A Question of Leadership

Could the American election break the post-cold war consensus for good?

Towering columns

On Understanding America, his new Substack, Oren Cass unpacks the fragility of the modern American economy and the political currents that are gathering pace.

The socially liberal and fiscally conservative quadrant of the matrix is by far the least popular in American politics and yields an agenda and vision for the nation that is fundamentally incompatible with what most people say they want and what can in fact deliver widespread prosperity. Precisely the opposite is now ascendant, particularly within the Republican Party, where the younger generation of leaders like Senators Marco Rubio, J.D. Vance, and Josh Hawley can be found walking picket lines with striking workers, criticizing stock buybacks, promoting industrial policy, and prioritizing more generous family benefits over corporate tax cuts, while also calling to restrict immigration, assaulting campus culture and the “Diversity, Equity, and Inclusion” fad, and opposing transgender ideology.

Donald Trump, of course, is most confusing of all. Look at how his last term ended, look at the things he says and does, look at his policy agenda—and he is leading in the polls, against an incumbent presiding over relatively strong economic growth and record-low unemployment, having made his most notable gains among non-white voters. If you read the New York Times and Wall Street Journal opinion pages to keep informed, you could be forgiven for not understanding what’s going on here. But perhaps it’s time to read something else.

Did you know, for instance, that fewer than one-in-five young Americans goes smoothly from high school to college to career? For young men, the outcome is even less likely. Indeed, for 25- to 29-year-old men, real earnings are lower now than in the 1970s. Did you know that fewer Americans aged 18 to 34 now live with a significant other than at home with their parents? Did you know that productivity in American factories has actually been declining for more than a decade—it now takes more workers more hours to make the same amount of stuff?

At Compact, Batya Ungar-Sargon argues that the realignment of American politics is splitting organised labour between progressive leaders and conservative members.

Blue-collar workers are put off by what the union leader I interviewed called “the permanent culture of progressive college-educated coastal elites,” which is endemic in the leadership of organized labor and includes unequivocal support for the Democratic Party, Planned Parenthood, climate-change measures like transitioning to electric vehicles, support for illegal immigrants, and the Palestinian right to armed resistance—things that are popular with journalists, teachers, and adjunct professors, but not so much with electricians, truck drivers, and people working the line at auto factories in the South. 

A YouGov/American Compass survey of 3,000 workers found that “excessive engagement in politics is the No. 1 obstacle to a robust American labor movement.” The pollsters found that “among those who said they would vote against a union, the top reason cited was union political activity, followed by member dues.” The explanation isn’t all that complicated: “These workers anticipate that unions will focus on politics, rather than delivering concrete benefits in their workplaces, and don’t want to pay the cost.” Adding insult to injury, the politics imported into union organizing are frequently contrary to the economic interests of workers. For the truth is that the class divide and the cultural divide are intimately connected. 

Take immigration, which under the most basic of all economic laws, supply and demand, is an obvious threat to the wages of working-class Americans. Immigration increases the supply of labor, thereby making it cheaper. Not coincidentally, Americans without a college degree are much less likely to support high levels of immigration (on the other hand, think of how hard you would have to work to find a university professor who supports mass deportation of illegal migrants, as the majority of Americans do). And yet the national unions have, like college professors and the Democratic Party more broadly, by and large embraced mass, low-wage migration to the United States, both legal and illegal. 

For The Spectator, Fraser Nelson believes the Reform insurgency led by Farage can only hand over incredible power to Labour to transform the country.

It’s not hard to see what happens next. If the polls are right and Starmer ends up with a majority out of all proportion to his support, he will be urged to use this freak moment of power to make the political landscape more favourable to the left, just as the Thatcher revolution promoted home ownership, share ownership and other causes more favourable to the right when the SDP split the left in the 1980s. ‘Why would Starmer sit there and wait for the right to recover?’ asks one Tory minister. ‘He’ll do what we did.’

State regulation of the press could be forced through, stifling commentary that challenges the government. Labour will be able to renew the BBC Charter and appoint a more muscular head of Ofcom. GB News, the television channel where Farage and Rees-Mogg are both presenters, may end up being taken off air. Online-debate rules could be tightened to make it harder to publish against-the-grain views. And who in the Commons would be there to protest such a crackdown?

A crushing majority will make it easier for Starmer to water down Brexit. He can sign Britain up to various regulatory schemes, taking it back into the EU’s orbit while stopping short of rejoining. Not a single member of Starmer’s front bench backed Brexit, so his team is unlikely to seek new trade deals to make Brexit work. All of this will be far more straightforward because Farage will have done so much to clear away the MPs who would have opposed it.

For The Times, J.K. Rowling criticises Labour for failing to define what a woman is and not standing firm on defending women’s rights.

If you’d catapulted me forwards in time from 1997, the year Labour last succeeded in ending a long stretch of Tory rule, and told me their male leader would appear live on television, dictating what women were allowed to say about their own reproductive systems, I’d have had no frame of reference by which to understand what would have seemed an utterance of outright lunacy. Unfortunately, by 2021, Starmer’s answer had to be seen in the context of a Labour Party that not merely saw the rights of women as disposable, but struggled to say what a woman was at all.

Take Annaliese Dodds, the shadow secretary for women and equalities, who, when asked what a woman is, said, it “depends on what the context is”. Take Yvette Cooper, the shadow home secretary: “I’m not going to get into rabbit holes on this”; Stella Creasy, Labour candidate for Walthamstow: “Do I think some women were born with penises? Yes … But they are now women and I respect that.” ’; Emily Thornberry, the shadow attorney-general@: “Women who are trans deserve to be recognised, and yes — therefore some of them will have penises. Frankly, I’m not looking up their skirts, I don’t care”. Dawn Butler, the former MP for Brent Central, actually announced on TV that “a child is born without sex at the beginning” (I choose to believe she meant the lesser of two insanities here: a sex, not that children really are delivered by stork.)

Some of this is almost funny, but loses its humour when real world consequences of gender ideology arise. When asked whether violent sex offenders who transition should be rehoused in women’s prisons, Lisa Nandy, the shadow secretary for international development, said: “I think trans women are women, I think trans men are men, so I think they should be in the prison of their choosing.” Rebecca Long-Bailey, the candidate for Salford, said female victims of male violence shouldn’t use their trauma “as an argument to discriminate against trans people” and vowed to change laws to stop women’s refuges excluding men who identify as women.

For The Telegraph, Ben Wright makes the case for altering the Treasury’s fiscal rules to reward greater long-term investment that can sustain a new economic model.

As the old adage tells us, it takes money to make money. Both Tory and Labour plans are massively hamstrung by fiscal rules, which require the Government to ensure debt is falling as a share of GDP over a five-year period. Such self-imposed strictures are designed to prevent governments from over-borrowing in order to shower the electorate with short-term goodies. But they also inhibit longer-term policies designed to boost growth. The elusive trick is finding a middle way.

One option would be to come up with rules that not only assess debt but also the country’s assets. In some ways this isn’t such a radical suggestion. Investors can only tell whether a company’s balance sheet balances because it contains both liabilities and assets. Why shouldn’t countries conduct a similar audit? Part of the answer is that the switch to this kind of system would be expensive. Another is that it can be hard to value national assets – like roads and hospitals – that you can’t really sell.

On the flip-side, if you don’t put a price on the nation’s infrastructure, there’s no incentive to invest in it and eventually, as we can now so clearly see, everything starts turning to dust. What’s more, there’s nothing to stop assets that can be sold getting flogged off for less than they’re worth to fund fiscal bungs. A side benefit of adopting this approach would likely be greater latitude from the market to borrow against public assets. As Andy Haldane, the former Bank of England chief economist and an advocate for new fiscal rules, says: “Financial markets know it is the value of the house, not the mortgage, that matters.”

At UnHerd, Kathleen Stock looks at how Kier Starmer’s intellectual ambiguity has provided tactical advantages but not a long-term ethical vision for change.

Interpretations of his background commitments differ wildly. Peter Hitchens thinks he’s “far-Left” bordering on Trotskyism; Jordan Peterson predicts that should he win, Britain will be “Venezuela for 20 years”. The New Internationalist says Starmer is a “cold-hearted Blairite”, and Corbyn’s former advisor Andrew Murray scornfully dubs him a “centrist liberal”. Bequeathing us a particularly distressing image, George Galloway has declared that “Keir Starmer and Rishi Sunak are two cheeks of the same backside”. In terms of sheer range, then, Starmer appears to be the Cate Blanchett of British politics.

This week brought a new performance to pore over, in the form of a filmed walk-and-talk with Gary Neville in the Lake District, a location for Starmer family holidays when he was young. “How did you find this place?” marvelled an incredulous-sounding Neville, as if Sir Keir had hacked through dense jungle foliage rather than trundled up the M6 like everybody else. Here again, though, the video signalled as little information as a plain white T-shirt worn on matchday. Along with a few repeated manifesto pledges, we learnt that the Labour leader puts “country first, party second”, believes in “action not words”, wants to “return politics to public service”, and is aiming for a “decade of national renewal, fixing the fundamentals”. On “day one, sleeves rolled up”, he plans to “hit the ground running”.

In fact, this is Starmer playing the fictional character created during focus groups before the Labour leadership election, as described in Deborah Mattinson’s book Beyond The Red Wall. In 2020, at the behest of influential policy group Labour Together, Mattinson drew together Northern town-dwelling former Labour voters (dubbed “Red Wallers”) and more prosperous city-based current Labourites (“Urban Remainers”). Each side was separately asked to create its ideal political party, complete with its top three possible leaders. Red Wallers chose Sir Alan Sugar, internet finance guru Martin Lewis, and Wetherspoons founder Tim Martin. Apparently unafraid of looking clichéd, the Urban Remainer team chose Michelle Obama, Hugh Grant, and “a young David Attenborough’”. The two teams were then brought back together in a “citizens’ jury” in order to thrash it all out.

Wonky thinking

For The American System on Substack, Sohrab Ahmari reviews the historical development of the corporation in the United States. During the colonial era and early republic, corporations were founded to serve a public good. However, this legal order disintegrated and led to corporations prioritising private interests. Ahmari considers whether corporations can be made to serve the common good once again.

Asked to explain why we have corporations, most Americans nowadays would answer: to turn a profit. Getting a little more technical about it, they might say that corporations exist to allow shareholders to pool capital and maximize returns. Do-gooders, they might add, should launch a nonprofit. All this is accurate enough as a description of the prevailing corporate-law regime and how most of our corporations operate.

Yet this pinched account of corporate purpose is a relatively new turn. As the University of Michigan legal scholar David B. Guenther has written, for much of American history, both before and after the founding, corporations served “overtly public” aims, especially the “development of local transportation, finance, and other much-needed economic infrastructure.” And this wasn’t a matter of mere goodwill on shareholders’ part. Rather, corporations’ public purpose was enshrined in the charters that structured their relationship with the state.

The first such American-based charter was handed down in 1587 to 13 gentlemen-venturers from London to establish a colonial city in Virginia to be named Ralegh (the project failed when the would-be colonists disappeared). As organized life developed in the colonies, the corporate form, dependent on royal or parliamentary charter, was rarely used. Insofar as corporations were formed, it was mostly to advance religious, educational, charitable, and municipal aims; some, like the ill-fated Ralegh corporation, blended trade with municipal purposes.

By contrast, only a handful of business corporations were formed in the entire colonial period, and these were chartered in fulfillment of public infrastructure needs, most notably water supply. The linchpin of the colonial corporation, in other words, was its public purpose. Business corporations were an extremely rare subcategory of the form, and these were compelled to serve the public no less than the more prevalent corporations that created churches, cemeteries, towns, and schools.

This public-purpose requirement remained in place even as corporations proliferated in post-revolutionary America. The Hamiltonian order set about transforming a land of yeomen farmers into a commercial and industrial powerhouse, able to stand free from Europe and most notably a British imperium determined to reduce the newborn country into a resource pool and market for its own manufactures: the fate that would befall colonial India a few decades later.

For Engelsberg Ideas, Munira Mirza looks at the importance of how we shape leaders in response to the challenges facing modern Britain. Short-termism and intellectual stagnation defines much of the modern political class. Mirza believes we need to cultivate new pipelines of talent that can improve British statecraft and promote a stronger sense of public duty.

In the past, successful societies gave much thought to the question of what might be called ‘elite formation’. Just as any family or business might do succession planning, different tribes, nations, city-states and empires have found ways to identify the people who will carry forward the legacy of one generation to the next. One of the most famous stories of succession planning in Western culture is Moses handing over the leadership of the Israelites to his apprentice, Joshua. Just before they reach the Promised Land of Canaan, after 40 years of wandering, Moses is told by God that he will die before entering their new home as punishment for an earlier transgression. Moses, concerned for the fate of his people, pleads to God for a replacement, ‘so that the Lord’s community may not be like a flock that has no shepherd’. God commands Moses to appoint Joshua, who has effectively been training as an apprentice with Moses in the art of leadership and statecraft. Moses lays his hands on Joshua in front of the community, reassuring them that his successor is ‘full of the spirit of wisdom’.

As Adrian Wooldridge documents in his excellent 2021 book, The Aristocracy of Talent, different systems around the world throughout history have found ways of using meritocracy as a guiding principle, and creating institutions that would guide future leaders. In around AD 600, Imperial China introduced a national written exam, which was rigorous, fiercely competitive, open to anyone and acted as the gateway to a high-status career as a bureaucrat; by the seventeenth century, two and a half million people took the exam. Key elements still form part of the recruitment process for the Chinese civil service today.

In the modern era, European nations, and latterly the US, created a range of diverse institutions – grammar schools, public schools, universities – to teach the practical skills, as well as the moral character, that would be needed to cultivate future civic leaders. It is a well-worn cliché in Britain that the Battle of Waterloo was won on the playing fields of Eton, while in the US, the early Puritans founded the Ivy League universities (including Harvard and Yale) to train ministers. These went on to become the pipeline for future political leaders – Harvard alone counts eight presidents among its alumni.

So what has happened to this idea of elite formation in liberal societies? Arguably, something subtle has changed in the culture of these institutions and within the British elite itself since the 1980s or 1990s. Modern institutions today emphasise their ethos of meritocracy (even though they continue to have a highly socially privileged and white intake), but Wooldridge argues they seem to have lost a vital characteristic of elite formation, which is the idea of ‘noblesse oblige’. Students are no longer trained to think of themselves as custodians of a nation who ought to ‘give back’ in return for their status, but as highly talented individuals who have earned their position through intellectual superiority and therefore deserve to pursue their own ambition first and foremost. As one disillusioned Harvard graduate, Saffron Huang, wrote recently of her alma mater: ‘In place of elite formation is a production line of professional strivers – albeit ones with relative wealth and a valuable social network.’

In the UK, the business model of universities has underpinned this shift. In 1998 the government introduced tuition fees for students, which has shifted university funding from the state to individual ‘consumers’. Universities have responded by increasing recruitment of international students who can be charged higher fees. In marketing literature today, universities are less likely to present themselves as educators of a national elite, but as powerhouses for global talent. Undeniably, this globalising of higher education has many positives, but it is surely one reason why it is less steeped in concern for the future governance of the country.

Book of the week

We recommend The Constitution of Political Economy: Polity, Society and the Commonweal by Adrian Pabst and Robert Scazzieri. The authors review the numerous ways in which the economic and political spheres intersect with each other, meaning policymakers should pursue a more nuanced understanding of how society shapes and is shaped by political economy.

Our approach leads to a constitutionalist view of the political economy in which the relationship between the political body and the economic body is one of mutual dependence. Each economic body, conceived as a constituted body, is identified by a particular division of labour, by a specific representation of interdependencies between economic activities and socioeconomic groups, and by the corresponding dispositions and interests of individuals and groups in the economy. Dispositions and interests are also central in the constitution of the political body, seeing that each political body is identified by a particular definition of systemic interest and by the range of variation within which a given systemic interest can accommodate different ways of satisfying partial interests.

In short, each political economy presupposes an economic body in which relational structures associated with the existing division of labour generate dispositions and interests whose ‘synthesis’ in the political body may or may not be compatible with the existing economic constitution. There may be cases in which the political synthesis of partial interests is compatible with the viability condition for the economic body, but there can also be cases in which partial interests find a political synthesis that does not allow the persistence of the given economic body, or cases in which changes in the division of labour (e.g. changes resulting from a radical transformation of production technology) are no longer compatible with the received composition of interests in the political body. In either case of mismatch, the constitution of the political economy is likely to change by adjusting the economic body to the political body, or vice versa. For example, a national political body may give way to a supra-national level of governance to avoid mismatch with a supra-national economic body (as in the case of economically induced political integration), or a supra-national economic body may give way to a national one to avoid mismatch with a nationally defined political body (as in the case of politically induced autarchy).

The dominant mapping of interests in the political body arises from compromise or conflict between the principal actors and is in turn at the origin of its institutional architecture. The latter results from a conciliation of partial interests, which may be invariant with respect to changes in the weights of the different actors provided such changes take place within certain limits. In this case, the institutional architecture is likely to expresses a mapping of partial interests compatible with the viability of the political body as a whole. In turn, the constitution of the political body may or may not be compatible with the mapping of interests arising from the division of labour in the economic body. In any case, changes in socio-economic interdependencies (such as changes in the dominant pattern of division of labour) are likely to bring about a reconfiguration of partial interests and/or a change in the identification of a systemic interest for the economic body and the political body alike…

…Under these conditions, a mismatch is possible between human dispositions, systemic viability conditions for the economic and the political body, and institutional architecture. For example: (i) division of labour may introduce a (systemic) viability requirement that is not compatible with the received constitution of the economic body and of the corresponding political body; (ii) the dominant constellation of interests in the political body may shift away from the dispositions and interests associated with the dominant pattern of division of labour, which in turn makes a mismatch possible between the institutional architecture and material viability requirements; and (iii) changes in the constitution of the economic body and of the political body may take place at different relative speeds, so that the coexistence of the two bodies within the same social domain may become difficult to sustain…

…Economic considerations take a political dimension when economic arrangements presuppose distinct but mutually dependent centres of agency, while political considerations take an economic dimension when political agency is constrained by ordering principles in the economy and society that are prior to it. In a system of interdependent economic and political activities, the economy has an intrinsic political dimension due to the formation of converging or diverging interests associated with the pattern of division of labour in society. On the other hand, the polity has an intrinsic economic dimension due to the material interdependencies needed to provide means for the pursuit of political objectives. This conception of political economy makes principles of economic ordering essential to the life of the polity, and political alliances or conflicts unavoidable in the division of labour between centres of agency in the economic sphere. In our view, the consideration of the matches and mismatches between the two spheres opens a line of investigation that is central to understanding the trajectory followed by any given political economy in the course of its history.

Quick links

The ONS has revised up the UK’s growth figures for the first quarter of 2024 from 0.6% to 0.7%.

Democrats discuss replacing Joe Biden as their nominee for the presidency after his poor debate performance.

The Canadian Conservatives won a shock by-election victory in a Liberal stronghold in urban Toronto for the first time since 2011.

A Labour government would make every borough accept their “fair share” of asylum seekers.

Research has outlined 50 benefits of leaving the EU, including changes to defence procurement rules, a bespoke subsidy control regime, and new freeports.

A ruling from the European Court of Justice has suspended Europe’s largest steelmaking plant due to environmental concerns.