Economic Theory Ethan Lamb

Oren Cass’ Antidote for the Populist Rage

Oren Cass advocates for changing the underlying conditions so that the market can achieve more auspicious outcomes for working families.

By: Ethan Lamb

Oren Cass advocates for changing the underlying conditions so that the market can achieve more auspicious outcomes for working families.

In an earlier piece, I wrote about the growing populist force, evidenced by Tucker Carlson’s monologue, that attributes many societal troubles to market forces. My conclusion followed like this: Instead of seeking to curb the free-market, government officials should focus on cultivating conditions that are likely to generate more auspicious outcomes through the free-market. Consistent with this notion, former Domestic Policy Director for Mitt Romney’s presidential campaign and current Senior Fellow at the Manhattan Institute, Oren Cass, writes a fascinating policy-intensive book called the Once and Future Worker. Senator Marco Rubio contends that The Once and Future Worker “offers much-needed clarity for how to make the American dream possible for many.” The author of the NYT bestseller Hillbilly Elegy, J.D. Vance, who is often used as a reference for describing the struggles (manufacturing jobs leaving, opioid crisis, etc) in the Rust Belt ,  calls it “among the most important [he’s] ever read.”  The central premise of this book is a push towards the goal of “productive pluralism,” in which policy goals should be constructed around a healthy labor market and an emphasis on work, rather than merely GDP growth. In other words, Cass contends that there are benefits existent in dignified work and community that cannot be captured by the metric of GDP growth. Dissimilar to Tucker Carlson, Cass acknowledges how GDP growth and productivity gains are necessary for a flourishing society—- he just posits that they are not sufficient.  Many of the failures, Cass contends, are the results of misguided regulatory policies and approaches to contemporary issues. This article will primarily deal with explicating his proposals on environmental regulation and higher education. That being said, with a variety of other policy areas discussed, this book is well worth the read in its entirety.

Cass makes the case for manufacturing without subscribing to the protectionist philosophy. He illustrates how it is not entirely the fault of the free-market in constricting employment in this industry. Rather, it’s a pervasive regulatory apparatus that is artificially shifting the demand for labor to industries free of regulation.

With regard to how environmental regulation impacts the labor market, Cass points to the EPA tightening air quality requirements from 75 parts per billion (pbb) to 65-70 ppb in 2014. While seemingly trivial, such a radical change creates “nonattainment zones,” which are areas that do not meet the updated standards. These cities include Atlanta, Baltimore, and St. Louis. Cass advocates for an increase in justifying regulations, in which the benefits of the regulation would have to equal or exceed the cost. This calculation, he points out, would have to account for the cost of unemployment for individuals in this region, among other things. Moreover, current permits allow existing plants to circumvent updated regulations, while mandating new plants to abide by the new standards. Cass notes how “large businesses benefit from barriers to entry that keep newer and smaller firms out, giving them an incentive to advocate regulation that hurts them but hurts their competitors more.” Given these distorted incentives, Case advocates for holding all plants to the same standards. He goes on, “This reform would be the economic equivalent of removing a dam. The current discrimination against new investments holds back a reservoir of capital that would surge forward were it not for the costs and restrictions now imposed.

Furthermore, Cass urges reform on the National Environmental Policy Act (NEPA). NEPA, instituted in 1970, requires the federal government to conduct reviews, including an Environmental Impact Statement (EIS), which can result in thousands of pages and five years before completion. According to Cass, “a completed EIS then provides an invitation for environmental groups to launch lawsuits over the quality of the EIS, occupying years more, even if no legal basis exists for objecting to the project itself.” Such prolonged spectacles predictably stifle infrastructure projects and deter future investments from taking place. Cass proposes adopting a “streamlined review process,” similar to Canada and Germany, that “guarantee short, fixed timelines for review and preclude further litigation once a decision has been made.” Cass points to the conspicuous incongruity in the oil and gas production that has taken place in private land, as opposed to public land.

Cass also addresses how certain misconceptions about higher education have not redounded to the country’s benefit in recent generations. He laments both a watering-down of the high school education system and the “college for all” initiative advanced by politicians. He points to the fact that, despite the doubling of per-person spending in the k-12 education system since 1970, the average National Assessment of Education Scores for both reading and math have not increased. In fact, national SAT scores have actually declined. Moreover, he continues, “in states where almost all high school seniors take the SAT, only about one-third achieve scores that would indicate a likelihood of B minus average at a four year college.

There has been external pressure on school districts to inflate their graduation rates. This, however, has come at the expense of actually educating kids. Cass writes:

In the nation’s capital, the Washington Post headlined with a straight face that the “Entire Senior Class at D.C.’s Ballou High School Applies to College,” even though the school’s graduation rate the prior year had been only 57 percent and few than 5 percent of its students had passed citywide standardized exams. A National Public Radio investigation discovered that half the graduated missed at least three months of senior-year classes and that teachers had faced overwhelming pressure to pass failing students. More than one-quarter of the teaching staff quit during the year.

While specious studies indicate a premium on college attendance, Cass contends that important omitted variables in these studies are intelligence and work ethic. In other words, the causal impact in expected income level is not college itself. Rather, on average, students with these formidable characteristics are inclined to go to college. This means that, perhaps, a restructuring of the education can leverage these students’ expected income, in ways that a bloated college system cannot. College, in large part, is responsible for the distortion of the labor-force and skills-gap that to blame for lagging productivity. When referring to college graduates, Cass states:

Roughly speaking, one-fifth of all students were already off-track and did not join their classmates crossing the stage. Another fifth will move from their senior year to something besides further schooling. The third fifth will enroll in college but fail to complete it. Yet another fifth will complete some form of college but land in jobs that don’t require the degrees they just earned. Despite decades of teacher training, student testing, and standards, as well as school choice and hundreds of billions of dollars in new annual education spending, only a final fifth will successfully navigate the path—high school to college to career—that is our education system’s ideal.

By no way is it compassionate to exhort younger generations to accrue an insurmountable amount of debt for a major that bears no relation to future vocational field. The underwhelming results of the bloated higher education system is underscored by a report Brookings Institution study in which it was found that, “although college attendance rates have risen steadily in the United States for the past two decades, bachelor’s degree attainment has not improved at all.” In fact, Cass points out, the percentage of twenty-five-year-old Americans with at least a bachelor’s degree was lower in 2015 than it was in 1995.

As a solution, Cass advocates for a “tracked system” that, in varying degrees, is practiced throughout most modern counties. Such a system does not preclude from ever achieving an upper-class status. The New York Times notes that “it is not uncommon to find executives in Europe who got their starts in apprenticeships.” Cass suggests that the tracking process would start in ninth or tenth grade and would emphasize “practical skills, offered opportunities to explore different industries, and instilled in students the flexibility to adapt and learn as their careers progress.” By the eleventh grade, the amount of time between classroom learning and vocational training would shift in the direction of vocational training. The Swiss system, which Cass uses an example of success, has roughly two-thirds of students pursue a vocational training route. Germany, which has also constructed a robust apprenticeship system, has a success rate of 80 rate in terms of young adult employment rate after graduation, compared to the United States’ meager 48 percent rate.

Specifically, Cass outlines a model where community colleges would bid to become “program sites,” offering a two year Advanced Manufacturing Technology (AMT) associates degree. Employers would sponsor the students and be able structure the program to best fit their needs. Students would spend two eight-hour days in the classroom and three eight-hour days working and accruing experience. Cass stipulates that with no net increase in education spending, “America could offer every tenth grader additional classroom learning, a subsidized three-year apprenticeship for which he might also be paid, and a savings account with $20,000 to $40,000 awaiting upon completion. It is reiterating Cass’ attention to the labor force and market when discussing such proposals.

The “college for all” initiative advanced by the federal government through subsidies and federal loans programs has generated a large artificial increase in demand for college, thereby eminently increasing the price. In public policy, many of the concerns surrounding the skills gap and lagging productivity growth are simply being ignored and obscured. Many political figures now promulgate a vision where the distinctions between college and high school education are increasingly blurred. By prolonging general education, the marginal cost of forgoing an expeditious path to a stable career far exceeds the marginal benefit of a college education for many people. Cass does a good job avoiding the temptation to pander to the populist outrage and lament the changing demands in the labor market. Rather, his reforms are designed to equip young adults with the requisite skills to join the labor force. Adopting Cass’ vision for education policy would go a long in aligning future generations’ capabilities with available work.

In sum, Oren Cass manages to unite Tucker Carlson’s instinctive apprehension with substantive policy reforms. Populist movements often devolve into resentment politics and counterproductive policies. Tucker, like many other populists, is guilty of throwing the baby out with the bathwater. He sees contemporary problems in society and attributes the cause to market forces. Capitalism has always engendered responses from reactionary movements, and creative destruction has always dispelled such fears. We have reached a uniquely prosperous time in human history and it is always worth protecting the precise mechanism that powered the engine of prosperity. Oren Cass knows this. He advocates for changing the underlying conditions so that the market can achieve more auspicious outcomes for working families. Economic policies alone cannot explain the entirety of the discourage trends in the middle-class. However, reactionary calls to stifle market forces can certainly make them worse.

Works Cited:

Image Source: Cass, O. (n.d.). The Once and Future Worker: A Vision for the Renewal of Work in America – Kindle edition by Oren Cass. Politics & Social Sciences Kindle eBooks @ Amazon.com. Retrieved from https://www.amazon.com/Once-Future-Worker-Renewal-America-ebook/dp/B079617VFZ

Cass, O. (2018). The once and future worker a vision for the renewal of work in America. New York: Encounter Books.

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