American Compass’ Oren Cass recently had a piece – co-authored with his colleague Chris Griswold – The New York Times That I just came to read. In it, they advise Republicans on what policies to push if the GOP wins big in November. But it was the following passage that particularly caught my eye:
Our organization, American compassCreating a conservative agenda that replaces blind faith in the free market with policies focused on workers and their families.
Accusing free market advocates of being motivated by “blind faith” is a good soundbite. But with all due respect, it’s also a load.
Those of us who support free markets are not remotely under the spell of blind faith. We have a well-worked theory, with plenty of history and empirical research to back it up—how innovation is encouraged and resources are efficiently allocated by market prices. (Among the many works that lend intellectual credibility to the support of the competitive market process are Hayek’s “The Use of Knowledge in Society” paper, Armen Alchian’s economics, and Deirdre McCloskey’s historical and theoretical work. Empirical literature that shows that economic freedom is key to promoting all major aspects of life that we wants such as growth, better education, relief from poverty, reduced crime, etc. As long as consumers spend and investors invest, they are allowed to own money and keep the bulk of the gains of good decisions bear the losses of poor decisions, less productive use of resources. is released so that it can be reallocated to more productive uses.
At the very least, the competitive market process allocates resources better than a system where politicians and bureaucrats – spend other Public finance – overrides market allocation through various forms of subsidies, restrictive licensing and protective tariffs. National-security concerns may justify narrowly targeted restrictions on competitive markets, but Cass and Griswold were writing here about how to improve the economy, not about how to strengthen national defense.
No offense, but those really Relying on blind faith are proponents of industrial policy such as Cass and Griswold who continue to claim that, in the face of overwhelming evidence to the contrary, public officials can allocate resources better than the price system. At the very least, until they explain how politicians and bureaucrats can gain and use the knowledge that markets will gain and use with remarkable success every day, and how to prevent the catastrophe and cronyism that have resulted from past attempts at industrial policy, Cass and Griswold blind people other than their fellow supporters. Art principles should not be accused of being guided by faith.
Veronique de Rugy is a senior research fellow at the Mercatus Center and a syndicated columnist for Creators.