An entire mythology arose, in which the United States was founded on libertarian principles of free trade, freedom of contract, minimal government intervention in the economy, and so on. A suggestion to use public resources or regulation to focus investment in vital industries would earn a rebuke that “we cannot beat China by becoming more like China.”

So it is important, especially for conservatives—who take most seriously the question of traditional practice in guiding contemporary decisions—to emphasize that, in fact, the American tradition is one of robust national economic policy. Conservative principles call for a substantial public role in making markets work. The essays in this chapter are two of the three that American Compass published on the day that we launched. The collection was titled Rebuilding the American System. (The third essay, Julius Krein’s “Planning for When the Market Cannot,” appears in Chapter Four.) Wells King’s “Rediscovering a Genuine American System” tells the fascinating story of American economic policy since the founding era. My own “Removing the Blinders from Economic Policy” provides the rationale and scope for government involvement in markets based on a conservative understanding of their purpose.

This, in a nutshell, has been the consensus position for economists concerned only with maximizing consumption and especially among those on the right-of-center inclined to believe that whatever benefits investors will eventually benefit everyone. Like many things in nutshells, it is nuts.

An economy benefits from cheap energy and cheap lumber. But the price of labor is an output as much as an input—or, more colloquially, the creation of family-supporting jobs is a key goal, not an inconvenient obstacle. This theme recurs throughout the volume: The pressure to pay workers well and, in turn, the incentive to invest in boosting productivity is key to capitalism’s success, not a “labor shortage” to be relieved. No phrase better captures the backward framework that has dominated policymaking than the toxic “jobs Americans won’t do.” And so this essay is titled, “Jobs Americans Would Do.”

This “financialization” of the American economy weakens the nation and threatens our future prosperity.

In “Planning for When the Market Cannot,” Julius Krein unravels the baseless assumptions that pursuit of profit will lead to productive investment and that policymakers cannot improve upon what the market might deliver. In “The Rise of Wall Street and the Fall of American Investment,” I provide the empirical support for Krein’s theoretical case, distinguishing between the different kinds of actual-investment and non-investment occurring in the American economy and suggesting how we might begin to get financial markets back on track.

These shifts result not from genuine comparative advantage, but rather in response to aggressive government subsidies and the availability of exploitable labor in countries like China.

In “Searching for Capitalism in the Wreckage of Globalization,” I argue that the “free trade” practiced by the United States is not the epitome of free-market capitalism but its antithesis. Capitalism relies upon the mutual dependence of a nation’s capital and labor to produce good outcomes for both, and for consumers, too. Globalization has severed those bonds, urging the owners of mobile capital to forsake the interests of their fellow citizens and pursue higher profits through labor arbitrage abroad. American workers, their families, and their communities paid the price. In “The Need for Tariffs,” Robert Lighthizer explains why trade deficits matter and protectionist measures including tariffs are an appropriate response. As the U.S. Trade Representative in President Trump’s first term, Lighthizer achieved a dramatic reorientation of the nation’s trade policy based on the principles he describes here.

Instead, China changed us—corrupting the free market, distorting investment flows, capturing valuable industries, and even exporting its authoritarian politics through campaigns of economic pressure.

“Trading It All Away” is an essay adapted from then-senator Marco Rubio’s remarks at American Compass’s inaugural Henry Clay Lecture, which happened also to mark the twentieth anniversary of China’s ascension to the World Trade Organization. Rubio analyzes both the causes and consequences of that catastrophic mistake. As for recovering from the mistake, Gabriela Rodriguez and I propose an approach in “The Case for a Hard Break with China.” While debate rages over “strategic decoupling” and “de-risking” and other euphemisms for tolerating the continued entanglement of the U.S. and Chinese economies, Rodriguez and I argue that market integration between such fundamentally incompatible political and economic systems has never in history succeeded and will inevitably fail here. Then, turning to foreign and national security policy, Elbridge Colby argues in “After Hegemony” that the proper U.S. objective is to prevent China from attaining its own regional hegemony in Asia.

An essay published early in 2020 by Samuel Gregg, Fredrich Hayek Chair at the American Institute for Economic Research, made a quintessential presentation of the neoliberal case. The first essay in this chapter, “Comparative Disadvantage,” is my effort to address the basic conceptual error in response.

But seeing is believing, and American Compass has undertaken a long- term research project to present examples of industrial policy done well. This chapter includes three. “The American Camry,” by Wells King and Dan Vaughn, Jr., describes how the Reagan administration’s negotiation of a quota on Japanese auto imports gave birth to the hugely successful auto manufacturing industry in the American South. King’s “Myth-Busting Silicon Valley” supplements the narrative of American technological leadership borne of entrepreneurs toiling in garages with the reality that every step of the digital revolution was driven by policy choices and taxpayer dollars. In “How Airbus Took Flight,” Gabriela Rodriguez looks across the Atlantic at how a consortium of European governments built the dominant commercial aerospace company that trounced the free-market American model.

Finally, in “Rebuilding the Supply-Side Platform,” Chris Griswold updates the conservative conception of “supply-side economics” to modern circumstances. Creating favorable conditions for productive investment is indeed among the most important goals for economic policy. And when tax rates were at their 1970s level, cutting them may indeed have been the ideal supply-side policy. But that does not mean cutting taxes will always be the answer. The experience of the past twenty-five years suggests that a very different set of policies would better encourage the investments that the nation now needs.

Reforming and reinvigorating the laws that govern organizing and collective bargaining should be an obvious priority for conservatives, who cherish the role of mediating institutions, prefer private ordering to government dictates, and believe prosperity must be earned rather than redistributed.

This chapter begins with a statement published by American Compass on Labor Day in 2020 and signed by a wide range of notable conservatives, including then-senator Marco Rubio and then-author J.D. Vance. On one hand, the argument that conservatives should embrace labor was perhaps the most radical and disruptive idea that the organization has advanced. On the other hand, it is also among the most obviously correct and among the ones that has made progress most quickly—to Teamsters president Sean O’Brien speaking at the Republican National Convention and giving input on selection of the Secretary of Labor in a Republican administration four years later.

But conservative support for labor means embracing its purpose and its potential, not its present dysfunction. In his essay “Labor’s Conservative Heart,” Brian Dijkema describes what that purpose and potential are, highlighting the vital role that labor has played everywhere from Catholic social teaching to bringing down the Soviet Union. In “Rebuilding Worker Power,” an essay that I wrote for the Economic Innovation Group’s American Worker Project, I dive into the dysfunction of labor unions as they operate today and highlight opportunities for reform.

Schools cannot prepare everyone for college, nor should they. But they can do what the vast majority of Americans want them to do: Help students develop the skills and values needed to build decent lives in the communities where they live. They can provide character formation, facilitate important research, instill common values, and equip students to be productive contributors to the society. If we made those our goals, we might begin to make progress.

The first essay in this chapter, “Teach for America,” is my foreword to the Failing on Purpose collection published by American Compass in 2021, which focused on these proper purposes. Two of the other essays from that collection follow: Bruno Manno and John Sailer describe the shortcomings of the college-for-all mindset in “The School of Self-Rule”; Yuval Levin critiques our education system’s malformation of the national elite in “Making Meritocrats Moral.” Both propose alternative approaches more consistent with the nation’s tradition, values, and needs.

Yet many on the right-of-center still argue that while everyone should of course have the freedom to form families if, when, and how they want, the choice is a personal one and the government should not encourage people to make some choices instead of others.

As with the last chapter, we open here with my foreword from 2021 American Compass collection—this time, Home Building, which was probably the largest and most widely read of the organization’s early efforts. The second essay, from Helen Andrews, asks and answers the question “Why Bother With Family?” addressing directly the position shared by libertarians and progressives that this is not a matter of public concern. Finally, in “A Plan for Supporting Working Families,” Wells King and I make the comprehensive case for a particular policy approach we call the Family Income Supplemental Credit, or Fisc. Our model provides the basis for proposals put forward by Senators Mitt Romney, Richard Burr, Steve Daines, and Josh Hawley, as well as the framework floated by Vice President J.D. Vance during the 2024 presidential campaign. If a broad bipartisan consensus ever develops for an ambitious family benefit, this is how it will look.

In the twenty-first century, the Republican Party has placed enormous emphasis on curtailing those programs to pay for large tax cuts, an agenda that is neither popular nor responsive to the nation’s challenges and priorities. Failing to “reform entitlements,” the so-called “fiscal conservatives” have plowed ahead with tax cuts anyway, contributing to annual budget deficits that now approach $2 trillion and a national debt so large that interest payments have begun to exceed defense spending.

Fortunately, conservatives are now rejecting entitlement cuts as a desirable pathway to “limited government.” As Michael Lind explains in “The Government Should Keep Its Hands Off Your Medicare,” social insurance programs like Social Security and Medicare are rightly valued by Americans across the political spectrum and a desirable element of any coherent conception of the state’s role in a free society. But, I argue in “The Return of the Fiscal Conservatives,” fiscal discipline remains a vital conservative principle, and a vital national imperative, as well. Something has to give, and that thing is the tax-cutting zealotry that infected conservatism in the 1990s and is only now beginning to subside.