It used to be Harvard-based neoclassical economists could count on their Republican friends and allies to support their free-market policies. Now, apparently, not so much.
That’s the only explanation for why Jeffrey Frankel has to step forward and attempt to remind Republicans that market mechanisms—such as cap-and-trade and Obamacare—were their idea.
In the US, cap-and-trade was originally considered a Republican idea. Market-friendly regulation was pushed by those who thought of themselves as pro-market, rather than by those who thought of themselves as pro-regulation. . .
Republican politicians have now forgotten that this approach was ever their policy. To defeat the last major climate bill in 2009, they worked themselves into a frenzy of anti-regulation rhetoric. . .
One can draw a fascinating parallel between the evolution of American political attitudes toward market mechanisms in the area of environmental regulation and Republican hostility to the Affordable Care Act, also known as Obamacare. Obamacare is a market mechanism in the sense that health insurers and care providers remain private and compete against each other.
Frankel is, in fact, right. Both cap-and-trade and Obamacare came straight out of Republican think tanks, precisely in the way neoclassical economists had designed them. Then, they were the best of friends. Now, apparently, Republicans have to be reminded of that friendship.
Or scared into remembering that close relationship. Because, Frankel warns, the alternative is more government regulation.
It really is a sign of how much political and economic discourse has changed in the United States that it’s Democrats who are implementing market-based, originally Republican-designed policies. And that, even more: from the perspective of someone like Frankel, any government regulation of business (not, mind you, government ownership) can blithely be referred to as “command and control.”