The economic mind of JD Vance

Last week, former President Donald Trump selected Sen. JD Vance to be his running mate. And a host of traditional free-market conservatives and libertarians were less than thrilled. In fact, up until the eleventh hour before Vance's selection, big Republican donors lobbied their butts off to try to convince Trump to pick someone else.

In some ways, Vance has the résumé of someone you'd think old-school conservatives would be happy with. He's a former Marine, a Yale-educated lawyer, a bestselling author and a successful venture capitalist. He's staunchly conservative on social issues. He's the embodiment of the American dream, rising from humble working-class roots in Ohio to become a self-made millionaire. He's well connected to titans of business in Silicon Valley, and he has proven his ability to help raise millions of dollars in political donations for Trump.

But Vance is far from a traditional conservative, at least these days (he has had a self-acknowledged political transformation over the last decade). In his less than two years in the Senate, Vance has emerged as one of the brightest minds in what has been called "the New Right" or "national conservatism." It's an intellectual and political movement that departs from the free-market fundamentalism and foreign policy hawkishness of the Republicans of yesteryear. We've covered this growing ideological schism in the Republican Party before in the Planet Money newsletter. At least in rhetoric, this new populist wing of the party sounds less like Ronald Reagan and more like Bernie Sanders meets aggressive social conservatism, isolationism and nativism.

With Trump's selection of Vance as his heir apparent, it seems clearer that this wing of the Republican Party is ascendant. In this Planet Money newsletter, we step into the economic mind of JD Vance to get a sense of what his vision is for American economic policy.

Vance's heterodox economics

Perhaps most illustrative of Vance's break from Reagan-style conservatism, the 39-year-old senator regularly opposes bedrock free-market principles and advocates for more muscular government intervention in the economy.

Vance opposes free trade and advocates for the mass deportation of undocumented immigrants. Prominent economists argue that Trump's proposals for higher tariffs and more restrictive immigration (including Trump's policy goal to deport millions of undocumented workers) would make goods and services more expensive for American consumers, reignite inflation, hurt businesses and harm the overall economy.

But Vance has a different view, stressing that, by reducing competition with cheap foreign and immigrant labor, these policies will help American workers. “The economics profession is fundamentally wrong about both immigration and about tariffs," Vance told The New York Times in May. "Yes, tariffs can apply upward pricing pressure on various things — though I think it's massively overstated — but when you are forced to do more with your domestic labor force, you have all of these positive dynamic effects."

In his keynote speech at the Republican National Convention last week, Vance blamed undocumented immigrants for increasing the scarcity of affordable housing. He went on, "We're done importing foreign labor. We're going to fight for American citizens and their good jobs and their good wages."

Vance supports industrial policy. Traditionally, conservatives have been skeptical of the federal government using tools like tariffs, taxes and subsidies to protect and boost strategic American industries (often referred to as "industrial policy"). They disliked the government picking winners and losers, fearing that this sort of intrusion would artificially distort the industrial makeup of the nation, prop up uncompetitive companies and industries, result in waste and inefficiencies and ultimately harm the economy. Not Vance. He's a strong advocate for using federal power to revitalize strategic industries, in particular manufacturing. He has argued that the government should intervene to boost and protect domestic companies to rebuild America's industrial base and create more good jobs for American workers.

Vance supports a higher federal minimum wage. Last year, Vance co-sponsored legislation that would raise the minimum wage to $11 per hour over four years for most of the nation's employers. But Vance has expressed openness to the idea of much higher minimum wages.

"You raise the minimum wage to $20 an hour, and you will sometimes hear libertarians say this is a bad thing," Vance told The New York Times. "'Well, isn’t McDonald's just going to replace some of the workers with kiosks?' That's a good thing, because then the workers who are still there are going to make higher wages; the kiosks will perform a useful function; and that's the kind of rising tide that actually lifts all boats."

Vance supports the cryptocurrency industry and personally owns over $100,000 worth of bitcoin. Vance has advocated for the cryptocurrency industry and has opposed efforts by the Biden administration and others to regulate it. Cryptocurrency enthusiasts recently celebrated him as the first "bitcoiner" to be on a presidential ticket.

Vance sends mixed signals on unions. Vance expresses support for workers and, as a senator, walked a United Auto Workers picket line, but he has opposed protections for workers that are widely supported by labor unions and activists. Many unions and activists have criticized Vance for voicing support for workers while opposing big goals of organized labor, including the PRO Act. The Pro Act, which would enhance protections for workers who organize, is widely supported by Democrats and organized labor. Vance's opposition to the PRO Act is one reason that the AFL-CIO gives him a zero percent score on its legislative report card.

"Sen. JD Vance likes to play union supporter on the picket line, but his record proves that to be a sham," said AFL-CIO President Liz Shuler in a news release. "He has introduced legislation to allow bosses to bypass their workers' unions with phony corporate-run unions, disparaged striking UAW members while collecting hefty donations from one of the major auto companies, and opposed the landmark Protecting the Right to Organize (PRO) Act, which would end union-busting 'right to work' laws and make it easier for workers to form unions and win strong contracts."

In a March profile of Vance in Politico Magazine, the senator sought to explain why, despite being purportedly supportive of workers, he opposed the PRO Act. First, he said, he thought that the PRO Act would further ensconce the existing system of collective bargaining in the U.S., which occurs between workers and employers at the establishment level. He said he supports the European style of collective bargaining, where instead of contracts covering workers at specific businesses, contracts cover entire industrial sectors.

Last year, we spoke to economist Suresh Naidu, one of the leading scholars of unions in America. Like Vance, Naidu expressed support for sectoral bargaining. He preferred that system because, among other benefits, it weakened incentives for companies to fight unions. When a contract covers a whole industrial sector, he said, it means competitors are on a more even playing field because every single one of them is subject to the same union contract.

However, unlike Vance, Naidu was supportive of the PRO Act. Naidu clearly believed more needed to be done to boost unionization. But he didn't see the PRO Act as standing in the way of further reforms. Likewise, left-wing supporters of the PRO Act have argued it is an important piece of legislation for workers, even though they see it as just a starting point for further reforms to revitalize collective bargaining in the United States.

The other reason he opposed the PRO Act, Vance said, was, basically, many unions in the U.S. support Democrats. "I think it’s dumb to hand over a lot of power to a union leadership that is aggressively anti-Republican," Vance said.

Vance has questioned the value of the dollar as an international reserve currency and suggested that a weaker dollar would benefit the American economy. Since the end of World War II, the U.S. dollar has played a special role in the global economy: It's the "international reserve currency," or the main currency the world uses to trade and save (for more, read our newsletter here and listen to this classic Planet Money episode here).

For a long time, mainstream Republicans and Democrats have supported this special role for the dollar. It offers the U.S. a host of benefits, including the ability for the government to borrow at lower interest rates. The benefits that come from the dollar being the international reserve currency is sometimes called the "exorbitant privilege."

But last year, in a Senate hearing with Federal Reserve Chair Jerome Powell, Vance questioned the value of this special role for the dollar. Sure, he said, it may strengthen the dollar, which boosts American consumers' ability to buy foreign goods and travel abroad. "But it does come at a cost to American producers," Vance said. "I think in some ways you can argue that the reserve currency status is a massive subsidy to American consumers but a massive tax on American producers." This, he suggested, contributes to "our mass consumption of mostly useless imports, on the one hand, and our hollowed-out industrial base on the other hand."

Vance is supportive of efforts to deregulate various industries, from artificial intelligence to energy. "I also think there's a lot you can do on the regulatory side — make building nuclear facilities easier, make building natural gas pipelines easier, make building housing easier — that doesn't cost money and in fact brings in money," Vance told The New York Times.

Vance is a self-proclaimed antitrust warrior who has expressed support for Biden's head of the Federal Trade Commission, Lina Khan. Despite — or maybe because of — Vance's background as a venture capitalist in the tech industry, he has been hypercritical of Big Tech. This February, Vance posted on X, "Long overdue, but it's time to break Google up."

Vance has also railed against the "Big Tech oligarchy." To be fair, though, he also has some very wealthy tech barons as benefactors, including Peter Thiel, Elon Musk and David Sacks, whom you might argue are also part of the so-called "Big Tech oligarchy."

This year, Vance elaborated on his antitrust beliefs at an event called RemedyFest, which was hosted by Bloomberg and Y Combinator, a startup accelerator. He said that working with early-stage tech startups, he learned that many companies struggled to grow and challenge powerful Big Tech incumbents because "they existed in a fundamentally noncompetitive market." He argued that the lack of competition in the tech industry harmed innovation and workers.

Vance then turned to the subject of Khan, an aggressive antitrust policymaker and legal thinker who was appointed by President Biden in 2021 to head the FTC. Khan's actions to prevent mergers and acquisitions and her scrutiny of big companies have angered believers in the free market as well as many business leaders (Khan has appeared on the Planet Money podcast; you can listen to our interview with her here).

"A lot of my Republican colleagues look at Lina Khan, and they say, 'Well, Lina Khan is sort of engaged in some sort of fundamentally evil thing,'" Vance said. "And I guess I look at Lina Khan as one of the few people in the Biden administration that I actually think is doing a pretty good job. And that sort of sets me apart from most of my Republican colleagues."

Vance went on to question the dominant, relatively lenient approach that has been used by federal courts and previous antitrust agencies to judge whether companies can merge with or acquire competitors and whether big companies should be broken up. It's known as the "consumer welfare" standard (for more on this, listen to the three-part Planet Money series Antitrust in America.)

Vance's (fraying) alliance with progressives on economic issues

While serving in the Senate, Vance worked with prominent progressive lawmakers on a host of economic policy issues. "The people on the left, I would say, whose politics I'm open to — it's the Bernie Bros," Vance told The New York Times in May.

After the East Palestine train derailment, Vance partnered with Sen. Sherrod Brown, D-Ohio, to try to improve rail safety (the legislation still hasn’t passed).

Most prominently, Vance worked closely with Sen. Elizabeth Warren, D-Mass., to take on the financial industry, including an effort to claw back the pay of bank executives if their banks fail. In 2023, Politico dubbed the duo the "new power couple taking on Wall Street." Warren was quoted as saying Vance was "terrific to work with."

After Trump announced Vance as his running mate, Warren made media rounds criticizing his positions on a host of issues, from abortion to tax cuts.

Biden, meanwhile, stated on X, after Vance's selection: "Here's the deal about J.D. Vance. He talks a big game about working people. But now, he and Trump want to raise taxes on middle-class families while pushing more tax cuts for the rich. Well, I don't intend to let them."

Wherever you stand on Vance, the reality is the vice presidency is often just a mostly ceremonial position without much power. Vice presidents tend to fall in line with what the top of the ticket wants. And Vance has shown a remarkable ideological flexibility over the last decade.

But Vance seems unlike Trump's former vice president, Mike Pence. Pence was largely selected to shore up Trump's support with more traditional conservatives and then didn't play much of a role going forward. Vance seems like a pick to shore up Trump's legacy. He intellectualizes Trumpism, helping it to become a more coherent policy program.

That said, Trump also talked a big populist game during the 2016 election and ultimately made nice with the more traditional, pro-business, low-tax wing of his party. One of his biggest policy accomplishments was the Tax Cuts and Jobs Act, which, among other changes, handed huge tax cuts to corporations and the wealthy. Trump promises to extend those cuts, which are set to expire next year. Trump also recently said he's considering Jamie Dimon, the CEO of JP Morgan Chase — biggest of the big banks — as his Treasury secretary.

If Trump and Vance win, we will be closely monitoring how this ideological schism in the Republican Party shakes out. Follow along with us at Planet Money, on our short daily podcast The Indicator or here at our newsletter.