to power, then we will ask, “If following your economic populist program led to this, of what use was the program?”