Unfree Markets

How Bidenomics works to relieve you of the oppressive burden of free choices...

(Source: Getty Images)

Bill Bonner, reckoning today from Normandy, France...

It’s the longest day of the year (in the northern hemisphere). Could it get even longer? Brighter? Sunnier?  

Why should we, the indispensable race, be constrained by nature? Aren’t we masters of it, not subject to it? After all, if we can set the world’s interest rates and its thermostat, what can’t we do?

So many breakthroughs, advances and improvements; we can scarcely catalog them, much less keep up with them. Stocks are up. Consumer price inflation is going down. After falling for two years, real wages are stabilizing. And the Russians are going to wave a white flag any day now.

And there’s Jake Sullivan. After advising Hillary Clinton and Barack Obama, he’s now at work for the Biden Team; every day on the job, he makes the world a better place.  

One Giant Step

Let us begin there…and look at a giant step forward for humanity. The Biden Administration has just said goodbye to the free enterprise system that was holding us back for so many years.  Now, we will have un-free enterprise; surely that will be an improvement.

Like it or not, you have to admit that capitalism is messy. That is its nature. It creates new wealth, but it destroys old wealth, too. You never know exactly which way it is going. But now, Sullivan tells us that he and his fellow elite apparatchiks are going to fix it. They know where they want to go. And they’re going to force America’s enterprises to take them there. The Wall Street Journal:

… laissez-faire is out, industrial policy is in. Markets allocate capital to achieve the highest return to private investors, but as Bidenomics sees it, they don’t take account of issues like climate change, fragile supply chains or geopolitical vulnerability. That is why Germany became dangerously dependent on Russian natural gas and China dominates the supply of many critical minerals and pharmaceutical ingredients.     

To correct these market failures, Bidenomics aims to direct private capital toward favored sectors via regulations, subsidies and other interventions. “Advocating industrial policy…was once considered embarrassing—now it should be considered something close to obvious,” Sullivan and Jennifer Harris, a colleague in both the Obama and Biden administrations, wrote in a 2020 essay in Foreign Policy magazine.

Under Bidenomics…U.S. foreign policy champions a range of economic interests, from workers’ rights to climate policy and tax compliance. Consumers and competition are not primary concerns.

Bidenomics accepts the value of markets but sees market failure all around.

Who Decides?

Let us simplify and clarify. People create wealth by providing goods and services to each other. Neither acts of Congress, agency regulations, or Presidential proclamations add a penny to our prosperity.  

Then, after the people have created wealth, they decide what to do with it. Or someone else decides for them. Sullivan is saying that people have failed to use their money the way he thinks they should. From now on, he says, the feds will be the deciders. 

We all know that this will make us poorer. The feds are terrible investors. They don’t know what they are doing. And it’s not their money. Neither theory nor experience – nowhere, at no time, by nobody – provides any reason for optimism.  

But money isn’t everything…and the well-meaning, pure-of-heart federales are aiming higher. They will help reduce inequality, keep the glaciers topped up, allow people to vote for the candidates the elite selects for them, and make sure their pals – deep staters, propagandists, indoctrinators, and crony capitalists – are properly rewarded.

And this is not just another sleazy power grab by the Democrats. Republicans are in on it too. The New York Times explains:

A rising generation of Republican politicians is more skeptical of the free market and more comfortable using government power to regulate the economy than the party has traditionally been…

Tomorrow afternoon, these four Republican senators — Cotton, Rubio, Vance and Young — will speak at an event on Capitol Hill that’s meant to highlight the emergence of a populist conservative movement in economics. The event is organized around a policy manifesto, called “Rebuilding American Capitalism: A Handbook for Conservative Policymakers.”

“We really like capitalism, but we recognize it’s not working right now,” said Oren Cass, a former aide to Mitt Romney and the executive director of American Compass, a think tank that published the manifesto.

A Rigged Economy

What a bunch of jackasses. The only thing wrong with free markets in America is that there aren’t any. They’ve been fettered with so many thousands of laws and regulations – including some 50 million pages of ‘classified’ documents – it’s amazing they work at all.  That’s why small enterprises find it hard to stay in business – they can’t afford a personnel department staffed by diversity lawyers…or an accounting office full of tax experts. Mom and Pop operations don’t have lobbyists in Washington looking out for their interests. Nor can they borrow money at the Fed Funds rate or pay their bills by issuing more stock. Instead, they pay real wages to real workers…and deliver real goods and services to real, paying customers.

The Feds have rigged the whole economy against the productive middle class. They pushed up asset prices with fake money lent out at fake rates. They caused inflation, so that now ordinary houses are so expensive that ordinary people can’t afford them. They lowered growth rates and productivity by discouraging real saving and investment. And they loaded up the federal government with $32 trillion in debt, so that next year, the interest will take up more money than the Pentagon.   

But take heart, Dear Reader. Happy days are here again…these same feds, Republican as well as Democrat, are no longer even pretending that US enterprises should be free.  

And even more good news, tomorrow. As we will see, a late, degenerate empire is incompatible with freedom and prosperity. And the feds are ridding us of both.

Regards,

Bill Bonner

Joel’s Note: According to data just released by the Census Bureau, America’s “Mobility Rate” has fallen to an all time low. That’s the percentage of the population that decides to up and leave for a higher paying job in the Big Smoke, to head west and try their luck at acting/bartending or just plain hit the road and move to a friendlier locale. Even within local and regional areas, Americans are finding it tougher to relocate.

From the Financial Times:

…the overall American mobility rate barely budged during the pandemic — which came during a multi-decade decline in population movement, reaching a record low in 2021. Exact figures vary by survey, but Americans are moving at roughly half the rate they were in the middle of the 20th century.

Bonner Private Research’s resident macro analyst, Dan Denning, was on the case from his own bolthole up in Laramie, Wyoming…

“Is this part of Imperial Decline too, a natural tendency to conserve and retrench...to find a bolthole?” he wondered in a private email to the BPR team this morning.

“Maybe. But I bet it has something to do with fuel prices and house prices and crime. All these people locked in 30-year fixed mortgages under 3%. Now they are closer to 7%. These people can't sell because they can't get the same house and the same interest rate.”

One could add record levels of non-dischargeable student debt… all time high credit card loans outstanding… a general pessimism about future employment prospects… societal tensions and civil unrest… political uncertainty, etc…

Whatever the causes (or mix thereof), the result is clear: Essentially, America is stuck.

The more the state is allowed to set policy – whether regulatory, restrictive or so-called “facilitating” – the fewer options voters typically enjoy. Government being naturally anathema to liberty, every facet of life that is subsumed by the Leviathan represents one more choice wrested from the grasp of free and voluntary people.

The ultimate endgame is the totalitarian state, where everything is either prohibited...or mandated. No thinking… no preferences… no individual choice necessary, or tolerated. Bidenomics is not there yet… but with the help of useful idiots like those over at the American Compass “think” tank, it’s certainly headed in that direction.

Dan’s weekly research note is delivered to BPR members every Friday. If you’re not already receiving his macro insights, consider finding a subscription plan that works for you below…