National Conservatives Should Learn Some Economics

by Don Boudreaux on August 6, 2022

in Creative destruction, Myths and Fallacies, Seen and Unseen, Trade

Here’s a letter to National Review:

Editor:

In his defense of many of the conservative critics of free markets – critics who participated in the recent American Economic Forum – Nate Hochman (“Conservative Economics Can’t Ignore the National Interest,” August 4) favorably quotes the late Roger Scruton:

Although I’m very much in favor of the free market, I’m very suspicious of the globalized form of it, and the way in which it does not respond to the demands of local communities and local forms of value. So this is a problem for real conservatism – to develop an economic doctrine that does not menace the local communities on which we all depend.

While I share Hochman’s respect for Scruton and appreciate the value of local communities, Scruton – like many others – is mistaken to assume that such communities are uniquely ‘menaced’ by the “globalized form” of the free market.

The only way that access to foreign suppliers can “menace” local communities is if those suppliers offer to fellow citizens new and attractive bargains – that is, new kinds of goods or services, or lower prices on familiar goods and services. The more attractive and frequent are such bargains offered to fellow citizens, the greater are the resulting changes in communities’ economic arrangements and patterns.

Every reasonable person easily sees the challenges of dealing with such changes. Yet too many otherwise reasonable people – including Scruton and, it seems, also Mr. Hochman – are blind to the fact that such changes are not uniquely caused by globalization. These changes occur whenever any supplier offers to community members new and attractive bargains.

The economics of local communities are changed no less if the retail prices of shoes, bed linens, and electric toasters are reduced by a new inventory-control method put into place by an entrepreneur in Arkansas than if these prices fall because of cuts in tariffs or because of improvements in ocean shipping. Particular factory jobs are destroyed no less by labor-saving technology invented in Massachusetts, California, or Florida than by labor-saving trade with Malaysia, Korea, or Finland. Particular local merchants lose customers no less to effective marketing or price-cutting by on-line merchants in other states than to effective marketing or price-cutting by exporters in other countries.

All economic growth entails economic change, and all economic change is disruptive. No myth today is more prevalent among “national conservatives” (and, not coincidentally, also among Progressives) than that which insists that economic changes that arise through fellow citizens’ commerce with foreigners differ in kind or are more unrelenting than are economic changes that arise through fellow citizens’ commerce with each other.

Another point warrants mention: Because we Americans have traded extensively with non-Americans for decades, many of the local-community economic patterns that national conservatives are keen to protect are themselves the product of globalization. Large numbers of American manufacturers, mining companies, and farmers export. Restricting globalization will disrupt these companies and their workers and, hence, their communities. And these disruptions, unlike those caused by free trade, are harmful, as they result in people losing some freedom by being shackled by their own government in ways that make them less rather than more prosperous.

I applaud national-conservatives’ desire to improve the lives of ordinary Americans. But unless and until national conservatives get serious about learning some economics, their policy proposals will have consequences quite the opposite of what they intend.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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