Category: books

This is another in my series of bad high school book reports on selected nonfiction books that I have read recently. I write them to memorialize my thoughts in the vain hope that I will remember a bit more of what I read.

Author and book

Matthew Rose, A World After Liberalism (Yale University Press 2021).

I was not familiar with Rose. The book lists him as the Director of the Barry Center on the University and Intellectual Life at the Morningside Institute. Its website says he is a scholar of modern religious thought. He has a University of Chicago PhD, but the website does not list the academic discipline it is in. He formerly taught at Villanova.

Why I read it

Reading this was part of my quest to better understand the philosophical underpinnings of Republican populism and the MAGA movement.¹ The book was recommended by Damon Linker who has a Substack newsletter that I occasionally read.

What I found interesting

Rose’s premise, which I agree with, is that we are living in a post-liberal moment. That’s liberal in the small “l” sense model of government, i.e., a democratic order based on the values of freedom and equality with protections for individual liberties.

In Rose’s words:

After three decades of dominance [presumably after the civil rights acts expansion of the franchise], liberalism is losing its hold on Western minds. Its most serious challenge does not come from regimes in China, Russia, or Central Europe, * * * [but] from within Western democracies themselves, where intelligent critics, and not just angry populists, are expressing doubts about its most basic norms.

* * *

A new conservatism, unlike any in recent memory is coming into view. * * * There is disagreement about how this intellectual space opened up, but there is no doubt about who is filling it. Nationalists, populists, identitarians, futurists, and religious traditionalists are vying to define conservatism in ways previously unimaginable. pp. 2 -3

The competitors for the radical right’s ideas include the likes of Curtis Yarvin, Angelo Codeville, Adrian Vermeule, Costin Alamariu, and others. The book is not about them, but five earlier thinkers (all except one, now dead), who are profiled and their thinking described, each in a chapter. Rose calls these “essay-portraits that focus on the arguments and intellectual backgrounds of their subjects.” (p. 11) He chose them for their importance and continued fascination for more intellectual righty types. The book concludes with a chapter titled, “The Christian Question,” consistent with Rose’s background in religious studies and the importance of religious themes to some of thinkers and to the movement generally.

In general, I found the book’s short introduction insightful. It describes what seem to me plausible themes explaining why the new right rejects the liberal order that most of us, regardless of partisanship or ideological preferences, have long accepted. The central insight is that they have a different understanding of human nature and its potentialities. In their view, liberalism, which is based on respect for individual autonomy and is dependent on individuals’ ability to make good choices and decisions, is based on a misperception of humanity, which is fundamentally tribal (i.e., dependent on one’s ethno-cultural origins). That reality cannot be denied or overcome. So they consider liberalism empirically wrong as a description of the human condition and society.

Even more important:

It held that as a moral vision of life, liberalism was evil. Not only in practice, where its understanding of human nature encouraged hedonism, selfishness, and mediocrity. Liberalism is evil in principle because it destroys the foundation of social order. * * * Politics is properly illiberal about everything, depending, from its smallest decisions to its highest goals, on judgments about human greatness. Liberalism for its part, promotes equality of lifestyles, declining to tell citizens how to become virtuous or great. And as a result, it slowly renders people incapable of answering life’s most basic question. (pp. 9-10)

These insights explain why the radical Right rejects liberalism and its attraction to authoritarianism IMO. But their agreement ends with rejection of liberalism, not what should replace it. The following are my attempts to capture a few of Rose’s insights for each of his five thinkers. I have not read any of their books or articles and before reading Rose’s account was unaware of a couple of them. Rose comes up with a descriptive title for each, which I list as well as their home country.

Oswald Spengler (GR) – The Prophet

Spengler was one of a collection of influential conservatives in Weimar Germany (Carl Schmitt was another who I was more familiar with).  Weirdly (keep in mind when he was writing), Spengler predicted the western decline at the end of the millennium (i.e., now), which he defined as the colored world attaining parity with West (“white”) world. This was the bigger deal than what was going on Germany at the time!²

In Spengler’s view, people are defined by and captives of their cultures. One’s culture is one’s destiny. He was a cultural relativist. Western culture (“Faustian” in his terms) wasn’t superior to Chinese culture, for example. But, according to Rose:

He advanced a stronger argument, or so he judged. He argued that European peoples and their culture are one, and that any attempt to compromise their unity would be fatal to both. p. 28 (emphasis in original).

For Spengler, the essence of Western culture was the ambition, energy, creativity etc. of the “Faustian man.” Rose contrasts him with Max Weber’s views (“objectivity, restraint, and logic as the motive force Western culture”) as instead irrational passion and energy (“personal striving” in Rose’s formulation. (p. 31)

Given this, Spengler not surprisingly rejected Christian doctrine or the hypothesis that Christianity was at the center of Western culture.

Julius Evola (I) – The Fantasist

I had never heard of Evola who was, according to Rose, the leading theorist of Italian neofascism. (p. 41) He constructed a fantastic world that was the antithesis of the liberal order – one that merged the sacred and the political. He was spiritual, but not religious. A cardinal flaw of Christianity, in his view, was the doctrine of the two kingdoms, the separation of the spiritual and temporal.³

The political problem with modernity was that it denied the core universal truth (“Tradition”) at the foundation of all social orders. That power and authority are top down, not bottoms up, contrary to liberalism’s evils of individualism, materialism, and egalitarianism. The law of life is inequality. (p. 51) Anti-democratic and authoritarian themes abound.

Francis Parker Yockey (USA) – The Anti-Semite

Among Rose’s oddball lot, Yockey’s biography stands out as the most bizarre. Rose characterizes him as “arguably America’s preeminent fascist theorist” (p. 66).  He, like others of Rose’s theorists, connected liberalism and communism as associated evils and posited the need for a cultural, social order that escaped the evils of communist slavery and the anomie of liberalism, in Rose’s formulation.⁴

At its core, his philosophy was based on his weird formulation of the superiority of Western culture (“cultural vitalism”), based on a combination of human risk taking and the great man theory of history. Rose credits him with the development what the Right now calls cultural Marxism. (p. 79)

He, again like most of Rose’s collection, was an anti-rationalist. Rose’s defining characterization of him as an anti-Semite (he clearly was in spades) reflects his belief that Jewish thought was using post-Enlightenment rationality to undermine Western culture.

Alain de Benoist (FR) – the Pagan

Benoist is the only one of Rose’s subjects who is still alive. Rose characterizes him the “principal architect of ‘identitarianism[,]’” the movement that fears cultural dilution by immigration, an increasing fixture on the Right – formerly only in Europe but now here. He explicitly describes his philosophy as illiberal, relativist, and pagan – anti-Christian and inequalitarian. He claims his philosophy is based on nominalism – a convenient way to promote differences and reject universals (e.g., liberalism’s core principle of respecting all individuals equally).⁵

Rejection of liberal democracy follows naturally from those premises. Instead, he favored “folk democracy” which is based on his view of ancient Greek democracy that limits the franchise to a particular people who share a homeland and history. You can see where this is going. The flaw in liberalism is that it “transfers sovereignty from the united ‘folk’ to the autonomous individual” (p. 97). Hence, identitarianism.

There’s even more: not only does identity depend on being part of the group, it also is defined by its opposition to outsiders. The idea that a society could functionally be open to all comers on an equal basis (e.g., as expressed on the base of the Statute of Liberty) is an impossibility. It’s a recipe for the classic blood and soil conservativism.

Samuel Francis (USA) – The Nationalist

I was familiar with Francis as a result of reading When the Clock Broke. Rose’s shorter essay is more nuanced and enlightening than the Ganz book IMO.⁶ Francis’s views track most closely with Trumpism and MAGA, FWIW.

Based on Rose’s description of his writings, I have difficulty considering Francis to be a political theorist or philosopher in the traditional sense (i.e., reflecting upon normative principles of social governance and organization). Rather, his thinking focuses somewhat more on observing/describing the social-political behavior of polities. In Rose’s description:

Francis’s deepening suspicion was that the study of politics is not principally the study of ideas at all. It is the study of power – how it is acquired, lost, used, and concealed by a dominant minority. The primary political question, he concluded, is always which elites shall rule, not whether elites shall rule. (p. 117)

Traditional conservatism, in his view, was an obsolete ideology of an out of power elite (the classic Liberty League, anti-New Deal, crowd, I guess, whose dominant principle was classic laissez faire). To Francis, dominant liberalism purportedly supported egalitarianism but really was about subverting traditional ways of life. He was strongly influenced by James Burnham, a more classic conservative, and Burnham’s analysis that modern societies had become “managerial mega-states” dominated by elites using administrative and technological tools. This regime did not benefit, in Francis’s view, the white middle working class.

His response was to oppose this liberal elite regime with a “Middle American Revolution” (white, middle- and lower-income earners without college educations – i.e., the now core Trump voter). This is a kind of identity politics. And it strikes me as just political tactics rather than a philosophy to animate a set of fundamental rules for governing. But it clearly maps on to the current dominant GOP political strategy and demonstrates how Francis was well ahead of his time in that regard. (He died in 2005 when the GOP was still mostly a traditional conservative party.)

Christianity and the radical right

The book’s last chapter is in some ways its most interesting. Given Rose’s background in religious studies, it focuses on a common thread in the ideas of his five subjects – i.e., their opposition to Christianity. This seems counterintuitive, given the popularity of Christian Nationalism in today’s GOP. But it’s a clear theme in Rose’s characterization of his subjects’ philosophies and as he points out, a theme of the classic alt-right. (pp. 137-38)

As Rose puts it:

To state their views succinctly, if also crudely: the radical right critique Christianity for nurturing individual freedom, not suppressing it; for undermining human inequalities, not upholding them; for being rationalistic, not irrational; for its openness, not its exclusivity; for being apolitical, not political; for living up to its ideals, not betraying them. What is shocking about these formulations is that they invert the conventional terms of intellectual discussion. They accuse Christianity of being the cause of modern values it is often blamed for impeding. (pp. 140-41) [emphasis in original].

The problem is Christianity’s (in the radical right’s view) consideration of or respect for individuals per se, as expressed in the second great commandment (“Love your neighbor as yourself” Matt. 22:29). This makes Christianity’s resulting social justice views the progenitor of liberalism:

Liberalism is a secular expression of the Christian teaching that the individual is sacred and deserving of protection. Socialism is a secular expression of Christian concern for the poor and downtrodden. Globalism is a secular expression of the Christian hope that history is leading to a kingdom of universal peace and justice. (p. 142)

He notes that the movement is only partially anti-Christian and can also “clothe itself in Christianity, claiming a religious mantle for its defense of ethnic and cultural identity.” (p. 147) It can lead to a variant on identity politics (hello, Christian Nationalists). Rose has a number of prescriptive suggestions for dealing with this that I found less than compelling.

What disappointed me

I found the book interesting and a useful short introduction to the eclectic and very unsettling thinking by parts of the populist right. Its brevity and pithy descriptions, while a virtue on one level, left me wanting more extensive discussions – at least in some cases.

Rose asserts he selected each of the five subjects because they were/are influential with the populist Right. I would have liked more documentation and discussion of his basis for that. He does some of that, but it would have been nice to see more to judge how important each of them is to the movement. I’m a numbers guy (unlike Rose and most/all philosopher types), so citation numbers or at least more anecdotal examples would have been helpful to me. He does a good job of that with Sam Francis, but less so the others.

SALT connection

NA

My Take

I found the book to be very interesting and scary: it provided some validation of my perception that the American conservatism as I knew it is largely history in favor of the European, ethno-nationalism version that I assumed was inconsistent with the heterogeneous nature of American society.

What strikes me most is the strong cultural conservatism elements and anti-rationalism that animates this thinking. The anti-rationalism is consistent with the thesis of Enchanted America – Intuitionists have migrated to the GOP and the conservative movement generally. This flavor of political philosophy is something only an Intuitionist could love, as far as I can tell.

I find it perplexing that the limited government, libertarian-oriented element of the traditional conservative movement in America can find common ground with those animated by this type of thinking. Its rejection of respect for individualism, free market principles, limits on government, and similar formerly core principles of American conservativism, one would think, are disqualifying. Wrong. Continued support can only be explained by the idea that the New Right’s authoritarian wielding of government power, as we are witnessing now, is less threatening than a social welfare state, even one constructed and managed by a democratic regime that at least ostensively hews to rationale principles. A true headscratcher.

Notes

1. I continue to be mystified by what its motivating and organizing ideology is, assuming it truly has one. It may be largely a cult of personality, although its strong antecedents that predate Trump suggest otherwise. I think Newt Gingrich is the more central figure than Trump. Trump just saw a vulnerable movement and a party that was ripe for his demagogic takeover. ↩︎
2. Rose takes pains to describe how Spengler attempted to distinguish himself from the typical racialist, decrying the rampant bigotry of his time and country. He also rejected race classifications altogether. p. 37. ↩︎
3. That view reveals a potential seed of Christian Nationalism, which fixes his perceived flaw in orthodox Christian doctrine. ↩︎
4. Interestingly, Yockey correctly predicted the reversion of the USSR to Russian nationalism (i.e., Putin’s Russia) in the 1950s! Yockey both collaborated with the Nazis and worked for communist eastern European governments in the postwar period. A truly weird character, probably partially due to his documented mental health issues. ↩︎
5. Why he rejects Christianity is obvious. That all people are create in the image of God and have equal dignity in God’s eyes is disqualifying. ↩︎
6. This probably results because of their differing professional backgrounds and perspectives. Ganz is a political journalist and evaluates Francis from that perspective, while Rose evaluates his basic ideas as one with an academic philosophy background would. Francis, as I noted, more of a de facto right-wing political consultant than a philosopher/thinker. But Rose evaluates him as the latter. I’m not convinced that Ganz read Francis’s posthumously published book, Leviathan and Its Enemies, that Rose considers his most substantial work and a synthesis of his thinking into a single work. Given Rose’s description of it as long, disorganized, and repetitive, that would be no surprise. ↩︎

This is another in my series of bad high school book reports on selected nonfiction books that I have read recently. I write them to memorialize my thoughts in the vain hope that I will remember a bit more of what I read.

Author and book

John Ganz, When the Clock Broke (MacMillan 2024).

I was unfamiliar with Ganz when I read the book. He’s a journalist, not a historian or political scientist, and has a Substack, which I haven’t read. I don’t know anything about him beyond that.

Why I read it

I’m interested in why the conservative movement and the Republican Party have cracked up (IMO), essentially turning their backs on prudential or dispositional conservativism. By that I mean an approach characterized by caution, respect for institutions, concern about unintended consequences, skepticism about the effectiveness of government programs, insistence on paying for stuff as you consume it, etc.

I grew up in a rock-ribbed Republican and conservative family. Those prudential values were the principles I absorbed in my formative years. As far as I can tell, they are no longer to be found in the dominant political version of conservatism, which instead reflects radical reactionaryism, often animated by conspiracy theories. Instead of caution and concern about unintended consequences, a compulsion to act fast seems to govern, never mind carefully considering the consequences or how to pay for what you’re doing.

Trump is the culmination of this, but the pattern long predated him. He just recognized what was going on and the opportunity that it presented. Trump, as far as I can tell, was never a partisan of either flavor. He just saw the Republicans as a more favorable takeover target.

I’ve been reading books to try to educate myself better about how this transformation over the last 50+ years has happened – both as a popular political movement and as a matter of philosophical ideas. I have written book reports on a bunch, but far from all, of those books. When this book came out, I saw several reviews that suggested it might have insights on that front.

I was particularly interested because the book treats the early 1990s as a tipping point. I had independently concluded that the 1992 election (i.e., Bush’s defeat largely thanks to Pat Buchanan and Grover Norquist) and the ascension of Gingrich as a dominant figure as the death of the old GOP and fiscal conservatism. It’s always attractive to read something that confirms your priors, even if it is intellectually flabby (confirmation bias and all that jazz).

What I found interesting

The book is essentially a narrative account of the political events in the period from 1989 through the 1992 election, mainly focusing on conservativism and the Republican Party. Ganz characterizes the book as a “history of losers” – people who lost elections, operated at the margins of the party, and are now largely forgotten – whose goal was reactionary, to turn back politics and culture to an earlier time (either 1920s or 1950s, I guess), essentially to “break the clock.” Hence, the book’s title.

His thesis is that the political and social turmoil in the 1980s and early 1990s allowed these fringe types to take over the party and conservatism more generally. In his words:

In general, the politics of national despair described here have now taken hold of the Republican Party: it is dominated by figures and ideas that once would have been considered fringe. P. 22.

He views traditional southern politics and values – the paleo conservatism of David Duke, Pat Buchanan, etc. – as the core of the party and movement conservatism now. It started as an electoral strategy by Goldwater, Nixon, and Reagan to capture the presidency. But it transformed the party, replacing standard Burkean or prudential conservatism. The party of Lincoln,¹ TR, and Reagan became that of Ben Tillman and George Wallace. I thought his theory was a bit extreme when I read the book before the election. Recent events make it more plausible.

Ganz spins a narrative of the era’s events that have political, social, and cultural ramifications to support his thesis. I lived through those times and was generally paying some attention. But it’s easy to see the trees but miss the contours of the forest. I had forgotten how many tumultuous events there were and was not paying much attention to how folks on the right were often reacting to them. That is what Ganz describes.

A list of some of the events and people he covers, sometimes at chapter or longer lengths:

• The David Duke phenomenon – I had forgotten he was nearly elected governor of Louisiana (got a comfortable majority of the white vote) and how much impact and turmoil he created for Republicans.
• How repeal of the FCC Fairness Doctrine spawned right-wing talk radio (Russ Limbaugh et al) and transformed Republican and conservative politics. The current situation – an entire right-wing media ecosystem that provides almost all the news to the party’s base – derives from this and is much of the explanation for Trump’s Teflon shield from adverse news and his not being held to account for norm and law breaking.²
• Pat Buchanan’s presidential campaign – I was aware of much of its transformative effects on domestic policy views but not that it was the beginning of the rejection of the neocon approach to foreign policy as well. Trump has now clearly brought that to fruition in favor of some unclear new approach, not so much a return to Bob Taft isolationism as favoring authoritarian dictators. I had paid no attention to Buchanan’s speech to the 1992 Republican National Convention that bombastically threw red meat to social conservatives. It was as much a harbinger of the current state of the party, as it was appalling to Bush’s operatives. In Ganz’s view, which I share, the elder Bush was probably the last prudential or dispositional conservative Republican president. If George W shared that philosophy, his governance did not (e.g., compare the Kuwait and Iraq wars or the deficit-closing tax increase under 41 with the big deficit-expanding tax cuts under 43).
• The Ross Perot phenomenon – I had forgetten just how wacky and conspiracy-addled he was.³
• The beginnings of deindustrialization, wage stagnation, etc. – foreign trade scuffles with Japan over auto and steel imports and so on – contributed to the dissatisfaction with traditional Republican economic policies.
• The Rodney King beating, the acquittal of his police officer assailants, and the resulting riots, as well as other incidents of largely racial-based conflicts, e.g., in NYC, fueled more racial resentment. (A current view of many Republicans, according to recent polls, is that racism against whites is a bigger problem that black racism!)
• Ruby Ridge – the debacle in how the FBI handled this and its political effects – led to more cynicism about federal law enforcement and institutions generally. In Ganz’s view, the martyrdom of the Weavers gave credence to the worldview of the movement they were part of, which was “intent on the wholesale destruction and replacement of America with another America.” Page 306.
• Crime and chaos in NYC of this era; John Gotti as political figure; Rudy Guiliani’s initial political flaying well before his later successful mayoral run.

The book’s narrative weaves together how these events and more that I didn’t list pushed the conservative movement and the Republican Party in an ever more reactionary direction. They made it into a party that is more populist economically and more suspicious of institutions, experts, conventional wisdom, traditional media, etc. I’m not even sure reactionary captures what it is.

What disappointed me

Political movements typically operate on (at least) two levels. One (expressed crudely) is the level of running electoral campaigns, i.e., trying to convince voters to support your candidate(s) through messaging and taking policy positions, and similar. Another is a higher philosophical or ideas level, i.e., expressing the principles that the movement or party stands for and that define its governing principles. The second is generally expressed by more intellectual types, rather than candidates or operatives. Bill Buckley, for example, was likely the defining voice of conservative principles in the decades that immediately precede the period Ganz covers.

Ganz does a good job of describing the nuances of the first level – essentially the retail politics level, less so at the higher or second level.

Ganz searches for one or more individuals who fill this role of defining the more general philosophical principles that defined the changed Republican Party. The principal guy he comes up with is Sam Francis, a newspaper columnist and book author who is generally characterized as a paleoconservative.⁴ I was unfamiliar with him (did not know he existed to be totally honest and have never read any of his stuff). Ganz describes his views generally (very pessimistic view of human nature, Hobbesian infected by a tinge of Nietzsche maybe would be an apt characterization) and reports on his reactions to the various social and political events that the book covers.

His views are very extreme but strike me as tactical and opportunistic, in the sense that they mainly attempt to capitalize on daily events to build political support for the movement. That is the opposite of someone developing and expressing a coherent political philosophy. But it may simply reflect that Ganz largely uses his newspaper columns as a main source (I think), rather than his books. It also nicely ties in with chronology of events, because Francis’s columns addressed those events.

The shape shifting or ad hoc nature of the philosophy probably also reflects a movement whose adherents are intuitionists, rather than rationalists. A defining dissatisfaction with the current order and longing for a return to a perceived better past are not a recipe for constructing a rational set of governing principles, in any case.

Ganz’s coverage of the movement’s animating philosophy is what left me most disappointed. That may simply be because there’s nothing much there to describe other than adhockery.

The other disappointment was that Ganz did not make any effort to discuss how or why the events he chronicles led to the Trump Republican Party. That seems to be the reason for writing the book. The assumption must be that it’s so obvious it doesn’t need to be said or that it would have increased the book’s length materially, requiring describing and tying in later developments. I get that.

SALT connection

NA

I try to connect the dots Ganz doesn’t

Ganz does not make an explicit effort to connect the dots – i.e., to draw a line between what happened in his narrative and how the Republican Party became the party of Trump. After writing the above, I couldn’t resist spinning out my own partial explanation based on his narrative and the subsequent events.

I think the party’s transformation occurred out of a combination of two factors:

1. More people experienced increasing discomfort with trends (the bulleted items noted above and similar) that were inconsistent with their view of an older and better world (1950s America, say).
2. Popular figures in the movement, Limbaugh, Buchanan, Duke, et al, increasingly gave voice and acceptability to these concerns and views. That mainstreamed the ideas in the Party. Even though their protagonists were often losing elections, they were winning the battle for the hearts of the Republican base by making the arguments from legitimating platforms (candidacies that got a lot of votes, popular radio programs, etc.).

These efforts led over time to individuals with high anxiety about social change (aka social conservatives) and economic change (e.g., those in geographic areas hard hit by globalization), and conspiracy minded types who are disconnected from factual reality and who have little respect expertise generally to migrate into the Republican Party. See what Matt Yglesias describes as the crank realignment.

I tended to think of these cranks as a small minority, a lunatic fringe of sorts. That is the way Ganz describes their ideas (“fringe”). But a book I’m currently reading, Enchanted America, suggests that folks with these tendencies are a material part of the population. They formerly were distributed between both parties. The John Birch Society people in the Republican Party were offset by anti-vaxxers, anti-GMO, and corporate conspiracy types in the Democratic Party. The trend Ganz documented is the beginning of the migration of more (most?) of them to the Republican Party.

A core part of the traditional GOP coalition are libertarians or quasi-libertarian (i.e., folks with strong limited government views). The Republican donor class (Kochs, Club for Growth, etc.) illustrate this view. This political philosophy is a hard sell to the general electorate who like social security, Medicare, and other government benefit programs they have come to rely on and/or built their lives around. Moreover, many think the government should solve social problems. But it’s easier sell to social conservatives and the cranks who focus on noneconomic issues or assume that the government is conspiring against them. So, limited government types welcomed them with open arms.⁵ That may have been a Faustian bargain.

This combination made the party and movement particularly susceptible to a form of populism that is mainly defined by opposition to elites and many traditional institutions (big business, academia, etc.). It led, I think, to the mindlessness of much of the Tea Party movement’s ethos and, more importantly, the party’s susceptibility to a candidate like Donald Trump.  They are a large enough cohort to control primary elections, when tapped by the right candidate. To be clear, this is just my spin on the implications of Ganz’s narrative and later developments. Also, it doesn’t explain why Trump, a fundamentally flawed candidate (i.e., in terms of competence and morals) who is often his own worst enemy (i.e., saying what he thinks and doing what he wants, no matter how impolitic), can win elections. That is a different story about the Democratic Party’s failures.⁶

Footnotes

1. To be fair, Lincoln was not a conservative. He was an anti-slavery Whig who actually supported above average government intervention in the economy. Hence, his support for robust infrastructure spending. Government support for building canals, railroads, roads, and so forth were Whig orthodoxy. TR also supported muscular government intervention on various fronts, antitrust, foreign policy, etc. ↩︎
2. His base does not watch mainstream media; if the right-wing media give him a pass or downplay coverage of the events, as often is the case, there are no consequences. That only goes so far, of course. ↩︎
3. Interesting counterfactual question is whether Clinton could have beaten Bush absent Perot’s campaign. If he hadn’t, the GOP’s descent into MAGA populism might not have occurred. ↩︎
4. This piece by Joshua Tait profiles Francis and makes a reasonable attempt at describing why many now pick him as foreshadowing the philosophy of the Trumpian Right. But it too does not satisfy in terms of describing an actual political philosophy, so much as a reactionary strategy for appealing to a group of voters IMO. ↩︎
5. The crank class would be okay with deregulation, since it is consistent with their skepticism of elites and institutions. Cutting social benefit programs, like SS, Medicare, and Medicaid, is another matter. The establishment finessed that (and probably will again in 2025) by enacting tax cuts while eschewing offsetting them with spending cuts in the programs that make up the vast majority of federal spending. That works for a while. How long is unclear. Ultimately, to spend is to tax; you can only keep expanding borrowing for so long. ↩︎
6. This interview is one take on that issue. ↩︎

This is another in my series of bad high school book reports on selected nonfiction books that I have read recently. I write them to memorialize my thoughts in the vain hope that I will remember a bit more of what I read.

Author and book

Robert C. Allen, Global Economic History, A very short introduction (Oxford Academic Press 1911).

Why I read it

I’m trying to bolster my knowledge of economic history. That was not a topic that was covered when I was undergrad (at least at the small liberal arts school I went to) and I probably would have avoided it anyway at that point in my life. (I did read Heilbronner’s The Worldly Philosophers as an undergrad, which is a history of great economists and indirectly economic thinking, not economic history. It’s a great book and still in print, 70+ years after its initial publication.) I have come to believe that economic history is necessary, along with economic theory and empirical research, to understand economics. Or at least to provide helpful context to the current state of affairs or events.

This book is part of a series by Oxford Press intended as short introductions (only 150 pages for this one) to academic topics. The book is well over a decade old, but I saw it on syllabuses for economic history courses at top schools. So, I figured it was a safe bet, and the electronic version was cheap.

Allen is an economics professor at NYU; he was teaching at Oxford when he wrote the book. He has a Minnesota connection as a Carlton graduate.

What I found interesting

There was a lot of interesting stuff in the book that I did not know or had forgotten. I’m listing a few items that stood out.

The book’s basic theme is to describe and provide insight into what Allen calls “the great divergence” – i.e., why after 1500 Northwestern Europe and North America broke out of the pattern of preindustrial economics, quasi-subsistence in most cases, and why that difference has largely persisted until now. He goes through, at a big picture level, the sweep of economic change – colonialism, mercantilism, the Industrial Revolution, efforts by other countries to catch up and why most failed, etc. – describing and analyzing them as an economist would.

Much of the story is about England and why it was the epicenter of the Industrial Revolution, going from 2% of the world’s manufacturing in 1750 to 23% in 1880. I have read other accounts and explanations for this, many of which heavily rely on political geographic and cultural factors (commitment to the rule of law, more stability, respect for property rights, acceptance of market principles, etc.). Allen weights more heavily the continuous application of technology to the production process. That occurred in England and Holland because of three factors or conditions:

1. Better fostering of education, literacy, and numeracy – this is obviously crucial to develop and continuously apply engineering skills necessary for industrialization and productivity growth.
2. England’s relatively higher wages (e.g., compared to France, Germany, Spain etc.) – low wages sap the incentive to expend capital on technology, which is crucial to improving the production function (productivity yields higher incomes)
3. Energy resources – specifically England’s ready access to coal, the mining of which itself stimulated technological improvements and its use powered steam engines.

He makes much of the high wage factor in analyzing many different economies. This was not something that occurred to me, but it makes complete sense, and he provides statistics to back it up.

This is all a matter of relative emphasis IMO. He recognizes that institutional and political factors are important, sometimes in ways that were counterintuitive to me. For example, he counts France’s greater respect for property rights, compared to England and Holland, as a negative because it made using eminent domain for internal improvements (e.g., roads, canals, railroads, utilities, etc.) harder. England’s greater ability to impose taxes similarly (and not so counterintuitively) was also a factor.

I was unaware of some economic effects of the civil and social revolution caused by Napolean – wiping internal tariffs (didn’t realize such a thing existed within countries), rationalizing taxes, and so forth. His indirect stimulation of greater unification of Germany had similar effects. All this was crucial in allowing France and Germany to somewhat catch up with England and the Netherlands.

Western Europe followed the catch-up model, essentially protecting their local businesses with tariff walls, investing heavily in public infrastructure and education, fostering investment banking to finance the necessary capital investments. This enabled most of western Europe, especially Germany and France, to catch-up with England by the beginning of WWI. The model worked less well elsewhere, Russia for example, for a various reasons.

Geography was a key factor in some cases – e.g., North America’s shorter distances to Europe gave its staple exports in 1700s and early 1800s an advantage over South America. South America’s lower labor costs and smaller markets were also a relative barrier to fostering the necessary technological developments. (I still don’t have a grasp on the why of Argentina’s 20^th century failure, despite having so many similarities to and advantages that the US had. Racking it up to political and cultural differences is the easy but unappealing answer.)

The book provides insights into some of the nuances of the economics of colonialism and how that helped and held back both some colonial powers and colonies. Spain and Portugal’s plunder model enriched them enormously in the short run (well, a century) but the results ultimately held them back.

Globalization (even back in the 19^th century!) allowed English manufacturers to rise to over one-fifth of the world’s production. They were supplanting less mechanized and higher cost, local production elsewhere, much of which was only possible because colonial rule prohibited tariffs on English goods and transport costs declined significantly.

The US was able to develop rapidly following the catch-up model (the Hamiltonian system put in place in the 1790s) because it was no longer a colony and could use tariffs and had many of England’s advantages. That option was unavailable to India, by comparison, and England’s textile manufacturing productivity wiped out India’s cotton spinning and weaving industry.

The human toll of colonialism – thanks to triple evil of enslavement, disease, and war – is simply breathtaking. The population of the Americas was 57 million in 1500. By 1750 it had dropped to 5 million! I probably had seen that before but it still shocks.

The book details some of the practical and economic dynamics of the slave trade – both from the perspective of the enslavers and their suppliers in West Africa. I was unaware of immense brutality of slavery in the West Indies, even relative to that in the southern US, as evidenced by this quote:

Mortality on sugar plantations was very high, and slaves were replenished by purchase rather than natural increase. For million slaves were taken to the British West Indies, for instance, but only 400,000 were present at emancipation in 1832. p. 70

The total and complete devaluation of human life is hard to wrap one’s head around.

Allen spends the last third of the book describing how and analyzing why only a handful of countries in the Pacific rim (mainly Japan, South Korea, and Taiwan) managed to successfully use “Big Push Industrialism” to catch-up to the US and Western Europe. Most of the world still has a production function equivalent to where England and US were in the late 19^th century: For example, even after adjusting for standard of living differences (i.e., its lower prices compared to the US and EU), China’s income level was 6X a subsistence level in 2010, about the same as England in 1880. It’s only modestly better now and China has been a remarkable success over the last 40+ years since Mao’s death.

What disappointed me

As a short introduction, the book is great but that was also its biggest drawback. Reading short sections too often led me to want a longer explanation with more basis for distinguishing between Allen simply applying theory to some basic factors (informed speculation by an expert) and more rigorous analysis by others and/or empirical support for the conclusions. But, as usual, that would be a different book than a very short introduction, as this is billed to be.

SALT connection

NA

This is another in my series of bad high school book reports on selected nonfiction books that I have read recently. I write them to memorialize my thoughts in the vain hope that I will remember a bit more of what I read.

WARNING: this is long. I struggled to keep it under my 3k word cap because there was so much stuff in it that I wanted to record as an archive/memory aid. The last section, not in most of my other book reports, is a selection of favorite quotes from the book.

Update: 5/9/2025

Ajay K. Mehrotra, a Northwestern University law prof and tax history expert, is out with a review, The Rise and Entrenchment of the Antitax
Movement: A Review Article, that is well worth reading (warning: it’s 19 pages long). He provides some background information on Graetz that I was unaware of. The review succinctly summarizes Graetz’s basic points and narrative.

Mehrotra is complimentary of the book, but levels three criticism, essentially sins of omission not commission, all of which seem fair to me but not a big deal:

1. He wishes that Graetz had spent more time on the heroes who pushed back against and temporarily slowed down the antitax movement’s takeover of the Republican Party (initially) and its ultimate hobbling of the Democratic Party. He’s puzzled about this because Graetz’s career gave him a front row seat to some of this pushback, e.g., working as a high-level appointee in the elder Bush’s Treasury Department when Bush went back on his “No New Taxes” pledge.
2. He thinks Graetz fails to provide adequate context on the US antitax movement that precedes the era Graetz covers (what Mehrotra calls its long runway). His perspective is that Graetz treats the latest (and most successful, I’d observe) version of the antitax movement as too much of a historical deviation. In Mehrotra’s words: “Whereas others see a strand of continuity, Graetz sees radical rupture.”
3. Graetz, in his view, fails to appreciate the historical contingency of the movement’s success.

Author and book

Michael J. Graetz, The Power to Destroy How the Antitax Movement Hijacked America (Princeton University Press 2024).

Graetz is a tax prof who has taught at Yale and Columbia law schools. I think he is semi-retired. He served as a political appointee in George H.W. Bush’s Treasury Department. In that role he was involved in the last federal tax increase that was supported by Republicans.

Why I read it

When I saw this book was coming out, I preordered it. I have read and liked some of Graetz’s previous books – both on tax politics (e.g., his book on the estate tax) and on policy (e.g., his book on social insurance). I previously did a book report on his book on SCOTUS with Linda Greenhouse. He’s an engaging writer who combines technical expertise with a flair for communicating to the average reader.

For years I have been appalled by the apparent death grip tax aversion has on the Republican Party and how that has transformed federal and secondarily state tax and fiscal policy. So, reading Graetz’s book was irresistible. Classic case of me seeking comfortable affirmation of my priors (confirmation bias on steroids).

What I found interesting

Graetz’s account is largely a chronological history of the twists and turns of federal tax and fiscal policy from 1978 through 2023. He starts with Prop 13 in California in 1978 and, then, shifts to federal policy, documenting how the antitax movement captured conservatives and the Republican Party. It’s a story of tax politics – both at the level of ideas and of assembling coalitions of voters or interest groups necessary to obtain electoral and legislative successes – seasoned with a helping of some numbers and economic commentary, a high-level account.

I lived through all of this and was tangentially involved professionally with it, but the book refreshed my memory and connected dots that had not registered for me, largely because I was not paying close attention. It’s useful for me conceptually to divide my takeaways from the book into three separate categories: (1) the underlying animating ideas and economic theories supporting the antitax movement, (2) its political and electoral strategies, and (3) some key events that got us to where we are.

The ideology

Pure tax aversion is irrational; a government needs to impose taxes to pay for its operations. Traditional conservatives have always known and accepted that. Enacting tax cuts without offsetting spending cuts (putting aside Keynesian-motivated, temporary cuts during a depression or recession – typically conservatives reject Keynes FWIW) would seem to be the antithesis of prudence and conservatism. Yet, the antitax movement, in varying degrees, basically denied that reality and repeatedly enacted unfunded tax cuts. Those unfunded tax cuts borrow money to redistribute income to their net beneficiaries, typically upper income folks. So, how did the antitax movement ideologically capture conservatives and the Republican party on the level of ideas?

According to Graetz, it used two basic concepts or theories:

• Supply side economics, the Laffer Curve, etc. – essentially that cutting taxes would stimulate sufficient economic growth and increased revenues to offset the cuts. The cuts were not unfunded!
• Starve the beast – by cutting government revenues, it would compel Congress and the President to cut spending to offset the reduction in revenues. This was the convenient justification of limited government types when supply side economics proved to be false.

Both theories were disproven by economic and fiscal events, as Graetz documents:

• The country’s tax system was on the left side of the Laffer Curve, cutting taxes did reduce revenues. GHWB’s characterization of supply side theory as Voodoo economics in his campaign against Reagan was correct. (Note: to this day, some righty intellectuals do not accept this.)
• Cutting government revenues did little to induce spending cuts, certainly after 2000. Rather than starving the beast, tax cuts, at best, kept the beast from putting on more pounds. And maybe not even that. They didn’t prevent enactment of No Child Left Behind, Medicare Part D, or the Iraq War.

Political strategies and events

This is the part of Graetz’s account that was most interesting for me, reminding me of stuff I had forgotten or overlooked. A few items to highlight:

• Race and the Christian Right – Brown v. Board of Education and the civil rights movement transformed Southern politics, opening up the Republicans’ Southern Strategy that gave them national majorities in presidential elections and ultimately control of Congress at various points. Proposed IRS regulations during the Carter Administration – they were compelled by a private lawsuit – that took away the tax-exempt exemption of and ability to make tax deductible contributions to private southern segregation academies was a big factor, according to Graetz, in cementing evangelicals and southerners as a core part of the Republican coalition. I had forgotten much of this history and how Reagan had withdrawn the proposed regulation and how the Bob Jones case had evolved with SCOTUS appointing lawyers to replace the DOJ. See the quote from Paul Weyrich in the last section that asserts this was a big factor in bringing evangelicals into the Republican coalition. Something I did not realize.
• Santa Claus theory of government – Conservative and Republican politicos consider themselves to be at a disadvantage in competing with liberals and Democrats who could offer government benefits and freebies that many voters would perceive others would mainly pay for. Mitt Romney’s “makers and takers” reflects this view of the political world, as well as Bob Dole droll characterization of it as “Root Canal Economics.” Early proponents of the antitax movement (specifically Jude Wanniski and his “Two Santas Theory”) recognized that proposing tax cuts without offsetting spending cuts would effectively neutralize this disadvantage or outbid it (not just one Santa, we won’t cut your government benefits and we will cut your taxes). Santa is more appealing than the Grinchy reality that government spending must be paid for.
• Grover Norquist and his tax pledge – This is the first part of Graetz’s triumvirate of the Movement’s key supporters; Rush Limbaugh and Newt Gingrich are the other two. I was sadly more than familiar with the grim reality of the pledge and its death grip on elected Republicans, including in Minnesota state government. Fortunately, some, like Tim Pawlenty, were willing to bend to the economic reality demanded by balanced budgets and agree to excise and corporate tax violations of the pledge. Not so much in 2011, when Republican legislative majorities refused to budge and forced the state to deficit spend, bending the constitution instead. (Mark Dayton’s hands were not clean in that regard, either.)
• Repeal of FCC fairness doctrine enables Limbaugh and right-wing advocacy media (e.g., Fox) generally – The Reagan Administration eliminated the FCC fairness doctrine, which required broadcasters who expressed opinions or advocacy to give time to the opposite side. This, in Graetz telling, enabled right-wing talk radio and specifically the big impact Rush Limbaugh had as an advocate for the antitax movement. As one who never listened to him or talk radio generally, I had not realized how big an element he was in the movement. His massive audience and daily hectoring obviously had an effect.
• Newt Gingrich’s takeover – the third of Graetz’s main figures provided the elected figure who transformed tax cuts from just a campaign/election winning strategy (i.e., we advocate them to win elections but govern recognizing that reality sometimes requires tax increases) to an unbending principle of governance (i.e., we’ll never increase taxes on anyone, PERIOD).
• Deficits don’t matter – this Dick Cheney quote provides one of his takeaways from the Reagan presidency. I do not cast it as an intellectual idea because it’s not something that the intellectual right actually says or believes (as far as I’m aware), but it appears to be the Party’s politicos’ governing philosophy.
• Demonizing the IRS – the book documents this as a core feature of the movement, starting in 1978 and continuing through the hearings in the late 1990s to the defunding of the agency in the last decade. Much of the grist of the hearings and the current claims proved to be false, but that doesn’t matter because the claims resonate politically.

Evolution of the Movement

The book loosely divides the period into three eras – (1) Takeoff, 1978 – 1981, the start of the movement through the big Reagan 1981 tax cut, (2) Turbulence, 1982 – 1994, an era when they backtracked in the face of deficits, enacting multiple tax increases, and (3) Resurgence, 1997 – 2023, the flower of movement when Republican opposition to any and all tax increases became de rigor.

The electoral defeat of George H.W. Bush in 1992 likely was a watershed for the movement. During the Regan and first Bush presidency, Republicans believed and acted as if deficits mattered and that raising taxes was occasionally necessary. Tax increases enacted during the Reagan Administration (in 1982, 1983, and 1984) essentially took back one-half of the 1981 cuts. Similarly, the 1983 Social Security fix involved a very large tax increase. Antitax rhetoric was a campaign strategy but not a governing philosophy.

The tax increase (contrary to GWHB’s Roger Ailes-inspired “Read My Lips” mantra) agreed to by Bush resulted in his electoral defeat thanks to Buchanan and Gingrich, the latter opposed the deal after initially agreeing to it in a classic double cross. The tax increase was impelled by the sword of Damocles, the Gram-Hollings-Rudman automatic cuts. An initial deal with Democrats was in many ways were more modest than Reagan’s increases:

[Dick] Darman [Bush’s OMB Director] estimated the tax increases were less than half as large as those signed by Reagan and spending cuts more than twice as large.

Power to Destroy, p. 142

When Gingrich refused to go along, the deal had to be renegotiated on less favorable terms to Bush and the Republicans. Buchanan campaigned against Bush and Limbaugh unrelentingly hammered him on the tax increase. Whether that is what caused him to lose is unclear, but it became received wisdom among Republicans. This is Grover’s account (from 1995):

Had Bush been able to win in 1992, it would have made the pledge meaningless. Bush had a pretty good presidency. He ended the Cold War peacefully. He kicked Saddam Hussein out of Kuwait. But he broke his commitment to the American people [i.e., Grover’s pledge]. Then he gets thrown out of office by a bum – a nobody from Arkansas. The message was: You can’t break the pledge.

Power to Destroy, p. 148.

Note: Graetz as Treasury Deputy Assistant Secretary for Tax Policy was personally involved in these events.

Dems hands dirty too. Graetz does not let Democrats off the hook. For example, he criticizes them for piling more goodies onto the Reagan tax cuts, capitulating to enactment of and extension of most of the Bush tax cuts, and now being unwilling to raise taxes other than on large corporations and on very high-income individuals. As he points out, that approach is not fiscally sound or responsible. I’ll give him that, but I am agnostic about whether doing otherwise (as both Obama and Biden must have concluded) would have been the equivalent of falling on a fiscal Hari-Kari sword.

What disappointed me

Most of Graetz’s concerns and criticisms focus on the deficit effects. That’s obviously a first order concern. He spends too little ink on other distortions caused by the antitax movement and its effects on the politics of taxes and spending, in my judgment, especially:

• Impelling the unthinking use of tax expenditures rather than direct spending. This is a way for proponents of government programs to finesse anti-tax rhetoric, while actually increasing the government intervention in the economy. There is nothing wrong, per se, with tax expenditures, but the merits of delivering government indirectly through the tax system should be evaluated carefully to see which delivery mechanism is most cost effective on a case-by-case basis, not the de fault rule which now seems to be the case.
• Effects on subnational taxes. It’s fair to say that spending a lot of time on that, especially covering the wide variance in state effects, is another book.

The book’s tone left me with a nagging feeling that he was being too much of an advocate (admittedly for a POV I agree with). I suspect that it will put off the nonbeliever as trying to prove too much.

SALT connection

Graetz’s points about the anti-tax movement start with SALT, i.e., Prop 13 in California, but mainly relate to federal tax issues. However, the transformation of the Republican Party into a party whose one unifying issue is tax aversion has had profound effects on state and local tax issues and government generally.

Because states and localities are subject to a real budget constraint (balanced budget requirements in nearly every state), its strong tax aversion has reduced the size and scope of state and local governments, especially in red and purple states. The greater political difficulty of raising taxes has likely led to cuts in state and local spending, especially in red states but also in purple states. Tax aversion typically trumps general but more diffuse support for public services, especially when one of the two major parties is fixated on it.

It has caused blue and purple states to focus more on taxing businesses and high-income filers. In the distant past Republicans were grudging willing to raise taxes. Democrats would typically compromise with them to add political cover, and this typically meant raising taxes that applied more broadly. When Democrats need to go it alone on tax increases, they focus more on what they consider to be politically acceptable taxes – taxing business for which the incidence is unclear, and which average Janes and Joes think they may not pay, or raising income taxes on high-income folks.

Other sources on the book

Here’s a list of other sources of information about the book:

• Brookings and TPC did an event on the book, which gives one a chance to listen to Graetz provide a 30-minute summation of his main points, as well as reactions from commentators. My take: Mike’s talk does not do justice to his book. It’s more interesting to read than his spiel implies. Doug Holtz-Eaton, a conservative economist who was involved with Graetz in the negotiations for the Bush 1 tax increase, shows that he has drunk the tax aversion Kool-Aid in my judgment based on his comments. I think his comments show just how deeply successful the Movement Graetz chronicles was successful in capturing the conservative movement, even its respectable intellectuals. Holz-Eaton is a former CBO director.
• Review by Howard Gleckman
• Review by Marty Sullivan in Tax Notes. Much of Sullivan’s piece focuses on the federal deficit effects.

Favorite Quotes

The following are some favorite passages from the book:

Paul Weyrich (as quoted by Graetz), a evangelical political activist, on how the Christian, evangelical right was induced to become a core part of the Republican and antitax coalition:

What galvanized the Christian community was not abortion, school prayer, of the ERA (Equal Rights Amendment). I am living witness to that because I was trying to get those people interested in those issues and I utterly failed. What changed their mind was Jimmy Carter’s intervention against Christian schools, trying to deny them their tax-exempt status on the basis of de facto segregation.

Power to Destroy, p. 44

Graetz’s pithy summary of the politics of the TRA86:

The 1986 tax reform was the product of an uneasy marriage of two contrary ideological and political camps: Democratic lawmakers, who favored treating income the same regardless of its source, collaborating with Republican supply siders principally interested in lowering rates.

Power to Destroy, p. 113

On Grover Norquist’s paternal legacy of tax aversion:

His father taught Grover about the burdens of taxation: when Warren Norquist [Grover’s father] took his children to the local Dairy Joy for ice cream, before handing the cone to Grover, his father would take one lick and say, “This is the federal tax,” than another “This is the state tax,” and a third “This is the city tax.” [Geez, there must not have been a county or school district government where they lived or maybe he only wanted three licks of his kids’ cones?]

Power to Destroy, p. 117

Is it any wonder Grover ended up the way he did?

On Newt Gingrich’s centrality to the anti-tax movement dominating Republican fiscal policy:

Newt Gingrich’s successful opposition to President Bush’s budget agreement had a more enduring impact on the anitax movement and the subsequent course of American politics than George H.W. Bush’s presidency. No Republican president has since has broken Grover’s antitax pledge – or proposed a tax increase. After Bush lost the presidency, Newt Gingrich was the Republican leader.

Power to Destroy, p. 148

On the effects of the Bush tax cuts:

The 2001 and 2003 Bush tax cuts reduced federal revenues from 20 percent of GDP in 2000 to 15.6 percent in 2004. [Aside: recession was a contributing factor too.] When all the changes were phased in, they raised the after-tax incomes of people in the top 1 percent by nearly 6.5 percent – $54,000 on average – compared to about 1 percent, or an average of $207, for the bottom 40 percent. * * * There is meager evidence that these tax cuts stimulated substantial economic growth, although the 2003 cuts did boost the stock market, further increasing economic inequality. They also produced large deficits and expanded the national debt. The historian James Patterson wrote that “this dramatic turn in fiscal policy was the most significant domestic legacy of [Bush’s] presidency.

Power to Destroy, p. 196

On Democrats’ de facto capitulation (subject to the codicil, “we can raise the money by taxing corporations and the rich”):

The antitax movement – the linchpin of Republican economic policy – struck fear into liberal Democrats. Republican dogma insists on no tax increases on anyone, anytime. In the 2008 campaign, raising taxes on anyone but the “rich” and large corporations became taboo for liberal Democrats, hardly a sound way to run an effective, fiscally responsible government.

Power to Destroy, p. 209

This is another in my series of bad high school book reports on selected nonfiction books that I have read recently. I write them to memorialize my thoughts in the vain hope that I will remember a bit more of what I read.

Author and book

Chris Miller, Chip War: The Fight for the World’s Most Critical Technology (Simon & Shuster 2023).

Why I read it

With recommendations from two economists, one lefty (Brad DeLong) and one righty (Greg Mankiw) who I regularly read, I couldn’t resist. More substantively, the book’s topic is an interesting mix of economics, business history, globalization, and geopolitics/foreign policy. The Ukrainian War reveals the real-world risks involved with the world become de facto dependent on two suppliers of crucial technology – advanced semiconductor logic chips made by TSMC and Samsung – in potential harms’ way in Taiwan and South Korea.

As Miller puts it in the introduction:

[T]his book contends that semiconductors have defined the world we live in, determining the shape of international politics, the structure of the world economy, and the balance of military power.

Chip War, p. XXVII

What I found interesting

The book is an easy read for anyone interested in economics, business, and history. It provides a high-level history of the semi-conductor industry and its collection of interesting and colorful figures, mostly engineer-entrepreneurs. Semi-conductors revolutionized the information and communications industries through miniaturization and reduced power consumption of circuitry. That enabled ever greater computational power, usable in more contexts for many more purposes, slowly triggering economic and social revolutions.

Success required the right combination of (1) technical expertise in science and engineering, (2) clever manufacturing techniques, (3) willingness to take big risks, (4) a strong drive to make money, and (5) a degree of ruthlessness. All the key figures in the book had some combination of those elements. There are a lot of them over the 70-year period the book covers. As things progress, the development timelines for next generation grow longer and the required capital larger, while the manufacturing challenges become increasingly more complicated. One story is that manufacturing expertise and willingness to take risks was ultimately more important than technical brilliance.

The story is largely one of private enterprise, initially seeded by the government. The military at first was a main customer and stimulant of semi-conductor development, providing a core funder (development grants) and buyer (also NASA). Serendipitously, Fairchild (the predecessor to Intel) was formed just three days before Sputnik spurred a national frenzy for the US to catchup with USSR on science and technology. Without the government’s early role, who knows how long it would have taken for the industry to develop.

But the rapid development after that start is largely one of entrepreneurs pursuing the bigger return potential of commercial markets. The communist bloc countries that relied on government-directed efforts constantly lagged. As Miller puts it, thanks to their “copy it strategy” both they were several years behind and never caught up. A situation that still holds.

It’s initially an American story centered in Silicon Valley, but in the predictable fashion of market economics it expands to also be an Asian and European story with firms specializing in different elements of chip production. It’s as Adam Smith and David Ricardo would have predicted, although I’m unclear as to how much of the globalization story is more one of competitive, rather than comparative, advantage. (Haven’t thought enough about it to have an informed opinion but my instinct is it is competitive advantage.) It’s a long and winding road with the rise and fall of a host of firms that design and produce chips and the equipment necessary to make them. Japanese firms experienced a period of ascendancy in the 1980s that was later eclipsed, for example.

The pattern now for high-end chips, the processors that run the most sophisticated cellphones and other computers, is:

• Chip design occurs largely in Silicon Valley or the US generally (e.g., at Apple, Nvidia, Google, Qualcomm, etc.)
• Chip manufacturing is in Asia, Taiwan (TSMC) and South Korea (Samsung)
• Photo lithography machines essential to that immensely complicated manufacturing come almost exclusively from Netherlands (ASML).

This unusual geographic distribution of chip production resulted from a combination of factors including:

• Cheap labor (the attraction of Asian locations for manufacturing plants initially)
• Governmental assistance to lower capital costs and obtain other incentives (e.g., Korea and Taiwan provided crucial early incentives).
• The randomness of the success of individual firms, including where founders (e.g., the founder of TSMC, Morris Chang, was Taiwanese and returned there when TI failed to promote him to CEO).

This is quite simply a testament to what happens when the private market is allowed to work, free of most governmental restrictions, I think.

A chunk of the book is devoted to the efforts by the USSR and China to steal/copy western technology. This inevitably left them constantly behind the curve. Competition among private firms in the west was simply too dynamic and left them in the dust. Given the complexity and technical challenges of the manufacturing processes, stealing/copying is just not a viable strategy. This gave the US a big military advantage – e.g., the communist bloc countries lagged well behind us in developing and using smart weapons. The Gulf War demonstrated the US’s advantage. How much of this military advantage persists is unclear, given the changing nature of war (see Ukraine and modified off-the-shelf drone use).

The current situation raises serious questions for foreign and military policy, particularly given the increasing hostility and expansionist aims of Russia and China. The vulnerability of Taiwan and South Korea is particularly troubling. There is no quick solution to this. Congress and the administration enacted an industrial policy (i.e., the Chips Act) to address this. National security trumps standard econ 101 principles in policy making. If this works (actually at best helps a bit), it is a very long-term solution, since building the most sophisticated chip manufacturing plants requires very long time periods.

Concerns over China’s intelligence gathering through Huawei’s cheaper 5G network led to its ban in the US, as well as an embargo on selling it the most sophisticated US designed chips. This increased prices to US consumers and slowed the rollout of 5G. Interestingly, China did not retaliate against any of this. The US tech industries concerns about the Chinese response – whether losing access to its market or the leverage provided by the industry’s reliance on Chinese factors – has led them to urge the US government to be very cautious.

The TikTok ban (obviously most developments have occurred after the book was written) is yet another example.

The big policy question is whether industrial policy and trade restrictions, reflexively pure economic policy no-no’s, will work. Crudely, is the Chips Act just a waste of money that will ultimately prove ineffective? The book’s narrative history is not encouraging. At one level, it’s a variant of the copy-it strategy used by the communist bloc. But an alternative way to address the national security concerns does not come to mind. More importantly, we’re not up against a market-fuel competitive economy, as the Soviet-bloc was during the Cold War. The consequences may simply be slower international growth. The bigger question is whether it was too little, too late. Did the US, lulled to sleep by the fall of the USSR, take too long to wake up to the national security implications of the globalization of the chip industry.

This blog post on Noah Smith blog (but not written by him) makes the case that the Chips Act, good as it may be in the author’s view (he’s a chip industry guy), is flawed in that it focuses mainly on high-end chips. That is, of course, what the book also focuses on. The author of the post makes a convincing point (to this amateur, anyway) that basic or low-end chips may be a national security problem, as well, if China comes to dominate that market. The pandemic-fueled supply problems with these low-end node chips were what hobbled much of the auto industry. They are crucial to manufacturing military equipment. The Ukraine War has made it clear that the ability to manufacture basic military supplies – artillery shells and so forth – may be crucial.

I would guess that our extensive reliance on China’s manufacturing for other essential goods, even if not just for military use could be a problem. This probably calls into question some very basic assumptions about the benefits of globalization and free trade under the conventional wisdom I have accepted for 50+ years since taking econ in college.

Update (8/17/2024): This Brookings Institution Commentary, Michael E. O’Hanlon, Could the United States and China really go to war? Who would win? (8/15/2024), has some good insights on the prospects for war with China, particularly over Taiwan, and possible scenarios as to how things could play out. Even though he has a relatively more sanguine view of China’s willingness to undertake extreme military actions than many conventional military planners, his scenarios for the U.S. seem both realistic and very sobering. Moreover, when you’re dealing with authoritarian dictatorships, unpredictable behavior by the dictator is always a live possibility.

What disappointed me

The book’s advantages – it’s a very readable, albeit long, narrative business history – is also its weakness, if your prime interest is a focus on the foreign and national security policy implications of the current situation that relies on Taiwanese and Korean manufacturing. That was my prime interest; the book gets at it only indirectly. Of course, Miller is a historian, not a national security or foreign policy academic.

I gave my copy to my brother to read. He has a PhD in computer science and is a retired professor and tech worker with some tangential connections with a few of the bit characters in the book. His reaction was (not surprisingly) that it was too simple technically and did not provide enough numerical details (he didn’t read the notes, of course). I have no way of judging that criticism but addressing it would have required a much longer book with a different focus and likely a co-author with a technical background.

SALT connection

NA