“Conservative economics” in the U.S. has become synonymous with libertarian principles. But that’s not what American conservatism was originally about. Oren Cass, the executive director of a new think tank called American Compass, is on a mission to restore conservative economics to its roots in family, community, and industry—and he joins Nick and Goldy to find common ground.
Oren Cass is the executive director of American Compass, whose mission is to restore an economic orthodoxy that emphasizes the importance of faith, community, and industry to the nation’s liberty and prosperity. He is the author of ‘The Once and Future Worker: A Vision for the Renewal of Work in America’.
Twitter: @oren_cass
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Further reading:
Workers of the World: https://americancompass.org/essays/workers-of-the-world/
The elite needs to give up its GDP fetish: https://www.nytimes.com/2020/08/27/opinion/us-gdp-coronavirus.html
Oren Cass on the future of economics and society: https://www.manhattan-institute.org/economics-after-partisanship-markets-society
Website: https://pitchforkeconomics.com/
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
David Goldstein:
There’s a conservative economics, Nick?
Nick Hanauer:
Yeah. Yes, there is.
Oren Cass:
What we casually call conservative in America today is for the most part not conservative at all, it’s libertarian. And what I mean by that is it places really almost absolute priority on free markets, on free trade, on everything that has the word free in it, to the exclusion of a lot of other things that are really important to human flourishing and a prosperous nation.
Speaker 3:
From the home offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics, with Nick Hanauer. The best place to get the truth about who gets what and why.
Nick Hanauer:
I’m Nick Hanauer, founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, senior fellow at Civic Ventures.
Nick Hanauer:
Well, Goldy today, we get to talk to an incredibly interesting person, Oren Cass, who’s the executive director of American Compass. He’s trying to figure out how to reinvent conservative economics.
David Goldstein:
There’s a conservative economics, Nick?
Nick Hanauer:
Yeah. Yes, there is. And Oren is a brilliant guy. He was a senior fellow at the Manhattan Institute for a while, not our favorite organization. But he was a domestic policy director for Mitt Romney’s 2012 presidential campaign. He’s a very thoughtful guy, working on trying to find a new way for conservatives to think about economics and economic policy.
David Goldstein:
In a constructive way that is free from all of that neo-libertarian garbage.
Nick Hanauer:
Exactly. So with that, let’s get to talking to Oren.
Oren Cass:
My name is Oren Cass, I’m the executive director at American Compass. And you can read all about us at americancompass.org.
Nick Hanauer:
We are incredibly excited to get to talk to you this morning, Oren, because you are among the few people, not just on the right, but in the country prepared to challenge the neoliberal and neoclassical economic orthodoxy. And we’ve been following your work really closely, and are incredibly enthused by it. So we’d love to just sort of start our conversation about conservative economics by asking just for you to take us through what it was, what it is today, and where it must go in order to work for Americans.
Oren Cass:
Sure, I think the important starting place is to recognize that what we casually call conservative in America today, is for the most part, not conservative at all, it’s libertarian. And what I mean by that is it places really almost absolute priority on free markets, on freedom, on free trade, on everything that has the word free in it, to the exclusion of a lot of other things that are just really important to human flourishing and a prosperous nation. And so certainly conservatives care a great deal about freedom as well. I love free markets, I think free markets are the correct way to organize a private sector and have a prosperous economy and deliver innovation in rising living standards and all those things.
But conservatives, I think, historically have had a much richer conception of both things besides free markets that matter. And then also all the things that go into an effective free market, that having markets that work well, having a successful system of market capitalism, isn’t simply a matter of getting everything else out of the way, it’s actually hugely dependent on healthy institutions. Obviously, dependent on strong families and communities, it’s dependent on the sets of rules that are set up within which the market operates and that are going to channel competition in productive directions. It’s dependent on the kinds of investments we make in education and infrastructure.
I would argue it’s heavily dependent on having a system of labor that ensures that workers are well represented and can look out for their interests. And so I think conservatives would say those things are all important to the free market. And then in turn, that it’s not just about the free market, that the free market is a wonderful thing, but we don’t serve it serves us and what we expect to do for us is to in turn support those families and communities and the prosperity of the nation. And if it’s not doing that, then the answer, which I tend to sense I get from libertarians of, “Well, that’s just it. That’s what the free market does.” Has to be, “No, we need to find ways to change that and channel it to be supporting the kind of ultimately sustainable society and nation that we value.” And so that’s what I think conservatives would say that they haven’t been saying for decades now, while really libertarians, within the right of center coalition have been allowed to dictate the direction of economic policy.
David Goldstein:
Can you think of a time, and I’m not asking a rhetorical question, I really do want to know, can you think of a time when truly conservative economics was ascendant?
Oren Cass:
Well, I think it’s actually much more in the American tradition. I mean, Alexander Hamilton has become popular now for other reasons. But for the true political economy wonks out there, Alexander Hamilton was the founder who envisioned a national economic system, obviously, we have a rap about the National Bank now. I wish we had a rap about his report on manufacturers, recognizing that if you were going to build a strong national economy, you were going to need some public policy to buttress and advance healthy domestic industry. And from there for, essentially 100 years, that was what America did.
I mean, Henry Clay was famous for expounding what he called the American system, which meant an economic model with again, a strong national economic policy focused on what they call the internal improvements, we would call infrastructure now and National Bank and strong protectionism. And it’s funny that in part, the reason it was called the American system was to contrast it with the British economists, Adam Smith and so forth, who were seen as being much more supportive of free trade, in part, at least from the American view, because that was good for Britain. [crosstalk 00:07:25] American, “Hey guys,” [crosstalk 00:07:28] to just by all our British stuff.”
And the Americans were saying, “Well, that’s fine for you. But let’s talk about what America needs.” And that goes right up, Lincoln was an avowed follower of Clay and advocated for the same things and then really, from the Civil War, essentially, all the way up through World War Two, depending on how you measure it, America probably had the most protected domestic market in the world. And you can then talk about their policies as well, the approach to the Homestead Act, land grant colleges, in part because of the way America was weaving itself together as a nation, there was a sense that these were all going to be priorities. But the kind of free market fundamentalism that we now hear from time to time, is sort of the American way, has only been the American way since roughly the ’70s.
And I think it is, I want to emphasize, I mentioned earlier, I love free markets too, I would also be the first to say, I think given where we were in the ’70s many of the things that someone like Reagan was advocating for, were needed correctives. Given the challenges we faced at that time, there was a lot of important work to be done, marginal tax rates in the ’70s, or what have you are probably not wise, industries that are overly regulated do need deregulation. I’m always fascinated by just the fact that you had to tell the government that cost benefit analysis was a good idea, because it literally didn’t exist before then. And so it’s not to say, “Well, if only we just stuck with what we were doing in the ’70s, all would be good.” That’s not the lesson at all.
But that approach that was so prevalent on the right of center beginning in the ’70s and ’80s, has not been updated since. And what was at that time, an innovative reform agenda has become this just sort of dogmatic fundamentalism that is not responsive, I think to the nature of the challenges we actually have today.
Nick Hanauer:
So Oren, the problem with this podcast is you sound too much like us. So I was really taken by your criticism and analysis of Danny Rodricks, sort of beyond neoliberalism set of ideas. A bunch of very smart economists of the left have acknowledged that a lot of the stuff that they used to think was not true and have acknowledged that some of the problems in the world are a consequence of that bad thinking and are scrambling to try to make amends. And have identified the market fundamentalism that we have been just been talking about as the enemy and are proposing this new thing on the left to supersede it. If you wouldn’t mind, can you try to characterize the argument that they made and that you made, because I think it’s really consequential.
Oren Cass:
Yeah, I think it’s a theme that comes up a lot in the work that we do at American Compass, is we get the question, “Well, why isn’t what you’re saying just what the left wants?” And my response is typically, “Well, go read a little bit more carefully what the left wants?” Because I think there are some ways in which there are things that I would say, “Yeah, people on the left of center have been making a point that’s really important and correct about the ways that workers have been losing out and don’t have sufficient market power and so forth. And as you just said there’re folks on the left of center who are making similar critiques of the kind of general economic orthodoxy.
In my experience, the problem with where the left has gone with this is that it seems to be sort of then shoehorning the entire discipline of economics into a somewhat pre existing left of center agenda. That is, if one were to sort of step back and just ask, “Well, what is the exact set of things that Barack Obama stood for?” Okay, economists go and develop a rationale for that. It would sound an awful lot like what some economists are kind of presenting as a good faith bottom up reconstruction of economics. And again, it’s always important for me, I think to emphasize, I don’t present that as an ad hominem attack on Barack Obama. If Barack Obama had a good idea, that’s fine and an economist is not suspect because he is proposing something that Obama would have agreed with.
But there is a sort of just so story component to it, where everything that the left of center would anyway, magically turns out to be what this new economics is supposed to point toward, in frankly some ways that I think are hard to take seriously. And so immigration is one of these, free college is one of these, we can dive into examples if it’s helpful.
David Goldstein:
Yeah. I’d love an example on re-empowering labor, because you talk about power a lot in what you write. And I’d love to hear the conservative argument for it.
Nick Hanauer:
Goldy, with all due respect, before we do that, because I think we’re aligned there. I want to hear where we’re not aligned. I think you’re making a very good point about where this beyond neoliberalism thing goes. Give us at least one example in that way.
Oren Cass:
Yeah, I’ll give you an example I suspect you’ll agree with and then maybe one that you might have some hesitation about. So one I think there’s actually widespread agreement on when you kind of dig into it is just on our policymakers obsession with college. And the idea that essentially, the best way to solve all our problems is if we could just send-
Nick Hanauer:
Send everybody to college.
Oren Cass:
Right. If we could just turn everybody into what the economy wants, then we wouldn’t have to rethink anything else.
Nick Hanauer:
Utter nonsense.
Oren Cass:
Well, as a preliminary matters, it’s worth noting that that’s not even what the economy wants. I mean, the trend in the labor market is not accurate and the share of college graduates who can’t even find a job that requires degrees is approaching half. But then stepping back from that, our capacity to actually push more people, we’ve shown we can get more people into college, but our capacity to actually create more college graduates just isn’t that great. And what we lose when we do that is essentially the… I mean, majority of people still don’t earn even a community college degree in this country.
And so if you asked me, we have $160 billion a year to spend, how much of that should we be spending on the kids who are in college and presumably on the kind of economic winners track and how many should we spend on kids who are not completing college? I would say, probably about $150 billion on the non college kids, and maybe $10 billion on the college. And it’s exactly the reverse. Say we throw 10s of thousands of dollars at students when they get their high school diploma, if they’re going to college and if they’re not, we say, “Well, okay, sorry, we don’t have anything for you.” And that’s absurd.
And so, rather than leaning further to free college, and I think even more absurdly forgiving student debt, particularly in the absence of any underlying reforms to how the how the system’s working, what we should be leaning into is exactly the opposite and saying, “Wait a minute, college makes sense for some people. But really what we need to be building is other pathways to a good career and a successful life.” And that means less support for the college pathway and it means admitting that, “Well, we’re just going to get everyone a college degree.” Isn’t actually a solution.
Nick Hanauer:
Yeah. I’m in violent agreement with you, myself. But the problem isn’t the education system or how we treat education, the problem is the economic system, which is effectively impoverished, everyone except the top 10% of college graduates, that’s the problem. Because if somebody could go to high school, get a high school degree and go to work for Starbucks, and earn a wage equal to leading a secure and dignified life and raising a family, the problem is solved, right? Now, all of the incentive to borrow $200,000 to go to college for no reason disappears. And I think that that’s the problem.
Oren Cass:
I think you’re right about the kind of how unequal the two pathways look is exactly the problem. I think it is a little bit unfair to ask the economic system to deliver comparable, or at least sufficient outcomes for both people who are going through this $200,000 Higher Ed process and people who are doing essentially nothing. That is part of what we’re missing, I think is we’ve converted our high schools, basically into college prep academies. So we almost make sure you don’t learn too much useful in high school besides how to pass tests to get into college.
Nick Hanauer:
Yeah, that’s a fair point. That’s a fair point.
Oren Cass:
And then we say, “Oops.” And look at that, if you just have high school, you can’t do anything. But the reality is that if we were using those high school years for folks who weren’t headed to college, and even more so if we then had programs at the end of high school, and a year or two afterward that actually subsidized and supported employer led training, then I think you’re really getting somewhere. And so that’s why I emphasize it. Yes, part of this is going to have to be an economy that creates more good jobs for people without college degrees. But there’s also a dimension of this where we could be doing, I believe we should feel a public obligation and get leverage out of human capital investment. But we should be doing it very differently than we do right now.
Nick Hanauer:
Yeah, I agree. So one of the critiques I think that you make of the sort of beyond neoliberalism camp is this over emphasis on market failures. And in fact, we we call that school of thought, market failureism, right? Which is the idea… but by the way, market failureism, is a much, much, much better school of thought, than market fundamentalism, in my opinion. I mean, if I had to pick between the two, I know which one I prefer vastly. But I do think that your criticism aligns with our view, that if all of the interesting bits in economics are failures, then maybe you have a system of thought which is inadequate to the task.
This is the core problem, is that what left economists want to do is take the same crappy, fundamental assumptions about human behavior, what prosperity is, the dynamics of markets, etc, etc, and somehow squeeze a different outcome out of those priors, and it just can’t work sustainably. It just makes no sense.
Oren Cass:
Yeah, it’s funny. What you call market failures, I would have just called neoliberalism. But everyone says you can’t define neoliberalism, so maybe market failureism captures it better. I think the one other thing that I think is helpful to say about that, is that the in my mind, the biggest problem with market, failureism, is that it assumes that whatever we’re talking about is something that markets should do, or could do. And that inherently then kind of centers all of the discussions on markets as the organizing principle, when I think it’s a lot more constructive to say, “Look, there’s something markets are good at. Markets allocate scarce resources well to whoever has the resources to pay the most for them.”
And that’s a useful thing. We need that in our society and it drives a lot of productive behavior. But then you could start making a list of things that markets just conceptually you would never say like, “Hey, how we should do that is with a market.” And whether you’re talking about issues related to sort of geographically spread prosperity and communities that are able to thrive or anything related to families, frankly a lot of things related to education. And then even when you get into things like investment, like when you’re talking about, “How do we make sure resources are flowing toward those areas that are going to yield the long run payoffs for society?”
Like, “Sorry, that’s not something markets are equipped to do because the incentives don’t work that way.” And so to start describing all those things as market failures, and try to correct them, as you said, kind of trusts economics to solve things that it’s not going to solve, in the framework that we use that that economists use today. But more importantly, it starts from the point that everything is supposed to be a market, whereas I think we need to say, “Markets have their place and then there are also a lot of places that markets really are not going to be the mechanism we need.”
Nick Hanauer:
Right. So let’s jump to Goldy’s question about labor, and its place.
David Goldstein:
And the reason why I raised this is that we struggle, we believe that the kind of economic narrative that we’re developing is actually nonpartisan, it’s not really left or right. Even though many of the policy prescriptions we come up with, most people would categorize as being more on the left, but not being conservatives, we struggle with making the conservative argument on some of these issues. And I think labor is a good one, because you’ve talked a lot about power in your writing, what would be a conservative argument for re-empowering labor?
Oren Cass:
Well, to appeal to conservatives, I think a really important starting point is to distinguish labor as a concept from labor as it operates in America today. I mean, today’s labor unions are an arm of the Democratic Party. Their primary function at this point, I would argue, is not even doing the kind of organizing and bargaining behaviors we think of, it is raising money to spend on elections for Democrats. And we could discuss whether that is even in the interests of the people they purport to represent, but it is certainly not something that Republicans are going to sign up for.
And there’s interesting history of how we got to that place, but it’s important to sort of step back from that and say, “We’re not talking about big labor as it is today, we’re not talking about what we are told in this country are pro labor policies, which are effectively just laws to get more people into these unions. We’re talking about the concept of labor, we’re talking about the idea that workers should have a mechanism to organize collectively, come to each other’s mutual aid, provide benefits and services to each other, and then exert collective power in the labor market.” And in those abstract terms, that is something that I at least believe conservatives should be extremely enthusiastic about. In fact, I would argue it is a sort of fundamentally conservative rather than progressive concept.
And the three dimensions that I always try to highlight, one is just it is superior in terms of economic outcomes and this goes back to something we were talking about right at the beginning, which is the idea that conservatives should recognize that well functioning markets require healthy institutions. And a vital institution to a well functioning capitalist system would be mechanisms that place labor on equal footing with management so that workers are able to advance their interests in the marketplace. That’s how you get markets that work well. And so we should want our economy to be one in which workers have substantial and I would say relatively equal power, vis-a-vis their employers. And one thing that that’s going to do is it’s going to mean better economic outcomes for them.
So that instead of having to debate redistribution after the fact, and have this model of itemized individuals, and a big government that takes money and moves it around, you actually have institutions and groups in civil society that are working to make sure that prosperity is flowing nationwide, and to all different segments of the economy. So that strikes me as a fundamentally conservative vision of how to make the economy work well. The second component is just from a regulatory one. The alternative to unions representing workers and bargaining with employers is Washington making the rules. And I think there’s an unfortunate way in which Washington deciding to make rules and the labor movement asking them to has crowded out things that unions might otherwise do.
But certainly from what conservatives would advocate for, I think it would be really important and valuable to say, “We want workers to have effective representation and a say on governance in the workplace, so that they can actually work things out. That the affected parties can agree to things and we don’t have to worry that one side is taking advantage of the other and we don’t need a rule from Washington that’s just going to cover everybody.” That, again, I think is the sort of fundamentally conservative bottom up, tailored approach to regulating the workplace as opposed to the one we’re going to have the absence of labor, which is just government regulation.
And then third is just the role as an institution in the community. I think conservatives, uniquely, or at least more so realize the importance of mediating institutions in our society, and the value that comes from having a voice in the local community, having mechanisms to actually accomplish things and at the end of the day, having someone to sponsor the local Little League team, or name your function of civil society. And labor has historically been one of those things, if not the primary thing for working households. And if you don’t hump that, it’s not clear what would replace it. Well, so far it’s clear, nothing replaces it.
And so as conservatives, I think, rightly tear their hair out over what has happened to social capital and civil society and the health of a lot of especially working class communities. I think they rightly say, “Look, there’s only so much government can do, a lot of these are cultural issues.” But then you have this huge red flashing light on the control panel of things government can do and it seems to me that that conservatives should be eager to pull that lever and try to find a way to resuscitate the labor movement as an institution.
Nick Hanauer:
So one of the great problems here with reforming economics is, and I just want to acknowledge that Democrats have been party to this as well, that neoliberal economics, both the theoretical framework and the policy framework, and the narratives, really are not much more than a protection racket for the rich, right? The phrase, raising wages kills jobs, the idea of marginal productivity that people are paid their marginal product, the Lucas critique of government intervention, that it always creates harm. Or the Okun’s trade off, right, that there’s always inverse relationship between increasing amounts of justice in the world and economic efficiency. The tax cuts create growth, that regulation kills productivity.
All of these things, all of these ideas are simply internally coherent narrative designed to make rich people richer, and everyone else poor, which is the story of the American economy since 1975. I mean, the great problem is the people who currently benefit from this arrangement are not going to be talked out of it with facts. The Chamber of Commerce is never going to stop saying, “Raising wages kills jobs.” Because they don’t say it because it’s true, they say it because it’s the most effective thing they have ever devised to keep wages low and profits high. So how do we prevail, how do you talk people out of these ideas that really are just a way to protect the power of the status quo and the power of entrenched elites?
Oren Cass:
Well, I would challenge the premise of the question a little bit. Actually, I would challenge the premise of the question a lot, to be more blunt. I think you’re right about some of the effects of the perspective, I think you’re wrong to describe it as a protection racket or view it as kind of explicitly designed to enrich a few people and impoverish everybody else. And that’s in two ways. I think, one going back to something we were talking about earlier, a lot of these ideas originated from a good place and still have relevance. I mean, there were times when we needed to hear that message, in a sense, and where economic reforms in that direction, I think, ultimately were to the benefit of the country. So I think it’s important not to describe them as entirely without merit in all their forms and never helpful. And I also think, at least in my experience, most of the folks who hold these views hold them quite genuinely. The Chamber of Commerce is a lobbying group, I believe. They are literally paid to just take positions that benefit people to benefit.
Nick Hanauer:
To benefit the executives and the shareholders of the corporations. Yes, they are.
Oren Cass:
Right. But that’s very different than if you look at for instance, the Think Tank community or you look at politicians themselves. Of course everyone is self-interested in various ways, as are all of us on this podcast. But they also, generally speaking, think they’re doing the right thing and I think the problem is that they are taking these ideas that had real important purchase at one time, and just blindly extending them. Rather than critically scrutinizing, and testing, and adapting them over time. And so to your question, what do you what do you do about it? One question it comes down to is sort of, to what extent do ideas matter and persuasion can work, versus to what extent is it purely a question of self-interest?
And on the first part, in my experience at least, I think persuasion does play an important role. Within the right of center, I think that you have started to see some movement, I think there is some rethinking going on. I mean, we put out this statement from American Compass on conservatives needing to rethink labor. And we’re able to get everybody from a sitting US Senator to a former Attorney General to leaders that are a bunch of different Think Tanks to some of the most prominent management side labor lawyers to sign on and say, “Yes, we don’t necessarily agree on specific proposal acts at this stage. But this is something that needs to happen.”
And likewise, I think on a question of like, what do you do about China? There’s been a tremendous shift over the last decade, on acknowledging that there’s a lot that we like about free trade, but we can’t just blindly say, more free trade is good no matter what, even if your trading partner is a communist authoritarian regime with a state led economy. Now, are there some people who will still say, “Oh, free trade is good no matter what.” Yes. But certainly, I think the conversation has shifted. And so I kind of highlighted point one, that I think good arguments and really focusing attention on the circumstances of today and saying, “What are you going to do about that?” I think moves the needle over time. And that’s certainly a big part of what American Compass is trying to work on.
And then secondly, from the self-interested perspective, I think it comes down to political coalitions. I mean, I think you will always have people who are most benefiting from the current system and will therefore want to see it preserved. Now, it’s an interesting problem that I would argue most of those people are now in the Democratic Party.
Nick Hanauer:
Really?
Oren Cass:
Oh, absolutely. I mean, I think the left of center coalition is becoming sort of overwhelmingly populated by an urban sort of so called coastal elite of those with higher education [crosstalk 00:33:05] instead of concerns that is very, very attuned to those interests. Now, obviously, there are plenty of folks on the right of center, who are likewise counting on the right of center representation of big business. But speaking of the chamber, there’s been a fascinating, meltdown might be too strong, but conflict within the chamber just over the last month or two, over its decision to start supporting Democrats. So anyway, I raised the realignment point because one way in which people are highly self-interested is in wanting to achieve majority support in a democracy. And so, one consequence of the neoliberal consensus that we’ve had for a long time is that you had two parties that were essentially taking the same position on a lot of these questions.
Nick Hanauer:
A hundred percent, a hundred percent.
Oren Cass:
And they would fight about, “What is exactly the best policy to get growth and how much redistribution are we going to do?” But basically the same. One way to understand Trump is to say whether or not you think there was any agenda there, he was the first person on either side who showed up and talked completely differently. And showed that there were an awful lot of people who said like, “Yes, actually that appeals to me an awful lot more.”
Nick Hanauer:
Yeah, narcissistic sociopaths are unusual in the way that they speak.
Oren Cass:
I mean, this is kind of more of a Shakespearean question. But it’s an interesting question whether you need someone of Trump’s personality to be as iconoclastic and rejecting of orthodoxy and quote, ‘things everyone knows,’ as he was in saying, “I don’t have to talk about those things. I’m going to talk about these things.” But regardless, I think that something that you might have been able to find glimmers of pre Trump, but certainly his success accelerated is rethinking some of these things and saying, “Wait a minute, maybe the actual kind of governing majority here would be one that thought and talked about things very differently and happily, by the way, in the process would govern the country better.”
And to the extent that you can get people thinking about that, and seeing that as in their interest, then I think you’ll see a shift that way as well. But I think it has to happen on both fronts. You have to have the persuasion and the actual intellectual foundation, and then you have to have a prospect of political success attached to it.
Nick Hanauer:
Well, I mean, I agree with you on the front of persuasion, I do. I’m always of two minds about it. I think you’re being naive, if you don’t consider the naked reality that a lot of the narratives that people advance have no connection to truth. They are simply effective ways of promoting the narrow interests of whoever it is that you’re onside with. And certainly, economics is mostly just a narrative, justifying who gets what and why. I realized that’s an affront to most economists. But that is the reality of how most people experience economics and how it impacts people’s daily lives.
But I will tell you that when I got involved in political economy writ large, even left leaning democratic senators believe that if you raised wages, it killed jobs. Even the economists that I was working on, thought we had lost our minds when we started talking about raising the minimum wage, because they were absolutely convinced by the neoclassical equilibrium models, which in fact, don’t describe anything except a spreadsheet in somebody’s computer and have no sort of real bearing on how market economies actually work.
Oren Cass:
I think you’re giving it a lot of credit to say there’s even a spreadsheet somewhere. And usually, there’s sort of two lines drawn on a graph with no labels on the axis and arrow point in one direction or another.
David Goldstein:
So we ask this of a lot of our guests, why do you do this work?
Oren Cass:
Well, that’s a difficult question. I guess I do it for two reasons. One is because I find it so interesting and there is nothing I enjoy more than thinking about this stuff. And ultimately, in a sense, thinking about arguments. I mean, these happen to be economic arguments. But I think it’s exactly as you just described, this problem of people just sort of believing things, that there’s no argument behind that as sort of a social problem fascinates me. What is the set of building blocks that leads to that conclusion and which is the one to push out to knock it over and just as importantly, what is the alternative thing we can be building with it? That is what I want to be doing. And fortunately, for me, it lines up very nicely then with something that I think is really important, invaluable.
I mean, I suppose one could go be a corporate transaction lawyer and do a lot of the same thinking. But in my mind, this is a vitally important issue. And if some of the things I’m good at can help make progress on it, then that is a wonderful alignment. And ultimately we got to this a little bias, we didn’t really get to this in the self-interest component. The last piece of making the case on self-interest, I think is to say, “Look, maintaining the status quo may be in your interest in the short term, but it is not in your self-interest in the long term.” And I am someone who genuinely believes we cannot take for granted for a day the extraordinary benefits of the extent we still have a healthy, cohesive democratic republic with a market economy. And one that at least has in the past shown the capacity and to some extent, today’s still generates incredible prosperity for an incredible range of people.
I think it is in my interests and my children’s interests and my children’s children’s interest more than anything to be finding a way to preserve and strengthen that. So obviously it’s convenient that I can also make a living doing it, but that’s why it’s what I’ve chosen.
Nick Hanauer:
Yeah, that’s fantastic.
David Goldstein:
Well, but best of luck in reclaiming the Republican Party from the libertarian nutcases who currently control the narrative there. [crosstalk 00:39:52]
Oren Cass:
Thank you and we are aiming to reclaim and welcome over a whole bunch of folks satisfied with the other side’s nutcases as well.
Nick Hanauer:
Great. Well, Oren, thank you so much for spending the time with us. It has been a fascinating conversation.
Oren Cass:
This was terrific. Thanks so much for having me.
David Goldstein:
You know me, I’m really skeptical about the opposition.
Nick Hanauer:
I know. I love the guy.
David Goldstein:
My starting position is that the other side is going to be ignorant or disingenuous. Clearly, that’s not the case with Oren, he knows his stuff and he seems to be incredibly well intentioned. I don’t know what the prospects are in this pathological republican party for abandoning trickle down in neoliberalism and having a thoughtful conversation within the right on how to redress economics from a conservative perspective. I genuinely wish him the best of luck.
Nick Hanauer:
And it is very complicated. And he is distinguishing between libertarianism, which is a strain of thought on the right and conservativeism, which is another strain of thought. And I think he’s absolutely right, that certainly in economic policy, libertarianism has dominated because it makes rich people richer, and that’s what the donors love. And that is what has become of the Republican Party. Oddly, libertarianism does not dominate on the social side. Where the right wants to tell you how to live and where to live, and what you can do and so on and so forth.
David Goldstein:
And libertarianism be clear is different from conservatism. They come out of different moral frameworks. I think what’s happened to the Republican Party is that, there’s this, the libertarian economics is so appealing, because it’s so simple. You can reduce everything to more freedom, more markets. The freer you are, the better we all are. And that’s a very simple narrative to understand and to explain and to repeat. But as you said, clearly, on the right, they have not extended that for like reproductive rights. And I just have to bring this up, because I have to take issue with both you and Oren on the conversation, your conversation about college, about education.
And that is I think that both of you, unfortunately, fell into the human capital trap. Thinking of a college education purely in terms of how it enhances human capital and I just have to give a call out as I sometimes do to a [Martius 00:42:49] and his Capability’s Approach that there’s much more to a liberal arts education than simply increasing your productive capacity. If what we care about is human flourishing, then a good education is useful in and of itself, regardless of what it does in terms of your income.
Nick Hanauer:
That’s true, Goldy. But it’s also true that you could spend two years after high school learning how to be a plumber in a world where being a plumber earns you 125 or $150,000 a year, and devote yourself when you’re not doing plumbing to French literature too.
David Goldstein:
Right. So I don’t want to come off as an education elitist here. I just wanted to lend my support for a liberal arts education and affordable liberal arts education.
Nick Hanauer:
All right. Well, with that, that was awesome. It was really cool to get to talk to Oren. And see you next time. On the next episode of Pitchfork Economics, we talk with Michelle Meagher about the six myths of market capitalism and what we can do to make things better.
Speaker 3:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer. Follow our writing on medium at civicskunkworks and peek behind the podcast scenes on Instagram @PitchforkEconomics. As always from our team at Civic Ventures, thanks for listening. See you next week.