This is a good piece. And deserves deep reading. Industrial policy matters and has been successful in achieving important goals. Matt Stoller writes about the this as well. Thank you for writing this. It’s unfortunate that more people (particularly on the right) don’t understand this. It’s my belief that absent government intervention, markets tend toward monopoly and cartel with all the concomitant market failures that engenders. Keep writing, Oren. Many people are criticizing Matt Gaetz but he is an anti monopolist as you have noted. It will be curious to see who Trump puts in the charge of the FTC
IIRC, the SF writer Cyril Kornbluth (d. 1958), was aghast at the then-recent industrial innovation called “planned obsolescence,” which caused him to forecast the eventual decline of the American dream.
So far as I can tell, his prophecy was accurate, as the state of our landfills will attest. Perhaps the best example is the irreplaceable batteries in cell phones.
One would think that the Greens would agitate for more long-lasting products, but, instead, they want us all to constantly replace our appliances with even greener ones every few months or years; this is only aided by the increasing shoddiness of consumer-product design and manufacture.
Also the “Right to Repair” movement has also spurred a bit more efficiency by encouraging or allowing people to fix devices (as diverse as tractors and cell phones). This is clearly an area that states have been active in but could do more in.
Fair observation. It touches on the topics of “efficiency” and well as “sustainability.” A lot of people really fail to grasp how incredibly inefficient the market can be (as you point out with planned obsolescence). I think part of this is unavoidable (technology improves) and part of this is totally avoidable (battery replacement issue). Curiously there was a discussion of designing cell phone to be more modular so that components (like cameras) could be replaced as new tech arrives without replacing the whole thing. For good or bad this never took off. The concept of modular design and reuse has been in software for a really long time.
I think Oren should do a “Profs and Pints” session. I expect it would be hugely attended. If you haven’t heard of Profs and pints it’s kind of like Meetup but with a more academic focus organized by a guy named Peter here in DC
Superb piece. Already shared among multiple friends and fora. But it’s not just the right that misunderstands some of its underpinnings and implications. That failure seems very broad spectrum. Part of the problem, it seems to me, is that the term and concept of “industrial policy” is largely a blank slate. It has no one specific meaning. It is silly to argue for or against it without context and content. For example, as a free market sort of guy, if someone said “let’s develop an industrial policy that incentivizes/subsidizes/“bounty-izes” a reduction in US supply chain vulnerabilities to hostile foreign powers, I might be all in, especially as a course charting correction from some previous mistakes. But if some of the idiots we have working for us in Washington said, let’s decide who we’re going to reward for that—maybe somebody named Solyndra—then all bets might be off (for me). The devil is often in those details. But wow, I so agree with your premises.
P.S. I love George Will’s Hamiltonian encapsulation, but I think I like Chernow’s even better (I paraphrase): if Jefferson was a voice from our past, Hamilton was a messenger from America’s future.
Important to point out there's always an industrial policy.
The US has one now..
For decades we have favored real estate with deductibility of mortgage interest, light (compared to Western Europe) environmental standards and cheap foreign labor to do the work..
China's industrial policy is to subsidize manufacturing and suppress its own domestic consumption and export the goods and surpluses to the US. By "free trading" with China our industrial policy is necessarily the opposite: suppression of domestic manufacturing, subsidies for consumer spending, retail, warehouse, shipping and of course banking and finance since the whole system requires huge amounts of money criss crossing the globe. And as our strongest brands move production overseas there is also increasing subsidies for intangible IP such as trademarks, patents, copyright etc..
The question is not whether we'll have an industrial policy..we always do. The question is what industries should it favor.
As a founder of a business that has lasted over 40 years, I can confirm that the Grateful Dead got it right, "Whoever leads must follow". However, we are not in the founders' world. See Ben Bahn's comment.
Hamilton and his frenemies were discussing industrial policy for a nation that could simply 'back fill' progress because the technologies were already in place. Invention wasn't the issue, it was implementation. The Chinese 'theft' of American innovations comes straight out of our playbook, when we were at their stage of development. The provisions of our patent and copyright laws make it clear were started as a nation of pirates. We are now a nation of monopolists.
Only by breaking up the 'deep oligopoly', will we unleash our industrial capacity. Government is NOT needed for funding now, its needed to put free competition back in the 'free' market.
Take a look at the history of Harpers Ferry. It was built around the Arsenal but had other industrial facilities as well and was a favorite of George Washington (after the War of Independence but before his Presidency). It also was the home of the first rail junction in the US but that came later.
Thank you for this column, Oren. I've been reading American Compass and now Understanding America for about three years. When I first started reading your articles, I was surprised that a conservative had these type of ideas ie government intervention via subsidies, the use of tariffs as a benefit to American industry, the importance of community and helping the family unit via "child allowances"...
These ideas are gaining more traction and that is good for the nation. I'm glad that Marco Rubio, Josh Hawley and JD Vance share your ideas. I hope you play some kind of role or give advice in Trump's upcoming term. I hope they listen to you, too! It's funny, but when I first started reading your stuff, I'd never heard of you before nor had, I don't think, many others. Now the name Oren Cass is becoming a lot more well-known--and for good reason.
The United States' did not become deeply politically and economically centralized until the 1970s and early 1980s, during the advent of the so called Neoliberal Era, so George Will is certainly wrong if he was implying that we were fully, in the senses he described it, in Hamilton's world from most of our history. And many people, including, it seems, yourself and this Substack page, believe that we have been worse off policy wise since the Neoliberal Era, and our deep centralization, began
The United States' did not become deeply politically and economically centralized until the 1970s and early 1980s, during the advent of the so called Neoliberal Era, so George Will is certainly wrong if he was implying that we were fully, in the senses he described it, in Hamilton's world from most of our history. And many people, including, it seems, Mr Cass and this Substack page, believe that we have been worse off policy wise since the Neoliberal Era, and our deep centralization, began
More than Hamilton’s arguments on any given topic, we would all benefit from the careful study and personal application of his “mode of reasoning.”
Hamilton never explicitly wrote abstract philosophical essays on reasoning, but there is nevertheless clearly some definable intellectual machinery guiding his essays.
And, I believe Hamilton is so deeply intertwined with our democracy precisely because his mode of reasoning has the epistemological and ontological basis that democracy itself does.
Aristotle discusses the linguistics of reasoning at the precise historical moment that alternatives to Athenian democracy were being articulated by Plato.
In Book 1, section 1, lines 20 to 25, Aristotle distinguishes between demonstrative premises, such as those employed by neoliberal macroeconomists, and dialectical premises of the sort employed by Plato.
Hamilton employs neither method of reasoning. He grants the alternative line of reasoning credence at the outset, then seeks out its flaws in the process of establishing an opposing argument, which are adjudicated by judgment rather than logic.
This was the method of reasoning first employed by Protogoras, which Plato devoted himself to replacing.
I would certainly be happy to explicate things further, but perhaps a more concrete example will suffice: Hamilton would not have accepted the terms of the debate between Cass and Winsip. And it is in getting at the reasoning as to why that the conservative case can best be made.
Besides which, if we follow Adam Smith, the theory of free trade never countenanced free mobility of capital, thanks to which today companies that do not mover operations to low-wage countries overseas soon go out of business.
So I think you misunderstand the lesson of Hamilton's report. It was the beginning of a number of efforts to inject the Federal government into the growth of the economy - but the Constitutional vision was much narrower. The Constitution thought of our industrial policy in a couple of ways - first as a groundskeeper thus the regulation of interstate commerce and the ability of our policy makers to set tariffs. Second as a rules maker in the recognition of patents and copyright. But as you comment early in the piece one respondent said "just because we’ve done something before doesn’t make it a good idea" - Hayek's the "Use of Knowledge in Society" lays out a clear case why the market is almost always superior to central planning no matter whether it is called Industrial policy or anything else.
Trump's recipe for manufacturing renaissance has the ingredients of trade protection, tax cuts, and deregulation. Industrial policy is absent, or am I missing something?
The US and Chinese economies are almost photo negatives. The US macroeconomic conditions are fantastic with above-potential growth, below-natural-rate unemployment, roaring stock market, and ferocious animal spirit, but it struggles to reindustrialize. Chinese manufacturing is unstoppable on its way to global dominance, yet the Chinese macroeconomic picture is bleak: subpar growth, high unemployment, tepid domestic consumption, dispiriting stock market, and low animal spirit.
Does the contrast mean there are inevitable tradeoffs (can be worthy tradeoffs) between growth and industrialization? Or as some (neoliberal) economists have been arguing, deindustrialization is a natural phenomenon accompanying growth and reindustrialization is like fighting economic gravity?
Very good piece, Oren. The only thing that's missing is a recommendation to a book (You have a review copy) elaborating how Hamilton's principles worked -- namely, Hamilton Versus Wall Street: The Core Principles of the American System of Economics. Why not help a fellow Hamiltonian? Nancy Spannaus, from americansystemnow.com
Very good piece, Oren. What's missing is a reference to a good book (you have a review copy) that reviews how well Hamilton's policy worked. I'm referring to my Hamilton Versus Wall Street: The Core Principles of the American System of Economics. Why not take the plunge? Nancy Spannaus from americansystemnow.com
This is a good piece. And deserves deep reading. Industrial policy matters and has been successful in achieving important goals. Matt Stoller writes about the this as well. Thank you for writing this. It’s unfortunate that more people (particularly on the right) don’t understand this. It’s my belief that absent government intervention, markets tend toward monopoly and cartel with all the concomitant market failures that engenders. Keep writing, Oren. Many people are criticizing Matt Gaetz but he is an anti monopolist as you have noted. It will be curious to see who Trump puts in the charge of the FTC
IIRC, the SF writer Cyril Kornbluth (d. 1958), was aghast at the then-recent industrial innovation called “planned obsolescence,” which caused him to forecast the eventual decline of the American dream.
So far as I can tell, his prophecy was accurate, as the state of our landfills will attest. Perhaps the best example is the irreplaceable batteries in cell phones.
One would think that the Greens would agitate for more long-lasting products, but, instead, they want us all to constantly replace our appliances with even greener ones every few months or years; this is only aided by the increasing shoddiness of consumer-product design and manufacture.
Also the “Right to Repair” movement has also spurred a bit more efficiency by encouraging or allowing people to fix devices (as diverse as tractors and cell phones). This is clearly an area that states have been active in but could do more in.
Fair observation. It touches on the topics of “efficiency” and well as “sustainability.” A lot of people really fail to grasp how incredibly inefficient the market can be (as you point out with planned obsolescence). I think part of this is unavoidable (technology improves) and part of this is totally avoidable (battery replacement issue). Curiously there was a discussion of designing cell phone to be more modular so that components (like cameras) could be replaced as new tech arrives without replacing the whole thing. For good or bad this never took off. The concept of modular design and reuse has been in software for a really long time.
How does one get the opportunity to receive a dinnertime lecture on industrial policy by Oren Cass without being a wealthy donor? Sign me up
I think Oren should do a “Profs and Pints” session. I expect it would be hugely attended. If you haven’t heard of Profs and pints it’s kind of like Meetup but with a more academic focus organized by a guy named Peter here in DC
Superb piece. Already shared among multiple friends and fora. But it’s not just the right that misunderstands some of its underpinnings and implications. That failure seems very broad spectrum. Part of the problem, it seems to me, is that the term and concept of “industrial policy” is largely a blank slate. It has no one specific meaning. It is silly to argue for or against it without context and content. For example, as a free market sort of guy, if someone said “let’s develop an industrial policy that incentivizes/subsidizes/“bounty-izes” a reduction in US supply chain vulnerabilities to hostile foreign powers, I might be all in, especially as a course charting correction from some previous mistakes. But if some of the idiots we have working for us in Washington said, let’s decide who we’re going to reward for that—maybe somebody named Solyndra—then all bets might be off (for me). The devil is often in those details. But wow, I so agree with your premises.
P.S. I love George Will’s Hamiltonian encapsulation, but I think I like Chernow’s even better (I paraphrase): if Jefferson was a voice from our past, Hamilton was a messenger from America’s future.
Important to point out there's always an industrial policy.
The US has one now..
For decades we have favored real estate with deductibility of mortgage interest, light (compared to Western Europe) environmental standards and cheap foreign labor to do the work..
China's industrial policy is to subsidize manufacturing and suppress its own domestic consumption and export the goods and surpluses to the US. By "free trading" with China our industrial policy is necessarily the opposite: suppression of domestic manufacturing, subsidies for consumer spending, retail, warehouse, shipping and of course banking and finance since the whole system requires huge amounts of money criss crossing the globe. And as our strongest brands move production overseas there is also increasing subsidies for intangible IP such as trademarks, patents, copyright etc..
The question is not whether we'll have an industrial policy..we always do. The question is what industries should it favor.
Yes but....
As a founder of a business that has lasted over 40 years, I can confirm that the Grateful Dead got it right, "Whoever leads must follow". However, we are not in the founders' world. See Ben Bahn's comment.
Hamilton and his frenemies were discussing industrial policy for a nation that could simply 'back fill' progress because the technologies were already in place. Invention wasn't the issue, it was implementation. The Chinese 'theft' of American innovations comes straight out of our playbook, when we were at their stage of development. The provisions of our patent and copyright laws make it clear were started as a nation of pirates. We are now a nation of monopolists.
Only by breaking up the 'deep oligopoly', will we unleash our industrial capacity. Government is NOT needed for funding now, its needed to put free competition back in the 'free' market.
Take a look at the history of Harpers Ferry. It was built around the Arsenal but had other industrial facilities as well and was a favorite of George Washington (after the War of Independence but before his Presidency). It also was the home of the first rail junction in the US but that came later.
Thank you for this column, Oren. I've been reading American Compass and now Understanding America for about three years. When I first started reading your articles, I was surprised that a conservative had these type of ideas ie government intervention via subsidies, the use of tariffs as a benefit to American industry, the importance of community and helping the family unit via "child allowances"...
These ideas are gaining more traction and that is good for the nation. I'm glad that Marco Rubio, Josh Hawley and JD Vance share your ideas. I hope you play some kind of role or give advice in Trump's upcoming term. I hope they listen to you, too! It's funny, but when I first started reading your stuff, I'd never heard of you before nor had, I don't think, many others. Now the name Oren Cass is becoming a lot more well-known--and for good reason.
The United States' did not become deeply politically and economically centralized until the 1970s and early 1980s, during the advent of the so called Neoliberal Era, so George Will is certainly wrong if he was implying that we were fully, in the senses he described it, in Hamilton's world from most of our history. And many people, including, it seems, yourself and this Substack page, believe that we have been worse off policy wise since the Neoliberal Era, and our deep centralization, began
The United States' did not become deeply politically and economically centralized until the 1970s and early 1980s, during the advent of the so called Neoliberal Era, so George Will is certainly wrong if he was implying that we were fully, in the senses he described it, in Hamilton's world from most of our history. And many people, including, it seems, Mr Cass and this Substack page, believe that we have been worse off policy wise since the Neoliberal Era, and our deep centralization, began
More than Hamilton’s arguments on any given topic, we would all benefit from the careful study and personal application of his “mode of reasoning.”
Hamilton never explicitly wrote abstract philosophical essays on reasoning, but there is nevertheless clearly some definable intellectual machinery guiding his essays.
And, I believe Hamilton is so deeply intertwined with our democracy precisely because his mode of reasoning has the epistemological and ontological basis that democracy itself does.
Aristotle discusses the linguistics of reasoning at the precise historical moment that alternatives to Athenian democracy were being articulated by Plato.
In Book 1, section 1, lines 20 to 25, Aristotle distinguishes between demonstrative premises, such as those employed by neoliberal macroeconomists, and dialectical premises of the sort employed by Plato.
Hamilton employs neither method of reasoning. He grants the alternative line of reasoning credence at the outset, then seeks out its flaws in the process of establishing an opposing argument, which are adjudicated by judgment rather than logic.
This was the method of reasoning first employed by Protogoras, which Plato devoted himself to replacing.
I would certainly be happy to explicate things further, but perhaps a more concrete example will suffice: Hamilton would not have accepted the terms of the debate between Cass and Winsip. And it is in getting at the reasoning as to why that the conservative case can best be made.
I agree, Jonathan. But I urge you to take care, such comments may lead to another outburst of the Wrath of Karl.
I’m so happy to have gotten your attention. You’re the first Gaetz defender I’ve encountered. Puzzling, to say the least:)
Besides which, if we follow Adam Smith, the theory of free trade never countenanced free mobility of capital, thanks to which today companies that do not mover operations to low-wage countries overseas soon go out of business.
So I think you misunderstand the lesson of Hamilton's report. It was the beginning of a number of efforts to inject the Federal government into the growth of the economy - but the Constitutional vision was much narrower. The Constitution thought of our industrial policy in a couple of ways - first as a groundskeeper thus the regulation of interstate commerce and the ability of our policy makers to set tariffs. Second as a rules maker in the recognition of patents and copyright. But as you comment early in the piece one respondent said "just because we’ve done something before doesn’t make it a good idea" - Hayek's the "Use of Knowledge in Society" lays out a clear case why the market is almost always superior to central planning no matter whether it is called Industrial policy or anything else.
Trump's recipe for manufacturing renaissance has the ingredients of trade protection, tax cuts, and deregulation. Industrial policy is absent, or am I missing something?
The US and Chinese economies are almost photo negatives. The US macroeconomic conditions are fantastic with above-potential growth, below-natural-rate unemployment, roaring stock market, and ferocious animal spirit, but it struggles to reindustrialize. Chinese manufacturing is unstoppable on its way to global dominance, yet the Chinese macroeconomic picture is bleak: subpar growth, high unemployment, tepid domestic consumption, dispiriting stock market, and low animal spirit.
Does the contrast mean there are inevitable tradeoffs (can be worthy tradeoffs) between growth and industrialization? Or as some (neoliberal) economists have been arguing, deindustrialization is a natural phenomenon accompanying growth and reindustrialization is like fighting economic gravity?
Very good piece, Oren. The only thing that's missing is a recommendation to a book (You have a review copy) elaborating how Hamilton's principles worked -- namely, Hamilton Versus Wall Street: The Core Principles of the American System of Economics. Why not help a fellow Hamiltonian? Nancy Spannaus, from americansystemnow.com
Very good piece, Oren. What's missing is a reference to a good book (you have a review copy) that reviews how well Hamilton's policy worked. I'm referring to my Hamilton Versus Wall Street: The Core Principles of the American System of Economics. Why not take the plunge? Nancy Spannaus from americansystemnow.com