Enough Talk of "Intervention"
Markets don't just happen—they're shaped
Festering anger animates a lot of the writing I do. I find frustration can be a uniquely motivating emotion when the work of getting the idea on the page feels particularly hard.
To be fair, I had a lot of fun writing my new book (published and available for sale this week!) Marketcrafters: The 100-Year Struggle to Shape the American Economy. I got to know the characters I profiled in the context of the political and economic debates of their time. But it was also motivated day in and day out by a desire to wage war on a specific verb: “to intervene.”
For the past century, Republicans and Democrats alike have devised ways to channel market forces to accomplish political goals like tamping down inflation, creating abundant and reliable sources of energy, and ensuring American global leadership in cutting-edge technologies. Sometimes we call these efforts “industrial policy,” but that term is too narrow to describe the work of the Federal Reserve or the functioning of healthcare markets, for instance. Instead, I call it “marketcraft.” I dive deep into the successes and failures of policymakers’ efforts to guide markets, teasing out lessons for our own time.
I wrote the book to help us get rid of the nasty habit of saying how government “intervenes” in particular markets. That metaphor suggests the market is a self-regulating, natural phenomenon, like a stream running downhill. It casts the government as a reactive external authority. At its best, an “intervening” government might correct missteps or offer aid after harm has occurred. But ultimately, its power can only go so far because, well, markets will be markets.
That erroneous framework is a relatively recent invention. Before the late 1970s, it was common to speak about managing markets, or even creating them. But in the last half century, we lost the habit and eventually forgot we ever had it. A sequence of historic events — the Great Financial Crisis, the rise of China, the intensification of climate change, and the coronavirus pandemic — is reminding voters and policymakers alike that markets need to be cared for to ensure that they are working for the common good.
The United States has a lot of experience doing just that, even if we rarely talk about it that way. Banking, finance, health insurance, pharmaceuticals, and airlines constitute nearly 40 percent of American economic output, and each sector has a long history of state management. The record of government involvement in these industries is mixed, but when marketcraft is effective, policymakers set a clear mission, empower institutions with discretion, and watch over their work to ensure they meet their goals.
Markets are more like a vegetable garden, a place of organic, unruly forces that humans can harness to their benefit. A gardener does not “intervene” in a garden; she cultivates it. Without her ongoing attention, it would turn fallow and quickly be overrun. Without qualified people in government managing our markets, we have no assurance their growth will satisfy our social priorities. I wrote the book to illustrate how what a successful marketcraft in the future might look like.
What We've Learned from Past Marketcrafters
My book tells the stories of a dozen people who shaped and crafted markets over the past century. Their names generally don’t appear in economic textbooks or standard histories. A few achieved renown, but most faded into obscurity. In the book, I take a look at some of their biggest successes and failures, including:
how a national investment bank shaped banking, aviation, and housing markets
the failure to craft healthcare markets to be accessible to all
the unexpected success of early 1970s energy policy
the rise of the Federal Reserve’s mandate for orderly, stable money markets
Reagan-era semiconductor industrial policy
…and several more…
What lessons can we draw from these diverse experiences? Successful marketcraft requires three essential ingredients: a clear mission, a coordinating institution we can hold accountable, and the investment of power in that institution to accomplish its work. By choosing not to micromanage the how of policy implementation, lawmakers enable these institutions to attract diverse experts who can develop nimble approaches to achieve their objectives.
Not every case in the book is a success story. For example, legislators in the 1960s were fearful of investing in a national institution to provide public health insurance or to manage the cost of private insurance. They created a byzantine public-private health-care market that causes Americans to pay more for health care today than any other advanced economy. But even failed attempts to organize and steer markets have something to teach us about effective marketcraft.
How to Respond to Trump
Lots of public policies affect markets without crafting them. Think of investment in roads or education, or even consequential decisions on marginal income tax rates. These are major economic decisions, but they are not motivated by intent to guide a particular market like real estate or semiconductors from Point A to Point B.
Trump’s destructive tariff policy and his threats to fire Fed chair Jay Powell are introducing profound instability into today’s markets. But they are not a marketcrafting effort to harness market forces toward a particular political goal. For instance, while tariffs can be used in a targeted fashion to support a particular industry, Trump’s are broad-based, applied to bananas, steel, and furniture alike. The one exception to the administration’s lack of marketcraft might be Trump’s effort to create a crypto reserve fund to stabilize and support the cryptocurrency market, a cynical move that will benefit large campaign donors (and the president himself) at the expense of everyone else.
Since Trump’s election, several competing theories have emerged about how Democrats should rewrite their economic message. It’s clear that voters want them to move on from the unfulfilled promise of Obama-era economic policies, which resulted in stagnant wages and increased corporate consolidation. Bernie Sanders and Alexandria Ocasio-Cortez offer a righteous critique of government by billionaires. An emergent “abundance” agenda promises to fuel growth by improving government effectiveness, although last year’s presidential election also made clear that abundant growth on its own is not enough to make Americans feel optimistic and secure in their future.
Fundamentally, Americans want predictability, stability, and order. They want to know their grocery bill will look roughly the same next week or that the dream of living in a dignified, affordable home is within reach. Trumponomics, by contrast, will raise costs for American families by $3,800 a year according to the Yale Budget Lab. It will also likely lead to a recession, throwing millions out of work.
This is tragic for American families, and a political opening for Democrats who want to articulate a better way. As a term, “marketcraft” is a little like industrial policy or competition policy—it isn't likely to be a rallying cry for any politician, whether left or right. It's a technical concept, a framework for channeling markets toward political goals. Voters expect candidates to focus on outcomes, not the intricate details of how those outcomes are achieved.
But to deliver on promises of price stability, geopolitical strength, and plentiful jobs in industries of the future, policymakers must understand how marketcraft works best. If successful, Democrats could build a more durable, diverse coalition of working families. That could help not just to win in the midterm election, but to create an enduring response to Trumpism.
If you haven’t already, please consider purchasing a copy of the book today!
Parts of this post are adapted from my book, "Marketcrafters: The 100-Year Struggle to Shape the American Economy.”
may 2 5-530?
Hi Chris :)
I have sent you an email from yashrathor@rnrstores.in , please have a time from your schedule to look