OF NOTE: Opinion: The US Needs A Chips Act 2.0

There's a lot of talk about the tensions between the "tech right" and the "populist right" (and perhaps also the Christian right). The figure of JD Vance is inevitably at the center of these discussions, both because he represents the future of the Republican Party and because he has a foot in all these camps. His personal history and his political orientation since his election to the Senate make him a part of the populist right, but he is also a former venture capitalist with a long friendship with Peter Thiel. (And he's a faithful convert to Catholicism.)

Which is why Vice President Vance's speech yesterday at the American Dynamism Summit, a confab put together by Andreessen Horowitz, the Silicon Valley VC firm notorious for coining and championing this concept of "American Dynamism" is so important. It was basically an outline of his economic vision.

The high level concept of "Vance-onomics" is based on a fundamental equality of macroeconomics, which is that labor and capital are substitutes. Therefore, if you increase the price of labor through migration restrictions and tariffs, you encourage more capital use, meaning more investment, meaning more innovation. This is good for workers, and this is good for tech.

Conversely, you can tell a story about the past 30 or 40 years in the West—and Vance told this story—where corporations got addicted to cheap labor, which he described as a "drug", but this has acted as a brake on innovation. And indeed, per Peter Thiel's "Great Stagnation" thesis, the era of globalization has also been the era of reduced innovation.

The other aspect of the "what went wrong" story of globalization that Vance touched o is that it turns out that manufacturing and design are highly intertwined. "It's no surprise that when we send so much of our industrial base overseas, we stop making interesting new things at home." He attacked the "conceit of globalization" that Western countries, referencing the infamous phrase "Designed in California" on the back of iPhones, that we could just outsource manufacturing to poor countries and keep the upper end of the value chain, because it turns out when you acquire a manufacturing base, that comes with network effects and know-how that allows you to improve on design as well.

"In the long run, it's technology that increases the value of labor," Vance said during his speech, accurately. Tech innovation will raise worker productivity, which will raise worker wages, which will make everybody, particularly populists and techies, happy.

So what's the policy toolkit? Vice President Vance assured us that President Trump is "dead serious" about changing the global trade regime and that tariffs are absolutely part of the "toolkit" to kickstart American dynamism, touting new auto jobs and noting that this year, for the first time in a year, the majority of job gains went to US citizens born on US soil.

Other policies: for "corporations making in America" will get "lower taxes," "slash[ed] regulations," and a lower cost of energy. Vance spent some time talking about the importance of reducing the cost of energy and of increasing energy output, since a manufacturing renaissance is going to require a lot of it.

Finally, there were announcements related to the tax bill: "100% bonus depreciation for capital investments as well as full expensing for R&D" and expanding full expensing for factory construction, as well as making the 2017 tax cuts permanent in order to add certainty to the business regulatory environment.

The policy specifics are important but what's even more important is the theoretical frame of Vance-onomics. Increase wages by scaling back globalization, which in turn (along with other policies) encourages investment and innovation, and that's how you get a "flywheel" where more productivity gains lead to more wage gains and broad-based prosperity, and an economy that "works for the little guy" without having to become socialist.

From Vance's other speeches and public comments, we can tell there is then a second aspect of Vance-onomics that comes in, one he didn't mention in that speech but which we are sure is equally important in his mind: once you have meaningfully raised working and middle class wages, this means you make family formation easier and people start having more babies. And perhaps (this is our speculation) if pro-family policy encourages or at least helps Moms spend less time in the workforce and more time with their kids this also raises wages and has a positive effect on the "flywheel." And so Vance-onomics fits "symbiotically" with pro-family policy.

Policy News You Need To Know

#RuleOfLaw — Last night on Fox, interviewed by Laura Ingraham, the President gave an iron-clad answer as to whether he would defy a court order: "No, you can't do that." This was a firm commitment, made over and over under repeated questioning. This, even though a recent district court judge produced an injunction citing Hamilton as a reference—that is to say, the musical "Hamilton", not the Founding Father Alexander Hamilton. Anyway, this shuts down that bit of speculation. But it doesn't solve the underlying issue: the US government cannot function (and the three branches of government are not properly balanced) if any of hundreds of judges can arbitrarily (and in many cases it is arbitrarily) freeze the functioning of the government. A good solution would be to ban nationwide injunctions, as Heritage's Paul Larkin and GianCarlo Canaparo have proposed. In the meantime, it looks like the policy, as cleverly expressed by Stephen Miller sending migrant flights out of the country before an injunction came out, is to aggressively use every possible legal avenue to get around and challenge those injunctions, but not defy them outright.

#Sports #Antitrust — Yesterday the Professional Tennis Players Association (PTPA), a pressure group founded by Novak Djokovic among others, announced it has filed legal actions in the U.S., UK, and EU against tennis's major governing bodies—the ATP, WTA, ITF, and ITIA. The lawsuits allege that these organizations operate as a cartel, engaging in monopolistic practices that exploit players through (especially) artificially suppressed earnings. In general, professional athlete earnings follow a power law, which generally follows the observed power law in athlete talent (there have been studies on this). But in professional tennis, the dropoff between the top athletes and those just below is among the harshest: unless you're in the top 100, the life of a "professional" tennis player is not easy or glamorous at all. The lawsuits allege that this is the result of deliberate policy. Unlike team sports such as basketball or football where athletes typically receive 35-50% of revenue, tennis players receive only about 17%. The lawsuits highlight shocking disparities, noting that in 2024, "the U.S. Open made $12.8 million from selling a single specialty cocktail, which was more than it paid to both singles champions combined." Beyond compensation issues, players face grueling 11-month seasons, are forced to compete in dangerous conditions (including 100-degree heat leading to hospitalizations), and must surrender their name, image, and likeness rights without compensation. Your correspondent here will disclose that we have a relative who was quite athletically gifted as a youth and was scouted several times as a child and teenager to enter accelerated tennis programs, but decided to forego the opportunity precisely because of this reality that unless you make it to the top 100 you are essentially sentencing yourself to a very unpleasant life. Maybe you're not a tennis fan. Don't worry, we've found a policy angle. This is, after all, an antitrust lawsuit and antitrust policy is exciting these days. The case parallels landmark actions like the NBA's Robertson v. NBA (1976) and NFL's McNeil v. NFL (1992), which fundamentally reshaped player freedom and compensation. Interestingly, the lawsuit alleges that tennis's notionally separate governing bodies collude to cap prize money and restrict players participation in alternative events through their ranking points system. If successful, this case could extend beyond tennis to impact how antitrust authorities evaluate coordination among ostensibly separate entities in sports and entertainment—potentially strengthening the ongoing shift away from the consumer welfare standard toward a more comprehensive view of anticompetitive harm that includes worker exploitation.

#AmericanSpaceDolphins — The stranded NASA astronauts Suni Williams and Barry "Butch" Wilmore have successfully returned to Earth—in a SpaceX made Dragon capsule. They landed in the waters near Tallahassee, Florida, just before 6 p.m. Eastern Time on March 18, 2025, alongside fellow crew members Nick Hague and Aleksandr Gorbunov, and the internet blew up with beautiful and heartwarming videos of the capsule's splashdown being greeted by a pod of friendly dolphins. If you have read this newsletter for awhile you will know that we covered this issue extensively at the time the astronauts became stranded due to several malfunctions with Boeing-made capsules, and we concluded beyond a reasonable doubt that the Biden Administration prevented SpaceX from rescuing the stranded astronauts—and even engaged in a coverup of the fact that they were stranded, denying plain facts—simply because it would give Elon Musk, a political adversary, a good PR moment. That was a shocking moment of un-American, third world-style politics. It also exposed the corruption of legacy media, as under normal circumstances, American astronauts being stranded would receive wall-to-wall coverage.

#Antisemitism — Poor Chuck Schumer. These are three words your correspondent never thought he would type. But you have to have a bit of sympathy. He's in trouble with his party for supporting a CR to keep the government open—something which should be normal for a Democrat. And he's had to cancel his tour to promote his new book on antisemitism in the face of planned protests—a biting irony. The response to the book's "both sides" approach to the problem is predictable. Critics on the left—including the Washington Post yesterday, repeating the debunked "fine people" hoax—fault him for not spending enough time on "orange man bad." Your correspondent's main criticism of the book would be the opposite, namely that Schumer takes too little responsibility for the fact that 99% of the actual antisemitism in America comes from the left, and that is the consequence of the immigration policies supported by the Minority Leader, which have imported millions of people from third-world cultures where conspiracy thinking is a national hobby and Israel obsession widespread. Is there a surge of antisemitism on the right? Sadly, tragically, yes, but as of this writing, it's almost completely confined to the internet; the overwhelming majority of Republican voters and officeholders remain, not only not antisemitic, but philosemitic to a striking degree.

#PromisesKept — The JFK files have been released, in their full unredacted version. Knock yourself out. It seems to be a nothingburger, to be honest, but it's a trove of documents, so someone may find something spicy. We predict nobody will change their minds about the JFK assassination because of this.

#Life #Family — Natalie Dodson and Emma Waters at EPPC have produced a fascinating report on what they call "the new frontier of reproductive medicine," which especially looks at alternatives to IVF. Long quote from the introduction but we thought this was very interesting: "Two things have become abundantly clear to the authors of this series. First, IVF may succeed in producing an embryonic child outside of the body, but it cannot heal or improve ongoing reproductive health conditions in the body that often lead to miscarriage, the failure to implant, or painful symptoms. Second, advances in restorative reproductive medicine offer an incredible opportunity to identify, diagnose, and treat painful reproductive health conditions in men and women, including those that are the driving cause of infertility." This is fascinating. Pro-lifers object to IVF because it creates and usually discards embryos, but it is also hard not to sympathize with the plight of childless parents (and the vast majority of Americans are more sympathetic to the latter view). But what if there are alternatives to IVF? We are reminded of the 2000s debates on embryonic stem cell research? What was so frustrating about this debate wasn't just the bioethical question, but the fact that embryonic stem cells were actually much less powerful for the touted uses than non-embryonic stem cells (as the science at the time already showed and later research vindicated many times over). Why do the bioethically dubious thing if there's a better alternative? This report sheds light on a fascinating new (at least to us) topic, and expect to read more on it.

#Budget #Spending — Well that raised our eyebrows: spending on food stamps increased 54% under Biden's tenure. This seems like an easy target for cuts. EPIC has more.

#PublicTrust #Science — NIH is withdrawing funds from a campaign to study "vaccine hesitancy." Vaccines are good, even very very good, but the sad reality of the post-Covid world, whether we like it or not, is that discredited public institutions pushing them is counter-productive.

#Personnel — Some very inside-the-beltway news: Joe Manchin and Mitt Romney have joined the board of the CRFB. Honestly, it makes sense. Congratulations to all involved. Budget hawkery may not always be politically realistic, but it's still an important part of the national conversation (and your correspondent hopes to see them win one day…somehow).

#Personnel — Other very good news from our world: Chris Rufo has received the Bradley Prize.