- The Heritage Foundation influenced the free-market policies of the Reagan White House.
- A recent report published by the think tank outlines how government could play a greater role in the economy.
Conservatism used to be synonymous with free markets. Maybe not for much longer.
The Heritage Foundation — a conservative think tank known for its pro-business allegiances — released a report Tuesday written by Alexander Salter, an economist at Texas Tech University, flirting with whether the US government should protect workers from free markets.
Conservatives have long argued that the government should not tax, regulate, or subsidize industry because consumers are better off when companies are forced to compete for their dollars. However, the consequences of globalization for American manufacturing have caused many conservatives to reconsider the need for government intervention. Heritage, once the center of free-market conservatism, is now at this very crossroads.
Heritage made its name influencing the deregulation, anti-union policy, and welfare and tax cuts of the Reagan White House, which adopted nearly two-thirds of its 2,000 recommendations, according to Heritage's website.
In his 1981 inaugural address as president, Reagan said, "government is not the solution to our problem; government is the problem."
In fact, Heritage was founded in 1973 specifically to counter economic policies promoted by liberal think tanks that had seeped into the Republican mainstream like the Nixon administration, according to Lee Edwards, a historian of Heritage.
Standing up for free enterprise, limited government, and individual freedom in its mission statement, Heritage continues to influence the conservative agenda and legislation through its research and lobbying efforts, boasting the Trump administration embraced 64% of its policy prescriptions.
With Tuesday's report, however, Heritage has moved away from its penchant for unfettered markets.
Where markets generate wealth but harm families, communities, and the nation, "Combating monopolies, redistributing income, and even guiding production in essential industries are all valid public policy options," the report said.
This is a sharp turn from when Heritage doubled down on free markets and opposed the industrial policy of the European Union in 2019. It's because the Republican Party is split. Now, conservatives are divided over whether free markets and globalization promote the interests of Americans who've seen their manufacturing jobs disappear, communities be left behind, and loved ones die from despair, the report noted.
A split in the Republican Party has conservatives re-thinking where they stand on government involvement with business
Donald Trump took the White House in 2016 railing against the consequences of free-market policies.
"Globalization has made the financial elite who donate to politicians very wealthy. But it has left millions of our workers with nothing but poverty and heartache," he said in a 2016 campaign speech.
Given Trump's continuing sway over the GOP base, Heritage said the aim of the report was to clarify the disagreements between the two major branches of conservatism. On one side are national conservatives like Sen. Josh Hawley who wants the government to boost domestic manufacturing and break up Big Tech. On the other side are libertarian conservatives like Sen. Rand Paul who opposes interfering with free markets.
The Reaganite fusion of free markets, social traditionalism, and anti-communism "is fundamentally dead," Geoff Kabaservice, vice president of political studies at the market-oriented think tank Niskanen Center, told Insider. "Ronald Reagan in 2023 might have seen his philosophy as pointing in different directions as the needs of the country are different now," he said.
"You need an economy that is not just trying to maximize welfare, to produce as much cheap stuff as possible," Oren Cass, the executive director of the conservative think tank American Compass, told Insider. The economy needs to "foster the domestic investment that will create that kind of economic activity" that supports communities and families with "jobs and opportunities that allow people to flourish" — what is referred to as the common good, he said.
"Heritage is clearly undergoing a really significant shift," Cass said.
"Now there is an acknowledgement that markets don't generate the best outcomes," especially with issues like trade with China and the dominance of Big Tech, and that public policy has a place in channeling market forces, Cass said.
The report "is the surest, formal sign of retreat" from Heritage's "free-market fundamentalism, that markets of their own accord generate the best outcomes, so economic policy is just a matter of the government getting out of the way," he added.
Since Heritage is "acknowledging that line is no longer indefensible" but wants to stay relevant in the conservative movement, "Heritage wants to play the role of convener and facilitator of debate rather than ideological enforcer," he explained.
They're "sort of acknowledging we don't have the answer," Cass noted, which is a big deal for an "extremely influential organization" known for speaking with one voice.
Heritage's president, Kevin Roberts, took over in 2021 and has aligned the think tank much more with the New Right, which is home to figures like Florida Gov. Ron DeSantis who wield state power in the name of culture war, Cass said, causing a lot of turnover in the organization.
Announcing a proposal to ban critical race theory in classrooms and corporations in 2021, DeSantis said, "we must protect Florida workers against the hostile work environment that is created when large corporations force their employees to endure CRT-inspired 'training' and indoctrination."
"Heritage is a follower, not a leader," Kabaservice said. "There was nothing about Heritage that suggested they would turn in a Trumpist direction until Trumpism won," he said, though "it is significant that Heritage has departed from Reaganism."
Limiting government intervention to restrained industrial policy, like subsidizing private-sector research and development or investing in infrastructure, did not necessarily contradict free-market principles, the report argued. Heritage just warned industrial policy advocates not to dismiss the "threats of opportunism, regulatory capture, and rent extraction that loom over all policy."
The think tank concluded, "The question is not whether to jettison free enterprise in favor of the common good, but how to orient free enterprise in support of the common good."