Steve Bannon isn't a fan of Austrian Economics

AP Photo/Gerald Herbert

Writing in The New York Times Magazine about last week’s stillborn RyanCare bill, Robert Draper recalls a conversation he had with White House strategist Stephen Bannon earlier this year. Bannon, lamenting the ability of both congressional Democrats and Republicans to get things done, contrasts the identity-obsessed progressives with the one-trick pony conservatives:

What’s that Dostoyevsky line: Happy families are all the same, but unhappy families are unhappy in their own unique ways?” (He meant Tolstoy.) “I think the Democrats are fundamentally afflicted with the inability to discuss and have an adult conversation about economics and jobs, because they’re too consumed by identity politics. And then the Republicans, it’s all this theoretical Cato Institute, Austrian economics, limited government — which just doesn’t have any depth to it. They’re not living in the real world.

There’s quite a lot to consider in these few sentences. For starters, Bannon clearly is not as familiar with the mindset of congressional Republicans as he imagines. They are primarily concerned with how the whole “repeal and replace” debacle plays back home. Bannon seems wholly unaware that incentives matter, that his only carrot or stick with regards to individual members is getting them reelected or un-elected. While Trump is likely to remain popular in deep red counties and states, it’s doubtful Bannon can leverage this to create an effective “enemies list” of GOP recalcitrants. For the majority of congressional Republicans the only existential threat to their jobs comes from their right flank in a potential primary, and supporting a watered-down version of the ACA may well hurt them worse than Bannon’s wrath. The only incentive that matters is reelection, not having “adult conversations or governing.” Is the wizened Bannon, architect of the brilliant Trump campaign, really so naïve about Congress?

Second, Republicans in Congress hardly are under the spell of the Cato Institute or Austrian economics (undoubtedly Bannon sees these two things as synonymous, although they are not). We know Bannon has read Sun-Tzu and Aristotle, but has he read the Austrian literature he dismisses so casually? His notion that the GOP conference is full of ideologues, much less libertarian ideologues, is just flat false. The GOP is the party of trillion dollar military budgets, the party that wants to protect Social Security and Medicare-provided prescription drugs, the party that won’t even kill an openly cronyist program like the Export-Import Bank. The House Freedom Caucus, which arose from the remnants of Ron Paul’s liberty caucus, shows occasional libertarian tendencies. It has a worthy role to play as spoiler for bad bills like RyanCare, but it’s hardly an ideological driver in Congress. And Bannon, like so many political observers in the media, fails to understand how little think tanks influence policy in the Beltway. Organizations like the Brookings Institute, the American Enterprise Institute, and the Heritage Foundation are orders of magnitude larger than Cato, yet few in Congress really read their material more than superficially. The real game in DC doesn’t involve think tanks and public policy, it involves lobbyists quietly putting language into authorization and appropriations bills at the committee level. An anti-establishment maven like Bannon should know this.

Third, Bannon’s use of the word “depth” belies a progressive longing for merging nation with state. And of course he’s right: Austrian economics per se, or any brand of economics, has very little to say about blood, culture, soil, language, and nationhood. Social science, at least honest social science, is not prescriptive. Economics can’t provide  a normative system, political science can’t Make America Great Again. But the libertarian response to this is simple and direct — nation is not state. Greatness, even goodness, is outside the purview of government. Culture is beyond the realm of politics. Work, family, markets, and civil society are the foundations of a robust civilization, not the state. The deeper the state, the shallower the civilization — and vice versa. To the extent Bannon sees “limited government" and laissez-faire economics as abstractions that fail to provide a satisfactory worldview, it’s because he sees government as the organizing principle for society. It’s a grandiose view of statecraft that libertarians reject.

Finally, there’s the old “not living in the real world” chestnut. How many times have libertarians heard this one? All around us are the almost unimaginable benefits of markets, cooperation, and technology, yet somehow we’re naïve if we don’t want to funnel human activity through government cattle chutes. The vast material and digital abundance we enjoy every day is provided without any state apparatus, in fact in spite of that apparatus. Is this private world not part of reality? Government is the artifice, and statists are the utopian dreamers who imagine that individuals acting under the magical banner of government can plan, coerce, and coordinate millions of lives. Realpolitik, Bannon’s idea of real-world governance, created a pile of several million bodies in the 20th century. If that’s the real world, perhaps it’s time to give libertarian theory a try.

Jeff Deist is president of the Mises Institute. He previously worked as a longtime advisor and chief of staff to Congressman Ron Paul. Contact: email; twitter.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

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