Conservative Economists in Exile in the Age of Trumpism

One of the defining stories of the year was a guessing game: which of the political Right’s factions (neoconservatives, libertarians, the Religious Right, etc.) would go along with Trump’s gleeful trashing of traditional movement conservatism and assertion of a populist white nationalism? Where members of each faction chose to stand often said more about them than it did about Trump himself, who often seemed to be making it up as he went along, reversing his policy positions on a dime if it seemed worthwhile at that moment. And as it is with those factions, so it is with the world of conservative economic thought, where the arrival of Trumpism has scrambled alliances and may have fundamentally dislodged economists from Republican policy for years to come.

Among certain factions on the left, economics as a whole is regarded as a right-wing thorn in society’s side, little more than a corporate-tinged justification for ‘neoliberalism’ and greed. During the Reagan Era, the most well-known economist and public intellectual was conservative-libertarian Milton Friedman, who, in his bestselling books and widely watched PBS series, championed sharp cuts in marginal tax rates, cuts to welfare and entitlement programs, corporate deregulation, and the idea that “the social responsibility of business is to increase its profits.” Republican President Reagan and Conservative British Prime Minister Margaret Thatcher specifically cited and championed the works of economists like Friedman as well as those of the iconoclastic libertarian Austrian School, such as Friedrich Hayek and Ludvig von Mises, which may have contributed to the perception of the field among some as a conservative outpost.

The view of economics as a vehicle for conservative ideology is a wild mischaracterization of the field as a whole, and Friedman, Hayek, and von Mises are not representative figures. Many economists work on issues that are not politically contentious, such as theoretical auction design or econometrics (specialized statistics), and their academic articles resemble papers in mathematics or computer science much more than competing policy arguments in The Wall Street Journal and The New York Times. When not mathematical theory, economics journals are usually populated by papers not embracing ideological visions, but performing rigorous proofs or hypothesis testing of data. Many economists, particularly those employed at institutions such as the Federal Reserve, try to avoid politicization of their work as much as possible.

While the field takes prevention of political bias in research quite seriously, when explicitly asked about their partisan preferences, a 2003 survey of 1000 randomly selected economists actually reported voting for Democratic candidates over Republican ones by a ratio of 2.5 to 1, and a 2016 study of faculty party registrations found that economists at 40 top US universities were more likely to be registered Democrats than Republicans by 4.5 to 1. In other words, if economists, in general or at top universities, were the only people who voted, the result would be a Democratic landslide unlike any ever seen in American political history.

Economists as a whole could only be considered right-wing in the context of the rest of academia, where the same 2003 survey found Democrats are preferred to Republicans by a ratio of 5.5 to 1 in political science, 6 to 1 in history, and 16 to 1 in sociology (the 2016 study of top universities found that faculty had shifted even further left, finding, for example, that the ratio of registered Democrats to Republicans in elite history departments is now 33 to 1). Also, because economists acknowledge that the fundamentals of supply and demand characterize markets and therefore resource allocation, they tend to have a certain bound on how far left they are willing to go, usually stopping at some point before outright government control of the means of production. In much of the social sciences and humanities, the only real political debates are between the center-left and the far-left, with conservatives considered a laughingstock and almost completely marginalized. Economists, on the other hand, although they still clearly lean left, have a long tradition and meaningful presence of conservative thought.

It is in this atmosphere that Trump has thrown everything into turmoil.

Drain the Ivory Tower

Before Trump arrived, the economic agenda of political conservatives was organized around several well-known planks: a preference for lower marginal tax rates (particularly on the wealthy) and free trade and opposition to regulation, unions, the minimum wage, deficits, redistributive programs, and economic stimulus.

But although conservative economists served in government economic positions such as the Council of Economic Advisors during Republican administrations, it was not only academics who could push their agendas, but also an assortment of non-academics working in grassroots organizations and some think tanks. Such people did not work in the field of economics or try to publish articles in economics journals, but instead promoted policy ideas like ‘supply-side economics’ or the famous pledge, developed by Grover Norquist, to never increase taxes on any individual or entity under any circumstances, ever. These activists attempted to use the basic vernacular of the field of economics, but did so without participating in the practices of the field meant to enforce rigorous accountability, like peer review.

A good predictor for whether an economics-affiliated conservative supported Trump during the campaign is whether he or she is an economist or one of these political activists. Conservative heavyweight think tanks stacked with economists, like the Hoover Institution or the American Enterprise Institute (AEI), were noticeably reticent about the election. Top officials in previous Republican administrations (John Taylor, Greg Mankiw, John Cochrane, Martin Feldstein, Glenn Hubbard, Richard Schmalensee, William Poole, and more) went on record opposing Trump.

When The Wall Street Journal contacted forty-five economists who had served on the Council of Economic Advisors under eight different presidents, not a single one supported Trump. When Trump initially put out his economic plan, economists across the spectrum immediately savaged it. With days to go before the election, a group of 370 economists, including eight Nobel Laureates, published a letter disparaging Trump for “magical thinking and conspiracy theories” just two days after a group of nineteen American economist Nobel Laureates published a letter endorsing Clinton; by contrast, a quadrennial letter signed by hundreds of economists in support of the GOP nominee this year simply registered objection to Clinton’s policies without mentioning Trump at all.

Meanwhile, when a group of over 130 pro-Trump intellectuals published a mission statement, only nine were economists on a list dominated by media commentators, cultural critics, and lawyers/law professors. When Trump unveiled his economic advisory team in August, out of the thirteen members, most of them were industry executives in finance and real estate, five of them were major donors to the Trump campaign, and only one, Peter Navarro, was an economist. Trump’s principal economic advisor on the list, Stephen Moore, the ‘chief economist’ at the Heritage Foundation, was a newspaper columnist and the founder of activist group Club For Growth who once published an editorial so riddled with factual errors that the editorial page editor of the paper commented, “You assume Heritage has edited these pieces too. But, lesson learned. There will be no future Heritage pieces published that don’t get thorough fact-checking.”

After Trump’s initial tax plan was pilloried because it would have cost $10 trillion over the next decade, he deployed to fix it Moore and Larry Kudlow, a CNBC host and political pundit who infamously declared that “President George W. Bush may turn out to be the top economic forecaster in the country” and that “it’s a non-recession recession” in May of 2008. What’s more, Grover Norquist, who at one point got all but seven House GOP Representatives to sign his pledge to never sign any form of tax increase, has been vocally pro-Trump.

University of Michigan economist Justin Wolfers put it bluntly in August:

“Most conservative economists have bailed on Trump. But supply-side pseudo economists haven’t.”

While ideologically driven economic activists and a few CEOs, free of having to rigorously justify their assumptions and ideas to other researchers in as much as a research journal, constructed the barest outlines of a policy platform, the actual economists affiliated with the conservative movement rendered their verdict: #NeverTrump. Trump-supporting economic activists are of course free to argue for whatever positions they want, but it is extremely telling that they make these arguments using wild assumptions accepted by almost no one actually in the field, including the economists whose ideological priors lean right.

Trump demonstrated no interest in learning the standard conservative arguments for policies such as increasing the retirement age. The attributes of typical Republican policy he adhered to (tax cuts on the wealthy, repeal of Dodd-Frank) were far more important for the purpose of signaling to his wealthy donors that having him in office would serve their financial interest.

On other issues, Trump ditched the AEI and Hoover-approved conservative orthodoxy, flip-flopping repeatedly on the minimum wage, protesting against any proposed cuts to Medicare and Social Security, and insisting on single-handedly throwing out “bad” trade deals. Trump, while hurling continuous invective at people of color, spent considerable energy on the campaign trail meeting with working-class whites and claiming that he would turn around downwardly mobile white areas. To Trump, a “bad” trade deal was one that resulted in job loss for white workers in blue-collar positions. In this vein, Trump appropriated some of the traditional language of the left, like “worker’s party,” a stance in sharp contrast to previous Republican nominee Mitt Romney’s lionization of “job creators.”

Trump triangulated his positions so as to balance his (whites-only) economic nationalism with giveaways to the GOP’s donor class like his highly regressive tax plan, making his economic policies a Frankenstein’s monster of the conservative policies most favorable to the rich alongside a populist affect of anti-trade and entitlement protection.

Conservative economists like Mankiw, Taylor, and Cochrane favor a tightly limited view of economic policy, in which the government should perform minimal action to uphold property rights, solve select public goods problems, and tax limited externalities, and go no further. This view involves support for policies like cuts to Social Security, a position which two-thirds of the general electorate and over half of the Republican electorate opposes. It also involves support for free trade, a view upon which Trump has heaped scorn and Republican support has correspondingly tanked. While Trump does endorse massive, top-heavy tax cuts, many in the Republican base do not: almost a third of Republicans are willing to go as far as to endorse the statement that the government should “redistribute wealth by heavy taxes on the rich.” Conservative economists tend to oppose raising the minimum wage and sometimes support eliminating it entirely, but nearly 40% of Republicans support raising the federal minimum wage to $12 an hour.

Lastly, economists, including conservative ones, tend to take a favorable view of immigration, and the Republican electorate remains decisively against it, including favoring a blanket ban on Muslims from entering the country. The vocal, strongly libertarian wing of the field, concentrated in the George Mason department (Alex Tabarrok, Tyler Cowen, Walter Williams, and Donald Boudreaux, among others), also viscerally opposes Trump. Such economists tend to be in favor of policies as radical as open borders — essentially Trumpism’s polar opposite.

In this context, it makes sense that conservative economists refused to play along with Trump, because conservative economists recommending policy tend to be committed to certain visions and ideas based on their priors and academic research, and the motley crew of Trump advisors was interested in some fusion of ideological enforcement and political power, even if it came by riding the coattails of a racist authoritarian with questionable fidelity to their positions.

With Trump having to settle into D.C., will he back off from his conservative heresies? Possibly. The institutional Republican Party retains many movement conservatives, and the Trumpist fever may die down. But the Republican electorate did not care about what ivory tower economists thought about policy when they selected their nominee, and their aggressive middle finger to the entire conservative movement signals what might be a fundamental break.

Since the election, Stephen Moore, that quintessential Reaganite, has directly told House Republicans that Reaganism is over and that the GOP is now a “populist working-class party.” Moore’s comment comes at a time when Trump’s pick for Treasury Secretary is Steven Mnuchin, a hedge fund manager and Goldman Sachs alumnus (who also sits on the board of a bank accused of refusing to lend to black and brown people). In the transition milieu, conservative economists are nowhere to be found, their fate in the Republican Party precarious at best.

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