Once Upon aTime, All Conservatives Believed in the Free Market

pa href=https://www.cato.org/people/scott-lincicome hreflang=undScott Lincicome/a, a href=https://www.cato.org/people/norbert-michel hreflang=undNorbert Michel/a, and a href=https://www.cato.org/people/alex-nowrasteh hreflang=undAlex Nowrasteh/a
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pLibertarians have many philosophical and policy disagreements with conservatives on issues such as national security, gay marriage, and drug legalization, but they have always agreed on the benefits of free markets. Now, just when it looks like Americans have had enough of anbsp;heavily regulated economy and the shortages and price hikes it inevitably produces, some conservatives have decided that they need anbsp;new approach./p
pThough the timing seems odd, and the logic flawed given the massive regulatory state that’s built up during the last several decades, these conservatives believe that the American worker is in crisis embecause/em of the free market. Recently, at the Intercollegiate Studies Institute, conservative participants in the American Economic Forum a href=https://isi.org/events/american-economic-forum/consider/aa href=https://www.nationalreview.com/2022/08/central-planning-with-conservative-characteristics/ed/a “alternative approaches to the economy” in search of anbsp;new “path forward” for conservatism./p
pTheir approach is not so free‐​market friendly, and it’s not exactly new. Their so‐​called “pro‐​worker” fusionism has little room for the libertarianism Ronald Reagan once called “the very heart and soul of conservatism.”/p
pThis development—a new conservatism rooted in free market emskepticism/em—carries serious risks for American workers. And one need look no further than the American Economic Forum to see those risks./p
pTake keynote speaker and former U.S. Trade Representative a href=https://en.wikipedia.org/wiki/Robert_LighthizerRobert Lighthizer/a, who lauded President Trump’s trade policy of “tariffs, threat, negotiations, and industrial policy” and denounced free traders as “materialistic” fools obsessed with consumption. Pushing a “balanced trade” alternative that favored production, he added that “the best way to fix consumerism is to raise prices.”/p
pLeaving aside the spectacle of anbsp;multimillionaire lawyer telling inflation‐​wrecked Americans to embrace even higher prices, Lighthizer reveals anbsp;deep and dangerous misunderstanding of basic economics. Workers don’t labor for national greatness; they labor to consume goods and services./p
pA price‐​hiking attack on “consumerism” is, therefore, an attack on all workers./p
p“Anticonsumer” trade policy also harms workers in other ways, as Lighthizer’s tenure demonstrated. Tariffs on metals and Chinese imports, for example, harmed import‐​consuming manufacturers, subjected exporters to foreign retaliation, deterred investment, and fueled anbsp;lobbying boom as thousands of companies begged for exemptions or for their own tariff protection. (Maybe those Knbsp;Street jobs are what former lobbyist Lighthizer meant by “pro‐​worker” trade policy?)/p
pAnd despite all the painful Trump era tariffs and bombast, the U.S. trade deficit emincreased/em between 2016 and 2019, proving once again that “balanced trade” is anbsp;futile and absurd trade policy objective. In this most recent case, anbsp;slightly smaller U.S.-China deficit was offset by larger bilateral deficits with Vietnam, Mexico, Germany, and others./p
pAs “stupid” (Lighthizer’s a href=https://twitter.com/njhochman/status/1553171273198477312words/a) libertarians have explained for decades, the trade balance is anbsp;terrible trade policy scorecard because it’s driven by global savings and investment patterns, not trade agreements or tariffs. We’ve once again been proven right./p
pThose “America First” policies really achieved higher prices and prevented pandemic‐​era adjustment and recovery. Today, U.S. manufacturers still suffer from some of the highest steel prices in the world. New England risks shortages because maritime protectionism blocks access to Texas energy. And infant formula—long protected by the tariffs, regulations, and government contracts conservative industrial policy advocates so love—remains out of stock across the country./p
pTrade often appears messy and chaotic, but it delivers the goods. Protectionism delivers scarcity and misery./p
pThe American Economic Forum’s new consensus also appears to require anbsp;skeptical view of legal immigration, with which conservatives have long been uncomfortable. Many fear that immigrants will vote Democratic and take jobs from Americans, but Hispanic voters are currently a href=https://www.axios.com/2022/07/14/republicans-democrats-hispnanic-voterstrending Republican/a and Asian‐​American voters are leading opposition to progressive policies in cities like a href=https://quillette.com/2022/02/11/to-fight-wokeness-the-gop-should-embrace-immigrant-voters/San Francisco/a. Immigrants are also more likely to a href=https://www.kellogg.northwestern.edu/faculty/jones-ben/htm/Immigration_and_Entrepreneurship_in_the_United_States.pdfspanstart businesses/span/a, a href=https://web.stanford.edu/~diamondr/BDMP_2019_0709.pdfspaninnovate/span/a, and a href=https://www.bls.gov/news.release/empsit.t07.htmspanwork/span/a than native‐​born Americans—all contributions that, contra several panelists, raise American productivity and wages./p
pSome of these conservatives also view Wall Street skeptically, but that view hinges on the mistaken idea that Wall Street is anbsp;bastion of free markets. Yet reality is the opposite: firms like Blackrock, Goldman Sachs, and Citibank have similar public‐​private relationships with the federal government as Fannie Mae and Freddie Mac, the emgovernment sponsored/em enterprises that helped crash the markets in 2008./p
pFinancial firms are some of the most regulated in the United States. They have long dealt with rules on capital, liquidity, disclosure, and leverage, as well as the constant threat that regulators would make up new rules or enforce old rules differently. This framework protects large incumbent firms from competition and innovation, thus further reducing the efficiency of capital markets and hurting American workers. Even if the 2010 Dodd‐​Frank Act—a law that Trump campaigned against but failed to fix—is fully repealed, anbsp;nightmarishly complicated and counterproductive framework would remain./p
pIn case after case, these conservatives demand we abandon the free market while ignoring the numerous government interventions already in place and their countless failures. They seek not to counter the leftist economic ideas underpinning the state’s expansion but simply to rebrand them./p
pYet bad marketing isn’t the problem with progressive economic policies. The policies themselves are flawed. New buzzwords, justifications, patriotic goals, or framing won’t suddenly make government management of the economy more successful./p
pThe consequences of these bad policies are currently available for all to see. High and rising prices, declining real wages, fewer and lower quality products, and endless uncertainty. More of the same policies, under any name, will produce more of the same outcomes. And that’s not going to end well for conservatives—or anyone else./p