The free-market conservative is a vanishing breed

Once upon a time, the conservative position on economics was easy to describe: It was in favor of free markets. In terms of public policy, this meant support for lower taxes, less regulation, smaller government and fiscal prudence. Republicans did not always adhere to those principles, but at least they aspired to them. Call them free-marketish.

But there has been a political and economic vibe shift, and now a large part of the conservative movement is turning against free markets. This shift may well be bigger and last longer than the presidency of Donald Trump. All of which raises an uncomfortable question for free-marketers like me: Is there still a market-friendly party in America?

Consider the 2024 Republican Party Platform, which does not mince words: “For decades, our politicians sold our jobs and livelihoods to the highest bidders overseas with unfair Trade Deals and a blind faith in the siren song of globalism.” Never mind Ronald Reagan — this is not the party of Mitt Romney.

For his part, Trump has his own free-market contradictions. His first-term policies were mostly pro-market. The tariffs were small, and his signature policies included tax cuts and deregulation. True, he ran up the debt, but that was one way he was similar to previous Republican presidents.

This time around, his administration also has some free-market tendencies, but the anti-market elements are more apparent. On the one hand, there are pledges to cut regulations, the size of government and taxes. On the other, there are even bigger tariffs on even more countries, a focus on narrow tax cuts instead of broader based reform, a fetish for manufacturing, talk of a DOGE dividend and — despite the lip service to fiscal responsibility — a strong commitment to not cutting entitlements.

Even the personnel is divided. Elon Musk, perhaps the most powerful member of the administration, could be described as pro-market, or at least pro-efficiency. Treasury Secretary Scott Bessent, Interior Secretary Doug Burgum and economic advisers Kevin Hassett and Stephen Miran are all pro-market. Labor Secretary nominee Lori Chavez-DeRemer and Federal Trade Commission Chairman Andrew Ferguson, with their enthusiasm for labor and antitrust enforcement, are more anti-market.

And then there is the probable future of the party, Vice President JD Vance, who is a graduate of the market-skeptical Yale Law School of Economics. So are other young and influential Republicans such as Senator Josh Hawley.

The divide within the leadership is reflected among its supporters. The party is becoming more working-class, and these voters may favor less market-friendly policies. Polls suggest that there is growing support for unions and tariffs to boost manufacturing among Republican voters. But Republicans also count on the support of big business, which is generally hostile to tariffs and pro-labor policies. A talented politician might be able to placate both groups for a while — but a reckoning is inventible.

In that sense, Trump's promise not to touch entitlements may prove to be the most significant deviation from free-market principles. The DOGE effort to cut waste and fraud in Medicare and Social Security, while useful, doesn't count — there simply isn't enough money there. Unfunded entitlement spending is biggest threat to America's fiscal health.

Trump's promise may be popular with both Republicans and Democrats. But it does away with any pretense of caring about debt and is unrealistic besides. In the next decade, both parties will need to take a stand on entitlements and say whether they favor raising taxes, cutting benefits or some combination thereof — or just plan to add more to the national debt.

In the Republican Party, actually, the answer may come sooner than that. If Trump's deregulation and tax cuts produce growth, and the tariffs don't cause too many problems, then the MAGA ideology will appear to have worked. A Vance administration would undoubtedly turn even harder against markets. But if inflation returns, growth falters, or there is a bad economic shock, then Trump's approach will be seen as less successful. In that case, more traditional Republicans may return to more market-oriented rhetoric.

Republicans are still more pro-market than Democrats. But conservativism itself is losing its enthusiasm for free markets. What is it for? As far as I can tell, conservatives favor a smaller, less intrusive government that makes big transfer payments, restricts international trade, keeps taxes low and runs up a lot of debt. As a governing philosophy, I am not sure what to call that. But I do have a word for it: unsustainable.

(COMMENT, BELOW)

Allison Schrager, a Bloomberg columnist, is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.

Previously:
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• Private equity won't diversify your portfolio
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• The Biden administration's plans to double the tax rate on capital gains will prove costly to all Americans, not just the wealthy
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• The 'Stakeholder' Fallacy: Joe Biden's vision of capitalism is a recipe for failure