Boccia notes that Sen. John McCain supported the BRAC mechanism [for choosing which military bases to close] even though, he said, “Congress has probably abdicated its responsibilities.” The brute fact, he said, is that Congress is “incapable of acting in any other way.” And Boccia knows that the stakes in the base closings were trifling compared with those in entitlement reform, concerning which Congress’s abdication of responsibility is ongoing.
Adopting Boccia’s recommendation — “a new mechanism for forcing action” — would be an admirable acknowledgment by Congress of an unadmirable weakness. Call it the Odysseus measure:
Confessing his weakness regarding the temptation of the Sirens’ voices, Odysseus told his ship’s crew, “Bind me, to keep me upright at the mast, wound round with rope. If I beseech you and command to set me free, you must increase my bonds and chain even tighter.”
David Henderson is correct: “To tame [budget] deficits, cut spending growth.”
Peter Earle ponders Fitch Ratings’s lower rating of debt issued by the U.S. government.
Samuel Gregg reviews Robert Lighthizer’s new book, No Trade Is Free. Sam is not impressed. Three slices from Sam’s review:
At the very beginning, however, Lighthizer specifies the lynchpin of what I will call his “new-school protectionism”: that “our citizens are first producers and only second consumers.” By this, he means that, through work, humans produce things and thereby “enjoy the dignity of work, support their families, and actively contribute to society.” The actual goods produced and then consumed are secondary to these ends. That position contrasts with Adam Smith’s famous argument that the purpose of production is consumption: that we produce things in order to consume them—not the inverse.
In one sense, Lighthizer’s position reflects his skepticism of free trade theory and stated preference for the lessons of praxis. But Lighthizer’s accordance of primacy to production also derives from his view that work—the doing of production—has value in itself. Moreover, when “all citizens—including those without college degrees—have a chance to be productive, it’s good for the country.”
This is why Lighthizer believes that “the only practical way to help working people . . . is to support the American manufacturing sector.” That part of America’s economy, he maintains, has hemorrhaged jobs overseas for decades, thereby devastating communities between the coasts. Versions of this narrative presently circulate in New Right and progressive circles.
Lighthizer reiterates his stance on production multiple times, not least because everything else in his book depends on the coherence of his production-over-consumption claim. But therein lies the problem. It is not a coherent position.
That human work can positively contribute to shaping people’s character, help them take care of their loved ones, and bolster communities’ well-being is undoubtedly true. Nonetheless, significant problems plague Lighthizer’s production-over-consumption thesis.
First, if you are not producing something that people (consumers) desire, they are unlikely to purchase your product. In other words, if businesses don’t meet consumption needs and wants, production (and therefore employment) is unsustainable—unless, of course, governments decide to disregard people’s consumption preferences and step in to subsidize production. That, however, is a recipe for stagnation and politicizing economic life.
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Here, it’s helpful to get some numbers in front of us. According to the US Bureau of Labor Statistics, American manufacturing jobs declined from 19.388 million to 12.989 million between January 1979 and June 2023. In the same period, however, total employment in America grew from 88.808 million to 156.204 million. The millions of jobs created, especially in service industries, thus offset the decline in manufacturing employment many times over. Many people—including working-class Americans—who might have been employed in manufacturing 50 years ago were employed elsewhere in often better-paying and less physically strenuous jobs. Is that an inherently bad thing?
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Such details are symptomatic of the wider problem with Lighthizer’s narrative. Too many of the premises on which he bases his proposals are erroneous, and his policy preferences, if followed on the scale he projects, would inflict considerable damage on America’s economy and magnify the political dysfunctionalities encouraged by neomercantilism.
In the end, Lighthizer-style protectionism encounters the same difficulty which has confronted free trade skeptics from Adam Smith’s time onwards, i.e., the burden of proof remains on Lighthizer and like-minded people to illustrate how essentially mercantilist policies would deliver better economic and political outcomes than markets. It is a standard that his book does not meet.
And here’s GMU Econ alum Dominic Pino, writing at National Review, on Robert Lighthizer. A slice:
The conceit of the prospective economic planner is to believe that if only he were in charge, things would work out better. This is ordinarily a hypothetical exercise, but not in Lighthizer’s case. He was U.S. trade representative for all four years of the Trump administration, serving under a president who was sympathetic to his views. The trade war happened, with Trump unilaterally raising tariffs to counteract so-called unbalanced trade. And what was the result? Gregg records it: “The overall US merchandise trade deficit during his tenure actually grew from $792.3 billion in 2017 to $904.4 billion in 2020.” Even by the protectionists’ own misguided metric, the Trump administration’s trade policy failed.
Protectionism has worked out well for Lighthizer personally, as his decades-long lobbying career has made him a multi-millionaire. His career is an illustration of the public-choice problems with trade policy, and he’s not someone conservatives should admire.
Indeed, the guidelines’ reliance on concentration and “bigness” and presumption that many mergers raise anti-competitive problems suffer from several basic flaws. First and perhaps most obviously, mergers—even really big ones—don’t ensure that a firm will suddenly become an unstoppable, anti-competitive force in a market and sometimes, in fact, can spark a once-thriving company’s downfall. Consider, for example, the much-publicized and now-bankrupt Yellow trucking, which in the 2000s was the top dog in the “less than truckload” (LTL) market and bought its biggest rival, second-ranked Roadway, in 2003 and then bought another big LTL rival, USF, two years later. At the time of the Roadway merger, analysts estimated that that the merged entity would control “58 percent of the total market for long-haul shipments of loads that are less than a full truckload,” and the transaction did receive some initial antitrust scrutiny and “unusual attention” in the press because, as one DOJ staffer put it, it was the “biggest trucking merger in the history of the known universe.” But DOJ signed off on the merger because, even with those scary market share figures, they saw little risk of an unstoppable “Yellow monopoly”—there was excess capacity in the market and plenty of available alternatives that would protect consumers from high prices or diminished service.
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Second, successful mergers—as opposed to the ones above—often increase efficiencies at the new firm and thus generate consumer benefits like lower prices, more variety or geographic coverage, or new and innovative products. As [Brian] Albrecht notes in a separate op-ed (and as decades of research has shown), these gains are most easily seen in vertical mergers, in which a firm like Apple acquires a complementary company like FingerWorks, whose touchscreen technology paved the way for the original iPhone. “These gains,” he adds, “are one reason economists, the courts and the agencies—before this administration, at least—have been much more positive about vertical mergers.” That group includes, by the way, Furman and now-director of the FTC’s Bureau of Economics Aviv Nevo, the latter of whom—prior to joining the agency—acknowledged in public comments that the economic “consensus would be to recognize that vertical mergers do have a more natural and fundamental relationship with the potential for merger-specific benefits or efficiencies.” (Gee, what changed?)
