A recent article in the WSJ, “Is the U.S. Moving On From Free Trade? Industrial Policy Comes Full Circle” should have ultimately been an Op-Ed because it was a baseless attack on the concept of free-trade. It starts out okay, pointing out that free markets, free trade and globalization have been the bedrock of a healthy US economy, especially since WWII. But then the author ignorantly blathers on and ultimately concludes that globalization based on neoclassical free-trade doctrine is wrong.
After World War II, government spending (military, etc.) dried up overnight. But it was a free-market, non-coercive environment at the time that allowed private investment to flourish and more than make up for the decline in government spending. What we currently have is a problem caused by runaway government spending. Government spending wholeheartedly crowds out private spending, substituting inefficient political and crony-based spending for free-market, give-the-public-what-they-want spending.
Likewise, economically stupid policies like tariffs against China were instituted and have yet to be repealed. Tariffs clearly and consistently hurt the consumer and taxpayer by driving costs up to everybody in amounts far in excess of any benefits given to those crony beneficiary companies. They don’t strengthen American manufacturers; it is cronyism of the highest order.
One of the most important takeaways from the COVID affair is the clear evidence of how critically important free markets are. While the free market developed workarounds for providing necessities and developing relevant new products, the government couldn’t get out of its own way in terms of what it was trying to do, while an overabundance of regulations hampered its responsiveness.
Trying to suggest that more government intervention in the economy is the solution and not the problem clearly is economically ignorant.