Puzder’s Unpatriotic Capitalism

2,560 words

One issue that seems to have escaped analysis in this election cycle is the fact that Trump received wide support from American conservatives despite taking a surprisingly “liberal” stance on a wide range of economic issues. While many of Trump’s economic policies come from the Republican playbook, here are a few of the stereotypically “liberal” economic policies Trump has claimed to support: 

• Eliminating the carried interest tax loophole ^[2] that allows general partners in investment partnerships to have their “carried interest” (to greatly oversimplify, you could very loosely think of this as “profits”) taxed at a significantly lower rate than it would be if it was treated as income—an issue Obama has long lamented that Democrats have made little headway on. In an appearance in Detroit, Michigan on August 8, 2016, Trump said that these “special interest loopholes” have been “good for Wall Street investors, and for people like me, but unfair to American workers.”
• Giving new mothers six weeks of partially paid maternity leave ^[3] (“The campaign estimates the program would cost about $2.5 billion a year, but said it would pay for that by ridding the unemployment insurance system of fraud, which it valued at $3.4 billion”), in addition to offering tax incentives for child care savings and tax deductions for the costs of child care.
• In the same Michigan appearance cited earlier, while discussing the U.S. trade deal with South Korea, Trump cited the Left-leaning Economic Policy Institute in support of his claim about the number of jobs that that trade deal has killed. For traditionalists, protectionism ^[4] has always been a significant part of U.S. economic history. But in today’s climate, protectionism is more closely associated with the economic Left than with the Right. Figures like Ralph Nader and Bernie Sanders stand in broad agreement with Trump’s analysis of the problem, while the Right-wing capitalists at places like the American Enterprise Institute are harsh critics ^[5] of Trump’s position.
• Trump stands in support of increasing spending on infrastructure. Again referencing the Michigan appearance, he says: “We will build the next generation of roads, bridges, tunnels, seaports, and airports. That, believe me folks, is what our country deserves.” During the campaign, Trump even claimed he would “at least double ^[6]” Clinton’s proposed $275 billion in spending on infrastructure.
• While critical of the way Obamacare has been implemented, he has also said that he “like[s] the mandate” and would “want to keep pre-existing conditions ^[7].” He once explicitly described himself as “liberal” on health care, has expressed sympathy with the idea of a single-payer health care system ^[8], and in his current campaign discussed allowing Medicaid to negotiate drug prices ^[9] — something the Republican-controlled Congress banned in 2003 ^[10], and once again something Democrats have attempted changing to no avail.

Were the national conversation not being so completely dominated by matters of race and identity politics, the story of this election cycle might have been that Trump supporters clearly aren’t voting on the basis of orthodox economic ideology. This is another way in which the Trump phenomenon overlaps with the Alternative Right and ethnonationalism, as well. As Greg Johnson writes in one of my favorite short essays for quickly explaining the nature of this type of “conservatism,” “5 to 9 conservatism ^[11]” is far more important to us than “9 to 5 conservatism.”

The reason why Germany and other countries regulate the hours of businesses is not because they are “socialists” or “liberals.” It is because they are 5 to 9 conservatives. They realize that shop clerks have friends and families and communities. Work days are regulated so that more people can spend the 5 to 9 hours, and weekends, with their families and friends. Yes, such laws inconvenience us insofar as we are consumers. But we are more than consumers. We have families, friends, communities. Or we should have them.

Why does the government have to get involved? Say that there are no laws regulating the hours of retail establishments. If one firm decides they will extend their evening hours to increase their market share, others will be pressured to follow. Eventually, through the magic of the marketplace, we will compete our way into a 24/7 economy, in which there will be entire industries where the entry level jobs often taken by young people who have children (or should have them) are on aptly-named “graveyard” shifts.

From a social point of view, this is a profoundly destructive development. And from an economic point of view, it is destructive too, since the same amount of milk is sold in a 24-hour day as would be sold in a 10-hour day, yet all are forced to keep the lights on and the buildings manned 24/7 lest they lose their market share.

For all the discussion that the influence of political correctness (and legitimate reaction against it ^[12]) has received, Trump’s break from economic orthodoxy played just as big a role in exciting many in the Alternative Right (and the public at large) about his candidacy. Trump’s supposedly “incoherent mishmash” of Right- and Left-leaning policies consistently lean toward “5 to 9 conservatism.”

For instance, many of us endorse Trump’s support of maternity leave ^[13] not because we see women qua women as a politicized victim class, or because we even care whether it’s “good economics,” but because attempting to create a healthy culture is simply more important to us than economic ideology — and because this is where the real core of our “conservatism” lies.

Economic ideologies are, for us, to be weighed in these terms rather than solely on whether or not they maximize GDP. While we don’t reject capitalism as radical egalitarians do simply because it results in inequality (indeed, we support the existence of natural hierarchies — so long as these are hierarchies of real, meaningful human virtue), we see Libertarians and followers of Ayn Rand as holding in common with Communists a view of the world that unjustly places shekels and homo economicus front and center in their understanding of humanity. We reject the idea that political philosophy can address the economic aspects of man in isolation from the nature of man as a whole, and we consider the familial and communitarian aspects of man to be as important as the economic, if not more important. Thus, the Catholic Distributists — who are social conservatives first and economic “liberals” second — have long been seen as fellow travelers of our movement ^[14], despite the fact that our movement contains as many atheists, agnostics, and pagans as Christians.

However, Trump’s personal lack of commitment to economic orthodoxy is not shared by many of his cabinet picks. He seems to be looking for people who have proven records of successful leadership, even if the entities they were leading aren’t good examples of the populism we seek to create. As a result, Trump’s cabinet may undermine many of the policies that made him attractive in the first place.

First, it appears the Trump campaign is selecting Rex Tillerson ^[15], CEO of ExxonMobile, for Secretary of State over the Libertarian Nationalist Dana Rohrabacher ^[16], who seemed far closer in perspective to the spirit of Trump’s candidacy — and to the spirit of the Alternative Right’s philosophy as well.

Now, the man poised to take the role of Secretary of Labor in Trump’s administration appears to be Andrew Puzder, CEO of the fast-food chain conglomerate CKE Restaurants (the parent company of Carl’s Jr., Hardee’s, Green Burrito, and Red Burrito fast food restaurants). While Puzder has repudiated his past views on immigration ^[17] in response to his selection by Trump, it is hard to tell how sincere this shift is, given Puzder’s long established record of being the stereotypical sort of capitalist who supports legalizing and increasing immigration ^[18] less from any belief that this would be good for the country as a whole than from the desire for cheap labor: a ready pool of people thankful to work for low wages in monotonous, mindless jobs.

In 2013, he wrote ^[19] that immigration is the way to “renew the American dream,” and said that “the reality is that the government is not going to enforce the law effectively now against those who are here unlawfully . . . As a nation, we lack both the will and the resources . . .”  In a later visit to Washington lobbying for immigration reform, he claimed ^[20] that “Immigrants appreciate what America offers . . . [and t]hey are not taking jobs from Americans, because there are not sufficient Americans applying for jobs.”

This is a particularly interesting argument. As Heather MacDonald wrote in her reply, “Does America Need More Hamburger-Flippers ^[21]?”:

Farm labor is almost certainly one of those hard-to-fill jobs, but it’s news to me that working a fast-food counter is another — unless perhaps that niche becomes dominated by Mexican or Central American immigrants. A black kid from Watts is going to have a hard time getting hired at a Carl’s Jr. in South Central L.A. where all the employees speak to each other in Spanish. . . . Puzder [says] fast food is a “great level of job for people to enter the labor force.” True enough. But why do we owe that opportunity to unskilled Mexicans, rather than to Americans first of all?

And in contrast to the emphasis ^[22] Puzder placed on immigration as a source of cheap labor, while advocating deportation only for felons, the position Trump took ^[23] during his Presidential campaign was that “Immigration law doesn’t exist just for the purpose of keeping out criminals. It exists to protect all aspects of American life — the worksite, the welfare office, the education system and much else.”

Puzder even took to the press prior to Trump’s entry into the Presidential race to urge all the Republican candidates to follow the lead of Jeb Bush ^[24] on immigration. Jeb Bush — the man who called illegal immigration an “act of love ^[25],” and was mercilessly mocked by Trump over it. And now Trump is considering putting Puzder in the perfect position to try to thwart his efforts to enforce the very policies he was elected for. While the Labor Secretary plays a lesser role in enforcing immigration policy than the Department of Homeland Security, Puzder would be tasked with leading investigations into abuse of H1-B visas, for example. And the Secretary of Labor does take a primary role in suggesting and enforcing roles related to the workplace.

On that score, Puzder is an adamant critic of overtime pay ^[26] and minimum wage laws ^[27] as well as a strong supporter of automation, who rejoices ^[28] that machines are “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall or an age, sex or race discrimination case.” Any one of these positions is more reasonable when considered individually on its own merits than is the combination of all three.

To be clear, there is absolutely truth to the claim that an improperly high minimum wage can reduce employment — just take a look at the results of Seattle’s shift to a $15 minimum wage. ^[29] But the argument that all minimum wage laws must result in unemployment doesn’t even take proper account of econ theory itself: it overlooks monopsony ^[30]. Monopsony is, in short, the idea that businesses have more freedom to move around than human beings do. Most of us have family, friends, and local activities that keep us tied to one area (or should do so), and that means our choice of workplace is, to that extent, limited. As a result, the perfect competition assumed in economic theory is no longer “perfect,” and businesses become free to pay workers less than what economists call the “marginal product of labor ^[31]” (i.e., the amount that one new worker contributes to the business’ final output, which in theory wages should always become equal to).

In these cases, minimum wage increases can in fact increase wages without adversely affecting employment. The fact that these conditions apply in some cases more than others probably explains why the economic data ^[32] measuring the effect of minimum wage laws on employment is so mixed. The solution lies neither in absurdly high minimum wage increases, nor total abolition of the minimum wage, but in a system like Australia’s ^[33] that adjusts the minimum wage according to differing age and skill brackets. Thus, while the strongest evidence for minimum wage increases impacting the employment rate in most countries can be seen by tracking changes in the minimum wage against teenage employment ^[34], this correlation seems to fall apart in Australia ^[35], where the minimum wage for workers under 16, for instance, is capped at around 36% of the national minimum wage.

There also are benefits to automation. If we could free people from the requirement to perform monotonous, repetitive work that has little room for growth, personal development, or creativity without creating unintended side effects, I think that would be an extremely good thing for everyone. And eventually, that process will be inevitable.

There are plenty of debates to be had about any of these issues individually. But the trifecta of Puzder’s philosophy on wages, automation, and immigration should tell us everything we need to know.

The moderate- to low-IQ individuals who compete for lower-wage jobs are simply not able to transition into more complex jobs when their lower-wage jobs disappear. The kind of person who is capable of working as a server in a restaurant is not going to be equally capable of designing, manufacturing, and maintaining the machines that replace him. Understanding the sociological impact of IQ is as important for people who care about the well-being of the moderate-IQ parts of the population as it is for those who desire hierarchy: you can’t eliminate moderate-IQ jobs and expect moderate-IQ people to be able to survive in the higher-IQ robotics market that sprouts up in its place.

And we are increasingly reaching the point where moderate-IQ jobs are being eliminated by automation entirely. Retail jobs ^[36] are disappearing, restaurants ^[37] are being automated, and those of us reading this article may very well feel like relics when we tell our children in the age of self-driving trucks that “truck driver ^[38]” was a career some people spent their whole lives doing.

But again, at the point when that happens, truck drivers as a group aren’t generally going to be capable of shifting over to programming self-driving trucks. Whatever one may think of any of these issues individually, the combination would clearly seem to be a recipe for dystopia for the country as a whole: automate all of the jobs that people around the average 100 IQ range are capable of performing, then bring in an influx of foreign workers to fight for the jobs that remain, while deriding minimum wage increases, which allows wages to spiral down from the competition from immigrants who quite clearly are not going to be the kinds of people who are capable of competing with the likes of Puzder to create and run new businesses in order to counterbalance that effect. If immigrants as a group fell closer to the 135 IQ range and were more likely to start a rival business competing with Puzder than thank him for letting them spend their lives washing his dishes, it’s unlikely Puzder would ever have been as adamant in his support for immigration.

And at least until his recent appointment to the Trump Administration, the dystopia just described is exactly the world that Puzder wanted to see. Puzder appears to be a hardcore “9 to 5” conservative, but hardcore “9 to 5” conservatism isn’t the philosophy that led to Trump being elected.