When “That’s How It’s Always Been Done” Is a Winning Argument

At dinner recently with a prominent funder of conservative organizations, I found myself recounting the tradition of American industrial policy—beginning, of course, with Alexander Hamilton. Admittedly, this is a not-infrequent experience for anyone unfortunate enough to have dinner with me.

In this instance, we had arrived here after I alleged that American industry could not expect to succeed in a “free market” dominated by Chinese state-owned and -subsidized competitors, to which he responded that we should not try to “beat China by becoming more like China.” Proudly concluding my narration with Ronald Reagan’s quota on Japanese auto imports and subsidized research consortium to revitalize the semiconductor industry, I was dumbfounded to hear in response, “well just because we’ve done something before doesn’t make it a good idea.” That was not the point.

In any policy debate, and especially one amongst conservatives, parallel assessments consider the likely efficacy of the proposal and the tradition within which it resides. In theory, presuming sufficient wisdom by the policymaker, only the former assessment would be necessary. Who cares when, where, why, or whether a government has taken an action before? Surely the question of whether to do something this time is best evaluated on its independent merits. To damn or praise an idea on the basis of past associations, or lack thereof, would seem to commit some version of the ad hominem fallacy. But conservatives rightly reject that presumption of wisdom and insist instead on understanding a proposal or argument’s ideological lineage. One can learn a great deal about an idea by who else has already had it.

On one hand, then, the common objection to American industrial policy that “we cannot beat China by becoming more like China” is entirely inbounds in a debate on whether such market intervention can rightly be understood as conservative, has any place in the American tradition of political economy, or is likely to succeed. But on the other hand, the reality of that American tradition is a comprehensive defense. Further, the tradition’s depth and extent, and its correlation with development of the American economy into a continent-spanning industrial colossus and home to the world’s most prosperous middle class, establishes a rebuttable presumption that such policy is indeed wise, and should be the nation’s default posture at least until opponents can make a compelling case to the contrary.

Hamilton’s Report on Manufactures, produced for the House of Representatives in 1791, is a seminal document in this debate. Most obvious, and most often cited, are the clear statements about manufacturing’s importance to a robust economy and the need for the federal government to play an active role in its success. Hamilton opens his report observing: “The expediency of encouraging manufactures in the United States, which was not long since deemed very questionable, appears at this time to be pretty generally admitted.” He concludes by asking, “In a community situated like that of the United States, the public purse must supply the deficiency of private resource. In what can it be so useful as in prompting and improving the efforts of industry?”