The battle for the soul of the Republican party after President Trump has begun.
Last week former United States ambassador to the United Nations, Nikki Haley, gave a provocative speech to the Hudson Institute setting herself up for a 2024 run on a largely free market platform. The speech has been published by Stand for America, an advocacy organization founded by Haley after standing down as ambassador in December 2018.
Haley argues that capitalism has lifted billions out of poverty, improved the environment, and created immense prosperity – including the electricity, cars, airplanes, the internet and much more. Notably, Haley not only goes after Democratic presidential candidates embracing socialism but also ‘conservatives [who] have turned against the market system,’ who she calls ‘hyphenated capitalists’. Both, she says, are ‘dangerous to the American people’.
While Haley is careful to back the Trump administration’s economic record, the speech is a challenge to Trumpian ‘national conservatives’ who want the government to intervene in the industrial structure of the economy in support of rust belt communities. Haley says conservatives who want a ‘different kind of capitalism’ would simply ‘give government more power to make more decisions for businesses and workers. They differ from the socialists only in degree’. Society’s problems have been caused by cultural decay, big government and special interest corruption, she says. Capitalism should be embraced to solve these problems.
Haley also criticizes the Business Roundtable ‘who should know better’. The Roundtable, whose members include the CEOs of major US companies, declared last year that businesses should downgrade Milton Friedman-inspired shareholder capitalism in favor of stakeholders such as customers, workers, and communities. ‘They seem embarrassed by their companies’ success. They shouldn’t be,’ Haley says. ‘It’s puzzling because in a capitalist economy, companies must tend to their customers, employees, and communities in order to succeed.’
‘If companies jump into politics, we’ll get more corruption, more collusion, and more corporate welfare, not less.’ It also leads to ‘liberal political correctness’ such as threats to boycott Israel. ‘Businesses should stick to business.’
Haley’s speech came just a week after Oren Cass announced that he has quit the free market Manhattan Institute to start up ‘American Compass’. Cass told the Washington Post that he seeks to challenge’ market fundamentalism’ – a phrase those on the right would typically view as a left-wing strawman. Cass wants to establish a new ‘post-Trump right-of-center’ orthodoxy focused on issues such as economic inequality, collapsing families, and declining marriage and fertility. Echoing the Business Roundtable, he also rejects an excessive focus on ‘shareholders’ and calls for a larger focus on ‘workers’.
Specifically, Cass advocated for ‘industrial policy‘ at the inaugural National Conservatism Conference last year in Washington DC. Differing from socialists only in degree, Cass claims that manufacturing deserves extensive state-support because the market under-appreciates its larger employment benefits. This is despite America’s recent successful economic and employment record, in stark contrast to many European countries with more extensive industrial policy.
‘The underlying assumption [of those calling for more government] is that they can design a better economy,’ according to Haley. ‘My question to them is simple. If politicians can best run the economy, then why is Washington, D.C. such a mess?’ Haley points to the dangers of the state picking winners. She highlights defunct solar panel manufacturer Solyndra — who received a $535 million loan guarantee from the Obama administration prior to its collapse. Haley explains how ‘when it went bankrupt, taxpayers were left holding the bag’. For conservatives, Solyndra is a parable about how individuals, through the millions of decisions they make in the market, are better than bureaucrats at directing the economy.
Nevertheless, Cass’s line of thinking is getting some traction on the political right. Freshman senator Josh Hawley has rejected Reagan, called for a greater role for government and advocated for policies that help people stay in their hometown. Fox News presenter Tucker Carlson wants ‘economic patriotism’ and fumed about New York hedge funds destroying small town America. Sen. Marco Rubio, still reeling from his failed presidential bid, has questioned shareholder primacy. He wants a Catholic social teaching inspired ‘common good capitalism’ based less on maximizing profits and more on greater cooperation between employers and workers. Cass’s American Compass advisory board includes Rubio’s chief of staff, Mike Needham.
But the libertarian right in America is not going anywhere. The intellectual right is largely not bending to Trump’s will. If anything, Trump has quietly bent to their will. Aside from Trump’s bombastic approach to trade, the meat of economic thinking and substantial reform at the state and federal level continues to be in the free market direction. Trump has embraced criminal justice reform, red tape cutting and tax reduction: much to America’s benefit. From the free market perspective, good and bad policy is not defined by changing electoral arithmetic (i.e. trying to win blue collar voters) but rather the historical experience of successful liberal market economies.
Haley is emerging as the early frontrunner to put the forward-looking, optimistic free market case on the right. She represents the American Dream. Haley is the daughter of small business-founding Indian immigrants. She went from small town America to become the first woman to serve as governor of South Carolina, and excelled in forthright appearances as UN ambassador.
On the other side of the ledger, the most likely Trump ‘continuity’ candidate is none other than Donald Trump Jr. In fine American dynastic form, he would test the extent to which the Republican party really is now President Trump’s party. Don Jr has grabbed attention for fanatical support of his father, party fundraising, and provocative comments on Twitter (where he has 4.4 million followers).
In his book released last year, Triggered, Trump Jr. claims to share his father’s ‘killer instinct’ and presents himself as the cultural warrior successor to the MAGA movement. On economics, he echoes his father’s opinions about trade deficits and China, NAFTA, and the suffering of rust belt workers. He has spoken about living in the rust belt through his formative years — albeit not mentioning that time was spent at a posh boarding school that costs $61,000 a year. A true man of the people.
A fiery Haley vs. Trump Jr. contest in the 2024 Republican primary would pit dynamically different views on the role of government in the economy. This could prove quite the showdown. It will decide whether President Trump is a blip or whether free marketers no longer have a natural home in the Republican party.
Matthew Lesh is the head of research at the Adam Smith Institute.