An Inevitable Schism

     Doctrines, regardless of the subject matter, are usually inflexible. Sometimes that’s not a virtue.

     Today in the Wall Street Journal, there’s an article about the divergence on economic policy between two wings of the Republican Party:

     There are, of course, widely aired disagreements over abortion and the war in Ukraine. But a potentially more consequential division has opened over economics. On one side is a pro-business libertarian wing that backs low taxes, free trade and international openness. On the other is a growing contingent of conservatives skeptical of big business, ambivalent about tax cuts and vocally supportive of tariffs.
     While both wings back Trump, who straddles this divide, they have different priorities should Trump win this fall’s election and Republicans retake control of Congress. Which side prevails has huge implications for the economy and business.
     The new Republican thinking was evident this week at the annual meeting of “national conservatism,” one of many labels attached to the new movement (along with the “new right,” “populist right” and “conservative economics”). Speakers interspersed attacks on the “Marxist” and “radical” left with condemnation of the “corporatist right,” “free marketism” and “globalism.”

     One side is dogmatically free trade: i.e., its adherents oppose any degree of government intrusion upon commerce, including international trade, regardless of the rationale. That’s the long-standing libertarian position. But there are others in the GOP who are exceedingly distrustful of mega-corporations, especially those that operate internationally. They see such entities as too willing to enlist government regulators for their advantage.

     The tariffs that President Trump imposed to compensate for other countries’ subsidies and subventions to their domestic industries are a central issue between them. Doctrinaire libertarians will have nothing to do with such. The more conservative-minded see such tariffs as right and necessary. Both sides have good points to make.

     Tariffs, like any other kind of tax, tend to become permanent. Not only does the government get accustomed to the revenue; businesses favored by tariff laws become addicted to them as well. Thus, over time their defenders outmaneuver the larger mass of consumers who have less focused concerns.

     But the era of exploding international trade and mobility has tempted governments around the world to provide all manner of supports, including outright subsidies, to their “important” domestic industries. In effect, part of the purchase price for those industries’ goods is paid by their governments, with savings for the consumer. That disadvantages American companies in competition with them, especially when we consider other disparities such as the looser regulatory environments in many other countries. It’s a great part of why so many American producers relocated their shops to other lands.

     In theory the problem is soluble, by the use of “sunset laws,” international agreements, and tax and regulatory provisions that discourage going “offshore.” But theory is heavily counterbalanced in practice by the powerful incentives that make accepting favors from the State both habit-forming and hazardous.

     It doesn’t pay to be dogmatic about such things. Neither the absolute-free-trade libertarians nor the neomercantilist conservatives can claim to be absolutely right. The unavoidable questions pertinent to that old shibboleth, “national security,” muddy the water still further.

     There are arguments on both sides, as I’ve said. But these days, even among people who agree on nearly everything, polite, restrained argument that honors facts and human experience is a rare thing. It’s always possible to accuse your interlocutor of having a hidden agenda. How could he prove that he doesn’t have one?

     Fortunately, advocates of both attitudes support Donald Trump. They’ll argue against one another after he’s elected, but for now returning him to the White House must take priority. It will make the maneuverings within the early days of a second Trump Administration something to watch closely.