How Free-Market Policymakers Got It All Wrong for Decades

— a little squishy on communism, getting together everybody who really, really, really hated communism turned out to be a powerful strategy.”

This coalition collapsed in 1989 with the Berlin Wall, Cass continued. That left the three-legged stool in splinters, with each faction vying for supremacy. “That is the economic libertarians unchained from any actual Cold War just running amok,” he argued. “This is [activist] Grover Norquist getting everybody to agree they will never raise taxes under any circumstances.

“And by the time you get to the 2000s, you have a bunch of [President George W.] Bush tax cuts that bear no relationship to any economic priority and manage to send us back into debt while producing no economic growth whatsoever. You have several massive new wars starting to no apparent effect. And you have social conservatives sort of sitting there, losing on their priorities for the most part.”

For 30 years, that group ceded all territory on economic issues, Cass said. “And then they started to say, ‘Wait a minute. The economy that the economic libertarians are producing does not align with any of the things we actually believe equate to human flourishing.’”

Core to Cass’ critique is the economic libertarian focus on cheap consumer goods over building a labor force where workers can support strong families.

As evidence that the free-market era has failed to deliver for the average American household, Cass showed a series of charts detailing everything from the growing U.S. trade deficit to 50 years of stagnant wage growth even amid rising per-capita GDP. Over the same period, deregulation led to the rise of offshoring, while an increasingly dominant financial sector embraced high-speed trading and speculation over investments in U.S. communities.

Cass also shared a data visualization of America’s growing reliance on government transfers, recently published by a bipartisan Economic Innovation Group associated with Facebook founding president Sean Parker. The display can be read as a “massive victory” by free-market thinkers focused, above all, on individual purchasing power, Cass argued.

But he ventured that most Americans are unsettled by increased dependence on Social Security, veterans’ benefits, and other federal aid programs. “This is not actually a sustainable model for a thriving nation either socially or economically,” he said.

Conservatives like to approach the market in definitional terms, Cass explained. What is the market, and what is it for? He rejected the terms put forth by former U.S. Senator Pat Toomey during a 2020 talk at the Heritage Foundation.“The market is … really just the name that we assign to the sum total of all the voluntary exchanges that occur every day by free men and women,” Toomey said.

“That’s not a market,” Cass countered. “A market is a much more complex mechanism that allocates labor and capital in response to conditions, rules, and institutions.”

What is the market actually for, in his view? “It’s not just for optimizing consumption,” Cass said. “We need to do a lot more than that, because we don’t want to rely on government to do everything else. We need it to empower workers to support their families. We need it to strengthen the social fabric. We need it to foster domestic investment and innovation.

“And if that’s the case, the role for policymakers isn’t as little as possible,” he concluded. “Their role is to create the rules and support the institutions that will lead to productive applications.”

Christy DeSmith is a Harvard staff writer. This article is published courtesy of the Harvard Gazette, Harvard University’s official newspaper.