The Ten Facts That Explain America

Bankruptcy Court is now in session, the Supreme Court tackles presidential immunity, and more…

On Saturday, the New York Times published my feature essay, This Is What Elite Failure Looks Like. Please go read it if you have not already! I’ve never received so much feedback, or such uniformly positive feedback, on something I’ve written—remarkable particularly for a piece whose core premise was to blame and mock most of the people reading it.

The essay clearly resonated because it provided a concrete, fact-based explanation for the political chaos that the country is experiencing, and then outlined an entirely plausible path back from the brink. In essence, it represents a synthesis of all the work that American Compass has done over the past four years, through our economic and public opinion research and policy development.

This got me thinking that a rundown of those key facts most important to understanding America’s plight would be useful. They’re scattered throughout the essay in narrative form, but I’ve compiled them here:

The Ten Facts That Explain America

(The first five are about the preferences and values of Americans; the next five are about the state of the American economy.)

1. For all the talk of “upward mobility,” more than 90% of Americans choose “financial stability” as more important.

2. While popular media often translates the American Dream as being better off than your parents in materialistic terms, Americans between 18 and 50 were more than twice as likely to say “earning enough to support a family” is what’s most important. … Note the contrast with the small cohort of upper-class Americans with college degrees and the highest incomes, who see the American Dream more in terms of going as far as their talents and hard work take them than as either supporting a family or even getting married and raising children.

3. Upper-class Americans regard the chance for their children to pursue postsecondary education that would offer “the best possible career options but was far from home” as more desirable than one that would offer “good career options close to home.” All other groups said they preferred the latter. (Relatedly, most American parent would prefer to have their children offered three-year apprenticeships that lead to good jobs over full college scholarships.)

4. Americans agree by ten to one that “we need a stronger manufacturing sector,” most often because it “is important to a healthy, growing, innovative economy.”

5. At no time on record have more than around one-third of Americans wanted to increase immigration levels; support for decreasing the level is almost always much stronger.

As I summarize these sentiments in the essay: While policy initiatives so often seek to maximize efficiency and growth, move people to opportunity and redistribute from the economy’s winners to the losers, the typical American has an attachment to place, a focus on family, a commitment to making things, and would accept economic trade-offs in pursuit of those priorities.

The economy is ensuring that everyone has lots of stuff, but it is failing to deliver on that which is most important to people.

6. Only around one in five young Americans makes the transition smoothly from high school to college to career, and for young men the figure is lower still.

7. For men ages 25 to 29, inflation-adjusted median earnings and compensation are lower than they were 50 years ago.

8. Americans ages 18 to 34 are more likely to be living at home with their parents than independently with a significant other.

9. The productivity growth necessary for rising wages has, in manufacturing, turned negative.

10. The typical worker no longer earns enough to provide middle-class security for a family.

In short, most Americans value above all else the ability to build decent and secure lives centered around family and community, supported by their own productive work. American elites do not. Through their political choices, the latter have shaped an economy that the former do not accept.

Someone sent me a wonderful Tocqueville quote on this point, that captures the situation nicely. In Democracy in America, Tocqeville wrote of “le bien du pauvre,” translated here as “the good of the poor”:

It is easy to recognize, however, that in English legislation the good of the poor has often ended by being sacrificed to that of the rich, and the rights of the greatest number to the privileges of a few. Therefore, within England today all the greatest extremes of fortune are present together, and miseries are found there that nearly equal its power and glory.

In the United States, where public officials have no class interest to insist upon, the general and continuous course of government is beneficial, even though those who govern are often lacking in skill and sometimes contemptible.

So there is, at the heart of democratic institutions, a hidden tendency that often makes men work toward the general prosperity, despite their vices or errors, while in aristocratic institutions a secret inclination is sometimes uncovered that, despite talents and virtues, carries them toward contributing to the miseries of their fellows.

A British economist, Nassau William, interpreted the term as “the wealth [rather than the good] of the poor” and objected:

I do not think that in England the wealth of the poor has been sacrificed to that of the rich. As far as my investigations extend, the wages of the English labourer are higher than those of any labourer. He has not landed property, because it is more profitable to him to work for another than to cultivate; but this depends on the same ground which makes it more profitable to work for a cotton manufacturer than to make stockings for his own use.

Tocqueville responded:

In page 115 I said that in English legislation the bien du pauvre had in the end been sacrificed to that of the rich. You attack me on this point, of which you certainly are a competent judge. You must allow me, however, to differ from you. In the first place, it seems to me that you give to the expression le bien du pauvre a confined sense which was not mine; you translate it wealth, a word especially applied to money. I meant by it all that contributes to happiness; personal consideration, political right, easy justice, intellectual enjoyments, and many other indirect sources of contentment. I shall believe, till I have proof of the contrary, that in England the rich have gradually monopolised almost all the advantages that society bestows upon mankind. Taking the question in your own restricted sense, and admitting that a poor man is better paid when he works on another man’s land than when he cultivates his own, do you not think that there are political, moral, and intellectual advantages, which are a more than sufficient and, above all, a permanent compensation for the loss that you point out?

Tocqueville celebrated the populist nature of American democracy for differing so clearly in form and outcome from the aristocratic English system. But in America today, the public officials find themselves with a “class interest to insist upon,” not unlike the English aristocrats of old. Ironically, the same conservative establishment that usually hangs on Tocqueville’s every word as scripture has become the chief defender of this dysfunctional status quo and makes constantly the same error as Mr. William in equating “the good” as merely “the wealth, a word especially applied to money.”

SPEAKING OF PRODUCTIVITY…

Last week, I discussed new research suggesting worker scarcity spurs investment and productivity, and one of the ten facts about America above concerns the decline in manufacturing productivity. Understanding productivity is key to Understanding America. If you too care about productivity, I highly recommend this post from Noah Smith at Noahpinion on Why has U.S. manufacturing productivity stagnated for over a decade?

BANKRUPTCY COURT: TAX EDITION

One of our semi-regular features here at Understanding America, Bankruptcy Court features the most woefully inept Old Right dogma still being trotted out by the conservative establishment’s legacy institutions. Market fundamentalism is intellectually bankrupt, and it is literally bankrupting the country. Let’s dive in.

It’s safe to assume that Advancing American Freedom (AAF), the new think tank founded by former vice president Mike Pence, will be appearing regularly. They are out of the gate supporting extension of the 2017 Tax Cuts and Jobs Act (which they, adorably, call the Trump-Pence tax cuts). At American Compass, we were very pleased to see Semafor reporting last week that “House Republican support grows for corporate tax increase, threatening key part of Trump’s economic legacy.”

AAF was less pleased, and not just because Semafor forgot to call it “Trump and Pence’s economic legacy.” AAF chairman (and former Pence chief-of-staff) Marc Short responded, “Corporate tax relief created 5 million jobs in three years.”

Presumably, he is referring here to the 4.7 million jobs created between December 2017, when the Mike Pence Tax Cut (with help from Donald Trump) passed, to February 2020, before the onset of Covid. And then, I guess, he’s attributing every single one of those jobs to the corporate tax cut? That’s… ridiculous. For one thing, it would mean that the huge tax cuts for individuals created no jobs, which seems kind of off message. But also, how many jobs would the economy have created without the tax cut? In the first year of the Pence-and-Friends administration, before the tax cut, the economy added 2.1 million jobs. In the next two years, after the tax cut, the economy averaged an additional 2.1 million jobs per year. As I’ve examined in depth, in Tax Cut Did What?, TCJA appears to have achieved precisely nothing.

Not to be outdone, newly appointed AAF president Tim Chapman added, “We aren’t going to beat China by playing their game of government-picked winners and losers. We need to do it the American way. Keep rates low and let Americans be Americans.”

This is, respectfully, drivel. All-American drivel, to be sure. But what does it even mean? Chapman seems to be suggesting that “the American way” is to “keep rates low.” But of course, the only reason we’re having this debate is that the American corporate tax rate has always been… high. It was cut from 35% to 21% only at the end of 2017. Before that it had been in the mid-30s since 1987. Before that, in the 1970s and 80s, it had been in the high 40s. Before that it had been above 50.

Conversely, as American Compass has documented in excruciating detail, the “American way” has been to provide robust public support for industry, protection from foreign competition, and direct investment in promising technologies. “Let’s have low tax rates and free trade, and leave industrial policy to our competitors” is a recent and disastrously failed experiment.

The latest illustration, coming after the TCJA cuts, is electric vehicles. As I wrote last month in The Electric Slide, Chinese industrial policy has run circles around American tax cuts and now the entire American automotive sector is under threat. The U.S. has raised tariffs on Chinese EVs to 100% in response. But maybe that’s just more government winner-picking and Team Pence would prefer to see yet another vital industry and its workers get crushed—something something America and all.

TRUMP V. UNITED STATES

As an administrative law buff, I’ve enjoyed the hyperventilation about the Supreme Court overruling Chevron, which was just a judicially invented rule of statutory interpretation. This thread from Senator Chris Murphy was particularly artful:

[Congress] intentionally wrote laws with non-prescriptive terminology, knowing the experts at the agency would implement it in the best way. This is good for democracy, because the voters get to decide who runs the agencies. But it's not good for corporations/billionaires, because they want right wing judges … to interpret laws.

So, voters decide who runs agencies (appointed by elected presidents) but not who serves as judges (appointed by elected presidents). Corporations have more influence over judges with lifetime appointments hearing public cases than over bureaucrats who are lobbied all day in private before passing through the revolving door to work for the lobbyists and the corporations? This is obviously not true. But I digress.

My point was going to be that, unlike the entirely manufactured Chevron hysteria, the commentary on the presidential immunity decision in Trump v. United States is worth following. There’s plenty of hysteria too—lawless this, Seal Team 6 that—but the underlying issues are really hard and consequential ones. Quis custodiet ipsos custodes?—who guards the guardians—is one of the oldest questions in political theory. So, I recommend reading this analysis from Professor Jack Goldsmith at Lawfare, which does an outstanding job explaining why this particular point of constitutional law is so complex, why there are no good answers and only hard tradeoffs, and why the justices on both sides reached the conclusions they did.

I would just add one additional note of my own, which is that I tend to think the majority was correct to lean toward broader immunity, because of a mitigating factor against the dissent’s concern. The public and the media tend to have a sharply mechanistic view of how the legal system constrains public power: laws say some things are illegal and political figures therefore don’t do them, for fear of being sent to jail if they do. A court decision saying “you can’t send a president to jail for that” leads directly to a conclusion that the president will now feel free to do it. In reality, the checks on presidential power are far more complex and inchoate.

On one hand, there’s a tremendous amount that might be illegal that a president can easily get away with if he wants. On the other hand, a president can do almost nothing on his own and so is constrained by what those around him will do, and all are constrained by the wide variety of consequences other than the (quite unlikely) prospect of jail time in deciding what actions to take. Put another way, presidents do not order Seal Team 6 to assassinate opponents, and a fear of going to jail for it is not the reason.

Seeing as America has made it this far without even attempting to prosecute a president (thus the novelty of the question presented to the Court) and seeing as the efforts at prosecuting one this time around have accomplished none of the democracy-rescuing objectives claimed, it seems unlikely that limits on such prosecutions are what will bring our Republic down.

Thanks for reading—back Friday with more links!

Oren

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