[00:00:00] Joe Selvaggi: This is Hubwonk. I’m Joe Selvaggi. Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. The 2024 Republican National Convention offered American voters more than just a preview of the upcoming presidential election. It also signaled a significant shift within the party itself, moving away from the free market, free trade, and limited government principles championed by President Reagan over 40 years ago, this year’s convention showcased a vision of a robust governmental role in cultivating the common good through the economy.
[00:00:36] The new GOP platform asserts that the nation is in serious decline. And promises to make America safe, wealthy, and great again by curbing international trade, checking corporate power, and supporting workers left behind by a system driven by free market capitalism. This new Republican vision argues that the lack of strong industrial policy has allowed financiers and foreign competitors to take American jobs in prosperity, and it pledges to reverse the damages to middle class labor caused by free market ideologues.
[00:01:07] How does this new GOP differ from the party of the past? And how might it reconcile, if at all, its updated vision of the future with the ideological leadership of the previous half century? My guest today is Dr. Norbert Michel, Vice President and Director of the Cato Institute’s Center for Monetary and Financial Alternatives.
[00:01:27] Dr. Michel has written extensively on the evolution of ideology and policy in Republican leadership. He will share his views on how public policy statements by emerging GOP leaders have been reflect a marked shift from past free market fundamentalism to a new right that envisions a governmental role in protecting industries and communities from competitive threats.
[00:01:48] We will discuss how this political narrative aligns with the historical record. And examine ways the party’s long-standing principles might integrate with those of the new right. When I return, I’ll be joined by Cato Institute’s Dr. Norbert Michel. Okay, we’re back. This is Hubwonk. I’m Joe Selvaggi, and I’m now pleased to be joined by Vice President and Director of the Cato Institute’s Center for Monetary and Financial Alternatives, Norbert Michel.
[00:02:13] Welcome back to Hubwonk, Norbert. Hi, Joe. Thank you. Thank you for having me. Okay, well, to bring our listeners up to where we are in current events, we’ve just completed a week of the National Convention for the Republican Party, and we’ve seen, of course, them nominate former President Trump for candidate for president, and he has Chosen, and they have nominated, Ohio Senator J.D. Vance as Vice President. So, in that, in this course this week, listening to lots of speeches and looking back on some of the, policy prescriptions and some, at least some of the rhetorical flourishes from the candidates and the speakers, it’s given me time to reflect on where, let’s say, the Republican Party seems to be moving and reflect on where it used to be and perhaps where it’s going.
[00:02:52] So, I’ve invited you onto the show because you’ve written extensively about the GOP’s change in tone. you’ve been critical of some of the changes, that you’ve seen. And so, I want to help our listeners understand, particularly if they’re not engaged in either politics or policies, where we were, where we’re going, so that when someone explains the old right versus the new right, they know what the heck. We’re talking about. So, if that’s fair, let’s start with some basic principles and a bit of history. I’ll confess, I’ll date myself. My first election that I was able to vote, it was, 1984, when Ron Reagan’s facing Walter Mondale. So, my history is 40 years old, Let’s start there. Where was the Republican Party and where did it stand for 40 years ago? Oh, man. Well, so my first was 90. 1990.
[00:03:39] Norbert J. Michel: Okay. and I think Ronald Reagan was, until he got elected, an outlier. I think he did come in and disrupt a calmer, conservative party with more free markets and more anti big government rhetoric but then, then that was a signal, that was a turning point, if you will. and the party, for a while, was, you the anti-government, anti-big government party, and it was for free trade. It was for free markets, and the econ policy piece is my specialty. That’s the thing I do the most with.
[00:04:18] I’m probably not your foreign policy guy. but on, on economics, it was, it was very much free market and then I think towards the end of the 90s that sort of started to peel off a bit, but nothing like what we’re seeing now, where you have a repudiation of free markets and a market-based economy.
[00:04:42] Joe Selvaggi: Yeah, so I want to, again, I don’t want to give short shrift to the past, but, in a nutshell, we’ll just say, at least rhetorically, the Republican Party led by Ronald Reagan was an advocate of free markets, because we could rely on it for prosperity, we believed in free trade, we were we buy the world’s stuff, they buy our stuff.
[00:05:00] strong defense, actually, to make sure those markets remain free. We don’t want anybody interfering with the lines of trade and, deregulation. We didn’t want barriers to innovation. and, of course, as you mentioned, a healthy skepticism of both the motives and the wisdom of big government, right?
[00:05:16] We’ve got one government, I think, 330 million Americans, even if they have the best idea. by the time the rubber hits the road, it’s probably gotten distorted. So, here we are 40 years later after, that, President Reagan. now we are looking at a GOP which is, and I’m going to throw around terms that if our listeners don’t know, these are not pejorative terms. I’m going to use a term called National Conservatives or NatCons. How they label themselves. This is what’s supposed to be the ideological North Star of this new guard of Republican. again, I don’t think I’m being unfair to anybody. I just want to say that’s what they call themselves. In broad strokes, how might a NatCon’s view of the world differ from that of our traditional conservative?
[00:05:56] Norbert J. Michel: Oh, it’s as close to polar opposite as you’re going to get. they’re anti trade. And they can dress it up and say that they just want it to be fair however they want, but they’re anti free trade. They’re even now becoming anti-tax cut there was always a little bit of tension on the immigration side, but this is, I think this is even more anti-immigration than it used to be.
[00:06:17] and they’re anti regulation, anti-deregulation rather. they’re openly questioning whether a market-based system. Is really the best approach to make, to give the most people the most opportunity to improve their lives and they dress it up all, slick like, and say, well, we just, the market’s not everything it’s to serve people.
[00:06:41] And we just want to make sure that it’s, that it is serving everybody and then that’s fine. But then when you look at all the different things that they want to do. They want the government to take over all these decision-making processes that people undertake in a market. So that’s not a market. That’s not market based economy anymore. and they’re openly doing this. So that’s a pretty much a 180.
[00:07:05] Joe Selvaggi: Right. So, it’s a shift from saying, okay, market’s Let’s say, I understand, how to allocate capital and meet the needs of individual consumers and producers. Instead, now we say, okay, look, that’s fine, but, maybe the government could improve, the markets, produce wealth, but, we can do even better.
[00:07:22] so, so NACONS, National Conservatives, just like, everybody else now have developed their own think tanks. So, you work at Cato, I’m at Pioneer Institute. They have their own think tanks. One of those, it’s led by a gentleman named Oren Kass, smart guy. It’s called American Compass, again, if it’s new to our listeners again, you can Google Orrin Cass and American Compass.
[00:07:39] I think he’s squarely in the middle of this sort of movement. and I’m going to read from their manifesto, and I’ll leave it to our listeners to think if this makes sense to say, okay. quote, to restore an economic consensus that emphasizes the importance of family, community, and industry to the nation’s liberty and prosperity.
[00:07:58] Our mission, we’re, we are developing the conservative economic agenda to supplant blind faith in free markets with a focus on workers, their families, and communities, and the national interest. Okay, there’s a lot of question begging in that statement. So, let’s talk about this. This is all predicated on the This need for change from the old guard to the new guard is predicated on the fact, it seems, that they believe the old guard has failed.
[00:08:23] The last 40, 50 years that I’m describing, you’re describing as policies, have delivered, haven’t delivered the goods. They’ve made us worse. They’re the foundation of this observation. This is page one of their brochures. They regard the past 50 years as one where corporate profit have risen by, I’m quoting them, 185 percent, while wages for workers have risen by one percent.
[00:08:44] this is a plain assertion that free markets have not delivered for workers. You’ve written recently in Forbes about this sort of metrics and this assertion that free markets don’t help workers. Say more for our listeners. What’s your issue with those claims?
[00:08:59] Norbert J. Michel: Well, so, right off the bat, the 185 percent versus 1 percent thing, okay, the 1 percent thing is just dead wrong. They’ve been talking about this income stagnation thing for a long time, and it’s been debunked thoroughly by lots of other people, not just me. But my colleagues and I have put a lot of stuff out on this, and the only way that you can get to Workers wages only rose 1 percent over the last few decades is to torture the data to the point of death.
[00:09:33] You have to selectively pick a measure of income. You have to selectively pick the right set of dates. You have to exclude other types of income and other dates. and you have to adjust it for inflation with one index and not any other indexes. And you have to ignore all consumption-based reality. So, you What I’m trying to say is, it’s absolutely positively not true that in general, Americans or American workers, however you want to call it, whatever you want to say, the typical American worker, that their wages only rose 1 percent during the last few decades.
[00:10:12] Worst case scenario, if you do a legitimate analysis, it’s more like, more like 10%, but it’s more like 40%. And if you actually look at broader measures of income, and if you look at consumption-based measures of income, it’s much higher than that, even. If you look at household income, for example, it’s over a hundred, it’s like, it’s closer to a hundred percent.
[00:10:37] So, it’s just not true that, Americans have not done any better over the last few decades. One of the things that we found, he picks, Warren Cass has this stat where he uses 1975 as a starting point for this one particular measure of income. And it turns out that even if you look at a whole range of starting dates that you could have picked in the 1970s, 1975 is the worst one.
[00:11:06] And, this, it gives you the lowest possible positive return. so why did you pick 75? it’s just not true that Our income has not gone up. It’s absolutely false. And if you look at lower wage workers, still the same. It’s not the case that their wages have stagnated. And in many cases, across many of these periods, the lower wage workers have had higher increases than the higher wage earners. And we’re talking about health increases, like over 20%. This, so, it’s just not true.
[00:11:42] Joe Selvaggi: Right. Well, I’ll say on, again, we don’t know the rehash of old episodes, but we’ve had, I don’t know if you’ve read the book by John Earley. He wrote the book, The Myth of Income Inequality, where he points out that when you measure income, sure, there’s a lot of disparity.
[00:11:57] We’ll say if you’re making no income, zero is zero everywhere. So, zero, but what you want to measure is not income, but consumption. How much do these people with zero income spend? And his analysis, he broke the sort of economy to five. Quintiles, and he said that when you account for transfer payments to the lower quintile, and the tax is assessed profoundly higher on the higher quintile, that difference between high and low has not changed at all in 50 years.
[00:12:23] The fact that it’s converged. That’s awesome. so again, I don’t want to cite someone else’s research, but I’ll just say, when measuring income, you’re getting nonsense data. When you’re measuring consumption, how much people spend, again, you’re getting better data. Let’s talk about the other narratives, about why it is that these workers are getting, in a sense, better data.
[00:12:42] Unfairly treated by blind faith and free markets. There’s two mains, themes. One is free trade and outsourcing, and the other is, again, internal, which is the financialization of America. I think I don’t want to put words in your mouth or their mouth, but it’s essentially saying back in the old and good days when we made stuff, workers thrived, now the bankers, the lawyers, the financiers, they’ve taken over. We don’t make anything. All we do is money. This is bankers taking all the wealth. And leaving nothing behind for the workers. You’ve done research on this. Is there any validity to this narrative that says the bankers have absconded with America’s wealth?
[00:13:19] Norbert J. Michel: No, there is no doubt that we have more financial market activity than we used to, 50 years ago, but we’ve also got almost twice as many people, so that by itself really doesn’t mean anything, and there’s no evidence that the financial sector sucked anything out of the real economy, because again, we go back to the real economy has not done worse.
[00:13:41] It’s done better. people have done better. and the idea, we have a whole book, my, my colleague, Jen Schulp and I, at Cato have a whole book coming out on financial markets. And you can go back to beyond the founding of the United States and find the same sort of anti-financial market sentiment, right? All the way to like ancient Babylonian times, but if you just focus on the U. S., even right at the founding in the 1700s, you have the same sort of distrust of Wall Street, of the financiers, The speculators, right? This is an ongoing theme. This is nothing new. Everybody’s always talking about this.
[00:14:22] But when you look at the data, financial markets grow right along with the economy. So, we’ve had a growing economy and growing financial markets the whole time. And it’s also not true that we don’t make anything anymore. We make different things. And we’re more productive, so it takes fewer people to make more things.
[00:14:42] That’s a good outcome. That is exactly what you want. You could do all these trades, all these anti tariff policies, or high tariff policies, anti-trade policies, and restrict trade. And so, you’re blue in the face, you’re, no matter what, you’re not going to need as many people to make steel. You’re not going to need as many people to make a car. We’re just that much more productive than we used to be. And that’s a large driver of the numbers that it takes to manufacture now, the manufacturing employment numbers.
[00:15:15] Norbert J. Michel: It’s not because of financial markets.
[00:15:16] Joe Selvaggi: Indeed, we’ve covered these issues, which is to say we roughly make one fifth of everything made on planet Earth, even though 4 percent of the world’s population. As you say, we make different things. And I think Americans probably are happy we’re not making cheap t shirts or picking up autos. We’re building airplanes and computers and whatever. Let’s just talk about one myth. I’m just, it popped into my head. There’s this whole idea, the boogeyman of financers, this whole notion that this phenomenon of stock buybacks is essentially, mustache twirling bankers saying, look, I could give it to the workers in the form of wages and benefits. Rather, instead, I’ll give it to our shareholders. Why is that not clear evidence that financiers are serving themselves and not the poor guy making the products on the assembly line?
[00:16:07] Norbert J. Michel: Well, ignoring the fact that A very large percentage of the middle class owns stock, and our shareholders are just forgetting about that for a second.
[00:16:20] All share buybacks are, they’re just one way of returning capital to whoever owns the shares. That’s it. So, it’s like a dividend, but it’s not a dividend. And in the case of a share buyback, that shareholder no longer has that share. So, it’s nothing dastardly. There are different reasons for companies doing these things, whether it’s tax benefits, or not.
[00:16:47] It’s worth having that discussion, but it’s nothing, it’s nothing dastardly. And if, If the, this has been researched in financial market, in financial academia for decades and decades. the Natcons make a big deal out of this going crazy in the 80s, but it actually went crazy in the 60s. And you said all the same arguments then, and all of this stuff has been researched to death. The SEC itself has come out with research papers on this. There’s just no evidence that this has hurt anybody, that the share buybacks have hurt anybody, that they’re any higher relative to the overall size of the market than they were in the 60s and the 80s.
[00:17:26] It’s nothing new, fangled. It’s nothing dastardly. It’s just one method. And if it is the case over time that the, the corporate executives who are doing this are hurting the shareholders. I’m pretty sure that the shareholders would pick this up, and they’re going to punish the owners, or the executives rather, who work for them. Who they vote in. This is it’s so silly, it’s not even work you know, it’s amazing that this keeps going on.
[00:17:58] Joe Selvaggi: Right, and they’re accountable to the shareholders. The shareholders have two things. They could fire the management and the board, or they could sell the stock and buy a company. Sell the stock, right. And then buy a stock that doesn’t do these nasty things. But of course, again, these ideas don’t stand up to five minutes of scrutiny because they’re never given five minutes of scrutiny. So, I would say that, in their manifesto, they talk about reducing financialization.
[00:18:20] I always say, a squint the eye to that. I say, well, how does one do that? I say, the reason I say this to my progressive friends, I say, what’s the difference between the money an American worker makes and the money somebody on the Uzbekistan or something? Why do we make more money than any other worker?
[00:18:35] Is it our brains? Is it our muscles? Do we work more hours? No, of course, it’s access to capital, right? Have access to capital. What would be the effect of, let’s say, either restricting or managing access to capital in a different way than, let’s say, unfettered free markets. Like, what do you think the net effect would be of the government involvement in finance?
[00:18:55] Norbert J. Michel: It would be devastating to our regular sort of path of economic growth, and you don’t have to be off by a full percentage point or two, to really hurt people’s income, right? This is a serious thing. The, the unique thing to the United States has always been the higher developed securities and banking combo, and that is what helps drive these things, and whether one causes the other is really irrelevant, they go together, they help each other, and you take away the financial market stuff, you’re going to lose out on all the economic benefits and the prosperity that our system has generated and continues to generate.
[00:19:30] They want to do things like a financial transaction tax, they want to do things like have, a ban on share buybacks, they want to have somebody come in and say which investments are good, which investments are, the good type of economic growth, which investments are, would be for bad economic growth, I mean that, again, that’s not a market based economy, and nobody has and That sort of, wherewithal and ability to forecast those things, and you don’t want to give anybody that kind of authority, because that’s literally telling everybody what they can and can’t do with their money. And, it exposes the people who want these things as hungry for power, because that’s really what it’s about.
[00:20:10] Joe Selvaggi: And of course, when you restrict choices, you increase risk, right? Of course, if you have less ability to move in and out of investments, all investments are trading now for money in the future with some amount of expected return and some amount of expected risk. All regulations impose greater risk because if you can’t move the money, if you feel risk, you are in a sense constrained and that constraint is a higher risk. So lower likely return on investment and less efficient allocation of capital. Again, I’m not going to explain capitalism to our listeners in five minutes, but is that fair?
[00:20:43] Norbert J. Michel: No, that’s more than fair. And I forgot, I might, I messed up my answer because I didn’t go into that. That’s, but you’re increasing the fragility of the financial markets, right? A basic principle of finance is diversity and diversification. And the more, Choice you have in assets, that are not directly correlated with each other.
[00:21:02] As long as they’re not perfectly correlated with each other, you reduce your risk, you’re, and when you start taking choices away from people, then you’re doing the opposite of that. And you are increasing the risk, and you are increasing the fragility of the financial markets, and they’re not working for people anymore. So, it is It’s not okay to come in and say, well, derivatives are too risky. We can’t have derivatives because derivative security allows somebody to get into a market without actually having to buy that asset. And it’s like, well, yeah, exactly. And that’s a good thing. That’s not a bad thing.
[00:21:38] That helps you diversify your risk.to just to sit here and say, well, but people have lost money in derivatives. Well, okay. People have lost money in manufacturing; people have lost money in every business venture you could imagine. There are risks associated with everything that we do. And the financial markets are not anything inherently different than that. And they’re just, they’re being given this evil sort of connotation and it’s completely unfair. And it’s worse than unfair when you look at these policy prescriptions, it’s dangerous.
[00:22:09] Joe Selvaggi: Indeed. Again, I would say to my listeners, if you want money for a new factory, do you really want the government to decide whether it’s good enough for the person who wants to lend it to you? Right. That’s right. If the person is willing to give it to you, the last thing you want is the government to say, yeah, well, I don’t think it’s a good idea. Let’s move on to the other boogeyman of NatCon, which seems to be the reason workers are doing so poorly is free trade. We’ve, in a sense, exported all our jobs overseas, particularly to China. To everywhere else but here. We’ve already established that we really produce about the same as we have for the last 50 years, which is a fifth of the world’s goods. Setting that aside, what do you think the effect of free trade has been on the economy, on jobs, and on the welfare of the ordinary workers?
[00:22:51] Norbert J. Michel: Well, the more that we’ve opened up trade, the better we’ve done, and that’s across the board. Not only people in the United States, but people in other countries. It’s helped them improve their wealth and their income and grow, and then they’ve bought more of our products as well. It’s been an incredible force for good in the world, and it’s amazing that we’re still having this fight. And serious people or otherwise serious people are trying to isolate us as if this is 1920 or something. It’s, we’ve proven beyond the shadow of a doubt that a more open economy is better. It creates more prosperity, more opportunity and its mind boggling that we’re going to go through this again. I. It’s hard for me to even know where to start.
[00:23:40] Joe Selvaggi: Oh, again, we’ve done, some, very good, past podcasts on this, but I like to say my bumper sticker is I believe in free trade for the same reason I believe I don’t want to build my own car or grow my own food. That’s right. Someone else can do it better and cheaper than I can. That’s right. And I’ll build my own car and grow my own food. I’m not efficiently using my time. Yeah. So, I’m not. I’m poor, and so is the person I would have otherwise traded with. They are poor. So, let’s talk about their remedy. Again, we haven’t really talked about remedy prescriptions, but the remedy for this is not merely, let’s say, isolating China, which let’s all agree is a bad actor. It’s a global competitor. They perhaps use, horrible human rights violations, slave labor, or Whatever you want to ascribe to China’s economy, but we’re talking about isolating China. Some of the prescriptions I’ve heard is that across the board, 10 percent tariff on all goods coming from everywhere else. Yeah. I’m going to guess your response, but let’s not put too many normative labels on this. What would be the effect of raising the 10 percent tariff on all imported goods?
[00:24:45] Norbert J. Michel: Well, there’s almost no scenario where that doesn’t cause other countries to retaliate and do the same thing and, it’s just not the case that if we put those tariffs on, that other countries pay the tariffs, it’s Americans pay the higher price that’s just a fact. And the worst that trade war gets, that’s And maybe, maybe trade wars is too emotionally charged, but the more other countries put their own tariffs on in response to our tariffs, the higher those price increases are going to be, the higher those price increases are, the fewer people are able to, the fewer goods people are able to buy, and that goes for both countries, involved in that, and if we’re talking about all countries, well, now we’re talking about essentially a global slowdown in economic activity, which is a global slowdown in prosperity.
[00:25:40] We’ve been opening up trade for the last 20, 30, 40 years. Bit by bit, and people across the globe have been doing better, and we’re going to reverse that, and how badly really just depends on how much we rate, how much we actually implement that policy, and how much other countries respond to it. Smoot Hawley is a great example of one of the worst. instances of this kind of tit for tat, trade policy, tariff policy, it would be tragic if we have to repeat that.
[00:26:11] Joe Selvaggi: Yeah, again, I reduce many of these concepts to the bumper sticker that, when someone asks me about this, I say, we walk into an average Walmart, which is, let’s say, where American workers are most apt to shop. What percent of those products come from elsewhere? China? If everything in that Walmart were 10 percent more expensive, what would be the effect on your life? And it’s a little consolation to say, well, I’m paying more for cooking, but the stuff I do buy is made by an American. Well, he, that American, is also poor when he goes to Walmart. So, it seems like a profoundly losing battle. I don’t want to reshore t shirt factories. But nevertheless, this seemed to be an inevitable consequence of such a policy action, right?
[00:26:57] Norbert J. Michel: It is the inevitable consequence, and it’s not going to increase the number of jobs in the manner that these NatCon guys are saying because, again, we’re just that much more productive. So even if we did start opening up the t-shirt factories again, you’re not talking about millions and millions of jobs. You’re just not. And, on top of that, think of any middle-class parent. Or a set of parents or grandparents, do you want your children and grandchildren to work in a factory making t-shirts all day? Do you want them to be in a coal mine all day? Do you want them to be in a steel factory all day? Most people are going to say no.so I, like, I, we’re just completely at odds here with The reality of the way America has been evolving economically and, it’s a senseless approach, really.
[00:27:45] Joe Selvaggi: Well, I want to get a little more abstract and say, let’s go back to where, let’s say, Republicans have agreed in the past. We talk about, what is it that conservatives seem to all agree on? And I’ll go on a limb and say, the importance of the family seems to be central, or at least some, a view shared by everyone, even, hardcore, three marketers. I’ll quote Natcon’s, well, I’m not going to quote them, but I’ll just say generally, industrial policy that makes it possible to have a good life, raise a family on one income, in the town where you were born and raised, this, I’m channeling Jay, this is a, a goal of, or a vision of everyone, regardless of ideological preference. It’s not clear to me how NatCons would have achieved this. Meaning, if I want to have a prosperous life with one income in the town I was raised, how does a federal government policy effectuate this kind of life? It’s almost as perhaps I might criticize people on the hard left that imagine government is po can make a utopia in this world, and that the fact that they don’t give everything to everyone that they want is some sort of, sadistic goal of mean-spirited conservatives. Right. This is the right thing, essentially. Yeah, we could all live and die in the same town with a wonderful income and a stay-at-home spouse. What do you see as any sort of real substantive, prescription that might achieve this goal?
[00:29:00] Norbert J. Michel: Well, I don’t. I wish I had a longer answer for you, Joe, but I don’t see any substantive prescription that would do that, for some of the reasons that we’ve outlined.
[00:29:08] And, this is, again, this is like this idea that, the increased trade and immigration, has killed off these towns. Okay, that’s wrong too. if you go, throughout the Midwest all the way to the West Coast, there are literally ghost towns everywhere. Some of them were mining towns.
[00:29:26] Mines dried up. and not just gold or silver. lead. Some of them were oil towns. some of them were farms, some of them were farming towns, it, some of them were one industry towns, like Gypsum. All over the United States this has happened, it has nothing to do with trade, it has nothing to do with immigration, per se.
[00:29:47] if you clamp down on the things that make this country’s economy vibrant, that make, that give people multiple opportunities, you are not going to create more opportunities. You are going to make it more difficult to live, more difficult to raise a family, more difficult to go where you want to go. It is backwards. It’s just backwards.
[00:30:10] Joe Selvaggi: Yeah, I think we’re hitting on this sort of, Schumpeter’s, creative destruction, which is where we thrive, because all the industries we used to thrive on, Buggy Whips and such, are all gone, and instead we have, Smartphones that can communicate with a microphone in an instant.
[00:30:25] I’m happy with that trade, but I’ll say let’s go back to again where we might find agreement as, if one were to identify as a conservative, we believe in not, our skepticism of government is not a problem. a belief in chaos, but rather a faith in, let’s say, intermediary institutions like, and everything from community groups and churches and boys, boys and girl scouts, PTAs, all these kinds of things.
[00:30:47] To me, if you want to have a pro family agenda, you want to cultivate these institutions that make communities great. In my estimation, this sort of, national conservatism, this sort of proactive pro family policy seems to be like, well, hell with those. The government is there. It’s like the left’s life in Julia, where the government supports you from cradle to grave, almost without any intermediary. It’s just you and the government and, if you need anything else that’s superfluous, we gotcha. Doesn’t this seem like to almost exactly mirror the sort of fantasies of the left?
[00:31:22] Norbert J. Michel: It is. It’s very much a progressive approach. and if you listen to it, I worked at the Heritage Foundation for a while and before I was at CATO. Yeah, they pull out their way.
[00:31:31] Norbert J. Michel: Yeah, I think but while I was there, they would do a lot of things about pro family policy and, they always used to talk about how the government was in the way of charities and different charitable organizations, that the welfare packages were too big, the incentives to, stay on federal assistance and state assistance were too large, and it made it harder for the charitable organizations to help people get back on their feet. So, I don’t know, I don’t know why they stopped saying that.
[00:32:05] And I shouldn’t say that so that I mean that Heritage has, right? But I don’t know. But the NATCONs have certainly not held to that position. They’ve certainly gone to the progressive approach, which is, no, we just need to fix the government program. And in many cases, they’ll even misrepresent that we have any government programs. They’ll say things like, well, we need to have more, we need to have, we need to fund Our two-year universities, the way we fund our four-year universities. And that’s again, wrong in that we have been funding the hell out of our two-year universities. for many of the last several decades, enrollment’s gone up and funding has gone up. So, it’s not that we haven’t been doing that.
[00:32:45] Joe Selvaggi: I’m glad you bring that up because, again, we’re getting close to the end of the time together, but I’ll say, who do the, in the olden days, let’s say back in the Reagan era, they would criticize the left, the, Democrats or the extreme progressives. It seems to me the ire in this past GOP convention seems more directed, not, President Biden doesn’t seem to be brought up at all. He seems, what, the boogeyman in the, in this, moral narrative is, the old guard, GOP, libertarian, no offense, traditional conservatives, as if we’ve had unfettered capitalism for the last 40, 50 years.
[00:33:17] I sit here, and I look at a government that spends 7 trillion, 7, 000 billion a year. We have a 34 trillion debt. We collect 19 percent of our GDP in taxes, the highest in the history of the United States. We collect more as a percentage of GDP than ever, and still, we have a deficit. We have huge regulations. We have subsidies and tariffs across the board all over, our, trade. Where is this libertarian utopia or this free market, utopia that we’re railing against in this great question. I don’t, where, on what do they base this, version of history? do you have a sense of that?
[00:33:57] Norbert J. Michel: It’s bizarre to me. I, this stuff, again, I was at Heritage when a lot of this stuff started floating around 2017, 2018. and you Used to hear it only on the progressive side, and then you started hearing the conservatives, some of the conservatives, so called conservatives talk about this.
[00:34:16] And, most of the people that I knew just laughed hysterically and it’s like, what are nobody’s going to take that seriously. the level of regulation, the size of the regulatory state, the amount of money we take out of the private sector, what, what kind of market fundamentalism are you what do you, this is insanity.
[00:34:32] Like this is a joke, right. but apparently, I, a lot of people just take this idea seriously enough that you can start a whole think tank based on it. And then I It’s bizarre to me, because we’ve all been documenting across many of the different think tanks, how large the regulatory state has gotten, for nothing, no lack, for lack of, forgetting the tax piece, right?
[00:34:58] Which is also, that’s also out there, but just the amount of involvement, that federal agencies have in our lives, it’s a factor of 10 larger than it used to be. I mean it’s; I don’t know where this free-market paradise is. I don’t know a single libertarian or older guard free market conservative who ever got what they wanted to that extent.
[00:35:24] Joe Selvaggi: Yeah, and I, again, I would say now, I’m saying this more to my friends on the right than on the left. I would say, okay, if you imagine a utopia run by a government that shares your values, that wants to implement things you think are valuable, you have, there’s two steps. One is, elect the right guy and never lose an election for the rest of your time.
[00:35:43] So you have to, in a sense, believe the government can do what you want, a conservative or a national conservative vision of the future. You have to get the government to do it, win the election, and then you have to never lose because it’ll all be undone by the next guy. So, unless you think you can be, win forever, none of this can be a reality.
[00:36:01] And yet, it seems like full steam ahead with this convention. So, I don’t want to be all spitting feathers here, If you, let’s say, take a, you’ve been analyzing sort of these emerging trends in, let’s say, the new ride, is there anything, look, maybe first, I’ll go first. There, I do see there’s huge problems, these deaths of despair, the fentanyl addiction, Disruption, I think, exasperated by, COVID and, social media, I think the average person, instead of comparing himself to his neighbor or his boss, now they’re comparing their lives to, Beyonce or Elon Musk or name your favorite billionaire. So compared to a billionaire, we’re not doing that well. I think that’s a lot of it. What do you think is where do you see this all coming from? And where do you, is there any value that we can, embrace, within the right that, that has value and merit?
[00:36:50] Norbert J. Michel: Well, I think that a lot of this is people, politicians playing up to people’s fears. If you look at something like immigration, there’s always this fear that some other people are gonna come here and take things away. When you look at the social media type stuff, you know that a lot of that brings out the worst in people. And then you can play up on the fears of that and talk about the tech companies, but they’re doing it in a way that where you lose the principles that used to be reliably on the right of, the government is a way to protect your rights, but you still have to work a lot of things out, you still have to be a responsible individual and think for yourself and, try to work these things out in the community is not that the government’s going to solve everything.
[00:37:35] And if we put the government in charge of these things, it might even make it worse. And I do still think that is. I think that’s a good message. I think that’s the right message. That’s why I think it’s a good message. I think it’s because I think that is reality. And I’m hopeful that people will figure that out over time that we need to stick to that approach that it will be better off that way, maybe I’m naive.
[00:37:57] Joe Selvaggi: Yeah, maybe it’s naive. I don’t know. There’s a sudden faith in wisdom and power. Certainly, the power. I have faith in the power of government, not wisdom. yeah. I’ll say anecdotally, I just was down at my local post office. I live on Beacon Hill in Boston. They were out of stamps. So, I’m not making it up. I almost took a picture and I put, put it in a shared screen here. Yeah, but nevertheless, let’s, well, let’s go government. So you have a book coming out. I don’t want to forget this. You have a book coming out in the fall.
[00:38:21] I hope to have you on to talk about it once it’s released but give us a little taste. What’s it called? What’s the title? What’s it going to be? It’s a topic perhaps our listeners want to go on to Amazon and pre-order it before it gets released.
[00:38:33] Norbert J. Michel: Thank you. Thank you so much. It’s called Financing Opportunity and it is a look at how important financial markets were historically in the U.S. It’s also a look at how they’ve always been criticized, and then if you need it, it’s got a little bit of an overview of just how broad our financial markets are now. So, it talks about all the different kinds, and then it talks about the regulation and how regulated they are and how it’s actually not true that they were deregulated before the 2008 crisis, and it talks a little bit about how it might be, what a better approach might be to, to our regulatory, our financial regulatory system.
[00:39:12] Joe Selvaggi: So, it sounds like it’d be a good read for, people in the biz, but also those people who think, right now it’s the wild west and, there’s nobody, keeping an eye on, the world of finance. So that sounds like a good read. I’ll put it on my, my reading list. And of course I want to also direct our listeners to where can they read more about your work at CATO?
[00:39:30] Norbert J. Michel: Oh, if you go to cato.org and you just type in Norbert Michelle, you’ll see all my stuff.
[00:39:38] Joe Selvaggi: Wonderful. And in Forbes. And you’ve written a couple great pieces. I appreciate you joining me again today, Norbert, and take, we wanna a little bit over, but I think I got a little carried away for this topic after a week of watching the convention. So, thank you for joining me today, Nobert it, it was a great conversation. Oh, it was a great time.
[00:39:55] Thank you very much. This has been another episode of Hubwonk. If you enjoyed today’s show, there are several ways to support Hubwonk and Pioneer Institute. It would be easier for you and better for us if you subscribe to Hubwonk on your iTunes Podcatcher. It would make it easier for others to find Hubwonk if you offer a 5 star rating or a favorable review. Of course, we’re grateful if you share Hubwonk with friends. If you have ideas or suggestions or comments for me about future episode topics, please email me at hubwonk@pioneerinstitute.org. Please join me next week for a new episode of Hubwonk.
Joe Selvaggi talks with the CATO Institute’s Dr. Norbert Michel about the shift in the Republican vision and policy goals from decades past, as reflected in the nominees and guest speakers at the 2024 GOP Convention.
Guest:
Norbert J. Michel is vice president and director of the Cato Institute’s Center for Monetary and Financial Alternatives, where he specializes in issues pertaining to financial markets and monetary policy. Michel was most recently the Director for Data Analysis at the Heritage Foundation where he edited, and contributed chapters, to two books: The Case against Dodd–Frank: How the “Consumer Protection” Law Endangers Americans, and Prosperity Unleashed: Smarter Financial Regulation. Michel was previously a tenured professor at Nicholls State University’s College of Business, teaching finance, economics and statistics. Before that, he worked at Heritage as a tax policy analyst in the think tank’s Center for Data Analysis from 2002 to 2005. He previously was with the global energy company Entergy, where he worked on models to help predict bankruptcies of commercial clients. Michel holds a doctoral degree in financial economics from the University of New Orleans. He received his bachelor of business administration in finance and economics from Loyola University. He currently resides in Virginia.