Biden administration seeks to control banking, technology, transportation to serve a woke agenda
Wars, famines and pandemics elicit massive government responses. The state must marshal whatever it takes or risk conquest, violence and state entropy. An equally significant challenge is to roll back the Leviathan when the threat passes.
The U.S. government was successful in accelerating the development of COVID vaccines and despite inconsistent choices among the states and recently inept messaging regarding masks from the Center for Disease Control, we will endure the Delta variant without too much disrupting our economy again.
However, congressional Democrats and the Biden administration want to extend and make permanent temporary programs such as the refundable child tax credit and enhancements to Obamacare. And impose ever greater control over private businesses and personal choices by imposing questionably constitutional racial preferences when allocating benefits.
As Saul Alinsky said and former Chicago Mayor Rahm Emmanuel appropriated, “never let a crisis go to waste.”
Embrace critical race theory
Tapping pre-COVID frustration with mismanaged globalization, income inequality and monopoly abuses, Biden administration actions and proposed policy change appear to embrace, more or less in whole, critical race theory and the policy prescriptions that follow its analyses.
The administration proposes a massive power grab through a 35% increase in federal spending over pre-pandemic levels and federal control of the plumbing under our economic and political system—banks that decide who gets credit, social media that provide the public square for political ideas, and transportation systems that move goods.
The 20th century was the stage for a great competition between authoritarian socialism, which the Soviet Union and initially China ran badly, and post-Keynesian democratic capitalism—free markets that governments supported with politically independent central banks and antitrust laws that gave priority to price competition and consumer welfare.
The latter substantially relied a lot on fast-moving technology to discipline monopolists. Remember when Microsoft MSFT,
Arbitrary control
The appointment of more politically progressive governors to the Federal Reserve Board could mandate the steering of bank credit to progressive constituencies—euphemistically characterized as regulating consistent with our values. And the new aggressive leadership at the Federal Trade Commission and antitrust division at Justice could result in arbitrary control over technology platforms and internet commerce.
At the FTC, Chair Lina Khan has jettisoned the consumer welfare and lowest price test in favor of the vague criteria that would permit the staff to investigate any business practice she deems offensive. The Surface Transportation Board and Federal Maritime Commission are being encouraged to regulate or substantially influence prices charged by railroads and ocean shippers.
Banking, technology and transportation all rigged to woke values? But what people buy and where businesses invest is driven by too much complex information—much more than state bureaucracies can amass and process effectively. Failure too often results—missed opportunities for innovation, shortages, inefficiency and flagging incomes for workers.
The Leviathan needs well-positioned loyalists when the bureaucracy fails to deliver promised prosperity, and progressives know how to cultivate them.
Wall Street gets a pass
Most every new idea as it matures must run through a narrow channel of investment bankers and money managers in New York. They control access to large buyout financing and initial public offerings when startup entrepreneurs and angel investors cash out. They possess working control of proxies for the voting shares of our largest corporations and loans for workouts for flagging enterprises through private equity.
Vast fortunes are made through this concentration of financial power and the carried interest—a privileged tax status that lets these institutions pay wages to financial engineers that are subject to radically-lower capital-gains rates.
Democrats talk about breaking up Big Tech and curbing railroads, but they never seem to breathe a word about breaking up J.P. Morgan or disciplining BlackRock, because those do their bidding by promoting the progressive agenda to establish control over the allocation of capital. Democrats wax relentlessly about ending the carried interest, but one tax bill after another becomes law without addressing it.
This column would not be surprised to see Lina Kahn and congressional Democrats pursue more aggressive commitments from social media to limit conservative voices under the guise of regulating dangerous false information in negotiating “reformed” antitrust rules for Big Tech.
The feudal lords controlled the mills that turned peasants’ grain to flour. Controlling the choke points—finance, technology platforms and transportation—is how the new Leviathan will rob liberty as surely as time steals youth.
Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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