Almost two years ago I posted what I thought might be a recurring type of post: a few brief hits on several timely topics or news items that I thought were important to pay attention to. Going to try it again this week.
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Conservatism
If, like me, you hold some views that would have once been called “conservative,” I highly recommend two recent articles that really do a fantastic job of describing how I see the current moment:
I Should Have Seen this Coming by David Brooks. A brilliant essay tracing some of the history of the conservative movement in America and its dual constituencies of genuine conservatives and reactionaries. He goes chapter and verse on how the latter group has taken over the Republican party in ways that violate the conservative, and often Christian, principles that he thought the party stood for, and the sorrow he feels as someone who believes in them. But it’s not all depressing - he concludes by offering some much-needed historical perspective that demonstrates that what we’re experiencing is not new in world, or even American, history, and that past movements like the Whig party show how we can recover and even thrive after this.
Slouching Toward Tyranny by the Dispatch Editors. I’ve recommended The Dispatch many times on this Substack because I find them to be among the few remaining true conservatives who have maintained their conservative principles despite great pressure to stay “on-side” with the Republican party in the Trump era. You don’t have to agree with their views to recognize that they come by them honestly and thoughtfully, and at a time of intense partisanship they have remained true to who they are. This article doesn’t end on as hopeful a note as Brooks’, but it’s nevertheless important as a principled conservative take on our current trajectory.
The Economy
Last week’s tariff “pause” was only a relief compared to the insanity of what preceded it. Even if the paused tariffs never go into effect, if what we have today remains for very long, every American is going to start feeling it. Corporate profits will either shrink or they’ll have to pass on higher costs to their customers, which will reduce demand for their products, which will reduce revenue. Unlike the Biden years in which prices rose but demand and corporate profits remained healthy, I don’t think we can expect incomes to rise along with prices and blunt the effect of inflation. Rather, rising prices and falling profits is a recipe for weak demand and corporate cost-cutting measures, including layoffs. In other words, stagflation.
There’s a fringe movement on the left called Degrowth which argues that a consumerist, GDP-focused economy ultimately leads to environmental devastation and social harms. I too think we should care about more than wealth generation and wouldn’t mind if Americans (me included) became less consumption obsessed. The problem is I don’t know of a solution that doesn’t also conflict with personal liberty, human dignity and ultimately lead to impoverishment. Surprisingly, though, the supposedly “pro-business” Republican party seems to be enacting this agenda, so I guess if you believe in the aims of Degrowth, there may be a silver lining in all of this.
Trump doesn’t appear to have a strategy for dealing with countries who have “cards” to play in a trade war, like China. Trump’s escalations have only caused them to dig in, and apparently now halt exports of critical minerals that only they produce. He’s in over his head and needs to find a face-saving exit strategy before US companies that depend on Chinese exports - including many small businesses - start going bankrupt.
The bond market’s behavior, which is apparently what got Trump to relent on his tariffs last week, is a worrying (but unsurprising) sign that this chaotic and incompetent approach to trade policy is impacting demand for US government debt, which does not bode well for our ability to borrow at low rates in the future (and could lead to even worse outcomes, as Noah Smith explains here). This could be a problem for Republicans wanting to pass a massively deficit-expanding budget.
Scott Galloway has been making the point that valuations of public U.S. companies have enjoyed a higher price-to-earnings multiple than equally healthy companies in other countries, because being a U.S. company confers a premium on the value due to the U.S. historically being a business-friendly, stable and predictable environment in which to operate. A U.S. government whose economic policy changes wildly from week to week and which bullies everyone from trading partners to law firms undermines this reputation and will likely reduce the premium investors are willing to pay. And this “multiple contraction” can have a major impact on market-wide stock valuations even if the companies themselves remain profitable (which is unlikely in a much higher-cost trade environment). In short: a good reminder for investors to be internationally diversified.
Speaking of which, how am I responding investment-wise? This is not investment advice, but I’ve been pessimistic about the near-to-medium term for some time now, which means my non-retirement savings are mostly in cash or cash equivalents (though to be fair, I’ve always been conservative with these). But I still haven’t touched my long-term savings which are in Vanguard target-date funds that have international exposure. I’ve been tempted to move some into cash recently, but I’m still counting on the set-and-forget investment strategy working out over the long-term. But I’m fortunate that I’ve still got a couple decades for those accounts to recover. I’d be very worried if I needed to tap those funds in the next 5 years (another reason target-date funds are great, as they automatically become more conservative as you near the target).
Due Process
One of the more morally appalling actions the Trump administration has taken so far has been denying due process to the undocumented immigrants it has been deporting to prisons in El Salvador. I am not opposed to deporting convicted criminals who are here illegally, and while I find it troubling that we’re outsourcing their containment to another country’s horrific prisons, I’d not be losing much sleep over this if I was confident these really were members of MS-13 or Tren de Aragua or some other violent gang. The problem is, not all of them are, or at least, the administration has not been able to provide any evidence backing up their claims in many cases, including some where the available evidence indicates they were not in fact criminals. And rather than try to correct these mistakes (including after the Supreme Court unanimously ruled that they must), they have resisted. This should be deeply troubling, and most Americans don’t seem to be taking this seriously enough.
Due process - the legal means by which individuals accused of crimes are given a fair hearing and opportunity to defend themselves - does not exist to serve criminals, as defenders of the administration’s extra-legal activities like to claim. “Criminals don’t deserve due process” completely misses the point. Due process exists to protect the innocent, for without it, we cannot be sure that it’s actual criminals that we’re punishing. The administration’s approach to “law and order” amounts to “trust us,” but as they themselves have admitted, they’re making mistakes. The law exists to protect the innocent, and not just from gangs. It also exists to protect us from an abusive government. Without it, what stops the government from denying due process to U.S. citizens that get in their way? If unlawful abuse isn’t what’s happening to these deportees, the administration needs to prove it. So far, they’re not making a convincing case.
I pray that more Americans will wake up to not only the economic harm that is coming their way, but also the immoral and lawless acts being done in their name and not shrug them off as “someone else’s problem,” and be part of a modern “Whig movement” that ushers in something better in its wake.