Can J.D. Vance’s Populist Crusade Succeed?

This is a very important article.  It not only explains the policies and ideology of Vance—and Trump—but it lays out a formula for peace and prosperity—along with common sense.

“So what does Vance think? He is in agreement with the views of a rising set of younger conservatives, populists like Sohrab Ahmari and Oren Cass, who assert that libertarianism is a cover for private rule, most explicitly in Ahmari’s book Tyranny, Inc. It is flourishing of the family that animates this new group, not worship of the market. At Remedy Fest, Vance was explicit in his agreement with this notion, saying “I don’t really care if the entity that is most threatening to that vision is a private entity or a public entity, we have to be worried about it.”

“If I can beat up on my fellow Republicans a little bit,” he added “[many believe] something is not tyrannical so long as a private entity does it. There’s this famous meme of two guys on their knees. And one guy has a gun pointed to his head, and the other guy looks at him and asks, ‘Aren’t you glad this was done through the free market?’ And the person holding the gun is Google.”

Can J.D. Vance’s Populist Crusade Succeed?

Matt Stoller, 7/18/24  https://www.thebignewsletter.com/p/can-jd-vances-populist-crusade-succeed

Wall Street is freaking out that Donald Trump picked populist JD Vance as his running mate. But parts of Silicon Valley and crypto venture capitalists are elated. What gives?

On Monday, Donald Trump unveiled his choice for Vice President, and picked a young Senator from Ohio, best-selling author and populist J.D. Vance. Last night, Vance spoke to the Republican National Convention, attacking Wall Street barons, the war in Iraq, multi-national corporations, and trade deals like NAFTA. What he said was shocking for a Republican. “We’re done catering to Wall Street,” he said. “We’ll commit to the working man.”

But what he *didn’t* say was equally shocking. There was no talk of tax cuts, deregulation, or attacks on government, and while he levied plenty of fire at Democrats over immigration, environmentalism and overall weakness, he did not go after the substantially populist pro-labor and competition focused elements of the Biden administration. Vance’s fight is not just with Democrats, it’s within the Republican Party.

It’s hard to overstate the earthquake this pick has fostered in the citadels of power. CNBC, libertarians, and the Wall Street Journal editorial page are in mourning. “Wall Street will be begging for the return of Lina Khan after two months of the Trump-Vance administration,” said one New York dealmaker to the Financial Times. CNBC is replaying clips of the Vance speech, with Jim Cramer analogizing it to William Jennings Bryan’s famous 1896 Cross of Gold oration.

So why did Trump pick this guy? It turns out, it was Don Trump Jr., and populist advisors like Tucker Carlson, who persuaded Trump to bet on Vance years ago. In 2022, Trump rescued Vance’s Senate primary campaign in a crowded field with an endorsement; a year or so later, Vance arranged Trump’s visit to East Palestine in Ohio, where a derailment of a toxic chemical-laden train caused a crisis. That visit helped resurrect Trump’s campaign. Politico reported that Trump said to his son and aides on the plane about Vance, “This guy is turning out to be fucking incredible.”

While liberals in the media were also very upset, calling Vance an authoritarian, alleging it’s a Trumpian double-down on right-wing extremism, it was the big GOP donors, like Rupert Murdoch and Ken Griffin, as well as national security hawks who had lobbied against Vance, that feel they lost. Economic populists on the right, and they exist, are elated, because they think the Republican Party is shifting its underlying philosophical orientation.

But is that true? And what does J.D. Vance’s selection mean? Moreover, how did this guy rocket to such a role in a party that is so historically friendly to big banks, big business, and war? Vance has a well-known story, characterized in his bestseller Hillbilly Elegy. He grew up poor in an Ohio family riven by drugs, went into the Marines, and then ‘made it’ by going to Yale Law on the GI Bill and falling in with libertarian conservative billionaire Peter Thiel, becoming a venture capitalist.

At first, Vance bought into standard libertarian ideas, consistent with Thiel’s thinking. Thiel was a co-founder of PayPal with Elon Musk, and the alums from PayPal, the so-called “PayPal mafia,” are hugely influential in Silicon Valley today, though they are not entirely aligned with big tech. Thiel, for instance, hates Google, and this group is one of Vance’s core influences.

While a venture capitalist, in the mid-2010s, Vance began to rethink his priors, ultimately transitioning into a populist with aggressive stances on economics, immigration, and foreign policy. While there’s a temptation to see this change as purely opportunistic, Vance has taken political risks inconsistent with mere careerism. Indeed, four months ago, Vance told a crowd that “Lina Khan is one of the few people in the Biden administration that is doing a pretty good job.” In the GOP, those are fighting words.

What’s most strikingly different about Vance is something simple. Age. He’s young. Both he and Khan are in their 30s, and both grew up seeing the disastrous set of policies of the 2000s and 2010s, not the prosperity of the 1990s. Neither has a sanguine view of big tech, a view which is largely held by those who came of age in the 1990s and still at some level understand Google as a disruptive upstart and Mark Zuckerberg as a kid. To Vance and Khan, Google and Facebook are just the establishment.

Indeed, when Vance praised Khan, it was at an event called “Remedy Fest” put on by a tech incubator called YCombinator, and oriented around the question of how to break up Google if the corporation was found to be acting unlawfully. To have a prominent 39 year-old Republican Senator show up at a conference whose sole focus is thinking through what a post-Google dominant internet would look like is a big political statement about what the younger faction of the right might look like.

“Economics Is Fake”

So what does Vance think? He is in agreement with the views of a rising set of younger conservatives, populists like Sohrab Ahmari and Oren Cass, who assert that libertarianism is a cover for private rule, most explicitly in Ahmari’s book Tyranny, Inc. It is flourishing of the family that animates this new group, not worship of the market. At Remedy Fest, Vance was explicit in his agreement with this notion, saying “I don’t really care if the entity that is most threatening to that vision is a private entity or a public entity, we have to be worried about it.”

“If I can beat up on my fellow Republicans a little bit,” he added “[many believe] something is not tyrannical so long as a private entity does it. There’s this famous meme of two guys on their knees. And one guy has a gun pointed to his head, and the other guy looks at him and asks, ‘Aren’t you glad this was done through the free market?’ And the person holding the gun is Google.”

More than disagreeing with some abstract notion, Vance deconstructed the very idea of a ‘free market,’ pointing out every market is structured by rules. He even attacked the idea of economics as a science, and praised Khan’s approach to moving beyond the consumer welfare standard in antitrust.

To make this point, Vance told a series of stories about his intellectual evolution. He had been a believer that America had a competitive economy until 2015. At the time, he was a venture capitalist, and saw a bunch of advertising technology companies growing very quickly, some with up to $60 million of revenue. But they were ‘un-investable,’ and were going to die quickly, not because there was anything wrong with their business, but because they were in a space dominated by Google. The market wasn’t competitive, even if you had a good product (though he did note that he doesn’t think technology to improve advertising is a particularly useful technology.)

And then Vance realized this dynamic wasn’t just about big tech, but extended throughout the economy, leading him to agree with Lina Khan’s analysis of antitrust. And that happened when he bought an old house with an old fridge.

We have a 40 year old refrigerator. And my takeaway from this whole purchase is that economics is fake. Because the refrigerator that we had, you would put lettuce in the icebox, and it would be good a month later. I’ve never seen anything like it to this day because the single old refrigerator that we had was a technological marvel. You cannot at any price point buy a refrigerator today that can do that. And there are a lot of reasons why.

One reason is we became less good at manufacturing in this country, too focused on low cost and not on durability. Some of those same issues are present in the way that we think about markets and antitrust policy. The fundamental question is that we ask a forward looking economic question. Does this increase prices? And if it doesn’t, then we would let mergers or market activities go forward.

We all should sort of know intuitively, at least I know now, with that refrigerator example, that that just doesn’t make a ton of sense. There’s something fundamentally missing from that analysis, there are questions of consumer choice, there are questions of consumer quality. The one thing I appreciate about Lina Khan’s approach is that she recognizes there has to be sort of a broader understanding of how we think about competition in the marketplace.

So what does this thinking actually mean in terms of policy? At that event, I asked Vance a question about how Trump thinks about antitrust and what that policy area would look like in a second Trump administration. He had a few guesses on that.

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“Trump’s instincts on this stuff are quite good,” he said, because “he fundamentally just rejects some of the old orthodoxies.” He went on to explain that Trump got that Google and Facebook were bad for his politics, so he realizes there’s a problem. Then, Vance offered a very Elizabeth Warren-like observation that “personnel is policy.” And there’s a particularly interesting nugget.

“A lot of what will determine Trump administration and interest policy is who ultimately takes the reins and the senior roles in the Trump administration, because they’re going to be the ones who are executing on this stuff… So when I think about how to solve how to put those instincts into policy, a lot of it’s going to be getting the right people in some of these roles and making sure we don’t get rid of some of the good people from the previous administration who are doing the right thing. So I think that’s the question, how do we get proper personnel rights so that we can get policy right the next Trump administration?”

I don’t think there’s any chance Trump would keep Khan at the Federal Trade Commission or Rohit Chopra at the Consumer Financial Protection Bureau, but it speaks to a recognition from Vance that whoever figures out how to reorient government will eventually have to draw from parts of the populist Democratic policy apparatus to run a genuinely populist administration. Could that happen with Trump?

Vance’s Ambition

Vance, to put it plainly, is THE leader of the post-financial crisis Republican generation, someone who has thought carefully about how to blow up our existing institutional governing arrangements. He’s scared the left by praising alt-right writer Curtis Yarvin and Hungarian Prime Minister Viktor Orban. He’s scared the right by, among other things, walking picket lines with striking auto workers and being open about his work with Elizabeth Warren, his respect for how Bernie Sanders supporters think, and his disdain for the old libertarian establishment. He hasn’t broken with the GOP economics establishment on everything; he’s in favor of oil patch consolidation, for instance. But the extent of his dissonance is real.

On the one hand, Vance’s selection as VP is consistent with a bit of what we’ve seen so far at the Republican Convention, in particular the barn burner speech of Teamster President Sean O’Brien, who laid into Amazon, big corporations, and the U.S. Chamber of Commerce, and thanked Republican Senator Josh Hawley for walking the picket line. On the other hand, well, there’s the entire GOP establishment.

Vance is seeking to eject the libertarians from the Republican Party and build a durable governing majority. In general, such a dynamic only starts in elections, it finishes through governance. In 1928, the progressive candidate for President, Herbert Hoover, won resoundingly, carrying 40 states and getting the endorsement of both the AFL and the U.S. Chamber of Commerce. But he didn’t realign the country. Four years later, FDR won an even bigger victory. Even that wasn’t the realignment. The real change was in 1934 and 1936, after voters experienced the New Deal, because that’s when Democrats cemented their coalition. A majority of black voters, for instance, picked Hoover in 1932, and FDR in 1934. That’s a realignment.

New Democrats or Alt-Oligarchs

And that gets to a seeming contradiction. Because this same week, a whole set of tech oligarchs, including the world’s wealthiest man Elon Musk, as well as venture capitalists Marc Andreessen and Ben Horowitz and bitcoin billionaire twins Cameron and Tyler Winklevoss, made it clear they are donors to a giant campaign fund on behalf of Trump. Musk alone is giving $45 million a month. And these donors are big fans of Vance, with Musk calling the pick a “great choice.”

Musk, Andreessen, and the crypto world are aligned in their own ways with Vance, though the extent of the alignment isn’t wholly clear. The arguments of these venture capitalists and crypto purveyors deserve to be taken seriously. Fortunately, Andreessen and Horowitz laid them out in a recent 90 minute podcast describing why they are supporting Donald Trump with vast financial resources. It comes down to the basic thesis that they believe that Joe Biden, far from a do-nothing President, is an existential threat to the status quo.

It was a fascinating discussion, if incomplete, watching two older tech billionaires try to explain to the public why they are making large donations to influence an election. I’ve followed Marc Andreessen’s career since the 1990s, when he was one of the early engineers working on browsers, for a company called Netscape, and he has been a wealthy venture capitalist and futurist pundit since then. He has strong anti-monopoly bona fides, since Netscape was crushed by Microsoft, and his work became an important part of the government’s antitrust case against the software giant.

His colleague, though a less well-known billionaire, is equally interesting. Ben Horowitz worked with Andreessen, and both went on to found a company, Opsware, that was a nascent creator of the principle behind cloud computing. He comes from neoconservative royalty, with his father, David Horowitz, a Communist Black Panther-sympathizer in the 1960s turned hardcore Reagan revolutionary.

The two formed Andreessen Horowitz (a16z), a path-breaking venture capital firm that put money into Facebook, Twitter, AirBNB, Stripe, and Lyft, among others. It had its heyday in the mid-2010s, during the era of the ‘sharing economy.’ Andreessen is, more than anything, a genius at framing. In 2011, he wrote an essay, “Why Software is Eating the World,” in which he argued that America was “in the middle of a dramatic and broad technological and economic shift in which software companies are poised to take over large swathes of the economy.” That paved the way for the firm’s investments. In 2020, another essay, “It’s Time to Build,” characterized the inability of the West’s to make things during the Covid pandemic.

Andreessen and Horowitz are New Democrats, which is to say they really liked Bill Clinton and Barack Obama. “The Obama years proved you could have a pro-business Democratic administration,” said Horowitz, noting the “great tech boom of Obama” and praising the dot com era under Clinton.

Despite Andreessen being a board member of Facebook, the framing these two offer is that they are on the side of ‘Little Tech.’ And they both make anti-monopoly arguments, noting that companies like Apple, Google, and defense contractors thwart new entrants, and are lazy as a result. So one might think, especially with Andreessen’s experience with antitrust, they see some value in anti-monopoly policy. But they don’t even mention it, except furtively, as a threat to their way of life, and thus, America’s way of life. And that’s where the argument gets interesting.

Andreessen and Horowitz have a view of America in which our might, and thus the world’s peace and prosperity, rests on three pillars: a strong economy, world-leading technology, and a powerful military. American culture is, as they put it, “depraved” and full of drug addiction, but our strength is that talented people can build things. We are not, as they put it, Argentina, or the Soviet Union. In World War II, America won because we invented better technology – not the government – but the private sector, the ‘Little tech’ guys like Henry Ford and Thomas Edison, whose legacy Andreessen and Horowitz see themselves as upholding. The USSR gave up the fight because they just couldn’t keep up with our technology, and the war in Ukraine is showing how important AI is for warfare.

Biden is threatening this very foundation in two ways. First, he is attacking the basis of technological innovation. Andreessen and Horowitz criticized the Biden administration’s industrial policy for trying to pick which innovations will be important and which won’t, which is wildly inappropriate. No one has ever been able to do that, history is littered with examples of failed arguments about what will matter and what won’t. This need for control, they argue, leads to Biden trying to strangle the blockchain, or crypto, in its crib, with lawless attempts by the SEC to apply securities law to tokens.

Many of their companies, like WorldCoin, Ripple, and Coinbase have been sued, and the Securities and Exchange Commission keeps losing, but it’s painful and frustrating to deal with the full might of the administrative state. Similarly, fintech, which is to say companies that try to innovate to help the poor, like LendUp, keep getting sued by the Consumer Financial Protection Bureau. Though they don’t mention the Federal Trade commission, Horowitz expressed his anger that one of their portfolio companies, Maze Therapeutics, which has a nascent treatment for a condition called Pompe disease was sold to Sanofi, but then had the sale blocked by the FTC. He says that all venture investing in biotech is now dead as a result.

Finally, both were apoplectic about Biden’s proposal to tax unrealized gains, the so-called ‘billionaires tax,’ which they claim would destroy the venture capital industry and California itself. This proposal would destroy the economic basis of American strength. “Clinton’s view,” Horowitz said, “was that if you want expansive social programs, you want a tax base to pay for it. There’s a level of self-sabotage here.” So that’s their argument.

With that said, there’s a lot that goes unmentioned. For instance, at no point in their praise of the blockchain do they bring up that large swaths of crypto, if not the entire apparatus, turned out to be a giant scam. It wasn’t that they said ‘oh sure Sam Bankman-Fried was bad but there’s some value here,’ they literally just didn’t mention any of the vast apparatus of fraud and money laundering that everyone saw in 2022.

But that’s not all.

Horowitz was, to put it nicely, imprecise about the SEC’s track record; the SEC is slowly winning many of its claims about crypto – including a16z portfolio firm Coinbase – otherwise crypto vc’s wouldn’t need to lobby Congress to act. Additionally, fintech is a disaster, costing poor people large sums of money, and the a16z portfolio firm LendUp was caught multiple times violating the law. Moreover, the story of biotech is just not correct. The FTC stopped Sanofi from buying Maze Therapeutics not for no reason, but because Sanofi was engaged in an illegal scheme of trying to kill a rival treatment for Pompe disease so it could preserve its ability to charge $750,000 for an annual course. And Maze Therapeutics quickly found a different company to buy their treatment, for the exact same price.

But of course, such incomplete commentary is not unusual. That’s why Andreessen’s essay in 2020 about needing to physically build happened as his investments in crypto – the opposite of building – took off in value. Even their thesis – that no one can predict which technologies will be useful and which won’t – wasn’t consistent with their insistence that they know how important crypto and AI will be. (It’s also not true. For instance, everyone understood immediately that the transistor, invented in 1947, would be a world-changing device, and why the U.S. military and antitrust enforcers insisted that AT&T share its patents and knowhow. How tech will matter is never clear, but it’s often obvious which tech will matter, which is why the U.S. government has been foundational in pretty much all important modern tech endeavors)

Andreessen and Horowitz are not partisan Republicans, at all, their goal is as much to change the Democratic Party as get Trump elected. They see Biden as an anomaly, with people in his administration, namely those under the influence of Elizabeth Warren, who “flat out hate tech and hate capitalism.” And like the New Democrats they are, they praise Democrats and administration officials, like Chuck Schumer, Richie Torres, Gina Raimondo, and Jake Sullivan. SEC Chair Gary Gensler, Warren, and Biden himself come in for scorn, in part because they refused to meet with the duo. .

In other words, these New Democrat billionaires view Trump, with whom they met, as a return to neoliberal normalcy, and closer in fact to Clinton and Obama than Biden. And this explanation is as close to a political argument for the financial backers of Vance, who, though he is very strongly supportive of crypto, is otherwise someone who deeply dislikes this kind of finance-heavy oligarchical thinking.

So there we go.

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To have this particular funder group behind Vance is on one level very odd. His breadcrumb trail of policy choices and actions would seem to be inconsistent with their views. Vance wants to raise tariffs, tighten antitrust, slash immigration, cut environmental rules, and roll back the U.S. involvement in Ukraine, all of which he thinks will help the working class. He helped block the foreign acquisition of U.S. Steel. Rare for a Republican, he has gone after the credit card duopoly and the CEOs of failing banks, sought to reduce the taxable benefits of mergers, and proposed a new rail safety law. He has attacked the role of the dollar as the world’s reserve currency, and is a foe of big tech, not just in supporting legislation, but in litigation as well. For instance, he filed an amicus brief calling for Google to be regulated as a common carrier.

On the other hand, at Remedy Fest, Vance sang the song these guys love. “If there’s a candidate for worst person” in the Biden administration, he said, that would be Securities and Exchange Chair Gary Gensler. “The fundamental issue,” he said, “is the approach that Gary has taken to regulating blockchain.” While Vance said he worried about “financialization” and whether “whether a lot of the crypto stuff is fundamentally fake,” he also said these technologies were the only real way to challenge big tech, because regulation and antitrust just took too long and couldn’t really work. That’s exactly how Andreessen and Horowitz pitch crypto, it’s ‘little tech’ challenging the big guys.

Moreover, these guys have a cultural affinity for Vance, a fellow venture capitalist. And these are not standard corporate CEOs, this group, along with Vance, believe they are entrepreneurs up against a powerful liberal establishment bent on war and control.

Still, there is not total alignment. There is a small but important age split, with these venture capitalists coming of age in the prosperous 1990s, and Vance in the disastrous 2000s. Because of this difference, Vance has much less trust in U.S. institutions, and wants to see Republicans realign the country around a working class coalition, which is something Andreessen and Horowitz don’t care about as long as the government gets out of their way in crypto and fintech.

Politicians are leaders of coalitions of people who don’t align on everything, their job is to bridge those differences as long as they can. In opposition, that’s easier, since all you have to do is get people to agree they don’t like the guy in charge. For now, a crypto-boosting venture capitalist and a citizen in East Palestine who feels betrayed by the railroads don’t have to agree on anything except they don’t like Joe Biden. Moreover, Vance is a venture capitalist, and a working class Ohio kid, so he can appear as either, just as Biden could code as a safe politician and as a populist.

So what happens if the Trump/Vance ticket becomes President Trump and Vice President Vance? There are huge swaths of policy where there is no conflict within this coalition, such as war and peace, and crypto. There’s even working class alignment with crypto venture capitalists and the PayPal mafia crew on some areas, like the CFPB’s rule to let consumers port their own data, monopolization cases against Google, Amazon, Facebook, Ticketmaster, and Apple, attacking pharmacy benefit managers, certain social questions, and limiting the power of the big prime defense contractors.

But in plenty of areas, like prohibition of acquisitions by big tech firms, labor standards, de-globalization, immigration, and preventing financial scams against working people, well, it gets dicey. It is in these places where there will likely be internal warfare, with Vance balancing his Silicon Valley experience, his youth, and his intuitive sense of how voters understand governance. I suspect Vance and the populists on the right will try to find institutions that can organize a nascent working class coalition, whether that’s labor unions, new advocacy groups, smaller and medium size corporations, and/or different ways of structuring government or working with allies in the trade space or within Congress. They may also try policies to elide such conflicts, like subsidizing venture capitalists to invest in corporations that help working people. But ultimately, this fight is youth vs experience, the bracing experience of the war in Iraq vs the belief it’s the endless decade of the 1990s.

All that said, Vance has a boss. Trump is the guy setting policy and defining the role that Vance will play, and Trump has made it clear that, while he agrees that big tech is a problem and seeks higher tariffs and lower interest rates, he is otherwise focused on an orthodox set of GOP policies. As I noted a month ago, Trump is different candidate this time around, he is not attacking big business anymore. In a recent Bloomberg interview, Trump talked about selecting JP Morgan head Jamie Dimon as Treasury Secretary, cutting corporate taxes, keeping TikTok, a “love-fest” with CEOs, and retaining Jay Powell as the head of the Federal Reserve. He is even gingerly discussing distancing himself from Taiwan in the face of Chinese power. And the Republicans in Congress – who are largely still libertarian – will get their say as well.

The Vance pick matters. If Trump loses this election, Vance is set up to run in 2028. If Trump wins, Vance will be a close policy advisor. Regardless, it’s going to take a lot of work to break through the institutional obstacles against populism on the right. And campaigns are not where realignments happen, they are only where promises are made. It’s in governance when the voters decide whether they like the current order. In 2006, 2008, 2010, 2014, 2016, 2018, 2020, and 2022, they’ve picked ‘throw the bums out.’ At some point a new coalition will cement a governing majority.