Yes, the market-driven economic policy of the last several decades left too many behind, but it also spurred historic growth.
Somehow it has become conventional wisdom that neoliberal economics was an abject failure. Like a lot of conventional wisdom, this is wrong. Not only has neoliberalism been a great success, but now is exactly the wrong time to reverse it.
That hasn’t stopped the bipartisan consensus from forming. Noting that neoliberal economics “left many working Americans and their communities behind,” one of President Joe Biden’s top advisers claims that the administration is pioneering a new industrial policy defined by tariffs and subsidies. Donald Trump promises similar policies, and would even take them up a notch.
The first problem with these critiques is definitional. Neoliberalism does not mean a strict adherence to free markets, the abolition of state intervention and a cult-like devotion to Milton Friedman. Yes, beginning in the 1970s, there was a general decrease in marginal tax rates, an increase in free-trade agreements, and easier flows of international capital. The so-called “ Washington consensus ,” fostered by institutions such as the International Monetary Fund, preached the benefits of less debt, more trade and reduced government intervention.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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