The Hill | I am an unapologetic proponent for the free market. Over the past 30 years I’ve advocated various policies and initiatives that foster economic growth. But such are the times that the free market, itself, is facing its biggest test since the Great Depression.
American capitalism needs the middle class and the middle class needs the free market. Without the political support of the middle class, free markets will give way to greater government control of the economy. Without free markets, we won’t have the ability to create wealth, produce jobs, reform healthcare — and the list goes on.
Everyone knows Main Street is struggling through high unemployment and a sluggish economy. Naturally, there has been much good-faith soul searching about American capitalism. No one supports completely unbridled capitalism, but in the haste to reassure a shell-shocked electorate, the market economy is slipping closer to a government-driven one.
Given the turmoil, it may be unsurprising that a Rasmussen poll this year found that a mere 53 percent said capitalism is better than socialism, with even less support from young Americans who feel the pain of a recession but have been sheltered from the history of socialism.
Unemployment is nearing 10 percent and job insecurity is the watchword of our time. Everyone is concerned about healthcare, retirement, our kids living better lives than we do; all are in question today. The decline in net wealth didn’t only come from Wall Street, but also from middle America, with U.S. families seeing their net worth plunge nearly 18 percent in 2008, according to the Federal Reserve.
But because we are enduring a deep and painful recession, does that mean free markets don’t work? To paraphrase Winston Churchill, capitalism may be the worst economic structure — except for all those others that have been tried.
Indeed, history is altogether clear on the relative success of market economies.
The intellectual debate about capitalism was won with the crumbling of communism or socialism in the 1990s that could not deliver on wealth creation and economic growth. Large increases in Chinese and Indian incomes took place after those countries introduced market-based reforms in the late ’70s and ’90s, respectively, and explained Nelson Mandela’s rejection of socialism when he become president of South Africa.
So what of America’s middle class? Its job security and retirement — whether in union pensions or 401(k)s — are linked to healthy, free enterprise. And, as the late Sen. Paul Tsongas said, you can’t have employees without employers. And you don’t have employers looking to employ workers when the burden of government becomes too great.
There is, then, a political reality to this debate. Certainly America’s voters are not going to reward politicians who put a noticeable dent in their long-term quality of life, and socialist policies that slow growth.
Therefore, free-market defenders must hold on to the support of the middle class. Here’s a game plan:
- Identify the core elements of capitalism (property rights, the rule of law, competition and free trade) and stress that government intrusion in the economy should be limited, especially its power to tax and regulate private economic activity.
- Engage in in-depth conversations with the public about their doubts, insecurities, and loss of confidence in capitalism today through the best survey research and focus group techniques.
- Enlist the best scholars in America to address the critical concerns of the middle class about capitalism and develop free-market solutions or the least intrusive government ones.
- Engage in a state-of-the-art economic education program, beyond sloganeering and slick advertising campaigns, tapping into the new media including Twitter, Facebook, blogging — all tools of the free market. Ironically, many of the young and impressionable users of these tools are also the greatest skeptics.
- Address the potential bankruptcy of the U.S. government, which could bring down our free-market economy. With U.S. government deficits at an unsustainable level, the U.S. faces the real threat one day of being unable to finance its budget, thus leaving the U.S. without a stable government upon which the free market depends. Everyone has a stake in this effort because a steel worker needs capitalism as much as a trader at Goldman Sachs.
If this steep and painful recession has shown us anything, it is that the free market is not a given and cannot be taken for granted. Will we set aside parochial interests and political partisanship to save it?