Today, David R. Henderson discusses a new book analyzing the economic history of the Great Depression; Lee Ohanian and Bill Whalen break down the politics of California’s Proposition 50 ballot measure, which would allow the State Assembly to redraw the state’s congressional districts; and Mike Kuiken warns of America’s dangerous dependence on China for computer chips that are critical to many industries.
Answering Challenges to Advanced Economies
In a new article for Defining Ideas, Research Fellow David R. Henderson provides an overview of the argument made in False Dawn: The New Deal and the Promise of Recovery, 1933–1947, by monetary economist George Selgin. Henderson finds that this volume “will likely stand for a long time as the definitive statement on the causes of, and recovery from, the Great Depression.” Henderson highlights Selgin’s analysis of outgoing president Herbert Hoover’s mixed feelings about declaring a “bank holiday” to calm depositor panic, given uncertainty about the limits of his presidential authorities. But as Henderson notes, “Hoover tried to persuade FDR to support a bank holiday with the new Democratic Congress on board.” What’s more, several senior Hoover administration Treasury officials “stayed on to help with the complicated details of the closing and reopening of US banks.” The article continues with an exploration of the Depression’s later phases and ultimate reversal around 1940. Read more here.
California Policy & Politics
As California enters the final phase leading up to its November 4 special election and a vote on Proposition 50, plenty of unknowns surround the fate of the controversial ballot measure that would redraw California’s congressional districts to offset a Republican-led gerrymander in Texas. Hoover Senior Fellow Lee Ohanian and Distinguished Policy Fellow Bill Whalen, both contributors to Hoover’s California on Your Mind web channel, discuss the tactics and messaging behind Prop. 50. Ohanian and Whalen consider the roles that current Governor Gavin Newsom and former Republican Governor Arnold Schwarzenegger have played so far in the ballot initiative campaign. The fellows also discuss why the upscale town of Calabasas ended up as a toxic waste site for Los Angeles fire debris as well as the failure of a prominent former legislator to gain traction in next year’s governor’s race despite her compelling life story. Read more here.
Confronting and Competing with China
“While Washington fixates on advanced AI semiconductors, Beijing is quietly cornering the market in so-called foundational chips that power everything from cars to medical devices to defense systems,” warns Distinguished Visiting Fellow Mike Kuiken in an op-ed column for the Financial Times. Kuiken emphasizes that in semiconductor policy, “the misleading terms ‘legacy’ or ‘mature’ connote obsolescence for what are, in fact, indispensable and innovative components.” Noting the ubiquity of Chinese chips across vital US industries, the author says, “Washington should adopt a ‘know your chip’ requirement—the semiconductor equivalent of financial know-your-customer rules—forcing companies to map and disclose their supply chains.” Kuiken, a commissioner on the US-China Economic and Security Review Commission, concludes that getting chip policy right “is the essential, urgent, nonnegotiable national security imperative of our time.” Read more here. [Subscription required.]
Politics, Institutions, and Public Opinion
“Incumbents have long enjoyed a substantial fundraising advantage in American elections,” note Senior Fellow Andrew B. Hall and coauthors in a new paper, “but it remains unclear whether this advantage has persisted as elections have become more partisan and nationalized in recent years.” To learn more, the authors analyzed a comprehensive dataset covering US House, US Senate, gubernatorial, statewide executive, and state legislative elections to present the first systematic evidence on the evolution of the financial incumbency advantage. The authors find that “the financial advantage enjoyed by incumbents at all levels of government has declined 25 percent to 50 percent over the last decade. This decline, however, is driven entirely by individual donors, and especially small-dollar donors; in contrast, the advantage among corporate PACs has remained stable—or even increased.” The authors conclude that “these shifts reveal a campaign finance landscape that is increasingly shaped by partisanship on one side and strategic investment on the other.” Read more here.
Law and Policy
In a coauthored column for Fortune, Research Fellow Patrick McLaughlin channels the historical example of the Roman emperor Justinian’s Corpus Juris Civilis—"a comprehensive codification and streamlining of Roman law across all provinces”—as a template for America’s “own Justinian moment.” As McLaughlin notes, “Between regulations, statutes, and case law, our country has accumulated around 260 million lines of law at the federal level alone.” Now, advanced AI tools can help to identify opportunities to streamline laws and regulations, promising a slimmer, more accessible, and more efficient set of governing rules. As the piece concludes, “While China uses AI for tyranny, we should use it for renewal, embracing technology to reverse legal and institutional decay. A millennium and a half ago, Justinian chose transformation over decline. History will judge whether we do the same.” Read more here.
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