Tech Right or Right-Wing Statism: Which Way for JD Vance?
What's at stake in the battle over the future of the Republican Party
We’ve just gone through the busiest two weeks in political news that I can remember. They finally got to Joe, which I had thought was increasingly likely since predicting he would stay in the days after the debate. Politically, I believe the Democrats did the right thing. The polls may be wrong, but for them it was a bad sign when their senate candidates were doing fine and the exact same surveys showed Biden losing pretty decisively to Trump. Kamala might not end up having much more appeal, but any other candidate at least has a chance of making up ground.
Biden can barely put together a few sentences anymore, and the party in the end realized it at least had to take a chance on someone else. My estimation of Biden’s condition changed pretty fundamentally with his NAACP speech last week. Up to that point, I said he can at least read off a teleprompter, which might’ve carried him to November. But any attempt at deviation from the script left him confused, and he badly misstated a pretty simple recent policy proposal. Plus, it actually matters if he can’t do the job, and his party realized that, although for strategic reasons they emphasized electability instead when trying to push Biden out of the race. I was quite impressed with Democrats’ ability to act in concert towards a common goal under really difficult conditions, which is yet another sign of them being the party of Elite Human Capital.
More can be said about all this, but for now, I want to talk about the other major news event from last week, which was Trump’s selection of JD Vance as his running mate. The former president has done something that most people thought he would never care to do, which was choose someone generally aligned with his worldview and who could be a potential successor to his movement.
I’m of two minds on Vance. He was the only person in the running I’m personally acquainted with. And in a way, his elevation is a triumph for what I have called the Tech Right. Vance’s political career got off the ground with a $15 million donation to support his senate bid from Peter Thiel, he recently worked with David Sacks to set up a major fundraising event for the Trump campaign, and Elon Musk personally lobbied Trump on his behalf.
So tech types are very excited about this choice. At the same time, the possibility of Vance as VP has energized those we might call the statists of the right. The Tech Right wants lower taxes and fewer business regulations, and is hostile to unions.The anti-market rightists take the alternative position on each of these issues. As some have already noted, both sides can’t get what they want.
One of the most important questions facing the United States in the coming years is whether the GOP is going to remain an outlier in its pro-market orientation compared to other major parties in the developed world. Free market policies simply work. While intellectuals have made names for themselves over the last several years by telling us that “free market fundamentalism” has failed, the wealth gap between the US and Europe has continued to widen, and in America, red states have for decades massively outgrown blue states, both in terms of GDP and individuals voting with their feet. The things people spend money on with the fastest rising costs — health care, education, and housing — are bought and sold in the context of markets where government takes a heavy-handed approach. Politicians and analysts denounce “Reaganism,” while conservative states that are governed in ways consistent with the dreams of a Heritage intern from the 1980s achieve remarkable success.
Conservatives have been correct on economics. Yet pro-market policies are never popular because people are naturally inclined towards statism and are bad at understanding the way the world works. With younger conservatives, I think there’s also been a psychological process that goes something like this:
I dislike cultural developments like increasing secularization, fat people with tattoos, demographic change, wokeness, gender confusion, etc.
The old GOP establishment likes markets and didn’t do much to stop any of this.
Therefore, markets are bad and Elizabeth Warren is correct on economics.
Number 3 doesn’t really follow, obviously, but young right-wingers are today emotionally invested in not only hatred of the left, but also the Paul Ryan types who they see as having not done enough to stand in the way of demographic change and the advance of cultural leftism. Yet economic statism doesn’t solve any of the problems that are really motivating conservative intellectuals and voters. It just makes people poorer, and gives left-wing bureaucracies even more power over their lives. Nonetheless, this is the psychological key to understanding what is going on here.
Populist posturing among Republican politicians is nothing new, and usually when achieving office they have ended up governing in relatively pro-market ways. But Vance seems to be a different kind of politician, and now there are think tanks like American Compass that are pushing for conservatives to adopt more left-wing economic positions, like support for private sector unions. Musk, to take the most prominent Vance supporter, has spent his career at war with labor unions, and he often likes my tweets about how much they suck. In my experience, Tech Right types are pretty much pro-market fundamentalists, and they are now making up a part of the GOP donor class. The fact that they are on the opposite side of traditional Republican donors on the Vance question reflects in part disagreements over Ukraine, but mostly just vibes. The latter prefer leaders who act and talk like Mitt Romney or Nikki Haley, while rightists in Silicon Valley are drawn to Vance, and Trump for that matter, because they like the aesthetics of excoriating your opponents and going around breaking things.
Yet despite what Republican donors may want, ideas can have an independent influence all their own. JD Vance seems to genuinely believe in using government to rein in business and is more hostile than any other Republican senator to cutting entitlements, which will soon eat the federal budget. He also has expressed support for keeping the corporate tax rate where it is, while Trump recently said he wants to see it go even lower. On unions, antitrust, and other topics, he departs from Republican orthodoxy in a more statist direction.
The vice president officially doesn’t have much power, but he obviously gets access to the president, can set the tone for the administration, and ultimately guide its agenda. When Trump took office in 2017, by his side was Mike Pence, who had previously been a high-ranking member of Congress and had a relationship with Paul Ryan, then serving as Speaker of the House. This helped ensure that the main legislative priorities for the Trump administration would be individual and corporate tax cuts, which passed, and an Obamacare repeal, which failed.
Beyond what happens in the Trump administration, becoming VP would make Vance a serious candidate for the Republican nomination for president in future years, assuming he doesn’t have a falling out with the boss like Pence did. Even a Trump loss in November would end up giving Vance a new status as an intellectual and political leader he didn’t have before. He’s 39 years old and will now have universal name recognition, plus the advantage of being blessed by Trump himself, which means that he’ll be in the top tier of future presidential contenders for a while. The odds of anyone who isn’t currently a major party candidate for president eventually achieving the office is never all that high in absolute terms, but starting in 2028 Vance will be as well positioned as anyone in American politics to one day do so.
His ideas therefore matter, and it’s worth thinking about whether we will be getting statist Vance, Tech Right Vance, or some combination of both.
In trying to answer this question, one has to set aside immigration and trade. Populism is at heart driven by the belief that Americans are in a zero-sum competition with foreigners. No matter what one thinks of this philosophy, I consider it baked in and a concession to democracy. Republicans have always been an anti-globalization party at the mass level, and the rise of Trump seems to have changed attitudes among elites to the extent that now the Heritage Foundation seems inclined to see trade in zero-sum terms. A key question for the future of the Republican Party will revolve around the degree to which anti-market sentiment can be cordoned off to only apply to interactions that involve foreigners. It’s also possible that anti-foreigner sentiment convinces conservative elites to become anti-market more generally out of hostility towards what they call the “ruling class” and a desire to completely give in to political expediency.
While things are going in a more identitarian direction, the future of conservatism is still to be written when it comes to attitudes towards domestic issues like taxes, business regulation, labor unions, and entitlements. If Republicans become more moderate on economics, then there is little to stop the United States from sliding into European-style social democracy. Much may come to depend on whether JD Vance works to ultimately preserve or undermine economic liberty. Let me say that Vance at his worst is probably not as anti-market as the typical Democrat, at least when tempered by the rest of his party. This means that Republican victories are still good for economic freedom in the short run. This is a matter of trajectories, and the issue of whether we will end up with two big government parties or not.
On the optimistic side, as mentioned already, the right-leaning tech elite is pro-market, and will not look kindly on attempts to raise taxes on corporations or increase government regulation. At the same time, Vance really seems to believe in economic populism. You generally don’t get points on the right for co-sponsoring bills with Elizabeth Warren or praising Biden appointees. He gets visibly upset when you bring up the basic fact that entitlement spending cannot continue as is, and deflects towards criticism of Ukraine as if letting us know that he opposes aid to Kiev makes all budgetary questions disappear. Vance is very online, more than it seems would be good for his political career, and this indicates sincerity in his views.
Some leftists have argued that the center of gravity within the Republican Party isn’t going to change all that much. Eric Levitz at Vox gives four arguments why, despite the shift in rhetoric. Among other things, he writes that donors punish Republican officials for taking views that conflict with free-market principles, while voters support the party mainly for cultural reasons. Nothing has changed with regards to the most self-interested path for Republican politicians to take, which has always been economic conservatism combined with populist posturing. Tech Rightists and more traditional Republican donors tend to support different kinds of politicians, but on economic policy these two factions are aligned, and Silicon Valley money coming from libertarian-leaning moguls should only reinforce the party’s current orientation.
At the same time, JD Vance is now going to have serious political power. If he truly wants to push the Republican Party to govern in a more economically populist direction, he’ll be in a position to do so. There are plenty of historical examples of political actors elevating a figure they think they’re going to be able to control and then losing influence. My first inclination when hearing about the Vance nomination was to say that successful entrepreneurs are smarter than right-wing socialists, but having been around many rich tech guys, I would say that you shouldn’t overestimate their political sophistication.
I think what we ultimately get with Vance is going to vary by issue. On entitlements, the populists have won for now. Sometime early in the next decade, a major funding crisis is going to hit. Vance has, like all other prominent Republicans, signed Grover Norquist’s pledge to never raise taxes. So we won’t get tax increases nor benefit cuts until politicians are forced to make tough decisions. In preparation for when that day comes, my view is that fiscal conservatives need to create an intellectual and media climate in which raising taxes is seen as much more costly for Republicans than cutting benefits. The ultimate solution to the entitlement crisis will probably have some of both, but it’s important to work to make sure things are tilted more toward the reducing benefits side to the greatest extent possible.
On antitrust, Vance has expressed support for Lina Khan, and there’s now more of a chance she’ll stay on if Trump gets elected. This is an area where the executive branch matters a great deal, since the president appoints the members of the Federal Trade Commission, with the stipulation that only three of the five can belong to one political party. Antitrust is a vague doctrine that in effect allows government to punish innovation and micromanage decisions that should be left to the market. Khan’s efforts have often been shut down by the courts, so Trump being able to stack the judiciary with conservative judges will probably matter more in the end than Vance’s opinions on antitrust. Nonetheless, he is likely to lead a policy shift in an undesirable direction.
I think there’s more room for optimism with regards to the regulation of new technology like crypto and AI, and also prediction markets, which can be seen as a kind of fintech. JD Vance’s brand of economic populism revolves around signalling adherence to things the Republican base is attached to, like the idea of nationhood and preserving well-established entitlement programs. There’s no tradition of right-leaning voters in America demanding Luddism from politicians. Usually, it is liberal elites in academia, NGOs, and journalism that lead the stampede towards regulating new technologies, and Vance seems to deeply detest members of this class. Silicon Valley entrepreneurs are usually big believers and investors in cutting edge technology, and here they will continue to influence Vance in a more techno-optimist direction.
Labor is a different issue and one that can go either way. At some point, I’ll devote an entire essay to this, as I believe that a relatively free market in employment is one of the main reasons American workers are so much richer than their counterparts in other countries. Vance is in an interesting position right now, where he supports organized labor in theory but in practice opposes contemporary unions because he says they’re hostile to Republicans. Hopefully partisanship continues to prevent compromise! Still, we can’t discount the possibility of Vance leading a change in thinking on this issue, which again I will address later.
Whatever other flaws our society may have, the US has continued to see exceptionally strong economic performance over the last several decades. This is despite the fact that free market policies have never been all that popular, whether here or anywhere else. The rise of the Tech Right has the potential to inject more resources and energy into our politics on the side of those of us fighting against any move towards social democratic stagnation. The elevation of JD Vance to the status of Republican vice presidential nominee and heir to Trump can be seen as a triumph for this crowd, but statists of the right also find reasons to be optimistic. In the end, neither side will achieve all of its policy goals, but the degree to which pro-market forces can maintain their influence within conservatism will help determine future American living standards.
There are a couple of problems with being too free-market (I'm not going to argue for a complete command economy, that won't work and we're more likely to wind up as Russia or Mexico than China lacking their long history of centralized state control).
1. Completely free markets create all sorts of negative externalities. I'd encourage you to read up on the Gilded Age. Even if a lot more good things like the USA becoming an industrial super power happened in that time period than people want to admit, you still had companies selling tainted meat and dangerous consumer products and kids working 12-hour shifts and not going to school (back when they actually learned something there). A similar thing may be happening now with social media and porn making the kids stop dating, though obviously the harms are much less. You need to understand why the transition from the Gilded Age to the Progressive Era occurred, even if you think it was ultimately a bad thing. People were reacting to something.
2. Completely free markets also create massive inequality. Even if the country is better off in the aggregate, you generate a lot of desperate poor people. Even if you can do some sort of calculation they're better off in consumer products, if they have to work twice as long and can't start families they are going to be upset. Humans are also social animals and very sensitive to status, so the inequality pisses them off even if the poor are better off in an absolute sense (which given increasing work hours and housing and healthcare prices I am not sure they are).
3. Related to 1., deregulation of the financial industry produced a huge recession that lasted for years (financial crashes tend to do that). You can see why young people might be wary of letting the businessmen do what they want. To do the American history example thing again, a similar thing caused the Great Depression, and only government intervention kept it from getting much worse (though whether it would have been as bad as the Depression is anyone's guess).
4. Healthcare in particular is super expensive and not so great at the low and middle ends (the rich do pretty well) at least in part because it's free market in addition to being regulated. All the European and East Asian markets have more regulation, often with the government being the single provider or payer, and lower costs--our system is insanely expensive.
So for all these reasons I think a shift away from free markets is inevitable and probably necessary. I'm not saying we should turn into China, and I'm not even saying we should go all the way to Sweden--we don't have the homogeneity for that, as you are one of the few pundits able to understand. But going back to, say, the 1950s in terms of regulation level might be a goal. Plus single payer. If you can get that done costs will fall considerably.
I found this a good distillation of what seem to be emerging fissures in the Republican party, thanks. Maybe the story is, if the existing donor class of a party can't hold its nose and instead bows out, it creates a vacuum, an opportunity for someone else to make a play for that slot. Which becomes mostly a return to business as usual, where donors check the excesses of the voting members, in exchange for some sector-specific concessions or broader tax breaks.
The three main (somewhat at odds) camps identified on the right in The Right Nation by Micklethwait and Wooldridge were God, money, and security. You could see Trumpism is a simplifying scalar across all of these. God means conservative justices then we're done. Security means border security then we're done.
Money is the most unsettled. Ryan got tax simplification, but Trump seemed agnostic on tax structure beyond preferring his were lower. Trump was specifically pro steel, maybe because that plays well on the stump, maybe because of money from Zekelman. (That made him anti-steel-product-manufacturers of course. But in general steel recognized the vacuum and took advantage of it.) Trump's money pillar will be less libertarian, and more protectionist pro-business, maybe primarily for those who donate. For the working class, maybe he's targeting the non-union middle class service worker. Appeals to service workers (outside of Nevada primaries) are weirdly missing from the US relative to appeals to manufacturing workers when you look at the size of sectors:
https://ourworldindata.org/grapher/employment-by-economic-sector
One of the things that was telling in AOC's recent discussion of the logistics of switching candidates is how she let slip how critical it was to secure early union endorsement for the system to function at all. Probably something well known but not talked about is how distortative union concessions are to the democratic process, despite a significant majority of workers in the US being non-union.
The tech right could take some novel populist stabs here... like outlawing GDPR compliance for websites viewed in the US, which might fracture the internet, but maybe for the better, setting limits on extraterritorial jurisdiction of the EU, which mostly finds ways to hobble and punitively tax the US tech sector because it can't compete.
I think your tweet on the wealth of US workers relative to Europe raises a good point. Though the correlational coefficient with state earnings adjusted for regional cost of living and Republican governors and for right-to-work status are both slightly negative. The correlational coefficient of percent union affiliation and earnings is moderately positive. I don't think this is causation, but it's the fact US states are dominated by different conditions unrelated to policy.
This is a bit like when Krugman dedicated a couple articles to how Kansas had ruined its economy with tax cuts then illustrated this by comparing Kansas to the sister state of... California. If you want to tell a story about economic prosperity in America you have all these non-economic lotteries some states won, like New York and Connecticut having finance, Texas and California and some northern rural states having energy, or California having Hollywood and tech. Having access to a coast and not being in the South seem like big factors unrelated to policy (for policies after 1865 anyway).
All parties have a donor class and a rank and file, and they all have natural tensions and disagreements. Your rank and file are going to be a combo of low information voters and some overzealous extremist fringe no matter which party you're in. I'm moderately bullish for the outcomes of a tech donor class playing the role of designated driver for either party, relative to the alternatives, despite the sometimes zany policy positions. But mainly because there aren't good high-intelligence alternatives to guide/filter policy on either side. Absent some strict and explicit meritocracy for policymakers, this seems like the closest we get to inching that direction.