Look toward the horizon, though, to the next generation of conservatives poised to lead the post-Trump Republican Party, and the signs of a possible sea change are visible. A cadre of young senators, led by Marco Rubio, J.D. Vance, Josh Hawley and Tom Cotton, have released a flood of proposals in the past few years for reshaping global trade and confronting China, rebuilding domestic manufacturing, removing environmental constraints on industrial development, enforcing immigration law and reducing the flow of low-wage workers into the country, discouraging mergers and taxing stock buybacks more aggressively, shifting resources from higher education to noncollege pathways, providing financial support directly to working families instead of through child-care subsidies, and so on. (My organization has worked with all four lawmakers on a variety of proposals.) They have done things like join picket lines with striking workers, push to increase the minimum wage and demand stronger regulation of railroads. Not coincidentally, Mr. Rubio, Mr. Vance and Mr. Cotton have all received attention as potential running mates for Mr. Trump.
They have areas of agreement with Democrats that present enormous opportunities for progress — and have already yielded some bipartisan legislation — but the conservative reformers’ positions on immigration, climate, education and family policies signal a different set of priorities. They also pair this economic agenda with an unapologetic patriotism and more traditional views on hot-button issues such as policing, racial preferences and transgender athletes.
Two threads run through this more populist, conservative economics, and they offer the best hope of rebuilding a capitalism that first and foremost serves the prosperity, liberty and security of the American people. The first thread is creating productive markets, which starts with an acknowledgment that many are anything but. The key to capitalism, as Adam Smith observed with his metaphor of the invisible hand, is that private actors pursuing their own self-interest can behave in ways that advance the public interest as well. But this holds true only if the activities that yield the greatest profit are also ones that yield broad benefits. Smith was quite explicit: For the invisible hand to work, the capitalist must prefer “the support of domestic to that of foreign industry” and “direct that industry in such a manner as its produce may be of the greatest value,” which would also “give revenue and employment to the greatest number of people of his own country.”
Those are substantial constraints, which modern economists managed to miss. When larger, easier profits can be achieved by offshoring production to countries that exploit workers or bringing foreign workers who will accept lower wages into the country, corporations will do just that. When the highest compensation goes to Wall Street speculators and the developers of addictive social-media algorithms, the most promising business leaders will pursue those careers. What share of Ivy League graduates bring their talents to vocations that will improve the productivity, and with it the earning potential, of anyone without a college degree, or create booming new businesses in struggling regions? It should be no surprise that the productivity growth necessary for rising wages has slowed and, in manufacturing, turned negative, that the longtime pattern in American economic development of poorer areas catching up with richer ones no longer holds.
The tragedy, but also the good news, is that these trends are not inevitable. They represent foolish policy choices, which means we can choose differently. Instead of the globalization that cast aside workers like unsold inventory and hollowed out communities, we can structure our trade and industrial policies to ensure the path to profit runs through domestic investment that creates productive jobs throughout the country. Instead of allowing migrants to enter the country illegally and employers to exploit them, we can enforce our laws rigorously and further restrict entry into the labor market’s low end, forcing employers to offer good, highly productive jobs to American workers instead of undercutting them.