Why Free Markets Matter – Q&A With National Review’s Andrew Stuttaford

ValueWalk’s Q&A session with Andrew Stuttaford, who had a long career in finance and has also been writing for National Review for decades. He is currently a contributing editor of the magazine. Andrew discusses the launch of National Review’s new section called “Capital Matters,” which defends free markets. Below is a (very) lightly edited transcript of the discussion.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q2 2020 hedge fund letters, conferences and more

Can you tell us about your background?

I am British born, but I moved to the US nearly thirty years ago. I began my career working as an attorney in London in the early 1980s, but I switched over to investment banking a year or two later and continued to work in various sectors of finance until March of this year. Meanwhile, I started a ‘second’ career in freelance journalism at the beginning of the 1990s, and have been writing on a varied range of topics from history to culture to politics and the economy for a number of publications, including, of course, National Review: I wrote my first piece for NR in 1992.

Notes From Schwarzman, Sternlicht, Robert Smith, Mary Callahan Erdoes, Joseph Tsai And Much More From The 2020 Delivering Alpha Conference

Stephen SchwarzmanThe following are rough notes of Stephen Schwarzman, Steve Mnuchin, and Barry Sternlicht's interview from our coverage of the 2020 CNBC Institutional Investor Delivering Alpha Conference. We are posting much more over the next few hours stay tuned. Q2 2020 hedge fund letters, conferences and more One of the most influential investor conferences every year, Read More


What inspired you to start this new section?

Well, it wasn’t only me. This was very much a collaborative effort, involving several people at National Review Institute and National Review. For me, the starting point was, years ago, during the financial crisis, when I realized that beyond those who worked in the financial sector, there was relatively little understanding of some of what was going so badly wrong—and what its significance was. What did it mean, for example, that the commercial paper market had dried up—and why did it matter?

Thinking on from that, I came to believe that, generally speaking, there was not enough understanding of how free markets worked. Plenty of people were well aware of what, given the chance, free markets can do, but not enough truly understood how they did it, something that left the market economy vulnerable to lines of intellectual and political attack that were—how to put it—not always based on logic or on fact.

National Review does cover economics, so why another entity for this purpose?

We have always covered economics, and, I believe, very well. Nevertheless, we would like to build and expand on that, with broader coverage and more writers. We also think that there is some advantage in having one ‘go to place’ on National Review’s website where people—whether regular NR readers or people looking for coverage of finance, economics and business from a rightish (or, at least, non-leftish) perspective can visit—and hopefully find something that is of interest to them. I hope too that this space will act as a place where strong writers who have plenty to say, but lack a large enough platform, will feel that they can come to make their voices heard.

It seems that economic liberalism is the order of the day, do you feel it's under attack?

If by economic liberalism, you mean classical free market liberalism, I must disagree. I don’t think it’s the order of the day. On the contrary, it is under attack and on the retreat. To be sure, it’s under attack from the Left—that’s what the Left does—but you have also seen some of the classic characteristics of free markets, such as free trade, come under fire from the right.

Meanwhile, the Business Roundtable, supported by the CEOs of many major corporations, has called for the adoption of “stakeholder capitalism”, the notion that a company’s primary function is not to work for its shareholders—its owners—but that instead it must labor in the interests of “stakeholders”, selected by, well it’s not clear who. Meanwhile, asset managers are espousing the idea of “socially responsible” (their phrase, not mine) investment under which their investment objectives now include not only making money for their clients, but also the pursuit of a social and political agenda.

Industries such as healthcare and tech have become incredibly concentrated, is your approach to just hope the free market will solve these problems?

Precedent would suggest that in most cases it will. Tech champions come and go. Do you remember Netscape or Myspace? There is a temptation to think that today’s dominant players will be tomorrow’s dominant players. But in a market economy, leaders rise and fall: Sears one day, Walmart another, and Amazon another.

Where matters become more complicated is where legal or regulatory structures either embed or enforce concentration or distort the market in such a way that efficiency and competition are hobbled. That, I suspect, is what you have been seeing in healthcare, a “good”, arguably, like no other, where entrenched interests, regulatory overreach and many other non-market related factors have muddled the well-intentioned effort to ensure wide access to affordable, first-rate treatment.

One reason many think that young people have been drawn to socialism is because of some of the problems mentioned to earlier. Many cannot afford healthcare - wouldn't small reforms like breaking up big tech giants be the best way to keep capitalism "solvent"?

The reasons that young people have been drawn to socialism—or what they imagine to be socialism—are complicated, and we could talk about them for a long time. I think that the issues you mention have relatively little to do with it, although the failings in the health care system, which are not failings of the free market, have clearly contributed to their discontent. I would rather look elsewhere, to the education system, to entertainment media, where the default mode almost always seems set somewhere to the left. And then there is another problem, which will get worse, that of the underemployment created by automation. How you deal with that, I don’t know, but breaking up today’s tech giants is not the answer.

This is also an issue with trade but there national security also gets involved. If China is making supplies for our weapons, doesn’t that indicate we have a big problem with industrial policy?

You raise a good point. We live in the real world, not in an economic model. And in the real world, we face, as a country, some major strategic challenges, most notably, perhaps from China. A trading relationship must be looked at with clear eyes, and that has not always been the case with China, where the combination of opportunity, free market fundamentalism and, yes, naivete meant that we got in too deep. That must change, particularly where strategically vital industries are concerned. And as we have discovered during this pandemic, there are more of those than we thought.

Final thoughts?

Free markets ought to be their own best justification, but, sadly, their deeds are not enough. Their defense needs words too, and we want to be out there making the case, a case that is not necessarily framed politically, although at times it certainly will be, but will often be a matter of explanation. This is how free markets work. This is what they deliver. And if you give them the chance, they can deliver even more.