The American conservative movement is at a crossroads. Will it continue to stand for a free market economy, limited government and the rule of law? Or will it pick up a nationalist populist agenda of government control to impose self-described “conservative outcomes” of redistributed wealth and government direction of how families live their lives?
Over the last several years, a growing contingent of thought leaders, policy experts and legislators have distanced themselves from what have long-been considered traditional conservative economic values. For generations, pro-capitalist, free-market principles have been at the heart of the conservative movement. These values, by and large, are what make conservatives conservative. These principles are also what have made our country the most prosperous in the world.
This departure from conservative economic principles is alarming. My organization promotes free markets and pro-growth policies as the key to creating a stronger, more prosperous economy for all Americans. Now, our foundation is working to put the conservative movement back on track.
The newly ascendant nationalist populist movement is, after all, self-contradictory at its core. While believers of this new movement call themselves “national conservatives,” they are more like socialists in their economic policy.
They support big labor and big government. They call themselves conservatives, but they support industrial policy and dismiss free market economics. They revile free trade and support taxes on families in the form of tariffs.
There are numerous examples of nationalist populist proposals that would throw icy cold water on whatever remains of the American economic engine after Bidenomics. Sen. Marco Rubio (R-Fla.) proposed one in National Affairs, calling for a return to a command-and-control economy not seen since the World Wars. Another is American Compass head Oren Cass’s proposal for a national development bank. If you want to know why that doesn’t work, look at the state of Boeing and the Export-Import Bank of the United States, another national bank that stifles competition, picking winners and losers in industry.
At the crux of the national conservative argument is the idea that capitalism has failed — that the free-market system is to blame for the ills of society and that economic nationalism is the answer.
What they fail to understand is that today’s societal afflictions — stagnant wage growth, high inflation, the deterioration of American manufacturing, the decline of the family unit — can all be tied back to the clumsy, corrupt and heavy hand of government.
Industrial policy has failed time and again because greater government involvement means more room for human error. Reckless government spending, overregulation, misguided trade restrictions, and burdensome tax rates are all a byproduct of bigger government.
Industrial policy promotes big government at the expense of free enterprise. It also creates an environment that allows cronyism to thrive — one in which bureaucrats can favor specific industries and pick winners and losers, rather than allowing the markets to do the work. This forces business to invest in lobbying and swampy political tactics rather than in their own workers.
“National Conservatives” believe that industrial policy and economic protectionism will lead to a stronger economy and a resurgence in American manufacturing. But one need only look to the steel and aluminum tariffs of 2018 to know that is false. Rather than bring jobs back home, the 2018 tariffs led to higher costs for businesses, resulting in the destruction of approximately 75,000 manufacturing jobs.
What’s more, industrial policy directly translates into more government meddling, which inevitably results in more red tape and more burdensome regulations. In 2022, government regulations cost the economy nearly $3.1 trillion. The cost for the manufacturing sector alone was nearly $350 billion — equivalent to $29,100 and $50,100 per employee for all manufacturers and small manufacturers, respectively.
The creation of more barriers to entry for new businesses and new entrepreneurs means competition will decrease, innovation will lag and our manufacturing sector will fall further behind. If industrial policy has proven anything, it is that big government is the problem — not the solution.
Rather than allow this national conservative embrace of industrial policy to go unchecked, we are trying to get the movement back on track. Instead of embracing failed ideas like industrial policy and economic protectionism, we believe reducing regulations, lowering the tax burden on families and businesses, promoting American energy production and deregulating our transportation and education sectors are the only way to build a stronger economy and promote American industrial strength.
If conservatives wish to re-energize post-Biden America, they can begin by making permanent several features of the 2017 Tax Cuts and Jobs Act, including bonus depreciation for investments in new machinery and equipment. They can also pass full expensing for research and development costs, accelerated expensing for investment in new factories through neutral cost recovery, and the eventual adoption of a flat tax on distributed profits. That would supercharge industrial growth by allowing businesses immediately to write off the cost of all capital investments.
These reforms, combined with numerous other pro-growth policy proposals, will ignite economic growth and empower American industry — something that cannot be said of the proven failures of big government industrial policy and protectionism
For generations, these ideas were widely embraced by nearly everyone on the right as the recipe for economic success. We want to ensure that these ideals are preserved for many more generations to come.
David McIntosh, a former congressman from Indiana, is president of the Club for Growth and Club for Growth Foundation.