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Tuesday, July 20, 2021

ANALYSIS/OPINION:

Every great crisis elicits a massive expansion of government — wars, crop failures, financial meltdowns, and pandemics threaten security, public health, and livelihoods. The state must respond or risk conquest, chaos, and violence. The real challenge is to curb the Mandarins when threats pass.

COVID-19 required governments to step forward to accelerate the development of vaccines, enforce social distancing, and support businesses and families. The Delta variant likely will be contained by booster shots. Still, Democrats want to create a modern Leviathan by making permanent the temporary increases in the Child Tax Credit, Obamacare, and the like, and grasping massive unlegislated control over private businesses, and imposing unconstitutional racial preferences when allocating benefits.


As Saul Alinsky said and former Chicago Mayor Rahm Emanuel appropriated, “never let a crisis go to waste.”

Tapping pre-COVID frustration with mismanaged globalization, income inequality, and monopoly abuses, the Biden Administration embraces Critical Race Theory and the 1619 Project narrative to explain injustice and cultivate divisive racism and sexism that sets Americans quarreling among themselves.

The chaos permits 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. All to establish the theology of woke as a state religion to compel what we can think, say, and do.

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, which the government supported with politically independent central banks and antitrust laws that prioritized price competition and consumer welfare.

The latter mostly relied a lot on fast-moving technology to discipline monopolists. Remember when Microsoft dominated software, but smartphones and apps upended that model. IBM accomplished a monopoly on mainframes but was displaced by cheap PCs and then Amazon’s cloud.

The Biden Administration’s power grab will be through massive spending on social programs that makes nearly every household in America dependent on Democratic politicians for the manna to obtain health care, raise children, and essentially live decently. The appointment of left-wing governors to the Federal Reserve Board to mandate the steering of bank credit to Democratic constituencies—euphemistically characterized as regulating consistent with our values. And radicals at the Federal Trade Commission and other agencies to exercise arbitrary control over technology platforms and commerce.

At the FTC, Chair Lina Khan has jettisoned the consumer welfare and lowest price test favoring the vaguest criteria that would permit her staff to investigate any business practice she deems personally offensive. The Surface Transportation Board and Federal Maritime Commission are directed to regulate prices charged by railroads and ocean shippers.

Banking, technology, and transportation are all rigged to woke values, but what people buy and where businesses invest is driven by complex information such as state planning always fails—useless products, shortages, inefficiency, technological stagnation, and flagging incomes.

The Leviathan needs well-positioned state loyalists as its bureaucracy fails to deliver promised prosperity, and the likes of Nancy Pelosi and Chuck Schumer know how to buy them.

Almost 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 buy-out financing and initial public offerings when start-ups cash out. They possess working control of proxies for the voting shares of our largest corporations and loans for workouts of flagging enterprises through private equity.

Vast fortunes are made through this concentration of power and the carried interest—a privileged tax status that lets financial institutions pay wages subject to radically lower capital gains rates.

Democrats talk about breaking up Big Tech and curbing railroads. Still, they never seem to breathe a word about breaking up J.P. Morgan or disciplining BlackRock because they do their bidding by shoring up the woke values necessary to sustain the hypnosis over voters. Democrats wax relentlessly about ending the carried interest, but one tax bill after another becomes law without addressing it.

And now you watch how Lina Kahn and Congressional Democrats will obtain continued commitments to censor conservative voices—read stifle criticism and dissent of their new order—in negotiating “reformed” antitrust rules for Big Tech.

The feudal lords controlled the mills that turned peasants’ grain into 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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