Will Anyone Defend the Free Markets?

Trump has made abundantly clear, from his handling of the Fed to his awful trade and tariff policies, that he won’t.
April 15, 2019
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(Photo by Chip Somodevilla/Getty Images)

Every day presents a new reason for free-market Republicans to question their party allegiance. Such a statement seems dissonant against the background music of a humming economy and ripping markets, but such is the nature of economies stuffed with fiscal and monetary stimulus. Donald Trump used to (correctly) criticize President Obama for it. But, distressingly, Trump’s reversal to fiscal imprudence is not some deviant datapoint; it fits a theme.

President Trump’s GOP pays little more than lip service to the defense of free markets.

Look, for example, at how Trump and the GOP are shrieking about the dangers of socialism and promising to protect the country from it. Reality: the political path for “socialism” in the U.S. is as narrow as the one for Trump’s wall.  Meanwhile, actual free-market defenders, who comprise one leg of Reagan’s three-legged stool, wonder who is worse for the economy: Republicans or Democrats?

The most recent example is Trump’s laughably unserious approach to staffing the Federal Reserve Bank’s Open Market Committee (FOMC). If possible, peer past the NASCAR crash of hot takes questioning the qualifications and independence of Trump’s preferred candidates Herman Cain and Cain’s former economic adviser, Stephen Moore.

Cain is expected to withdraw his name from consideration. If so, a bullet has been dodged. Consider an email advertisement that Cain sent recently: He promoted a secret “money making” strategy that has returned 79,900 percent (really). As one one internationally known economist commented, “He’s an ass clown and a woman beater, but somehow he has far more Fed expertise than Moore does.”

Republicans once had legitimate gripes about President Obama’s penchant for loose-money FOMC candidates, but Trump’s own loose money picks get a pass. His picks are so bad that they face only half-joking questioning of whether Cain stole his 9-9-9 economic plan from SimCity.

Controlling the national debt, the GOP’s former shibboleth, receives the same whimsical treatment. Ha ha! Remember Obama’s porkulus? The GOP will not be outspent by that $800 billion orgy of cronyism. They spent two years making sure the national debt topped $22 trillion.

Eat your heart out, Paul Krugman. That kind of spending is full-octane Keynesian. Trump’s economic policy–massive fiscal stimulus alongside massive monetary stimulus–screams it. Yet, most Keynesian economists also consider it foolish to stimulate the economy at a time that it is humming at breakneck speed and approaching the natural end of a business cycle.

That is because, when the economy slumps, Keynesians will meet it with more spending. And international markets might question even more debt, which could mean higher interest rates and thus more burdensome debt servicing, more expensive home lending, among other things.

Trump’s GOP presents free market proponents with a perverse, Keynesian Hobbesian choice. What does it say about the GOP’s economic street cred that Obama’s former chief economist and Treasury Secretary essentially cheer Trump’s profligacy?

In theory, Trump could moot this by avoiding an economic downturn. However, starting unprovoked trade spats with your closest trading partners based on an ignorance of economics  is not helpful in that regard.

At least, the GOP had better hope that Trump is simply ignorant about economics because the alternative—Trump is simply gaslighting voters—would underscore an inexcusable cowardice when it comes to defending the middle class, the secret sauce of the American economy.

And the middle class has the most to lose with the administration’s China policy. Instead of using America’s geopolitical leverage to push back on China’s expansion in Asia, Trump has squandered it on his steel tariff self-own, which highlights another feature of the GOP’s new economic policy: cronyism.

Before becoming U.S. Trade Representative, Robert Lighthizer was a well-known shill for Big Steel—as were his deputy and general counsel . Same for one of the Commerce Department’s senior-most trade policy voices. Of course, his boss—Commerce Secretary Wilbur Ross—owned one of the world’s largest steel companies. To assemble his Big Steel dream team, Trump turned to the former CEO of Nucor Steel. Middle class consumers, who exponentially outnumber steelworkers, should keep that in mind next time they have to pay more for something containing steel.

The GOP and Big Steel nuptials perfectly symbolize the new GOP’s economic policies. Grift that is the stuff of banana republics is the new transparency, apparently.

The problem here is that Trump takes the free market set for granted, hoping to skirt by feeding his supportes a load of sound bites. Past GOP presidents understood the importance of fusing the sometimes-competing policy camps within the party to maintain Reagan’s three-legged stool. Without this fusionism, as George Nash pointed out in, “The Conservative Intellectual Movement in America Since 1945 ,” the modern Republican Party does not have the throw-weight to oppose the rowdy band of interest groups that comprise the modern American left.

Governing is hard, but history demonstrates that modern conservatism’s related philosophies can thrive together, provided that libertarians, traditionalists, and muscular internationalists all benefit from peaceful cohabitation. In other words, “but Gorsuch!,” while necessary, is insufficient.  

Trump chased off the muscular internationalists and gnaws away like a rabid beaver at the leg comprised of free-market libertarianism. Elected Republicans should consider the ramifications of a president who rejects the fusionst function played by Buckley, Reagan, and Goldwater.

Will the GOP’s free market camp outlast Trump, and why—exactly—do Republican officeholders believe that free-market defenders will remain happy living under the neo-traditionalist thumb of the likes of Jerry Falwell, Jr? More importantly, what happens when they just leave

Kristofer Harrison

Kristofer Harrison is senior managing director for a macro-economic consultancy and is a Russia expert. Previously, he served as an official at both the State and Defense Departments during the George W. Bush administration.  During the 2016 primary, he was a senior foreign policy advisor to Sen. Ted Cruz.  He votes his conscience.  You can follow him on Twitter @ToferH.