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Politics

My Biggest Post-Trump Fear: A Progressive Revival

Richard A. Epstein

The nearly four weeks since President Donald Trump’s inauguration have been the most divisive period of American politics since the end of the Second World War. The sharp lines that everyone is drawing in the sand pose a serious threat to the United States.

Teaming-Up

On the one side stand many conservatives and populists who are rejoicing in the Trump victory as the salvation of a nation in decline. On other side sit the committed progressives who are still smarting from an election in which they were trounced in the electoral college, even as Hillary Clinton garnered a clear majority of the popular vote.

As a classical liberal who did not vote for either candidate, I stand in opposition to both groups. And after assessing Trump’s performance during the first month of his presidency, I think it is clear that he ought to resign. However, it is important to cut through the partisan hysteria to identify both what Trump is doing right and wrong in order to explain my assessment of his presidency to date.

On the positive side is the simple fact that Trump won the election. What is right about Trump is what was wrong with Clinton—her promise to continue, and even expand, the policies of the Obama administration. The day after the election, it was clear that none of her policy proposals would be implemented under a Trump presidency, coupled with a Republican Congress.

Virtually every Trump deregulation is met with protest, yet these very deregulations explain the stock market surge and will revive the economy.

As I have long argued, there are good reasons to critique the progressive worldview. Progressives believe that reduced levels of taxation and a strong dose of deregulation would do little or nothing to advance economic growth. In their view, only monetary and fiscal policy matter for dealing with sluggish growth, so they fashion policy on the giddy assumption that their various schemes to advance union power, consumer protection, environmental, insurance, and financial market regulation—among others—only affect matters of distribution and fairness, but will have no discernible effect on economic growth.

In making this assumption, they assume, as did many socialists and New Dealers in the 1930s, that it is possible to partition questions of justice and redistribution from those of economic prosperity.

In taking this position, they fail to account for how administrative costs, major uncertainty, and distorted incentives affect capital formation, product innovation, and job creation. Instead, today’s progressives have their own agenda for wealth creation that includes such remedies as a $15 minimum wage, stronger union protections, and an equal pay law with genuine bite. But these policies will necessarily reduce growth by imposing onerous barriers on voluntary exchange.

The fact that there was any economic growth at all under the Obama administration—and even then, it was faltering and anemic—had one cause: the Republican Congress that blocked the implementation of further progressive policies and advanced a pro-growth agenda.

Lost Ground

Sadly, both President Obama and his various administrative heads pushed hard on the regulatory levers that were still available to them. And so we got a Department of Labor (DOL) decision to raise the exemption levels under the Fair Labor Standards Act from just over $23,000 to just over $47,000, in ways that would have disrupted, without question, several major segments of the economy for whom the statutory definition of an hour does not serve as a workable measure of account.

If President Trump went about his job in a statesmanlike manner, the progressive counterattack would surely fail.

Thus, at one stroke, DOL compromised the status of graduate students, whose studies and work are often inseparable; of tech employees, whose compensation often comes in the form of deferred stock payments; and of gig workers, who are employed by the job and not the hour.

At the same time, the general counsel of the National Labor Relations Board has taken steps to wreck highly successful, long-term franchising arrangements, by announcing henceforth that the franchisor may on a case-by-case basis be treated as an employer subject to the collective bargaining obligations of the NLRA.

These and similar decisions are acts of wealth destruction, and they offer one powerful explanation, among many, for the decline in the labor participation rate to its lowest levels since World War II.

Opposition, Pipelines, and SCOTUS

The misguided opposition to the Trump administration extends far more broadly. I was an advisor to the MAIN coalition (Midwest Alliance for Infrastructure Now) in the now successful effort to undo the roadblocks that the Obama administration put in the path of the Dakota Access Pipeline, and still find it incomprehensible that any administration could engage in a set of collusive rearguard actions to block a pipeline that met or exceeded every government standard in terms of need, safety, and historical and environmental protection.

The handwringing of the Obama administration over the Keystone XL pipeline was equally inexcusable. Two expertly crafted executive orders from the Trump administration removed the roadblocks simply by allowing the standard review processes of the Army Corps of Engineers and other agencies to run their course.

Nonetheless, virtually every initiative to deregulate that comes from the Trump administration is greeted with howls of protest, whether the topic be healthcare, banking, brokerage, or consumer protection. Yet these very deregulations explain why the stock market has surged: Collectively, they will help revive a stagnant economy.

Any effort to be successful in the export market requires importing cheap components from foreign firms.

Worse still are the attacks on the integrity and independence of Judge Neil Gorsuch from most, but not all, progressives. Georgetown University’s Neal Katyal should be singled out for his praise of Gorsuch as a person and a judge. Unfortunately, the vast majority of progressives, like Senate Minority Leader Charles Schumer, wail that Gorsuch is not a mainstream judge, is not sufficiently supportive of progressive ideals, and, most critically, is not Judge Merrick Garland.

The United States sails in treacherous waters when members of either party think that any judge appointed by the opposition is not fit for service on the United States Supreme Court unless he publicly denounces the President who nominated him for that high office. I have long believed that any nominee should be judged on his or her record, without being called on to play rope-a-dope before hostile senators who only wish to bait, trap, and embarrass the nominee.

It seems clear that if President Trump went about his job in a statesmanlike manner, the progressive counterattack would surely fail, and a sane Republican party could gain the support of a dominant share of the electorate for at least the next two election cycles, if not more.

Endangered Trade

Yet there are deeper problems because President Trump’s anti-free trade agenda will hurt—if not devastate—the very people whom he wants to help. Extensive trade between the United States and Mexico is indispensable for the prosperity of both countries. The looming trade war threatens that win/win position.

The notion that the United States should run positive trade balances with every country is an absurd position to take in international economic relations, lest every country has the right to claim the same preferred status for itself. Yet it has never occurred to Trump that a negative trade balance amounts to a vote of confidence by other countries that it is safe to invest in the United States, allowing the United States to create new industries and new jobs.

Nor does he understand that any effort to be successful in the export market requires importing cheap components from foreign firms—an oversight evident from his ill-conceived executive order calling, whenever legal, for American pipe on American pipelines.

My fears are that he is too rigid and too uneducated to make the necessary shift to good leadership.

If our trade partners retaliate, the current stock market surge will take on a different complexion. The Dow may be high, but the variation in future prices will be high as well. If Congress thwarts his anti-trade agenda, the domestic reforms should yield lasting benefits. If Congress caves, or if Trump works by aggressive executive order, the entire system could come tumbling down.

Speaking of executive orders, the President’s hasty and disastrous order dealing with immigrants has vast implications for America’s position in the world.

In a global economy, the United States cannot afford to let petty protectionism keep the best talent from coming here for education and staying later for work. I, for one, believe that his executive order exceeds his executive powers. Others, like Michael McConnell, disagree. But no matter which way one comes down on its legality, nothing excuses its faulty rollout, petty nationalism, exaggerated fears of terrorism, and disruptive economic effects. The Trump administration agenda desperately needs to be rethought from the ground up by a deliberative process in which the President relies on his Cabinet.

Turn It Around

So the question remains: does Trump remain his own worst enemy? My fears are that he is too rigid and too uneducated to make the necessary shift to good leadership. By taking foolish and jingoist stances, Trump has done more than any other human being alive today to bring a sensible classical liberal agenda into disrepute.

Some miracles happen, but a Trump transformation will not be one of them.

Then there is the matter of his character. The personal moral failings of the President include his vicious tweets, his self-righteous attitude, his shameless self-promotion, his petty resentments, his immoral flirtation with Vladimir Putin, his non-stop denigration of federal judges, his jawboning of American businesses, his predilection for conspiracy theories, his reliance on alternative facts, and his vindictive behavior toward his political opponents.

Hence, I think that there is ample reason to call for Trump’s resignation, even though I know full well that my advice will not be heeded. And this welcome outcome will not happen so long as the attack against him comes solely from progressive Democrats. Sensible Republicans should focus on the threat that he represents to their plan, and recall that the alternative is no longer Hillary Clinton, but Mike Pence.

I think that Pence is unlikely to abandon the positive aspects of the Trump agenda, and there is some reason to hope that he will back off Trump’s suicidal positions on trade and immigration, and put a stop to the endless train of uncivil behaviors demeaning the office of the President. Some miracles happen, but a Trump transformation will not be one of them. Unfortunately, his excesses could power a progressive revival. Would that I had the power to say to Trump, “You’re fired!”

 Reprinted from the Hoover Institution.

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