Free markets deliver real American greatness

Since its postwar rise, the American conservative movement has staked its reputation on defending the free market as an abiding principle. Conservatives pointed to the liftoff in the American economy caused by the Reagan tax revolution and the deregulation of heavily controlled parts of the economy. Less government and less regulation were better for the American economy. The left disagreed with this fundamental axiom of conservative wisdom. Now, surprisingly, many on the right have joined them.

Something obviously changed in the post-Cold War period. China’s entry to the World Trade Organization in 2001 resulted in the so-called China Shock, or the loss of 15 to 20 percent of manufacturing jobs in America. Global commerce rewarded certain skill sets generously, bringing dramatic wealth gains to tech, finance and upper-level management in highly productive companies. But these same elites have showed indifference to American culture, mismanaged foreign policy and miscalculated China’s political condition. Americans also struggled under the weight of the financial crisis, which was followed by almost a decade of paltry wage gains.

In 2018 Senator Marco Rubio argued in the Atlantic, “There was once a path to a stable and prosperous life in America that has since closed off.” Economic commentator Oren Cass observed that “a significant share of the population, perhaps even a majority, has seen no gains at all and may now be going backward.” Both statements are belied by the facts. But they seem true based on certain pieces of evidence. The belief, however, that federal bureaucrats, managing our economy even more actively than they do presently, will improve economic outcomes seems unlikely.

Take Cass’s extreme claim about wage decline. In a debate with Cass in National Review, labor expert Scott Winship noted that from 1973 to 2018, hourly wages grew by between 7 and 13 percent for any given decile of the bottom 50 percent of male earners. More robust wage growth is wanted here, but that is hardly a decline. Complicating things further, this was also a period where women entered the workforce in large numbers, thus increasing labor supply and lowering its price.

Likewise, according to the Bureau of Labor Statistics, wages for average workers over the last three decades have increased 34 percent. Again, more growth is needed. But the correct treatment is to increase the opportunities for broad-based economic growth, not to revive industrial policy, wage subsidies, and labor unions, as many of the populists advocate. That economy would be built on a retread of progressive ideas employed for conservative cultural and family policy ends.

The prescription offered by many economic populists also misses the moment we are in. Before the pandemic, there were more unfilled jobs than jobseekers. This condition has only increased as our economy regains post-Covid footing, with two jobs available for every unemployed person. Many job openings are in construction, trucking and manufacturing, where we are told real opportunity rests. However, large numbers of men choose idleness: one in eight prime-age men is unemployed.

The real problem here is not a rigged “neoliberal” economy, but a welfare transfer payments system that finances laziness, with negative consequences in the lives of the unemployed, creating an overall drag on the economy.

Free markets are what delivers real American greatness, not the Department of Labor.

Richard Reinsch is a senior fellow at the Heritage Foundation. This article is one excerpt from “Fight for the right,” a symposium on the future of American conservatism. Read the full series here.