Castles on Economic Sand

Bringing Beliefs Down to Earth

By Erik W. Matson.

When intellectually cornered by the overwhelming evidence that economic freedom generates material prosperity, advocates of social control retreat to cultural and ethical modes of argumentation. This tactic has been frequently adopted in recent years in the United States by supporters of President Trump’s protectionism—his widespread taxes on imported goods—and interventionist tendencies generally.

In a 2022 speech, Robert Lighthizer, who served as the US Trade Representative during the first Trump administration, told his audience that throughout the 1990s and early 2000s “we forgot that the purpose of economic policy is people. Not things.” Free trade, he continued, might bring us cheap “Christmas lights and toys… tennis shoes, and garden tools.” But it costs citizens, said Lighthizer, more enduring sources of satisfaction: stable and meaningful work, rooted communities, and a sense of agency in their lives.

Likewise, Oren Cass, perhaps the most prominent popular defender of economic interventionism on the right in the past decade, remarked years ago in a similar vein that economic freedom might serve consumer welfare; but “we have to recognize that whatever’s best for consumer welfare in the moment is not necessarily what is best for the trajectory of the economy over time.” This is because the free market creates “problems for our social infrastructure, for the stability of our families and communities, for the ability of people to flourish.”

In the wake of his “liberation day” tariff spree in April 2025, President Trump himself conceded that his policies make goods more expensive. But he has argued, implicitly, that the costs are trivial—consumers will lose out on a few superfluous Christmas lights and garden tools—and that they are more than outweighed by the positive social and geopolitical effects. As he told a reporter, “I don’t think that a beautiful baby girl needs—that’s 11 years old—needs to have 30 dolls. I think they can have three dolls or four dolls because what we were doing with China was just unbelievable.”

The sensibilities of Lighthizer, Cass, Trump, and similar figures on the political right increasingly resonate with the common slogan of the American left used to support a wide range of coercive measures: “People, Not Profits.”

Underneath the supposed cultural and ethical critiques of economic freedom often lurks a deeper suspicion of the modern science of economics itself. Lighthizer was up front about this in his 2022 speech. He condemned what he called “free-trade theology,” and asserted that “as with so much in academia, there [is] little real debate” in economics departments. Lighthizer, Cass, and many of their compatriots on the right—not to mention the vast swaths of the American left drawn toward the “warmth of collectivism”—implicitly depict modern economics as a defunct and morally suspect enterprise.

This view of modern economics is not, in fact, a modern view. It is a view as old as the discipline of modern economics itself. Many have long suspected that those who actively engage in and endorse modern economic analysis subscribe to what Wilhelm Röpke, in his 1960 book A Humane Economy, called “economism”: the “cult of the standard of living” that “only thinks of bread and never of those other things of which the Gospel speaks.” Fifty-some years before Röpke, the American minister and theologian Walter Rauschenbusch proclaimed in a related vein that economics is “an oracle of the false god of mammonism.” Economics for Rauschenbusch promotes a false vision of the good that elevates conflict and competition over peace and cooperation and erroneously foregrounds material prosperity as the centerpiece of the summum bonum, the highest good.

Such views are partly understandable. Economists typically model human beings as self-interested, aware agents perpetually attempting, in the words of Adam Smith, to “better their condition.” The effort to better one’s condition can take many forms, of course; but economists have mostly focused on forms of betterment that involve the pursuit of income. Alfred Marshall, in his Principles of Economics, defined economics as “a study of man’s actions in the ordinary business of life; it inquires how he gets his income and how he uses it.” The focus on income is natural given that economics—or political economy, as it was originally called—emerged to study the nature and causes of wealth. A decade before Smith, another Scot, Sir James Steuart, provided one of the earliest definitions of political economy. He wrote that the object of political economy is to “secure a certain fund of subsistence for all the inhabitants [of the nation].” Economics is and has always been about wealth.

But it does not follow that those who study the production, distribution, and consumption of wealth necessarily believe the maximization of wealth to be the summum bonum, any more than it follows that those who study physics necessarily believe that the human person can be completely reduced to its material dimensions. It is true that economists occasionally seem to believe that our social problems would be resolved if we could attain a certain level of material prosperity. The 19th-century British political economist Nassau Senior arguably pointed in such a direction when he claimed that political economy is the true queen of the moral sciences. But the existence of such views within the body of practicing economists does not mean that the economic science itself is unavoidably committed to false ideologies. And it does not mean that we are free to dispense with its insights into reality at will.

The analogy with physics again might be useful. The laws of physics, of course, underdetermine reality. Who would seek to understand the insights into human nature conveyed by Shakespeare or Dante or Dostoevsky by recourse to the law of gravity? But the law of gravity is a well-attested aspect of physical reality, and we ignore it at our peril. Something similar can be said for economics. It would of course be foolish to claim that trade liberalization could resolve the deep cultural and spiritual conflicts of our day. But the principle of comparative advantage, on which many arguments for trade liberalization are predicated, is a well-attested aspect of our social reality—as certain as arithmetic—and we ignore it at our peril.

Taking issue with certain modes of cultural and ethical argumentation adopted by economists, those on the right in contemporary American politics—the likes of Lighthizer, Cass, and Trump—dismiss rudimentary insights concerning not only the arithmetic of comparative advantage and the balance of payments, but the fundamental insight that exchanges—domestic or international—are two-sided and mutually beneficial. Long disenchanted with the benefits of modern civilization, those on the left have become accustomed to dismissing the unalterable reality of scarcity itself. The impediment to economic progress in the leftist mind is not scarcity, but the existence of a few wealthy individuals and a lack of collective political will and power.

One can have a variety of viewpoints on architectural style. But any building plan that ignores the realities of gravity will, quite literally, not get off the ground. One can have a variety of viewpoints about the good life and the appropriate set of political arrangements for promoting it. But one cannot, as Kenneth Boulding once remarked, build political and ethical castles on economics sand—and this is precisely what many of those in our political and intellectual classes have made a career in.

Erik Matson is a Senior Research Fellow at the Mercatus Center and Deputy Director of the Adam Smith Program at George Mason University. He additionally serves as a lecturer in political economy in the Busch School of Business at The Catholic University of America.