A Sophisticated Defense of Free Market Capitalism (From a Former Governor)

Bobby Jindal

Wow, who has the ear of former Louisiana governor Bobby Jindal?

In a Wall Street Journal op-ed piece, he has written a pretty sophisticated defense of free market capitalism.

A key snippet:

Liberal politicians, abetted by the mainstream media, regularly document the alleged shortcomings of free-market capitalism. Politicians like Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez point to rising inequality and a supposed lack of upward mobility to make the case for socialism. Today, American Democrats have a more positive view of socialism than capitalism, and less than half of young adults have a positive view of capitalism. But the debate isn’t merely between left-wing socialists and right-wing capitalists. Even President Trump argues that capitalism generates prosperity abroad at the expense of American workers. Years of wage stagnation and diminished economic prospects have soured many Americans on the system that made the U.S. the world’s largest economy...

The problem isn’t market dynamics, but the increased government intervention in the economy that discourages competition. Rather than relying on innovation, many companies often now seek to exploit licensing arbitrage opportunities and engage in other rent-seeking behaviors. They try to beat competitors through regulatory capture and crony capitalism rather than making better products for less.

Almost every large company has calculated the benefits of lobbying government. It is no coincidence that the seemingly recession-proof Washington area dominates the list of the nation’s wealthiest counties. For consumers, this means fewer meaningful choices. For new producers, the goal is often not to displace an incumbent firm but to be purchased by one. Even many tech entrepreneurs hope to sell to Google or Facebook rather than become the next big thing...

Some argue that targeted government economic intervention is necessary to fix capitalism’s errors and prevent more-radical political elements from gaining power. Some historians credit President Franklin D. Roosevelt with saving free markets from rising support for socialism fed by the Great Depression. They argue the New Deal, by dramatically expanding the role of government, vaccinated capitalism against a more virulent form of socialism propounded by Huey Long and others. More-moderate modern leaders than Mr. Sanders and Ms. Ocasio-Cortez see today’s economic challenges as profound and argue they warrant similar inoculating shots of regulation.

These recommendations come from all across the political spectrum. Sen. Marco Rubio proposes paid parental leave, while Manhattan Institute scholar Oren Cass argues that some short-term growth should be sacrificed to strengthen families and prepare communities for long-term growth. President George W. Bush labeled his version of this approach “compassionate conservatism.”

Democrats, meanwhile, argue for a higher minimum wage, a more progressive income-tax code, stronger unions, and ObamaCare’s Medicaid expansion and exchange subsidies as the best alternative to a single-payer system. Others have pushed for breaking up larger companies—especially tech giants—expanding the earned-income tax credit, raising tariffs, and adopting a universal basic income as possible responses to the displacement caused by globalization and automation.

Small-government conservatives and their libertarian brethren still reject these notions. The biggest threat to American capitalism, they say, comes from liberalism and its incremental—but constant and accumulating—push for a larger, costlier and more powerful government. They see reform proposals from moderate Republicans as attempts to be partway pregnant. They wonder why the GOP would want to become a weaker, cheaper version of the Democratic Party. Free-market Republicans argue that conservatives should be consistently pulling in the direction of lower taxes, less regulation and smaller government.

-RW