As the Nov. 8 midterm elections approach, President Joe Biden and his minions will be traveling the country celebrating statism. That is to say: ignoring what made the nation unique and great, capitalism and the freedom to contract.
Capitalism, free markets, and the consistent application of the rule of law are what brought prosperity to 97% of Americans. Unfortunately, Biden wants to emulate the policies of Europe, a geography fast becoming irrelevant in the arena of geopolitics.
Last week, Treasury Secretary Janet Yellen touted top-down industrial policy. Does anyone remember Solyndra? But Yellen also spouted the big lie about tax policy. Yellen asserted that the affluent, who provide us with goods and services that we freely choose to consume, don’t pay their fair share in taxes. Her use of the word “fair” is entirely subjective. Any objective person would agree that when 1% of households pay 40% of all federal income taxes, which is more than the bottom 90% combined, that is a fair share of the total tax pie. The United States is a wealthy country, but it would be wealthier if economic free-riding was less widespread.
Moreover, while touting new business investment, Yellen said corporate tax rates should be raised to their historical averages, around 35%, from the current 21%, a rate that has caused a boom in corporate investment and receipts by the Treasury Department.
Put simply, Yellen wants to play the shell game: give to preferred businesses and take from the rest. But neither Biden nor Yellen is omniscient. Biden bores with his hectoring about the benefits of unions. He forgets the recent economic history of the U.S. automobile industry, where the United Auto Workers union was complicit in the near-death experience of Detroit. Today, with the labor negotiations involving the rail industry railroad workers, as well as the equally protracted labor negotiations between West Coast port owners and the longshoreman’s unions, we see that unions with monopoly power extract wages, benefits, and working conditions that injure the country. Both the longshoreman’s unions and the rail unions are cartels that would be illegal under U.S. antitrust law, but for legislative carve-outs.
Still, the Presidential Emergency Board appointed by Biden in July to avert a strike proposed that rail employees receive a 14.1% wage increase effective immediately and a 24% compounded wage increase during the five-year period from 2020 through 2024. Service bonuses would also be given to employees over the duration of the contract and would total $5,000. The average pay of a rail employee if the deal is ratified would be approximately $110,000 per year by the end of the agreement. Combined with benefits such as retirement and healthcare, employees would earn $160,000 a year.
Textbook economics says that unions with monopoly power reduce employment in their industry and reduce compensation in nonunion industries because labor that is turned away from a cartel union floods other nonunion industries. Similarly, the longshoreman’s unions brag that their members’ annual wages and benefits equal and exceed $200,000 a year.
Equally alarming, the Biden administration demonizes the oil and gas industry, which creates wealth for all. The administration wastes money on green energy, while the countries of Asia, especially China, laugh and burn coal. The Biden administration does not want us to know that the U.S. has technically recoverable oil reserves of 373 billion barrels. The U.S. has sufficient oil to last well into the next century. The U.S. has even more natural gas.
These things bear noting as people consider for who they should cast their votes in the midterm elections.
James Rogan is a former foreign service officer who later worked in finance and law for 30 years. He writes a daily note on finance and the economy, politics, sociology, and criminal justice.
