Disputes over economic policy are no longer between right and left, but between populist and centrist.
The political realignment has come for economics. At least since the days of Friedrich Hayek and John Maynard Keynes in the last century, the divide in economic thinking roughly corresponded political split. In the mainstream, everyone was a capitalist and saw some role for government. The right/left divide was mostly over exactly how big that role should be.
Now, in economics as in politics, it is no longer left versus right; it is moderates versus populists. The question isn’t so much the optimal size of government in a global market-based economy, it is whether the economy is positive or zero-sum and how it entrenches power.
The result is unlikely allies and enemies. The horseshoe theory of politics holds that extreme left and right partisans agree more with each other than they do with the centrists in their party. That theory now also applies to economics. A decade and a half ago, economists and policy wonks were divided on things that in retrospect seem quite small — the structure of the Affordable Care Act, for example. More and more lately, I struggle to find disagreement with center-left economics pundits who used to make me shake my head.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
Photo by Andrey Denisyuk/Getty Images
