Economic Policy And The GOP

We refer to ourselves as capitalistic orphans because currently the Democrats are all-out to stop capitalism and the current GOP, at best, doesn’t care about capitalism. Two posts this week emphasize that. At NRO Capital Matters Richard M. Reinsch and David L. Bahnsen beg us, Can We Talk About Economic Growth Again? While at The Dispatch, Jacob Wendler tells us about The Economic Rift On The Right with the scary and easily answered subtitle: Will Conservatives Embrace A Populist Economic Agenda? The answer is No.

Sidebar: Consistent with our previous usage we use the word conservative to identify individuals with conservative beliefs rather than as sloppy synonym for right wing. Conservatives are a small percentage of the right wing that, from time to time, have had substantial influence on US politics. End Sidebar.

We are desperate to talk about what policies will bring the growth fairy to visit. You should read all of Richard and David’s post. We’re not sure there is much juice for economic growth in the tax code but we’d much rather be talking about how to get the growth fairy to visit rather than how to divide up the pie with Jacob and the populists. One sure way to do that would be to lift as many regulations enacted in the name of Climate Change as possible

Reading Jacob might help you understand why the GOP fails in cities. Like the Democrats, the GOP is trying to support various targeted groups rather than appeal to the masses. It seems like a conservative message that includes support for the gig economy, less regulation, and less corruption could resonate in various cities but the GOP leadership reflected in Jacob’s post makes such a message untenable.

Many forget but the Democrats were the tax cutters under JFK and the deregulators under Jimmy Carter. And, of course, the GOP was serious about and effective at getting the growth fairy to visit for decades starting with Reagan. But now both parties are looking for new shiny things to sell the electorate. The politicians seem to think, and they should know, that it always works or it never works doesn’t play well with the voters.

Right now it looks like the best outcome from the 2024 would be a divided federal government. That might limit the bad outcomes. Then in 2026 or 2028 we might get to talk about serious stuff like coxing the growth fairy to visit again.

Why Everybody DOESN’T Love Capitalism

We get a mild amount of joy from the Quora site. They ask misleading or sometimes just leading questions and have answers that vary from crazy to almost serious. Recently somebody asked: Why do most people love capitalism? The answer told us why most people should love capitalism. There is a great picture with one half being a big house and the caption: Capitalism: an unequally shared blessing and the other half a huge concrete Soviet apartment block with the caption: Socialism: Equally shared misery. We measured one of those apartment buildings in Poland at over a quarter of a mile long. Of course even equally shared misery is an overstatement for socialist outcomes as we know from watching Communists outcomes in the Soviet Union and Cuba and the application of socialism in Venezuela. We also know that capitalism, or a move in that direction has taken enormous amounts of people out of extreme poverty. Here is the data for 2011-2019.

We regularly refer to ourselves as a capitalistic orphan because few other people love capitalism. Consider the 540 elected officials in the federal government. How many act as if they love capitalism by supporting it?

Sidebar: One might try to argue that all 540 of them all love capitalism in the sense that it produces Other People’s Money they can use to buy friends and influence people. The problem is that those 540 people use that money and their influence to reduce the capitalistic nature of our republic. End Sidebar.

All of the Democrats including the president, The Frontrunner, the Vice-President, Triple A, and all the 260 or so Democrat Congress critters, including the ones that caucus with the Democrats can be eliminated from the love list for capitalism. All of the supporters of The Donald (GOP or otherwise) can be eliminated as well for their stance on free trade. Most of the other GOP Congress critters like “Mr. American sugar,” Marco Rubio can be eliminated individually. We think it is fair to say that the vast majority of elected officials are reacting to the electorate. They don’t like capitalism.

Why don’t people like capitalism? As we see it, almost everybody loves capitalism as a consumer. Except for dedicated socialists like The Bernie everyone is delighted to see dozens of different choices of Oreos at the grocery store. We stopped counting at 32 (that is 32 items not 32 dozen). The Bernie is frowning and talking about the inefficiency while the folks that love Golden Double Stuf Oreos are rejoicing. It is great that we are better off many ways than the world’s richest man of 100 years ago. Comparing us to him we have amazing vehicles, wonder drugs, jet travel, and all of the astonishing electronics like our phones. People do love the fruits of capitalism.

What people don’t like is the other side of the ball: Creative Destruction. Here is a summary of Creative Destruction:

[T]he process inevitably results in losers and winners. Producers and workers committed to the older technology will be left stranded. Entrepreneurs and workers in new technologies, meanwhile, will inevitably create disequilibrium and highlight new profit opportunities.

Here is the story of Sears Roebuck going from entrepreneurs to an economic winning business to a bankrupt loser in about a century. Nobody wants to be an economic loser and with the 540 elected officials in the federal government there is somebody to listen and who can often do something about those pleas. So we have numerous business restrictions like CAFE, tariffs, the extraordinarily complex tax code, and the government buying unreliable energy from silly contraptions to just name a few of the government reactions to try and stop change.

Most people dislike capitalism because it causes change and new economic winners and losers. Folks don’t want to change if they are on the losing economic side so they get the government to slow down change. People love the fruits of capitalism but the process is what they don’t like and that has the big immediate impact on them. That is why we are an economic orphan.

Do We Need The GOP?

We were reading Nate Hochmann’s NRO post on Jim Banks and his bid for the GOP nomination for senator from Indiana. Jim, to put it mildly, is not our guy. Here is Nate on Jim:

Urging [the GOP] “to embrace our new coalition” as “the Party of the Working Class,” Banks called for a “Main Street” agenda organized around immigration restriction, China hawkishness, anti-wokeness, and a more aggressive posture toward big business and Big Tech. “President Trump’s gift didn’t come with a receipt,” [Jim] argued in the memo. “Members that want to swap out working-class voters because they resent [The Donald]’s impact on the GOP are wrong.”

Or, to put it another way, Jim is a big tariff and big regulation guy. We would much prefer Mitch Daniels who has not yet thrown his hat in the ring. Here is Jack Butler at NRO on Mitch and the curious case of the Club for Growth no longer being pro-growth.

Our immediate reaction to Jim’s bid was, “Why do we have a GOP?” If the GOP is going to support the Democrats in opposing free trade and free speech then why do we need two parties?

Nate’s post came out last week so we having been doing some thinking about the need our for the GOP. Party politics is about trying to create a majority coalition so priorities can be accomplished. We describe ourselves as a capitalistic orphan for a reason. We support capitalism but we don’t have a home. For the last fifty years the Democrats have hated capitalism. The GOP has had a different attitude towards capitalism. They like it in the abstract but rarely support it in actual votes so we have, among other things, tariffs, trade restrictions, trade wars, and incentives for ineffective energy. Jim takes it one step further to not supporting capitalism in the abstract.

So why do we need the GOP if they join in supporting the Democrats? The answer is that it is up to the GOP to determine what it thinks is the best road to a majority. Remember that forty or so years ago both parties supported free trade and free speech. Now neither party does. Going further back, Calvin Coolidge, one of our GOP heroes, was a protectionist. Frankly, conservatives are not a big splinter group and capitalistic orphans are a tiny one.

It seems unlikely that the Democrats are going to revert to JFK but one never knows. For now, conservatives need to decide if they can get enough from the GOP to support them in the general elections in 2022 and 2024. If Jim wins the primary in Indiana then lots of conservatives, not just in Indiana, will have difficult voting choices. But to answer our question, we still need the GOP even if it doesn’t do much for conservatives because we conservatives know that competition works best.

Hooray For Capitalism

We’ve missed posting as we’ve been on vacation in Tampa to see Tommy and the Bucs lose to the Dallas Cowboys. Congratulations to ‘Boys coach Mike McCarthy. He looked to be the difference in the game to us.

We flew from Chicago to Tampa and back and did the four-hour drive on either end to get to Wisconsin. We scheduled the drive times so it was easy in and out of O’Hare and the easy drive home today got us thinking about the many joys of capitalism and the occasional joy we get from government that is usually is conjunction with capitalism. We graduated from high school in 1968 and during the uneventful trip we were thinking about how the world, and especially how the transportation part of life in these United States has changed since then.

For staters, there is the deregulation of the airlines in 1978 where the credit goes to Jimmy Carter. Deregulation means more capitalism, more efficiency, and almost always lower prices. Using real terms and 1968 dollars, each round-trip ticket to Tampa cost a little over $39 in those 1968 dollars. We are all part of the jet-set now. If you are not familiar with the term, here is Wikipedia with some background:

In journalism, jet set is a term for an international social group of wealthy people who travel the world to participate in social activities unavailable to ordinary people. The term, which replaced “café society“, came from the lifestyle of travelling from one stylish or exotic place to another via jet plane.

The cost of jet travel is one of the many things that have changed about travel in the past 55 years.

Illinois is a toll road state. It used to be drag to drive through Illinois because of all the toll booths but E-Z Pass has made it much more enjoyable and even a little less expensive. The drivers there, however, are still crazy. This is another area where government, in this case state governments, have allowed new ideas to flow. Now you just open up an account, make a credit card payment online, and attach a device to your windshield and it charges your account as you drive through certain areas. It the old days you needed to load up your car with change and stop several times on the way into O’Hare and throw the change into a basket. You may not have owned one but some cars had places with slots for quarters et cetera to be ready for such events. If you didn’t have change then you had to go through the manual toll booths and paid the person with bills and got coins as appropriate. It was slow and dangerous because of all the stopping and starting with perhaps three driving lanes and seven toll lanes.

Sidebar: Capitalism is disruptive. Lots of toll booth attendants lost their jobs as states went to E-Z Pass. It speaks well for the states that they supported the many drivers who got a small gain versus the the few toll booth attendants who had a big loss. Of course, it seems highly likely that each state had big gains because there were lots of attendants that were needed and they were needed 24-7. Also, all of that currency had to be controlled and deposited leaving opportunities for dishonest behavior. Now it is all electronic so somebody must be way more clever to be dishonest. We pay in advance with our credit card and the state makes the deductions as appropriate. What about the scofflaws? The electronic system records their number plates and they get a bill, a bigger bill than the folks with the E-Z Pass devices. At least for in-state residents the state has effective means to coerce payment by restricting vehicle privileges. End Sidebar.

We chose to park at O’Hare. It is expensive but we are risk averse and a vehicle that is not covered in snow in January is valuable to us. The pictures in our phone which was unavailable at any price in 1968 led us right to the vehicle. Yes, we could have written it all down but we didn’t need to and we couldn’t lose it. Well, if you lose your phone you have big problems.

Speaking of using phones, Uber and the other ride sharing services are great in a big city like Tampa. Unlike some folks we get utility from driving (we like it) but big new cities present lots of driving problems. Uber is cheap, fast, and there are no parking problems. We actually took a cab once in Tampa to remind ourself why monopolies suck and capitalism rocks. As the Lady de Gloves observed, don’t the cab companies see how Uber (etc.) is kicking their ass? Uber was founded in 2009 so we’re not sure anybody was even dreaming about the possibility in 1968.

We had four tickets to the game but our usual compatriots were not available but Ticketmaster was. We’re not sure when Ticketmaster created a second market for NFL and other tickets but it makes life nicer and sometimes profitable. Playoff tickets sell well above face value so it worked especially well for us. Of course, in 1968 you would either eat the tickets or be forced to try and sell them illegally on the street.

We finally get to what got us thinking about all these joys of capitalism: our vehicle. It might not be as pretty as the ones in ’68 or have a 6.5 or 7 liter engine as an option but it is surely more efficient and reliable. Remote entry, remote starting, and heated seats make it easy to have a warm vehicle. As it happened, there was mist in the air as we came out of Chicago. It was just the thing that intermittent wipers work on. And the traffic was light so it was a perfect day for cruise control. And on a long drive SiriusXM is, from our perspective, just the thing you want in your vehicle. You get just the content you want, in our case it was soccer talk and classic rock, and you never need to look for new channels as you change location. As always, human memory and knowledge are imperfect but we are certain that Sirius XM didn’t exist and pretty sure that none of those other things existed in 1968.

So cheap airfares, automatic tolls, phones, ride sharing, second markets for tickets, better cars with options we couldn’t imagine, and satellite radio are just some of the things that we observed from capitalism on our five day vacation. Governments play a crucial role in capitalism by setting up the rule of law that makes capitalism possible. They also have the difficult job of standing up to the few who would get big benefits from special government dispensations at the expense of the many who have small losses. Governments deserve kudos for airline deregulation and automatic tolls but those are the exceptions. What we call crony capitalism is really “governmentism” where the government benefits the few by offering to create tariffs, tax breaks, or regulation for them at the expense of the many. Governments do such things because governmental officials reap benefits from the few.

It is extraordinary to see what capitalism has created over the past 55 years. Will we see the same picture in 2078? Or will governmentism strangle the disruption and progress of capitalism?

Regulatory Capture And Voting

Scott Lincicome at The Dispatch is always worth reading but My Treason Charge And The New Right’s Governance Fantasy is astonishingly good. It is worth paying for. Scott starts with the Jones Act and regulatory capture. The Jones Act restricts water transportation within the United States and is causing major energy problems in Puerto Rico and New England. The problems caused by the Jones Act are exacerbated by the capture of the regulators by the industry they are supposed to regulate. Scott quotes Dominic Pino at NRO:

“Regulatory capture” is the term that describes when an administrative agency works for the benefit of the industry it is supposed to regulate. Rarely is there such a clear case of regulatory capture as in U.S. water transportation.

Then Scott moves to generalize and find the problem with what he describes as the new right (we would call them the angry middle). The new right, as Scott sees it and we agree, wants to harness government to “better” goals:

The new right shares and amplifies this elite skepticism but eschews limited government and instead embraces state power to achieve its “anti-elitist” objectives. 

The problem is, as the Jones Act and The Weed Agency (a must read) show, trying to repurpose government is not going to be effective. Here is how Scott puts it:

As mentioned, that’s a big reason why limited government of enumerated powers is so central to the classical liberal thesis: No matter how well-intentioned a policy is, elites are fallible, and the systemic, corrupting influences of a big, unaccountable state all but ensure that policy results won’t match their intentions. 

Even if you win all the elections, and you won’t, it still doesn’t work. As usual, conservatives are right.

Sidebar: New faculty tend to be excited about their ability to make successful change. We would often encourage them to lead but remind them that either “We aren’t going to die on that hill,” or “We’ve already died on that hill.” End Sidebar.

Yet we find Dan Crenshaw’s arguments for unity in the WSJ (another paywall) for 2022 and beyond appealing. For example, the new right or angry middle was a crucial part of the coalition to make corporate taxation more sensible during The Donald’s administration. Dan invokes the sainted Ronald Reagan to attempt to unify the right behind the GOP in 2022:

The choice before Americans next month is simple. Will we sell our votes to politicians promising us prosperity if only we give them more of our money? Will we choose to be free—acknowledging the risks and challenges that inevitably accompany freedom—or will we choose to be dependent? Will we, as Reagan said, “believe in our capacity for self-government, or abandon the American Revolution and confess that a little intellectual elite in a far-distant capital can plan our lives for us better than we can plan them ourselves”?

If the new right is wrong about economics and so many other things that we haven’t covered then why should we Reaganite conservatives support them? The problem is that although there are many conservative leaning folks, conservatives or serious conservatives or classical liberals as Scott calls them are few in number. On economics, we self-identify as a capitalistic orphan indicating that there are few of us. Unfortunately, we are not going to end up with 370 clones of Scott in Congress. One is a big ask. If your minimum qualification for elected office is as conservative as Ronald Reagan then you are unlikely to ever vote again. On the other hand, if you are a classical liberal in Georgia’s 14 district you can be excused for whatever choice you make about your vote for a representative in the House.

The Jones Act has been impoverishing most Americans and enriching a few for over a century yet there is not sign of eliminating it. Despite all the hardship it causes we rarely can even get waivers for it. Being right isn’t enough. You need a majority to elect just one candidate and then need to win a majority of elections to govern. And governing and the related compromises is hard work. Identifying the economics of regulatory capture is easy. Fixing it is really hard. Thus, we need to stay in the political game by electing folks that we have a chance to influence. That’s why we voted (yup, voting is open in WI) GOP this year despite our concerns about some of the nominees.

Our Temptations

Charles C.W. Cooke at NRO has a post titled Vote For The Dangerous Guy. Democrat groups have spent millions of dollars in Colorado trying to influence the GOP Senate nominee. It didn’t work and it is a bad idea but we understand the temptation.

The Wisconsin primary is fairly late in the nomination process. We think it is in April and it is an open primary. In 2016 The Donald had all but sewn up the GOP presidential nomination. The decision between Hillary and Bernie was a more open question. We didn’t want The Donald as the GOP nominee but there wasn’t much chance of having an impact on that. We really, really didn’t want Hillary as president. Time has shown that The Donald and Hillary were two of the (or just the two?) most corrupt presidential nominees in history.

So the question became: should we vote for Bernie in the Democrat primary? He, as you know, identifies as a socialist and we are a capitalistic orphan so we disagree vehemently on almost every political point. Still, we judged him as way less corrupt than Hillary so we were tempted to vote for Bernie. Bernie might be a less bad president than Hillary because nobody is going to listen to him. Right? Right?

Our decision came down to what would we tell our children and grandchildren if Bernie became president. It would be worse than lame to say we voted for Bernie because we didn’t think voters were foolish enough to elect him or Congress was foolish enough to listen to him. We voted for a senator, we think it was Ted Cruz, in the Wisconsin GOP presidential primary in 2016. Voting or spending money to game elections is really dangerous because the person you think is a sure loser might win.

The same reasoning is why we voted for The Donald in the 2016 and 2020 general elections. It is dangerous to try and game the current election and even more dangerous to try and game the next election. The Donald was the best choice both times. He wasn’t a great choice but he was the best of the two on offer. And yet, we don’t think we can use that argument in 2024. If the GOP is foolish enough to nominate The Donald in 2024 we might leave the presidential boxes blank. It is about what we can tell the kids and grandkids.

Growth Fairy Fantasies

As we approach the 2022 elections, we start to see the GOP policy trial balloons for the 2024 presidential race. People running for government offices have to propose the government do something different. It has been disappointing but not surprising that the GOP has not come up with an energy policy. It is an axiom of politics that you let the other party on off ramp when they are royally screwing up as the Democrats are with energy policy. Political consultants rarely favor the bold. We shall make a less than expert’s stab at energy policy in the near future.

Glenn Hubbard’s post at NRO and the magazine is Economic Growth and it is, we expect, the one of many “growth but” proposals from conservatives and the GOP. You should read it all. The first part reminds us of why economic growth is crucial. We have two comments on that to come. The second part is the “But” with a proposal for expanding community colleges. Here are two of Glenn’s assertions on why community colleges should be expanded:

To begin, community colleges are the logical workhorses of skill development and retraining, and their presence in regional economies makes them attractive partners for employers. Yet community colleges have seen their state-level public support wither. 

We’d like to see some evidence to support that community colleges are the workhorses. It seems likely to us but we await the evidence. Community colleges get their support, at least in Wisconsin, from a variety of public levels. All of them need to be included and we are not sure they are withering. Evidence please. Two obvious political problems are: How does Glenn define a community college? And can Glenn limit funding to just community colleges? The first problem seems surmountable but the second looks like Everest to us.

What is unequivocal is that visits from the growth fairy, economic growth is good. Do read Glenn for the why but we would like to emphasize two points.

First, Glenn says that growth and destruction are the two sides of a coin. Growth means destruction so we don’t make many princess phones anymore. We agree but we want to make sure nobody takes the inappropriate inference that a coin flip might suggest that it is equal parts growth benefits and destruction. It is not. JFK overstated it as all but a rising economic tide lifts most boats.

Second, destruction is inevitable. The classic case is the Soviet Union. The Soviets had complete control over the economy so they could block the destruction change brought. They didn’t really want to block the growth fairy too but that is how it works. In 1991 the Soviet Union economy imploded.

Now, let’s get the popcorn and ready ourselves for lots of growth but … proposals. What politician can convince us that he is dedicated to the growth fairy and not the BUT.

JFK And The Growth Fairy

We are big fans of the growth fairy. There are two aspects to our fandom. First, we think it should be uncontroversial that economic growth, a visit from the growth fairy, is something that governments should encourage. Even some of the people currently associated with the Democrat Party agree although they, as we show, have a tough sell. Ruy Teixeira writing to his fellow Democrats at NRO and in the current print version of NR says:

It is a mistake to lose sight of the need for faster growth. Growth, particularly productivity growth, is what drives rising living standards over time, and Democrats presumably stand for the fastest possible rise in living standards. Faster growth also makes the achievement of Democrats’ other goals easier. [Emphasis added]

Ruy is our second winner of Profiles In Democrat Courage (PIDC) because he is speaking truth to power. You should read the whole thing carefully. You should subscribe to the National Review too. Even we, however, think the statement in bold is a bit bold. We think Democrats are at best indifferent about economic growth. For example, see Cato on our 44th president. The GOP are slightly more enthusiastic about economic growth than the Democrats but they are nowhere near standing for the phase in bold. Certainly, our last three presidents have not put economic growth as a high priority.

What is more controversial is that we have a good idea of what causes the growth fairy to visit. We think we do. A not exhaustive list of policies that cause the growth fairy to visit would include rule of law, light regulation, and reasonable taxes. Because economies are not a closed system it is difficult to prove conclusively what, if anything, works because what happens outside of a country’s economic system will influence that economy.

JFK was a believer in the growth fairy. He is noted for his overstatement that “a rising tide lifts all boats.” It is an overstatement because, as great as economic growth is, it involves Schumpeter’s creative destruction. Growth means change and that means that some suffer in the short term while most of the boats are lifted.

On the opposite side of PIDC is Brent Budowsky at The Hill who invokes JFK to get Joe Manchin to do the anti-JKF. It might be worth reading Brent to get an idea of what some on the left really think. He thinks that huge majorities of Democrats support the current proposals in Congress. Brent starts out with some fake data:

Liberal and moderate Democrats, who are 98 percent to 99 percent united on the issues addressed here, might consider that JFK’s political greatness was that he was both a starry-eyed idealist and a cold-blooded realist. [Emphasis added]

First, nothing gets 98 or 99 percent support even for one party. If you asked the GOP if The Frontrunner is a fool or Democrats if The Donald was a dipwad you wouldn’t get that level of agreement. Second, he is invoking JFK, famous for supporting economic growth, to support anti-growth policies of higher taxes and more regulation.

As capitalistic orphans we would love for both parties to approach supporting Ruy’s statement in bold. We would settle for both parties considering the trade-offs among economic growth and other policies like Climate Change (search Bjorn Lomberg but you could start here), immigration, and taxes including tariffs. We like to think that Ruy will have some influence on the Democrats but we would bet against it and we wouldn’t bet on the other party supporting the growth fairy.

The Ukraine And The Future

And we are back. We didn’t announce our vacation in advance because we thought we might find something of interest to post. As much fun as blogging is skiing in Vermont is more fun. And hard physical work that demands partying afterwards.

John Hillen at NRO has an interesting piece on How Russia’s War On Ukraine Will Change The World. It can fairly be described as wishy-washy and yet it is worth reading. We think the problem is that the headline over sold the post. John has eight points to make and, by our counting, only one is unequivocal, For aggressor states, being in the nuclear club is a must-have. Here is John’s run up to the eight points:

It is still possible that Russia “succeeds,” but painfully and slowly. And it is possible that Ukraine’s current counteroffensives could repulse the Russian incursion into much of the country. It is possible, too, that Vladimir Putin could escalate the war both inside and outside of Ukraine in a desperate attempt to achieve a better outcome or stronger position.

On the one hand it is wishy-washy. Yet it is a thoughtful review of possibilities. We like the post because it made us think and think you should read it all. We want to discuss two of John’s eight points: energy policy and globalization. We lean with him on energy policy and against him on globalization. See, we can be wishy-washy too.

John says that energy policy will be more firmly anchored to security policy. He gives the Germans as an example. The Germans are working on legislation. Now, as the WSJ reports, even some American Democrats in regulatory positions have moved an iota in that direction:

Federal regulators rarely backtrack, especially as quickly as the Federal Energy Regulatory Commission. Yet on Thursday Democratic commissioners hit pause on a new policy requiring a greenhouse-gas analysis for natural gas pipelines and export projects. 

It is a tiny step but it could be particularly important because regulations and regulators are crucial to the accomplishment of the left’s goals in America. As the WSJ concludes, the action is only a reprieve. That’s why we only lean with John. We think that there will be lots of talk of a serious energy policy in America and elsewhere but we want to see (and this is not a comprehensive list) pipelines, electrical transmission lines, and LNG terminals approved, being built, and transmitting energy.

Sidebar: Politicians have created a real problem for themselves in energy policy. Because of the attempts of political management of energy production, e.g., mandates for inefficient energy production, and the attacks on carbon based energy, we reasonably see lots of cautious actors in energy production. It will be a rational decision for businesses not to trust any “new” policies. End Sidebar.

John is not a fan of globalization or as we would put it economic freedom. He says it is not the end of economic freedom but we can see it from here. Then he burns a straw man:

In its purest form, economic globalization would mean, among many other things, that no one really cares where his supply chain operates, just that it operates in the most economically efficient way. 

Everyone has always cared how the supply web works. Well, at the very least almost everyone as very few countries don’t have tariffs. Only us few capitalistic orphans prize economic efficiency. People like Marco Rubio will still try to argue that sugar tariffs are a matter of national security. Fighting for economic freedom and the resulting prosperity has always been a challenge because the concentrated benefits of regulation versus the dispersed benefits of prosperity. We see a continuing battle over economic freedom as rent seekers seek rents but there are security benefits from a supply web rather than a chain. An example of a global supply web is that Germany wants many sources of energy rather than just gas from Russia. We think that economic freedom will tend towards expansion despite the best efforts of the rent seekers.

John’s headline reflects that people want a Conan The Barbarian outcome:

“To crush your enemies — See them driven before you, and to hear the lamentation of their women!“

There aren’t many Waterloos in battle and even fewer in politics. We should move towards energy security and economic freedom even as there are some conflicts between the two. These things are going to be wishy-washy in a constitutional republic. It is not satisfying but it is how it is.

What To Do About Not-For-Profits

We have been over the lack of commitment to free markets and economic growth by governments in general and the USA in particular before but it is a perennial problem. To review, we have had the Great Enrichment as chronicled by Deirdre McCloskey. During the 19th and 20th century humans leaped from a per capita income of $3 dollars a day to $100 a day. Jonah Goldberg has a very readable appendix in Suicide Of The West on this topic. More recently free markets have expanded beyond their traditional bounds and led to an unprecedented reduction in extreme poverty. But governments have been reluctant to embrace free markets. The Heritage Index of Economic Freedom for 2022 ranks 177 countries and only seven with a total population of less than 50 million are classified as free.

What led us to this review is an expose by the WSJ Editors (yes it is behind a paywall)about the problems with philanthropy and particularly the Hewitt Foundation. The Editors quote the Foundation:

“For more than 40 years, neoliberalism has dominated economic and political debates, both in the U.S. and globally, with its free-market fundamentalism and growth-at-all-costs approach to economic and social policy,” the press release says. It “offers no solutions for the biggest challenges of our time, such as the climate crisis, systemic racism, and rampant wealth inequality—and in many ways, it has made those problems even worse.

We are not sure if it is stupidity, dishonesty or both but few paragraphs can match the one above. We usually bold the parts in question or error but in that paragraph everything is wrong except for: the press release says. We will respond to the historical inaccuracies in the first sentence. It marks time from the Reagan administration when the US and many other counties successfully reversed direction to move in the direction of free markets. The US government has, unfortunately, never been in or even near the grips of free-market fundamentalism and, again unfortunately, never ever had a growth-at-all-costs economic or social policy. If you investigate all the 177 countries Heritage ranks you might find one where free-market fundamentalism reigned for a while but you might not. Many governments have nudged towards free markets to be part of the Great Enrichment but few, if any, have embraced it.

We will let the WSJ editors respond to the second sentence about markets and solutions:

Actually, capitalism [we’ve been using free markets] offers solutions to all of those challenges. The largest reductions in carbon emissions have come from natural gas, thanks to the market innovation of shale fracking. Competitive labor markets have helped minorities rise despite residual racism because bigotry is too expensive. The wealth created by free markets and innovation, along with global trade, has lifted billions out of poverty. Extreme global poverty has plunged to less than 10% from 45% in 1980 while world GDP has more than tripled.

Free markets are the best chance countries have to get the growth fairy to visit. JFK was wrong that a rising tide lifts all boats but it does lift almost all of them and it produces a surplus to help the ones that leak. You should read the whole WSJ editorial if you can. Governments have a problem avoiding free markets because they need to enrich their people. Of course, few if any governments back free markets whole heartedly because they prefer the power they get from crony capitalism. Not-for-profits from foundations to universities to the YMCA are a bigger problem because there are fewer incentives for them to behave. We wish we had a solution.