Free Market Economics is the foundation of Professor Steve H. Hanke's intellectual and policy work. Drawing from classical liberalism and the Austrian School of Economics, his approach emphasizes that unlike socialist, fascist, or interventionist systems, free markets and economic freedom lead to economic prosperity.
Prof. Hanke’s Free Market Economics at a Glance
Professor Hanke's views on free market economics are summarized in the autobiographical piece, “A Life Among the Econ,” which was published as a chapter in …
Economic Freedom and Prosperity
One of the early studies that measured the the positive relationship between economic freedom and economic prosperity was published by Professor Hanke in the Cato Journal with Stephen Walters in 1997, “Economic Freedom, Prosperity, and Equality: A Survey.”
Prof. Hanke’s Trade Policy
On Hanke’s trade policy position, as Gary Huffbauer put it, “Professor Hanke takes the high road: He argues for unilateral U.S. trade liberalization…”
- See my article in the Cato Journal (1983/1984), “U.S.-Japanese Trade: Myths and Realities”
Hanke’s article with Ed Li applies the classic savings investment identity to the trade deficit myth for the first time. When savings in a country are less than investment, a trade deficit results. When savings exceeds investment, a trade surplus results. Put another way, when consumption + investment + government spending exceed GDP, a trade deficit results. When consumption + investment + government spending are less than GDP, a trade surplus results. When it comes to the USA, the trade deficit that the country has had since 1975 has been due to Americans saving less than they invest. These trade deficits are not made by foreigners who engage in currency manipulation and other nefarious activities. US trade deficits are made in the good ol’ USA.
- See my article in the Journal of Applied Corporate Finance (2019), “The Strange and Futile World of Trade Wars”
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Key Publications
Selected papers and books where Hanke develops and applies his free-market views on topics ranging from exchange-rate regimes to privatization and monetary reform.
Explore This Section
- Monetarism — Hanke's monetarist framework: quantity theory, Divisia aggregates, and rules-based policy
Recent Publications (2025–2026)
- U.S. Trade Deficit Is Homegrown — Op-ed, National Review
- Why Does Washington Hold So Much Land? — Op-ed, WSJ
- Trump's Tariffs & Trade Deficit Flaws — Op-ed, Fortune Magazine
- Mar-a-Lago Accord for the Trash Bin — Op-ed, Fortune Magazine
- Tariffs & America's Exorbitant Privilege — Op-ed, Fortune Magazine
- U.S. Trade Deficit: Back to Basics — Op-ed, Fortune Magazine
- Ending Trade Deficit with Tariffs Is Impossible — Op-ed, Fortune Magazine
- Trump Tariffs as National Sales Tax — Op-ed, Fortune Magazine
- Trump Tariffs: Economic & Legal Ignorance — Op-ed, Fortune Magazine
- Tariff Tantrum at State of the Union — Op-ed, Fortune Magazine
Related Topics
- Monetarism — The monetary framework at the core of Hanke's economics
- Currency Boards — Rules-based monetary institutions
- Dollarization — Replacing failed currencies with stable ones
- Hyperinflation — The consequences of monetary mismanagement
- Currency and Commodity Trading — Applied market economics