In the realm of political commentary, a curious phenomenon is taking shape among some of the more astute voices on the center-left: a potential neoliberal renaissance. Notable figures such as Matt Yglesias, Ezra Klein, Derek Thompson, and Noah Smith are at the forefront of this discussion. While they may bristle at the label, my focus here is less about semantics and more about the substance of their arguments.
Noah Smith recently articulated this viewpoint, reflecting his exasperation with both the authoritarian/populist right and the heavy-handed left. Intriguingly, he draws parallels to Latin American political dynamics to underscore his critiques, starting with the issue of populist nationalism:
Trump’s tariffs came as a profound surprise to me. I never anticipated that a U.S. president would adopt such a fundamentally flawed understanding of trade or inflict such self-sabotage upon the American populace. Yet, in hindsight, I should have considered historical examples like Juan Peron, whose brand of protectionism and fiscal irresponsibility sent Argentina spiraling from affluence. I should have delved deeper into the outcomes of “import substitution” strategies from the mid-20th century or the political backdrop that led to the Smoot-Hawley Tariff in the U.S.
Traditionally, left-leaning commentators have tended to conflate various strands of right-wing ideology, but Smith identifies critical distinctions:
For the last eight years, I’ve viewed Reaganite conservatism as the overarching authority, suppressing the chaotic instincts of right-wing factions like Patrick Buchanan and the John Birch Society. However, it seems plausible that free-market principles, for all their shortcomings, managed to keep the right’s inherent leanings toward Peronism in check.
Admittedly, libertarianism has fallen short in addressing several pressing issues of the 21st century — such as maintaining U.S. defense manufacturing against Chinese competition, accelerating green technology adoption, ensuring fair distribution of trade and technological gains, and propelling innovation amid soaring research costs. Yet, who wouldn’t prefer the libertarian strategies of Argentina’s Javier Milei, who has successfully curbed inflation and alleviated poverty over Trump’s tariff policies?
[Verlan Lewis echoes similar sentiments in his comparison of Donald Trump and Charles Koch.]
Back in 2016, I drew parallels between Trumpism and Peronism, albeit perhaps prematurely:
A genuine advocate for the working class would champion free-market solutions rather than resort to protectionism, elevated minimum wages, and expansive government spending. How did Peron’s policies fare for Argentina’s working class?
During his initial term, President Trump set the budget on an unsustainable trajectory and imposed significant tariffs on Chinese imports. However, neither action was drastic enough to transform the U.S. into a mirror image of Argentina. Since then, both fiscal and trade conditions have worsened considerably. Fortunately, confidence in U.S. Treasury securities remains, although it was momentarily shaken recently before Trump moderated his more extreme tariff ambitions. While we are far from the economic chaos of Peron’s Argentina, the trajectory is slightly concerning.
Smith also critiques left-wing economic policies, highlighting another Latin American instance:
I’ve observed esteemed progressives, like Joe Stiglitz, hastily laud the economic strategies of Hugo Chavez, only to neglect to retract their praise after those policies led Venezuela to an economic disaster.
A 2007 article illustrates Smith’s point:
Despite experiencing high growth, excessive public spending and consumer demand ignited inflationary pressures, driving inflation up to 15.3%, the highest in Latin America. Stiglitz, a Nobel Laureate in economics, contended that elevated inflation isn’t inherently detrimental to the economy.
He posited that while Venezuela’s growth was largely fueled by surging oil prices, unlike other oil-dependent nations, Venezuela utilized this boom to implement citizen-benefiting policies and foster economic development. In his latest work, “Making Globalization Work,” Stiglitz argued that leftist governments, such as Venezuela’s, are often labeled as ‘populist’ for prioritizing education and health benefits for the impoverished.
In terms of economic advancement, Stiglitz criticized excessive autonomy for central banks, suggesting that Chavez’s proposed constitutional reforms would undermine the Central Bank’s independence.
How does that perspective hold up today? Consider this tweet:
These figures do not account for fluctuations in the U.S. dollar’s value over time. Since 1980, the U.S. price index has quadrupled, which implies that Venezuela’s inflation-adjusted GDP per capita has plummeted from about $30,000 to $8,000, whereas South Korea’s has soared from approximately $7,500 to $56,000. (While these numbers are approximate, they illustrate the trend.)
Currently, both the Democratic and Republican parties harbor market-friendly factions. However, they diverge in one critical aspect: no single figure exerts control over the Democrats in the same manner that Donald Trump does over the GOP. Consequently, the Democratic Party is more fluid, while the struggle for the GOP’s identity will remain on hold until Trump vacates his leadership role.
In the 1990s, neoliberal ideologies were the prevailing doctrines in both major parties. By the late 2010s, these voices have been marginalized within each party. The question now remains: Can neoliberals reclaim a place in either party, or will they linger on the periphery for the foreseeable future?
