GMU Econ alum Dominic Pino reviews Rainer Zitelmann’s In Defense of Capitalism. Two slices:
Each of the first ten chapters presents a common anti-capitalist argument followed by an empirical record of whether it is true. Zitelmann destroys claims such as “capitalism promotes selfishness and greed” and “capitalism entices people to buy products they don’t need.” He does not do so from a theoretical economic point of view. Trained as a historian, Zitelmann relies on the record of the past to adjudicate the truthfulness of anti-capitalist claims.
He writes about how the fall of communism helped to all but eliminate famines worldwide. With the advent of modern agriculture and a global market for food, famines today are rare and almost always man-made, and world hunger declined by 42 percent between 1990 and 2017.
He notes many of the problems with recent income-inequality scholarship and highlights other research showing that happiness is not correlated with equality, especially in developing countries. Historical episodes of inequality reduction often look like war or plague, not holding hands and singing “Kum bah ya.”
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Zitelmann’s defense of markets combined with his research on people’s opinions of markets form a unique book that offers a fresh perspective on the economic system we all participate in. It will challenge skeptics of markets to rethink their views in the face of the historical evidence and inform defenders of markets on how to better communicate the successes of economic freedom. By no means comprehensive, In Defense of Capitalism nonetheless provides a wide range of evidence explaining why markets work and why many people continue to be skeptical of them. As Hayek knew well, market defenders will always have work to do.
Last month, the public-policy organization American Compass put out what it called a “handbook for conservative policymakers” on economics. As I noted in the print magazine, it brushes aside tax cuts as outdated, despite the unprecedented success state-level conservatives have had cutting taxes in the past three years. As Jonathan Nicastro noted for Capital Matters, the handbook’s recommendations on industrial policy are economically illogical and resemble the sort of “technocratic machinations” conservatives expect to hear from the Left.
Bryan Riley has taken on the handbook’s trade recommendations in a new article for the National Taxpayers Union. Like Nicastro, he notes that many of the policy proposals are similar to those that politicians on the left have advocated for decades.
American Compass’s recommendation of a “global tariff” on all imports, starting at 10 percent and raised further until the trade deficit disappears, is a callback to anti-trade Democrats in the ’80s. In 1985, Jack Kemp wrote against a proposal, supported by Democrats such as Dick Gephardt, Dan Rostenkowski, and Lloyd Bentsen, that would have imposed a 25 percent import surcharge to reduce trade deficits with major countries.
Riley reminds us that “the surest way to reduce the trade deficit is to wreck the economy.” The sharpest decline in the trade deficit over the past few decades was during the Great Recession. On the positive side, Riley writes, “since 2000, real U.S. GDP has increased more than twice as much in years where the trade deficit has increased than in years where it has gotten smaller.” That’s not necessarily causal, but it demonstrates that a higher trade deficit isn’t automatically a bad thing.
Of American Compass’s desire for a 50 percent local-content requirement for certain goods, Riley notes that when other countries do it, the U.S. considers it an unfair trade practice. “Far from a conservative policy, this is based on policies like the 35 percent domestic content requirement for automobiles under Venezuela’s United Socialist Party,” he writes. And since “nearly 90 percent of U.S. trade is with countries other than China,” such a requirement would hurt the vast majority of U.S. trading relationships, including the ones with our close allies who stand with us against China.
Wall Street Journal columnist Gerard Baker is among those who find Patrick Deneen’s new book wholly unpersuasive. Two slices:
Take the most obvious current battleground in the so-called culture wars—the battle over human sexuality.
On the face of it, this looks like Exhibit A for the case of those who say we have taken liberalism to its most self-destructive point. We have elevated individual choice to the level at which we are told we can actually reject our biological sex, and that this freedom is so expansive that it must be extended to prepubescent children.
But if you dig beneath the rhetorical surface, you see that this isn’t really about extending freedom at all. The real objective here isn’t to emancipate children as young as 10 from the shackles of convention, but to remove parents’ freedom to determine what is best for their children. This effort to undermine the institution of the family serves the larger purpose of transferring authority for children away from parents to the state.
Why do they do this? Because families are obstacles to the left’s ambitions. They are the most important building blocks of genuinely free societies. This conception of the family as an obstacle to the superior will of the collective is rooted in traditional Marxist ideology, not liberalism.
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It takes a village. You didn’t build that. Parents have no right to tell schools what to teach. Sex isn’t real, only “gender,” a social construct. These are the modern watchwords of the left’s ideology of control. And we should make no mistake: It is this mix of illiberalism old and new that most seriously threatens the American way of life.
Pierre Lemieux writes wisely about climate change.
James Pethokoukis reflects on the decline, in the 21st century, of economic freedom.
Jay Bhattacharya talks with Dave Rubin about covid censorship.
