Former President Donald Trump and Democratic Sen. Elizabeth Warren appear as polar opposites, but in 2019 Tucker Carlson observed a similarity between the two on economic policy. After approvingly quoting a Warren economic plan on-air—“Politicians love to say they care about American jobs, but for decades those same politicians have cited ‘free market principles’ and refused to intervene in markets on behalf of American workers”—the Fox News host declared, “She sounds like Donald Trump at his best.”
This wasn’t a one-off. Much of the progressive left and “national conservative” right have spent the past few years coalescing around the idea that government should play a bigger role in America’s economy. They may differ on the precise nature of the interventions but generally favor “state-directed capitalism”—an agenda embracing protectionism, industrial policy, “pro-worker” initiatives, and a corporatism whereby governments can jawbone companies for taking the wrong political or social stances.
Rather than lament these ideas as braindead errors, Samuel Gregg takes seriously the best arguments for such proposals in his excellent new book, The Next American Economy. More importantly, the economics writer and much-affiliated think tanker recognizes that wittering on about “deadweight losses” or economic inefficiencies in state-directed capitalism isn’t enough to convince those tempted by the new zeitgeist.
Gregg begins by explaining just how stark the turn away from free markets has been in recent years. After the Soviet Union collapsed and industrial policy-laden Japan’s bubble burst in the 1990s, the idea that the state could plan or tilt the sectoral composition of an economy toward prosperity seemed utterly discredited. Free markets and global economic integration were seen not only as guarantors of prosperity but a means of creating binding interests to spread freedom, peace, and prosperity.