NORMALLY, YOU need read only the first six or seven words of a senator’s sentence to be able to correctly surmise his party. See if you can tell from the next 40 or so, an extract culled from a prominent senator’s recent book: “Today, neoliberalism is in. In the eyes of our elites, the spread and support of free trade should come before all other concerns—personal, political and geopolitical. In recent years this has led to a kind of ‘free-market fundamentalism’.” Suppose you were given a hint. The three proposed solutions for the neoliberal malaise are: “putting Wall Street in its place”, bringing “critical industries back to America” and resurrecting “an obligation to rebuild America’s workforce”.

If you guessed a Democrat—perhaps even more cleverly Bernie Sanders writing in his recent work, “It’s OK to be Angry About Capitalism”—you would be wrong. It was in fact Marco Rubio, the Republican senator from Florida and one-time presidential contender, writing in his just-published book, “Decades of Decadence”.

The populist era marked by Donald Trump’s ascension has been tumultuous for economic policy on both the American left and right. What was once heterodox has quickly become orthodox. It is easy to be drawn to where the new left and the new right are diametrically opposed, because partisans amplify disagreement, and because there are real differences on the role of policing, say, or whether pupils ought to be schooled in gender fluidity. What the culture wars distract from is that, on matters of economic policy, there is rather a lot of agreement. The culture wars may even have hastened the convergence between the two sides by quickening the break-up between the Republican Party and big business, which is now commonly derided as just another redoubt of wokeness.

The diagnoses from the new right and new left of what ails America are strikingly similar. Both sides agree that the old order that prized expertise, free markets and free trade—“neoliberalism”, usually invoked as a pejorative—was a rotten deal for America. Corporations were too immoral; elites too feckless; globalisation too costly; inequality too unchecked; the invisible hand too prone to error.

These problems, both sides agree, must be rectified by the state, through the use of tariffs and industrial policy to boost favoured industries. That should be coupled with greater redistribution, to the detriment of corporations and to the benefit of left-behind workers. When Jake Sullivan, the national security adviser, who is tasked with making something called “a foreign policy for the middle class” a reality, endorsed the idea that the administration’s domestic economic policies represented a “new Washington consensus” in April, he was speaking grandly but not incorrectly.

For wonks pushing in this direction, that is great news. “It is a sign of a healthy politics that you have people with their eyes open on both sides of the political spectrum saying, ‘This is really broken,’” says Oren Cass, a former policy adviser to Mitt Romney and now the executive director of American Compass, a think-tank leading the charge on the right. In June the organisation released an anthology of policy essays called “Rebuilding American Capitalism: A Handbook for Conservative Policymakers” that resembles a slaughterhouse for Republican sacred cows.

Trade deficits are obsessed over; federal budget deficits are hardly mentioned. Child benefits for parents should be made much more generous, as Democrats suggest, though only on the condition that parents work. Financial engineering should be resisted, with share buy-backs banned. Organised labour is to be encouraged rather than being dismissed as a hindrance. “Conservative economics, unlike the fundamentalism that supplanted it for a time, begins with a confident assertion of what the market is for and then considers the public policies necessary for shaping markets toward that end,” Mr Cass writes at the start of the manifesto.

This is apparently a catchy proposition. Most of the young guard of Republican senators who are trying to fashion populist economic policy—like Tom Cotton of Arkansas, J.D. Vance of Ohio and Todd Young of Indiana—gave lengthy interviews at an event to celebrate its unveiling. Mr Rubio was there, too; his recent book of recriminations against the decadent technocratic, neoliberal elite is studded with references to Mr Cass and his writings.

The idea that capitalism has inherent contradictions that require government intervention is more usually associated with the left. But Thomas Piketty, the famed French chronicler of inequality, is also optimistic that there is a broader ideological shift under way. “Beginning with the 2008 financial crisis, we’ve seen the beginning of the end of this sort of neoliberal euphoria and the pandemic accelerated this transformation,” he reckons.

Mr Biden is doing “interesting things” when it comes to industrial policy, says Mr Piketty—who freely admits his preference for the more revolutionary Democratic alternatives like Elizabeth Warren and Mr Sanders over the centrist Mr Biden. The president, he says, is “not really questioning the very high level of inequality that we have in the US today”.

This is a critique that those in the Biden administration might heed. There are more than a few casual fans of Mr Piketty in the White House. Heather Boushey, a member of the president’s Council of Economic Advisers, helped edit an entire volume of economic essays titled “After Piketty”. Even as a tight labour market after the pandemic increased wages for the lowest-paid workers, top incomes continued to rise, causing some measures of inequality either to rise or remain stuck at stubbornly high levels. Mr Piketty had called for a return to the high marginal tax rates on income in effect in the three decades after the second world war, as well as a new steeply progressive wealth tax to finance a generous welfare state.

This is one difference between new right and new left. Mr Biden has taken on board the idea that extreme wealth at the top of the distribution is a problem that needs tackling, and insists that he will not raise taxes on those earning less than $400,000 a year (98% of Americans fall below that threshold). Mr Cass and co spend less time fretting that the top 2% are doing too well. Though since Mr Biden has not managed to actually raise taxes on top earners, the difference is moot.

All of which leads Mr Piketty to worry that America could have a “neoliberal stabilisation” at a very high level of inequality, or continue to flirt with alternative systems like the “neo-nationalism” embodied by Mr Trump. He also worries that some of the leftish industrial policy that the Biden administration has championed, and which plenty of Republicans would copy, is in fact something more retrograde in disguise. “Some of what we call industrial policy today looks a lot like subsidies and sort of a new wave of tax competition and a race to the bottom,” he says.

Crossing the Piketty line

Aside from the focus on the super-rich, the differences between the new left and new right on economic matters can be hard to detect. Those on the left often discuss social policy as something that happens between state and individual; the right insists that the family remain the intermediating institution. Both find competition with China to be a justification for industrial policy; but the new right does not find the threat of climate change to be nearly so moving. There is little appetite on either side to reform entitlement programmes before the trust funds that hold cash for old-age-pension and health benefits are depleted within the next decade.

Both the new left and the new right agree on empowering workers but disagree on the means. “The Democratic Party is just completely committed at this point to strengthening existing unions,” says Mr Cass. He prefers alternative ways of organising labour like sectoral bargaining, or a German-style co-determination system in which a set number of corporate-board seats are reserved for workers (an arrangement also praised by Mr Piketty).

If there is so much agreement, why is Congress not enacting more laws that reflect the new consensus? The main reason is that mutual suspicion on matters of culture, the primary currency of contemporary politics, infect whatever new economic consensus there is. A wholesale refashioning of America therefore won’t come soon. But the ideas are already proving to be more than a mere passing fad.■

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