Welcome to The Closing Argument, our verdict on the news, plus everything The Argument published and appeared in this week.
The Verdict, by Jerusalem Demsas
There’s an entire Wikipedia article devoted to the term “Exorbitant privilege.” It’s not about the advantages tall people enjoy at concerts or that models have in the dating market.
No, it refers to the fact that everybody wants the U.S. dollar.
People, governments, and banks like to hold U.S. currency because people trust that it will continue to hold value. That trust comes from our geopolitical dominance, the size of our economy, our deep financial markets, and, uh, political stability.
This exorbitant privilege is the subject of many long academic articles. But to keep it short: It makes it cheaper to borrow, makes it easier for us to enforce sanctions, and makes it cheaper to buy foreign goods.1
Vice President JD Vance, crusader against structural advantage that he is, is not impressed with the benefits that flow to Americans from this arrangement. In a 2023 clip popularized by economist and The Argument contributor Phil Magness, then-Sen. Vance presented a take he called “maybe super heterodox”:
“I am not sure that I think the reserve currency is actually good for the United States of America. I think there is a good argument that reserve currency status is akin to coal in Appalachia — it’s a resource curse, right? It allows your consumers to consume very cheaply. Right? That’s been the story of the American economy for the last 15 or so years, even before that, is we can just borrow, basically in an unlimited way, because we have the reserve currency.”
Personally, I think the benefits of the dollar as reserve currency can be slightly overblown — as former Federal Reserve Chair Ben Bernanke explained in 2016, other countries, like Canada, Germany, and the United Kingdom, were able to borrow more cheaply than we were.
But the actual debate over reserve currencies is, to me, beside the point. What’s more interesting is Vance’s strange distaste for “consumers.”
The U.S. dollar’s status as the world’s reserve currency creates a huge demand for dollars, which makes our currency stronger relative to other nations’. That means it takes fewer dollars to buy things priced in Chinese yuan or Japanese yen than it otherwise would.
If a Japanese car costs 1 million yen and $1 = 100 yen, then the car costs $10,000. But if $1 = 150 yen, then the car costs about $6,700.
Vance thinks that this is bad. He would like you to pay $10,000 for a Japanese car. Why? Because he thinks it would make you buy American and because he thinks it would make foreigners buy American (because our currency would be weaker).
As the straight logic goes, Vance is right: If you made it more expensive to buy Hondas, more people would buy GM. But does that mean more people would be better off?
At the peak of manufacturing in 1979, 19.6 million Americans worked in the sector. No one really thinks we’re getting back to this, because modern factories are much more automated. Even boosters of the Vance agenda like the Conservative Partnership Institute’s Rachel Bovard have pivoted to talking about increasing manufacturing output rather than jobs.
But let’s say for the sake of argument that we were going to return to 1979 levels. Let’s even scale that to today’s population, which would mean roughly 30 million working in manufacturing.
That’s just 8.7% of the country. So, in order to pull people out of whatever they’re doing to instead manufacture cars or clothes or plastics, Vance seeks to make almost 350 million Americans (including those now working in manufacturing) pay thousands of dollars more for critical goods like computers, phones, and vehicles.
What’s bizarre about all of this is that there are entire strains of industrial policy that aren’t hostile to the American consumer. A normal, recurring view within economic debates is that markets underinvest in certain capabilities — like basic science, infrastructure, workforce training, and supply-chain redundancies — so the government should step in and build or subsidize those capacities.
Vance’s worldview differentiates itself through its hostility to the idea of low prices for consumer goods. He is part of a long line of “producerists“ who believe that the economy’s moral purpose is to reward producers rather than maximize consumer well-being.
Who does this leave out? The roughly 50% of Americans who are not in the workforce: children, retirees, disabled people, students, and stay-at-home parents.
But at its core, I just don’t think being a consumer is somehow embarrassing. To be alive is to consume. I consume clean air and water, clothing, books, pens, glasses, medical care, legal services, train tickets, and so many more things.
These are not signs of decadence; they’re signs of human flourishing.
If you are lucky, for most of your life, you will not be working. But regardless of how things are going, you will be consuming. Every producer is also a consumer, and every consumer makes a producer’s work possible.2
That’s why it’s good for the government to prioritize consumer well-being — and why a producerist politics necessarily devalues people and stages of life that are less “productive.”
Midterm update
Lakshya Jain, our director of political data, uses data from The Argument’s polling operation to inform the Split Ticket 2026 House and Senate models. These models update every day; bookmark this page to see the odds of each party taking the House and the Senate.
Top stories this week, by Milan Singh
This week we’ve been continuing our anniversary series, focusing on the core question undergirding the liberal tradition: How do we live with each other? We’ve got some great pieces in the works that we’re excited to share with you; don’t forget to subscribe so that you can get everything in your inbox.
On Monday, Kelsey Piper tackled one of the trickiest problems facing liberalism: the conflict between the idea of moral equality between people and the reality that we are not equal in all things — some of us are taller or stronger or smarter or richer or better-looking.
Social media has transformed the way we get our news, shop, and interact with one another. It also tends to make us see politics as black and white, us versus them. Jeremiah Johnson argues that while many social media platforms tend to reward conflict, some have cultivated more thoughtful communities — specifically, text-based platforms that allow downvotes.
Sen. Chris Murphy seems like he’s going to run for president: He’s grown a beard and has also written a new book. Unfortunately, the book isn’t very good, as Jerusalem Demsas points out in her excellent review-slash-takedown.
🌟Abundance wins of the week🌟
Seattle Mayor Katie Wilson launched two housing teams in a new executive order: a task force to advise the city on housing and an interdepartmental team to streamline the city’s permitting processes. The interdepartmental team, according to the mayor, will aim to “better coordinate our City departments to shorten permit timelines” and propose funding to help affordable housing developers navigate the zoning system.
Delaware is taking action to streamline its occupational licensing system. The review process will focus on cutting state-specific requirements that go beyond what other states have on the books and are not clearly related to health and safety. The state said it was prioritizing “[occupational licensing] boards based on the number of professionals they regulate, workforce shortages, and how much the occupation affects the cost of living, housing, and access to essential services.”
Albuquerque Mayor Tim Keller has announced a new “Abundance Agenda,” arguing that the city suffers from a “scarcity mindset.” The program includes listing nearly 200 city-owned properties that could be used for new housing, businesses, or recreational facilities online, as well as a “yes first” policy that would allow developers to break ground on new projects without waiting for inspections to wrap up.
Worth watching…
It seems like everyone these days is talking about “the elite.” But who are the elite? Sen. Bernie Sanders says that the elite are the millionaires and billionaires who exercise outsized influence in politics via campaign donations. The right argues that the elite are actually university professors and journalists, who use their cultural power to push a left-wing political agenda on the unsuspecting masses.
But who do the American people agree with? On the latest episode of The Argument podcast, Jerusalem Demsas and Matt Yglesias dig into the results of our July poll, which was all about who voters think the elites are and what they think elites believe.
What’s News with The Argument
The Argument recommends, by Milan Singh
One of the classic examples of convergent evolution is something called “carcinization”: the tendency of non-crab crustaceans to evolve a crab-like body plan. It’s happened at least five different times.
Last year, Jeremiah Johnson wrote an excellent piece about “The Carcinization of Content” — or, the tendency of social media platforms to become short-form video platforms. You see this everywhere: Even LinkedIn has introduced short-form video.
Like it or not, short-form video is increasingly the dominant form of media. The top news sources among voters under 30 are Instagram and YouTube. There’s a case to be made that short-form videos — at least some of them — are a type of art. They’re also increasingly the medium through which we (meaning people my age) relate to each other: a lot of the inside jokes between my friends and me are lines or bits drawn from particularly funny Instagram reels.
To celebrate our brave new world of brain rot, I asked my colleagues to send me their favorite short-form videos for this week’s culture recommendations.
True to form, office independent thinker Kobe Yank-Jacobs claimed that he had “never seen a short video in [his] life” (dubious). Half an hour later, he sent me this clip of George W. Bush saying, “Our enemies are innovative and resourceful — and so are we. They never stop thinking about new ways to harm our country and our people and neither do we.” Presumably this was not what he meant to say.
Jeremiah Johnson bemoaned the “deeply unfair” requirement that he only recommend one video, showing me a TikTok of a man who (presumably) used AI to turn his pregnant wife’s texts into a pop song. I didn’t quite see the appeal of this one, which may be an illustration of the generational divide in America.
Eli Richman, our copy editor, sent me this Instagram Reel parodying the gaslighting that TSA does every time you go through security about whether you’re supposed to take off your shoes or remove your laptop from your bag. (Very relatable, I must say.)
Our fearless leader Jerusalem Demsas sent me this reel of a guy who put Squidward’s face on a replica of the ancient Greek sculpture Discobolus and then sunk it into the Mediterranean. I approve.
As for myself, my tastes in short-form video are perhaps a bit less highbrow than the rest of the office. I’m a big fan of edits, which I swear I watch ironically; some of my favorites are this edit of Mike Ehrmantraut from Better Call Saul and this edit of the best episode of The Sopranos, “Pine Barrens.” I also really like this video of a nice lady being visited by blue-and-yellow macaws and this fishing edit.
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“Among the savage nations of hunters and fishers, every individual who is able to work is more or less employed in useful labour, and endeavours to provide, as well as he can, the necessaries and conveniencies of life, for himself, and such of his family or tribe as are either too old, or too young, or too infirm, to go ahunting and fishing. Such nations, however, are so miserably poor, that, from mere want, they are frequently reduced, or at least think themselves reduced, to the necessity sometimes of directly destroying, and sometimes of abandoning their infants, their old people, and those afflicted with lingering diseases, to perish with hunger, or to be devoured by wild beasts. Among civilized and thriving nations, on the contrary, though a great number of people do not labour at all, many of whom consume the produce of ten times, frequently of a hundred times, more labour than the greater part of those who work; yet the produce of the whole labour of the society is so great, that all are often abundantly supplied; and a workman, even of the lowest and poorest order, if he is frugal and industrious, may enjoy a greater share of the necessaries and conveniencies of life than it is possible for any savage to acquire.” - Adam Smith, The Wealth of Nations
> “I am not sure that I think the reserve currency is actually good for the United States of America. I think there is a good argument that reserve currency status is akin to coal in Appalachia — it’s a resource curse, right? It allows your consumers to consume very cheaply. Right? That’s been the story of the American economy for the last 15 or so years, even before that, is we can just borrow, basically in an unlimited way, because we have the reserve currency.”
That's not anything like what "resource curse" means. It mostly describes the phenomenon where states primarily based around crude resource extraction neglect advanced industries that make things out of resources because they don't need to bother with manufacturing capacity as long as they can just keep exporting whatever expensive rocks are under their land. It works great until they run out of expensive rocks and their economy crashes because without expensive rocks they have nothing going for them. The United States was already running its economy on advanced manufacturing and services, until Trump got it into his head that he can make coal come back by wishing really hard and Vance went along with it.
Remember everyone, Vance is what passes for a smart Republican these days. You're looking at the peak of the mountain, the rest of them are even worse.
I want people to pay more for a Honda. Privately owned motor vehicles, and the infrastructure they require, place a huge burden on society. It's fair for people to pay more.
Yes, I know I've taken your topic off on a wild tangent.