Why Republicans are suddenly panicked by the market they used to love

Did Mitch McConnell cancel the market? Answer: No. He was never a real fan.

For the past few decades, the GOP's interests aligned harmoniously with those of corporations. Businesses amassed wealth while staying out of social issues. The GOP, in turn, rewarded businesses with tax cuts. The status quo was fine.

This state of affairs allowed the Republican Party to reward itself with the mantle of the "pro-market" party. However, as society has become more socially liberal, businesses are adapting to their customers' evolving preferences. A longstanding symbiosis has been upset and the Republicans have begun panicking.

The Senate minority leader issued an ominous warning to corporations who stood in opposition to voter suppression laws in Georgia, stating, "My advice to the corporate CEOs of America is to stay out of politics," adding these corporations would "invite serious consequences if they became a vehicle for far-left mobs to hijack our country."

Many noted that McConnell's stance was blatantly hypocritical. How can a conservative party that has argued that corporations deserve the rights of speech now be telling these same entities to shut up? And, certainly, one wouldn't expect the party of markets to be troubled by corporations responding to customer preferences. So what happened to the Good Old GOP, champions of markets and freedom?

The answer is simple. The Republicans never defended markets on principle. It was always an alliance of opportunity. The rhetoric of markets was a useful instrument—an anti-government cudgel—wrapped in the language of freedom. The GOP's claim, since Reagan, was that the markets promote freedom and the government does not. Thus: lower taxes and shrink the government. Start with eroding protections for civil rights.

The branding was effective. The GOP is widely perceived as the pro-market and pro-liberty party by conservatives and liberals alike. But, if you start to poke beyond this veneer, a different picture emerges. Its love of markets, it seems, is as sincere as its periodic despair over the deficit, which reliably animates opposition to Democratic policies, but recedes as soon as the resident of the White House is a Republican.

To understand the GOP's relationship with the market, we need only to consider its entire platform since Reagan. Republicans have consistently advanced policies that facilitate what economists call market failure. Such failures occur when conditions, such as monopolies, information asymmetries, and externalities, prevent the market mechanism from operating properly. By this measure, the GOP does not fare well.

Consider, first, how the GOP's deregulatory policies proliferate negative externalities. The predictable result? Depletion of resources, increased pollution, and poisoned communities. In these cases, the Republican Party seems conveniently unconcerned about personal responsibility. They're happy to have businesses impose costs on the rest of us, and eager to ensure that responsible parties escape accountability.

The second issue stems from the GOP's cavalier attitude toward monopolies. While some Republicans opine about anti-trust when it suits their interests, the party as a whole continues to encourage monopolies. For example, few Republicans have expressed any qualms about Sinclair—a rightwing group—buying up local media stations, thus creating an information monopoly. While the GOP may wax poetic about the marvel of markets, their favored policies hamper their proper function.

That the GOP's commitment to markets is disingenuous—tenuous and unprincipled—is elsewhere apparent. For example, markets could better improve people's welfare if wealth and income wasn't so concentrated. Yet the GOP's fiscal policies reliably produce income inequality, as if by design. This correlates with lower market participation. Rather than using markets to improve lives, the GOP prioritizes the returns of a tiny minority. Or, to take another example, consider the GOP's resistance to increasing the labor force, such as investing in childcare. They favor policies that keep individuals in perpetual debt, unable to engage in a variety of markets, such as housing. They also oppose legislation that alleviates job lock, such as the ACA.

We should not believe this party ever cared about markets. They loved the rhetoric of markets. It was useful. It allowed them to adopt a faux neutrality in their opposition to civil rights. Their hostility towards government could be dressed up as principled support for freedom. Yet they have stood by while markets crumbled, content to encourage the accumulation of wealth, as others drowned in bankruptcy and poverty.

Despite all of this, the GOP is regarded as pro-market. Their rhetoric worked. Why? Because American consumers were largely content with the social status quo. There was little reason for corporations to take a stand on social issues. Thus the happy symbiosis between Big Business and the party of corporate tax cuts was preserved.

But now the times are changing. The GOP hasn't undergone a reformation, nor have CEOs developed a collective sense of social conscience. The real shift is occurring within American society. The market reflects this. It has become relatively unpopular to be a bigot. Majorities of Americans now support same-sex marriage and pluralities support the Black Lives Matter movement. Of course, let's not overstate the point. The country still has a problem with bigotry (we elected Trump, after all) and much of the anti-bigot movement might be performative or aesthetic. But, overall, people who identify as non-bigots are in the majority, especially among the younger generations.

Big businesses recognize this shift and its implications. They see how the path to profit has changed. They don't necessarily oppose the Georgia voter suppression laws because of deeply held moral principles. They just see the writing on the wall. Customers prefer companies that oppose bigotry and stand up for civil rights. Businesses, to survive, are doing what the GOP has always said they should: listening to the market. But the message of the market has changed. The GOP can't accept it.

As corporations have come out against Georgia's voter-suppression laws, Republican voters have launched their own boycotts. If the pro-market party truly cared about the freedom of the market, they would say, as they always have, "let the market decide." But now, given they're unhappy with the market's decision, they can't say that. The market is becoming less useful. The marriage of convenience is over.

So what is the GOP left with? Not much. Since they won't adapt to changing preferences—of consumers or voters—they'll resort to something else. There is already some indication of what's to come. They might deploy more of the empty populist rhetoric that served the previous administration. Or they might try to find some middle ground. They might argue, as The Wall Street Journal did in an editorial last week, that "markets" are still sacred; but the heads of business are nefarious. Perhaps they'll ultimately settle on a strategy. But at the moment, the party is panicked.

The GOP's future is uncertain. What's clear, however, is that the party will continue to do whatever it takes to pursue their actual goals: bigotry, wealth and power.