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Aug. 20, 2021, 10:24 a.m. EDT

Biden administration seeks to control banking, technology, transportation to serve a woke agenda

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Peter Morici

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 c hild 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 20 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 /zigman2/quotes/207732364/composite MSFT -0.51% dominated software, but smartphones and apps upended that model. IBM /zigman2/quotes/203856914/composite IBM -0.35% accomplished a near monopoly on mainframes but was displaced by cheap PCs and then Amazon’s /zigman2/quotes/210331248/composite AMZN -2.90% cloud.

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.

/zigman2/quotes/207732364/composite
US : U.S.: Nasdaq
$ 309.16
-1.60 -0.51%
Volume: 17.45M
Oct. 22, 2021 4:00p
P/E Ratio
38.38
Dividend Yield
0.80%
Market Cap
$2333.15 billion
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/zigman2/quotes/203856914/composite
US : U.S.: NYSE
$ 127.88
-0.45 -0.35%
Volume: 11.58M
Oct. 22, 2021 4:00p
P/E Ratio
24.20
Dividend Yield
5.13%
Market Cap
$115.02 billion
Rev. per Employee
$196,163
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/zigman2/quotes/210331248/composite
US : U.S.: Nasdaq
$ 3,335.55
-99.46 -2.90%
Volume: 3.14M
Oct. 22, 2021 4:00p
P/E Ratio
58.13
Dividend Yield
N/A
Market Cap
$1739.63 billion
Rev. per Employee
$297,430
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