From New York Times Opinion, this is the Ezra Klein Show. Good Lord, what a weekend politics. For the weekend there was an assassination attempt on Donald Trump. I thought that was going to reshape everything going forward, but then on Monday everything shifted again. And Donald Trump picked Ohio Senator JD Vance as his vice presidential running mate. There is a lot to say about Vance. Maybe I'll start here. Vance is a very ideological pick, not a political one.
If Trump was worried about the polls, if Trump thought he might lose, if he wanted a vice president who could help him win Virginia or win Wisconsin, those picks were on offer. But in Vance he showed a different kind of confidence. He picked the vice presidential candidate who has done the most to turn Trump's impulses, his rhetoric, his political and personal brand into a coherent governing philosophy.
Vance has done that in ways I find scary, like the deep distaste for a democratic process and elections that he's shown since 2020. But he's also done that in ways I find interesting, maybe even important, like the more serious form of economic populism he's pursued in the Senate. I find that a lot of liberals don't want to admit this is happening. They want to brush it off as just illusion, but something is happening here.
If you watch the first night of their public and national convention, the key speech was given by Sean O'Brien, the president of the Teamsters Union. That was startling and listen for a second to O'Brien. There are some of the parties who stand in active opposition to labor unions. This too must change. The Teamsters and the GOP may not agree on many issues, but a growing group has shown the courage to sit down and consider points of view that aren't funded by big money think tanks.
Senators like JD Vance, Roger Marshall, and representatives are among elected officials who truly care about working people. And this group is expanding and is putting fear into those who have monopolized our very broken system in America today. Having a stadium full of Republicans cheer the idea of being a pro union party, that's different. Something is changing here. Whether or not it actually changes, I don't think we know yet.
But there is some factional struggle happening in their Republican party. And in picking Vance, Trump has given a lot of power to the emergent faction. On Friday, so a few days before Vance was named, I sat down with Orin Cass. This is interesting. This is interesting. He was Mitt Romney's domestic policy director in the 2012 campaign. But then after Romney's loss and Trump's victory in 2016, Cass went through this evolution, founding a group called American Compass.
It's become a policy nerve center for the party's younger, more populist generation. It is critiqued the Republican party. It is attacked the Republican party for being an anti-worker party, for giving up on the very people who vote for it, who it is supposed to represent. American Compass does not represent or speak for a large faction of Senate Republicans.
But there are a number of younger Senate Republicans like Tom Cotton, like Marco Rubio, like Josh Hawley, like JD Vance, who are quite close to it, who are part of this sort of emergent faction. And so I think it's worth exploring what Cass has been trying to do here. He wants Republicans to become a pro-worker party as he and they define it, which is definitely different than how Democrats define it. He wants to see Republicans become a pro-union party.
It's not often that I have Republican policy experts on the show who make an argument for sectoral bargaining. I mean, that is something new. And the Vance Pick makes his conversation a lot more relevant, because it means Cass's thinking is now much closer to the center of Republican party politics. You might soon, if Donald Trump wins, be in the White House, or at least in the Vice President's office. But that doesn't mean that Cass's thinking is alone.
Look at Project 2025. That's not an economically populist document. Look at the GOP platform. The Republican party is in the midst of a faction ideological battle. You still see it proposing these corporate giveaways and all this deregulation and these tax cuts. And so it's easy enough to wonder. Is any of this real or is it just putting another populist face on the same old agenda? And if it is real, is what is being proposed here even a good idea?
As always, my email as we're ClientShow at nytimes.com. Or in Cass, welcome to the show. Thank you so much for having me. We're here talking on the cusp of the 2024 Republican National Convention. But I wanted to play you a clip from the 2012 Republican National Convention when Mitt Romney received the nomination. And I wanted to hear how you hear this now. In America, we celebrate success. We don't apologize for success.
Now, we weren't always successful at Bain, but no one ever is in the real world of business. That's what this president doesn't seem to understand. Business and growing jobs is about taking risk, sometimes failing, sometimes succeeding, but always striving. It's about dreams. Usually it doesn't work out exactly as you might have imagined. Money jobs was fired at Apple. And then he came back and changed the world.
It's the genius of the American Free Enterprise System to harness the extraordinary creativity and talent and industry of the American people with assistance that's dedicated to creating tomorrow's prosperity, not trying to redistribute it today. You were Mitt Romney's domestic policy advisor on that campaign. What do you think of that political message now? Well, let me say, first of all, I'm relieved. I thought you were going to play the bit with Clint Eastwood and the chair.
So I was there for that. That was one of the most surreal moments in my political life. Yes. Well, anyway, we've only moved to the more surreal from there in various respects, but it is a fascinating clip. And one of the things that strikes me most about it is it's almost drowned out in the applause.
But what he describes as sort of the secret of the Free Enterprise System is harnessing the, I don't remember the exact adjectives, ingenuity and productivity and so forth of the American people to build these successful enterprises. And I think that remains exactly correct.
I think what was so often missing in the Republican Party, including in the message as often presented in the Romney Ryan campaign, was recognizing that we had moved away from that system that if you ask who was being most successful in the American economy, whether you're talking about Steve Jobs at Apple or the folks running Bane Capital, it was not achieving success by harnessing the power of the American worker. It was achieving success by avoiding the American worker.
One thing that strikes me about that clip and Republican Party rhetoric from that period is that it is pitched at somebody specific. The sense was that we had come to talk down the entrepreneurs, the risk takers, the corporate executives.
And now when I listen to a lot of Republicans and I don't think their policy always backs us up, but when I listen to them and when I listen to you, there's been an implicit shift at least rhetorically in who is the, the Vox Populi, who is the political ideal voice. That's definitely true. I think it is true both in a sort of political understanding of who the Republican Party's base is. It's also true as a matter of understanding what message they want to hear.
Of course, it was always the case that most Republican voters were not the business creators in the entrepreneurs. That's always a small share of the population. But that those who weren't were not necessarily as enamored of that message as maybe people assumed as the consultants and the speed traders certainly seem to assume. And then of course, that's only become more true.
If you look at the realignment going on with, within American politics, you see increasingly the upper income most educated parts of the population moving left. And you see a huge number of working middle class moving right. And so you have a new political coalition that Republicans are speaking to.
And I think you have a much better understanding of reality among conservatives about the real challenges the country has and the kinds of things you're going to have to not just talk about, but actually focus on if you're going to solve anything.
My sense is the shift you have made and some of the people who politically you are closer to like JD Vance and Marco Rubio and Tom Cotton and Josh Holly have made is a sense that the Republican party's view of what if anything economic policy should be subordinate to what it is downstream of what it is trying to achieve has changed. So in 2012, what would you say Republicans believed the point of economic policy actually was.
And what now is the faction of Republicans that you are part of trying to say the point of economic policy actually is. If you look back to 2012 to sort of the pre-Trump Reagan, Ryan, GOP, whatever you want to call it, there was essentially this view that GDP was the goal that we're here to grow the pie growth is the end and maybe if there's a lot of inequity as we get that growth we'll do some redistribution on the back end but we'll complain along the way.
And I think you're exactly right that underlying this shift in thinking on trade, on labor, on any of these things and so forth is the recognition that GDP growth is nice, right? I'm not a degreaser who wants to go live in a log cabin but that it's certainly not the be all and end all and it's not even a very good proxy for a lot of the things that matter most.
One thing that I've always found fascinating and somewhat coincidental but it's between the 2012 election and the 2016 election that all of the research on deaths of despair have even emerged. And during that same period that David Otters research on the China shock emerged and the consensus among economists that well free trade is always good so of course free trade with China has been good was finally challenged by the reality that in fact free trade with China had not been good.
You know, it's an interesting thing about Romney and this thing I've written about that was very formative for me was that he was actually very skeptical of the China trade story and I sort of I got sent off to do the research on why was that not working well for the American people but that was seen as a sort of you know, weird one off exception.
And the basic assumption was still you know, the understanding of the invisible hand as people thought Adam Smith spoke of the invisible hand which was that there is some miraculous force out there that ensures that whenever one is left to pursue their own profit the public benefits as well, you know, the rising tide lifts all ships. And that is something I think you know, certainly I to a significant extent took for granted and just proved as an empirical matter not not to be the case.
We have now had decades for which that did not happen. And so I think the ship certainly that that has occurred in my own thinking and I think you're right that is is driving a lot of what's going on within conservatism is a recognition that the ends that were actually focused on which you might kind of broadly describe in you know in a vague term like human flourishing has a bunch of specific elements within it and high material living standards is one of them.
But strong stable communities family formation the ability of people to build decent lives typically in the communities where they've lived where their families have lived to raise children to be productive contributors to their communities that that's really what the goal is supposed to be and that were actually allowed to assert that those things are goals instead of just saying well whatever liberty in the market produce is the end unto itself.
Senator Rubio has a very good line about this that the market it or the economy is supposed to be serving people not people serving the economy that is then not not only are right but in our sense are our duty to think about how we want to govern and to to proactively govern to ensure that the market is generating the kinds of outcomes we care most about even if those aren't the ones that would kind of get an A on the exam as as efficient.
But let me try to understand why this felt so earth shaking to you because I'm more liberal I would describe the dominant view among liberals in this era as pro free trade but quite aware that you had markets that were poorly structured you had people a huge shift in income to capital away from labor and that that income should be redistributed.
I don't exactly understand the shift from that insight which felt true to me then and is true to me now to where at least some on the right have gone which is to a full on skepticism we should fully move away from the level of global integration we've had.
There's a lot to impact there I think exactly as you describe the progressive view tends to more take for granted that markets are good for some things but they're not going to work all that well you have to have therefore a lot of interventions all over the place in various ways both sort of in advance hopefully to get more equitable market outcomes and after the fact to redistribute and compensate for inequitable outcomes.
And I think the conservative view certainly my view is that there is always going to be some need for that but that the better model the one that we should be aspiring to to the extent that we can is one in which we actually set up markets that they do work well that in some respects the kind of big structural questions are the better place to operate.
And so you know that's where one of the key arguments we make had American compass certainly to right of center audiences in particular is to say it's not even necessarily a trilema it's a pretty basic dilemma either you have to be willing to put constraints around the American market such that we can have a relatively free American market or you're going to leave the American market totally exposed to global forces and then on the back end going have to intervene all over the place.
And so we didn't sense rather focus on those big structural questions and see if we can get them right. Let's ground this in terrorists because I think it's helpful to put this round of policy because look anybody trying to get the right to question the idea that markets are some natural phenomenon that arise out of natural law and then work perfectly wherever they appear
so long as the government does again in their way you're doing the Lord's work I appreciate and I appreciate everything you do on that but I do think that the traditional way that progressive economics thinkers think about this is like okay which markets are failing and why.
And what you're saying is at a place where conservative reformers populist conservatives like yourself have begun to diverge is saying well we don't want this piece by piece set of interventions we want to put in place some big rules that shift the structure.
So a big role that would shift the structure that you have proposed that Donald Trump has now proposed is a 10% tariff on all imported goods a significantly higher percent tariff than that on imported goods from China I believe for Trump at 60% stop by making the case for that policy to me. I think where it starts is with consideration of the trade balance and whether or not you care that we run roughly a trillion dollar a year trade deficit.
And what that trade deficit represents at the end of the day is roughly a trillion dollars worth of stuff being made overseas to be consumed in the American market that is exchanged not for stuff that we make here to be consumed elsewhere but that is instead exchanged for assets because when you have a large trade deficit when people are sending you a lot more than you're sending them it's not being sent you for free as a favor you are in fact buying it on credit.
And so to a significant extent what we send back for instance is treasury bonds right we literally send back pieces of paper that say well the US government will pay you be a tax payers at some point in the future you're sending back corporate debt you're sending back corporate equity you're literally saying here you can have our companies and the future profits that come from them and so forth and we'll just consume this stuff now.
And you know in some respects hopefully as that description makes clear that that is an extraordinary long term concern for the health of an economy and of a nation but in the short run what you're doing is you're taking what would otherwise have been demand for
things that are produced in America and you're just eliminating it you're just saying there is now less demand for stuff made in this country there is less demand for the American labor that comes with that there is less need to do investment in the United States and we're just going to enjoy the consumption anyway.
Now there are some people who say that's fine for a long time the mainstream view among economists was that that's great even even on the on the left of center and I think what people are increasingly recognizing is that this is a terrible model it is bad for American
workers it is bad for the communities in large portions of the country where you know manufacturing resource development things in the physical economy or where there can be most productive it's bad for innovation because in the long run it turns out that you can
try to do the iPhone designed in California assembled in Shenzhen thing but in the long run actually where the manufacturing goes then the research development goes and you end up not being able to do it at all and that has happened in broad swaths of the American economy with with our industrial base and so if you look at this and say okay this is not good then you are prepared to ask what we can do about it and so that then leads you to start thinking about things like tariffs.
I'm not a believer here that there's a one size way to think about industries I think it's good to make some garments in America but I don't think given an economy like hours with labor like hours it makes sense to try to imagine a world where most garments that
Americans wear are made in America I'll be interested here when when I finish this question if you disagree with that but let's think about say semiconductors I'm completely bought in that we want semiconductor manufacturing to a much greater extent than is true now
to happen in America semiconductors are a huge global industry they are tremendous strategic importance if we lost access to semiconductors made in Taiwan say we'd be in terrible trouble and Taiwan is a very politically volatile spot but the reason we lost dominance in semiconductor
manufacturing is I mean it's a complicated story but but one of the major parts of the story is it just became too expensive to make things here and the semiconductor supply chain is insanely complex and there's no way it's all going to be here you have to import
a huge number of goods and so at this exact moment when we are trying to bring back semiconductor manufacturing through the chips and science act through you know giving groups like Intel money to create plants here we're going to come in and say to them oh also every part
that you import to make semiconductors in America is going to be 10% more expensive because we're going to stop a tariff on it and when I hear that I think oh that's going to be really good for anybody wants to locate a semiconductor manufacturing plant in Canada
or for that matter in Taiwan because we're creating a cost increase to making complex goods here tell me why I'm wrong here about what this will mean for say an Intel well I guess what I would start with is your description of why we lost semiconductor manufacturing
as because it got too expensive to make things here which I don't think is is really true at all the reason that semiconductor manufacturing moved overseas at a significant rate was because other countries introduced massive subsidies to invite and underwrite the cost
of building fabs elsewhere so it is true that relatively speaking it ended up being more expensive here but that wasn't a market force there wasn't any sort of comparative advantage like you know rocky outcroppings off the coast of China turn out to just be
really great places to make semiconductors and silicon valley is not and the reason I sort of started that is to say I think it's really important to recognize that our basic model that we learn in economics class of so-called comparative advantage where everybody's
going to specialize in the thing that they're relatively more efficient in making simply does not describe a modern industrial economy compared to advantages is really created not discovered based on who invests in what if the United States decides it wants to have
semiconductor manufacturing here we really should do two things we both need the industrial policy things like the chips act but then we're also going to need policies that essentially just say if you want to serve the US market you are going to have to do it from the US
and that may raise your costs somewhat relative to elsewhere and that may mean the final cost of the thing that you produce is higher at least in the short run I think we have to question whether over time it will be cheaper or more expensive to do something in the
US but that's just the way it's going to be so to answer the question specifically when you say well maybe I'll go do it in Canada instead well the answer is no you won't because if you do then you're going to have to pay the 10% tariff when you try to import
the chip into the US anyway and so what you're doing at the end of the day is saying look access to the US market it is going to be more advantageous to be in the US market and sometimes that will mean you end up having to pay tariffs for some of your inputs but
it's also going to mean other parts of the supply chain move to the US as well because it's certainly the case that you know Guatemala can't have a soup to mucknut supply chain in semiconductors but I have yet to hear a reason why the United States can't of course
the United States did when we pioneered and developed the semiconductor before we allowed it all to move overseas well let me make a couple points on this so why not I really just just want to say strongly disagree that it is plausible that we would have a soup
to nuts advanced semiconductor supply chain in America I mean if people have read chip boars which is I think the best book on this the semiconductor supply chain is just extraordinarily complicated and fragile and there's a lot of populism in the way these proposals are
framed but something we have seen with real starkness in the past couple of years is people do not like higher prices those are politically unstable something we have also seen and something you're talking about is Americans like to have want to have in many
these cases strong export focused industries we want to have global leadership and to the extent that we have made it very difficult for these industries to import what they need to then be cost competitive when exporting what they need to export that's going to be
of a lot of anger possibly the voters we're not going to turn the country out of being in a globalized world where there are real advantages to participating globally and to selling globally and particularly like a one time huge shock to prices is going to be
politically tricky so to also be very curious how you think about that it would be lovely to have high levels of of trade if it's balanced trade if we are making things and sending them elsewhere in return for things that are made elsewhere and sent to us that that
is the economic model we all thought we were signing up for so my point is not that literally you know we will be a closed economy that that makes everything and you know we we can't use a sml machines from the dutch or whatever else but I do think it's worth just noting
that this idea like well we couldn't do that I'm not sure why I mean there was a time when the soup to not semiconductor process was executed in the US because we had literally invented the whole thing but it is much simpler than I mean I think that's the answer to
the question you're asking the the semiconductors being made then it works extraordinarily simplistic compared to the hyper advanced semiconductors that TSMC is now dominant in now if you look at what the US has done repeatedly in industry after industry as it has developed these
technologies we show an extraordinary ability to innovate and develop the entire thing and then we sort of look away and say like well I mean it was literally our view it we don't care whether or not we actually make it you know the most famous quote on this is computer
chips potato chips what's the difference I mean that was the policy environment in which we stopped making all of this stuff it was not because it was too complicated for us to make it was not because we were not the best at making it it was because we just didn't
care and so I do think it's important to sort of step back and recognize that he in a well functioning trading system first of all most of this stuff never would have left we would I mean you could make the case that you know we're not going to have every raw mineral
that that goes into the chip that that my very will be the case but the idea that we can't be the technological leader in the various stages of the semiconductor manufacturing process when we are still 25% of GDP among other things of a global GDP 20 25% I don't know why
that would be the case to be very clear my view is that the US actually can be the leader on many dimensions of these things but that to take seriously the complexity of the things we need to make and the cooperation across supply chains needed to make them that to try
to achieve leadership by raising the prices we pay for the things we need to be competitive both on a manufacturing level and on a innovation level in these things is likely to be counterproductive and as you say you learn a lot by manufacturing and so if it's much cheaper to manufacture
in other places not just because labor costs are lower but because there's much easier to cooperate across supply chains etc we are not going to take over that manufacturing and if we don't take over that manufacturing we're not going to take over that innovation
we don't if we don't take over that innovation we're not going to have the leadership that you want us to have so I'm not arguing that we shouldn't have leadership in these places I am skeptical that broad based tariffs will get us there yes there's absolutely a cost
associated with reshoring and regaining leadership but I think the two things I would say about it first is the cost is certainly temporary and and potentially quite short lived and I think a good illustration of this comes from the auto industry where you know one of
the quintessential illustrations of successful trade policy and it wasn't even tariffs it was an outright quota was the 1980s when the Japanese automakers were not just making inroads but but sort of poised to badly beat Detroit and Reagan just negotiated an outright
import quota with the Japanese you will not import growth of imports will simply stop now what happened the economists will tell you Japanese car prices therefore did go up maybe as much as 5 to 10% in those initial years but more importantly what happened is all
of the Japanese automakers moved their production facilities to the United States right right away they started with assembly facilities soon after that their entire supply chains moved then they started opening R&D centers here it was literally only a few years before
the quotas could be lifted because once you'd actually change the flow of that investment and said if you want to sell in the American market you have to make it in the American market guess what you can actually make things in the American market quite efficiently and
effectively for many many years the Toyota Camry was the most American car on the market in terms of American content in the vehicle and so I guess you could step back and say oh whoa what a disaster look at how the prices of these cars went up for a couple of years
but I'm not sure if there's anybody who would say well actually I know a couple of people the kid who is due to wood so let me say there are not many people who would say well this was just a mistake having the the Japanese auto industry now in the US employing hundreds
of thousands of people all of those jobs all of that future innovation et cetera well you know we shouldn't have done that because if you actually intervene in the market like that you're going to raise the price for consumers so that's one point the second point is that
it's really important to keep in mind and I find it funny when when folks on on the left of center make this mistake because it is the quintessential right of center mistake I fight with the tax foundation folks about this all the time people complaining that tariffs
are going to raise prices behave as if the tariffs just set the money on fire tariffs are tax revenue what you're talking about is a tax the instance of which is not entirely born by Americans anyway and even to the extent that it is lands as revenue in the treasury
and so I think we have to have a much broader conversation about what an economy with versus without tariffs looks like and how that balances out and who wins in the long term because I would say it is in fact working families that that win the most rather than do this
sort of very narrow static analysis of okay well there's a tariff so now the banana is 10% more expensive or you've put me in genuinely a terrible position here because there are a lot of things I want to ask you about but I also really enjoy talking about trade policy
and I'm having trouble between the part of me that knows how to structure a good conversation and the party that just wants to do this forever I'm going to do one more beat on this and you can have laws for it on it then we'll move on I have friends who are trying to calm
off us and the auto examples really interesting and it drives them bananas to keep using bananas in different ways in our conversation because as you know the Japanese examples really interesting we decided we needed to bring in Japanese manufacturing right we actually what we created
in that policy that you're talking about in the Reagan it was a profound collaboration with Japanese firms and we learned a lot from those firms we respected Japanese innovations in manufacturing and logistics and organizational processes like you could find from that era
a lot of books about how Toyota was run as a company and the five wise is still a tactic from how Toyota was run that is often talked about in American business classes so what we did was brought that in and we learned a lot in addition to profiting from the fact
that now Toyota was running manufacturing facilities in America right now we know that China is not just effective as a manufacturer because there's a lot of low wage labor in China they have figured things out as a manufacturer that we have not they have developed kinds
of expertise that we have not they know how to make things that we are not as good at making one thing you can imagine doing is a policy what we want to do is bring in these Chinese electric vehicle manufacturing firms to work in America right to start up these
factories and do roughly what we did when we were doing this with Japan and Japanese auto making in the 80s that is not the policy really of either by an or Trump to my knowledge they have been in a much more competitive position with China they want to see the Chinese
auto firms weakened they do not want them to have a foothold in the American market even if that foothold would come through having factories in the American market and also we don't treat Chinese manufacturing as something we could learn from we don't treat Chinese
firms as having lessons to teach us my sense of the politics is that nobody is saying well the real thing we're trying to aim at here is having Chinese EV firms manufacturing their low cost very popular electric vehicles here which is what we did with the Japanese are
you saying that that's what we should do that's the point of where our policies should go no definitely not and I think you put your finger on a really interesting challenge and the EV industry is in fact the exact quintessential illustration of it I just finished up a large
project on EVs for this exact reason that the Japanese analogy fails when you get to the point that okay we'll just getting BYD to set up American factories is not where we want to end up but you're the one using the Japanese analogy I guess I would you
know won't tie a bow on it but you're exactly right there are things about China and the relationship between the US and China that makes it a lot harder what we're talking about setting up if we create the incentive that you have to make it in America is not bringing
Chinese factories to America it's creating that incentive and then allowing the investment to figure out the best way to do it here which is going to look very different but given where we are in technological development potentially is an ideal time to be doing it and
you know maybe that's just the free market conservative me talking but I think that's exactly the formula we should be striving for I don't want to just see us sort of going around and trying to figure out okay here you know this spot in that spot that we need to do a big
subsidy to answer a question I actually think garments are an extraordinary potential area of innovation and I would love to see our policy be look it's going to be more expensive if you have to use foreign stuff and if you can use domestic stuff now companies of the free
world investors of the United States go for it and figure out what to do there's a lot that you now propose that others now propose which you know if you squint it can sound like Elizabeth Warren not the terrorist but policies around labor for instance that they
get much closer to what liberals have been saying for a long time but my sense is this is where a lot of things diverge that when I read you and I read some others in your sphere what I really hear being said is that we need to use economic policy to make the
single breadwinner but two parent family with not one to two kids but three to five kids possible again specifically although not only for a lot of these men in the Midwest for whom we see really now quite negative outcomes how how fair unfair is that is a description
of your goal I'd say partly fair partly unfair the part that's definitely fair is I think you've put your finger on very specifically when I talk about the idea that human flourishing means people being able to build decent lives in their communities contribute productively
form and raise families yeah we want that to be possible in the ways that most people in fact say they want to do it which is that model you've described being able to get married have kids and have a single income be sufficient to support the family so that
you have choices about the extent to which you want one or two earners and especially you can have a parent at home with young kids the part I would say is very unfair is I think when you start to sort of throw in that you know we're specifically talking about men
in certain Midwestern communities and so forth you know Adam Pozen who was the president of the Peterson Institute had an infamous quote a couple of years ago saying that the concern for manufacturing was it was it was really about a fetish for keeping white men in
rural areas in in powerful positions what whether white men in rural areas have ever been in all that powerful position is another matter but this isn't an issue of race or gender or region within the country it's an issue of making sure that people actually have the ability to pursue
the life courses they themselves say they want to pursue and recognizing that that only happens if you have an economy that makes it possible to raise a family on one income and if that is a possibility then you can do that and you have lots of flexibility around that but I don't think we
have that today the reason I focus it there is that things I notice right the whole death of despair thing was about white men in particular parts of the country is now expanded I'm not a believer really in desive despair I don't think the evidence on that has held up as what is going on but
but it is where a lot of this was generated from and because there is a very strong focus in the work you and others do on manufacturing production and what has happened to the declining fortunes of men who have lost a space as breadwinners and by the way I actually am concerned about that I
don't think it's a thing to wipe aside so when I say this it's not really as an attack it just strikes me that the concern came from somewhere and the policies being proposed are more specific to a certain kind of job whereas say if you're really worried about families headed by black or
Hispanic mothers you would be much more concerned about service sector jobs and whether or not those pay well and what kind of advancement they have and how the scheduling works and I'm not saying you or the people you advise don't care about that but I hear a lot less about it and going back to what I was saying earlier about their Romney and Donald Trump and implicitly who is being spoken about it often seems to be where we're implicitly speaking about you know the kinds of people that say
Vance is worried about in his book Hilbal E. L.A.G. and the policy proposals are flowing in that direction. I don't think that's the right way to characterize the policy agenda overall I think you're certainly right that when we're talking about globalization and trade deficits and so forth we're obviously talking about manufacturing it wasn't predominantly because those are the good family supporting
jobs these are going to be highly automated factories I think they certainly provide some good family supporting jobs that is among the reasons we care about them but in my mind actually a critical reason to care about those manufacturing jobs is because manufacturing and the industrial
economy described it more broadly is typically recognized I think correctly as the foundation for productivity growth more generally it is a lot easier to get high levels of productivity growth in the making of things than in in many parts of the service sector and it is in fact through
productivity growth in the manufacturing sector that everybody can be paid higher wages everywhere else and so an industrial economy as the anchor for productivity growth and innovation where you can get productivity growth and then can provide the anchor of of local economies that can enjoy
more prosperity in the service sector as well I think is at the end of the day the reason that manufacturing is such an important place to focus I think if you look then at other parts of the policy agenda you see again that that much greater focus on service sector so just give two examples
one is is immigration policy and I I always love hassling my progressive friends on this point that it is unclear to me how one talks about worker power or higher wages in the service sector for that Hispanic mother you were just describing while taking the democratic party's position
on immigration in fact tight labor markets particularly at the low end are incredibly important to higher wages in the service sector and then another area I think where you see a lot of focus is on as you mentioned these some of these questions around labor and how do you develop a
labor movement and a model for organized labor that actually works effectively in the especially more distributed service sector and I think that's a key argument for more of a sector bargaining model you know the American model that we take for granted as what a labor union is you know
norm array standing about the table with the sign that says union this idea that organizing is supposed to be this company by company factory by factory worksite by worksite fight which among other things companies quite rationally resist it it is a real competitive problem to have a
union if your competitors don't you know pick your industry let's say you're a janitor in New York City there shouldn't be a fight in your building or or in the janitorial service company you work for whether that is going to be unionized there should be a janitor's union and you know we
can talk about all the upsides and downsides of that but I think it avoids a lot of what's worst and most dysfunctional about our system in the US and empirically has shown much better outcomes where it is used as a way of giving workers power and representation and so I think if you're having
a discussion about trade and tariffs then yes you're quickly talking about manufacturing jobs but if you're looking at the agenda as a whole I think it is very clearly and holistically and and in good faith I mean I think if you asked Senator Vance this he would tell you the same
thing he is deeply concerned about wages in the service sector of people of all races and genders and how you give those workers more power at the low end it is fascinating to me that you and some others in the Republican Party began to get interested in sectoral bargaining which for
a very long time has been a policy view held by people like me that would have been like last on my list to ever imagine there might be any kind of Republican interest in so on the one hand there is something happening there on the other hand I would not look at Donald Trump's agenda 47
and say what I see is a holistic focus on the labor power of Hispanic mothers in the service sector I think that would be a unusual argument to defend you know quite hostile to unions etc. Something people like me worry about and I worry about even when I do shows like this is it
within Republican Party economic politics you're one of the people I find more interesting I found myself more sympathetic to but there can be a dimension of populist washing where there are people who have more holistic agenda here but then you know and they're part of the coalition but the
parts where they get listened to are not necessarily those parts you were a contributor to the labor chapter specifically in project 2025 and that proposes a number of reversals of unpro union policies so I'd be curious for your description because I'm obviously outside your coalition
from inside it how would you describe what the sort of factional cleavages are that allow some of these ideas to go over the finish line and do not allow at least at this juncture some of the other ones to become the headline proposals or you know make it into these big
coalitional documents. Now working on that was a fascinating experience because you know as you said that the coalitional dynamics are front and center it is certainly not the labor chapter I would write but I'm actually incredibly proud of what we accomplished because it maybe in all of
project 2025 departs most from what was the standard orthodoxy on the right of center for so long I mean there's actually a ton of stuff in there so much so that they then for coalitional reasons had to include dissenting opinions one of my favorites is prohibiting a BA requirement in a job
description you know embracing the idea that workers should have voice and power that we care about that the idea of putting workers on corporate boards I could kind of you know go on I think that being said certainly as as you know there is not a endorsement of unions today labor unions
are functionally arms of the democratic party in in the way that they collect enormous amounts of money from what is an entirely heterodox set of workers if any a set of workers that probably tilts more pro Trump than pro Biden at this point and converts that into political and financial
support for the democratic party so at the end of the day I can't blame Republicans and folks in the conservative movement for saying purely as an instrumental matter that we are not going to support that Trump is going to talk about what Trump is going to talk about and so if your
observation is that the politically salient things that Trump is focused on don't align entirely with this economic vision you won't get any argument from me about that but I think in earlier in the conversation when you were sort of characterizing this movement and thinking I
think you rightly identified you know senators Rubio vant cotton holly and if you look at what they're working on and in fact bringing to the floor as legislation I think it's exactly across this swath of topics I mean just you know to give some examples I believe it's Romney cotton
and vant are all on a proposal to raise the federal minimum wage significantly and impose mandatory e-verify right like that is a quintessential raising wages at the low end focused on immigration policy in a constructive tightening of labor market way proposal you know holly more generally
I think is particularly made a point of trying to be more I engaged with unions I was just at a speech he gave where he specifically said it's time for conservatives to embrace unions private sector unions but he's obviously been you know working with with the teamsters in particular you
have trump has Sean O'Brien the the teamsters president speaking at the rnc senator rubio has likewise done concrete things on labor he and jim banks who is currently a congressman likely to win a senate election in diana in november you know I've done a proposal
for alternative models of of worker representation including putting workers on boards and so you know I mean we could go on across all these areas I think you know certainly an interesting work on industrial policy other work on on immigration enforcement other work on
you know non-college pathways which I think is is an incredibly important area and so my factional analysis would be you know the question is first of all who is going to be making policy in congress if there is a trump administration and then what comes after trump and on both of those
fronts I think what you see is that this exact cohort is the rising leadership not just in the conservative movement but in the republican party and this is the stuff they're talking about in working on one reason I'm interested in the work you're doing I'm going to happen for some
time but but it feels more relevant to me now is look by the time this comes out we'll know who Donald Trump's pick is but all the reporting suggested it's down to rubio vans and bergum and rubio vans are so far as anybody is in your camp in the senate rubio vans are in your camp
in the senate so two of Trump's three plausible vice presidential picks are very american compass curious we could say but I think you could you could put it more strongly than that so it does seem to me when I talk also to younger republicans that there was something generational happening here
the other thing that I'll throw you a softball on here is one of the reasons or one of the ways it it feels to me like it's playing out is a sense that the liberal coalitions self-conception of who it is for and who it serves is no longer true and there's a tremendous wedge that can be driven
in there and I took that as sort of part of the argument you're making in your timespiece about populism and sort of elite failure and so I'd like you to expand on that a bit because I do sense that the part of the opportunity you see and that rubio vans and some of these others we're talking
about see is a view that liberal economics is not about what liberals think it is about it is not about who liberals think it is about and that there is some political opportunity there so do you mind laying out that critique why thank you as right would be delighted to to pick a briefly on
the on the generational point I think you're exactly right and in some respects you know this is a process that is ongoing in conservatism that looks a little bit confusing because of Trump's presence I mean if you think about the sort of 15 or 20 year periods over which parties you know truly
realign and ship their ideology typically it starts with something of a of a bang and that bang is usually a massive electoral loss right it's goldwater in 64 that eventually leads to Reagan in 1980 it's been Reagan crushing Mondale that gives birth to the new Democrats and ultimately
leads to Clinton and I think all of this work would be going on post 2016 on the right of center and it would look a lot more familiar to analysts if Trump had lost and you have a lot of this work sort of more going on in the wilderness and building to something that emerges as the next
generation takes over and in the sense that that is just happening in parallel to the things going on at the top and so it is you know when you say Rubio Hawley cotton vans not by Quinnston so you talking also about a younger generation of Republican leaders when you look at what the orientation
is of essentially everybody under 40 on the right it's overwhelmingly in this direction I'm right at that cutoff and I I essentially qualify as sort of a sort of a gray beard I guess and elder millennial that's that's right an elder millennial for me the interesting question is what's my first
political memory and for me it's watching the the jets take off of the aircraft carriers in the Persian Gulf in 1991 watching CNN which means that Ronald Reagan is followed the Berlin wall the Cold War that's that's just in a history book and that's not at all to minimize its significance but
it is to say that when I think about political problems orientation political parties you know economic challenges for the nation it is the problems and challenges of the 90s and 2000s and and 2010s and picking up a Ronald Reagan Heritage Foundation playbook and flipping through it for
the answer just seems absurd and so I think generational turnover is almost inevitable in the post Cold War era I'm very pleased to see that this kind of conservative economics is is what people are moving toward and and it is I think what is is going to come next but certainly there's there
there's a lot of chaos and and inconsistent conflicts and and factional fights along the way so this then I think connects to your your point about you know the Democratic coalition the the Republican coalition you know what I think is especially exciting and appealing about this
situation for conservatives is that moving in this direction has the prospects of building a durable governing majority you know it is true that you you lose libertarians as well as gaining working class voters of of all races but it turns out there are maybe 10 times as many
working class voters who are fairly socially conservative and would just like to hear something sane on economics from the right as there are libertarians who are taking their college degrees and and their $7 lattes over to to the Democratic Party how much of the lattes you you buy
I I maybe lattes in in in these coastal elite markets are even more expensive now especially when you add the the sewing milk and the shot of chia I don't obviously I'm I'm no longer in my area of expertise you don't go to coffee shops I don't live I'm not a coastal elite living in a in a big
city so I can't tell you what the prices are anyway but the point is that in theory there could be an opportunity here for either political party I was just delivering remarks on at the national conservatism conference where I made this point there's a world in which the Democrats take some of
the the basis of their economic message and combine it with just something slightly more sane on their progressive social issues and you could imagine them coming out on top the reality is that they seem to be headed in in the opposite direction still and you do see on the
right at least the potential for a conservatism that combines a social conservatism that that attracts a lot of of working in middle class voters with an economic message that appeals to them as well but we've described this in terms of the wedge being social but but when I read you I
often see the wedges educational that the critique you make of the Democrats is it whether or not they realize it's been happening that their economic policy has begun to serve more and more the questions of a more educated electorate right that their economic policy is more for people
with college diplomas than without them make that case because I don't think that's how Democrats see themselves yeah I think that's right and and so I guess what I'd say is it seems to me there are a lot of people out in the U.S. maybe even the majority who on these more social issues tend to be
more conservative but have typically preferred what was the traditional more working class focused democratic message but what you have today from the Democrats notwithstanding some of the rhetoric is an agenda that to me and Amy looks overwhelmingly focused on the interests of a quite sort of
narrow highly educated high-income set of voters and so you know the quintessential set of policies if I think about the sort of you know the big fights that the Biden administration has chosen to pick certainly immigration policy is one example you know an education policy focused
overwhelmingly on just telling people they don't have to don't have to pay back with the borrowed to go to college is another element of that I think the the climate agenda as the focus of industrial policy is another element of that you know a lot of people ask well like isn't the
stuff you're talking about on industrial policies and that exact with the Biden administration is doing I would say conceptually to some extent it is but it is all done subject to this green agenda which has a set of costs and benefits that I don't think pans out very well for for most workers
and I don't think they do either and so I think when you sort of step back and look at it it's very hard to make out the priorities of the democratic party and the things they're going to the mat on as at all aligning with what most Americans care about and certainly what those who are
not doing so well economically are focused on although when I look at a lot of Republican party positioning and this includes still with things like project 2025 I still see a lot of financial deregulation proposals project 2025 wants to get rid of the financial industry regulatory authority
it wants to severely limit the consumer financial protection bureau I still see a lot of proposals to slash Medicaid very very deeply to cut the affordable care act as much as you might be for a child tax credit it is Republicans who let the expanded child tax credit expire and have been very very
resistant they'll get not your faction to figuring out some way forward on it it still seems like there's a Republican party that has kind of the old Reaganite spending priorities and the old Reaganite views on on regulation and the democratic party while it does say have a view on college loans
that it didn't used to have and my view for a very long time has been if you want to go around for giving debt you want to start with medical debt which I think is much more built around bad luck than college debt is but nevertheless that it's still very focused on negotiating pharmaceutical
prices and trying to expand subsidies and health insurance programs and trying to expand things and Medicare that there is this sort of this old spending line has actually not changed all that much well no disagreement on on the Republican point and and if I could you know quote one of our
great statesman I I am in a sense trying to imagine what could be unburdened by what has been you know what I'm describing is is a potential future for conservatives and to your point it's the one that folks like Vance Rubio Hawley are also trying to make the case for right you you don't
hear JD Vance out there talking about cutting entitlements and removing access to medical care and and so on and so forth I think on on the democratic side you're right that Democrats certainly do stand up for and represent essentially the the big spending element of the
agenda I'm also not sure at this point how much it actually does distinguish them from where Republicans are on any of this stuff and and so that's why you know I very specifically said if I if I look at the fights the Biden administration chose to pick like if you're looking at
where where the actual political conflicts where are you actually going to see a very different world depending on which party is in power the things the Democrats at least the Biden administration really seem to have planted their flag on are these set of things that are very important to people
who work for the Biden administration but not necessarily those that that are called mass of voters are interested in and I think they're just the the last thing to say about this a really interesting place to see where the rubber meets the road where we've started doing our work at
American Compass is is on fiscal and budget questions because it seems to me there's no question given where we are right now you are going to have to bring spending down and I think that is something that there is going to be significant support for in the country whether either party can can find the right position on that remains to be seen I I've at least started to see some Republicans going out there saying look we need both to bring spending down and we are going to eat more revenue
I have yet to see the Democrat ready to acknowledge that yes some spending is going to have to come down and and here's where we're going to focus really I feel like Democrats acknowledge that I mean I think we're acting we just fell out of a coconut tree to quote the same great uh stateswoman
I feel like Democrats talk about this frankly all the time I mean you walk into Mark Warner's office and ask him if he doesn't think spending needs to come down sometime look like I think Joe Biden would be perfectly happy to get into negotiation with congressional Republicans I mean I've got
money on this real money that if Mike Johnson want to come to Joe Biden and say hey look I think our fiscal position is out of whack and we're open to a deal the cuts spending and racist taxes Joe Biden be like I would love to have those negotiations whereas Donald Trump has a a real
articulated policy here which is that he wants to continue his tax cuts which cost in the trillions of dollars and we're large and paid for or at least like we're not nearly fully paid for as I guess another way of putting that and he wants to use some of the money from the very tariffs we were
talking about earlier to do a deeper corporate tax cut this is a place where since the Republican party of Mitt Romney and Orrin Cass and Paul Ryan in 2012 things really seem to have changed where I can't track what Republicans even think about debt and and fiscal policy any longer
they don't really seem to care doesn't seem to motivate anybody and Donald Trump specifically seems to care a lot about tax cuts this suspicion Democrats always have about Republicans because it has you know in the lifetime of someone like me always been proven true is Republicans want to talk
about fiscal irresponsibility but then when they get into office the first thing they want to do is cut taxes so what I see when I look at Republicans and you can tell me if you think this is wrong is a desire to extend the Trump tax cuts a desire to cut taxes more and a desire to radically or at
least significantly increase defense spending and I've heard actually zero that is not sort of old school Paul Ryanism you know we're going to get rid of the Department of Education or something about how they're going to pay for any of this am I mistating it in your view I think you are
a little bit I would have agreed with that as of a as of a couple of years ago and also so stipulated with respect to Trump I I did have not heard anything fiscally responsible for but that's a big that's a big stipulation right because he is the leader of the party and people fallen behind him
oh and I think we've made clear at a number of points during this conversation that certainly what I'm speaking about and have optimism for broadly speaking is essentially what the set of folks in Congress is working on where conservatism is headed and you know in that respect if you look at this exact question you've seen a dramatic change even just in the last year on how very prominent Republicans are talking about this so you know Jody Arrington who's chair of the House Budget Committee
went on the record saying we need to put revenue on the table Tom Cole chair of the Appropriations Committee went on the record saying we need to put revenue on the table chip Roy policy director of the House Freedom Caucus went on the record saying he's open to taking the corporate tax rate up
Josh Hawley I mentioned the speech he just gave about embracing unions also specifically highlighted corporate tax cuts as a mistake suggesting we should have a higher corporate tax rate and so it seems to me that quite recently there is actual reason for some optimism that there could
be progress on this and that the the 2017 version of the kind of Paul Ryan led fiscal policy is not what is going to be the future here for conservatives I am struck by your comment though about go and ask Mark Warner go and go and ask Joe Biden because something that we've tried to do some work on
given this openness that some Republicans have conveyed is okay who are the Democrats who could be the other side of it and you know just an example we did an American Compass podcast interviewing Jody Arrington and then also interviewing Rokana the Democratic Representative
and it was fascinating to interview Kana about this because he essentially just said no I'm not actually interested in reducing spending I you know I do believe we could get more efficiency in healthcare spending negotiating drug prices etc but that what he do with that is plow that into more
healthcare programs not actually bringing spending down at all certainly other Hill offices on Democrat side we've spoken with we've run into the same thing which is I'm not actually sure what would Mark Warner say I mean you are to speak for him directly but what is the spending cut
that Democrats might actually be open to putting on the table at this point look unlike literally any significant policy I know of during the Trump administration the inflation reduction act was scored as fully paid for and more I mean they raised taxes in order to pay for
what they wanted to do and then raised taxes by a bit more than that so they would get a positive score under the congressional budget office so I think one there's just a baseline level outside the stimulus spending of COVID which I think was a very extraordinary situation for all
kinds of reasons there's a baseline level of belief that you should not worsen the physical picture and you should pay for what you're doing and then though and I do think this I won't speak for row but I feel like I have a good sense of people like Warner and your Tim Keynes and your Ron Whydins
and so on on this they all feel very burned and your Joe Biden's for that matter they feel very burned by the budget negotiations of the Obama era where they feel like they put a lot on the table and at the end it was endlessly difficult to get Republicans deliver such you finally just
have the super committee sequestration process engage and we just had these dumb automatic cuts for years and years and so my read of them because I don't think they've been saying anything different than they frankly always said and all of these people have at different times endorsed all kinds of
packages of potential spending cuts but they don't believe it's there for a deal. I remember Barack Obama signaling openness to raising the Medicare retirement age which made everybody on the left super angry at him only at the end for Bainer to not be able to deliver and the view of Democrats is it Republicans cannot deliver on hard votes in Congress any longer and so the upside of getting into that kind of of process particularly around an election year would be quite low.
I'd be very curious to see what would happen in the kinds of negotiations you're talking about. If you're asking me why is Joe Biden which is a different question. If you're asking me why Joe Biden has not engaged in a budget process with Republicans I think it's an interesting question but I don't think they believe Speaker Johnson can deliver and I don't think Johnson has signaled the kinds of
things you're talking about here. I agree that people like Vance and Rubio have a time signaled an openness to a bit more revenue but I think that there is a credibility building operation that
would need to happen there before people took that seriously. Yeah no totally agree and we just did a big project on where on earth do we go on this stuff and that was exactly where we landed that these here's my 10 year budget to path to a balanced budget here's your commission on this or that is exactly backward what's needed is these smaller credibility building exercises can we get in a room and actually do can we do 50 billion of revenue and 100 billion of spending cuts right
like just something that both sides actually begin to believe the other side is serious. I am more optimistic than I've been in a long time that that could actually happen and it is a function of as with our things we've been talking about I you know some of these shifts on the right that I
hope will continue. Let me end here on a question about prices. One thing that you are very sensitive to when you're writing is that if you want to be a populist economics thinker you have to take pretty seriously what the public thinks and the public is pretty clear right now that they want
prices to go down they are very mad about how much they are paying. A lot of these policies that even some of the ones that I agree with but some of the ones that I don't tariffs and you know sharply curtailing immigration they're price increasing sometimes as a one time thing sometimes for longer than that. How is your thinking about the politics and pitfalls I guess of prices changed given how many people say the thing they want from their politicians above all is for
things to be cheaper again. I guess it hasn't really changed my thinking very much. The inflation of the past few years was obviously very damaging it is in my mind rightly connected to some quite irresponsible policy choices that were made and I don't think that's going to be forgiven and so I think that is sort of priced into current thinking about how people feel about the last few years.
That being said inflation has obviously now come back down hopefully we are returning to a period of price stability and I think it would be a mistake to infer from this experience therefore the correct policy agenda is one that first and foremost promises low prices because I think what
there is still an opportunity for is to essentially be honest about and intentionally pursue a policy that has trade-offs and that's something that's been lacking in our politics for a very long time and I honestly think there's an opportunity right now and this thing we're doing a lot of work on
particularly in a populist framing to be quite honest about the whole that we have dug for ourselves over the last 40 years and about some of the things we can and should do to dig back out of that hole and I think if we're understood that you were actually getting something for your price
increase that is this was not a result of bad policy and mistakes this is happening because we actually are doing the reshoring because we actually are bringing up wages for those who have been struggling I really do think there's a political message to be built around that that is way
more effective than a lot of what we've been hearing and certainly all the polling that we do finds that same thing that when you tell people honestly look here the ups and downsides of a tariff one of the downsides of a tariff is it raises prices that doesn't reduce support for tariffs
but the idea that you should ask people to pay a price for something is not foreign to our politics and in fact can be a very healthy part of a message then all is there a final question what are three books you'd recommend to the audience all right I put some thought into this because I want
to provide a useful and diverse set of recommendations so I have nonfiction I've been reading Robert Carrows Lyndon Johnson biography and I must admit I'm not very far into you know what the thousands of pages and four volumes but I'd always been skeptical that of four volume
thousands of pages biography could be especially interesting and I have to say it's phenomenal so the path to power by Robert Carrows would be one for those who enjoy science fiction and especially if you need an audiobook for a long drive I would recommend Project Hail Mary by Andy Weir he's
the guy who wrote the Martian which became the movie with Matt Damon stranded on Mars but this one's even better and and without too many spoilers it is an intrepid scientist and his little alien buddy saving the world and finally for those with kids a wonderful bedtime read aloud it's called
the green ember it's actually given to me my my team because they knew I like reading to my kids and it is about rabbits fighting with swords who could do better than that or I guess thank you very much this was awesome thank you
this episode of the Ezra Clancho is produced by Annie Galvin fact checking by Michelle Harris with Kate Sinclair and Mary Marge Locker our senior engineer is Jeff Geld with additional mixing by Amin Sahota and Isaac Jones our senior editor is Claire Gordon the shows production team also
includes Roland Hu a Lys Isquith and Kristen Lynn we have original music by Isaac Jones Audien Strabge or Christina Samiluski and Shannon Busta the executive producer of New York Times opinion audio is Annie Rose Straser and special thanks to Sonia Herrero