By Nancy Spannaus
July 30, 2022—To me the most telling moment in this year’s conference on the American Economy sponsored by the Intercollegiate Studies Institute (ISI) came in the panel entitled “Is Wall Street Good for America?: Finance and Financialization.” During the one-hour session, all the panelists, including those identifying as pro-Wall Street, had strongly attacked the nation’s financial center as responsible for a variety of disasters. Yet the only time the young student audience broke out into spontaneous applause was when one panelist asserted that, despite everything, the solution is to deregulate, i.e., keep the government from “interfering” in the economy.
To me, that was a very bad sign. Faced with overwhelming evidence of the malfeasance and destructive behavior of Wall Street, this group of approximately 200 young people, mostly besuited men in their 20s, chose anti-government ideology instead. Ideology trumped reality.
Unfortunately, this ideological bent dominated the conference as a whole. ISI President Johnny Burtka and many of the speakers cast their approach as one in favor of the working class, as against the dominance of the financial elite, who are consorting with China (almost always called the Chinese Communist Party) to destroy the U.S. economy. We are the populists, they intoned, the representatives of the working man. Some even invoked Alexander Hamilton and the American System.
But the anti-government, anti-regulation policies which most of the speakers espoused, like the majority of the policies of Donald Trump, do the opposite. They effectively leave working people at the mercy of the very financial interests these conservatives claim to oppose. They also ensure continued collapse of the physical economy and infrastructure, portending a miserable future.
The ISI, which was founded by William F. Buckley in the 1950s, seeks to serve as a forum for sometimes conflicting currents of the conservative movement, as well as a conduit for ambitious young conservatives to engage in politics (or get hired by Republicans in Washington, D.C.). The organization has 150 chapters on college or university campuses, Burtka announced in his opening statement, and is seeking to get youth to oppose the “woke” culture and the Chinese threat, while building a “free and humane economy.” After outlining his view of the Founders’ consensus, Burtka defined the common core of conservative belief as the commitment that the “market at home be free.”
Two keynote presentations followed. The first was by Dr. Samuel Gregg, an affiliate scholar at the Acton Institute, and the Distinguished Fellow in Political Economy and Senior Research Faculty at the American Institute for Economic Research. Gregg’s lengthy presentation focused on the ideas of political economy espoused by 18th Century British political thinker Edmund Burke.
Burke, who was a Whig and sought to ameliorate the British approach to the American colonies, is best known in the U.S. for his opposition to the French Revolution. But he also was a highly respected economic reformer, Gregg said. His key intervention came in the 1790s with the document “Thoughts and Details on Scarcity,” which demanded that the markets decide everything, especially wages. Burke was also a strong advocate for the imperial Navigation Acts, on the basis that in the case of international interests, the need for defense was more important than free markets.
At the conclusion of his detailed review of Burke’s thought, Gregg emphasized the British thinker’s insistence that commercial liberty had to be embedded in morality, and the “habits of the gentleman.” In the course of a short dialogue with ISI vice-president Daniel McCarthy that followed, he explicitly characterized Burke as mixing the medieval with modern commercial society. This is a challenge Gregg believes should be taken up by the fractured conservative movement today.
The second keynote was presented in interview format, with ISI President Burtka in a dialogue with Kevin Roberts, the president of the Heritage Foundation. The interview dealt with a large number of the current controversial issues in the conservative movement, including the just-passed Chips Act, China policy, inflation, and the safety net. It’s impossible to summarize all of his answers here, but I will address three.
The first, in response to a question on who had influenced him intellectually, was Roberts’ assertion that he is an Aristotelian, who believes that economics should be viewed from the “bottom-up.” This cohered with his emphasis on his populist roots and sympathies.
Yet in virtually his next breath, Roberts declared that he was a Hamiltonian! Hamilton, of course, proceeded from the standpoint of the nation, not the individual household. For example, where the individual householder will insist (as Roberts did) that you can’t spend more than you have in the bank, the national statesman (like Hamilton) will avail himself of the use of credit to create resources which are not immediately at hand.
Yet Roberts (and presumably Heritage) are not libertarians. They believe in wielding government power in national defense—which is the way they justify economic warfare against China and government measures against monopolies like Google and Big Pharma. In particular, Roberts supported the Chips Act (which will subsidize new manufactures of computer chips in the U.S.) in principle, but called for a “skinny” version, which would spend less money and allegedly avoid simply aiding the well-heeled big tech companies.
Like Gregg, Roberts paid lip service to the need for a moral dimension in economic policy, invoking the standard of the “common good” as a necessity in national economic policy. How this was to be applied while letting the “free markets” prevail, completely overhauling (i.e., mostly eliminating) the social safety-net system and prioritizing debt reduction, was unclear to this author.
Is Wall Street Good for America?
My main reason for attending this conference was the panel on Wall Street which I mentioned at the outset. Four speakers addressed the topic of Wall Street’s role, in a discussion moderated by self-described investor Byron Smith. They were, in order of speaking, and avowed support for Wall Street’s role: Andrew Stuttaford, head of National Review’s Capital Matters; Mark Calabria, senior advisor to the Cato Institute; Oren Cass, executive director of the American Compass; and Julius Krein, editor of the journal American Affairs.
The panel was set up to be a debate, but, as Cass noted when it came to his turn, if Stuttaford and Calabria’s presentations were intended to be pro-Wall Street, they hardly made the case. In fact, both opening speakers felt compelled to repeatedly discuss Wall Street’s failures and excesses.
Yet, both of these gentlemen insisted that Wall Street (including its current practices) was “good for America.” Stuttaford went so far as to claim that it was the regulators, not Wall Street speculators, who caused the financial crises (like 1987); that Wall Street was responsible for more than 70% of U.S. R&D; and that it was nonsense to say Wall Street wasn’t concerned with the long-term. They were about “human flourishing.” Calabria was more nuanced, and admitted that the dominance of Wall Street had led to cuts in manufacturing (his best line was that, thanks to the City of London, the UK’s biggest export is derivatives). But he seemed to see the main problem as government subsidies (student loans, housing), including to bankrupt Wall Street institutions such as Citibank. “Less government” is the solution, he concluded.
When it came to Cass’s turn, he pulled no punches. Wall Street isn’t what’s funding R&D, he countered, and the idea that regulators caused financial crises is “absurd.” Wall Street could be good if it put capital to productive uses, but instead it is leading to a misallocation of capital, talent, and risk. Current practices amount to extracting capital from productive industry, giving it to their shareholders instead. The country’s talented youth are being lured into finance for huge incomes, rather than areas of science we need. Cass characterized the whole Private Equity market as a “boondoggle,” and concluded with a plea that the conservative movement at least raise its voice to identify the problem, even if it didn’t have solutions at hand.
As the last speaker, Krein actually called for government intervention to deal with the problems created by the “free market fundamentalist mindset.” We have falsely conflated the maximization of returns on capital with the optimization of growth and productivity, he said. Historically, this is shown to be clearly not the case. What our challenge is, is to use government to realign financial returns with the common good. We need to channel finance to do the current things we need. (On this he was not very specific, except for bringing home our pharmaceutical industry, for example)
The weakness of Krein’s presentation, in my view, was his approach to China. Although he asserted that the world of economics is never lacking subsidies (i.e., every government does it), Krein nonetheless seemed to blast China for its subsidies, going so far as to say that Chinese strategy was to deindustrialize the United States! What that view omits, among other things, is the role of Wall Street and Western financial elites in explicit pursuit of that aim long before China had begun its extraordinarily rapid rise to economic strength. It was Wall Street and London finance who were the major backers/enforcers of outsourcing Western manufacturing jobs to China.
At the conclusion of this panel, I was able to make a short intervention, citing my book Hamilton Versus Wall Street, and pointing out that the history of American economic success depended upon American System principles involving government intervention (like industrial policy). There was no visible or audible response then, or afterward.
The close connection of ISI to some in the Republican establishment was reflected in the number of prominent Republican politicians who made an appearance this year. This included former Trump administration official and Senator Jeff Sessions; former Trump Trade negotiator Ambassador Robert E. Lighthizer; current Indiana Congressman Jim Banks (by video); Kentucky Senator Rand Paul (by video); and former Senator Rick Santorum.
I heard at least some of the presentations by Sessions, Banks, and Paul. Sessions recounted a meeting of the Senate Caucus where he said he championed the idea of the Republican Party as a party of the working class, and decried the views of institutions like the Wall Street Journal, which sees every increase in wages as a cause for alarm. Yet in his praise for Trump’s alleged support for the working man, he failed to mention the effect of the 2017 tax cut on building up Wall Street speculations, the lack of infrastructure investment, and other anti-labor actions of that administration.
Banks’ speech was heavily populist, stressing that the big elite financial institutions were all with the Democrats. The only blue-collar industry we have left is oil and gas, and they are out to destroy it, he said. Our objective should be to make the world run on American oil and gas. That said, the biggest threats we face are China (whom the elites support) and the ESG movement targeting our corporations.
(ESG, which stands for Economic and Social Governance, was a target of numerous speakers. It is a movement among shareholders which seeks to impose certain standards [economic, social, and often “green”] on corporate investments.)
Sen. Paul’s short video was focused on attacking Federal government actions (which he calls “central planning”) on the pandemic, and government spending in general. He seemed to blame the huge government expenditures against COVID as the cause of the current inflation, although he also included the Federal Reserve. “What made us great was leaving people alone,” he said – demonstrating a totally deficient knowledge of American economic history.
What We Can Learn
There are several relevant observations we can make from this year’s ISI event.
First, the divisions within the conservative movement (at least on the leadership level) have apparently deepened, especially on the question of government intervention in the economy and the current functioning of Wall Street.
Second, the Republican Party, unlike the Democrats, have realized that their future absolutely depends upon an appeal to the working-class electorate, and that it believes it can taste victory in November because of Democrats ignoring working-class interests (in fact, not just the working-class, but the general welfare of the nation).
But, third, the specific requirements for reversing American economic decline through the appropriate government application of American System principles, are still unknown, or even anathema, to the conservative foot-soldiers. It’s not enough to attack Wall Street. When it comes to the need for a Hamiltonian-style infrastructure bank, or Medicare for all, or massive government investment in major infrastructure projects and nuclear power expansion, they oppose them. The monetarist ideology of the balanced budget and the free-market trump reality.
This is a problem for all Americans, and it needs addressing urgently.
Nancy Spannaus is the author of Hamilton Versus Wall Street: The Core Principles of the American System of Economics..
 The conference was held July 29-30 at the Omni Shoreham Hotel in Washington, D.C.
 Conservatives seem to me to have this unfortunate habit of finding their economic heroes in Great Britain rather than the United States.
 This contrasts with Cass’s approach in last year’s conference. See my report at https://americansystemnow.com/the-future-of-american-political-economy/
 For a fuller discussion of this issue and its history, see https://americansystemnow.com/can-we-revive-we-the-people/