In this and succeeding columns, I intend to develop a new paradigm for thinking about economic progress for America in the 21st century. I believe that supporters of free markets are faced with both extraordinary opportunities and great cause for concern in the 21st century. The opportunities for our nation lie in the extraordinary expansions in health, wealth, and well-being around the globe, due in no small part to the global shift toward economic freedom and, to a lesser extent, representative government over the last two generations.
As a result, the U.S. has more to gain in the 21st century than at any other time in our history by embracing and doubling down on our nation’s strengths, chief among them our role as leader among free nations and free peoples dedicated to the exchange of goods and ideas.
At the same time, a large portion of the American political class, and the political elites in the West more broadly, have begun a wholesale retreat from the ideas that have made us strong. Chief among these shifts in policy and rhetoric is a move to an anti-trade populism on the right, coupled with a growing anti-capitalist sentiment on the political left.
The growth of these ideologies, and the attendant restrictionist worldviews, frame our country’s problems in terms that involve an expansion in the power of the state over the individual, restricting your ability to save, invest, and trade, or simply to live your life unencumbered by persistent government oversight.
The rise of these ideologies also hides from view decades of evidence-based practice and experience on which we can call to right our ship. Instead, each side is attempting to frame the very real problems we face as either the fault of foreigners (which is wrong) or of capitalism itself (which is also wrong). As a direct result of this, we then misdiagnose the problems we face and propose “solutions” that usually make things worse, such as restricting trade, or dismantling incentives for investment and growth.
To fix the perpetual misreading of America’s real challenges and opportunities, we need to focus on America’s skills gap, with the goal being that every American is prepared to win their own future. Politicians and government economists tend to focus on how changes in GDP growth affect individuals. The media reports changes in economic growth as if it were a horse race, breathlessly tracking minor variations in GDP growth, housing sales, and the stock market. While this framing has some value, we must look beyond the week to week and even year to year fluctuations in economic output and instead consider the underlying fundamentals that produce robust growth decade after decade.
Our discussion of individual skills must not be framed through an equity or deficit perspective, focusing solely on the ways in which the government must step in with Band-Aids like jacking up the minimum wage or expanding welfare benefits. Instead, conservatives and free markets proponents should focus on promoting the skills that underpin and drive the prolonged success of each person, allowing them to thrive. Promoting individual skills and education, which are the true long-term drivers of economic success, will allow us to simultaneously support sustained national economic growth while also expanding opportunity and social mobility for every American.
Damon Dunn is a fellow in Business and Economics for Pacific Research Institute and writes the regular “Free Markets 101” column for “Right by the Bay”. He is a successful real estate developer, investor and businessman, former collegiate and pro football player, and was a Hoover Institution fellow from 2011-13.