King Biden’s Industrial Edict Makes Bureaucracy the Law of the Land
Posted July 12, 2021
Karl Marx, ever the Hegelian mystique, believed that history takes a determined course irrespective of human will. We can push it along towards its end state, but we cannot change its course. His theory was mostly bullocks, but he sometimes stumbled on truth. One of his most famous observations says that “History repeats itself, first as tragedy, second as farce.”
The quotation came immediately to mind on the news of Biden’s new executive order on industrial organization, an edict that includes 72 new “initiatives” and enlists more than a dozen agencies. Some of the order seems innocuous enough, while other parts seem absolutely dangerous. Depending on how agencies deploy the mandate, it could play out to be the closest thing we’ve seen since World War II to near-comprehensive industrial planning.
The trick here is that the order itself does nothing on its own. Instead, it instructs government agencies to exercise more aggressive power in overseeing business with a generalized goal of striking down anything seen as uncompetitive – or just anything that the people in power don’t like. The mandate is extremely broad. It is even retroactive, for example, demanding that agencies “challenge prior bad mergers that past Administrations did not previously challenge.”
This is not really about establishing “competition,” a word that when invoked by government usually means its opposite. To government, “competition” is an end state, not a process. Their models determine if it is exists, and grant them power to crush enterprise if they decide that it does not.
This executive order is about establishing many executive department agencies as new centers of power and control over mergers, acquisitions, contracts, and industrial practices. It builds a new minefield for litigation against enterprise, and presumes that government knows better how to manage economic life than the people with a financial stake.
In other words, this is no longer about only the Justice Department and the Federal Trade Commission. This order seems to enlist the entirety of all executive agencies in comprehensive economic oversight.
With history as our guide, we know the results. The institutions that survive in such a world are the largest players with the most political access, whereas the innovative startups and small businesses face a new thicket of regulatory compliance and ultimately give up. That’s the history of antitrust in a nutshell. Regulatory agencies are already full, captured by the largest players in the industries they control. This order will supercharge this problem.
This is how an attempt to impose “competition” actually ends in creating cartels.
New Deal Redux
This isn’t only about Progressive-Era trustbusting. The order is an attempt to recapture the ethos of the New Deal, a period that American culture romanticizes as the nadir of government planning. Power elites ruled the economy in cooperation with industry and labor, and saved the world (except that the economy did not really recover until after the war).
The industrial planning of the New Deal was the tragedy. Biden’s will be the farce. At the very time when US enterprise desperately needs freedom, openness, and the ability to experiment and adapt to myriad possible crises on the horizon, this push introduces a new legal uncertainty and fear in multiple industries that are supposed to be drivers of growth.
The executive order essentially covers everything and everybody:
“Among the White House’s targets are agriculture, healthcare, shipping, transportation and technology, as well as labor practices that the administration says limit wages and mobility. The executive order also seeks to promote affordable broadband and boost consumers’ rights to repair products they own.”
Beyond that, the order essentially asserts the right of the White House to directly manage the industrial organization of the US economy – a push we’ve not experienced on this level since the 1930s. Back then, the National Industrial Recovery Act (executive action issued in 1933) regulated everything from business competition to the price of dry cleaning. Two years later, the Supreme Court struck it down as an abuse of power.
Bad Time for Central Planning
Some aspects of the executive order will be popular, such as the promise to rein in big tech. Republicans agree with this one. Donald Trump the other day hit it out of the park with his likely futile lawsuit against Twitter and Facebook for having blocked his account. Both parties are fed up with big-tech power. Their censorship and pace of consolidation has energized politicians and the public to seek a fix.
But let’s talk about reality. There is zero chance that the Biden administration will undertake some gigantic regulatory attack on big tech in a way that is contrary to the interests of the most powerful players. It’s absurd to believe otherwise. The promises to re-impose net neutrality will hobble competition in wireless providers and consolidate the industry around incumbent players.
In one of the most implausible shifts in American politics in my lifetime, big tech largely supported Biden in the election, and used all its power to unseat a hated president. The Biden administration owes them in a big way. All the rest is theater, just as it was when FDR denounced the titans of business before inviting them all to enjoy a crony relationship with the White House.
It will be the same here.
It’s true that anti-trust is at the heart of the executive order. The courts have thus far refused to rule against big tech because of legal precedent in the economic realm. The proof of exploitation has usually come down to whether and to what extent consumers are harmed by an industry. That’s nearly impossible to document in an industry that is consumer facing (but for the censorship part) and offers so much of its services for free.
Frustrated with the courts, the Biden administration empowers regulatory agencies themselves to decide what they do and do not like. An example concern is product offerings on sites like Amazon or any online retailer. The order restricts them from creating products that compete with other sellers, a practice that has driven down prices on many staples. The implications here are awesome, putting agencies in charge of whether online stores can offer their own brands and reduced prices.
The Horse Is Dead; Beat It More
In the past year, our governing elites attempted to replace the energy of enterprise with a wild frenzy of spending, debt, and money printing. That the effects of lockdowns could be muted or blotted out by government action was always a fantasy. With the reopening, we saw a burst of optimism that comes with the realization that it surely cannot get much worse. Good times surely follow the worst of times.
In truth, no growing economy can survive on government support alone. You need real enterprise operating in an open marketplace. Nothing threatens that more than another burst of legal uncertainty and regulatory dictatorship.
The Biden administration will not just leave well enough alone, letting matters stabilize into normalcy, fixing bottlenecks, allowing recovery from the astonishing disaster of the last 16 months. Instead, the administration is on a tear to recreate some fantasy of the New Deal that White House wokesters studied in college.
Let’s put a fine point on it. Do you want the same government that imposed health mandates in 2020 to be charged with reorganizing American industry to achieve what it calls competitive outcomes? Will this end well?