When former U.N. ambassador Nikki Haley addresses the Heritage Foundation this morning to give the group’s annual Margaret Thatcher Freedom Lecture, she’s expected to deliver a full-throated defense of capitalism that mixes boilerplate conservative arguments with a salvo against “the silliest argument of all” — the idea that “capitalism is bad for America but good for Communist China.”
Haley’s speech reprises the theme of a Wall Street Journal op-ed she authored in February, in which she wrote that the “hyphenated capitalist” solutions put forward by conservative critics of the free market “differ from socialism only in degree.”
Critics of free markets on the right and on the left, Haley will say, according to a copy of her remarks obtained by National Review, miss the point entirely when “they say that economic freedom means shipping critical industries from Chicago to Shanghai.”
“The pandemic proved that we can never be dependent on our biggest enemy for medicine. The same is true for advanced technology and security systems,” she’ll say, arguing that championing capitalism is not the same as advocating policies that create a reliance on Beijing. “That’s commonsense.”
Haley will then accuse those critics of wanting “to do business like China” because “they’re calling for a ‘national industrial policy,’ which basically means the government should control what companies make, pick which businesses succeed, and dictate what the economy looks like.” She’ll call such a policy “totally un-American.”
Although she isn’t expected to mention it explicitly, her comments come as a massive industrial policy package awaits action in Congress. The U.S. Innovation and Competition Act, which the Senate passed on bipartisan lines earlier this year, comes in at a whopping $282 billion. That money will be directed to support domestic semiconductor production and National Science Foundation grants on critical technology research, among other things.
Conservative critics of the legislation, including the Republican Study Committee, however, have pointed out that the legislation lacks appropriate safeguards to prevent the theft of U.S.-funded research and that none of the funding goes to projects specifically intended to play a role in countering the Chinese Communist Party’s global ambitions. The RSC has said that the legislation would only result in an influx of research funding, without a clear national-security aim.
Haley’s criticism of industrial policy centers on what she views as a worrying parallel with Beijing’s own approach to these questions: “We can’t out-central plan a bunch of communists, and if we play by China’s rules, China will win. The better bet is to play the game the American way — and that’s capitalism.”
The likely presidential contender will also warn conservatives against competing with progressives to offer bigger government spending programs. “If all we’re offering is a cheaper welfare state, or slightly less bad mandates, we will lose,” she’ll say, according to her prepared remarks, adding, “Conservatives should know better. Don’t cave — not now, not ever.”
As the U.S.-China competition intensifies, Washington will need to do much more to position itself against the threat posed by the Chinese Communist Party. But already, a number of people have taken advantage of that very real imperative to justify proposals with no immediate bearing on U.S. national security, such as President Biden’s China-centered arguments for more infrastructure and education spending. That only makes it difficult to build out an effective policy to counter Beijing’s ambitions.
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