Both left-wing and right-wing populism are bad for markets, welfare and freedom

21 May 2024

TLDR: The interview with Aaron Ross Powell and Ryan Bourne delves into the shift in the conservative movement's economic philosophy from free enterprise to populism since Donald Trump's rise. Bourne's key points include the importance of markets reflecting society's pluralism, the misconception of a radical libertarian experiment in the U.S., and the warning against steering markets toward particular outcomes. Despite current economic populism, Bourne sees hope for a pro-market perspective.

The interview with Aaron Ross Powell and Ryan Bourne via The Unpopulist brightens the stark contrast between the conservative movement's traditional and current economic philosophies since Donald Trump's rise to prominence. Traditionally, American conservatism championed free enterprise, a core tenet during the Reagan era. However, today, the right has veered towards a more populist stance on economics, diverging from its free-market roots. This shift involves the use of state power to achieve specific social goals, a perspective traditionally associated with progressivism.
Ryan Bourne argues that markets are inherently valuable because they reflect society's pluralistic nature, allowing people to express their preferences and enabling suppliers to meet those demands. This pluralism is lost when markets are manipulated to achieve particular social outcomes. The new right's vision of markets involves configuring them to support a larger manufacturing sector, traditional family structures, and other specific social goals, thus imposing a particular social design rather than allowing markets to operate freely.
Powell raises a crucial question: Is the problem the new right's view of markets as tools for achieving social goals, or is it the specific goals themselves? Bourne responds by emphasizing that the current economic history narrative adopted by the new right needs to be revised. They mistakenly believe that the U.S. has been living under a radical libertarian experiment, attributing economic issues to free markets. However, the U.S. has never adopted the unfettered free trade or minimal government intervention that true libertarians advocate. Instead, the country has extensive trade protectionism, a large welfare state, and significant regulation, including occupational licensing.
Bourne underscores the potential consequences of steering markets towards specific social outcomes, a practice that might seem benign but often leads to undesirable results. Both progressive and national conservative interventions can result in the state favoring certain industries or companies, thereby distorting market neutrality. For instance, trade protectionism aimed at bolstering domestic manufacturing can lead to higher consumer prices and inefficiencies in other economic sectors.
Powell and Bourne also discuss the disconnect between economic indicators and public perception. Many people feel economically insecure despite positive economic indicators like declining inflation, rising wages, and a strong stock market. This perception is often grounded in local economic conditions rather than national statistics. Bourne acknowledges that free markets cannot ensure universal prosperity but argues for policies that remove barriers to mobility and professional adjustment, enabling people to move to areas with better economic opportunities.
The conversation shifts to the cultural and regulatory aspects of the current conservative movement. Bourne expresses concern about a potential second Trump term, where the administration might use state power to punish companies perceived as "woke" or to impose conservative values through regulatory means. He criticizes this approach, arguing that it undermines state neutrality and distracts businesses from serving customers.
Bourne explains that the recent inflation spike resulted from supply constraints and an extraordinary increase in money supply due to fiscal stimulus. He dismisses the "reflation" argument, emphasizing that inflation is a macroeconomic phenomenon driven by excess money supply relative to economic production.
 Bourne also suggests that while the short-term outlook for free market advocates may be grim, there are signs of intellectual pushback against economic populism within the conservative movement. He also notes that some progressives recognize the need to remove state-imposed barriers to achieve broader economic goals. Over the long term, hope remains for a pro-market perspective that enhances the U.S. economy's potential.
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