One Economy to Rule Them All

THE ONLY WAY IS THIRD:

Is a Liberal Realignment Emerging from the Rubble of MAGA Authoritarianism?: Democrats have an opportunity to champion a confident, forward-looking market liberalism given that the GOP has fully returned to its reactionary roots (Michael Wood, Oct 08, 2025, The UnPopulist)

Part of the angst and uncertainty of the current moment lies in the fact that American politics has entered a new era—but only one party seems to have received the memo. The Democratic Party is still struggling to articulate a vision that meaningfully contrasts with a newly reactionary and anti-market GOP. For those who have spent years railing against “free-market fundamentalism” and other convenient straw men, it takes genuine effort to pivot toward arguing for a pro-growth regulatory regime, or even to defend the basic liberal principle that markets depend on the neutral and predictable application of the law. I am not suggesting that most Democrats oppose such ideas; rather, they have simply not been in the habit of speaking in those terms, or of exercising those rhetorical muscles.

There are, encouragingly, signs of such evolution for those willing to look closely—even in a party that often appears paralyzed by timidity and managerial incompetence. Negative polarization has turned many ordinary Democrats into Cato Institute-style free-trade enthusiasts. But not all of the rethinking is merely a partisan reaction. Writers such as Derek Thompson and Ezra Klein have helped to spark what has been dubbed the “Abundance Movement”—a genuinely reformist impulse that, despite its progressive framing, adopts many of the classic free-market critiques of overregulation and scarcity politics.

There is indeed a political party in America today that celebrates the state’s direct ownership of private enterprise—but it is not the Democratic Party. Recall that Bernie Sanders did not get the party’s presidential nomination and Massachusetts Sen. Elizabeth Warren’s star has dimmed quite a bit in the last decade.

If a liberal pro-growth consensus is to take shape in the aftermath of Trumpism, it will require the Democratic Party to rediscover something that once defined the American tradition at its best: a belief that freedom and progress, both material and moral, are mutually reinforcing. The market, for all its failures, remains the most effective mechanism for harnessing creativity, rewarding effort, and translating innovation into tangible improvements in human life. The left’s task, then, is not to restrain or moralize against this process, but to channel it—to ensure that the benefits of dynamism extend broadly enough to sustain the political legitimacy of the system itself.

This requires a shift in sensibility as much as in policy. It means treating economic growth not as a background condition to be redistributed after the fact, but as a moral good in its own right—one that expands the realm of human possibility. It means understanding that progress is not simply the reduction of inequality, but the enlargement of opportunity. If Democrats wish to lead the next political era, they must speak again in the language of confidence—of construction, of experimentation, of abundance—rather than that of scarcity and suspicion.

This requires not just a return to the Third Way–of Clinton, Blair, W, etc.–which enbraced capitalist means as the best way to achieve secure funding for social programs. But it would require getting rid of the Identitarianism on the Left, an even harder lift.

FDR WHO?:

What Ended the Great Depression?: A new history clears the air on what worsened, and what eased, the macroeconomic crisis. : a review of False Dawn: The New Deal and the Promise of Recovery, 1933-1947, by George Selgin (David R. Henderson, 10/02/25, defining ideas)

Selgin doesn’t score cheap points. He carefully sifts through the evidence. His bottom line is that early parts of the New Deal, such as going off the gold standard, helped the economy recover but that later parts, such as the National Industrial Recovery Act, which cartelized hundreds of American industries, set the recovery back. Later actions by the Federal Reserve in 1936 and 1937 created a “double dip.” World War II helped end the Great Depression by causing FDR to quit castigating businessmen. The biggest surprise to many, which I wrote about here, and which Selgin quotes, is that neither expansionary monetary nor expansionary fiscal policy was responsible for the postwar boom. […]

One of the main contributions to economists’ understanding of why the Great Depression lasted so long is economic historian Robert Higgs’s idea of “regime uncertainty.” With the early New Deal, FDR had cartelized industries. After the Supreme Court found this cartelization unconstitutional, FDR switched to aggressive enforcement of antitrust laws and attacked successful businesspeople as “economic royalists.” This, argues Higgs, can account for the drying up of investment in the late 1930s. Selgin lays out Higgs’s argument. Selgin also points to FDR’s proposed tax on wealth, which, he argues, “was less concerned with raising revenue than with soaking the rich.”

But in 1940, Roosevelt, wanting to get into World War II, knew that he needed businesses on board. He did so by getting rid of his most anti-business aides and, after the United States entered the war, often replacing them with the so-called “dollar a year” men, businesspeople who worked for an annual federal salary of one dollar and were paid at the same time by the businesses they had left. This ended “regime uncertainty” and helped cause a boom. The boom actually started in 1940 and went through 1941.

What about the claim we often hear that wartime spending created a boom? Selgin quotes Higgs’s point that FDR’s turning the US economy into a command economy during World War II means that we can’t take prices and output data at face value. Because so much of production was for the war effort, this was not the usual economic boom. Selgin quotes one economist’s statement that “the war was, particularly for the United States, a deepening of the Depression.”

Selgin points out, as I detailed in my 2010 study “The US Postwar Miracle,” that many prominent Keynesians thought that the United States needed substantial federal government spending to avoid a post–World War II depression. In fact, federal spending was cut by over half. Yet we avoided a depression.

PROFANITY FOR THE WIN:

Melville’s Bartleby: The Great-Great-Grandfather of the Quiet Quitters of Today’s Gen Z: Herman Melville’s “Bartleby the Scrivener” had It right: Why forcing workers back to the office misses the point. (Stephan Richter, 8/02/25, The Globalist)

Corporations across the globe are currently doubling down on “return to office” mandates. They are keen on summoning their employees back into their cubicles and open-plan watercooler chatter.

And yet, one wonders: What exactly are they being called back to? The promise of collaboration? The lure of higher productivity? Or is it something more profane — a claim of presence meant to boost executives and assure them that corporate control has not slipped?

COVID WAS THE BEST BOOST SINCE Y2K:

The Weird and Lovely Surge of US Productivity Growth (Timothy Taylor, July 3, 2025, Conversable Economist)

Economists have come up with four potential explanations. Three of those suggest this surge in productivity growth probably won’t continue.

The first explanation is that this is mostly just a reflection of the rise of work from home. … [I]f an increase in work from home drove the extra boost to productivity, that would be a one-time boost to the level of productivity, not a change to the overall growth rate going forward.

The second explanation is what economists call “labor reallocation and increased match quality.” Which kind of tells you why you should never ask for messaging advice from people with PhDs in economics. But this is just the idea that before Covid people were stuck in jobs they didn’t love and then the Great Resignation essentially let people rematch to do things that they are more motivated or better suited to do, and productivity went up. Even if you buy that as a driver, quit rates and other measures of job turnover are back to their pre-Covid levels, so the lovefest is probably done. This one, too, would be a one-time increase to the level of productivity, not a longer-lived change to the growth rate.

The third explanation is entrepreneurial dynamism: The number of startups each year was steady or falling for a long time, and it jumped at the start of Covid to a higher level and it hasn’t gone back down. But again, if new firms have higher productivity, this jump will show up as a one-time increase, not a sustained increase in the growth rate.

The fourth and final explanation is that this boom in productivity has been tech and AI driven. I realize that might have been where many of you first started, but note that economists are still skeptical—mainly because there hasn’t been enough adoption yet to explain why the economy-wide productivity growth rate would’ve increased this much.