The advent of “Bidenomics” has resurrected decades-old debates about the merits of markets versus industrial policy. When President Joe Biden announced his eponymous strategy in June 2023, he blasted what he described as “40 years of Republican trickle-down economics” and insisted that he would seek instead to build “an economy from the middle out and the bottom up, not the top down.” He would achieve this through “targeted investments” in technologies like semiconductors, batteries, and electric cars — all of which featured heavily in initiatives like the CHIPS and Science Act and the Inflation Reduction Act. Yet despite the president’s professed support for a “middle out” economics, Bidenomics has thus far proven to be less of an intellectual framework than a set of well-intended yet ill-fated industrial-policy interventions implemented from the top down.
Some conservatives have joined Biden in embracing industrial policy. Writing recently in these pages, Republican senator Marco Rubio of Florida asserted that while it is difficult to “get industrial policy right, conservatives can and must take ownership of this space to keep the American economy strong and free.” Former president Donald Trump, for his part, staunchly advocates heavy tariffs to promote domestic manufacturing.
Conservatives who adopt their own version of protectionist tinkering with markets are missing an important opportunity. As mercantilism’s decline did for classical liberalism in the 19th century and Keynesianism’s misadventures did for neoliberalism in the 20th, Bidenomics’ failures offer an opening for the right to champion a new type of economics — one that puts opportunity for the people ahead of the economic rules of the game.
Rapid globalization and technological change have left too many Americans behind. But the answer is not for the state to invest in costly projects with dubious prospects, nor is it to adopt a strictly laissez-faire approach to the economy. By reviving classically liberal ideas about competition and opportunity in the face of change, conservatives can promote an alternative economics that retains the enormous benefits of markets and openness while putting people first.
LIBERALISM’S RISE AND FALL
Before “Bidenomics” became a popular term, national-security advisor Jake Sullivan hinted at the president’s economic priorities in an April 2023 speech at the Brookings Institution. There, he declared that a “new Washington consensus” had formed around a “modern industrial and innovation strategy,” which would correct for the excesses of the free-market orthodoxy propagated by the likes of Adam Smith, Friedrich Hayek, and Milton Friedman.
This orthodoxy, according to Sullivan, “championed tax cutting and deregulation, privatization over public action, and trade liberalization as an end in itself,” all of which eroded the nation’s industrial and social foundations. Finally, after nearly three decades of such policies, two “shocks” — the global financial crisis of 2007-2009 and the Covid-19 pandemic — ”laid bare the limits” of liberalism. The time had come, Sullivan concluded, to dispense with decades of policies touting the benefits of markets and free trade — and economists would just have to get over it.
The Biden administration’s assault on open markets and free trade is odd in some respects. Scholars at the Peterson Institute for International Economics — located just across the street from Brookings — concluded in a 2022 report that, thanks to America’s openness to globalization, trillions of dollars in economic benefits have flowed to U.S. households. Moreover, the United Nations estimates that integrating China, India, and other economies into the world trading order has brought one billion individuals out of poverty since the 1980s. The impact of technological change as a driver of growth and incomes is larger still. Juxtaposing such outcomes with the administration’s grievances calls to mind the popular outcry in Monty Python’s Life of Brian: “What have the Romans ever done for us?” Quite a lot, in fact.
Proponents of free markets have clashed with advocates of government intervention before, most notably at the dawn of classical liberalism toward the end of the 18th century and the advent of neoliberalism during the first half of the 20th. These contests were not so much battles of ideas as they were intellectual critiques of real-life policy failures.
In 1776, Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations threw down the gauntlet. The book was radical, offering a sharp rebuke of the economic-policy order of the day. Mercantilism — or the…
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