Jeremiah Johnson defends economic growth against its detractors on the left and right. Five slices:
Economic growth matters, and when we quantify it, we are not dealing with abstract numbers. Trends in things like GDP per capita point to real material progress, and almost every argument against pursuing GDP growth is wrong.
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Even so, neoliberal economists and technocrats do tend to spend a lot of time worrying about GDP growth specifically. That’s because GDP is highly correlated with nearly every other value you might care about. Do you care about life satisfaction? It’s strongly correlated with GDP. Measures as varied as infant mortality rates, day-to-day happiness, academic achievement, and human freedom are all correlated strongly with GDP. People in richer countries are safer from violence, have more leisure time, produce more beautiful art, and live longer, healthier lives than those in poorer countries. Recent data suggests the highest fertility rates in the United States are among very high-income families. GDP isn’t just a matter of having a better toaster or a larger TV. When GDP increases, so does nearly everything else we care about.
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Conservatives are concerned about the erosion of small-town America. Immigration is one of the few viable paths to revitalizing small towns: Haitians have revitalized Springfield, Ohio, and Somali immigration reversed the decline of Lewiston, Maine. But the conservative movement is more opposed to immigration than it has been in decades, and it offers no alternative vision of how to save towns like Lewiston.
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OF COURSE, ALL THIS TALK OF POLICY misses an important point. There are countries in the world right now whose societies are organized around different goods than the encompassing pursuit of GDP growth. Some may be poorer than their Western counterparts as a result, but they are richer in other ways—they respect tradition, perhaps, and have larger families and a more religious population, and their lifestyles are more communitarian. And yet there’s virtually no out-migration from America or Europe to live in those places. Instead, many citizens of those poorer countries feel called to leave their homes and emigrate to the richer countries. Revealed preference shows that when people are given a choice of where to live, they choose to go to the high-GDP countries with all their associated benefits.
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It’s easy to criticize GDP growth and list a variety of high-minded ideals that society should pursue instead. For thinkers on the New Right, the society-orienting formula usually offered as an alternative to GDP is the ‘Common Good’; they often refer to themselves as common good conservatives. But despite their love letters to community, courage, justice, tradition, families, small-town life, and middle-class values, they have no coherent plans to achieve any of their goals. It’s often not even clear what the goals are. What would more justice and courage and community look like in practice?
The reason there’s so little policy detail is that when you peel back the abstractions to look at the practical realities, what the New Right wants to achieve is almost universally unpopular. They want to return to a world where women have less autonomy and fewer reproductive rights. They believe people should stay where they’re born, and that America should close itself off from the world. They want to reverse decades of progress in the civil rights of black and LGBT folks. In general, they seem to pine for an imagined 1950s utopia that never actually existed. Some imagine that society went off the rails in the post-war era, while some seem to think the problem started around the fourteenth century. But they’re united in a belief that the old ways were better.
Jeff Yass and Steve Moore warn that “Kamala Harris is eyeing your 401(k).” Two slices:
Extracting money from those big and faceless corporations with profits in the tens of billions of dollars has populist appeal. But the more accurate way to think of the corporate income tax is that it puts Uncle Sam first in line to take a share of all the profits an American corporation earns. Only after the government takes its pound of flesh does anyone else get a return on his money.
At a 28% federal corporate tax and an average of roughly a 5% state and local tax, the government would snatch away roughly 33 cents of every dollar of profit. This leaves 67 cents to the shareholders. Those include the more than 100 million Americans who own stock directly or through pension and other retirement funds. Every percentage point that Congress and Ms. Harris raise the tax would dilute the value of the stock owned by the rest of us.
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It is a mathematical certainty that Ms. Harris’s tax scheme will lower the value of stocks a great deal. What we find troubling is that most investors who own as much as half of a company don’t vilify it as a “price gouger” or hassle them with inane and costly regulations. Ms. Harris would treat corporate America as a fat goose to be plucked, and the rest of us would pay the price.
Jonathan Chait, having committed himself to the notion that the Democratic ticket of Kamala Harris and Tim Walz are actually friends of constitutional democracy and the rule of written law, has to explain away the most menacing aspect of the authoritarian and lawless Harris record: her endorsement of the Biden Court-packing plan, coming as it does after she outright endorsed expanding the Supreme Court in 2019.
If this proposal came from the right (see the reaction to what Benjamin Netanyahu proposed to change Israel’s court system), Chait would be shrieking with alarm. But defend it he does, in an article titled “In Defense of the Biden-Harris Plan to Reform, Not Pack, the Courts.”
Former President Donald Trump’s promise to carry out “the largest domestic deportation operation in American history” would not only be a moral calamity requiring an enormous expansion of government—it would also be hugely expensive and ruinous to the American economy.
Scott Lincicome looks back on “six-plus years of incoherent, ineffective China policy.” Three slices:
We’ve already detailed the tariffs’ costs here at Capitolism: higher taxes and higher prices paid by U.S. businesses and consumers; fewer sales by U.S. exporters; billions in subsidies to bail out politically connected farmers; less U.S. investment due to policy uncertainty; and so on. But we’ve done less on whether the tariffs are actually succeeding as part of some grand strategy to cripple Beijing and reduce U.S. “dependency” on China and Chinese companies. Maybe all those costs are, like, totally worth it if they keep Chinese content away from the U.S. market and hurt the CCP as a result. And six-plus years of tariffs—five of which at the high levels they remain today—should give us a pretty good idea of whether the tariffs are working.
Spoiler: They really aren’t. And nobody should be surprised.
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Meanwhile, there’s plenty of evidence undermining the idea that the China tariffs are an integral part of some broader strategy to contain China. For starters, the U.S. applies tariffs on many Chinese goods with no plausible national security or even “resiliency” nexus. This includes breast pumps, garage door openers, bagless vacuum cleaners, portable electric heaters, bicycles and bicycle frames, tiki torches, babies’ blankets and swaddle sacks, cotton blankets, and blood pressure cuffs. I’ve yet to hear a remotely coherent explanation for why these tariffs are in any way “strategic” or otherwise necessary. And that’s because, as anyone who knows the tariffs’ history understands, the White House’s original strategy to target mainly high-tech manufacturing inputs linked to Chinese industrial policy went out the window when China first retaliated and Trump instantly vowed a massive U.S. escalation in response. So, after several U.S.-China tit-for-tats, we get to enjoy tariffs on bleeping baby blankets for no serious policy reason.
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Then there’s all the non-China protectionism. “National security” tariffs and quotas on steel and aluminum continue to be applied to imports from most of our closest friends, including Japan and Europe, and to things like rebar that have no plausible defense use. New industrial subsidies—in the Infrastructure Investment and Jobs Act, Inflation Reduction Act, and CHIPS and Science Act—generally target and in some cases even mandate the onshoring of production, not “nearshoring” or diversification away from China. Both the Trump and Biden administrations have also touted enhanced “Buy America” restrictions on federal spending, despite their high costs and discrimination against close U.S. trading partners. “Trade remedy” (antidumping and countervailing duty) cases continue to proliferate against both industrial inputs and finished products, with non-China countries increasingly subject to duties. In this regard, Vietnam—long alleged by the government to be a solid non-China alternative—is particularly disadvantaged by a “non-market economy” status that the Biden administration just re-upped.
The Editorial Board of the Wall Street Journal writes sensibly about differences in monetary incomes. A slice:
The headline conclusion from the working paper published last month by the National Bureau of Economic Research is that the more you work over your lifetime, the more you earn. So far so obvious, but the surprises lurk in an explanation that’s more complex than you’d think.
The authors (from the Federal Reserve Bank of St. Louis, Vanderbilt University and Princeton) use a rich vein of survey data tracking individuals as far back as 1979. They find that a major determinant of total lifetime hours worked is individual choice—some people just prefer to work more, while others might prioritize other activities.
Going a step further, the paper finds that those who work more earn more because they accumulate more skills during the extra time they work. The overlapping effects of different preferences for work and different levels of skills acquisition account for a hefty share of overall differences in lifetime earnings, and operate independent of other factors such as the level of education or skills an individual gains before entering the labor force. In other words, income inequality is in part a matter of choice rather than intractable economic or social forces. Sorry, socialists.
“The economic consequences of Hugo Chavez.” (HT GMU Econ alum Dominic Pino.)
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