The term “Washington consensus” has been used for decades to describe widely held views among lawmakers regarding economic policy. Now, there is a new Washington consensus, a radical change in the views of elected officials in recent decades. It is important to understand the origin of these ideas and how they impact public policy.
The origin of the original Washington Consensus can be traced to the classical economists Adam Smith and David Ricardo. Classical economists laid the foundations for policies of free trade and investment in a global trading system. These ideas convinced the British government to reject mercantilism, and other countries, including the United States, followed the British lead. Policies of free trade and investment launched the era of modern economic growth in the 19th and early 20th centuries.
However, mercantilist policies were given new life in…
