Not long ago, distinguished economists in the U.S. and Europe offered favorable assessments of highly socialist economies [Maoist China, the USSR under Lenin and Stalin, Castro’s Cuba], and many contemporary commentators appear to have forgotten or overlooked this record."
--2019 Economic Report of the President, p. 384.
The Trump administration released the 2019 711-page Economic Report of the President (summary here). The 711-page tome includes the Annual Report of the Council of Economic Advisers.
Touting recent U.S. economic performance, "a unifying theme throughout this Report is that these conditions are generally achieved by providing maximum scope for the efficiency of free enterprise and competitive market mechanisms."
The Report covers labor markets and "potential benefits of reducing occupational licensing, and incentivizing investment in designated Opportunity Zones"; health care markets and how these "often, and unnecessarily, restrict choice and competition"; the role of price incentives in renewable and non-renewable energy; and even government's own role in financial crises.
A chapter-length assessment of "Adapting to Technological Change with Artificial Intelligence" addresses cybersecurity implications of this new era. As for the effect of AI and information technology on "future U.S. labor markets," the takeaway is an optimistic one:
[S]tatic focus on possible job losses leads to a misleading picture of the likely effects of AI on the Nation’s economic well-being. Technological advances might eliminate specific jobs, but they do not generally eliminate work, and over time they will likely greatly increase real wages, national income, and prosperity."
It is appropriate that the Report also contains a chapter on "Markets vs. Socialism" (381-426) given the rise of so-called "democratic socialism" and the loss of individual rights authoritarianism brings.
In a fit of good sportsmanship, the Report asserts that "Present-day socialists do not want the dictatorship or state brutality that often coincided with the most extreme cases of socialism" (p. 393), but this tolerance ignores the reality that early communist and socialist movements were themselves "social justice" movements just like similar campaigns see fit to call themselves today.
"Why should Russians have all the fun of remaking a world?" asked Stuart Chase on p. 252 in concluding 1932's A New Deal.
Fun? Russia? Today's university and media warriors are not the ones to thank for the abundance and prosperity Americans enjoy by comparison that was unimaginable a few short decades ago, and it is no use helping pretend otherwise.
The Report refers to socialism as a "question of the degree" (p. 383), but that's not advisable; whether the means of production are fully owned by or "merely" controlled or directed by the state is ultimately immaterial, as the system is not stable and the pressure is toward more government, as our own compounding administrative state demonstrates.
Furthermore, consistency is vital when challenging premises of socialism and intervention. President Trump himself is a fan of many kinds of regulation that could cost more than his regulatory savings. And the Report rehashes platitudes regarding public goods and externalities rather than emphasize the administrative state's own sizable role in perpetuating these politicized characteristics in social organization. These rationalized an ongoing failure to extend institutions of liberty such as complex property rights that themselves are a compounded regulatory cost today.
And...speaking of regulation. Years go by, administration's come and go. The fact that the current Economic Report of the President has to spend multiple pages on such concoctions as Medicare for All demonstrates the need, for posterity's sake, a broader taxonomy of regulatory costs than Washington presents these days.
This is why my favorite is Chapter 2, "Deregulation: Reducing the Burden of Regulatory Costs." This 62-page discussion covers Trump's cost caps powered by his one-in, two-out requirement for rules and regulations (covered earlier by the administration and elsewhere). This chapter develops "a framework to analyze the cumulative economic impact of regulatory actions on the U.S. economy" (p. 16), which entails stressing regulatory effects within industries, along supply chains, and in the economy as a whole.
"[W]hen more factors are used to produce in the regulated industry," the Report asserts, "fewer are available to
produce in the other industries" (p. 107). There is an example of a unique and fresh appreciation in this Economic Report of the ripple effects and deadweight costs of regulations, from agencies individually and overlapping. The total volume of rules rather than solely specific rules matters but gets neglected. There also are reductions in aggregate amount of capital available in the economy owing to industry-specific regulations. The Report also helpfully examines problems of identifying market failure (as opposed to political failure), and pitfalls of "nudge" regulatory actions. Encapsulating all this;
By raising the cost of conducting business, regulation can prevent valuable business and consumer activities. More important, however, we also stress that regulations in one industry affect not only the regulated industry or sector but also the economy as a whole. We find that this implies that official measures understate regulatory costs and therefore also understate the regulatory cost savings of the Trump Administration’s regulatory reforms because they do not account for relevant opportunity costs, especially those accruing outside the regulated industry."
Indeed, the Report notes that a "major theme" is that the cumulative burden of multiple regulatory actions exceeds the simple sum of costs when each action is considered one by one." For this reason the noted "current practice" of the Office of Management and Budget to "focus on the last 10 years of major Federal regulatory actions," does not capture anything close to the full picture of the regulatory enterprise. On this point, the president should issue an executive order to (re)command the aggregate report that is required already by a law called the Regulatory Right-to-Know Act, but ignored. (My own position is that regulatory costs are incalculable for the same reasons central economic planning is impossible, and so the aim of such disclosure attempts is to demonstrate their inadequacy and induce Article 1 restoration. That is, Congress should be voting to approve all costly or controversial regulatory laws.)
Most costs are not merely unmeasured and unmeasurable, but unfathomed in the administrative state mindset. For example, the reckoned costs of the vast administrative state neglect costs of the loss of liberty and attendant concerns like over-criminalization. Even the Economic Report of the President, perhaps the most comprehensive executive branch assessment of, and philosophical reflection on, the regulatory state in decades, does not dive that deeply.
But the new Report paves the way for future editions to do so. How could it be otherwise, given the Report's ample juicy references to Friedrich von Hayek and Ludwig von Mises?
Indeed among the greatest of costs is the administrative state's cavalier sidelining of individual liberty that has rendered the precious Constitution's unique protections a blip in human affairs. Americans possess an inalienable right to practice limited government, yet that institution is rendered impossible by the changes wrought by Progressivism, socialism and alleged softer “Third Way” variants, which have themselves fertilized the “democratic socialist” spending/regulatory programs, plus changes to the electoral college and Supreme Court, being teed up.
All these interventionist strains are united by less freedom, more powerful central government, disregard for measurement and disclosure, minimal concern for political failure, and indifference to the duty to extend institutions such as property rights into the governance of complex emerging frontier sectors.
The new Economic Report of the President breaks new ground in raising the issue of the human costs of regulation and intervention as a social justice issue in its own right. But could we have expected otherwise, given the comic-book superheroes who helped in the report's preparation? (p. 624, Appendix).
