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Rise of National Conservatism
The Trump election and Brexit in 2016 kicked off a new phase of American and global politics. Whether Trump was elected or not in 2016 doesn’t really matter. Even if he had lost to Hillary, the emerging National Conservative movement would have continued growing. Trump is dumb enough to think that the 2016 election was about him when it was really the emergence of a new conservative political movement that had been bubbling under the surface in America for more than 2 decades that wanted to reform conservatism and move it in a different direction on economic issues. The 2020 election was proof that the 2016 election was not about Trump. Yet many of the policy changes that Trump started remain under Biden and will remain because that is what America wants. There is a lot more work to be done and all of it will be done without Trump. Trump just happened to be an opportunist who saw an opportunity to grift off the National Conservative movement by plastering his brand all over it. But the movement has nothing to do with Trump. With or without Trump, National Conservatism was bound to emerge.
Today we are in a period of global geopolitical and geoeconomic realignment that symbolically got kicked off in 2018 when Trump initiated his “trade war” with China. This realignment will continue for at least a decade and will be happening on multiple fronts. Perhaps to understand better where the world is going, let’s define the broad goals of National Conservatism. I have been debating whether to call it Labor Conservatism or National Conservatism, but David Brooks of the New York Times labeled it “National Conservatism” and many already refer to these folks as “NatCons” so I will stick with that. Brooks’ attempt of course is to paint this as an ethnocentric movement and disparage it as a new form of fascism, but the reality is the movement’s focus is more on repairing the relationship between Capital and Labor. There is a new think tank called American Compass created by Oren Cass (pictured below) started in 2020 that is trying to craft this new conservative ideology. Of course to the great intraparty opposition by libertarians and neocons - the losers in this ideological conflict. The think tank is funded by moderate Republicans like Mitt Romney and its proponents are younger Gex X senators like Senator Marco Rubio of Florida and Senator Josh Hawley of Missouri. You can read the American Compass Annual Report here. Below I am going to outline my understanding of National Conservatism. Much of my views on the topic are formed from the writings in American Compass. Of course this National Conservatism ideology brand new and under development and I am sure there are various perspectives on it – this here is mine.
Rules for Limiting Market Fundamentalism
The main goal of the National Conservative movement is to come up with a framework of rules of limiting market fundamentalism. The conservative position on the economy has always been that there should be no government involvement and that there should be no rules or restrictions on private sector economic behavior. Economic liberties should never be constrained via bureaucratic regulation or taxation and the problem in the economy is always the government. Fed Chairman Alan Greenspan in the middle of the 20th century was a big fan of “counter-party surveillance” as a method for checking private sector excess but the 2008 Financial Crisis proved that this strategy does not work if every actor in the economy has incentives not to do surveillance when a rising tide lifts all boats.
Economic libertarianism or anarcho-capitalism is obviously an idiotic ideology from the very start since government is the ledger of record for property rights and the dispute resolution mechanism for contractual agreements (ie markets exists because of government not despite it). Proponents of anarcho-capitalism always point to an agreed upon private sector coalition of top business players that becomes ledger of record and I point out to them – what the hell do they think government is? Government is all the top mafia guys, Arthur’s round table of knights. Government IS a coalition of the top private sector players.
Unfortunately, anarcho-capitalist nonsense somehow got reinforcement when the Soviet Union collapsed, as if the failure of communism as an economic ideology somehow automatically validates the success of anarcho-capitalism. The question always is: why did communism exist in the first place if unregulated laissez-faire capitalism is so perfect? The answer is that it isn’t perfect. The failures of capitalism during the Robber Barron era of the late 19th century is what led to the Marxist movement to establish worker rights and later communism as government organization ideology in the 20th century. In an economy there are always economic actors who are more efficient and those who are less efficient. The more efficient will take over the less efficient. This is a process that knows no bounds and when left unchecked and unregulated, it results in a “there can be only one” economic system of monopoly or oligopoly – a state of very few winners and many, many losers. This process resulted in the Gilded Age and the Robber Barons. The winner-take-all process of unregulated capitalism sidelines many very capable people who simply aren’t the best of the best. A system that wastes its productive human capital like this simply can’t survive in the long run. A more utilitarian economic system is needed.
But communism is no answer either. Communism also failed because total collective ownership is simply not natural. When there is no generational continuity of property and knowledge, there is no incentive for individuals to build property or knowledge. Communist leaders always pose the JFK maxim to their populations “What can you do for you country?” The retort always is “What can the country do for me?” This standoff between government and its people is a quick road to nowhere. People work for themselves and then out of their property and earnings they decide how much to contribute to collective enterprise. This is not a very complicated setup but it is amazing how it gets screwed up everywhere around the world except in Anglo-Saxon nations. In communism, over long enough period of time, the lack of individual incentives ends up producing a lack of results and lack of economic activity.
Thus the ideological extremes of both individual action (laissez-faire capitalism) and collective action (communism) are both economic failures in the long run. The truth is somewhere in the middle – there should be restraints on economic actors in both the public and private sectors. But who would put those restraints? Modern day Democratic Liberalism has an easy answer – government should put restraints based on public sentiment/polling and bureaucratic expertise. Government is of the people and therefore knows best. The problem is that in practice, government policies get applied by the government bureaucracy which is a very small portion of the population. Often you end up with policy overreach – the policies are really out of step with the majority opinion. An example of this was the Trump travel bans from Muslim countries or Biden’s private sector vaccination mandates. These are policies driven by ideological extremists in the bureaucracy. The problem with government bureaucracies is that the agencies get staffed with ideological extremist who are way out of touch with the general population. All you have to do is look at the nomination of Saule Omarova to head the OCC. A government agency pick doesn’t get any more ideological and out of step with the American population than that.
But there is another issue - it’s not like the general population can be an expert in every topic. People can be really stupid on occasion due to lack of expertise. The crowd doesn’t always know best. Sometimes those publicly determined and imposed restraints result in good economic outcomes and many other times they don’t. In particular, if the government becomes overly activist and political in its economic policies, you have the emergence of black markets that end up going around the nonsensical regulations anyway. It is a mistake to think that in communist countries people didn’t believe in a command-control economic system. They did. They were simply wrong. They believed in a system that doesn’t work.
National conservatism seeks to find restraints to market fundamentalism that originate not from the government but from the citizens and workers who are also economic actors themselves. Instead of skewing government policy against workers and citizens as the conservative movement has done for the past 100+ years when in power, National Conservatism would give workers and citizens a seat at the table alongside Capital. National conservatism views Labor as the natural check of Capital. This is very different than prevailing liberal ideologies that simply want to see Capital completely excluded as a decision making factor in government policy. This is also very different than the current conservative ideologies that want to see Labor completely eliminated from policy decision making. National Conservatism seeks to find that middle between orthodox liberalism and orthodox conservatism.
Decoupling Benefits from Employment/Unbundling of Organized Labor
National Conservatism seeks to decouple Labor representation from the Labor Union movement which is viewed as being overly political. Labor Unions aren’t purely economic actors, they are also political actors that are driven by directives of Democratic Party and express opinions on social issues. The political activism of Labor Unions thus reduces their ability to be an effective economic check on market fundamentalism.
The biggest flaw in the US labor system today is that benefits are tied to an employer. Labor unions are entities that exist inside an employer and represent collective bargaining rights of employees only inside a specific employer. Labor unions actually tie employees to a given employer. This system doesn’t work because employees have to renegotiate benefits from scratch when jumping to a new employer or as is often the case - lose them altogether. That presents Americans with a massive Benefits Cliff. Labor mobility in the US economy is thus severely constrained because employees have to reckon with the Benefits Cliff. This puts all of the negotiation advantage with Capital. Also wage and benefits negotiations are bundled together in the agenda of a Labor Union. There is simultaneously bundling of negotiation items and lack of portability of benefits. It is a terrible design. All of this serves to harm employees and it is no coincidence that American labor unions have largely seized to exist. They were just malfunctioning entities from the start and were doomed to failure.
However, collective bargaining is a real force and real check to Capital and simply needs to be reconfigured and utilized in a different fashion. Benefits need to be portable from employer to employer. Moreover, a better bargain can be struck since benefits of scale can be achieved through federation. What if benefits were negotiated at the sectoral/industry level instead of the employer level (let’s say at auto industry level)? Wouldn’t that result in better and cheaper benefits? Sectoral bargaining can be done by creating a special class of non-profit organizations that deal with employee benefits. Those non-profits will have a defined mission and can only participate in a specific set of activities such as negotiating unemployment insurance benefits, health insurance benefits, paid leave benefits and so forth. Those non-profits will be prohibited from any political involvement of any kind. Their sole purpose will be to do collective bargaining on behalf of workers. Let’s call these a “Worker Benefits Organization” (I am winging it here). One WBO can represent all auto workers in the country for example. Another WBO - all graphic designers or maybe all computer workers. These will be organizations with participation in the millions to tens of millions. The larger they are the better because they can negotiate better discounts with benefit providers. WBOs will set the terms of how much burden employees carry, how much burden employers carry and how much government can subsidize a specific benefit. WBOs are thus very efficient middleman that can drastically reduce the costs of many of employer provided benefits in America. This increases both corporate profits and real worker wages at the same time. The creation of the WBOs will be massive boost to further the profitability of big corporations and will largely eliminate the cost of health insurance, unemployment insurance and other employee benefits from their balance sheets.
Since workers will be members of a WBO when they move from job to job they will no longer face the dreaded Benefits Cliff. The employer automatically accepts the WBO terms for various benefit plans and pays out benefits to each employee based on their WBO participation. For example, an employee health insurance plan won’t have to change just because they lost their job (which is really out of their control). Majority of layoffs and business failures are due to business cycle fluctuations and industry competition. In fact, economic resilience will be greatly improved because labor mobility will increase. Higher levels of labor mobility create more resilient economies since zombie firms die faster and labor capital is more efficiently relocated to better management. Thus WBOs and the portability of benefits they engender is a huge driver of economic growth inside the country and will enable a much faster reallocation of labor during periods of large economic duress like COVID.
Rise of Gig Economy/Elimination of Single Employer Employment Model
I have never been a fan of the single employer model. In fact, I have always hated being an employee. I got off the employee track as fast as I could. I incorporated an S-corp by my 5th year out of college and most of my tenure on Wall Street was actually as a contractor. I worked at Goldman for 4 years as a contractor. They offered me to be an employee after I was there for 6 months, but I declined. My Goldman boss didn’t like it at all, but I always viewed all my job as temporary assignment and I have always resented identifying myself with a particular company. But more importantly, in my own S-corp I could customize the benefits to myself and I didn’t want to deal with a different benefits setup when going from company to company. So these things I talk about here, I practiced in my life.
I have always viewed work as project based. To me a company like Goldman Sachs is not one company that does the same thing all the time. All banks go through rapid change internally. If commodities are booming, Goldman creates a commodity trading desk for the 2-3 years they are booming and when the boom ends, they close up shop. Thus Goldman is really an umbrella structure over a series of companies that exist for a limited amount of time. Goldman is just a label for a bunch of guys who are constantly sprinting from one project to another. There is a tremendous amount of turnover and creative destruction. The larger economy is similar to Goldman. Industries and practices always change due to competition and innovation. Work and skills required on projects change all the time. Therefore I have a Project Based view of the economy. You have a project to do – you gather people with the skills to do it and when the project is over, everybody goes to do something else. The grouping into corporations I view as somewhat arbitrary.
In fact, I don’t think people like their entire livelihood being tied to one employer. People don’t like being fired and in fact the single employer model leads to employees doing really stupid stuff to preserve their jobs. I am totally in favor of dismantling the single employer model. Good managers should be able to handle multiple projects and they don’t need the threat of firing to motivate workers. I think the best outcome for both employees is when they actually have 2 or 3 part-time gigs. I think this would be a tremendous improvement over the current system. If you have 2 jobs and one of them goes away for whatever reason (industry or economy sucks), the worker doesn’t lose all of his income. The income gets cut in half but that person doesn’t go to zero income and then become dependent on the government. A proper conservative movement should seek to not only decouple benefits from employers but also eliminate the single employer model and move to a Gig Economy model.
I have worked at many Wall Street companies and to me the tech teams overall are usually 4-5 core members (the VPs) and everybody else on the tech team is really a contractor who is hired for their skills which are needed for a few months. This model of having 4-5 core employees and then everybody else being a skills based contractor is really the best way to run projects, corporations and the economy overall. Too often corps hire somebody for a specific skill and then try to mold him/her to do other tasks which the employee doesn’t want. My wife had this issue at her last job. She was hired to be an accountant and she loves being an accountant. But the company started giving her other tasks like doing Human Resources work which she need to learn on the fly. She then started resenting her job. When she lost her job, we now migrated to a new model. She now has 2 jobs where she is an accountant in both, 20 hours each. If one gig ends, she has the time to find another gig without going through an existential panic of her income going to zero. She is doing what she is good at 2 places that need her. She is happy and both of her employers are happy.
Broadly speaking, a move to Gig Economy on steroids and eliminating the single employer model will result in tremendous resiliency of the US economy which will be coupled with tremendous amount of innovation. People will constantly be employed in some capacity which means their skills will remain relevant. At the same time there will be less dependence on government benefits and lower government burden. Labor capital will be more efficiently moved to what the economy needs and to those who manage it better. This is an inevitable development that will be aided by cloud and blockchain technologies. In fact, the rise of the crypto industry – which is really a pure play on a project based economy – is clearly showing us what the future economy will look like.
Board Representation for Workers
For legacy industrial companies where you have a lot of blue collar labor, National Conservatism envisions a seat the table for workers. Workers would create Worker-Management Organization (WMO) inside an employer and then elect a representative that will sit on the board of the corporation. Senator Warren’s proposal is to staff corporate boards with 40% of labor rep but NatCons view this is as too much worker representation. Currently worker representation on boards is zero. Natcons would allow for 1 seat or maximum 2 seats. The point here is that worker rights are represented (as opposed to not represented), not that worker rights become the dominant decision maker inside big business. Workers should have the option of board representation, not an automatic seat they must fill. Worker board representation should be a feature of labor law (which is federal) rather than corporate law (which is the province of state governments). The initial priority should be worker board representation for employees of the largest corporations, which employ the preponderance of the American workforce and have the most well-established corporate-governance infrastructure.
Industrial Policy/Protection from Foreign Geoeconomic Attacks
The “between the lines” promise of Trump in the 2016 election was the return industrial policy. Obviously, instead of industrial policy we got anarcho-capitalism because Trump is a liar and a fool. But with his verbal attacks on China, Americans assumed with Trump they will get a return of Nixonian industrial policy and a conservative government approach to regulating trade and commerce. Obviously they didn’t get that. They got some insane “Art of the Deal” stock market manipulation crap that permanently severed the relationship with China in the worst possible way. It made the Chinese lose complete respect for America. Trump was an absolute embarrassment.
But what American want in this case is correct: China and Europe do use industrial policy to rig trade and commerce in their favor and there is no natural “free market” response to that. The goal of industrial policy to relocate production and tax base into a country and China and Europe have been very successful at thinning out the American tax base, removing production from America and thus devaluing the US dollar, weakening the American economy and denting American geopolitical strength and prestige. They have been so successful that America today is a shell of its former geopolitical self. There is only one way to fix that and that is for America to have an industrial policy of its own.
The goal of American industrial policy, however, is not to pick winners and losers like Democrats want (for example favoring green energy) but simply to level the playing field for businesses and consumers against the industrial policy of other major geoeconomic cartels like China and Europe. Thus the industrial policy that National Conservatives propose is to be defensive in nature rather than activist. The important thing to for conservatives is to recognize here is that industrial policy must exist and must be part of the government policy toolbox. This is something that libertarian ideology has failed at for the past 40 years and as a result we have 60 million people in the American heartland without proper representation in government. This is a human tragedy. We have mass layoffs and communities that are falling apart. Your worst enemies wouldn’t pick libertarians to run the economy like conservatives have for the past 4 decades. It is a natural disaster that has befallen all those communities in America.
The goal of National Conservatism to erect protections for those communities and to give them a chance to succeed in a reconfigured world economy. And the only way to do that is to counter the industrial policy overreach of foreign governments with a defensive industrial policy of our own. Ultimately, National Conservatives see both a purely market based approach or a purely government based approach to economic policy to be both poor policy. Instead they view broad government support that leaves much to market (but not all) for key industries that are being attacked as the optimal approach for government policy.
Community Protection from Private Sector Collectivism
American communities have also another enemy that is non-governmental in nature – big businesses. International corporations are now so massive that they have power almost equal to that of governments. In fact, corporations staff the government with both politicians and bureaucrats. Unlike governments, however, businesses are completely unaccountable to the public and can pursue devastating economic policies that bring to their knees local communities around the country. While obviously businesses should be allowed to do what they want, once they get big enough to influence governments, big businesses present a private sector collectivist force that needs to be regulated, just like public sector collectivists (the government) are regulated by the American public via the US constitution. There needs to be an institutional check on big business. The US constitution writers didn’t foresee big corporations as such a big factor and didn’t set up the system to account for them.
Woke capitalism has become an escape hatch for socialists who have realized that public sector (ie government level) socialism will be always met with vigorous resistance by the conservatives US government. Instead, socialists have chosen a guerrilla approach to fight back by seeking refuge in private sector corporations because US conservatives don’t regulate the private sector. The socialist went to fight where conservatives don’t fight. As corporations grow bigger, their worker policies and more importantly customer policies become an ever bigger factor in the economy and society. Today if you want to watch a Clarence Thomas biography you are likely to do it on Google YouTube or Amazon Video. What if both Amazon and Google decide to censor Clarence Thomas biography for whatever reason? You can’t watch it. Thus big corporate censorship and other internal policies can have tremendous social and economic impact and they absolutely must be regulated by the state to ensure common access and generally accepted behavior/censorship rules. This is no different than requiring electrical companies to provide electricity to everybody in the country. At a certain size, you simply can’t allow social scoring systems to influence business behavior and allow socialists to do social engineering via the private sector.
American conservatives have always relied on the idiotism of libertarian anarcho-capitalist ideology to guide government policy and that has cost America dearly over the past 40 years. All we have as result is the hollowing out of America and reducing its gravitas in world affairs. If the goal of libertarians was to embarrass America, they certainly have succeeded. The stance of all the GOP Senators for the past 40 years was to celebrate Facebook and Google as if America is the only place in the world with big corporations. You know – never mind Samsung. The GOP of today has a totally idiotic Cold War era mentality that drowns in outdated symbolism. I mean people like Chuck Grassley couldn’t be any more fossilized. And he has the temerity to run for reelection at 82. Under the mismanagement of morons like Grassley, socialists have taken over big corporations through classic communist crowd management techniques such as backdoor committee shaming and consumer boycotts. Big corporations in America have a mandate to make money for shareholders and when threatened with loss of customers via a customer boycott they fold to the demands of social activists. Any issue can be made controversial and in the age of social media used as a weapon of corporate destruction. Thus control of business leaders through consumer boycotts is super easy. Private sector collectivism now is being used to transform America to a land of liberal idiots. No wonder why China and Europe no longer respect American conservatives like Grassley. What is there to respect? He is a complete idiot and dumb as a brick. And moreover doesn’t have the humility to retire. GOP fossils like Grassley are getting metaphorically slaughtered by socialists while they sing songs about times long past. Witness the latest $100 million Obama donation by Bezos to fund Obama’s library. The only thing missing from this picture is Bezos prostrating himself and kissing Obama’s feet.
The goal of National Conservatives is to establish procedures to protect both workers and customers from private sector collectivism gone astray. The first step is to identify big corporations that need to be designated as “common carriers” of goods and services. Then these Designated Common Carriers (DCC) have to be forced to obey generally accepted rules for doing business and be hit with big fines and cease and desist orders if they start to become activist organizations. In other words, we need to create “Common Carrier Rules Organizations” (CCRO) that will define what these rules/regulations are and then the designated big corporations through federal law need to be made to comply with these rules. CCRO rules are similar to government regulations but not entirely because the CCRO membership will consist of private sector and public sector organizations as well ordinary citizens. Thus CCRO rules won’t be subject to political infiltration like government bureaucracy is.
Foreign Agent Registration for Big Corporation with Large Stakes in Strategic Adversary Nations
The major stakeholders of big corporations and financial organizations need to be under closer government scrutiny and be forced to register as foreign agents if they have large investments in countries which the US considers “strategic adversaries” like China and Russia. It is very important that the lobbying activity of these large corporations/Wall Street players be properly discounted in discussions of national security and national economic security. An example of this is somebody like Ray Dalio. Ray Dalio has massive investments in China and his company’s domestic lobbying behavior is heavily influenced by the Chinese government to the benefit of China and to the detriment of America. Yet Ray Dalio and Bridgewater aren’t labeled as foreign agents and thus their lobbying activity in DC is viewed as if it is purely domestic. That is wrong and something that can’t continue to happen as it results in very bad government policies for Americans. If big corporations have a big enough lobbying presence in Washington DC, it needs to be forced to register as a foreign agent of the strategic adversaries it represents. The threshold for registration is having assets north of $1 billion in a strategic adversary nation.
Conclusion
The root of this National Conservative movement is the failure of both the Bush neo-conservative and Clinton/Obama neo-liberal movements over the past 40 years to put restraints on market fundamentalism because both movements ideologically believe that markets know best. This is part ideological laziness and part political inertia. This lack of market regulation in turn got exploited by China with clever industrial policy and resulted in mass offshoring of jobs to China and disenfranchisement of 60 million Americans – a population the size of Germany. When viewing National Conservatism through historical lens, I offer this progression of general politico-economic ideology: Communism arose as a reaction to the failures of Laissez-faire Capitalism in the 1930s since the unregulated capitalist economic model resulted in a highly unequal and stagnant economy. Then in 1980s, Neo-conservatism arose as a reaction to the failures of Communism because Communism ran out of big economic development ideas and couldn’t generate economic growth after industrialization phase was completed. In 1990s, Neo-liberalism arose as reaction to Neo-conservatism because Neo-conservatism was a spent force after the collapse of the Soviet Union and large military buildups were no longer required. In 2010s, China’s State Capitalist model (allowing big corporations to flourish within the constraints of a collectivist economy) arose as a reaction to neo-liberalism because neo-liberalism refused to counter China’s geoeconomic attacks via industrial policy. Now America needs an ideological answer to China’s State Capitalism. That answer is National Conservatism.
Above I outlined 6 areas in which the National Conservative movement can improve the present economic status quo and strengthen American’s national and economic security. This list is not a comprehensive list by any means and I am sure there is a lot of other people with good ideas on what National Conservatism is, but this is a good start:
- Decoupling Benefits from Employment/Unbundling of Organized Labor
- Rise of Gig Economy/Elimination of Single Employer Employment Model
- Board Representation for Workers
- Industrial Policy/Protection from Foreign Geoeconomic Attacks
- Community Protection from Private Sector Collectivism
- Foreign Agent Registration for Big Corporation with Large Stakes in Strategic Adversary Nations
I think National Conservatism will be the dominant ideological force in American politics over the next 20 years and the rise of the natcons starts right here and right now with the 2022 mid-term election. By the 2024 election, the US President will be chosen from the natcon camp (I happen to think it will be Ron DeSantis). By addressing worker rights and the gig economy, Republicans will be able to successfully counteract political attacks on economic issues by progressives and Democrats will no longer be able to split Republican voters on economic issues. This political weakness of the GOP has been exploited to great effect over the past 20 years and it is time for the Republican Party to mount an effective response. That response is National Conservatism. Trump’s emergence on the political scene in 2016 was the very first and very clumsy attempt at defining this ideology. With the benefit of time, this ideology is now coming to fruition and we will see its implementation in the future.
This coming Wednesday, I will be attending the inaugural “Henry Clay Lecture in Political Economy” in Washington DC. This is a speech that will be given by Senator Marco Rubio in front of the American Compass think tank. I think this speech should put National Conservatism on the American political map and you will start to hear about it in media more often going forward.
Reference articles:
https://americancompass.org/collections/a-better-bargain/
https://americancompass.org/essays/a-better-bargain-worker-voice-and-representation/
https://americancompass.org/essays/a-better-bargain-worker-power-in-the-labor-market/
https://americancompass.org/essays/a-better-bargain-worker-solidarity-and-mutual-support/
https://americancompass.org/wp-content/uploads/2020/12/Annual-Report-2020_Digital_Spreads.pdf
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