The last years of the twentieth century were a time of triumph for the American economy. Fears about jobs lost to foreign competition were assuaged by the promise of new ones to be created through the telecommunications revolution. The internet seemed to offer limitless possibilities—not only for profit but for personal freedom as well. Anyone could start a website or, by the early 2000s, a blog. “The New Economy,” as it was called, would be freer as well as wealthier than the industrial economy that had preceded it. Together wealth and freedom would make up for anything that was lost in the transition. Americans would be at liberty and empowered to build new communities in place of those that could not survive the change.
The ethos of that era was a blend of Charles Reich’s The Greening of America and the movie Wall Street. Gordon Gekko had said greed was good. The high-tech hippies of the millennium believed greed was good—not in Gekko’s cynical, self-interested sense but rather in that what was morally good would be well served by innovation brought about through the pursuit of profit. There was no conflict between community and progress, between Bill Gates’s wealth and the rising prosperity of those who used his products, or between China’s enrichment and America’s.
Three decades into the new economy, the costs appear higher and the benefits disappoint. The internet is not a wide-open frontier; it is dominated by large firms that enforce a certain conformity, while social media mobs demand not freedom but greater suppression. The communitarian dreams of the early internet era—Newt Gingrich’s “internet town hall,” for example—have given way to a reality in which men and women (and children) are increasingly alone with their devices even when they are in rooms full of other people. China has not liberalized, while huge tracts of what was once America’s industrial heartland have been abandoned to opioids and despair.
Wealth and freedom by themselves did not create a humane social order. If we are to build one now, we will have to act more consciously. That does not mean economic planning, but it does mean thinking anew about the relationship between society, market, and policy, while never forgetting that a humane economy is one in which civil society and well-formed individuals prosper.
Conservative Thought Needs a Marginal Revolution
Samuel Hammond
There are few areas in life where the law of diminishing returns does not apply. Conservatives understand this well within the economic realm, where we often take trollish delight in reminding progressives that the optimal amount of pollution (say) is not zero. At some margin, the costs of eliminating putative “bads” can and will exceed the benefits, keeping Eden out of reach.
Yet the law of diminishing returns is no less potent in the intellectual and political realms. Ideas pushed to their extreme run into a parallel kind of “last mile” problem; edge cases where the costs from the attempt to achieve ideological purity begin to explode.
Libertarianism, in particular, is often presented as an ideology with no margins on which it is wrong. Complex and multifaceted issues are collapsed into a formal system that offers the illusion of intellectual clarity. Edge cases are diminished or ignored, allowing coalitional differences to be suppressed and all the major ethical perspectives—freedom, fairness, consequences, virtue, tradition—to be forced into miraculous agreement.
Libertarian-conservative fusionism can be thought of as having fallen prey to a similar fallacy. Rather than being a middle ground between libertarian views on the state and market and conservative views on morality, on closer inspection fusionism is just free-market economics paired with the assertion that a small government, market-oriented society will promote conservative social outcomes by a happy coincidence. The collapse in the fusionist consensus can thus be understood as the realization that unfettered free trade, weak labor protections, unfunded public services, lax antitrust enforcement, and rights-oriented jurisprudence have no necessary alignment with genuine conservative outcomes. On the contrary, the unrestrained market is essentially progressive in nature, “disrupting” traditional and transcendental modes of life absent countervailing institutions that push in the other direction.
Put differently, free markets can themselves suffer from diminishing returns and have margins where their influence may even be downright perverse. Similarly, as corruptible and wasteful as governments can be, there are margins where robust state capacity is absolutely essential. As a form of democratic pollution, the optimal amount of public sector waste is thus far from zero, as illustrated by the begrudging return of congressional earmarks.
This makes marginalism in some ways the ultimate Nirvana. When resources are finite, scarcity requires some trade-offs, which implies not being an absolutist. Embracing the generality of this fact makes it easier to acknowledge edge cases openly, without fear of falling down a slippery slope or being labeled a traitor who’s now obliged to throw in with the other team.
Another term for this orientation might simply be “conservatism,” given its skepticism of utopian projects and its privileging of customs and traditions that, by dint of their immanent reality, are in demonstrable harmony with existing interests. While libertarians want to debate the morality of driver’s licenses or whether heroin should be sold over the counter, conservatives are comfortable with what economists call “interior solutions”: a social equilibrium that lies between various “corner solutions” where one good is maximized at the expense of any other but that, despite its apparent messiness, obtains a deeper form of “optimal.”
In recent decades, American conservatives have tended to sound more like uncompromising libertarians than Oakeshottian, evolutionary pragmatists. That finally seems to be changing. Whether it’s the burgeoning interest in an industrial policy to counter China, or family-support programs like a child allowance, conservatives aren’t abandoning their principles wholesale so much as recognizing the existence of edge cases where the old formulas break down.
At least that was my takeaway from the recent Humane Economy symposium hosted by the Intercollegiate Studies Institute. The meeting was an opportunity for a small group of conservatives from more-to-less-libertarian backgrounds to discuss these issues candidly, in hopes of finding common ground.
On trade, for instance, there was near unanimous agreement that China’s rise presented a serious challenge to the free trade status quo, independent of one’s views on the Ricardian theory of comparative advantage. On the margin, most agreed that the U.S. will need to engage in a variety of countermeasures, from public investments to move our domestic manufacturers up the value chain to reforms designed to limit private-sector incentives to offshore production in the first place. Where we disagreed was more a matter of degree: where some favored a policy of total decoupling, others expressed cautious optimism that China would eventually liberalize given sufficient international pressure. The Panglosian view of unilateral free trade as an unalloyed good, however, was nowhere to be found.
This is not to understate the sizable differences between the various factions on the American Right. The fissions are real and growing, with conservatives increasingly held together by little more than chewing gum and a shared hatred of the Left. Yet that is all the more reason to drop our idealizations and embrace the inevitability of intra-conservative compromise. The emerging conservative realignment won’t have the internal consistency of an Ayn Rand protagonist, but so what? For conservatism properly understood, that’s a feature not a bug.
Samuel Hammond is director of poverty and welfare policy at the Niskanen Center.
Uncle Sam is Not Your Neighbor
Andy Smarick
Our federal government has essential but limited duties and authorities. In its legitimate spheres of responsibility, Uncle Sam ought to act. But outside those areas, he should not.
Unfortunately, it is not always easy to define those borders. As is the case whenever someone must determine, absent perfect information, what is “in” and what is “out,” there will be Type I and Type II errors—mistakenly labeling an “out” as an “in” and an “in” as an “out.” In governing, progressives typically make the false-positive mistake, identifying areas for the federal government to act where it should not. American conservatives can be guilty of the false-negative mistake, arguing that Uncle Sam should stand down when he ought to stand up.
Thankfully, we have been handed down rules of thumb for helping us understand when Washington should engage. These guides are always important because central authorities tend to be voracious: without a strict diet, they will consume and consume and grow and grow. But they are especially important in moments like these, when the nation faces big challenges, and the idea of resorting to swift, certain federal action becomes enticing.
A good place to start is the Constitution. The federal government has enumerated powers, and the Tenth Amendment reserves the remainder for states and the units they create. From the beginning, then, Washington was legally constrained. But we also have informal rules, namely American traditions of governing related to democratic-republicanism, localism, civil society, and pluralism. In combination, these continuously remind us that America is an extraordinarily diverse, continental nation conceived in liberty; as such, self-rule, individual and community agency, and variation are vital. Accordingly, we decentralize power to an array of close-to-home governmental and nongovernmental bodies.
We are also guided by moral principles. For example, natural rights generally constrain the state. Subsidiarity assigns responsibilities and authorities to different entities within society, with a clear preference for deferring to those closest to the action and inhibiting the consolidation of power. Solidarity reflects humans’ need for community and our obligations to one another, especially those nearby.
There are also hard-learned lessons like those related to the dangers of technocracy and “seeing like a state.” These teach us that those with technical “expertise” in centralized positions of power are seldom as wise as they believe, never possess enough information to act with sufficient prudence and agility, unavoidably underappreciate local conditions and customs, and typically cause a rash of unintended negative consequences.
These rules of thumb don’t tell us exactly what to do with regard to every policy particular. But they do give us direction, and they do forecast the costs of centralization. They warn us that if we give Uncle Sam too much power, we run the risk of enervating mediating bodies and attenuating local bonds; undermining local democracy and differentiation; empowering distant, impersonal, ignorant but self-certain authorities; and distorting individual and community behavior.
***
We are, prayerfully, on the tail end of an era when the federal government regularly responded poorly when called upon—Katrina, the financial crisis, the pandemic. We are also in the midst of an era when some of our most serious national challenges (related to immigration and China, for instance) can only be meaningfully addressed by the federal government. As a result, some have begun to reason that we simply need a more confident and muscular Uncle Sam—he needs to act more and needs the power to exert his will when he does so. Relatedly, some seem to have set as their default position “increase federal action” when presented with a pressing problem, whether it’s Big Tech, out-of-work men, deaths of despair, declining fertility, or any of an array of other social difficulties.
Indeed, our recent uptick in nationalist energy—like most waves of nationalism here and abroad—reflects this exaggerated sense of what role the central government ought to play in citizens’ lives. That is, bouts of heightened nationalism are typically not a mistake of kind but a mistake of degree. It is right to love and be loyal to your nation and to want and expect it to accomplish important things. But it is wrong to orient our thinking around or hand too much power to the distant, centralized state. This is how conservative nationalism has ended up reproducing progressivism’s false-positive error: identifying too many tasks for Uncle Sam.
The principles of governing that have traditionally led the right to decentralize power should animate our humane-economy agenda. We need to begin with place, solidarity, tradition, variation, civil society, republicanism, and federalism. We need public policies that strengthen connections among citizens and fidelity to community. We need state action that distributes, not consolidates, power and that fortifies and energizes close-to-home institutions.
We must never forget that federal handouts aren’t generous; they are enervating. A distant technocrat who relies on Bureau of Labor Statistics data and econometric models doesn’t know your community. A federal bureaucracy that knows you only by your Social Security number cannot truly care for you and your family. Politics that constantly draws our attention to Washington also pulls us away from our local institutions.
Any policy agenda designed to foster a humane economy must be built on the great communitarian lesson: institutions remain strong only to the extent that they have meaningful work to do. We sap the energy and formative capacities of the organizations that care about us, that give us meaning, and that provide us security when we take away their purposes and efficacy. So more initiative, funding, and planning from Washington isn’t how we strengthen the social fabric; it’s how we weaken it.
It is time to turn our attention to state and local leaders—governors, mayors, legislators, town councils, school boards, philanthropists, and faith- and community-based organizations. They need to develop great schools, retrain workers, preserve existing jobs and create new ones, provide social services, and foster the creation of new local institutions. These are things Uncle Sam cannot do well. To the extent he is involved, his involvement should always be geared toward catalyzing or temporarily capacitating closer-to-home leaders.
Yes, returning to the core principles of American-conservative governing will stop Uncle Sam from accepting many of the jobs he is currently being offered. But it will also demand more action from other entities, which is precisely what we need: neighborhoods, foundations, nonprofits, churches, towns, cities, regions, and states need to rebuild the muscles that have atrophied from disuse.
Andy Smarick is a senior fellow at the Manhattan Institute.
The Humane Economy is No Myth—and Can Become Real Again
Helen Andrews
Expectations are one of the most powerful forces in society and one of the most difficult to manipulate. Stubborn social problems are frequently the product of low expectations. Corruption is endemic in the Third World, for example, because people in those societies regard bribe-taking as normal. It’s not that people in the Third World think corruption is good. They would prefer to have honest politicians like everyone else. But as long as they have low expectations of their politicians and assume that most of them are probably crooked, corruption will continue.
Changing people’s expectations is difficult, since it amounts to making millions of individuals change their minds at once. But it’s not impossible. Economists have long studied the role of rising consumer expectations in the Industrial Revolution. In the eighteenth century, British merchants started offering their customers more and more enticing products to spend their money on, which made workers more eager to have disposable income, which made them more willing to migrate from farms to factories, where pay was better. The sleepy pace of agricultural life, where there wasn’t much to buy with extra money so nobody tried very hard to earn it, was replaced by the more ambitious pace of capitalism, with all its attendant benefits. The same story is playing out today in developing countries where migration to cities drives consumer spending and economic growth.
But what about other kinds of expectations? We see how the whole economy benefits when workers expect to be able to buy lots of stuff. But what about when employees expect to have leverage in the workplace, or when young people expect that dating will lead to stable marriages and childbearing, or when adults expect that any city they might move to will have thriving community groups they can join? Or—as is more often the case today—what about when they don’t?
One of the biggest obstacles to a humane economy right now is the unwillingness of younger generations, millennials and Zoomers, to believe that things were ever any better. As far as they are concerned, it’s a myth that Americans were once able to raise a family on a single income, enjoy thriving civil society groups and strong churches, and have just as good a life in a small Midwestern or Southern city as in a coastal megalopolis. The suggestion that these benefits really did exist for previous generations is dismissed as rose-tinted nostalgia.
In February 2021, the Los Angeles Times published a pitifully sad column by journalist Virginia Heffernan titled “What can you do about the Trumpites next door?” She was complaining that the Trump-loving family next door plowed her driveway without being asked, which she thought was “kind of weird. Back in the city, people don’t sweep other people’s walkways for nothing.” She dithers for eight hundred words about how to handle this “act of aggressive niceness.”
In the end, Heffernan decides that “driveway work, as nice as it is, is just not the same currency as justice and truth. To pretend it is would be to lie.” But the saddest thing about the column is not its author’s close-mindedness. It’s that she considered her neighbors’ gesture noteworthy at all. She explains in the column that she was new to the neighborhood, one of many big-city refugees who moved to smaller towns during the coronavirus pandemic; probably her neighbors assumed she didn’t have the equipment to plow her own driveway. Far from being “weird” or “aggressive,” their act was normal, the bare minimum of basic courtesy that neighbors used to be able to take for granted. It is the atomized, suspicious Heffernan who is weird by historical standards.
Everywhere you look, Americans of Heffernan’s generation and younger are demoralized. They don’t do nice things for their neighbors because they don’t expect their neighbors to do nice things for them. They accept gig-economy jobs because they don’t expect employers to treat them as anything but expendable cogs. They waste their prime childbearing years on app-based hookup culture because they don’t expect to be able to extract any long-term commitment from their partners.
Small-government conservatives believe that traditional institutions can’t be propped up by government but need to stand up for themselves. Individuals, not bureaucrats, are the key to healthy families, churches, civil society groups. If workers want a bigger slice of the economic pie, they shouldn’t demand that government redistribute it. They should stand up for themselves and negotiate with their bosses to get the wages and benefits they deserve.
That’s all true to an extent. But the first step in trying to make society better for families and workers is believing that a better society is possible. Americans under forty need to be told that cohesive neighborhoods and single-income households are not just imaginary figments from reruns of Leave It to Beaver but really existed within the memory of people now living. The willingness of free-market conservatives to point to GDP graphs and say that things have never been better is therefore counterproductive.
Helen Andrews is senior editor of The American Conservative and the author of Boomers: The Men and Women Who Promised Freedom and Delivered Disaster.
The Way Back to the Humane Economy
Daniel McCarthy
In the 20th century, the humane economy was a balance to be sought between commerce, industry, and technology on the one hand and the human person, family, and community on the other. A humane economy would be free and dynamic, but businessmen and workers would have their character formed by traditional institutions outside the market: by religion, home, and civil society. The state was to play a role largely limited to upholding the rule of law. Although a country’s practice might deviate from this ideal, the ideal itself was a broadly plausible one for the nations of Western Europe and the English-speaking world, and for other free states as well.
In the twenty-first century, one notices an immediate difficulty. The human person, family, and community no longer mean what they once did. Although Americans move less often than a century ago, their attachments to local traditions seem weaker than ever. Fewer Americans and Europeans belong to organized religions. The family is no longer understood by the leaders of society as a primarily natural unit. The educational institutions of American life promulgate outlooks that cannot be reconciled with the humane economy. The dominant point of view within them asserts that economies must be subject to close supervision by enlightened officials, who are the guarantors of social and environmental justice. A minority view rejects statism but also rejects the idea of traditional moral constraints on market activity.
Even the human person is no longer the same. Racial discrimination was a glaring contradiction to the universal dignity of man that was proclaimed by leaders and intellectuals in the mid-twentieth century, and public opinion at length repudiated segregation in the United States. Men and women were understood to be morally equal yet biologically different, and the task of the social order was to mediate the tension between equality and difference. Today the educated elite views race as a primary constituent of a person’s identity, and the differences between men and women are discussed in terms of injustice when they are not denied altogether.
There are still enough vestiges of society’s ancien regime that those conservatives and libertarians who prefer to live in the past can do so. If only government would get out of the way, they maintain, society would return to health, and we would enjoy both prosperity and a humane order. On the flipside, others on the Right now believe that the state must reorder society and the market thoroughly. A third faction splits the difference, believing that expert management by the right technocrats will restore civil society to something close to pristine condition.
By comparison with the difficulty of reestablishing the social order necessary for the humane economy, the economic side of the problem seems tractable. But only by comparison. Since the last decades of the twentieth century, the world economy has become more tightly integrated, with especially close ties between the United States and the People’s Republic of China. In this global economy, local economies and small firms are less independent than ever. The widest possible division of labor may mean the lowest possible prices and the most efficient returns to capital, but it also means greater dependence on more remote markets and suppliers. The consequences have been vividly illustrated by price shocks and scarcities during the COVID crisis, as overstretched supply chains snapped.
The fate of towns across America increasingly depends on decisions and actions that are taken far away—not just across the country in Washington but across the world in Beijing. Yet what is bad for American independence is good, on the surface, for consumers and, more importantly, for financial interests whose returns increase as they replace expensive American goods and labor with cheaper foreign alternatives. Global arbitrage is lucrative and an easier way to make money than by investing in new economic development at home.
Free-market advocates don’t worry when a factory closes in Michigan because theory tells them that the laid-off workers will find new, better jobs, and the overall economy will improve as capital gets allocated more efficiently. Yet those who value free markets ought to look closely at the new jobs that are taking the place of old industries in the United States. Manufacturing serves a market, however well or badly: it has to sell something to people who want to buy, domestically or abroad. The jobs that are increasingly characteristic of the American economy of the twentieth-first century, however, are not even inefficiently productive; they are administrative.
As libertarians and economic conservatives are painfully well aware, the spiraling costs of health care and education in the United States are not the result of exorbitant doctors’ salaries or vast numbers of new teachers and professors being hired. Exploding costs in these sectors are largely attributable to the expansion of administrative personnel. Education and healthcare are, of course, sectors that blend for-profit interests (such as insurance companies), heavily regulated nonprofit private institutions (universities and hospitals), and government programs (public schools, healthcare entitlements).
These sectors are neither capitalist nor socialist, but a hybrid. The same might be said of “green energy,” also a product of regulation combined with rational economic self-interest—and nonrational progressive ideology. The diversity industry, which cuts across the American economy, is another case in point. The simplistic dichotomy between capitalism and socialism fails to describe these important new features of the U.S. economy.
Nor are these new features to be found only in a few industries: on the contrary, there are few that do not have to hire more and more administrators to respond not only to overt regulation but also to the ideological demands of the college-educated progressive elite. The result is an economy that resembles that of the Soviet Union, only inverted. In the USSR of old, a broad base of farmers and industrial workers supported a small but politically all-powerful class of commissars. In the U.S. today, a vast administrative class produced by politics is supported by a relative handful of highly productive workers in high-tech industries.
Technology and finance are the sources of the present system’s success. The wealth generated by those fields is transferred, though salaries and taxes, to the administrative class and trickles down to the growing ranks of low-skill workers who provide personal services—nannies, Uber drivers, and nail-care professionals. The prosperous few underwrite a welfare state and private charity to serve a widening class of nonworkers, too.
America’s inhumane economy of the twenty-first century still makes and sells things, but it is increasingly defined by distinct classes of value-creators, administrators, servants, and proles. If the pace of technological innovation were to slow substantially, or if the financial system were to invest in one Ponzi scheme too many, the entire edifice would collapse. Yet the greater risk is not imminent downfall but a long, slow loss of productivity and resilience. The steps that our country must take to resist this are obvious enough—we must strengthen domestic industry, curtail administrative expansion, and replace the symbiotic relationship between technology, progressivism, and bureaucracy with a healthy symbiosis between technology and production: the combination that built American prosperity in the twentieth century.
We have to bring many supply chains home. And if we do that, if our local communities become more self-sustaining and self-governing again, and if we recognize the long-range economic and moral competition that exists between civilizations—especially between the West and Communist China—will we rediscover our social virtues in the process? We will at least have made a start.
Daniel McCarthy is editor of Modern Age.
