Quietly but at an accelerated pace America is creeping towards socialism. The allocation of capital is more and more being decided by the concentrated regulatory power of the Biden White House and the vast unelected bureaucracy who it dictates ideological directives to. As such, economic freedom where the free movement of capital is allocated to where it is most productive, is now fleeting. Americans are having less say in policies and rules which will affect our lives in every way such as our economic, social and even national security well being. More so, the traditional capitalists in the corporate and asset management world who normally would counter balance big government has instead colluded with it.
Private companies are allocating a higher percentage of their capital to product portfolios dictated by the government regulations or enticing taxpayer subsidies instead of market conditions. Asset managers have also abandoned their fiduciary duty to allocate private investors capital from where they should gain maximum return or economic viability, and instead based on government regulations such as ESG ( Environment and Social Governance), or again taxpayer funded subsidized industries favored by the government which artificially boosts value and thus stock prices. Like many previous economic bubbles and busts, it involves the government forcing the misallocating of capital with the compliance of corporate leaders.
We are becoming an Amerisocialist nation. However, a major legislation and the need for public awareness of the principles around it could slow and ultimately reverse this trend, and return crucial governing decisions to the people as the founders intended. Last June, Republicans in the House passed the REINS Act ( Regulations from the Executive in Need of Scrutiny Act) which would require Congressional approval or rejection on every major regulation that is defined as costing $100 million or more per year that is advanced by executive agencies.
Aptly described by Nick Stehle from the Foundation for Government Accountability in a New York Post Op-ed, "Such democratic accountability stands in stark contrast to the current system, which can best be described as ' regulation without representation'. Thats fundamentally un-American."
However, GOP presidential candidates and the Party need to bring stronger public awareness about the REINS Act and the context of why it is necessary to actually protect democracy and the ideals of the American Republic by assertively making it apart of the GOP 2024 election campaign platform. Without the GOP majorities in both the House and Senate and a Republican President, this legislation may not go anywhere especially with the current record of Democrats persistence of ignoring basic economics, their hastened politically-subsidized economy, and reckless regulatory assaults.
The playbook for America's Socialism creep is similar to socialist and Marxist ideas before. It is cloaked in a virtue of providing a common good for equal results by enabling a concentration of power and decision making by the state. However there are stark distinctions to this new iteration of Amerisocialist experiment which seeks to fundamentally uproot and replace the original American experiment. In order to make it more palatable to a innately freedom loving society both young and old, the word 'socialist' is rarely or ever used as it would raise red flags of previous historical references. Instead words such as 'equitable' 'sustainable', 'climate crisis' and 'diversity' are used in the contexts of mission statements or acronyms as a preface of purported virtuosity.
As opposed to historical socialist movements that pandered mostly to the working class to surrender power to the state, Amerisocialism appeals to the elites who have already have vast influence of directing or managing trillions of dollars of capital whether their own or of others, entrusted to their management so they can coral it towards the direction of the government determined causes while ignoring pragmatism. In return, despite the prospects of viability, the government promises to underwrite it with subsidies to guarantee favors and continued wealth creation for the elites while the elites in cyclical fashion reward officials with donations. Elites also get a sense of moral superiority as their public status is elevated as being part of the 'greater good' and literally earn social credit points such as from ESG from the government that enhances their status and economic standings. The catalysts for all these elements to work in sync is that there must be crises or emergencies so the general public surrender absolute authority to the government to break laws, uproot established norms and remove freedoms. Once allowed, the government will then continue to create 'emergencies' to break laws, remove established norms and freedoms.
The Covid-19 pandemic was the accelerant of Amerisocialism. It inspired the thought and allowed practical examples of government commandeering capital, removing freedoms in name of a common good and censoring undesired speech called ' misinformation' to defeat the pandemic. An underlying aspect of Amerisocialism is that worse than having questions that cannot be answered, there are 'answers' that cannot be questioned. With the diminishing ability to use Covid-19 as a crisis, the same context to control vast elements of the economy and society was transitioned to using Climate and identity politics as the 'existential crises' to allow the continuation and expand of doing so.
Amerisocialism became the basis to defy basic economic principles for the ideological grasp of attending to the embraced crisis of Climate Change and the Green Industrial Complex behind it. One of President Biden's first action was to start a war on a major factor of production, energy. He cancelled the Keystone pipeline and signaled to American energy that he was out to coming for the rest of it. He also signaled to elites in asset management and banking directly with regulation to do the same. Thus many in asset management started forming pacts like ClimateAction 100+ to urge divesting from American fossil fuel energy and find ways to punish it. Some of these companies still manage billions invested in foreign oil and coal industries that supply China. He also prolonged employment benefits way longer than necessary while the country was coming out of Covid. Basic economics says if something or someone causes the scarcity of the factors of production such as energy and labour, their costs will go up as supply gets more limited. More so, if it happens when there is a spike in demand such as after the pandemic, when demand outstrips supply and too much money start to chase too few goods, this is a recipe for inflation.
As America was coming out of Covid, growth was 6% while inflation was less than 2%. The Amerisocialism of Bidenomics started to reverse those numbers and that trend even before Russia's war on Ukraine last year which helped to exasperate the worldwide energy shortages and prices. Europe had already self-inflicted energy suicide and vulnerabilities from their own Eurosocialism of climate alarmism by curbing their domestic fossil fuel and even nuclear power sources which inevitably led to a dependence on Russian oil and gas.
Instead of proven supply side economics which would incentivize market based productivity and growth, the Biden administration has over relied on the Federal Reserve to tame inflation through rising interest rates which hasn't had a substantial desired effect. This manufactured crisis of runaway inflation has led to the Amerisocialistic ideas of Bidenomics on steriods to steer even more government mandated 'investments', reckless ideological spending and a misallocation of capital away from where they otherwise would be more productive on a scale never seen in America's history. Many of these laws and directives are being made by 2.1 million unelected bureaucratic officials in various agencies who face no accountability to the american people and keep their jobs no matter the damaging results. Most are so vast that the average American cannot pin point the exact policy that directly affect certain crucial aspects of their lives. One of the most damaging aspect of any socialism is that because it creeps in rather than overnight, the source of its damaging tendencies often are not noticed till it has been firmly established and thus difficult to reverse. Only the REINS Act can return the decision process to the American people so we can identify such threats and prevent them before they cause irreversible damage.
President Biden and Democrats have already dictated more regulatory costs on the economy than any administration in recent history. According to University of Chicago economist and Prof. Casey Mulligan, Biden's regulatory rules cost American households $5019 annually, which is 15% more than Obama's $4353 annually while under Trump regulatory costs where reduced by $2636 annually. On party lines last year Democrats passed the mis-named Inflation Reduction Act (IRA) which was really a cover for their ideological version of the Green New Deal which he implied recently. Trillions of dollars of tax payer funded subsidies and tax credits are being doled out in the name of controlling the climate which enticed companies to get apart of the pie to distort investments in areas that may not be productive or have profitable return. The opposite of economic freedom. First Solar will take in $710 million this year for its solar panels which is 90% of its operating profit (distorting how profits should be defined). Over $4 billion of Teslas profit really is from selling regulatory credits to traditional car makers who are forced to buy them to meet the government's EPA standards so they can make a profit selling gas powered vehicles. After Ford received $9.2 Billion in DOE loans for two battery plants it was laying off 3000 people and having massive losses due to selling EV sales. Most auto companies are directing investments in product portfolios not based on market demand but to meet EV mandates. Even oil and gas companies are investing in subsidized green energy and forgoing investment in viable traditional oil and gas. Goldman Sachs estimates that the EV subsides that were scored in the IRA to be $14 billion will actually be $1.2 trillion more than the CBO's estimate because they are open ended. China's EV bubble spiked by its subsidized economy is starting to bust with thousands of unsold EVs. See Bloomberg's article China's Abandoned EV Graveyards. Amerisocialism is about imitating communist and socialist policies no matter how often they are proven to fail.
Amerisocialists want to take away the fundamental decision and choice of what powertrain powers vehicles and force EV transition even if its not economically or scientifically viable or cost effective. Biden's Transportation Department proposed a 696 page rule raising corporate fuel economy (Cafe) standards that would effectively require 100% of new cars to be electric by 2032. The Biden administration also proposed a 236 page revision to the National Environmental Policy Act (NEPA) with guidelines to require that federal agencies consider climate change and " environmental justice" in project reviews. Consequently this empowers China who controls over 80 percent of the world's limited resources to make EV batteries and to transport electricity such as copper. This is while China is also making steps to secure reliable supplies of fossil fuels very often extracted with very low environmental standards. Ironically, communist countries are doing more to enable and access efficient or reliable sources of energy than capitalist or 'free' first world countries.
Yet another reason the REINs Act is necessary to protect Americans. The Amerisocialist nature of Bidenomics also wants to get rid of another basic principle and most important concept of economics: Opportunity Costs. This is the cost of the opportunity lost or what would have happened if the resources or capital had not been used for a certain purpose such complying with federal regulations and mandates. The White House Office of Management ( OMB) is proposing to phase out regulatory cost/benefit analysis to further unleash federal regulators to have been more control of the economy. The original opportunity cost guidance was meant to protect taxpayers or American voters by requiring that any proposed regulation justify its cost based on certain criteria and serve as a check to prevent exact runaway regulatory assault that is happening now. The new Biden OMB rule would redefine "significant regulatory action" to be one that has a $200 million annual economic cost, up from $100 million annually. The cost side is then subjected to accounting gimmickry that reduces the apparent impact on the U.S economy and society. (See: Regulators Gone Wild - WSJ)
A practical example of opportunity costs can be illustrated by a topic in my previous article: Asset Manager's Misguided EV Bet to Oust Toyota's Chairman. Toyota which has resisted the government and asset management class intimidation to go all electric has outlined the inconvenient facts that the minerals to make one EV battery could instead make 90 hybrids, and those 90 hybrids reduce the carbon output over their lifetimes 37 times more than ONE single EVs lifetime. Both government officials and asset managers tried to oust Akio Toyoda off the company's board for stating this fact because so much money is tied into EV mandates and subsidies that benefit them and their donors plus spiking stock prices. Since the premise behind man made climate change is primarily due to carbon emissions, this is one example that the Amerisocialist control of allocation of capital to mandate EVs is grossly misdirected, misconceived and economic malpractice based on false premise. The opportunity cost of the EV mandates is that you could have 90 cars produced that has benefit of being 37 times cleaner while being less expensive and practical for a customer compared to one EV. Competition and innovation has also made the conventional internal combustion engine increasingly efficient and there are still more ways it will evolve in that direction. The REINS Act could evaluate facts such as these so the Americans could re-claim the choice of what they drive and most importantly prevent trillions of mis-allocated capital to fundamentally transform the economy and transportation industries for impractical and unscientific goals. In addition to actually allowing resources going to where they are more realistically environmentally friendly, it would make us less vulnerable to a Chinese dominance of critical minerals and supply chain disruptions.
The inability Republicans and conservatives to effectively communicate awareness of their policies, why they are a benefit and to counter false narratives, for too long ceded an advantage for Democrats to be the charlatans of virtue and righteousness. Returning the government to the people via the REINS Act should be advocated by the GOP as an essential and genuine act of virtue. Democrats have been much more tactful in achieving their causes. They purport to be called 'progressives' while their policies are causing cities and the country to regress into 3rd World standards in many aspects. Instead the GOP should stop calling Democrats what they want to be called and instead rebrand them what they really are as 'regressives'. Democrats have claimed to be about racial diversity and equity, but they impose regulatory assaults such as ESG and DEI inject race and identity political mandates or racial preferences in hiring in private companies over qualifications. Not only does this revive racial resentment after years of making significant racial progress and diversity, it will affect America's competitiveness and innovation if the criteria of hiring the most qualified is mandated away. We cannot remain a first world country if we remove merit standards and adopt socialist economic policies that make or keep countries third world nations.
There has never been a time when there is so much information and mediums for it and people know so little. Liberals with such control of the narrative and freedom of speech in every area of life means people are overly mis-informed of things that are actually not so. The REINS Act would bring freedom of speech, proper debate on real science and transparency to major issues especially those that are being weaponized as the context under Amerisocialism for vast regulatory control such as Climate Change. The American public would resonate if parallels are made with the bad decisions during Covid especially by the elite 'expert class'.
In making the case for the REINS Act, Republicans should dispel the caricature branded on them by liberals of being against a clean environment by making actual environmental case for American 'all of the above energy' and facts carbon emissions. Republicans believe in Climate Change because it has been having for thousands of years. Even by liberals own data the regulatory actions they propose will have only have a 0.0010 % effect on the climate by the end of the century, while allowing China and the rest of the world to emit what the want and have control and use of energy supplies. Opportunity Cost or cost/benefit analysis of policies would be a key criteria restored to measure regulatory action under the REINS Act. Most importantly it restores to the people a say in that decision process via their elected representatives. Elected representatives would now be more directly held accountable on making decisions based on real facts and debate especially if they they made decisions as consequential to Americans such as what they drive. Corporate leaders and asset mangers will also be held accountable in how they allocate capital, especially of those they manage and be less inclined to follow false premises and ideology such those as under global warming catastrophism. Instead the REINS Act would restore the economic freedom for more productive allocation of capital in the private sector instead of based on a subsidy driven or directed economy.
America has led the industrialized world in lowering carbon emissions even further than the requirements under the Paris Accord, mainly due to our transition to cleaner natural gas derived from the technology demonized by climate alarmists: fracking. American oil and gas is 70 % cleaner and extracted with higher environmental standards than countries Biden has made concessions to such as Venezuela. Despite major increases in the demand for energy, America's reduction in CO2 emissions remains at the rate it was in 1970 even though the economy has expanded 30 times larger. While there will be increasing demand for electricity, the REINS Act would encourage more efficient innovation of nuclear technologies than subsidy driven wind and solar such as modular nuclear plants. The freedom of debate aspect of REINS Act would also highlight where some issues are falsely blamed on man made climate change but rather caused or worsened due to climate or environmental policies. Wildfires (which have been having for millennia) in Canada, California and in Maui have been exasperated by 'green' policies which diverted resources away from fire prevention or limited forest management. Some have even been tied to scoring ESG points by not removing trees that actually fuel wildfires. Restricting pipelines or export terminals have meant that cleaner American oil and gas were replaced with dirtier extracted oil and gas from the Venezuela, Russia and the Middle East. Even restrictions and bureaucracy limiting extraction of rare earth minerals to make electrical components in the U.S means the supply chain is more reliant on minerals mostly controlled by China extracted with low environmental and labor standards.
During the debates discussed in the The Federalist to create our Constitution there was a common theme to argue why there should be limited government power and why government should be for and by the people. " For man is not infallible and subject to fault"
The massive expansion of government and the greed for power behind it has shown its many faults. American's need to be reacquainted and empowered to take back the government for the people by passing the REINS Act.