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American Compass, Moving the Needle

American Compass, Moving the Needle

Oren Cass’s pro-worker, pro-family think tank has exercised surprising influence on the broader conservative movement.

Mitt Romney Campaigns In Wisconsin And Ohio
Republican presidential candidate Mitt Romney sits with advisor Oren Cass aboard his campaign plane on November 2, 2012 en route to Milwaukee, Wisconsin. (Justin Sullivan/Getty Images)

In 2011, in between his second and third years at Harvard Law School, Oren Cass joined Mitt Romney’s presidential campaign as a summer fellow. As editor of the Harvard Law Review, Cass had acquired a reputation as a rising expert on trade and technology. The campaign put him in charge of what internally was called the “jobs book,” and later became Romney’s “59-point plan” to jump-start a sputtering economy.

As the platform began to take shape, Cass was asked to brief Romney on trade. He assembled a PowerPoint littered with shopworn Republican platitudes about the virtues of globalization; he called the World Trade Organization “the best hope for efficiently opening markets around the world.” Romney thumbed through the proposal and said, “That’s fine. But what are we going to do about China?”

Cass didn’t have an answer. Few right-wing economists had even grappled with the question, and most of the ones who had thought it was foolish—why wouldn’t we let China send us cheap stuff? Cass told me he found the mainstream conservative treatment of the issue “incredibly superficial and poorly developed.” So he kept digging. And after stumbling upon the work of thinkers like Robert Lighthizer, Dani Rodrick, and Clyde Prestowitz, Cass considered that America’s becoming dependent on a mercantilist dictatorship with a burgeoning industrial base was, at the very least, a national-security threat that couldn’t be addressed by blind faith in market forces.

By summer’s end, Cass was named Romney’s domestic policy director. And the platform that emerged from his and Romney’s mind-meld was, in substance, shockingly Trumpian. Romney promised he would sanction China for manipulating its currency and stealing America’s intellectual property on his first day in office. He didn’t want a trade war with China, but said he didn’t want a “trade surrender either.” Romney’s plan even drew the ire of the Wall Street Journal editorial board, which denounced parts of it as “crude” and encouraged other Republican candidates to “repudiate” his “China blunder.”

Cass counts the moment as formative, setting him off on a “journey” through the right-wing policy ecosystem, challenging its cherished libertarian pieties on everything from trade to labor. His 2018 book, The Once and Future Worker, claimed that the labor market’s ability to sustain strong families and communities, not aggregate consumption, is “the central determinant” of America’s “long-term prosperity.”

And after bouncing from consulting to blogging to the nonprofit world, he institutionalized that mission with the founding of American Compass in 2020, a small but influential Washington think tank crafting pro-family, pro-worker policy proposals and engaging critics in digital debates.

Compass is engaged in the long-running, internecine conservative dispute over globalization, industrial policy, and family subsidies that came to a head with the election of Donald Trump. In each case, Compass sides against the Reagan-era consensus that free markets and liberal trade policy always benefit the American worker. And it is trying to define a new course for a conservative movement that has tired of platitudes about “free markets and free people.”

“I always use the metaphor of a flagship,” Cass told me of Compass’s founding mission, “for post-Trump conservatism, and in particular, for conservative economics.”

American Compass is small—a six-employee outfit headquartered in a converted yoga studio. It doesn’t love the label “think tank,” which, as research director Wells King put it, is evocative of fellows who “sit at their desks and think long and hard for a long time and maybe produce one or two white papers a year.” But Compass is similar to the established think tanks in that it is organized around an idea—to “restore an economic consensus that emphasizes the importance of family, community, and industry to the nation’s liberty and prosperity.”

That mission statement is a conscious pivot away from the current right-of-center economic consensus, which is laser-focused on slashing marginal tax rates for hedge-fund managers. And in contrast to its rival think tanks, Compass is grappling with the tensions between conservatism and unfettered capitalism. “Creative destruction” upends businesses and ways of life that sustained communities for generations. The free movement of goods across national borders and the birth of international supply chains ship physical resources and know-how from American communities to those overseas. The collapse of American manufacturing has shunted once-employed men to the service industries, if they’re lucky, or drug abuse and Social Security fraud if they’re not. Financialization has created a caste of people whose livelihoods are removed from actual production and who increasingly hold their fellow countrymen in contempt.

Compass’s policy proposals, such as local content requirements, aggressive antitrust enforcement, generous child benefits, and a financial-transaction tax, call for interventions in the marketplace that would have been unthinkable for a conservative think tank ten years ago.

And that has won them their share of critics. Libertarian economist Michael Strain, who declined to be interviewed for this piece, dismissed Cass’s work in an interview with Jonah Goldberg as “mostly a source of confusion.” That is of a piece with Compass’s other opponents, who think the debate on economics is settled: free trade gives us cheaper consumer goods and lower input costs for small businesses, and government action creates distortions in the marketplace. To intervene in the market, as Cass and Compass propose, would be to “pick winners and losers” and adopt progressives’ “big government” pose.

King argues that those Reagan-era hang-ups have stunted the conservative movement’s ability to face the challenges of the modern economy, which is why Compass has rejected the “ideological approach that characterizes too much of the right of center.” It also gives Compass “a more accurate assessment of what’s gone wrong in the economy,” King said.

Take family policy. Conservatives have long cared about family structure and plummeting birth rates. But instead of hosting a well-funded roundtable on “cultural breakdown,” King and Cass drafted Compass’s Family Income Supplemental Credit (FISC) proposal, which would pay families with young children $9,600 per year in monthly installments. It’s not a “tax break” or trickle-down benefit from an “opportunity zone”—it’s money, straight from Uncle Sam, to families with kids.

The FISC proposal is a good example of how Compass operates. Sensing a fight over family policy brewing in the new Congress, Cass and other Compass staff rallied to draft a proposal that could serve as model legislation and was true to its organizational principles, providing relief for American families without creating disincentives to work.

Weeks before Compass published its proposal, Senator Mitt Romney had introduced the Family Security Act, which would give families a $350 cash benefit per month per young child. It did not, however, include a work requirement. Cass and King felt this omission would warp the relationship between families and the state.

Cass, King, and the Compass staff, while pleased with what King said was the senator’s “important, constructive” work, felt the Compass plan, with its still relatively lax work requirement, “did better with conservative principles and priors.” Shortly after Romney introduced FSA, Compass hosted a 30-minute discussion with the Utah senator. Romney was convinced by the discussion and later meetings, and created “FSA 2.0“—a streamlined benefit for working families that would provide qualified families with $600 per child per month.

As opposed to legacy think tanks, where fellows dedicate themselves to a niche cause and put out obscure white papers on their subject of interest twice a year, the FSA was an example of how Compass mobilizes its small team to move the needle on the Hill. Its targeted-strike approach has proven effective in other areas as well. Senator Tom Cotton’s Workforce Training Grant, which would tax university endowments to pay for on-the-job training programs, was inspired by a Compass proposal. King and the Compass staff also provided the research that inspired the CHIPS Act and influenced Marco Rubio’s new labor-reform bill.

“We deploy our entire team’s resources to focus on the mission,” King said.

In debates, essays, and interviews, Cass has called for a “bounded economy.” In the “bounded” system Cass envisions, the flows of goods and services, capital, and people across national borders would be well controlled, with caps on immigration and creative regulations to induce domestic production. A bounded economy, Cass wrote, “imposes the necessary interdependence on labor and capital while also allowing for the actual benefits of trade that Smith and Ricardo described.”

Adam Smith and David Ricardo are frequently cited by both Cass and his critics. The two economists’ views on trade have been the subject of intense debate; a famous economics textbook even omitted part of a quote from Smith’s The Wealth of Nations to make Smith out as an unreserved champion of international trade. Smith’s and Ricardo’s theories, particularly Ricardo’s theory of comparative advantage, are the foundations of our international-trade regime and at the heart of the debate in which Compass is engaged.

Ricardian theory holds that trade between nations will redound to the benefit of both countries, so long as the countries are producing those goods and services in which they have comparative advantage—that is, the industries in which they are relatively more efficient. Trade between such countries will produce a bundle of goods for both trading partners that exceeds what would have been possible had they not specialized and traded with one another.

That’s why many economists don’t object to China’s rise. Free trade, in their view, is good, as long as both sides are producing those goods in which they hold comparative advantage. “The economist’s case for free trade is essentially a unilateral case,” said Paul Krugman. “A country serves its own interests by pursuing free trade regardless of what other countries may do.”

Veronique de Rugy, senior research fellow at the Mercatus Center, told me she was “a little baffled” that people still believe trade deficits are a meaningful indicator of economic health. “Economists have explained this to others for years,” she said, and “a lot of the remedies to try to address this notion that trade deficits are bad are actually hurting precisely the people that those who don’t like trade deficits are trying to help.”

Compass argues that it matters which goods and services are being traded, and whether that trade is sending critical industries and capital away from the United States and to our strategic rivals. As Cass told me:

Part of the problem is that if you expect the logic of comparative advantage to hold, but you have one country—China—that’s trying to strategically figure out what it wants to specialize in, and another country—America—that says, “Free markets will tell us what to specialize in” (and that may be whatever’s left over that no one else wants to specialize in), then you can get a situation where you lose the expertise and the supply chains and competency in the stuff that’s actually most valuable, both for national and military power right away and what’s going to be healthiest for your economic trajectory in the long run.

And it’s not only a question of economic trajectory, but community health. Ron Hira, associate professor of political science at Howard University, argued that offshoring firms are “systematically transferring productive capabilities—knowledge, tools, and technologies—from one country to another.” Once those assets leave a community, they rarely return. And that’s in part why Cass thinks de Rugy’s libertarian commitments at home are undermined by a liberal international trade regime.

“I think that’s where, ultimately, the libertarian rhetoric falls most flat,” Cass said. “You can have free trade or you can have free markets. But you can’t actually have both.”

Since its founding in 2020, American Compass has moved the right-of-center conversation in Washington in a more pro-family, pro-worker direction. They’ve challenged old-guard institutions like the Heritage Foundation, who have begun to change their tune, ever so slightly. Kevin Roberts, Heritage’s new president, who did not respond to an interview request, made several concessions to Cass in a recent debate at the Reagan Foundation. Cass thinks this is indicative of Compass’s influence.

“I look back to early 2020, when Heritage, under prior leadership, hosted Senator Pat Toomey to speak about why this new turn on the right of center was wrong, mentioning me and American Compass by name,” Cass told The American Conservative. “Then I look at my recent conversation with Kevin Roberts, and the extent to which he and Heritage have inched in our direction. To me, that’s an important microcosm of the impact that we’ve been able to have.”

Wes Hodges, former Compass coalitions director, said the organization has given young conservatives the tools to speak about economics outside the libertarian framework proposed by rival right-wing think tanks.

“American Compass has, by a good amount of work and a great amount of wit, built a vocabulary that allows people to talk about these economic topics in a way that is more nuanced and focused on our needs today,” he said. “It has allowed offices on the Hill and young scholars-to-be to be able to actually engage on these ideas in a way that won’t immediately exile them.”

The post American Compass, Moving the Needle appeared first on The American Conservative.

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