Republicans, Democrats, and Economics: What Actually Works?

Shannon Bray

Written by
September 05, 2026

Beyond Red and Blue: What the Laws of Economics Tell Us About Jobs, Healthcare, and Better Public Policy

An evidence-first approach to evaluating Republican, Democratic, and free-market policy

Political debates usually begin with a solution.

Republicans propose lower taxes, deregulation, tariffs, domestic production, and greater reliance on markets. Democrats propose public investment, stronger worker protections, expanded healthcare coverage, subsidies, and government action to reduce household costs.

I think we should begin somewhere else:

What is actually causing the problem?

Before deciding which party has the better answer, we should ask what economics tells us about scarcity, incentives, supply and demand, competition, market power, information, externalities, and opportunity cost.

Then we should measure whether the proposed solution actually addresses the mechanism causing the problem.

That sounds obvious.

Washington rarely operates that way.

Start With the Evidence

The August 2026 national employment report is a useful example.

The United States added 162,000 payroll jobs in August, and unemployment remained at 4.1 percent. Taken alone, those numbers sound encouraging. But beneath the headline, employment in the information sector fell by 23,000, while food services added 59,000 jobs and local government education added 42,000. Manufacturing added 16,000.

A national employment number therefore cannot tell a software engineer, factory worker, construction worker, nurse, or rural North Carolinian whether his or her economic opportunities actually improved.

North Carolina illustrates the problem even more clearly.

The latest statewide industry report available shows that North Carolina payroll employment fell by 700 jobs in July. Professional and Business Services gained 6,100 jobs and Construction added 800, while Private Education and Health Services lost 3,800 and Manufacturing lost 1,000. Looking over the previous year instead of one month changes the picture again: Professional and Business Services gained 19,400 jobs, Construction gained 15,400, and Education and Health Services gained 15,000, while Manufacturing lost 9,900 and Information lost 3,300.

Geography matters too.

From March 2025 to March 2026, employment increased 2.4 percent in New Hanover County, 2.3 percent in Cabarrus and Wake, 2.1 percent in Buncombe and Union, and 2.0 percent in Pitt. At the same time, employment declined 1.2 percent in Durham and 2.2 percent in Cumberland County.

Even wages tell only part of the story.

Average weekly wages in the first quarter of 2026 were $2,210 in Durham, $2,167 in Mecklenburg, and $1,680 in Wake. The statewide average was $1,515. In Pamlico County, the average was only $718.

But a dollar of income has to be compared with the cost of living where that person lives. MIT's 2026 Living Wage Calculator estimates that a single adult in Wake County needs roughly $26.56 per hour to meet basic household expenses. A single parent with two children would need approximately $56.80 per hour.

That gives us our first economic lesson:

National averages can describe an economy while concealing the economic reality experienced by individuals.

Public policy should therefore be evaluated locally, by industry, and against purchasing power—not merely against headline statistics.

The Economic Principles We Should Use

There are no political exemptions from economics.

Republican policies do not become economically sound because Republicans enacted them. Democratic policies do not become economically sound because their goals are compassionate. Libertarian policies do not become economically sound merely because they reduce government.

Every policy has to operate within the same constraints.

 

Scarcity

Resources are finite.

Money, labor, land, doctors, nurses, hospital beds, houses, energy, capital, and time cannot be used simultaneously for unlimited purposes.

Opportunity Cost

Every resource used for one purpose cannot be used for another.

A billion dollars spent subsidizing one industry is a billion dollars unavailable for another public purpose or private investment.

Incentives Matter

People respond to changes in costs and rewards.

Taxes, subsidies, regulations, benefit phaseouts, tariffs, licensing requirements, and price controls all change behavior.

Supply and Demand Matter

Increasing demand for something without increasing its supply can increase prices.

This matters enormously in healthcare, housing, education, and child care.

Prices Carry Information

Prices communicate scarcity.

When price signals are distorted, suppressed, hidden, or disconnected from buyers, resources can be allocated inefficiently.

Competition Disciplines Markets

Competition pressures businesses to improve quality, innovate, and control prices.

But private ownership alone does not guarantee competition. A market dominated by one hospital system, one insurer, or several protected incumbents is not meaningfully competitive.

Market Failures Exist

Markets can produce poor outcomes because of monopolies, externalities, asymmetric information, public goods, or other failures.

Recognizing that does not automatically justify any particular government intervention.

It means government must identify the failure before trying to fix it.

Government Failure Exists Too

Government actors face incentives, incomplete information, lobbying pressure, political cycles, and bureaucratic self-preservation.

An intervention intended to correct a market failure can create a government failure.

Marginal Effects Matter

The question is not simply whether a program produces benefits.

The question is whether the next dollar spent produces benefits greater than its cost.

There Is No Free Lunch

Someone ultimately pays.

Government spending, tax preferences, regulations, tariffs, borrowing, subsidies, mandates, and corporate welfare all impose costs somewhere in the system.

These principles give us a better way to compare the major parties.

The Republican Approach

The Republican platform contains several policies that align strongly with traditional economic theory.

It emphasizes lower taxes, reduced regulation, greater energy production, innovation, domestic investment, and healthcare competition. In healthcare specifically, the platform calls for greater transparency, choice, and competition.

Those ideas recognize several important economic realities.

Excessive regulation can increase the cost of entering a market. Lower marginal tax rates can improve incentives to work or invest. Increasing energy supply can reduce an important input cost throughout the economy. Competition can discipline prices.

Those are legitimate strengths.

But modern Republican economic policy contains a significant contradiction.

Tariffs Are Still Taxes

The Republican platform explicitly supports baseline tariffs on foreign-made goods as part of its strategy to protect American industry and rebuild domestic production.

There can be legitimate national-security arguments for protecting specific strategic industries. We should not become dependent on hostile countries for certain military systems, critical infrastructure, pharmaceuticals, semiconductors, or other indispensable goods.

But broad tariffs are not free.

The Congressional Budget Office estimates that the tariffs enacted during 2025 raise the cost of imported products and production inputs, increase inflation temporarily, reduce household purchasing power, reduce investment, and leave real economic output below what it otherwise would have been. CBO also recognizes that tariffs increase domestic production in some protected industries and generate substantial federal revenue.

That is the correct way to describe the tradeoff.

A tariff may purchase strategic industrial capacity.

But Americans still pay part of the price.

We should therefore treat a national-security tariff the same way we treat defense spending:

as a cost that may sometimes be justified by the security benefit—not as free money extracted from another country.

Tax Cuts Require Spending Discipline

Lower taxes can improve economic incentives.

But cutting taxes without controlling expenditures does not eliminate the cost of government.

It finances more of that cost through borrowing.

CBO's current outlook shows the competing forces clearly: provisions encouraging capital investment can increase economic output, while additional federal debt places upward pressure on interest rates.

The economically consistent position is therefore not simply:

Cut taxes.

It is:

Reduce unnecessary taxes and unnecessary spending together.

Republican economic scorecard

Republicans are generally strongest when emphasizing:

  • supply;

  • investment;

  • entrepreneurship;

  • energy production;

  • competition;

  • lower regulatory barriers; and

  • incentives.

They are weaker when supporting:

  • broad protectionism;

  • politically favored industries;

  • subsidies or protections inconsistent with free competition; and

  • tax reductions without equivalent fiscal discipline.

The Democratic Approach

Democratic economic policy begins from a different concern.

Markets do not always distribute resources efficiently or fairly, and some important markets suffer from structural failures.

That observation is economically legitimate.

The Democratic platform emphasizes public investment, infrastructure, domestic manufacturing, stronger unions, a higher minimum wage, expanded tax credits, healthcare coverage, housing construction, child-care assistance, and efforts to lower household costs.

There are circumstances in which government intervention can improve an outcome.

Infrastructure can create benefits that cannot easily be captured by one private investor. Pollution can impose costs on people outside a transaction. A dominant employer can exercise monopsony power over workers. Healthcare markets suffer severe information asymmetry.

These are real economic issues.

The weakness comes when government attempts to solve a supply problem primarily by increasing demand.

Subsidizing Demand Does Not Automatically Create Supply

Imagine a town with 100 available apartments and 150 families seeking them.

Giving every family an additional housing subsidy improves their ability to bid for the apartments.

It does not create apartment number 101.

Unless supply can respond, some of the additional purchasing power can become higher prices.

The same logic matters in:

  • housing;

  • healthcare;

  • higher education;

  • child care; and

  • other supply-constrained markets.

This does not mean subsidies never help.

It means every subsidy should be accompanied by the question:

Can supply expand?

If not, government may simply finance increasingly expensive scarcity.

Minimum Wages Illustrate the Tradeoff

Minimum-wage policy is another area where both political narratives are too simple.

CBO's analysis finds that increasing the federal minimum wage raises wages and family income for many low-wage workers and can move some people out of poverty.

It also reduces employment for some workers.

Both effects occur.

That suggests a useful distinction.

If our goal is to increase the disposable income of low-income workers, we should compare several mechanisms rather than assuming that increasing the employer's marginal cost of labor is always the best one.

The Earned Income Tax Credit is one alternative mechanism because it supplements the income of people who work. But benefit programs and tax credits have their own design problem: as assistance phases out, workers can face high effective marginal tax rates. CBO has specifically documented how taxes and benefit reductions can reduce the amount of additional income a worker actually keeps after earning another dollar.

The right objective is therefore:

Make each additional dollar of productive work materially improve the worker's household position.

Democratic economic scorecard

Democrats are generally strongest when recognizing:

  • market failures;

  • externalities;

  • bargaining-power problems;

  • poverty;

  • public goods;

  • healthcare access problems; and

  • the importance of household costs rather than aggregate output alone.

They are weaker when policies:

  • subsidize demand without expanding supply;

  • underestimate behavioral responses;

  • increase barriers to hiring;

  • protect government programs from meaningful performance measurement; or

  • assume public spending has no significant opportunity cost.

The Free-Market Approach Must Pass the Test Too

A libertarian or free-market response is often:

Reduce government and let markets work.

That is directionally attractive in many markets.

It is not sufficient.

A genuine free market requires competition, not merely private ownership.

Healthcare demonstrates the problem.

Hospitals and physician practices have consolidated significantly over recent decades. CBO finds that provider consolidation can increase prices in commercial insurance markets and can also increase public spending by shifting treatment toward more expensive settings or increasing service intensity.

A market in which a regional hospital system has enormous bargaining power is not transformed into a competitive market simply because the hospital is privately owned.

Similarly, price transparency is useful but insufficient if consumers have few meaningful alternatives. CBO has found that transparency can help consumers and purchasers, but its ability to lower healthcare prices is limited when provider competition itself is weak.

The economically defensible free-market position therefore cannot be:

Government bad. Market good.

It should be:

Use competitive markets wherever they can function. When they cannot, identify exactly why they are failing, correct that specific failure with the least distortion possible, measure the outcome, and stop interventions that do not work.

That is the foundation of the approach I believe we should pursue.

An Evidence-First Market Framework

Before passing a major economic policy, government should answer seven questions.

1. What Is the Failure?

Define the problem precisely.

Is it:

  • insufficient supply?

  • monopoly?

  • an externality?

  • information asymmetry?

  • poverty?

  • a public good?

  • a labor-market mismatch?

  • excessive regulation?

  • government-created scarcity?

If we cannot identify the mechanism, we should be extremely cautious about prescribing the remedy.

2. Can We Increase Supply First?

Before subsidizing a scarce good, remove artificial restrictions preventing more of it from being produced.

For housing:

Build more housing.

For healthcare:

Increase provider capacity.

For energy:

Increase reliable production and transmission.

For skilled labor:

Expand practical paths into skills employers are actually buying.

3. Increase Competition

Government should oppose both public and private restrictions on competition.

That includes:

  • corporate welfare;

  • unnecessary occupational barriers;

  • anticompetitive healthcare contracting;

  • incumbent-protection regulations;

  • politically selected tax advantages;

  • monopoly behavior; and

  • unnecessary barriers to market entry.

A genuinely free market protects the ability to compete, not the profitability of incumbent businesses.

4. Help People Rather Than Industries

When assistance is justified, assistance should generally follow the individual.

Portable and targeted support preserves consumer choice better than permanent subsidies designed around institutions or corporations.

A safety net should protect people from catastrophic hardship.

It should not become a permanent guarantee of revenue for politically connected industries.

5. Price Externalities

When an activity imposes measurable costs on other people, those costs should not simply disappear from the economic calculation.

Where possible, policy should cause those responsible for the external cost to internalize it instead of attempting to centrally manage every operational decision.

6. Publish the Opportunity Cost

Every significant bill should disclose:

What does this cost?

Who actually pays?

What behavior will it encourage or discourage?

What alternative use of these resources are we giving up?

A $10 billion regulatory burden remains a real economic cost even if it never appears as an appropriated federal expenditure.

A tariff remains a tax even if it is collected at the border.

A tax credit remains government-directed economic policy even if Congress calls it a tax cut.

7. Sunset and Measure

Programs should not become permanent merely because they exist.

Major interventions should contain:

Baseline → Objective → Measurement → Review → Sunset or Reauthorization

If a program cannot demonstrate sufficient benefit relative to its cost, it should change or end.

What This Means for Jobs

Our employment policy should begin by abandoning the idea that one national payroll number adequately measures prosperity.

Build a Local Economic Opportunity Scorecard

For every North Carolina county, publicly track:

Employment by industry → Labor-force participation → Median compensation → Wage growth → Housing cost → Healthcare cost → Transportation cost → Child-care cost → New business formation

That would tell us far more than a national unemployment rate.

Wake County and Cumberland County should not be assumed to have the same economy.

Durham can have some of the highest average wages in North Carolina while simultaneously experiencing declining covered employment.

Both facts matter.

Remove Barriers to Creating Work

We should examine regulations based on whether the public benefit exceeds the cost they impose on:

  • starting businesses;

  • hiring workers;

  • building facilities;

  • constructing housing;

  • providing professional services; and

  • investing capital.

Regulation should have to justify itself.

That does not mean eliminating safety standards.

It means requiring evidence.

Stop Corporate Welfare

Government should not tax one company so it can subsidize another.

Economic development policy should focus on making North Carolina broadly attractive for investment rather than negotiating special treatment for politically favored companies.

If an enterprise cannot survive competition without government protection, taxpayers deserve to know why protecting it is worth the cost.

Keep Trade Open—With Narrow Security Exceptions

Free exchange generally increases economic efficiency and consumer purchasing power.

But national security is a legitimate consideration.

Strategic trade restrictions should therefore identify:

the security vulnerability, the expected benefit, the cost to consumers and downstream businesses, the duration, and the exit condition.

Protection should be exceptional, measurable, and temporary—not the default economic model.

Make Work Pay

Benefit cliffs should be redesigned so that workers do not face situations in which earning slightly more money causes a disproportionate loss of assistance.

The objective should be straightforward:

The next hour worked should leave a person economically better off.

What This Means for Healthcare

Healthcare requires an equally disciplined approach.

North Carolina's Medicaid expansion now provides coverage to approximately 740,000 people, according to NCDHHS.

That is an important fact.

It is not sufficient to evaluate the program.

Insurance coverage and healthcare are not the same thing.

North Carolina already recognizes this distinction by separately publishing Medicaid expansion enrollment and utilization information.

NC Medicaid also distinguishes network adequacy—whether enough participating providers exist within geographic standards—from network accessibility—how long a beneficiary must wait to obtain an appointment.

That gives us the basis for a better measurement standard.

The Healthcare Evidence Chain

Every major healthcare program should be evaluated through:

Eligible → Covered → Provider available → Appointment available → Appointment completed → Treatment received → Outcome → Total cost

If a person receives a Medicaid card but cannot obtain a specialist appointment, coverage succeeded while access failed.

If an appointment occurs but the treatment produces poor outcomes, utilization succeeded while care effectiveness failed.

If outcomes improve but the cost rises dramatically faster than alternatives, affordability may have failed.

We need the entire chain.

Increase Healthcare Supply

Coverage expansion increases demand.

Economic logic therefore requires us to pay equal attention to supply.

North Carolina should continuously examine whether laws or regulations unnecessarily restrict:

  • physician supply;

  • advanced-practice providers;

  • telemedicine;

  • interstate practice;

  • training capacity;

  • facility expansion;

  • independent medical practices; and

  • new healthcare competitors.

Every restriction should have to demonstrate a public-health or safety benefit large enough to justify its effect on supply and competition.

Confront Provider Market Power

Free-market healthcare cannot ignore consolidation.

CBO has concluded that healthcare consolidation can increase commercial prices and public healthcare spending.

That requires serious competition policy.

Government should scrutinize:

  • anticompetitive mergers;

  • contractual restrictions preventing competition;

  • payment structures encouraging consolidation;

  • unnecessary facility fees; and

  • regulations that entrench incumbent providers.

Being pro-market requires being willing to challenge private monopoly power.

Make Prices Understandable

Patients should be able to know the expected price of a non-emergency procedure before receiving it.

But transparency must be usable.

Publishing millions of incomprehensible machine-readable numbers technically satisfies a transparency requirement while doing little to create consumer discipline.

A functioning market requires information people can actually use.

Maintain a Durable Safety Net

There will always be people for whom ordinary market mechanisms are insufficient.

Serious disabilities, catastrophic illness, extreme poverty, and other circumstances justify a safety net.

The debate should not be whether vulnerable people deserve care.

They do.

The question should be:

How do we provide that protection while preserving choice, increasing supply, controlling cost, and measuring whether people actually get better?

That should be the standard for Medicaid, Medicare, private insurance, and any future reform.

Where This Leaves the Three Approaches

The Democratic approach generally begins with:

Identify a social problem → finance or regulate a solution.

The Republican approach generally begins with:

Reduce taxes and regulation → encourage private production, while selectively protecting strategic domestic industries.

The traditional libertarian approach often begins with:

Reduce government → allow markets to operate.

Each contains something important.

Each is incomplete.

Our approach should instead be:

Identify the economic mechanism → remove artificial scarcity → increase competition → preserve useful price signals → correct demonstrated market failures → protect people rather than industries → measure outcomes → terminate policies that fail.

That is not simply smaller government.

It is more disciplined government.

A Simple Standard for Public Policy

Before I support an economic intervention, I want answers to these questions:

What problem are we actually solving?

What evidence demonstrates that problem?

What economic mechanism is causing it?

Can competition or increased supply solve it first?

If government intervention is necessary, what is the narrowest effective intervention?

Who pays for it?

What incentives does it create?

How will we measure success?

When will we stop if it does not work?

Republicans will sometimes have the right answer.

Democrats will sometimes have the right answer.

Libertarians will sometimes have the right answer.

And all three will sometimes be wrong.

That is precisely the point.

Public policy should not require us to decide which political team we trust enough to stop asking questions.

It should require evidence.

The Principle

My economic philosophy can ultimately be reduced to this:

Markets should determine ordinary economic choices wherever genuine competition can function. Government should protect individual rights and competition, maintain a durable safety net, correct clearly demonstrated market failures, and otherwise get out of the way. Every intervention should be judged by measurable outcomes, opportunity cost, and the incentives it creates.

For jobs, that means measuring whether people can actually build prosperous lives where they live—not celebrating national statistics that conceal local decline.

For healthcare, it means measuring whether people actually receive timely, effective treatment—not treating either insurance enrollment or government spending as proof of success.

And for government itself, it means accepting a principle that should not be controversial:

Good intentions are not evidence of good results.

Measure the outcome.