To understand the populist revolt against free trade and other pillars of mainstream economics – a revolt that US President Donald Trump harnessed to his political ambitions with remarkable skill – one must look back to the anti-austerity movement that followed the 2008-09 Global Financial Crisis (GFC).

In the aftermath of the GFC, anti-austerity advocates began arguing that the so-called “government budget constraint” is less of an economic necessity than a malign intellectual construct that cruelly restricts social spending and transfers. In their view, governments – at least in adva...