If your constant objective is to expand government’s permeation of society — to enlarge its role in the allocation of capital and opportunity — you have a permanent incentive to invent or misdescribe social problems. So, if you are a progressive, you will embrace the myth of a U.S. “manufacturing crisis.”
This is a perennial excuse for protectionism and other manifestations of “economic planning” by a supposedly clairvoyant government. Which is socialism, under the anodyne title of “industrial policy.”
You also might favor government going beyond mere control of imports. You might want it to deport the Cato Institute’s Colin Grabow. His report “The Reality of American ‘Deindustrialization’” overflows with inconvenient (for progressives) truths, such as: The United States has the world’s second-largest manufacturing economy, which produces a larger share of global manufacturing output than Germany, South Korea, India and Japan combined. (Remember the 1980s panic, loudly encouraged by a publicity-mad New York real estate blowhard, about Japan eclipsing U.S. manufacturing?) The manufacturing sector of the U.S. economy, which supposedly has withered as the service sector has grown, would, standing alone, be the world’s eighth-largest economy.
The decline of factory work in some U.S. states often results, Grabow says, from the relocation of jobs not to other countries but to other, more hospitable states. And, says Grabow, “if reasons exist for U.S. policymakers to actively promote domestic manufacturing, jobs aren’t one of them.” The idea that manufacturing wages are generally superior to those in the service sector is mistaken: “Nonsupervisory workers in manufacturing earned an average hourly wage of $21.29 in 2017, compared with $26.73 for nonsupervisory construction workers and $36.21 for nonsupervisory workers in the electric utility industry.”
I recently read Alexander Field’s book The Economic Consequences of U.S. Mobilization for the Second World War. Field argues that, contrary to popular belief, wartime production substantially reduced the productivity of the U.S. economy, and the effects of the wartime economy continued to hamper economic productivity for years after the war ended. He makes a persuasive argument, but what I found most interesting about the book was how it presents a case study into the pitfalls of top-down planning.
Milei is an economist with a deep understanding of the classical liberal tradition and its power to deliver prosperity to all. He also has a very clear philosophy about the limited role government should play in our lives and the greatness of markets. In contrast, Mr. Trump seems to have no systematic philosophy about the role of government or markets.
The best evidence of their profound differences is found in Milei’s very speech (which you can listen to in English translated by AI with the president’s own accent). In the speech, the new Argentine leader made the case for what he calls a free-trade capitalist regime and a free-enterprise capitalist system.
He is indeed a “market fundamentalist,” as Oren Cass likes to critically call those of us who believe that unfettered markets, though not perfect, are the best way to deliver prosperity to the masses rather than only to the politically powerful. Market fundamentalists such as Milei are also skeptical of all government schemes, including protectionism. He also makes a remarkable case against government interventions faultily justified as a means of correcting so-called market failures.
I have no idea if the new president of Argentina will be able to achieve what he is setting out to accomplish. After all, good economics and politics often clash. Politics being downstream of culture, and Argentina being culturally very left-wing, it will likely prove to be a challenge. I wish him luck.
However, I want to applaud him for trying. I also thank him for lecturing the world’s elites about the greatness of the free market and the danger of excessive government interventions, as he has been doing ever since he burst on the international scene. As he said at Davos, “We are here to warn you about what can happen to Western nations that became rich on a model of freedom if they continue down this path of servitude.”
I see no such market fundamentalists and coherent thinkers on our U.S. political scene these days.