Bret Stephens is a CL, which means he supports laissez-faire capitalism. When it fails, or when alternative models succeed, that means he has to look really hard for answers that don’t contradict his core beliefs. In the case of China, he basically argues that it can’t be an industrial powerhouse, so it isn’t. In the case of rampant dissatisfaction with the American model, he thinks he has found a reason–loose money. Is he right?
No, for two reasons. First of all, low interest rates had nothing to do with the job losses associated with globalization and technological change and the resulting loss of status for male workers. That is where the real sense of grievance is, and why Trump is proposing tariffs to deal with it. Second, low interest rates weren’t even primarily responsible for the explosion he correctly notes in housing and asset prices; that was primarily due to the increased inequality inherent in the dollar store economy, and the corresponding belief that investing in businesses that would serve the declining American middle class was a bad bet. With lots of money in the form of regressive tax cuts and booming profits floating around, the wealthy chose to invest in real estate, government bonds, and expensive paintings. This right-wing recycling, as I call it, only entrenched the dollar store economy even more firmly. It is still with us today, in spite of Biden’s best efforts to reform it.
There are lots of other reasons for the increase in the cost of housing, including the loss of construction workers during the Great Recession, pandemic-driven increases in demand, inflation in material costs, and issues with exclusionary local regulations. None of these have anything to do with interest rates, either. Stephens will have to find another reason why American workers don’t gratefully embrace laissez-faire.