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ICYMI: Rubio Joins the American Compass Podcast
U.S. Senator Marco Rubio (R-FL) joined the American Compass Podcast to discuss pro-America industrial policy, Common-Good Capitalism, the push to ban TikTok, and more. See below for highlights and listen to the full interview here.
On Rubio’s journey to Common-Good Capitalism:
“I’m a product of traditional late 20th-century, early 21st-century conservatism. It basically was an environment that argued that the free market was not just the best economic model in the world, but that it was virtually a perfect one. The more you allowed it to work, the more problems would take care of themselves.
“Obviously, these are thoughts that operated in the context of the end of the Cold War and 30 years of a unipolar world where, frankly, America held not just a foreign policy influence over the world, but sort of an economic flexibility that obviously it no longer possesses and hasn’t possessed for much of its history, but it has over the last 70 years since the end of the Second World War and certainly since the end of the Cold War.
“I’m a big believer in the American dream, I’ve lived it. My parents were immigrants who worked in the service sector as a bartender and a maid. With that, they made enough to own a home and raise four children and retire with dignity and leave all four of their kids better off than themselves. I’m not just a product of the American dream. I’m a witness to it. And it gives me tremendous optimism about America and its future.
“Then I run for president, and suddenly, as you’re putting this message out there about how wonderful the country is, how special we are, and how fantastic the American dream is, you’re running into people that are not nearly as optimistic, not because they don’t love America and don’t believe in it, but because their life experience has been different.
“Where my family’s experience has been upward mobility, theirs has been stagnation…. Their stories are about people that, for example, in two generations worked in a certain industry that overnight picked up and left. They were told that the job that left was going to be replaced by a better job. Sometimes that didn’t happen. Sometimes that better job was halfway across the country, and they did not want to move. Sometimes that better job required a 45-year-old to go back to school and learn how to do things that by the time they got back in the workforce were not going to add up.
“Then, not only did they lose jobs, but it began to have an impact on their culture and community. The city, all of the places that once made that town what it was, the PTA, the Little League, the civic organizations, the churches and synagogues. All those things began to crumble. Now you have people that are living in the societal impact of it.
“They’re not nearly as excited about the future. They believe in the American dream as it once existed, but they think it’s dead and in trouble…. Florida is in many ways a frontier state, it’s the state of people who move in search of a better life. It has a very unique economic mix. When you realize that there are whole swaths of the country that feel very different, you start to understand it. It forces you, I think, if you’re serious, to delve into it a little bit and say, well, what exactly is going on here?
“What you learn from it is what [American Compass has] been working on when it comes to economics. We built this on the assumption that borders no longer mattered, that nation-states no longer mattered. Really what mattered now is that all of us became consumers in global markets and citizens of the world. That idea has not worked out well for America.
“It has indeed displaced, I would argue, in every Western industrialized country, millions of people, [who] are very upset about it. It has had all kinds of disastrous social implications and, to add to that, all kinds of implications for the stability of our economy. It has created an economy today that’s largely powered by finance and high-end services. There’s nothing inherently evil about either one of those industries, but they won’t do you much good in a time of conflict or need. America didn’t win World War II with its banks. It won it with its tanks that were built by factories that used to make cars and tractors and all of a sudden were repurposed.
“The fundamental question is whether the free market is the best economic model in the world because it will always allocate capital to the most efficient use. What happens when the most efficient outcome, the market outcome, is not in our national interest? That does happen. It happens when you talk about rare earth minerals or semiconductors or pharmaceuticals, you name it. What happens when the market says the cheapest, most efficient place to make this is halfway around the world in a country that’s hostile towards us…? What wins out, the market or the national interest?
“That’s not to mention what happens when jobs vanish, American jobs vanish. The trade-off between that and the cheaper product being sold at Walmart or Target, is that in our national interest? That’s the conversation that is the balancing and the analysis that I think traditional 21st-century free-market fundamentalism within the conservative movement has missed.”
On the financialization of America’s economy:
“It would be an error to say that the Left is totally absolved here…. One of the interesting things about it is that the Left is actually deeply invested in the financialization of our economy. Huge donors who are aligned with them on most social issues and cultural issues [have driven financialization]. Bill Clinton had as much to do with this as anybody else by giving China most favored nation status and then admitting them to the World Trade Organization and allowing their mercantilist policies to undermine our economy.
“I think, as a conservative, we have to have a balance here. It comes down to this: do we exist to serve the market, or is the market here to serve us? I mean us both as people and as a country. [My intellectual journey] was really an evolution over time. To live is to learn and to adjust to new information as it comes in. When you’re exposed to this, if you’re serious about the job you do, I think you have to start analyzing it…. I would say that process has been going on for a couple of years, but that 2019 speech [at Catholic University] was really the first time I was given an opportunity to sort of talk about it holistically….
“I’m not accusing [people in the finance industry] of being cocaine dealers or narco-traffickers. They’re doing something that’s existed for a very long time. It’s just never been considered a core function of an economy. It’s an important function. People have to put money somewhere, both hardworking, everyday people and big investors who’ve made money and want their money to make money. They deposit that money somewhere. What finance is, is a middleman. It basically takes that money and provides it to people that have a good idea, so that they can pay for starting up that business or expanding a business and being successful.
“Finance is basically a service. That’s what it is. It doesn’t make anything, but it does provide capital to those who could make things. What’s happened now is that finance has become an industry in itself. If you see some of the great titans of American business and people we celebrate for great success and where a lot of the wealth has accumulated, it’s people that have basically used other people’s money to invest it in functions that may or may not have resulted in productivity or the creation of something….
“[You make] money off an investment primarily by figuring out, how can I make the most by investing the least? How can I produce the most income or revenue or profit with the least amount of cost? What happens with that is it relegates workers to a number of inputs as opposed to the fact that they’re human beings, upon which society depends not just for the functioning of our economy, but for the functioning of a nation-state.
“The second thing it overlooks is globalization. Today, investing in a business that has an address in the United States does not necessarily mean you’re investing in an American business. You may very well be investing in a company which is making more profits because it has been able to take what it used to do in America with Americans and do it somewhere else for a fraction of the cost…. That’s a problem, because now those Americans who’ve lost their jobs start to have an impact on their family, community, society, and culture…. [And] if the product that they make is something that’s essential and important to our country, you’ve now created these very long and vulnerable supply chains that can be disrupted by anything from a pandemic to a conflict over Taiwan….
“Financialization, where the money goes, has been completely removed from the national interest. It is basically chasing, where is the place that I can make the most for the least costs to have the highest profits and returns without any regard for the impact it has on our culture, society, workers or national security, or economic well-being as a nation-state?
“I think that ties into the broader globalization problem, which is the promise of globalization, where we’re all going to become consumers in a global market, and that will bind people together, and it will replace nation-state conflict. There will never again be fights and wars between countries, because they’re going to be so heavily intertwined economically at the consumer and macroeconomic level that they won’t possibly be able to go to war.
“Obviously, that ignores the lessons of both world wars in the last century, fought by not just some of the largest economies in the world, but economies that themselves were intertwined up until the time the bombs started dropping. You can’t argue that the invasion of Ukraine has been economically positive for Russia, yet they did it anyway. These people believe that somehow this global economics would somehow replace the importance of nation-states and geopolitical conflict. Obviously, that, as we see now on a daily basis, was an absurd and damaging fantasy.”
On the solution to America’s economic woes:
“I can tell you the models of the 20th and early 21st century don’t have answers for it. Socialism is not the answer. It would be a disaster, because that would be the notion of, what we need are a couple of national champions or government-controlled industries that produce things. That doesn’t work. It never has worked. If that worked, the Soviet Union would have overtaken the United States….
“I think the answer is in the market. The market is a tool…. We’re not the handmaid of the market, but the market is a tool at our disposal, and the market responds to incentives. The reason why the market has moved production of critical industries overseas is because of incentives. The labor is cheaper, the regulations are less. For a variety of different reasons, it’s responded to a sense and [to] our own policies. I think you start to see where [we can] create incentives for some of this activity to either return to the United States for the benefit of our workers or closer to the United States for the benefit of the resiliency of our supply chains.
“By the same token, I do believe that—and this is something that’s more difficult, this is the part that makes conservatives a little bit more nervous, but it shouldn’t, because it’s been long a tradition of the country—there are some industries in which government investment serves the national interest and, as a byproduct, helps develop the economy. As an example, the heavy investment of the United States in the space program spun off all kinds of commercial innovations that have gone on to become commercialized and become a cornerstone of our economy. The same can be said for the Internet and GPS and all kinds of other things that were innovated for a national security purpose but ended up also being commercialized for a broader economic purpose….
“As a nation, we have a long tradition of investing in key cornerstone future industries for the benefit of the national interest because we didn’t want to depend on a foreign power for them. I don’t think there’s anything socialistic about that. That is what positive economic nationalism looks like.
“You want to identify, as policymakers, are…all of our incentives, in regulations and taxes and rhetoric, driven in a way that encourages employment, that views the creation of dignified work as a key national interest? Are we investing appropriately at a government level into the key cornerstone industries of the 21st century? We want to have a position of influence or dominance in industries that are going to be really important for the future or that are always going to be important, like agriculture.
“You have to make that determination, as a policymaker. What really matters? Are our policies all geared towards incentivizing the creation of American jobs? Whether that’s immediate expensing, whether that’s some of the regulatory impediments that exist to job creation in America, you have to think through it that way, because if we’re only going to be judged by how the market closed, and we’re only going to be judged by the return on investments in American companies that are headquartered in the United States, if that’s all you care about, then you don’t really care very much about whether it grew because it expanded capacity and created jobs for people in another country. You’re not going to really be interested either if it grew because it’s a startup or an investment in a critical industry for our future.”
On how to restore corporate patriotism:
“I want to talk about the concept of citizenship and healthy patriotism. That is the idea and the notion that there are some companies that will decide, I’m not going to be as profitable as I could be if I were 100 percent invested somewhere else. I’m willing to do it in America, because I’m a patriot, and it’s good for the country. I ultimately am okay with that.
“Some will say, that’s naive. The job of these people is just to maximize returns. That’s not what’s happening now. When you look at some of these guidelines and investing that’s going on on things like equity and diversity, all that sort of drive that’s happening there, they’re serving a purpose beyond profits. When they’re doing that, they’re arguing that there’s some social good that we believe in, and we are going to ensure that investment, even if it’s not the most profitable investment or the most efficient one, is going to reflect our priorities and values.
“One of the core fundamental problems we have now is that a lot of people driving this and making these decisions are basically the products of 20 years of elite higher education that has told them that America is not a great country. In fact, it’s an evil country. It’s a country whose foundation is built on a white racist patriarchy and has done much harm in the world. Reversing that is not easy. I do think that that’s an important aspect of this that we should discuss, because that lack of citizenship, that lack of pride in nation, which is built on the foundation of love—love of neighbor, love of country, love of God, those three pillars—that’s really what patriotism is defined as and has been lost….
“I think that there are industries you can point to and say, they left because not only was labor cheaper somewhere else, but there was a tax incentive to do it that way, either by the host country that pulled them over or what have you, the tax incentive often being that if I did that here in America, I’d pay a lot more in taxes. Why would I stay here? You almost drove people to do that. You have to make sure that all of this is aligned, not just on immediate expensing.
“You also don’t want to have incentives that don’t serve growth and productivity. It’s where I talk about stock buybacks. I’m not in the Bernie Sanders camp that says that’s an evil practice that we need to punish. I don’t believe that, but I don’t think we should incentivize it. I think it should be treated like any other return on investment, not as a one that’s set aside….
“We cannot have American finance pouring into companies that are building weapons systems designed to kill American sailors and Marines and soldiers and shoot down airmen. We can’t have that. We can’t have that drive. We can’t have American investment into companies headquartered in China that are listed on our exchanges for whom there is no transparency, that don’t have the same audit requirements as other companies would, because you are placing at systemic risk the investments and retirement funds of big institutions and millions of Americans…. We have no insight into [these companies]. They shouldn’t have some special status there.
“There have to be some [policies] reserved for things that are threats to the country, but it should be primarily incentive-based, with the hope that we can begin to instill some level of love of country, that…companies and industries take pride in being able to say, this is done in America.”
On wokeness in corporate America:
“For 20 years, we used to see some of these weird things going on on campus and [among] students, and we remembered the 60s and said, that’s what these students are all talking about on university campuses. Don’t worry, when they get a job and go into the real world and own a home and have kids and pay taxes, all that silliness, they’ll leave it behind. It’s been going on for 20 years.
“To work in these industries and at these levels, you have to go to some of these elite schools. Higher education in general has basically been a farm system for all of this. As it turns out, they didn’t leave that stuff on campus. They brought it with them to the company. They brought it with them as employee activists. They brought it with them into the investment room and where the decisions are being made. Now it’s gone on long enough that many of these people, products of that system, have climbed to the highest rungs of many of our industries. We shouldn’t be surprised to see some of this stuff manifesting itself now in our economy.
“At the core of it is basically the teaching that America is not that special or unique. In fact, America is a bad place. We’re all part of one human family, and we live in this global community, and…the notion that we’re actually a country that has a border and has a national interest is not just Neanderthal and backwards, it’s actually probably racist and bigoted and xenophobic and hateful and so forth and so on. That’s deeply infused and reinforced constantly by the culture and by what’s being produced by universities…. Disney did what it did because of an employee revolt in California. A lot of these companies have followed suit in that way. That’s an aspect of it.
“I think the question is, if companies are going to be motivated in their investments and economic activities by a set of values, what would be the values that are good for the country? Those are the ones that I would want them focused on in making these decisions. I’m largely in the camp of swapping out these concepts that are built on lies into ones that are built on things that are positive for our country and for the future. Obviously, we’re not there yet, nor are we headed in that direction….
“I don’t totally discard the idea that some of these investments are actually bad for the companies, too, in terms of return to shareholders…. I think that [focusing on shareholders] is to some extent in our national interest as well, but I would certainly like to see a counter to ESG that’s built on patriotism and good for America. To get there won’t be easy, because we’re trying to undo 20 years of indoctrination at the highest levels of academia. That’s filtered down to all levels.”
On how to prepare America for the new era of geopolitics:
“I think the most important thing is to help people make sense of what’s happened and what’s happening. Maybe that sounds simplistic, but what I mean by it is, we’re living in a moment of extraordinary transformation. Everybody senses that this isn’t good, whether it’s what’s happened culturally and socially or what’s happened economically. Everybody has that sense, but they don’t understand why.
“You can fall easy victim to people that have bumper sticker answers for it, and some of those are not good. In some cases, if I’m on the Left, it’s going to be, because capitalism doesn’t work. That’s why we need to become socialists. At the other extreme, it’s ethnic nationalism. The notion is that this is because of people of a certain race or creed or ethnicity or whatever. That’s also not only anti-American, un-American, it’s destructive.
“I think it’s really important to explain to people how we got to this point and why they’re feeling the way they’re feeling and why things have happened. To me, that’s the most important thing, because none of the answers in a republic are possible without people understanding the why. Why is it happening? The why is what leads you to the what of what we need to do about it….
“I don’t mean to say this to sound negative or apocalyptic, but whether we like it or not, human nature is unchanged, and it is inevitable that the world will face great crises again. The idea that we are now going to live forever in perpetuity, in a place where we’re not going to have great crises, is just not true.
“We have to prepare for the fact that we are in conflict now with China. We hope it never turns into a war, but conflict with China is coming, because their goals for the world and ours are incompatible. I think COVID to some extent was a great crisis that opened people’s eyes to things like supply chains and the lack of resiliency and things of that nature. I think we have to prepare ourselves for the fact that we are entering an era now where things are going to be a lot harder, and we’re going to have to do some things that we haven’t had to face in 30 years.
“We have a near-peer competitor. We have to fight for our place in the world, our nation. We don’t have the luxury of ignoring these things with complacency and believing it’s all going to work out on its own because it always does. I think we have to start [preparing] people’s minds [for] the fact that we are in an era of conflict that we hope doesn’t turn to warfare, but we are in conflict. To me, there’s a lot of policies that will flow from this.
“Helping people understand the era that we live in and how we got here is really critical. The work that you do [at American Compass] and [the work] others do is important, because we are still, every day, trying to fine-tune how we talk about this with people, how we explain it to them in a way that they can absorb, understand, and then operationalize, because you’ve got to build, in a republic, the political consensus to carry out some of these very difficult things.
“This fight over TikTok is a pretty good example of it. People are against it because even if they instinctively are uncomfortable with Tiktok’s relationship with the Chinese Communist Party, they love the platform so much. It would be so inconvenient. You’re taking something away from them that in the end, they’ve decided, I’d rather just keep the app and watch the videos, even if it’s bad for the future of our country. That’s nothing compared to some of the more difficult decisions that we may need to make soon in all kinds of industries. I think we really need to begin to reshape how we think about these things as a society, because we won’t be able to do the hard work if we don’t have that in place.
“I think it’s a very human reaction. You like something a lot, whether it’s the ability to buy electronics at a cheaper price, whether it’s the ability to enjoy entertainment. You love it so much that even if I can show you that it’s bad for you and bad for us in the long term, you want us to figure out how to make it not bad for you so you can keep doing it or manage the risks of it, or you justify it in some other way. I get it.
“TikTok is very successful because its algorithm is very powerful in terms of what it knows about us. That, even though it’s a big deal, is nothing compared to what it’s going to be like if we are held hostage and coerced in the future because something we rely on is controlled by a hostile nation-state that’s using it as leverage against us. I think it’s the obligation of policymakers to do the right thing for our country.
“If we were a dictatorship, we wouldn’t even be talking about it. We’d just do it. But we’re a republic, and that’s how we want to remain. You have to do the hard work, over years, of explaining it to people, explaining what’s at stake, and explaining to them the truth. As we make these changes, some of them will feel uncomfortable. Some things are going to be more difficult or more expensive than they used to be. But the result is even worse if we do nothing.”