Tyler Cowen warns that Trump is indeed yanking America down the road to socialism. Two slices:
The word socialism is overused in political debate, but during his 10 months in office, Trump has certainly put us on the path toward it. And in case you’re wondering, this is a bad thing: American business has been world-beating for a long time now, in large part because we avoid these sorts of public-private arrangements, which are common in faltering European economies. A dose of government ownership and the associated politicization are not what American industry and innovation need.
There’s a reason we have a private sector to begin with, which is that market realities force companies to efficiently deliver good products at a reasonable price, or else go out of business due to competition.
Now think of everything you know about the federal government and how it operates. Do you observe our own government being successful in cutting costs? Keeping its debt and finances in line? Enforcing standards of accountability? It is laughable to even pose such questions. So given those realities, why should government ownership of private corporations be such a good idea?
To an outsider, the government owning 10 percent of a company might sound like small potatoes. But, typically, a 10-percent share is significant enough and concentrated enough to give that shareholder a large and often decisive voice.
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A parting question: What do the Republicans expect will happen the next time the Democratic Party assumes power? Will the Democrats use their equity shares to enforce more DEI? Pass new green energy requirements? Shift contracts toward blue states? Penalize right-leaning CEOs—or push them to shut up?
The rejoinder from the right is that this is how Democrats already behave, and there’s some truth to that. But empowering the government further in these areas is a terrible remedy. That is bound to make things worse, subjecting all sorts of companies to rule by federal fiat. That won’t just be bad for these companies and their ability to compete. It will also prove catastrophic for freedom of speech.
The GOP is traditionally the party that resists this kind of federal overreach into the private sector. Now that it has abandoned that principle, it also has established a precedent for a future left-wing government to take control of America’s most powerful companies. I predict that Republicans will not enjoy the final result.
Not even shutting down the government can stop Republicans from forcing their way into corporate boardrooms these days.
The federal government is, at the moment, incapable of completing its most basic and routine task—passing a budget—and yet it is simultaneously expanding its portfolio to include a 10 percent ownership stake in an Alaskan mining company.
Stefan Bartl warns of the “tech-industrial complex.” A slice:
The line between policymaker and producer has all but vanished; the businessman and the bureaucrat are now one and the same. This is no longer a free market but a semiconductor cartel, where government, regulators, and industry titans coordinate the future of computing power. By combining subsidies, ownership stakes, and regulation, Washington leaves little room for genuine competition. This “tech industrial complex” locks in incumbents, crowds out rivals, and turns policy into corporate protection.
Eric Boehm is correct: “Trump’s planned farm bailout should require Congressional approval.”
When government offers trade ‘protection’ on national-security grounds, be aware that every industry under the sun will lobby for such protection. Case in point: U.S. manufacturers of decorative hardwoods assert that they are critical to U.S. national security. (HT Scott Lincicome)
My Mercatus Center colleague Liya Palagashvili rethinks monopsony power in “a multi-earner economy.” A slice:
More Americans are earning income from multiple sources—driving for Uber part-time, running an online business, freelancing, teaching on the side, doing high-level consulting. This isn’t necessarily about people being desperate for extra money (though for some it is). It’s about the fundamental structure of how people earn and think about household income. In the 20th century, it was one job or one career for your whole life. In today’s economy, jobs and careers are more fluid, and up to 60 million Americans are earning income from many different sources.
Of course, the experience varies widely—for some workers, juggling multiple jobs is exhausting necessity, not empowering choice. But for millions of others earning supplemental income by choice, the dynamics are different.
I’m starting to believe that this shift into the multi-earner economy is reducing monopsony power in ways we haven’t fully appreciated yet (not for all workers, but for many).
When you have multiple income streams, you’re simply less dependent on any single employer. If your full-time job cuts your pay or becomes untenable, you already have other revenue coming in—and you already have relationships with other clients or platforms. The cost of walking away drops dramatically.
That’s not theoretical leverage. That sounds more like real bargaining power.
Mark Mix justly criticizes Sen. Josh Hawley’s (R-MO) penchant for carrying water for labor unions. A slice:
The real injustice in union bargaining has nothing to do with the time it takes. The deeper problem is that union contracts apply to every unionized worker, even though many have legitimate reasons to want to reach agreements with their employers directly.
Some workers have enough merit to be paid more than their one-size-fits-all union contract allows. Others may object to the union’s politics or feel the union doesn’t adequately represent them.
Forced unionization harms these independent-minded employees, a problem that passing statewide right-to-work laws outlawing compulsory union payments addresses. Real national labor reform should ensure that union representation and paying union dues are voluntary for every American worker.
Messrs. Hawley and [Sean] O’Brien would prefer to supercharge the coercive status quo. Under the Faster Labor Contracts Act, if a union contract isn’t reached after 90 days of negotiation and 30 days of mediation, an arbitration panel overseen by federal bureaucrats would have the authority to draw up its own agreement and impose it on all parties for two years.
Does anyone think those bureaucrats would do a good job? They’d be required not only to understand a business’s present needs, but also to anticipate future challenges. Putting businesses into a two-year bind crafted by uninformed arbitrators risks destroying companies and leaving employees jobless.
Eager to cozy up to union bosses, Mr. Hawley and other supporters of the bill take their cues from American Compass, a think tank that accepts money from the left-wing Hewlett Foundation given to “move conservative thinking in a more worker-friendly direction.” American Compass brought Mr. O’Brien on a podcast to promote Mr. Hawley’s bill, while Daniel Kishi, an American Compass adviser, praised the bill as “an important step in the right direction.”
Mike Solon ponders the stakes of the government ‘shutdown.’ Two slices:
For Democrats in Washington, the pencils all lack erasers and none of the calculators have a minus button. It’s always addition, never subtraction. The Biden-Schumer-Pelosi spending surge generated the highest inflation in 40 years, the highest interest rates since the subprime crisis, and the loss of the White House, Senate and House. Democrats still insist on no reductions in the post-pandemic spending that fueled their defeat.
Demands to increase healthcare spending are a charade to mask the Democrats’ fury over Republican tax reductions and spending cuts. After the One Big Beautiful Bill Act extended the 2017 tax cut, at a projected cost of $4.5 trillion, and cut spending by $1 trillion, Democratic activists insisted on a futile gesture. Senate Minority Leader Chuck Schumer has obliged, shutting down the government and calling the new law the “Mount Rushmore of fiscally irresponsible bills.”
Have Republicans been excessive in their tax and spending cuts? Hardly. Democrats may point to the Congressional Budget Office’s original budget projections but only by including the CBO’s revisions do the facts become obvious. Spending, not tax cuts, remains the driver of federal debt.
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To slow America’s pace on the road to bankruptcy, Republicans must stop Mr. Schumer’s plan. Acquiescing to his shutdown demands would mean not one dime of the post-pandemic’s massive spending surge that generated high inflation and keeps interest rates high is ever recalled.
