The Political Economy of Oren Cass

What do we do if “the market and the family are not, generally speaking, friends”?

Credit: American Compass

Last Thursday, the Department of Government’s Vik-Bailey Lecture Series hosted in Harvard’s Tsai Auditorium a presentation from Oren Cass, one of the most prominent voices on the “New Right.” Cass, an advisor on the 2012 Romney presidential campaign and the founder of American Compass, an economic policy shop, spoke about “The Future of Conservative Economics.”

Cass argued that supporting low taxes and free trade is not an inherently conservative economic position but rather a solution to the particular political problems of the Cold War—a solution that has outlived its political and economic usefulness. Instead of accepting what he calls the “market fundamentalist” view, Cass argued, conservatives ought to recognize that “markets can work, but only when conditions and constraints are in place that align private interest with the common good.”

Professor Daniel Carpenter, chair of the Government department, introduced Cass, stating that inviting him would have been appropriate regardless of the outcome of the presidential election. Carpenter said that he decided to invite Cass after reading the latter’s June op-ed in the New York Times, “This is What Elite Failure Looks Like.” He also noted the role of the lecture series in promoting intellectual diversity on campus. 

Cass began his lecture with a history of American conservative economic policy, which he argued was consistently characterized by support for domestic industry, including tariffs, until the development of fusionism. Even Reagan’s deviation from this tradition is overstated, as he raised taxes several times and his protectionism led to criticism from the libertarian-leaning Cato Institute. 

Instead, Cass said, “market fundamentalism” is a post-Reagan phenomenon defined by four key ideas: “the consumer is king,” “labor is an input,” “GDP is fungible,” and “profit is value.” These principles became the theoretical basis for lower tariffs, increased immigration, and consumption-centric economic goals. 

He also attacked this view on empirical grounds, claiming that since the mid-seventies, GDP per capita and labor productivity have risen but average wages haven’t. In response to a question from Professor James Hankins, who lauded what he described as Cass’ “brilliantly clear analysis,” Cass clarified that income measured as wages plus government transfers has indeed risen, but that this reliance on transfers is socially corrosive. “Everyone is better off in material terms than ever before”—but how valuable is that in the face of a “social breakdown in which a solid third” of people can’t support a family?

His preferred response includes raising tariffs, supporting a strong labor movement, and implementing an industrial policy designed to rebuild American manufacturing capacity. In response to the argument that tariffs will raise prices for consumers, Cass acknowledged that the “trade-offs are real,” but argued that the need to reshore some industrial capacity is worth the cost. 

The New Right’s economic vision also involves reimagining the financial system. Cass took the topic as an opportunity to remind the audience of the differences between his theory and progressive economic views: he believes in the value of maintaining a strong financial sector and that its employees and executives should be well-compensated. But rather than effectively allocating needed capital to productive industry, he claimed, too much of the industry relies on speculation. To keep the industry from embracing overly risky financial instruments, he voiced support for a financial transaction tax and changes in bankruptcy law to make stockholders “take [losses] on the chin.”

Only time will tell if this Cass’ heterodoxy will help conservatives “rebuild their economic muscles.” But, he says, Vice President-elect J. D. Vance has worked closely with his shop. So have Secretary of State-designate Marco Rubio and Senator Josh Hawley. American Compass has secured a ringside seat to the domestic policy-making of the second Trump administration.