Republicans and conservatives are trading free markets for cronyism
Religion & Liberty Online

Republicans and conservatives are trading free markets for cronyism

“Don’t forget, this is called the Republican Party,” said Donald Trump in an interview justifying his opposition to free trade, “it’s not called the Conservative Party.” When Trump made that statement six months ago it was still possible to believe a distinction could be made between traditional Republicanism—which tends to be pro-Big Business—and traditional conservatism—which has generally been pro-free markets.

But a recent poll finds that both Republicans and conservatives are more skeptical of free markets than are liberals(!). The poll, taken by The Economist/YouGov, asked people to respond to vice-president elect Mike Pence’s bizarre statement that, “The free market has been sorting [the economy] out and America has been losing.” Both Republicans (57 percent) and conservatives (55 percent) were more likely to agree than were Democrats (33 percent) and liberals (31 percent).

My hope was that conservatives weren’t really listening to the question and just gave a knee-jerk response agreeing with Mike Pence, a former governor who used to be considered a conservative on economic issues. But my fear was confirmed when I saw the poll asked if the federal government should “imposing stiff tariffs or other taxes on U.S. companies that relocate jobs.” Once again, Republicans (73 percent) and conservatives (70 percent) were more likely to support this policy than were Democrats (49 percent) and liberals (46 percent).

The Republican part isn’t altogether surprising. After all, the GOP has had a significant protectionist strain since President William McKinley, who said in 1892, “Under free trade the trader is the master and the producer the slave.” McKinley’s successor, Theodore Roosevelt, also claimed that “pernicious indulgence in the doctrine of free trade seems inevitably to produce fatty degeneration of the moral fiber.” Republicans have a long history of protectionism that is a result of pro-cronyism and economic ignorance.

Many of us conservatives, though, thought the tide had turned after Reagan. We thought the GOP had finally realized that crony protectionist policies merely kept the working class poor while mainly benefitting politically connected corporations. Instead, it was the Democrat Party took up the free(r) trade banner. While the party didn’t fully embrace free markets at home, they realized what every economist knows: free trade benefits more people than protectionism.

In contrast, the GOP quietly slipped back into the Charles Erwin Wilson mindset. Wilson was the head of General Motors when President Eisenhower selected him as Secretary of Defense in January 1953. At his Senate confirmation hearing, Wilson infamously said he could not conceive of any decision he could make as Secretary of Defense that would be adverse to the interests of General Motors, “because for years I thought what was good for our country was good for General Motors, and vice versa.”

That’s the type of fallacious thinking that leads to cronyism, yet too many conservatives (and way too many Republicans) still think that what is good for business is what is good for America. What they should embrace instead is the idea that what is good for consumers is good for Americans. We should, in other words, be pro-market rather than pro-business. And, contrary to what many people believe, the two are definitely not the same.

Two years ago, in his column for National Review, Jonah Goldberg noted the difference between being pro-business and pro-market and says the GOP can’t have it both ways anymore:

Just to clarify, the difference between being pro-business and pro-market is categorical. A politician who is a “friend of business” is exactly that, a guy who does favors for his friends. A politician who is pro-market is a referee who will refuse to help protect his friends (or anyone else) from competition unless the competitors have broken the rules. The friend of business supports industry-specific or even business-specific loans, grants, tariffs, or tax breaks. The pro-market referee opposes special treatment for anyone.

Politically, the reason the lines get blurry in good times and bad is that in a boom, the economic pie is growing fast enough that the friend and his competitor alike can prosper. In bad times, when politicians are desperate to get the economy going, no one in Washington wants to seem like an enemy of the “job creators.”

Goldberg is absolutely right about the difference being categorical. As economist Arnold Kling has helpfully outlined, support/opposition to markets and business gives us four categories:

Consider the following matrix:

Pro-Business Anti-Business

The point is that there really are four separate categories, not just the two pro’s and the two anti’s. On health care reform and bank regulation, I would argue that the Obama Administration is trying to be pro-business and anti-market. The wonks do not trust markets at all, and they think they can do a better job of regulating them. But they are more than willing to keep big business interests happy.

An important point is that well-established businesses do not trust markets either. The last thing that a well-established business wants to see is a free market. What it wants is a regulated market that keeps competitors at bay. The people who benefit from free markets are small entrepreneurs and, above all, consumers.

Many people are initially surprised to find being pro-market does not mean being pro-business and being anti-market does not require being anti-business. The confusion likely resulted from a misunderstanding of the hybrid position embraced by many conservatives: “I’m pro-business until it conflicts with being pro-market” (a compromise similar to the pro-market/anti-business position). Today, though, many conservatives seem to be adopting the position common to populists and pre-Reagan Republicans: “I’m pro-market until it conflicts with being pro-business.”

This change is significant and will have a detrimental effect on the well-being of Americans, especially on the poor and working classes. If we don’t find a way to convince Republicans and conservatives to see the errors and evils of protectionism, we’re soon going to find the only thing we’ve “protected” ourselves from is economic growth and increased flourishing.

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).