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Average toddler day care costs in Washington, D.C., exceed $24,000 a year, outstripping expenses in cities like New York and San Francisco. Despite the steep prices, parents such as Megan McCune and Tom Shonosky, who live in a suburban D.C. neighborhood with their children John and Lizzy, believe day care is still worth it.

"They're doing these amazing activities with kids. John's last teacher was planning just all these really stimulating, exciting experiences," McCune says. "That's just not something that we can feasibly do and also have full-time jobs."

But day care might soon become a luxury the couple can no longer afford. In 2016, a regulation was passed mandating that day care workers obtain a college degree. The city's logic is straightforward: If D.C.'s day care staff had college degrees, they could do a better job helping disadvantaged kids climb out of poverty. 

"The developmental opportunities and those early opportunities that they have really set the foundation for their potential success long term," explained local education official Elizabeth Groginsky, a proponent of the regulation. After a delay, the rule was finally implemented in December 2023. 

Yet contrary to its intended benefits, this regulation could lead to job losses among day care workers, increased operating costs for day cares, and higher tuition for parents. 

Ami Bawa, lead teacher and assistant director at a nursery school in northwest D.C., exemplifies the unintended consequences of the regulation. Although she has been working in the field for over 20 years, Bawa may now be forced out of her job. "Even though I have a lot of experiential learning, I don't meet what is now the current standard," she explains.

As a veteran teacher, Bawa is technically eligible to apply for a waiver to continue working, but she's been waiting for five months for a response from the city. "All of these roadblocks make it harder. We're going to lose a lot of really good teachers," Bawa says. 

Proponents argue that the regulation will earn teachers more respect and higher salaries. But Bawa disagrees: "A profession like teaching specifically has to be one where you really care for and love what you're doing. What your education credential is doesn't equate to loving and being committed to the field."

The regulation "makes us feel like we're interchangeable, like anybody could do this job, when that really is not the case." 

In addition, the college requirement complicates the process for day cares to find qualified staff. McCune explains, "It's going to be the smaller day cares, the more affordable day cares that are going to suffer because they're not going to be able to attract talent or retain it, and they're not going to be able to put their prices to the level that they need to be to cover that talent, because people like us aren't going to be able to pay it." 

In 2018, the libertarian-leaning public-interest law firm the Institute for Justice sued the D.C. government to overturn the education requirements, claiming it interferes with the right to earn a living. But the courts ruled in favor of the city on the grounds that the requirement was reasonable. 

Yet the effectiveness of college requirements remains a subject of debate. As Robert Pianta, a professor of early childhood education at the University of Virginia, points out, "The evidence for a two-year degree or a four-year degree is not strong." 

There are over 3,000 early childhood degree programs across the United States, and they vary significantly in terms of what they teach and focus on. "With all that variation under there, it's no surprise to anyone that the degree itself doesn't matter," Pianta says. 

Many day care teachers eager to retain their jobs have enrolled part-time at institutions such as Trinity Washington University, a small college in the district. To earn the degree required to be an assistant teacher at a D.C. day care, students at Trinity can take classes like American history and music appreciation but aren't required to take courses in early education.  

Councilmember Christina Henderson supports the idea that day care workers study subjects unrelated to early education, emphasizing the importance of "critical thinking and learning." In contrast, McCune remarks, "Let's just back up a little and remember that these are babies….I think the needs of children at that stage, they're pretty primal." 

Nicole Page, a local preschool director, believes that "it does not only take education, it takes experience" to work at a day care. "That's what we will lose if we are not able to retain our staff, is the wealth of knowledge that they have by hands-on experience."

Her preschool is at risk of losing valuable staff, with at least 11 teachers failing to meet the new qualifications. One teacher even has a Ph.D. in family and children studies and is an adjunct professor teaching a policy and advocacy course for early childhood education at a local university, but she's no longer qualified to teach at a day care because her degree isn't in early childhood education. 

"If we are not able to retain the staff that we have, we may end up having to close some of our classrooms," Page explains.

This regulation, intended to improve child care quality, may instead harm those it aims to assist. "I just think in D.C., there's a lot of bureaucracy," says Shonosky. "This is just another case where bureaucracy is going to make our lives worse."

 

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The post A New Law Is Making It Even Harder To Find Day Care in D.C. appeared first on Reason.com.

After surviving a disastrous congressional hearing, Claudine Gay was forced to resign as the president of Harvard for repeatedly copying and pasting language used by other scholars and passing it off as her own. She's hardly alone among elite academics, and plagiarism has become a roiling scandal in academia.

There's another common practice among professional researchers that should be generating even more outrage: making up data. I'm not talking about explicit fraud, which also happens way too often, but about openly inserting fictional data into a supposedly objective analysis.

Instead of doing the hard work of gathering data to test hypotheses, researchers take the easy path of generating numbers to support their preconceptions or to claim statistical significance. They cloak this practice in fancy-sounding words like "imputation," "ecological inference," "contextualization," and "synthetic control."

They're actually just making stuff up.

Claudine Gay was accused of plagiarizing sections of her Ph.D. thesis, for which she was awarded Harvard's Toppan Prize for the best dissertation in political science. She has since requested three corrections. More outrageous is that she wrote a paper on white voter participation without having any data on white voter participation.

In an article in the American Political Science Review that was based on her dissertation, Gay set out to investigate "the link between black congressional representation and political engagement," finding that "the election of blacks to Congress negatively affects white political involvement and only rarely increases political engagement among African Americans."

To arrive at that finding, you might assume that Gay had done the hard work of measuring white and black voting patterns in the districts she was studying. You would assume wrong.

Instead, Gay used regression analysis to estimate white voting patterns. She analyzed 10 districts with black representatives and observed that those with more voting-age whites had lower turnout at the polls than her model predicted. So she concludes that whites must be the ones not voting.

She committed what in statistics is known as the "ecological fallacy"—you see two things occurring in the same place and assume a causal relationship. For example, you notice a lot of people dying in hospitals, so you assume hospitals kill people. The classic example is Jim Crow laws were strictest in states that skewed black. Ecological inference leads to the false conclusion that blacks supported Jim Crow.

Gay's theory that a black congressional representative depresses white voter turnout could be true, but there are other plausible explanations for what she observed. The point is that we don't know. The way to investigate white voter turnout is to measure white voter turnout. 

Gay is hardly the only culprit. Because she was the president of Harvard, it's worth making an example of her work, but it reflects broad trends in academia. Unlike the academic crime of plagiarism, students are taught and encouraged to invent data under the guise of statistical sophistication. Academia values the appearance of truth over actual truth.

You need real data to understand the world. The process of gathering real data also leads to essential insights. Researchers pick up on subtleties that often cause them to shift their hypotheses. Armchair investigators, on the other hand, build neat rows and columns that don't say anything about what's happening outside their windows.

Another technique for generating rather than collecting data is called "imputation," which was used in a paper titled "Green innovations and patents in OECD countries" by economists Almas Heshmati and Mike Shinas. The authors wanted to analyze the number of "green" patents issued by different countries in different years. But the authors only had data for some countries and some years.

"Imputation" means filling in data gaps with educated guesses. It can be defensible if you have a good basis for your guesses and they don't affect your conclusions strongly. For example, you can usually guess gender based on a person's name. But if you're studying the number of green patents, and you don't know that number, imputation isn't an appropriate tool for solving the problem.

The use of imputation allowed them to publish a paper arguing that environmentalist policies lead to innovation—which is likely the conclusions they had hoped for—and to do so with enough statistical significance to pass muster with journal editors.

A graduate student in economics working with the same data as Heshmati and Shinas recounted being "dumbstruck" after reading their paper. The student, who wants to remain anonymous for career reasons, reached out to HeshmAati to find out how he and Shinas had filled in the data gaps. The research accountability site Retraction Watch reported that they had used the Excel "autofill" function.

According to an analysis by the economist Gary Smith, altogether there were over 2,000 fictional data points amounting to 13 percent of all the data used in the paper.

The Excel autofill function is a lot of fun and genuinely handy in some situations. When you enter 1, 2, 3, it guesses 4. But it doesn't work when the data—like much of reality—have no simple or predictable pattern.

When you give Excel a list of U.S. presidents, it can't predict the next one. I did give it a try though. Why did Excel think that William Henry Harrison' would retake the White House in 1941? Harrison died in office just 31 days after his inauguration—in 1841. Most likely, autofill figured it was only fair that he be allowed to serve out his remaining years. Why did it pick 1941? That's when FDR began his third term, which apparently Excel considered to be illegitimate, so it exhumed Harrison and put him back in the White House.

In a paper published in the journal of the American Medical Association and written up by CNN and the New York Post, a team of academics claimed to show that age-adjusted death rates soared 106 percent during the pandemic among renters who had received eviction filing notices, compared to 25 percent for a control group.

The authors got 483,408 eviction filings, and asked the U.S. Census how many of the tenants had died. The answer was 0.3 percent, and that 58 percent were still alive. The status of about 42 percent was unknown—usually because the tenant had moved without filing a change of address. If the authors had assumed that all the unknowns were still alive, the COVID-era mortality increase would be 22 percent for tenants who got eviction notices versus 25 percent who didn't. This would have been a statistically insignificant finding, wouldn't have been publishable, and certainly wouldn't have gotten any press attention.

Some of the tenants that the Census couldn't find probably did die, though likely not many, since most dead people end up with death certificates—and people who are dead can't move, so you'd expect most of them to to be linked to their census addresses. But some might move or change their names and then die, or perhaps they were missing from the Census database before receiving an eviction notice.

But whatever the reality, the authors didn't have the data. The entire result of their paper—the 106 percent claimed increase in mortality for renters with eviction filings versus the 22 percent observed rate—comes from a guess about how many of the unknown tenants had died.

How did they guess? They made the wildly implausible assumption that the Census and the Social Security Administration are equally likely to lose track of a dead person and a living one. Yet the government is far more interested in when people die than when they move, especially because they don't want to keep cutting them Social Security checks. Also, dead people don't move or change their names.

Whether or not their assumption was plausible, the paper reported a guess as if it reflected objective data. That's considered acceptable in academia, but it shouldn't be.

Another paper, titled "Association Between Connecticut's Permit-to-Purchase Handgun Law and Homicides," was published in the American Journal of Public Health. It cooked up data to use as a control. The study claimed to show that a 1994 gun control law passed in Connecticut cut firearm homicides by 40 percent. But firearm homicide rates in Connecticut followed national trends, with no obvious change after the 1994 law.

Forty percent compared to what? The authors arrived at their conclusion by concocting an imaginary state to serve as the control group, combining numbers from California, Maryland, Nevada, New Hampshire, and Rhode Island. This fictional state had 40 percent more homicides than the real Connecticut.

Reality is too messy for a technique like this to tell us anything meaningful. The author's entire finding derived from the fact that Rhode Island, which comprised most of "synthetic Connecticut," experienced a temporary spate of about 20 extra murders from 1999 to 2003, a large percentage increase in such a small state. Since the temporary spike in murders wasn't the result of a change in gun control policy, it tells us little about the efficacy of Connecticut's 1994 law or the policy issue at hand.

Is it always wrong to guess about missing data? No, not under conditions of extreme uncertainty in which data collection is impossible before a decision has to be made. For example, if you're considering taking a potentially life-saving medicine that hasn't been properly studied, you make the best guess you can with the information you have. But difficult decisions that have to be made with scarce information shouldn't influence public policy and aren't worthy of publication.

Yet researchers routinely rely on these methods to generate results on matters of no great urgency, because in academia publishing matters more than truth. Which is a shame. Progress in human knowledge requires real-world observations, not clicking a mouse and dragging it to the bottom of the screen.

 

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In his 1996 book, The Vision of the Anointed, economist Thomas Sowell sketched out a pattern that many of the "crusading movements" of the 20th century have followed. First, they identify a "great danger" to society, followed by an "urgent need" for government action "to avert impending catastrophe."

A new book by psychologist and author Jonathan Haidt, The Anxious Generation, argues that the government must regulate social media because it's causing a teen mental health crisis. Haidt is, in many ways, a model researcher because of his rigor, transparency, and openness to dissent. On this issue, however, he fits neatly into Sowell's framework.

Those best equipped to get attention from the government and the media are the most "articulate" people, Sowell observes, and they often reference opaque studies without explaining them. And Haidt is certainly articulate—his book is well-written and filled with compelling insights. But he claims far too much certainty for his views, based on research that is mostly junk. And he advocates for restrictive government policies without doing the simple tests that might support or disprove their value.

Academic studies often make use of statistical techniques that are hard for the average person to decipher, which is a shame because "most published research findings are false," as Stanford's John Ioannidis argued in a 2005 paper. Ioannidis wasn't just referencing the many scandals of fabricated data, conscious or unconscious bias, and misrepresented findings. Even top researchers at elite institutions have been guilty of statistical malpractice. Peer review is worse than useless, better at enforcing conventional wisdom and discouraging skepticism than weeding out substandard or fraudulent work. Academics face strong pressure to publish flawed research. Few have the skill and drive to produce high-quality publications at the rate required by university hiring and tenure review committees. Even the best researchers resort to doing some easy, low-quality studies. Bad studies tend to be the most newsworthy and the most policy-relevant.

Many of the papers Haidt compiled contained coding errors, inappropriate statistics, and other issues. Most downloaded some data of little relevance—either cheap to generate, like surveying your sophomore psychology students, or data collected for a different purpose—and analyzed it with an off-the-shelf statistical approach.

Haidt cites 476 studies in his book that seem to represent an overwhelming case. But two-thirds of them were published before 2010, or before the period that Haidt focuses on in the book. Only 22 of them have data on either heavy social media use or serious mental issues among adolescents, and none have data on both.

There are a few good studies cited in the book. For example, one co-authored by psychologist Jean Twenge uses a large and carefully selected sample with a high response rate. It employs exploratory data analysis rather than cookbook statistical routines.

Unfortunately for Haidt, that study undercuts his claim. The authors did find that heavy television watchers, video game players, and computer and phone users were less happy. But the similar graphs for these four ways of spending time suggest that the specific activity didn't matter. This study actually suggests that spending an excessive amount of time in front of any one type of screen is unhealthy—not that there's anything uniquely dangerous about social media.

An example of a bad study that Haidt cites in his book is one that paid $15 each to 1,787 self-selected internet respondents, aged 19 to 32, to answer 15 minutes' worth of questions online. Few were likely to have been teenage girls, and there's no reason to expect any were depressed teenage girls who used social media. In fact, I couldn't find any studies in Haidt's compendium that spent substantive time interviewing any depressed teenage girls or heavy social media users.

Another study that uses low-quality data was based on surveys of 143 University of Pennsylvania students, who participated for psychology course credit. Undergraduate psychology students at an elite university are hardly a representative sample of the population. The authors seem to have made significant coding and random assignment errors.

Haidt cites 17 studies he considers to be longitudinal that either find no effect or an effect in the opposite direction of his claim, and only four were true longitudinal studies, meaning they analyzed the same group of people at different times to see how changes at one time, like increased social media use, were associated with future changes, like more depression. One of the studies on Haidt's list contradicted his claim, finding that depression occurs before social media use, not the other way around.

Practically all of the studies Haidt cited either have major methodological errors or didn't say what he claimed. I doubt many of the senators on the Judiciary Committee or members of their staff, to whom Haidt claimed an "urgent need" for government action, read the underlying papers. The fact that Haidt cites a lot of studies just makes the problem worse. Errors cascade; they don't cancel each other out.

Even the best studies Haidt relies upon have the fatal flaw of not studying the subject. You can't establish the effect of heavy social media use on teenage girl depression unless you study heavy social media users and depressed teenage girls. None of the studies do this. Instead they study mostly adults, mostly average social media users, without serious psychological issues.

When Haidt moves on to policy, a different kind of study is called for. If you want to ban phones in schools, study kids who went to phone-free schools vs. a control group of kids who were allowed to use phones in school. Even this would only tell you average effects, but at least showing the change is positive on average is a step toward testing your hypothesis.

To be fair, Haidt does have some solid policy proposals that don't suffer from this flaw. When he argues that governments should stop criminalizing free play or that internet companies should insist on more reliable age-verification measures, which parents are requesting, he doesn't need studies.

When Haidt first presented his argument on Substack, I critiqued the studies he cited, and he responded by suggesting that I have impossibly high standards for proof and that the consensus of hundreds of researchers studying related issues is strong enough to justify policy actions. My objection is that the researchers whose work Haidt relies on didn't bother to talk to teenagers who are heavy social media users and who are in treatment for depression. Based on poor quality studies, he wants the government to dictate to parents how to raise their children, overruling the judgments of those who are intimately acquainted with the individuals involved.

Some have argued that it's obvious that social media is causing depression in teenage girls. It may be a contributing factor, but the purpose of social science research is not to confirm but to challenge our knee-jerk assumptions, because reality is so complicated. The proper scientific approach is to try to falsify your hypothesis.

If you are going to recommend new laws to regulate social media, as Haidt has, you need to consider the likelihood that your intervention isn't going to yield the effect you want.

There's a tendency among the anointed, Sowell observes, to see "little standing between intention and result." But the real world is "a system of innumerable and reciprocal interactions, all constrained within the confines of natural and human limitations." Often "individual problems cannot be solved one by one without adding to other problems elsewhere."

As any parent knows, children are complex human beings. Policies designed to control their behaviors don't often yield the results we expect. Even if we knew social media use caused depression, we wouldn't know the effect of policies that restrict social media use.

We know alcohol leads to many catastrophic problems, but that doesn't tell us how to regulate youth drinking. If we stop adolescents from using social media, we don't know what they'll do instead, and it might be more harmful.

There's no doubt that social media has significant effects, positive and negative, on the mental health of many young people. Dealing with this is one of the challenges modern parents must face.

But Sowell's anointed class of academics seem happy to impose coercive solutions on evidence that takes a one-size-fits-all approach and that they wouldn't rely upon for their own troubled teenage daughters.

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Once upon a time, America embraced nuclear power as the future of energy. Today it accounts for a mere 18 percent of the nation's electricity generation, while fossil fuels remain dominant at 60 percent. Why did nuclear fail to take off? 

From 1967 to 1972, the nuclear sector experienced significant growth, and 48 new nuclear plants were built. But in March 1979, a meltdown at Pennsylvania's Three Mile Island nuclear power plant, which resulted in no casualties and no lingering environmental damage, spooked the entire nation and empowered anti-nuclear activists.

"After Three Mile Island, what was considered to be in the best interest of the public was just reducing risk to as low as possible," says Adam Stein, director of the Nuclear Energy Innovation Program at the Breakthrough Institute. "It resulted in a huge volume of regulations that anybody who wanted to build a new reactor had to know. It made the learning curve much steeper to even attempt to innovate in the industry."

After the incident, the momentum behind nuclear reactor construction tapered off and no new reactors were built for the next two decades. Nowadays, the landscape remains unchanged: The federal government makes permitting arduous, while many states impose severe restrictions on new plant construction and force operational ones to shut down prematurely. 

For example, take Indian Point Energy Center, the largest nuclear plant in New York State. In 2007, anti-nuclear activists targeted the plant, which provided a quarter of downstate New York's electricity. Their cause gained significant traction with the support of New York state attorney general—and future governor—Andrew Cuomo, who believed the nuclear plant was "risky." 

Cuomo promised to usher in a new era of clean energy for New Yorkers. His moves against Indian Point garnered support from fellow Green New Deal advocates, including Senator Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D–N.Y.), as well as environmental groups. 

The plant eventually closed in April 2021, but there was "a gulf between intentions and results," explains writer Eric Dawson, co-founder of Nuclear New York, a group fighting to protect the industry. The closure of Indian Point increased New York's carbon emissions. State utilities had to make up for the loss of energy by burning more natural gas, resulting in a 9 percent increase in energy-related CO2 emissions. At the same time, the state's energy prices also increased.

This outcome isn't unique to New York. Germany also opted to phase out nuclear power, betting on wind instead. Electricity from windmills increased, but so did the country's reliance on coal. In 2023, Germany emitted almost eight times the carbon per kilowatt-hour than neighboring France, which still gets the majority of its electricity from nuclear and less than 1 percent from coal. 

According to Dawson, nuclear power is "the most scalable, reliable, efficient, land-conserving, material-sparing, zero-emission source of energy ever created." Wind and solar aren't as reliable because they depend on intermittent weather. They also require much more land than nuclear plants, which use about 1 percent of what solar farms need and 0.3 percent of what wind farms require to yield the same amount of energy. 

The economics of nuclear power are undoubtedly challenging, but its advocates say that's primarily because of its thorny politics. The headache of building a new power plant is vividly exemplified by Georgia's Plant Vogtle. The first U.S. reactor built from scratch since 1974, the project turned into a nightmare scenario: It took almost 17 years from when the first permit was filed for construction to begin, it cost more than $28 billion, and it bankrupted the developer in the process. 

Nuclear regulation is "based on politics and fear-mongering and a lack of understanding," explains Indian Point's vice president, Frank Spagnuolo. If they aren't shut down, he says, power plants such as Indian Point could safely continue to provide clean energy for decades. 

Despite the opposition, there remains some hope for the future of nuclear energy. Companies are actively developing next-generation nuclear technologies, such as small modular reactors and molten salt-cooled reactors, to minimize the risks associated with nuclear meltdowns and explosions. And some former nuclear opponents have become advocates, acknowledging it as a vital source of clean energy. The converts include the Environmental Defense Fund, the Natural Resources Defense Council, and even Rep. Ocasio-Cortez. The Biden administration has also demonstrated support for nuclear power, with the Department of Energy projecting a tripling of nuclear energy production in America by 2050. 

Anti-nuclear activists, environmentalists, and politicians have crippled the only truly viable form of clean energy. But the long nuclear power winter might finally be coming to an end in America.

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As Ronald Reagan's first budget director, former Michigan congressman David Stockman led the charge to cut the size, scope, and spending of the federal government in the early 1980s. He made enemies among Democrats by pushing hard for cuts to welfare programs—and he ultimately made enemies among his fellow Republicans by pushing equally hard to slash defense spending. His memoir of the era, The Triumph of Politics: Why the Reagan Revolution Failed, is a legendary account of how libertarian principles got sacrificed on the altar of political expediency.

Stockman's new book is Trump's War on Capitalism, and it takes a blowtorch to the former president's time in office. "When it comes to what the GOP's core mission should be…standing up for the free markets, fiscal rectitude, sound money, personal liberty, and small government at home and non-intervention abroad," he writes, "Donald Trump has overwhelmingly come down on the wrong side of the issues."

At a Reason Speakeasy event in New York City, Reason's Nick Gillespie talked with Stockman about his political journey from being a member of Students for a Democratic Society who protested the Vietnam War to being one of Reagan's main advisers to his denunciation of Donald Trump and his hope that Robert F. Kennedy Jr.'s candidacy helps throw the 2024 election into the House of Representatives.

Stockman also explains how Trump led the charge on COVID lockdowns, got rolled by Wall Street and the Federal Reserve, and why his nativist views on immigration are inimical both to freedom and economic growth.

Watch the full video here and find a condensed transcript below.

Nick Gillespie: This is The Reason Interview with Nick Gillespie. Thanks so much for coming out. Our guest tonight is David Stockman. He is a former congressman, a two-termer from Michigan, south of Grand Rapids. Probably best known in the public eye for being Ronald Reagan's first budget director who made the naive, idealistic, and absolutely wonderful mistake of believing that Ronald Reagan wanted to cut the size, scope, and spending of government across the board. He wanted to cut the welfare-warfare state, right?

David Stockman: Well, the welfare part.

Gillespie: And this is before we get into his fantastic book, a real stinging critique of Donald Trump, Trump's War on Capitalism. In preparing for this, you as budget director, you came in and you had to cut $40 billion from a $700 billion budget in 1981. To give you a sense of how quaint that is, the defense budget now is about $700 billion. I think we may be approaching that just in interest on the debt. But you were scrounging around to find $40 billion to cut. What happened? 

Stockman: Well, I think the problem was Ronald Reagan believed in small government profoundly, except for the Pentagon side of the Potomac River. And he was really a hawk, a real, unreformed, unrequited Cold War hawk. The defense budget was about $140 billion when we got there. By the time he left, it was $350 billion, a massive increase on the theory that the Soviet Union was developing first-strike capability. None of that was true. That was the origination of the whole neocon view of the world. That's where all these characters originally got their start in the process. And so, by the time we got to 1988, the defense budget had eaten up and then some of all the domestic cuts, and the Republicans who were willing to stand up for domestic spending cuts and title reforms and so forth were so demoralized by seeing these massive increases year after year for the Pentagon that they basically threw in the towel, and the whole thing was kind of a wipeout. 

If you want to get the numbers on it, just to kind of cap off the point, when Jimmy Carter left the White House after all those years of big spending by the Democrats, first Carter and then before him, of course, [Lyndon B. Johnson (LBJ)], and guns and butter and all the rest, the domestic non-defense budget was 15.4 percent of [gross domestic product (GDP)]. So way up, historically. When Reagan left, it was 15.3 percent. So he made a 0.1 percent difference. And that's about all we got. 

Gillespie: I would recommend everybody read, The Triumph of Politics, David's memoir of his time. The subtitle is Why the Reagan Revolution Failed and—if you're interested in political economy as well as gossip—it's really one of the great memoirs. 

But the book we're talking about tonight is Trump's War on Capitalism. The title says it so well there isn't even a subtitle. Why don't you start by telling us what was Trump's war on capitalism? He is a businessman. He talked about having the greatest, the biggest, the best economy ever when he was president. What's the essence of Trump's war on capitalism?

Stockman: Well, the question I think you're getting at is, why did I write it? And the answer is I had already written three books trying to expose the fact that Donald Trump isn't remotely an economic conservative; he doesn't believe in small government. I don't think he believes in free markets. And certainly he had no affinity whatsoever for sound money or fiscal rectitude. So in 2016, I wrote a book called Trumped! to warn people. In 2018, I wrote another book called Peak Trump to say I was right. In 2020, I wrote a third book called Dump Trump. Well, the fourth time would be the charm, right? And the book came out five days before the Iowa primaries. It was too late. But there is a bigger point to it, and that is: We're never going to get the kind of government, I think, that all of us believe in—the kind of society, the kind of liberty, the kind of economic prosperity, the kind of market capitalism and so forth. Unless there is an honest contest in the process of democratic governance in the United States between one party that more or less lines up as the government party, the party of state, the party of the political class, the bureaucratic class, the apparatchiks in Washington. And there's a second party that represents the hinterlands and all of the impulses that go with us, to leave us alone, to tax us less, to spend less, to intervene less, to get out of our way, to allow the private society and economy to breathe. So we really need a government party contesting with an anti-government party. 

The problem is, today we have a uni-party in terms of the primary leadership in the Republican Party in Washington. When I look at [Mitch] McConnell, who's been there 55 years on the government payroll, I can't really tell any difference between him and our senator from New York, the leader on the Democratic side. And so, what I think the great danger is that the problems in the United States today in terms of our position in the world—which is a disaster in terms of our public debt but we can get into a lot of those numbers in a minute—and in terms of a rogue central bank that is totally out of control is that, if we don't address any of that, then [we will have continued rule of the uni-party], and we can't have [that]. We need to break it up. But Donald Trump, despite all of his rhetoric and all of his loud boasting about draining the swamp and being the outsider and coming in to clean up the whole thing, is just as much a statist when it comes to all the key issues. And we go through them in the book, as well as most of the mainstream politicians in Washington. 

So the last thing we need is a fight in 2024 between Trump and Biden. It's pointless. It's useless. We need to have a clean break in the Republican Party, blow it up if we have to, and not allow the second party in our democracy to be Trumpified. Because if it's Trumpified, then we get more of what we had during the four years that he was there. I've got a lot of data on that, but let me just cap it here with one, and then we can go into some of the details. When Trump was sworn in, the public debt was $20 trillion already, and it had been swelling rapidly for several decades. When he left, it was close to $28 trillion. So let's just call it $8 trillion in four years. Now, someone might ask later, numbers of this magnitude are almost hard to grasp, to understand, but here's how to understand: The first $8 trillion, equivalent to the $8 trillion that Trump racked up in four years, had taken from the first day of the Republic to 2005 to approve. That is, the first 43 presidents in 216 years generated $8 trillion in public debt. Trump replicated that in four years, not only because of huge tax cuts that he didn't try to offset with spending but because of the whole disaster of the pandemic, the COVID, the lockdowns, and $6.5 trillion worth of bailout and relief and free stuff that came out of the effort to try to tell people, "Yeah, we're sending everybody home. And don't worry, we'll send you money too." So, that's the heart of the matter. 

Anybody that can generate $8 trillion in four years of additional public debt, equal to the first 43 presidents—and there were some real rascals, obviously, and bad guys in that lineup, including [Franklin D. Roosevelt] and LBJ and a lot of others in between—that's the kind of number that grasps you by the collar and tells you, this guy is part of the swamp. He's not part of the solution. 

Gillespie: What is wrong with running up massive debt?

Stockman: Someone asked me that in 1970 when I first went to work on Capitol Hill. I ran for Congress in 1976 against the outgoing [Gerald] Ford deficits, which were large. And the question was raised, and here we are. And it's now $34 trillion and rising and so, maybe it's no problem after all. 

No, the answer is there are two ways to finance the deficit, both of them bad. The first way is the honest way: You finance it in the bond pits by borrowing out of the private savings stream. The effect of that, though, everybody understood when I was first on Capitol Hill in the '70s and into the early '80s, is that when you finance the public debt deficits the honest way, it causes crowding out. It forces up interest rates higher and higher, because whatever the given supply of savings is at the moment. Uncle Sam is the sheriff. His elbows get first call on the money. Crowding out happens. Rates go up. That's where we got the famous bond vigilantes and so forth. And that's why, actually, when we were trying to cut taxes in the early '70s, what I called the College of Cardinals—the established, seasoned Republican leaders in the House: Bob Dole, Sen. [Pete] Domenici, Howard Baker, who was the Senate leader—they said, "No, we've got to be careful here, because if we finance all of these tax cuts with red ink and borrowing, we're going to crowd out private investment. We're about to hear from our car dealers who can't finance their lot. We're going to hear from our home builders whose customers can't get mortgages," and so on. So the point is, if you finance it the honest way, you cause crowding out, you get an early reaction economically. You basically suppress productive investment and you shift society's resources to "government investment"—if you think that's a word, and I don't. I think it's an oxymoron. 

The honest way of financing the deficits, which by the way, had to be done in the late '70s and early '80s because Paul Volcker was sitting in the chair at the Fed, and he was not about to monetize the debt. As a result, we had an environment in which the political reaction function, the feedback, was almost instantaneous. Run big deficits, drive up interest rates in the bond pits. Those spread to the banking sector. Those spread to the hometown car dealers and homebuilders and SNL bankers and just regular consumers. And it causes a political reaction that tends to create a constituency in the political system in Congress for reining in the deficit. That's the first way. 

The second way is to issue all kinds of public paper and have the central bank buy it. And that's called monetization. And that's exactly what we've been doing ever since the late '70s or late '80s, effectively after Volcker left. And let me just give you some idea of how much has been monetized. When [Alan] Greenspan took over, and you remember, this is 1987, he was allegedly at one time a great believer in the gold standard and an Ayn Rand disciple and other things. He sort of lost his economic rigidities. He was kind of nerdy. But in any event, the balance sheet of the Fed was $200 billion, and this is 1987. So it has something like 70 years of the Fed's existence. It had taken 70 years to get to $200 billion. And I'm going to talk a lot about the balance sheet of the Fed and people say, "What does that mean? Why is that such a big deal?" The balance sheet of the Fed is simply the track record of how much cumulative money they seized out of thin air and printed, fiat credit, over time. So we had $200 billion. 

To cut this story short, until they decided that inflation was out of control about a year ago and began to pull back, the balance sheet of the Fed had reached $9 trillion. Now, this is in a lifetime. I am looking out here, I can see probably quite a few people that might have been around in 1987. You went from $200 billion to that $9 trillion. That's 45 times growth in that period of time—several decades—at a point when the GDP was only increasing by 5x.

So when the money printed by the Fed goes up 45 times and the size of the economy goes up five times, you are way, way, way, out of kilter, out of skew. And it is that massive, continuous money printing which monetized all of the debt being created by a reckless Congress and White House that allowed us to continue to run these huge budget deficits year after year. But eventually it catches up with you as well. 

There's this famous thing, I think it's Hemingway's book where he's asked, "How did you go bankrupt?" And the answer was, "Slowly at first, then all of a sudden." What I'm trying to get at here is the honest way to finance the deficit will cause problems very quickly. What we're doing is the slow way, but we've created massive financial bubbles. Massive misallocation of resources, tremendous amounts of speculation that should never happen in a healthy economy and wouldn't happen. And it's permitted this to go on much longer than would have been the case if we had done it the honest way. But, now we're at the point where I think the chickens are coming home to roost. Even the Fed has stopped printing money because inflation was out of control.

Gillespie: So to bring it back to Trump, Trump made a big deal about caring about the forgotten man, talking about Main Street vs. Wall Street, all of that. Your book makes the case that whatever he's saying, he's actually helping Wall Street or the financial sector far more than production sectors and service sectors of the economy. Talk a little bit about his tariffs and his immigration policy. He's trying to help small producers, saying we're going to keep China from dumping cheap products here so you can have your industry here. Why is that wrong?

Stockman: The big irony about Trump is that he was the outsider who campaigned against the status quo, the establishment, the deep state, and the political class. And that all made for good rhetoric, and it actually resonated with the public. But when you look at what his policy solutions are, they have nothing to do with draining the swamp. Trump's basic take on why all these people were left high and dry in flyover America and in the Rust Belt, and why we lost millions and millions of jobs, and why manufacturing is going to China and elsewhere is that this was all due to the work of nefarious foreigners. Foreign governments that were cheating and unfair in their trade practices. Immigrants coming across the border in hordes, who were allegedly bloating our welfare state and undermining our economy and undermining our security.

Gillespie: That's always the great thing, right? Immigrants are simultaneously coming here for welfare and then outworking us.  

Stockman: Yeah. But see, the point is if you want to drain the swamp, then you better go to the swamp and change the policies. Ask what has caused all of this disorder, distrust, and failure. That would have pointed exactly to the Federal Reserve because it's been pro-inflation since the '70s. And then it made inflation official with its 2 percent target. And it was that pro-inflation policy decade after decade that priced out the world market. It's that simple. 

I look at one statistic that I've got in the book that looks at the cumulative increase in unit labor costs over the decades. And that's important because remember what unit labor costs are: It's when wage cost increases—benefits and pay—[while productivity remains the same or decreases]. Because if you have wage increases and you have equal productivity gains, then the cost of production doesn't change. And a business can go on and expand and thrive without raising the prices. But if wages are increasing dramatically, more rapidly than productivity, because you have a pro-inflation policy being run by the central bank, then over time, unit labor costs get totally out of control. And here's a startling number: From 1970 when we basically flushed sound money down the drain at Camp David—in 1971, actually, [Richard] Nixon [was president]—from then until the present, unit labor costs in the United States have risen 275 percent. And as a result of that, we have priced ourselves out of the services market because all of the services have gone to India and other low-wage countries, to say nothing of the merchandise goods market that has gone to Mexico and China and so forth. 

I have one little thing in the book that gives a pretty good example. IBM was the great monster, the midway at one point in terms of making the computer hardware, which is the modern economy. But between 1990 and the present, their employment in India has gone from zero to about 180,000, and their employment in the United States has been cut by more than a third. So, that's on the services side to say nothing of what happened to these massive year-in, year-out, merchandise trade deficits. Why did that happen? It all happened because of the unit labor costs increasing at these rates. It happened because you had a pro-inflation rather than a pro-deflation central bank. And ironically, it happened because Milton Friedman gave Richard Nixon—tricky Dick, as we all fondly call him—some very bad advice. He said, "OK, we're going to unlink the dollar from its base, from its link to gold. But don't worry about that, because the free market will take care of exchange rates." And what that really meant was that if we inflated too much domestically, relative to the rest of the world, our exchange rate would go down. All of a sudden, the imports would cost a lot more, our exports would be less competitive, and there would be a disciplining mechanism, a braking mechanism that would prevent huge increases in the trade deficit and the offshoring of production. And that's what Friedman told Nixon. Now, in theory, he was probably right, but in practice, he was utterly wrong, because what happened over the last five decades is all the central banks in the world have engaged in dirty floats. And so there never was a free market.

Gillespie: Could you explain what a dirty float is?

Stockman: A dirty float basically says, rather than let the market clear in terms of the exchange rate between, say, the dollar and the yen, or the dollar and the euro, or the dollar and Mexican peso, the central bank stepped in and tried to peg the exchange rate. They believe if they peg their exchange rates low, it'll help their export factories. It'll help jobs. It'll help prosperity. They can export more to the rest of the world. That's called mercantilism. And what the Fed has done after 1971 is spread a massive monetary disease in the world called mercantilist monetary policy. I've got a lot of examples in the book of why we've lost so much production and jobs to Mexico—and to say nothing of China. [This is all] basically because the Fed said it's OK to manipulate your currency. It's OK to increase your domestic money supply at huge unsustainable rates because we're doing the same thing here. And so as we flooded the world with fiat dollars, the Fed's balance sheet went—as I said, just in that short period of time—from $200 billion to $9 trillion. The rest of the world, these other central banks, but particularly the Asian ones and also the Persian Gulf, oil Petro central banks, bought in dollars hand over fist. But the secret in that whole thing is when they were buying dollars to keep their exchange rate from rising, they were basically selling their own currency to the domestic market. In other words, the Fed was exporting inflation, and the other central banks reciprocated by buying up the dollars and inflating their own money supplies. 

Now, why am I going into all this? Because that meant that what Friedman said [about] the automatic adjustment mechanism of the free market in exchange rates was short-circuited. It was blocked. And so the adjustment never came, and as a result, from 1974 onward, we have not had one year of a trade surplus. And it's gotten worse and worse. And over that period of time, it was $15 trillion of cumulative trade deficits. And if you even throw in the surplus on services that we have in the world, it's still $11 trillion over the last 40 years. Is 11 trillion a big number? Well, if you put it in today's purchasing power, it's $20 trillion.

Therefore, basically, we have borrowed $20 trillion from the rest of the world to keep this whole game going. So this is how we got into the mess, on trade. And this is why Trump, as I say in the book, had it totally upside down. The problem was, he would tell you, these nefarious evildoers in the U.S. Trade Administration or in the Commerce Department or lobbyists sneaking around the banks of the Potomac that made bad trade deals and gave away the store with all of our competitors. And that's why we're in such a big mess. And that if you put a guy who really knows how to negotiate—for instance, not pay his bills, which is one of his negotiating techniques—if you put a tough guy like me in the Oval Office, I'll negotiate good trade deals. And before you know it, everything is going to be better. Well, he negotiated NAFTA, as you all remember. There was a lot of hoopla about that. Basically, if you look at it, it just got a new name. Nothing changed. And secondly, if you look at what happened to the deficit with Mexico, it doubled— 

Gillespie: And is that a bad thing, though? I mean, he renegotiated NAFTA. We kind of got worse terms on some level, but we got more stuff cheaply. 

Stockman: Well, yes. I think that's true. But there's a certain kind of libertarian free market and free trade that ignores the monetary side. There is this point I used to make, and I think half of it's valid and the other half isn't. The point we used to make in the '70s and '80s was, well, if other countries are stupid enough to fill their harbors with rocks and figuratively stop trade, why should we reciprocate and be as stupid as they are? Therefore, if they want to subsidize their exports like the Chinese or others, more power to them because they're basically transferring wealth to our consumers; domestic welfare is better off, and so that's fine. Well, that's half of the equation. But the other half of the equation is that when you have a net export imbalance of $20 trillion over a period of time, you have exported a huge amount of your production base to the rest of the world. And unless you can keep borrowing at higher and higher rates, that isn't sustainable as an economic matter first, but as a political matter. 

And this is the point. And you may think it sounds a little flippant, but I don't think it is. I think that Milton Friedman was the godfather of Donald Trump, because Milton Friedman basically told Nixon, "Sever the link to gold"—I'm the gold standard man, I think you might have noticed that—and [that] we don't need to worry about the ancient relic or barbarous relic or whatever [John Maynard] Keynes called it, because we have a market—a free market that'll set the exchange rates right. Well, he was wrong about that. We exported massive amounts of our industrial base. We created a burned-out zone in much of the Rust Belt, the upper Midwest, Pennsylvania; New England was long gone. I was from the auto state of Michigan, and you know that was totally burned out. But where did Trump get elected in 2016? On the margin, he got elected in the Rust Belt precincts of Pennsylvania, Michigan, Wisconsin, Iowa, in all the places that got left behind because we had an unsustainable set of economics with the rest of the world. And it was caused by the central bank that Friedman was willing to let free. 

Now, of course, Friedman thought that all of the central bankers, that is, the members of the Fed, would be just like him. They would be Milton Friedman clones, and they would be very punctilious about the rate at which they were expanding Fed credit, and he had all kinds of rules of thumb and so forth. But of course, that was a pipe dream. That was naive. People who would get appointed to the Fed are basically there to do the business either of Washington politicians or Wall Street speculators. 

I'm not really trying to trash Milton Friedman because he's a great hero—in terms of free markets and the understanding of the rudiments of a free society, you can't beat Milton Friedman. But the problem is he had a view of central banking and a view of the Federal Reserve that I think was totally wrong and that became the fulcrum for all of these things that happened. 

Gillespie: Whatever has been going on in terms of economic growth has been bad for a while, but you talk a lot about TARP—how at the end of the Bush administration and the beginning of the Obama ones, handouts to automakers were locked into place. But could you talk a little bit about how Trump did something similar with COVID? Is part of the problem that these parts of the American economy get wiped out because they're not allowed to change and adapt because they get various kinds of programs that are designed to help them make it through to the next paycheck?

Stockman: Yeah. That's kind of the problem of crony capitalism. For anybody that might be interested, I wrote a 640-page book on that whole topic that was released in 2013. But I think the issue that we need to find a way to understand is that everything goes back to central banking. And when the central bank makes it so easy to borrow money, we end up with an economy that when Greenspan left or got there, there was about $10 trillion of total debt on the economy, public and private. And that was less than 200 percent of GDP. Today it's $96 trillion. In other words, they have kept interest rates so low, they've had such deep and long-lasting financial repression that the economy has become a giant [leveraged buyout (LBO)]. And when you do an LBO—I was in the private equity business, so I know—there can be prosperity for a couple of years. But if things don't work out right, you're going to have interest payments that begin. 

Gillespie: To bring it back to Trump's specific policies, he came into office saying he was not only going to stop illegal immigration, but he was going to cut legal immigration in half. What is bad about that? Why is that part of the war on capitalism? 

Stockman: Essentially, it raises a whole issue of supply-side policy. And I was a supply-sider back in the 1980s with Reagan. And then I got run out of the supply side church because I didn't follow all the precepts exactly. 

The issue that we have today, as to why growth has been so tepid and why living standards have sort of stagnated, why there are so many very alienated people out there in flyover America wanting to get behind Trump—the reason that this has been happening is because we've got huge deficiencies on the supply side of our economy in terms of labor and capital investment. You know, the native-born work force is actually shrinking. It peaked in 2015, and it's shrinking. And that's because, for whatever reasons, native-born women and families are not having babies. And so our labor force is shrinking, and since historically half of GDP growth has been labor—the other half is productivity—our economy is grinding to a halt because the labor supply is shrinking, unless we allow immigrants who want to work to come here and become part of the work force. 

I got a number that I think is kind of startling when you hear about the flood of immigrants coming in and that we're being overrun and how America's being somehow turned upside down. If you go to 1870, we finally got out of the Civil War and all the chaos that generated. There were only 39 million people left in America—north, south, all the states after the union reunited. Over the next 40 years to the eve of World War I, we had 25 million immigrants. So, relative to the population in 1870, the immigrant population in a few decades was two-thirds of the population to begin with. Now, how many immigrants do we have today? We have legal immigrants of about a little over a million. We have a population of 335 million people. So immigration today is less than one-third of 1 percent [of the population], not 66 percent or 60 percent. 

That's the first point. The second point is we have a totally broken, ridiculous, immigration policy that comes right out of the swamp in Washington, and if Trump really understood what he was saying when he said, "I'm going to drain the swamp," the first thing you would do would be to change the basis for immigration. To get here, you either have to be a family unification, which is about 400,000 out of the million, or you have to be a Ph.D. or some high-tech skilled worker to get a couple hundred thousand more slots, or, and this is the big or, you have to be a refugee or an asylee. That's the only way that unskilled workers can get into the United States today, when we desperately need unskilled and low-skilled workers, because our native work force is declining. 

In the last year that the data is available, 2022, only 4,000 green cards were issued under the category of things called E3 and E6, for unskilled workers; 4,000 out of the 1,118,000 legal immigrants that got here, to say nothing of the hordes littered on the border. Now, the hordes on the border, if you look—if you can stand it—at Fox News every night, most of them are pretty strong-back to able-bodied young people, and their families are middle-aged. But it's an unskilled, low-skilled work force looking for a job and a better economic opportunity. But the policy is equivalent to trying to drive a dump truck through a pinhole. 

In other words, there are millions of people at the border trying to come in. There are only 4,000 slots for unskilled workers, so all of them are at the border, being forced to pretend that they're asylees, that they're refugees. And the only way you can become a refugee is to cross the border, break the law, get arrested, and then be put into the queue that takes months and months, in fact, years of determination in a totally clogged up court system in order to get certified that you're an asylum seeker. And you have to prove, for instance, that if you come from Costa Rica, you're in endangerment of life and limb if you stay. 

I bring up Costa Rica because I checked the other day, it turns out you can get a ticket from Costa Rica to Kansas City if there were some job openings there for $214 a day. So if we had a guest worker program of that kind that makes so much sense today that would allow people to go to the U.S. consulate in Costa Rica, get a guest worker permit, and be matched up with someone looking to hire people for lawn care work or warehouse work in Kansas City, they could get there for $214. No fuss, no muss. No chaos at the border. No border patrol people chasing around in the middle of the night. And we would open up that little pinhole to the economic rationality that we need to have. 

In other words, [the system can be reformed simply] to make it economics-based rather than asylum-based, which is politics. If you have a guest worker program and people come here and they're making the payroll and their employer is certified month after month, year after year, after 10 years, I'd say give them citizenship and let them stay. The whole problem would be solved. 

The hordes at the border are millions of people who want to be economic immigrants but are being forced to be political refugees, and they're creating a mess. And the reason I mentioned the $214 Delta ticket is that to get from Costa Rica to the Rio Grande, you have to pay the coyote $4,000 to $10,000 to get you there, when Delta would be happy to do it for $214, if we were only smart enough to have a rational, economics-based immigration system. But there you go again. Immigration control, the whole byzantine, convoluted control system is statism at its worst. It's run by the lobbyists in Washington. Google gets everybody they want. They get all the Ph.D.s, they get all the smart young techies coming out of South Korea or Taiwan or wherever else they're coming from. They take care of their needs. The Fortune 500 takes care of their needs because there are four or five categories for advanced degrees, Ph.D.s, unusual skills. They all get in 3,000 or 4,000 a year. But employers that need to have people working in fast-food joints or in lawn care businesses or in warehouses or in agriculture can't get anybody here legally. So you get the whole mess that we have today.

Gillespie: So, Trump is awful. I can't speak for this audience. I know for myself, I didn't vote for Trump. I don't expect to vote for Trump. I'm not moving to Canada and I'm not moving to Cuba if he wins or anything like that. But isn't the alternative as bad or worse? Because it's going to be Joe Biden.

Stockman: Well, if you have to suffer through another Democratic administration, might as well have a senile guy in the chair, because very little is going to get done. But that's a little facetious. I think from our point of view in the world that four years is not the end of history, and that if we don't get a nonstatist or an anti-statist party, reassemble, realign out of the mess of the uni-party that we have today, well then there really is no hope because you continue to do the same old thing over and over again, which [Albert] Einstein said is the perfect definition of insanity. So I say, what we need to do in 2024 is blow up the Republican Party. It needs to be purged. It is a gang of cultural right-wingers, neocon warmongers, and basically career politicians who use the party as a fundraiser. 

Gillespie: Do you still consider yourself a Republican? 

Stockman: Well, I think, no. This party needs to go. 

Gillespie: In the book, you mentioned the drug war is stupid. Can you give us some explanation in 10 seconds?

Stockman: I'll give you three seconds. The drug war is really goddamn stupid. And again, this is part of the whole Trump shtick. He came down the escalator in 2015 talking about the murders and the rapists and the drug dealers coming across the border. As I lay out in my book quite clearly, if the drug part of it is a problem, deregulate drugs and let the teamsters ship the stuff in and let Philip Morris distribute. Keep it legal. 

Bring it above ground. Make it legal. Take out all the premium profit that basically goes to funding the criminal organizations that are necessitated when the government decrees that a desired product shall be artificially scarce. So, that's part of all the rhetoric too. I mean, everything you hear about all the drugs coming across, that is a different issue. And we need to separate them out, the economics of immigration vs. the economics of the stupid war on drugs and the drug control laws that we have. People don't probably remember this—I don't think any of us could, we haven't been around long enough—but until 1918, you didn't have to have a passport to come to America, OK? There were no passports. 

All of this immigration control really began then, and it's created its own bureaucracy and its own set of politics. So if we got back to sort of economically driven border policy, which was what we had to our great benefit until 1923 when they passed the first Immigration Act,  most of this problem would go away. 

This interview has been condensed and edited for style and clarity.

• Video Editor: Adam Czarnecki
• Audio Production: Ian Keyser

The post David Stockman on Why Trump Can't Fix the Debt: 'This Guy Is Part of the Swamp' appeared first on Reason.com.

After enacting sweeping reforms in Argentina, President Javier Milei faced a major protest. Tens of thousands of people marched through the streets, hundreds of flights were grounded, and schools and businesses closed in protests to Milei's attempt to fix the troubled South American country.  

Milei is the first self-described libertarian head of state in history. To avert economic disaster in a country facing huge deficits and a 160 percent inflation rate that has since spiked to over 211 percent, he told the country, things would likely get worse before they could get better. 

In his inauguration address on December 10, Milei acknowledged the daunting challenges ahead. "No government has received a worse inheritance than the one we are receiving. We neither seek nor desire the difficult decisions that must be made in the coming weeks. But unfortunately, we have no choice," he explained. 

Ten days into his term, Milei issued a "mega-decree" of more than 300 executive measures. He abolished national rent control, which had caused a 75 percent drop in available apartments in Buenos Aires between 2022 and 2023. He repealed price controls, slashed subsidies, and fired more than 5,000 government employees. He allowed direct competition with Argentina's government-owned airline, which he plans to privatize. And he defied the country's powerful labor unions. 

Milei's transformative agenda has encountered resistance, notably from Argentina's largest labor union, the General Confederation of Labor, which represents about one out of every five Argentine workers. The union called for a nationwide strike on January 24, bringing portions of Buenos Aires to a standstill. 

Their main reason for protesting? Milei had issued an order ending the automatic withholding of union dues, leaving workers free to opt out of union membership. He also banned government workers in sectors like health and education from striking. While his measures were temporarily suspended by a court ruling, unions are making a show of force so that Milei's agenda doesn't make it through Congress.

Despite the economic challenges and opposition, Milei remains resolute in his pursuit for a freer, less regulated, and less debt-ridden Argentina. Addressing world leaders at the World Economic Forum this January, he said that the Argentina of the future will be based on libertarian principles.

"If measures are adopted that hinder the free functioning of markets, free competition, free price systems, if you hinder trade, if you attack private property the only possible fate is poverty," Milei said. 

Yet Milei's main political adversaries aren't Argentina's workers. In fact, Milei is calling for increased welfare in the short term to ease the pain for the working class during this transition to a new economic model.

As Argentine political economist Marcos Falcone told Reason, Milei's actual adversaries are wealthy Argentines who have benefited from government largesse.

"Milei is going against crony capitalism because he is basically trying to kill the businessmen that have lived off of government support," Falcone said. "We need to move forward. And the people need to be able to profit, you know, not just companies because of regulations and privileges." 

In his speech at the Davos conference, Milei encouraged business owners to not be intimidated "by the political class or by the parasites who live off the state." 

"You are heroes. You are the creators of the most extraordinary period of prosperity we've ever seen," Milei continued. "Do not surrender to the advance of the state. The state is not the solution. The state is the problem itself."

Milei faces a thicket of regulations and political resistance in Argentina. It won't be easy to carry out Argentina's economic transformation. We'll have to wait and see if he picked the right chainsaw to cut through the challenges ahead. 

Photo credits: Fernando Gens/dpa/picture-alliance/Newscom; JUAN MABROMATA / GDA Photo Service/Newscom; Pepe Mateos/dpa/picture-alliance/Newscom; Franco Trovato Fuoco/dpa/picture-alliance/Newscom; Matias Baglietto/dpa/picture-alliance/Newscom; Florencia Martin/dpa/picture-alliance/Newscom; Martin Cossarini/dpa/picture-alliance/Newscom; Hannes P Albert/dpa/picture-alliance/Newscom; Carlos Smiljan / SOPA Images/Sip/Newscom; Cristobal Basaure Araya / SOPA Images/Sipa USA/Newscom; Abaca Press/Gross Frederico/Faro/Abaca/Sipa USA/Newscom; Javier Gonzalez / Xinhua News Agency/Newscom; MatíAs Baglietto/ZUMAPRESS/Newscom; Patricio Murphy/ZUMAPRESS/Newscom

 

Music Credits: "The Art of Loneliness" by ANBR via Artlist; "Chapter Two" by Brianna Tam via Artlist; "The Racer" by Tristan Barton via Artlist

• Video Editor: Danielle Thompson
• Graphics: Adani Samat
• Sound Editing: Ian Keyser
• Translation: César Báez
• Article Writer: Katarina Hall
• Camera: Juan Renau

The post Javier Milei vs. Big Labor appeared first on Reason.com.

If we all went a little nuts during the COVID-19 lockdowns, it's absolutely true that some of us—including many of our country's leaders and people in the media—went absolutely batshit crazy, often with disastrous results.

Exactly why that happened is the subject of author Jon Ronson's latest season of Things Fell Apart, a podcast that explores the deep origins of today's culture wars in controversies, panics, and delusions from decades ago.

Reason's Nick Gillespie talked with Ronson about why he believes the creation of a fake medical condition called "excited delirium" in 1988 ultimately led to the death of George Floyd in 2020, how law enforcement fixations on white supremacy warped the investigation into a plot to kidnap Michigan Gov. Gretchen Whitmer, and how the director of the massively influential Plandemic documentaries was actually rewriting the script of  Star Wars. 

Ronson is best known as the author of The Men Who Stare at Goats, an account of a U.S. Army unit that tried to perfect paranormal powers like walking through walls, and So You've Been Publicly Shamed, which helped define cancel culture just as it was becoming widespread via social media.

• Video Editor: Adam Czarnecki
• Video Editor: Regan Taylor
• Audio Production: Ian Keyser

The post Why We Went Crazy During COVID Lockdowns appeared first on Reason.com.

"If the problem with campus speech codes is the selectivity with which universities penalize various forms of bigotry," wrote James Kirchick recently in The New York Times, "the solution is not to expand the university's power to punish expression. It's to abolish speech codes entirely."

Kirchick was writing about widespread outrage at the nuanced and hypocritical defense of speech offered by the presidents of Harvard, MIT, and the University of Pennsylvania at a congressional hearing about antisemitic and anti-Zionist campus reactions to the October 7, 2023 Hamas attacks on Israel.

Although Kirchick, the author of Secret City: The Hidden History of Gay Washington and The End of Europe: Dictators, Demagogues, and the Coming Dark Age, is an ardent defender of Israel, he is also a self-described free-speech absolutist who is disgusted by calls to restrict expression, whether on or off-campus.

Reason's Nick Gillespie spoke to Kirchick about how identity politics has overwhelmed the left's traditional defense of free speech, why so many younger journalists seem lukewarm at best to the First Amendment, and how to muster the courage to speak up for first principles in uncomfortable and hostile situations.

Articles mentioned:

"What Happens Where Free Speech Is Unprotected," by James Kirchick

"Calling Out An Antisemite," by James Kirchick

• Video Editor: Adam Czarnecki
• Audio Production: Ian Keyser

The post Free Speech Absolutism in Practice appeared first on Reason.com.

Did you know that by 2050, fully a quarter of the planet's population will reside in Africa? Yet despite abundant natural resources and a young and ambitious population, the continent remains the poorest of them all.

Born in Senegal and now residing in Austin, Texas, Magatte Wade is director of the Center for African Prosperity at the Atlas Network, a nonprofit that supports think tanks and activist groups in the developing world. A serial entrepreneur, she's currently the CEO (and founder) of SkinIsSkin, which sells a series of skin and lip products sourced in Africa.

Wade is also the author of the new memoir and manifesto, The Heart of a Cheetah: How We Have Been Lied To about African Poverty—and What That Means for Human Flourishing. The solution to Africa's problems lie with what her mentor, the late economist George Ayittey, called "the cheetah generation," young Africans who embrace free markets, individualism, human rights, and transparency in government.

Reason's Nick Gillespie sat down with Wade to discuss her book, "conscious capitalism," charter cities, and how cryptocurrencies are helping people like her build the Africa—and the world—they want. 

• Video Editor: Adam Czarnecki
• Audio Production: Ian Keyser

The post The Real Reasons Africa Is Poor—and Why It Matters appeared first on Reason.com.

During his two terms as governor of Arizona, Doug Ducey managed to pass a flat income tax with a rate of 2.5 percent, reform public sector pensions, universalize important school choice measures, reform occupational licensing rules, turn a budget deficit into a surplus, and substantially shrink the size of the government workforce. He also built a makeshift border wall out of shipping crates, pushed back on marijuana legalization, and was accused of doing both too much and too little by his constituents during COVID. Today, he runs Citizens for Free Enterprise. 

In December, he received the Reason Foundation's Savas Award for Privatization, which is given annually to someone who is advancing innovative ways to improve the provision and quality of public services by engaging the private sector. The former governor and Reason's Katherine Mangu-Ward sat down to talk about his worries about the future of the Republican Party, his commitment to fusionism, and why Arizona politicians are so weird.

Watch the full video here and find a condensed transcript below. 

Katherine Mangu-Ward: What is it about Arizona that seems to just generate a kind of heterodox or unorthodox politician?

Doug Ducey: I don't know. I think it's a good question. I think maybe the fact that we're the youngest state in the lower 48, that we're a place where so many people came to live. So few people that are there today, were actually born there. So people make that decision. And then I think there's something about the West and the spirit of Barry Goldwater, where it brings an independent-mindedness to it.

Mangu-Ward: Arizona has been red of late, but it's trending blue. What do you attribute that to? 

Ducey: Candidates matter. I would actually push back pretty hard. I was able to win in 2014 with the wind at my back and win by a larger margin in 2018 with the wind in my face in what was really a tough year for conservatives and Republicans around the country. And I was also able to capture 44 percent of the Hispanic vote against an opponent named David Garcia. 

So if you have the right candidate, who's talking about common sense kitchen table issues, and actually persuading the electorate, I think the state is still a center-right state. If you have somebody that wants to come and relitigate 2020 and only speak to the base, that's a losing message. 

Mangu-Ward: You campaigned in your first campaign on bringing taxes in Arizona as close as possible to zero, and you got to a 2.5 percent flat tax in the end. How did you do that? 

Ducey: Persistence, persistence, persistence. It was our goal. Every year we lowered or simplified taxes and we actually had the left overreach and came into Arizona and I think deceived the voters with an initiative saying, "We can put 1 billion dollars additional into K-12 education and it won't cost you any money, only the rich people." And they took our 4.5 percent tax at the highest progressive level to 8. Now, 8 percent in Arizona would have been a cancer that would have metastasized over decades. That's Bernie Sanders' Vermont, Washington, D.C., or New York state. But it was popular. We worked hard to beat it. It was polling at about 65-35. We were able to drive it down to 51 percent on election day. 

But when I was a young boy, there was a show on Saturday morning, Wild World of Sports, and they would talk about the thrill of victory and the agony of defeat. We suffered about 18 months of the agony of defeat while we challenged the initiative in court and eventually got to our Supreme Court. And then we reformed taxes in the legislature in the interim. The law, the initiative, was struck down and we had reduced taxes along the way. So had we been successful on election day, taxes in Arizona today would be 4.5 percent. But because we had a bad result, we persisted in the legislature and we had a Supreme Court that was not going to let out-of-state interest deceive the voter. Today, we have the lowest flat tax in the nation. So I would say a combination of good planning, good timing, and good luck.

Mangu-Ward: Is this something that other states can duplicate? I mean, this sounds like a lot of things coming together just right.

Ducey: Well, I believe so. I mean, I think if you make a pledge to your constituents that you're going to simplify taxes every year and you win on that, then you have the permission to do that. If you can grow your economy, you have surplus funds. So it allows you to basically buy down your tax rate. And I'm a huge fan of the flat tax. I want us to be fair and equitable. And I think a flat tax makes a lot of sense. And it's also very hard for the left to change because people understand it. Massachusetts is not known for being a low-tax state, but they do have a 5 percent flat income tax and they've not been able to change that or raise it. And today in Arizona, like I said, we're at 2.5 percent. But if you get your economy growing and that's my background, Katherine, I came from the private sector at Cold Stone Creamery, the ice cream company was my business. And I ran on a platform of kickstarting the economy. Now I want to shrink a government and grow the economy. I was looking at places like Texas and asking, why are they so successful in comparison to other states? And I was trained coming out of University of Procter and Gamble [PG]. PG is a big fan of best practices of something called "search and re-apply." If you see another good idea anywhere in the world, you bring it back to headquarters with attribution. 

In politics, I found people find good ideas all over the country and bring them back to their state, often without attribution. But Texas was the model. [Former Texas Gov.] Rick Perry and governors before him had turned an oil and gas state into a cosmopolitan place with international businesses that did business around the world. I saw no reason at all why Arizona couldn't occupy that space. And I also was aware of the bad decisions that California was making. So I thought we were perfectly positioned and I wanted to be the chief salesperson and spokesperson to do that. 

When I came into office, we had a billion-dollar deficit that first year. I think the first tax reform that we were able to pass was to make certain that you weren't indexed out with inflation. And that was the start. We got the budget under control. The economy began to grow and we were able to ratchet that tax code down.

Mangu-Ward: I think sometimes, particularly in the modern GOP, you get a lot of emphasis on tax cutting and a lot less on the reduction of spending or balancing the budget. Do you think that issue is getting worse? Do you think that there's a way to reconnect to those two ideas in American political rhetoric or in voters' minds?

Ducey: Well, Katherine, I think you live here in Washington, D.C., and that's what you are responding to as to how the Republicans in this town behave. You see the Democrats tax and spend. You see the Republicans in Washington, D.C. cut taxes and borrow. Governors don't get to print money and there's no appetite to borrow money except in the worst of a crisis. So you really do have to find a way to shrink your government. 

I'm proud of the growth and attractiveness of Arizona. I think we have 400,000 additional people in Arizona versus the day that I came into office. But our state government is smaller. We were actually able to shrink the footprint of our state government, the number of people inside the state government, the number of buildings, and real estate holdings of the state government. 

If you look at governors around the country who take this winning game plan and execute it, there's a model that could be used in Washington, D.C. But here no one really seems to want to persuade on why we need to tighten the belt. I did take a hit that first year to balance the budget. There is no constitutional obligation to balance the budget. I just came from the private sector and I had lived through several downturns before, and I knew each time I navigated through a downturn as a CEO, I wished I would have acted faster with more of a sense of urgency and rightsizing the business. So I didn't want to lose those lessons. And the largest responsibility I had in my life to date at age 50. So I said to the legislators who said, "We don't really have to balance the budget. Nothing's going to happen" that I wanted them to blame me for it, that I ran on it, I wanted to do it. I thought it was possible and the economy was going to get better and we could begin to invest again next year. And if the economy didn't get better, we'd be happy we acted today because we wouldn't be exaggerating problems for tomorrow.

Mangu-Ward: What was the cut or elimination or reorganization that you enjoyed the most during that period? 

Ducey: I had a lot of people from the business community that helped me become governor, but none of them wanted to come work with me in government, so I had to find the best people in these agencies, the best people from around the country, to come work inside these agencies. And in my first month, you have the inauguration, "state of the state," you present the budget, and in 2015, we were hosting the Super Bowl. So I was meeting with each of these agency heads and basically asking the same questions I would have asked somebody who wanted a top-level position in Cold Stone. "Who are you?" "What do you do?" "And how do you know if you do it well?" And you really want to hear somebody tie something to a metric as to how they measure things inside their agency. We had a director at Weights and Measures who said, "Let me tell you what I'm going to do. I'm going to sting Uber and Lyft during the Super Bowl and shut them down." Obviously, he wasn't paying much attention to the campaign. I was able to ask my general counsel, "What's my authority over these agency heads?" He said, "They work at the pleasure of the governor." I was able to release this gentleman into the private sector in what would soon be a growing economy. But that was my way to capture the attention of the state government that I was serious about making real reforms.

We went through a strategic plan just like we would in business. I wanted every agency to know what the mission of that agency was, to have public metrics, and how they could advance it, to have transparency to taxpayer money, and then to memorialize what they had accomplished the past 90 days, and could accomplish in the next 90 days, and make adjustments. So it's basically a Six Sigma-type thing that you can do. I want to see us have less government, but I'm not somebody on the right that thinks government is unnecessary. I think the government serves a purpose. And when the government is responsive and it's not putting obstacles in people and small business owners' way people flock to your state. Businesses grow and have great success. And then in this economic development competition that we have among the states, we were winning the majority of them, and in yesteryear, it was all Texas. I think you'd see today that Arizona's leading on this. Places like Texas continue to do well. Utah is very good. Florida, Tennessee, are all states that are really growing and they're following the same model.

Mangu-Ward: Where do you think immigration fits into the picture of attracting the best people and kind of opening up the state to free enterprise?

Ducey: I think people in Washington, D.C. confuse border security with immigration. They are separate and mutually exclusive issues. Border security is about law enforcement. It's about national defense. It's about public health. We had a pandemic over the last two years, the border in Arizona is wide open and unprotected under President Biden. It was in the same condition under President Obama and that's not how the law works. This is illegal migration. So if we can secure and stabilize the border, which was happening in 2019 and 2020, we can talk about immigration. And I'm pro-legal immigration. And we need new immigrants from the service sector to software engineers. 

My first visit as governor internationally was to Mexico City. My first international visit upon reelection was to Mexico City, and my last visit as a sitting governor was to Mexico City. They are our number one trading partner times four, we have an incredible relationship with them. But we weren't open to people illegally migrating. Solve the border situation, which is very solvable. It was already done in 2019 and 2020. Then we can talk about immigration reform, but border security happens in Texas, New Mexico, Arizona, and California. Immigration reform happens down the street here in Congress.

Mangu-Ward: What was the state of play on school choice in Arizona when you came in and what did it look like you left?

Ducey: Arizona has always been very good on school choice and it's something that I believe in. I stood on the shoulders of giants like Lisa Graham Keegan and Fife Symington. At the state level, we have 525 schools of choice in Arizona, charter schools. Your listeners will know those are our public schools with private management. If you take those schools, that's the number one state in the nation for accomplishment on math, reading, and science. We did a lot to grow that model. We have systems like the Basis School System and Great Hearts, both founded in Arizona. Part of what animated my run for governor in 2014 was universal school choice. The Milton Friedman idea that he shared on Free to Choose in his book and his PBS series is something that took me all eight years of my governorship to accomplish. We actually were able to pass a limited [Empowerment Scholarship Account] program in 2017. We have an anomaly of our Constitution where if you get enough signatures, you can refer a law to the people, and ESAs were referred to the people in 2017. And it was crushed. It lost 65 to 35.

Mangu-Ward: And these are education savings accounts? So essentially vouchers.

Ducey: Milton Friedman also said in a crisis, people will look for the ideas that are lying around. And the crisis that came was COVID and parents were able to see what their kids were being taught or not taught and the level of rigor and expectation from the public schools. They also saw that the charter schools opened and the Catholic schools opened and many of the largest public districts chose to stay closed for nearly two years, even when the government was telling them to open. So we were able to pass universal educational savings accounts. This is for every child in the state of Arizona, [who are] able to take a large portion of their tax dollars and go wherever they would like to school, including homeschool, micro-school, or a new school. So I think we were able to move the bar to the highest rung. Nine other states have since followed with universal school choice. Texas and Tennessee are on the one-yard line. 

It reminds me a bit of Roger Bannister, [who] was the first man to break the four-minute mile. People thought that that was physically impossible. From the marathon in Greece to the 1960s, no one man or woman had broken a four-minute mile. I think it was several months after Roger broke four minutes, somebody else broke four minutes. And it's been broken over a thousand times since. I think that this universal school choice is the way to truly reform K-12 education, and I think in many ways renew our country. This one crosses party lines. It was actually the African American pastors and a lady that leads the Black Mothers Forums, who wasn't very happy with the way that I handled the summer of 2020, who was my lead advocate on universal school choice. Now, one of them, a Republican, and we were able to pass this with no Democrat votes. I wanted those votes, but they were beholden to the teacher's union in Arizona. In my final year, we had a one-seat majority in our house, a one-seat majority in our Senate. We had a confluence of circumstances that happened that we were able to get in the final days. And like I said, other states have since followed.

Mangu-Ward: You were governor during COVID, and I saw there were moves from the Arizonans for Liberty who wanted to recall you for doing too much. And also from Accountable Arizona who wanted to recall you for doing too little. Which of them was right? 

Ducey: I made the best decisions I could for the state of Arizona. I didn't want to play politics with COVID, and I didn't want to compete with other governors. I was going to make the best decision in real time for what was needed in our state. I did it a lot differently than many of the other Western states. I prioritized lives, livelihoods, and individual liberties. 

I came from the private sector. I was the owner of a small business. Those are the people that I know and I understand what they go through. There were a lot of calls from elected officials with guaranteed government paychecks, people that would not miss a paycheck or a salary, choosing to work from home. I wanted to keep our businesses open. I think the evidence of how Arizona came out of COVID in comparison to other states is where the proof lies and to how COVID was handled.

Mangu-Ward: Is there something you would have done differently, though, in retrospect? 

Ducey: I imagine there is, but not in the real-time of what was happening. Because, of course, I'm somebody who thinks you surround yourself with experts. But I made the decisions, so the experts were not on top. I erred on the side of caution until I had enough evidence that we knew where the vulnerable people were. We had communicated to the vulnerable people. And then they live in a free country, and it's up to them to make the decisions that they want. But to get kids back in school, to have our businesses open, and to allow people to make responsible decisions. It's something I felt very passionate about advocating for. 

Mangu-Ward: Let's talk about the current state of the Republican Party at the national level, as well as in the States. You recently took a new gig at the Citizens for Free Enterprise. My perception is that the current Republican Party, to say nothing of the current Democratic Party, is not too friendly to free enterprise these days. What can we do about that? 

Ducey: Well, again, I would separate what you're seeing in Washington, D.C., and some of the big government Republicanism that's happening here, versus what you see happening in many of our states. Yet, there are some folks out there that are bullying big businesses. I think if we're going to be a majority party, if we're going to win on our ideas. There's a lot of freedoms we could talk about over the course of this discussion, from freedom of speech to freedom of religion, freedom of assembly—all rights that we've seen under assault in the last several years. But they're all undergirded by economic freedom. And it's what's allowed us to be the mightiest military in the history of the world. It's also allowed us to make a lot of really stupid spending decisions and overcome that. I do think that if you go into a college classroom today and you held up a sign that says socialism and capitalism, it's about a 50-50 proposition, and that should scare every freedom-loving individual in the country to death. So I think we have some work to do, not only with our youth and college classrooms but also with our electorate. 

Part of the reason Citizens for Free Enterprise exists is because it's an evergreen issue. There's going to be certain social and cultural issues that we fight about every two years, and these are worthwhile discussions. This is how we answer these questions. But it wasn't that long ago that a blue state governor who became president was actually accused of being pretty good on the economy. Under President Obama, it became more of a class warfare between the haves and the have-nots, with, I think, an overemphasis on inequality while now looking at the government supplements to what we do to those in the most vulnerable positions. 

So we want to advance the cause of free enterprise, and we'd also like to drain some of the partisanship out of it. But it should always be protected on the right. And through what we're going to be doing, people that are going to be attacking it are going to feel consequences regardless of what party they're in.

Mangu-Ward: It's a pretty big project to convince Americans to feel better about capitalism or to like free trade or something like that. It's Reason's project as well, in many senses. Where do you see the doors that are open for that? 

Ducey: Well, I would come at it from a different angle. I think that Americans love small businesses and they love small businessmen and women and they love many of these entrepreneurs and local shop owners and their own cities, towns, and municipalities. And if you go to CitizensforFreeEnterprise.com, you'll see many of their stories on our website. So part of it is, of course, the principles that you and I have read and understand and want to make certain are being communicated properly in our grade schools and our high schools and our colleges and happen at many places like a great arts academy in Arizona. Kids come out really understanding what makes the economy tick and how to live within your means and why this is not only a good personal habit. It's also a responsible habit of a business or a government or an enterprise. 

But I think when people can hear the story from the entrepreneur, whether it's the local microbrewer or the guy who runs the four-wheel shop who retrofits pickups, it helps people understand why this is important. And we have so many stories of people that have had great success. The other thing that I think happened rather recently is we've separated the entrepreneur and the small business owner from the employee. Well, actually their interests are aligned. The more successful the company is or the city or town or municipality, the more opportunities are there for the employee. They may or may not want to cast their lot in the entrepreneurial world. They may just want to climb the economic ladder and be able to build personal financial security. And without that opportunity to build financial security, is there really freedom there? I mean, these are things that go hand in hand.

Mangu-Ward: Economic liberty requires more than just protecting small businesses. Right? What is there to do about this "we'll tax the rich and solve all the problems" mentality?

Ducey: Well, one, the numbers don't work. And you know that the math on that is never going to work. And that's not unusual. I actually think that's playing on some of the worst of human nature to build this envy in folks. There's all kinds of social scientists that will show you that people actually feel better if somebody is doing worse while they're doing better. And we're not going to participate in any of that. We're just going to educate and advocate around free enterprise and try to bring that voter into the fold so that they can make the decision on election day on who's in support of it. And it's regardless of party. I think you'd find more of that right now on the right, but as you mentioned, there are some folks here in this town and there are some folks in state capitals that are beating up on businesses. I think if we continue to do that or allow that to happen, we're only sharpening the knife that the left will eventually use on us.

Mangu-Ward: Who are some folks either in D.C. or around the country that you think are doing good work right now?

Ducey: Well, I mentioned the states. Greg Abbott's doing good work in Texas. Everybody's seen what Ron DeSantis has done in Florida. Bill Lee and Bill Haslam before him in Tennessee. Pete Ricketts just came out of Nebraska and you're lucky to have him in the United States Senate here. Hopefully, he can bring a little bit of the common sense of what governors have to deal with. Eric Holcomb in Indiana and Kim Reynolds are also people that are taking states that don't have some of the sunbelt attractiveness but are attracting companies and have their citizens very happy with what they're doing.

Mangu-Ward: Is attracting companies the right measure? I'm thinking here in D.C., we're currently having a battle over where our stadium is going to be. And of course, with that comes a bunch of cronyism. Can you talk about how to make those distinctions?

Ducey: Well, I think a company would be different than a stadium. I was trained at Procter and Gamble that any business that is won on price will be lost on price. So all of the incentives that we had in Arizona were performance incentives and they were in statutes. We were not able to negotiate with that business owner. And listen, if it was all about the numbers and all that mattered was the bottom line on that decision, you would have states going to the absolute lowest cost place in which to do business, but no business owner or CEO moves to where they do not want to live. They also know that quality of life is going to attract their senior management team and their employees. That's the mix that I believe we had right in Arizona. Not only low tax rate regulation, affordable, and reliable energy with excellent education, but we had a great quality of life. They could have confidence that their taxes were not going to be hiked and that they would be able to hire people from across the country and around the globe that would want to come live in these communities.

Mangu-Ward: What do you think about the rise of this kind of economic variant of national conservatism? To some extent, it's a D.C. phenomenon and certainly a D.C. chattering classes phenomenon, but it's manifesting in our politics for sure. 

Ducey: Well, the right has always been a fusion. I think the right, especially from Barry Goldwater, and we like to say in Arizona that he never lost that election in 1964. It just took 16 years to count the votes. But that idea of what William F. Buckley and Goldwater and Ronald Reagan projected was what made the Republicans and the right a majority party. That not only had the fiscal conservatives and the tax hawks, but it had the social conservatives and the people that cared about Second Amendment rights and then Tea Party folks and evangelicals. And each time the party continued to grow. 

I think you see this Washington, D.C. free-con versus NatCon discussion. One thing I wholeheartedly agree with the NatCons is countries have borders and those borders should be protected and ours is not on the southern border. And I think that's lost on people of responsibility here, including the president and vice president, who have not been to the border or understand the situation that ranchers in these small towns are going through. But I think the fusion between the folks that want to talk about national identity and our borders and what you see on the freedom side of the equation is where we'll land. I am much more of a free trader. And I do think that we were able to get some things right in the Trump-Pence administration in finally understanding what was happening in China. 

I know from opening ice cream stores in both Beijing and Shanghai that they were able to play by different rules. No one had ever called them on it. There's an immense amount of trade that happens between the two countries, and I think that both countries benefit. But I don't think it's unfair for us to expect that they behave by a certain set of rules if we're going to continue to do that. 

And the other opportunity I think COVID gave us was that we don't want to be put in that position again with our supply chain. One thing I really liked about the [United States-Mexico-Canada Agreement], which was an improvement of [the North American Free Trade Agreement], my focus was first and foremost on Mexico as our top trading partner. Well, our number two trading partner was Canada. You can say that for pretty much all 50 governors. So if somebody is not going to open their business in Arizona, I'd prefer they open it in one of the other 49 states, if not one of the other 49 states. I prefer Mexico or Canada. That's not only good for North American free trade. It's also good for peace and prosperity. And in any pandemic or global crisis. This doesn't mean we decouple from China, but it also doesn't mean that we allow them to steal our intellectual property and to run roughshod over any way they would like to in which to do business. And we have a vote as well. 

Mangu-Ward: People are going to feel closer to what they're seeing with the Israeli-Palestinian conflict. People are going to feel closer to conflicts all around the world. How does that play out for U.S. involvement, either in terms of foreign policy or trade?

Ducey: Well, I am generalizing here, but I think that you and I have basically come of age in a magical American moment. I mean, in our lifetime we've had one bad day, and September 11th, and it changed a lot in this country. But we were one of two superpowers around the world and we were the only superpower in 1989. And smart people were able to write books where they claimed it was the end of history and freedom and democracy and free enterprise would spread around the globe. And then we had the shock and surprise of 9/11. Now, this is a return to real history. While I fear that we've projected weakness around the globe and these conflicts are what is more normal in the course of time. 

I think us making responsible decisions at home, making sure we're investing in our defense, are projecting strength so that we can achieve peace. And then we're divided as a nation. There is an isolationist attraction right now. This is not new in this nation and it's not new for the right or for the left. We weren't eager to get into World War Two until the morning after December 7th, 1941. What we don't want is that kind of shock to our system or to what's happening around the globe. I do think, of course, Ukraine and Russia's aggression is something we were all talking about until October 7th. And then we saw how fragile geopolitics are right now. So I think we're having a real discussion. This is going to happen in an election year, and I'm going to be advocating that we project strength where necessary and make sure that we keep our alliances.

Mangu-Ward: You mentioned a few influences earlier, Barry Goldwater, Ronald Reagan, Bill Buckley. In this sort of American era that you just described, what were some of your influences that shaped your politics?

Ducey: Well, what [former Gov.] Mitch Daniels did in Indiana, I found very encouraging. I always look for a model of someone that I can study. And Mitch really talked and thought and wrote like a businessman. I'm from the Midwest. I grew up in Toledo, Ohio, and lived there till I was 18. And God bless the Big Ten. But Mitch didn't inherit a state where a lot of people were dreaming of retiring. He did this in the traditional heartland. I thought in his book Keeping the Republic, where a lot of innovative entrepreneurial policy ideas. That really is the great thing about being a governor, most people wouldn't know who a governor is in another state. COVID might have changed a little bit of that because I think you were able to see a real difference between red states and blue states and how we handled it. I didn't realize how many of my peers on the left were closet authoritarians, but before that, we were all trying to solve problems. We might have solved them from a different point of view, but governors are very collegial. 

I spoke about this in my last public speech before I left the governor's office at the Reagan Library about a return to federalism. I simply think that our federal government here in D.C. tries to do too much, and it does most of it poorly. So why doesn't it focus on a national defense and securing the border and reforming our finances to protect a social safety net for our elderly and most vulnerable, and then push everything else back to the states and let the states compete? Governors communicate or collaborate, but at the end of the day, we compete with each other. We want to show up at a Republican Governors Association meeting and talk about who's lowered the taxes the most or who's eliminated the most regulations. We know that Americans vote with their feet, and there will be a time—it may not be in Gavin Newsom's or Andrew Cuomo's or J.B. Pritzker's time—but where these governors will be held accountable for the people that are fleeing their states to go to a better quality of life. I think we would have better policies if we were able to do that with no strings attached because I don't know what happens when someone gets elected to Congress. They can be a good conservative in the state legislature and they come here and all of a sudden they think that you're a middle manager in their federal corporation.

Mangu-Ward: When Mitch Daniels made a kind of earlier foray into national politics, he ended up drawing a lot of fire for saying something that's always stuck with me, which is essentially "we don't have time to do culture wars because our economic situation is so dire and our fiscal situation is so dire. We simply cannot get distracted by culture wars." This was many, many years ago. Was he right?

Ducey: I think the reality of politics is that you have to meet the voters where they are. I have this same sense of concern around our finances and our debt. We've not paid a price for it, so to speak. And when we do, it will be devastating. So I think somehow you have to navigate the social issues and maybe part of the silver lining of an October 7th, if there can be any, is the exposure of what's happening. So many of our universities and our elite institutions that we realize that so young people aren't learning. Twenty percent of these young people don't believe the Holocaust happened and they've divided the world into oppressors and victims. I think if there's an issue right now, it's the woke stuff that you're seeing, for lack of a better way to put it, on the left, and then some of the discussion on the right that is much more top-down and driven from the newly elected king that will come to Washington, D.C. Those are realities. And it's going to be up to leaders to present a better, more constitutional alternative. 

This interview has been condensed and edited for style and clarity.

• Video Editor: Adam Czarnecki
• Video Editor: Justin Zuckerman
• Audio Production: Ian Keyser

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