When I was reading Samuel Gregg’s excellent new book, The Next American Economy, I kept thinking about the vision of America that President Ronald Reagan put forth in his Jan. 11, 1989 address to the nation upon leaving office:
“I've spoken of the shining city all my political life, but I don't know if I ever quite communicated what I saw when I said it. But in my mind it was a tall, proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace; a city with free ports that hummed with commerce and creativity. And if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here. That's how I saw it, and see it still.
And how stands the city on this winter night? More prosperous, more secure, and happier than it was 8 years ago. But more than that: After 200 years, two centuries, she still stands strong and true on the granite ridge, and her glow has held steady no matter what storm. And she's still a beacon, still a magnet for all who must have freedom, for all the pilgrims from all the lost places who are hurtling through the darkness, toward home.”
Even though Gregg does not reference Reagan’s farewell address in his book, I can easily imagine, at least in terms of our economy, that Gregg does not see our country shining so brightly in 2023:
“In economic terms, today’s American economy is neck-deep in state regulation and interventions bequeathed by American progressives, modern liberals, social democrats, and ostensive conservatives. The United States of today more closely resembles a European social democracy than many Americans are willing to admit.”
To reverse this trend away from a free-market economy, Gregg would like to see America unwind from its current levels of cronyism (corporate/government partnerships), stakeholder ideology, protectionism, industrial policy, and over-regulation. Moreover, the empirically observed decline in entrepreneurship needs to be reversed as well. He suggests that increased immigration can help with that.
In my opinion, this will be a Herculean task. For the last 90 years our political process has allowed for such an intertwining of government and economy that the march toward a European social democracy or worse really didn’t slow down that much during Reagan’s time in office and there is no sign of it abating during the Biden Administration.
But Gregg believes it can be done. First, he understands that a political move back to free markets cannot be accomplished by simply appealing simply to our desire to consume more goods:
“The case for free markets will lose if it remains narrowly economic in its content and emphasis. Instead, the case needs to be wrapped into a broader story about America. For if American defenders of markets can only offer an argument for “more stuff produced more efficiently for more people,” if they allow free markets to become associated with borderless utopias, or if they trivialize the very real bonds that many Americans have to their country and communities, millions of Americans will not listen to them—no matter how compelling the economics.”
Instead, Gregg believes that the political will needed to remedy our vices will require our leaders, thinkers, and academics to persuade U.S. citizens that a free market society is what is necessary to live a life of virtue, not one where the only moral compass is money:
“People in commercial societies increasingly recognize that, through entrepreneurship, competition, and sheer hard work, they can constantly aspire to things that were beyond their parents’ generation, albeit with no guarantee that this will be simply a matter of course. Then there are the particular virtues associated with commercial orders: prudence, industriousness, thrift, creativity, self-restraint, and the willingness to trust people we have never met before. Certainly, the fullness of the virtues go beyond these particular habits of action, but their presence in society and the economy is central to the type of polity that … key American Founders were in the business of establishing.”
In essence, Gregg argues that a free-market economy creates the foundation for pursuing a life of virtue. This is an interesting point as this was something that our founders were most likely thinking of when they signed off on the phrase “pursuit of happiness” in the Declaration of Independence. As serious and learned men, they would have been heavily influenced by classical philosophers who believed that a life of virtue was how one obtained happiness.
Effectively making this argument will be a huge task of persuasion, and perhaps will be decades in the making, but perhaps it is our only way out.
Of course, there were two additional topics that I would have loved to see covered in this book on our political economy. First, a discussion of how externalities such as climate change should be evaluated and effectively dealt with through the political process. Second, a discussion of our history of slavery and racism, the mistakes made in trying to rectify the harm caused, how it has impacted our economy and society over time, and what can be done to better deal with this most important issue.
In sum, a very fine book that really makes you think about America and the economic direction it is and has been taking. It exudes optimism, but it also should make one worried that it may be too late to overcome our political economic history.
