Commentary
The Sunday New York Times a week ago featured a lead, front-page article titled, “Failures of Globalization Shatter Long-Held Beliefs,” rattling off a litany that included COVID, Russia’s invasion of Ukraine, the Trump administration’s tariff-based pushback on China’s economic warfare against the free world, the 40-year-high inflation coinciding with President Joe Biden’s big-spending presidency, global warming, financial inequality, and then crowed in not so many words that the culprit is capitalism.
The Times cried, “It has suddenly seemed as if almost everything we thought we knew about the world economy was wrong.” Too bad everything we thought we knew about the establishment media in America always turns out to be right: they will use any and every excuse to encourage giving socialism a try because, look, here’s new evidence the free market is failing.
We’ve been here before, of course. “The Price of Greed” was the headline of Time Magazine’s cover for non-U.S. editions as the financial crisis of 2008–09 unfolded; for its readership living in the 50 states who know from their own lives the benefits of economic freedom, Time’s U.S. edition softened the message (in a manner of speaking) to “How Wall Street Sold Out America.”
The 2008–09 crisis actually had everything to do with government, run by politicians seeking glory, rather than markets left to their own preferences. The long-term pressure from Washington on banks to extend loans to those in low-income, high-crime neighborhoods—i.e. sub-prime mortgages—fueled by many years of loosey goosey credit, finally imploded. Those who assumed residential real estate mortgages were a safe investment that could be folded into equity instruments discovered all the hidden junk within.
In 2015, a year when Greece defaulted, Europe was overrun by a million Middle East refugees, and ISIS struck Paris, the Manchester Guardian cheered, “The End of Capitalism Has Begun.” And in recent years, The Washington Post has been a veritable red carpet for the arrival of the successor to the free market. In April 2019, for example, the newspaper ran the headline, “Capitalism in crisis: U.S. billionaires worry about the survival of the system that made them rich”; a year ago another Washington Post headline announced: “America’s MBAs Are the Latest Skeptics of Capitalism” (failing to explain why these supposed skeptics chose to devote their careers to a failing system); and in February of this year, another headline from the political class’s favorite daily reading pronounced: “Democratic Capitalism Is Running on Fumes.”
If you take the word of mainstream media, the market economy always seems to be on its death bed, but reports of its impending expiration are greatly exaggerated. For one thing, the underlying premise of the high-profile Sunday Times article is flawed. It began with a slap-happy 2018 quote from International Monetary Fund managing director Christine Lagarde, who told supposedly “jubilant” attendees of the World Economic Forum in Davos that “the current global economy, where it stands, is in a very sweet spot.”
But Lagarde actually also warned about politicians falling prey to complacency, and economic and political events causing medium or long-term volatility. At the same time, as was widely reported, Paul Achleitner, chairman of the Supervisory Board of Deutsche Bank, used strong words while at Davos in regard to worries about Brexit, telling a British journalist that “the uncertainty we currently have—with all understanding for the negotiating position—is just poison.”
The next part of the Times’s faulty premise comes from its citing a new World Bank analysis titled, “Falling Long-Term Growth Prospects: Trends, Expectations, and Policies.” The Times quotes the report’s warning that “nearly all the economic forces that powered progress and prosperity over the last three decades are fading” and that “the result could be a lost decade in the making … for the whole world.”
What the Times failed to note was the report’s recommended remedy. “The potential growth rate can be raised through policies that grow the labor supply, increase productivity, and incentivize investment,” World Bank Group president David Malpass stated in the report’s forward. “Business-enabling reforms can be carried out to address a range of impediments to private sector development, such as high business startup costs, weak property rights and corporate governance, inefficient labor- and product-market policies, and shallow financial sectors.”
In the section titled, “Trends are not destiny: Policies to boost potential growth,” the analysis emphasizes that “it is possible to reverse the slowdown in potential growth through structural policy interventions. Structural policies associated with higher physical capital investment, improved human capital, and faster labor-supply growth could raise potential growth by 0.7 percentage point a year in 2022–30” both globally as well as in emerging markets and developing economies, offsetting a projected 0.4 percent decline. “Global potential growth would rise to 2.9 percent per year,” while the potential growth of emerging markets and developing economies (EMDE) would be 4.7 percent per year.
In other words, the solution is more—not less—capitalism. That’s a far cry from the Times’s contention that “the unfailing superiority of open markets, liberalized trade, and maximum efficiency” are conventions that “look to be running off the rails.”
The so-called “paper of record” contended that during COVID, “the ceaseless drive to integrate the global economy and reduce costs left health care workers without face masks and medical gloves” and caused shortages elsewhere in the economy. But how exactly would non-integration have left us with a more responsive supply chain? And, once again, government is to blame for much of the shortages.
Reporters for the Associated Press and PBS noted in the fall of 2020 that manufacturers were worried about suffering significant losses if they invested millions of dollars in machinery, raw materials, and hiring new employees and finding new factory space “to churn out a product projected to have a short-lived demand, without assurances that the government will continue to buy their meltblown textile after the need for [N95 mechanical filter respirators] recedes post-pandemic.” They quoted Federal Emergency Management Agency Supply Chain Stabilization Task Force chief Rear Adm. John Polowczyk as saying, “I’m not going to sit here and tell you that we’re going to guarantee purchases in 2021 or whatever date you pick.” While he was at it, Polowczyk denied that there even were shortages.
Next, the Times declaimed: “The idea that trade and shared economic interests would prevent military conflicts was trampled last year under the boots of Russian soldiers in Ukraine.” It’s hard to imagine who this side of the discredited Francis Fukuyama (cited by the Times) is being accused here of believing that more capitalism around the world had set in place some pseudo-Marxist “end point of mankind’s ideological evolution,” to a “post-historical” world order featuring an enforceable “transnational rule of law.” Neither the ballot box nor the cable TV box nor the smartphone armed with the Amazon app and its choice of over 350 million products for sale has put an end to aggressors and oppressors in the world—be they in Russia, the Middle East, or North Korea—any more than capitalism or prosperity has ended violent crime within the borders of the freest, most prosperous countries.
The remainder of the supposed chinks in the free market armor also don’t bear scrutiny. The reemergence of serious inflation after the COVID lockdowns can obviously be blamed not on business but on Biden and Congress’s yanking the economy from park to fifth gear via a nearly $5 trillion spending spree. An idle workforce presented with a mountain of cash is the Econ 101 explanation of inflation come alive: too much money chasing too few goods.
The matter of economic inequality is raised by the Times too, a popular bugaboo predicated on the false notion that there is a fixed pie of wealth in the world that our betters slice up and divide to their liking. Economic equality has never, and can never, exist outside the bloody utopian fantasies of the Khmer Rouge or Albania’s Hoxha.
Western capitalism is also blamed for failures in combating the rise in temperatures, even though the Chinese Communist Party presides over more than twice the carbon emissions of the United States. And it is blamed for companies undertaking “a worldwide scavenger hunt for low-wage workers, regardless of worker protections, environmental impact or democratic rights,” finding “many of them in places like Mexico, Vietnam, and China.” Presumably the Left would prefer that the way the West improve third world nations would be by sending them bags of cash—or inviting all their residents to live in America and vote for Democrats.
The real failures of globalism do not reflect poorly on the free market at all but on the socialist enterprise—elites’ attempts to move beyond trade channels between countries in hopes of weaning the masses away from their quaint attachments to nationality and local self-government; their preferences for the individual freedom of cars they own to communal mass transit the state owns; and a long list of unquantifiables that not always make sense to governmental bureaucracies but bring joy to people’s lives and should be kept off limits from state meddling.
