“Drain the swamp” and “deconstruct the administrative state” are two stated goals of the rising populist wing of American conservatism.
The swamp refers to the lobbyists and entrenched interests who curry favor with politicians to gain legislative goodies (that come at the expense of everyone else) and the politicians who are happy to dole out the goodies in return for political support.
The administrative state refers to the mass of federal agencies and bureaus that impose regulations on people and businesses with no accountability to them, and apparently little, if any, accountability to Congress.
Another tenet of populist conservatism is “economic nationalism,” often expressed as the slogan “America First.”
Economic nationalism is an ideology that claims that a strong nation is an economically self-sufficient nation. To achieve economic self-sufficiency, the government takes it upon itself to direct economic activity through steep tariffs, subsidies to “critical” industries, strict regulations on cross-border capital flows and substantial investment in public infrastructure.
Therein lies a fundamental and irreconcilable contradiction of populist conservatism.
Administering tariffs, subsidies and all the rest of economic nationalism requires a huge and powerful administrative state. It requires legions of federal bureaucrats to rule on an enormous array of questions. Such as:
Which industries are to be protected by tariffs? How big should the tariffs be? Which industries are to be subsidized? How big should the subsidies be?
What infrastructure projects should the government undertake? Where? How much?
And in deciding which domestic industries to help with tariffs, subsidies and regulation, politicians and bureaucrats simultaneously decide which industries to hurt.
Tariffs on steel? Good for domestic steel producers, not good for domestic producers of goods made out of steel.
Further, government economic planning, which is what economic nationalism is, invariably has unintended consequences. For example, by restricting imports, tariffs also restrict exports.
Tariffs cause Americans to buy less foreign goods. That means fewer dollars supplied to the foreign exchange market. That causes the foreign exchange value of the dollar to appreciate, which makes U.S. goods more expensive for foreigners, which causes them to buy less.
So, domestic exporters, when the economic nationalists raise tariffs, you’re going to suffer. Welcome to government economic planning of the populist variety, where a few politicians and the administrative state decide which industries win and which industries lose.
Under economic nationalism, bureaucrats thrive. So do the lobbyists and entrenched interests who inhabit the swamp.
A government that doles out hundreds of billions of dollars in goodies — and harm — attracts lobbyists and special interests like doling out barrels of chum attracts sharks.
Entrenched interests lobby hard to get the goodies. Lesser interests lobby hard to temper the harm. The lobbyists get rich.
This is not academic speculation. It’s happening now.
Thousands of domestic businesses that stand to lose big from steel and aluminum tariffs have spent days and dollars applying for exemptions from the tariffs. Not receiving an exemption could spell the end of some firms. Who decides the fates of the applications? Department of Commerce bureaucrats.
Earnings of Washington’s prominent K street lobbying firms, already fat, are up 20 percent over last year.
And unintended consequences? How about the $12 billion to pacify farmers clobbered by the trade war? That’s $12 billion on top of the $20 billion in subsidies they’ll receive this year.
Some conservatives understand that economic nationalism enriches, first and most, the swamp and the administrative state. Populists don’t.
Reg Murphy Center