Not your Father’s Portland; Parallel Society in Britain; Industrial Policy; Democratic Alliance
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It is time for democracies around the world to rekindle old alliances. We need a new pact, similar to the one that was developed after the Second World War. A new Declaration of Human Rights. The items on the agenda should be privacy, AI, and cybersecurity. The more we can join ranks on these issues, the more power we will have to face threats to democracy.
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An alliance of democratic countries has to lead the world in the digital age, because if they don’t, China will.
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Portland Was Once a Byword for Tattooed Vegan Microbrewers
Plywood windows; boarded-up buildings; stores protected by fortifications fit for a demilitarized zone; homeless encampments spread along the pavements: Portland, Oregon, a year after racial-justice protests began peacefully, turned violent, and were met with tear-gas and federal shock troops, does not look like the Portland of old.
The Economist writes:
Portland’s woes are especially acute, but they resemble those of many prosperous west-coast cities: a febrile political climate where social-justice activism is ascendant, rising crime rates, declining trust in the police and widespread street homelessness. These pose a threat to the cities’ engine of prosperity.
Before covid-19 downtown Portland housed 100,000 jobs, the heart of the city’s (and to a large extent, the state’s) economy. Its reputation has taken a bruising hit. The Urban Land Institute, a think-tank, runs annual surveys ranking the desirability of cities to property developers. In 2017 Portland ranked third. Now it has dropped to 66th out of 80. Polling in May for the Oregonian newspaper found that 53% of residents in the metro area felt safe downtown during the day; only 20% felt safe there at night. More than 60% of residents worry about protests, crime and homelessness. Ratings for the city government’s handling of those are pitiful. As in most American cities, violence is up markedly. There were 55 homicides in 2020, the most in 26 years. This year looks even worse. Already there have been more than 40 murders.
The optimists see the tumult as temporary. The pessimists think that Portland’s accommodation of anarchy and lawlessness in the name of social justice augurs bleak times ahead. “The message of social justice and racial equality was overrun, it was overtaken by a group of anarchists,” says Daryl Turner, president of the police union. “The city is in a state of hopelessness.”
The Economist concludes: “In a few months’ time, it will be clear whether such pessimism has firm foundations.”
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Industrial Policy in the Real World
Historians and political analysts agree that one of Donald Trump’s more significant accomplishments (although not everyone sees this as an accomplishment!) was the shake-up of the Republican Party’s economic platform by unleashing, and legitimizing, a skepticism of the free-trade consensus – often called the Reagan-Thatcher doctrine — which has dominated conservative politics for the last four decades. His appeal to working-class, non-college educated voters bolstered a wing of the GOP which has grown increasingly concerned with the country’s economic policies, economic future, and the consequences for the working class and middle class of an unfettered free market approach.
These national conservatives, as they call themselves, are advocating an industrial policy which would promote American manufacturing and reshoring – two elements which national conservatives see as essential for the revival of the American economy; a more equitable distribution of the fruits of economic growth; the strengthening of U.S. national security; and, not unimportantly, for the solidification of the GOP’s appeal to the working class.
Mike Watson writes in National Affairs that
Though some aspects of [the national conservatives’] criticism are well founded, the history of American economic policy provides as much a warning for industrial-policy advocates as it does a guide. A closer look at the past reveals the intractable challenges these would-be planners face, thanks in large part to the governing framework the framers established.
Watson writes that American history offers many examples of why we should treat with skepticism the notion of a government arbiter who, dispassionately and objectively, would always select the optimal policy which would foster industries best suited for contributing to the general welfare.
Hamilton was a believer in the ability of robust government policies a help the economy, but Watson writes that the decentralized American political system will likely see the use of government policies as political weapons. One example was Martin Van Buren’s adept political manipulation of the tariff issue in 1828 to help the political fortunes of Andrew Jackson.
Watson writes:
…there is no reason to believe that today’s executive branch has either the vision or the competence to carry off the kind of policy leadership that industrial planners wish to see.
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American political institutions do not make coherent and enlightened policies easily. To gain approval, any attempt to introduce discipline into the economy will require carve outs and concessions that, if not tempered, could make a mockery of the ostensible objective. Policymakers should thus be exceedingly cautious about any attempts to re-orient the American economy from the top down.
Government intervention in the American economy is akin to adding chlorine to a pool. Without enough chlorine, swimmers can catch waterborne diseases, and the pool will become filthy and unusable. Yet too much chlorine will damage swimmers’ lungs and blister their skin, leaving them sicker and more vulnerable than before.
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Ideally, there would be a coherent strategy for adding chlorine to the pool and ensuring that the right concentration remains over time. But in the American system, there is no single statesman who can dole out the proper amount of chlorine at will. Championing a political program premised on enlightened statesmen accurately identifying and consistently pursuing the national interest is thus a mug’s game.
Planners may dream of a new Hamiltonian moment, but they do so in vain. This is still Van Buren’s world, and we must act accordingly.
