Book Excerpts

Crisis of Responsibility

Table of Contents

1. Building Walls: A New Era
From Brexit to Trump, a new world is here, where famed orthodoxies of the power of globalism are no longer taken for granted. Global coordination is no longer assumed to be the win-win it claims to be. Trust in institutions is at historically low levels. Working class and middle-class people feel at odds with “elites” in government, media, and finance. This distrust has organized around populist sentiment, even anger, and changed electoral history. There is no point in denying what has happened, but there is a huge need to understand it, appreciate it, and form a thoughtful response to it.

2. Name Your Bogeyman: Wall Street, Washington, NAFTA, China, Mexico, and the Media
The most popular foes of this new era are evaluated and dissected for what they are, what they are not, and what they are perceived to be. A coherent analysis is offered on how the American people see these culprits in the attack on their quality of life, where fact separates from fiction, and where perception is given license to become reality.

3. Disintegrating Responsibility: The Social Foreshadowing to the Present Crisis
Where cultural fibers of family, morality, and accountability unwind, so will economic opportunity and social mobility unwind as well. And it is exactly that which has transpired in our society over one generation – and the data makes it abundantly clear. The groups most struggling in the new global economy are the groups that have seen family structures disintegrate around a new low in personal accountability.


4. Occupy Main Street: The Moral Confusion of Vindicating the Culprit
Past is prologue, and the 2008 financial crisis is the quintessential embodiment of everything this book is about. The great recession and financial crisis of not-so-long-ago dismantled faith in institutions from Wall Street to Washington D.C. But before we throw out the Fed, Fannie Mae, and Goldman Sachs, maybe we the people should also take a hard look at the man in the mirror. What we learn from examining the evidence is that it was the monsters on Main Street who helped trigger the perfect storm of financial collapse, not just the demons on Wall Street and K-Street.

5. The Robots Are Coming: What Free Trade and Automation Mean for the American Worker
At the heart of the modern angst is the plight of the American worker. Manufacturing onshore has been described as dead and gone, even as manufacturing productivity has exploded. An economic analysis is needed on what has happened with these trade deals and the game-changing role of technology in what is about to happen next! Could it be that automation and globalization (not globalism) represent the opportunity of a lifetime for the American worker?

6. Pro-Business or Pro-Crony: Where Corruption Erodes Our Cultural DNA
The Right rightly believes in the efficacy of free markets to create prosperity, and yet it has failed to protect free markets as truly free. Corruption abounds whether it be “hard” corruption (bribery, crooked deals, pay-for-play), or “soft” corruption – companies using lobbying and zoning and regulation to stifle competition and protect their fiefdom. The survival of free markets as the vessel of prosperity and growth depends upon crony-free markets. Cleaning up and preserving those markets is perhaps the greatest policy challenge facing America today.


7. Empowerment through Educational Choice: The Great Civil Rights Issue of Our Day
Is it any surprise that we have a population that feels “left behind” when we have an education system in which many are, quite literally, left behind? The resentment many feel today starts with the disparity in educational opportunities. Voucher systems, tax credits, and the charter school movements (the “pro-choice education community”) have been viciously attacked by public employee unions. This is the greatest and most legitimate populist issue. The victims? America’s children and our hopes of future prosperity.

8. Where Culture Trumps Green Card: Patriotism, Immigration, and Nationalism
The sentiment behind President Trump’s vision of an America that puts the American worker first is both understandable and defensible, but the policy meat on the bone requires a more cohesive understanding of how immigration works. What should a smart, national security-friendly, and globally competitive immigration system look like? Is it possible to be pro-America and pro-immigration? In fact, it is impossible not to be!

9. Higher Education’s Safe Spaces: Kerosene on the Crisis
If the populist craze has a reason to be livid, it is at the state of higher education in America. The pillars of leftist institutional academia promised economic security and an incredible educational experience. Instead, they delivered a horrific debt burden accompanied by the coddling of the student’s feelings and numbing of their ethical compass.


10. Government By the People, For the People: Why the Stunning Incompetence and Inefficiency of Big Government is the People’s Problem
A representative democracy generates the government the people want. Elected officials vote the will of their constituencies, or they are thrown out. Politicians abuse and misuse power, but at the core of a large federal government failing to do its job is a populace asking for too much, and understanding too little.

11. The Responsibility Remedy:
Ten Ways You Can Compete, Prepare, Defend, and Get Ahead
When we look at all the problems around us, it is easy to give into the false notion that the system is rigged, and that financial security and even prosperity are available only for insiders and elites. Americans must say goodbye to that defeatist attitude and understand the economic and practical realities that create wealth.

12. The Cultural Remedy for Main Street: A Vision for a Free and Virtuous Society
The moral and social fabric of our society must be improved to improve civic life, including strengthening mediating institutions (families, churches, community organizations, etc.) which serve at the core of civil society and do not rob individuals of dignity or humanity. A re-moralization and a renewed belief in responsibility starts with shedding scapegoating, repudiating victimization, and asserting bold individual determination in our lives and communities. Only then can America expect to experience prosperity as we move forward in this populist era. Only then can our nation once again shine like a city on a hill.


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Crisis of Responsibility –  Chapter One



A New Era

There are more ideas on earth than intellectuals imagine. And these ideas are more active, stronger, more resistant, more passion­ate than politicians think. But it is because the world has ideas (and because it constantly produces them) that it is not passively ruled by those who are its leaders or those who would like to teach it, once and for all, what it must think.

In the case of everything that belongs to the realm of sentiment, religion, politics, morality, the affections, and antipathies, etc. The most eminent men seldom surpass the standard of the most ordinary individuals. From the intellectual point of view an abyss may exist between a great mathematician and his boot-maker, but from the point of view of character, the difference is often slight or nonexistent.

June 23, 2016—the voters of the United Kingdom went to the ballot box to express their views on a controversial referendum to exit the European Union. Although Brexit, the shorthand term for the vote, had taken hold in American media, the substance of


the referendum, and certainly the true implications, meant very little to the average American.

For one thing, the referendum was not expected to pass. Polls had fluctuated a bit, with some showing it modestly leading and some showing it modestly failing. Betting markets consistently showed the referendum likely to fail. Despite being averse to any form of uncertainty, U.S. stock markets rallied dramatically the week before the vote. Clearly, few believed something as dramatic as a world superpower (Britain) leaving a core global institution (the European Union) was likely to happen. As the Dow Jones Industrial Average advanced 500 points in the week before the vote, pundits proclaimed that cooler heads would prevail. Ratio­nal, mature voters would override the temper tantrums of the ignorant few.

I had an uncommon opinion about the vote. I was (and remain) convinced that a British exit from the European Union would be the right decision for Britain. And yet, I was also con­vinced it would not prevail. Polls, betting markets, and, most significantly, the ruling elites of most institutions agreed it simply would not pass, regardless of the merits of the arguments.

Yes, there was some angst among the masses to be addressed. Sure, the more liberal posture on refugee immigration had created complexities in Britain (and across Europe) that were proving to be a bit of a nuisance. But, at the end of the day, the esteemed wisdom of the elites would prevail. The people would fall in line, the elites told us. The advanced and cosmopolitan population of Britain wouldn’t dare cross the wisdom of unac­countable bureaucrats in Brussels.

The elites had it all wrong.

Brexit was less about the arguments for and against and more about what the vote itself revealed. The vote revealed a par­adigm shift taking place around the world that transcends the United Kingdom.


Yes, the voters of Britain stood against global authoritar­ianism, and, yes, they stand to benefit from reclaiming their sovereignty on matters of immigration, trade, and geopolitical policy. But the Brexit vote revealed something real and pro-found—a growing sense of distrust toward and dissatisfaction with the institutions of modern society. It gave voice to the growing belief that the cultural elite—long believed to be the responsible ones in society—have lost their way.

To be fair, elitist arrogance that Brexit would not pass was forgivable. Even supporters of the move, like myself, predicted failure. I appeared as the “pro-Brexit” advocate in a May 2016 debate sponsored by the World Affairs Council and British-Amer­ican Business Council. My “anti-Brexit” debate opponent, former Allergan CEO David Pyott, argued passionately that the move would be a disaster to British economic opportunity. I argued in defense of Britain’s sovereignty and the opportunity to enhance their economic standing outside the European Union. After two hours of debate, the moderator asked for a show of hands as to who believed the Brexit vote would pass. Almost no one raised a hand—not even me—in spite of nearly half the audience agree­ing with me by the end of the evening.

Ironically, the arrogance with which elitists predicted the disintegration of British society discredited the ruling class. I appeared as a special guest on CNBC’s Squawk Boxthe morning after the referendum vote to discuss the stock market outlook in light of the Brexit surprise. Stocks were indeed pointing down­ward that morning. Financial Times managing editor Gillian Tett appeared on the show just before me. She pontificated that the Brexit impact would be on the scale of the Lehman Brothers bankruptcy of 2008—the precursor to the largest financial crisis of the last eighty years!

Her prophecy of market collapse and economic catastrophe stood in stark contrast to my claims on the show minutes later.


Famed economist Jim Grant joined me to insist Brexit not only was not a systemic event, but also was likely to create incred­ible buying opportunities if market prices dropped enough. To be candid, neither one of us could have guessed the market drop would end in a few days. The ensuing post-Brexit market sell-off would last only forty-eight hours. Markets would fully recover and even set new highs just days after the vote.

Nevertheless, behemoth financial institutions said they would be forced to withdraw thousands of jobs from London if Brexit were approved. To date, no such job relocations have taken place, and superpower financial firms have walked back such Chicken Little forecasts. In the face of such fearmongering, the vote of the British people to exit the European Union was quite the declaration. They no longer only questioned the legitimacy of “the establishment”—they questioned its very credibility.

Trumping Brexit

Not to be left out in 2016, America also demanded a seat at the table of unexpected political transformation. The contrarian reality of the Donald J. Trump candidacy and eventual election to the presidency made Brexit look like a sideshow. Campaigning as a sort of conservative Huey Long, the billionaire real estate developer and Fifth Avenue Manhattan resident ran the first populist campaign since Ross Perot—and the first successful one in a century or more.

Initially dismissed as a publicity-seeking reality TV star (including by this author), his campaign quickly morphed into one of the most historical political events of our lifetimes. His road to the Republican nomination first had to go through some of the most qualified and recognizable Republican candidates ever assembled. From the extremely well-financed, former suc­cessful governor of Florida, Jeb Bush, to the young conservative


stars Marco Rubio and Ted Cruz, each member of the sixteen-per­son field tried and failed to block the nomination of Donald Trump. The candidates were not considered weak conserva­tives or questionable Republicans. They were mostly traditional Reaganite conservatives, strong on Republican orthodoxy and untainted by scandal or personal damage to their candidacies. But in 2016, traditional Republican orthodoxies weren’t generat­ing massive crowds or blowout primary wins. The broad policy platform that has always served the Republican Party well—tax cuts, smaller government, balanced budgets, entitlement reform, and the hope of a more restrained Supreme Court—were not enough. In fact, they were not even necessary.

A sort of poetry took over the 2016 election cycle. It was decidedly sociological, populist in nature, and struck a unique chord in the national psyche. Time and time again, enthusiasts for Donald Trump claimed they were attracted by his “outsider” status and commitment to change the way business is done in Washington, DC. Trump complained about Wall Street; the busi­ness-friendly GOP base ate it up. He criticized the Left, not for being too liberal but for being ineffective. He didn’t campaign on making government smaller; he campaigned on making it more productive (more “businesslike”). He didn’t try that hard to reach out to the social conservative wing of the Republican party; he reached out to all in the party who were tired of media bias and political correctness. He donned a red ball cap and filled arenas with thousands of people as he promised to undo the damage caused by the “establishment”—lumping the media, the Beltway insiders, and the GOP leadership all under one broad tent.

A fair and charitable interpretation of the Trump move­ment, and certainly of his successful bid for the presidency, is that Trump was an imperfect candidate who crafted the perfect message for a key constituency—a certain middle-class and


lower middle-class economic group that had not participated in the economic growth of the last two decades.

The message was simple: the system had been rigged against them. Regardless of the messenger, that message resonated. From free trade deals such as the North American Free Trade Agreement (NAFTA) and the proposed Trans-Pacific Partner­ship (TPP), to the rising number of immigrants who crossed our southern border illegally, to the war in Iraq which cost unfath­omable dollars without a clear win for America, to the way China managed its currency, to American companies sending jobs offshore—Donald Trump tapped into a list of frustrations.

Most importantly, all of them provided reasons for this frus­trated and neglected constituency to feel like victims. All of them provided bogeymen, problems that President Trump promised to confront and resolve. All of them fed a powerful narrative that establishment forces had enjoyed their fun for far too long. A new sheriff was coming to town.

This political phenomenon would never have happened if this target voting market hadn’t been frustrated to begin with. Although the phenomenon hit its peak in 2016, resulting in the nomination and eventual election of Donald Trump, the reality is that it had been building for at least an election cycle or two before it. Rick Santorum, a perfect encapsulation of social con­servatism and economic populism, came extremely close to winning the Republican nomination in 2012. In the cycle before that, Mike Huckabee, an early representation of that same blend, was the near spoiler. While neither Santorum nor Huckabee crossed the finish line, their unlikely and extraordinary show­ings demonstrated that populist angst was brewing.

Many perspectives exist about each of the 2016 campaign issues, and, indeed, this book will parse some of those issues with what I hope to be precision and fairness. But like the Brexit vote, the media and punditry class simply could not believe what


they were seeing take place. I’m not referring merely to those who didn’t believe Donald Trump would prevail in the race (that included the vast majority of Americans). I’m referring to those who could not see the movement, did not understand the pent-up generational resentment, and were not convinced any cultural divide existed in the first place.

The 2016 Trump win revealed that a large segment of the country had no clue what an even larger segment of the country felt. As with the Brexit tale, myopia was most prevalent in large cities, coastal enclaves, and the big media and financial firms. Sociological disparity more than partisan differences caused them to miss the reality that a significant bloc of Americans felt left behind.

Understanding that angst, the reasons for it, and the cultural implications of it on our economy is the subject of this book. I don’t intend to address the question of whether or not Donald Trump represents the solution to specific campaign issues. At the time of this writing, he is the president of the United States. In due time there will be a political and historical record of his pres­idency and the impact of his policies. That is not my aim here.

I want to go deeper, into the cultural substrata, to discover what has gone wrong for so many in this new era of the Amer­ican experiment. I’ll candidly consider the implications of what we find and identify the chief malady keeping us from confront­ing what I call a crisis of responsibility—our cultural addiction to blame.

Someone Blame Somebody for Something

I focus on economics, not only because of my financial expertise, but because economics matter a great deal in assessing the lay of the land. Since the U.S. financial crisis of 2008, GDP growth has underperformed its own trend growth by at least 1 percent per


year (see Fig. 1.1).1 As a result, our economy is estimated to be $2.8 trillion less than it other wise should be.

A series of cultural and economic factors contributed to this break from trend line growth, creating a negative feedback loop. Consequently, the growth disruption itself has exacerbated the cultural and economic malignance that helped create the under-performing trend in the first place. Serious analysts must be careful not to miss the vicious, cyclical nature of this effect.

However, the angst-filled population bloc that revolted against globalism and institutionalism of all stripes is probably not parsing distinctions about GDP growth, economic causation, and other such academic nuance. Hundreds of millions of people worldwide have simply lost faith in the “smartest people in the room,” the alleged gatekeepers of the economy, key institutions,


*Strategas Research, 2017


and political structures in society. Much of their lack of confidence is wholly justified, even if the frustrated don’t fully understand what has caused the problem.

But they want someone to blame for it. As I’ll demonstrate throughout the book, what has emerged in our culture is a “scapegoatism” run amok—a victim mentality that is dangerous to all, regardless of political affinity or socioeconomic class.

Our stalling GDP growth didn’t cause the current unrest, although it has accelerated it. Many other economic data points enter the fray, but the break from trend line growth captures nearly all of them. Wage growth has continued to stagnate. The income inequality conversation seems to have transcended normal class-warfare rhetoric. While many of the economic forces behind the present era are abstruse, a paycheck that isn’t growing is simple to understand. Human nature being human nature, people watching their paychecks decline tend to become resentful toward those experiencing income growth. Trade deficits are not easy to comprehend (quite frankly, as I’ll demonstrate in later chapters, even many professional econo­mists do not understand trade deficits), but the general feeling is that most people are now on the outside looking in at the real opportunities.

One need not be a neo-Marxian or class-warfare leftist to see that the green-eyed monster of economic envy has been stirring for years and laid the foundation for many of the walls—ideo­logical, social, and physical—that we hear so much about in this new, angst-driven era.

This new era is not defined solely by an economic and polit­ical tantrum. A significant number of Americans feel talked down to, forgotten, and disconnected. Blue-collar whites don’t feel only economically separated from white-collar whites, but socially separated, as well. Political analyst Sean Trende refers to this divide as “cultural cosmopolitanism” versus “cultural


traditionalism.”2 These two camps have different perspectives on family, church, education, and country. Their cultural differ­ences have produced a level of social angst, because the more cosmopolitan camp largely “occupies the commanding heights of American culture.”3 The result is a complete distrust of key institutions in our society. The media, big business, big finance, and higher education are now often held in contempt, not just for their ideology (though that’s part of it), but because they collectively form someone to blame for the present malaise—a composite scapegoat, if you will, on which fears can be placed and railed against at rallies.

Are the fears fair and coherent? Certainly not. But they’re not irrational and random either. As my colleague Jonah Goldberg, leading conservative pundit at the National Review Institute, says:

To the extent that Donald Trump has damaged democratic norms, his success is attributable to the fact that elites— in journalism, but also in academia and elsewhere—have corrupted those norms to the point where a lot of people see them as convenient tools for only one side in the political and cultural wars of our age.4

Thus, my objective in the pages that follow is to sort the truth from the misunderstandings about what has compromised American productivity and, indeed, American prosperity. It is not my intent to defend the forces of anti-elitism or anti-global­ism, which have so much momentum in this new era. In fact, my intent is to provoke a counterintuitive conversation about what really ails us all, and offer concrete suggestions as to where sub­stantive and generational remedies may be found—if we have the courage and candor to pursue them.

I don’t intend merely to condemn one guilty party (arro­gant institutional elites), but then embrace an ignorant victim


mentality that ignores the cultural tides of this era. The para­digm for returning to the possibility of prosperity for all is not one of choosing between the elites and non-elites, the strong and the weak, or the influential and the oppressed. That’s the picture that has been painted. It is not lacking some prima facie support, but it is incomplete at best, and dangerous at worst.

My counterintuitive presupposition is that the forces of elitism and statism, which are so despised by so many, stand to grow by leaps and bounds as a result of this present global angst, if we fail to understand the core cause. If the efforts to delegiti­mize and disempower elite forces is temporarily successful, but the weak and morally emasculated alternative falls on its face, I am quite convinced that out of the ashes of this groundswell failure will come greater bureaucracy, greater institutional arro­gance, and far-reaching top-down authoritarianism that will crush the cause of freedom.

There is no wall in this new era that cleanly divides us into two sides. One may advocate for free trade and still support Brexit (as this author does). One may live in a more culturally cosmopolitan part of society and still be patriotic to the core. On the myriad of issues in our national conversation, there is room for nuance in almost every single one. A sincere investigation of these issues will not create a simple, binary choice between “establishment” and “populists.”

And yet, the one perspective that has the potential to destroy us all, and which must be unilaterally rejected if we are to stave off the coming authoritarian backlash, is embracing victimhood. To reject victimhood, we must first understand howand why so many hot-button issues are being framed as scapegoat issues, reasons for someone to blame somebody for something.

Room exists for disagreement on policy specifics on issues like immigration and trade, but there can be no doubt about these three things:


  1. A new era is upon us, and the political, social, economic, and cultural effects are just beginning.
  2. Our path forward must reject the institutional arro­gance and elitism of top-down control.
  3. Yet, we must recognize our cultural addiction to blame, properly understand the key issues, and forge a new culture of responsibility in which free people become virtuous people, and virtuous people become productive people.

Where It All Begins

There exists a tension in these present times for people of my ideological bent. That tension partly motivates my writing. On one hand, there are natural forces in society right now that demand attention. The beliefs that created a large and impo­tent European Union are real. A form of secular humanism has clearly metastasized in our culture, aided by the ivory tower of academia and the liberal, unchecked media. The economic landscape has helped create a frustrated group of people who feel forgotten and alienated. Those who resent the arrogance of elitists are not without basis; those who portray economic frus­tration are not fabricating these sensations from thin air.

These are all true; however, what is “on the other hand” is what drives my passion on these pages. There is no need to ignore the reasons for angst, but we do need to get the remedy right. Any prescription that misidentifies either the cause or the cure could prove fatal for the patient.

I am a limited-government advocate who has long believed that the size of government is in direct, inverse correlation to the responsibility of the people. My concern is that behind much of the cultural angst today is a narrative that blames great and powerful forces, not unlike the mysterious, unknowable wizard


behind the screen in Oz. These forces become the scapegoats, almost always with some level of legitimacy, while individual people are indemnified.

I contend that the key stakeholders in our societies—individ­uals, families, and communities—must not be permitted to play victim and avoid careful scrutiny. Where policies and prevailing attitudes have served to disenfranchise some, we must note it as such and fight for change. Yet where irresponsibility abounds and culpability lies, we must say so and prescribe solutions that honor the dignity of every stakeholder while calling them to greater moral accountability and individual responsibility.

Trade, immigration, capital markets, big media, and other global realities are key issues to be addressed. However, the key to American prosperity is not to feed our cultural addiction to blame, but to begin—right here, with both you and me—to make responsibility matter again.


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Chapter 11 – The Responsibility Remedy: Ten Ways You Can Compete, Prepare, Defend, and Get Ahead