By guest author David Robb
Recently, AIER published two articles here, and here discussing a new Executive Order mandating extensive government involvement in a huge range of business activities. Both articles tended to focus on how the order would affect large businesses but suggested that the effects of the Order might be more pervasive. In a fact sheet issued by the Biden administration, the Order is represented as a way to promote competition and increase innovation. Through it, regulatory agencies across the board are directed to develop new regulations pertaining to agriculture, healthcare, employer-employee relationships, the internet, and a host of others. But how is this Fascism?
To explain that, we need to look at a bit of history. Fascism is currently defined as a trait of the Right. That wasn’t always so. Both FDR and JFK spoke glowingly of Fascism and FDR even incorporated many of its principles in his New Deal policies. He also spoke well of National Socialism, otherwise known as Nazism. The ability of the State to organize and direct labor, to have centralized planning, and to subsume the individual into the collective state were much-admired aspects of both Fascism and National Socialism. It wasn’t until after the Second World War when the atrocities and inhumanities of both were exposed, that Fascism and National Socialism lost their luster and acquired a bad odor.
True to their Leftist practices, once these ideologies acquired a negative image, their proponents disavowed the labels, and sought to attribute these ideas to the Right, in a classic move of ideological “pin the tail on the donkey”. Most dictionaries and encyclopedias today will state that Fascism and National Socialism are characteristic of the Right. As we’ll see, there are good reasons why the Left doesn’t want to take credit for these ideologies anymore.
Socialism still has a patina of acceptability, in spite of its many failures whenever and wherever it has been tried. Few are aware, though, that Mussolini, often considered the face of Fascism, considered Fascism to be the perfection of Socialism by adding the use of collective force and violence to impose and maintain a Socialist state. For many years prior to WWII, Mussolini was considered one of the most influential theorists of Socialism. Today, of course, we think of him as a pompous, strutting buffoon, but then he was well respected and a leading European thinker.
There is a fair amount of confusion about the differences between Communism, Socialism, Fascism, and National Socialism. Let us take a moment to clarify the differences.
Communism is where everything is in one big pot. Everything – land, people, businesses, factories, everything – is collectively owned. No one owns anything personally, and they are all supposed to be happy. To the extent that the State exists, it is there to organize things and make sure everything runs smoothly. It is expected to gradually disappear as people get used to the collective way of doing things. Its motto is “from each according to his ability, to each according to his need.” People quickly learn that it is best to have no ability and to be very needy.
Socialism differs by separating productive enterprise, businesses in other words, from the State. However, the State still retains control and directs business enterprises to its own goals and ends. People and everything else are still collectivized and owned by the State. This organization is well regarded by State agents especially as it gets around one of the principal disadvantages of Communism.
Under Socialism, if the country is prosperous and the people are happy, the state can take credit for its wise and benevolent management. If, on the other hand, things don’t go well and there is poverty and shortages and misery, then businesses can be blamed for not following properly the directives of the enlightened State. The State can even accuse businesses of sabotage and subversion and terminate, sometimes with extreme prejudice, a few business leaders to encourage the rest. The clear advantage of Socialism over Communism is that Communism has no one but the State leaders to blame – a rather inconvenient circumstance at times. The motto of Socialism is “from each according to his ability, to each as the State directs.”. People quickly learn the advantages of having no ability except the ability to cozy up to State agents.
National Socialism is just a variant of Socialism that holds one nation to be supreme over all others. Essentially, other nations are just placeholders waiting for the principal nation to come and take over to make everything bright and wonderful. Indeed, such a takeover often involves a bit of housecleaning and removal of undesirable riff-raff that the superior national Elites deem unfit. The National Socialist motto is similar to that of ordinary Socialism: “from each according to their ability, to the National Elites everything to distribute or keep as they deem fit.”. The lessons are essentially the same as for Socialism.
This brings us to Fascism. This offshoot of garden variety Socialism adds State coercion to the mix. Communism and other forms of Socialism have been built on the idea that people will want to share and work together once they see how good it can be if everyone has what they need, no-one is above anyone else, and there is a benevolent State to watch over, care for, and protect everyone. With Fascism, everyone will recognize the benefits of sharing and working together for the common good and there will be peace and love throughout the land – or else.
The motto of Fascism is a bit more complex than the others: “From each according to as much ability as they can muster – slackers will suffer, to each according to whatever the State Elites don’t want for themselves, and only as little as necessary to keep the proles from rebelling”. The lessons are confusing but might be summarized as: Keep your head down, don’t attract attention, don’t show a lot of ability, do as you’re told, and if you’re not among the Elite, take whatever you can get and be happy to get it. Former Soviet bloc countries had a saying that encapsulated matters well: “We pretend to work, and they pretend to pay us.”.
So how does this relate to the recent Executive Order? Is it just directed at big, nation scale businesses, or does it have wider effect?
The Order, number 14036 of July 9, 2021, is entitled “Promoting Competition in the American Economy”. As is typical with such things, the title is rather the opposite of what it actually specifies. What the order does is empowers the entire Federal bureaucracy to regulate, in detail, how businesses conduct themselves in nearly every aspect that might be conceivably be associated with “competition”.
The agencies specifically listed include: National Economic Council
- Department of the Treasury
- Department of Defense
- Office of the Attorney General
- Department of Agriculture
- Department of Commerce
- Department of Labor
- Department of Health and Human Services
- Department of Transportation
- Office of Information and Regulatory Affairs
In addition, other agencies may be included from time to time, including
- The Federal Trade Commission
- The Federal Communications Commission
- The Federal Maritime Commission
- The Consumer Financial Protection Bureau
- The Surface Transportation Board
- any other agencies or offices deemed appropriate
In other words, the entire army of the Federal bureaucracy is being mobilized to bring businesses across the country under the direction and control of the Federal Government. Does that seem to fit the definition of Fascism, especially when the enforcement arms such as the FBI under the Attorney General’s office can be used to ensure compliance?
So now we have a horde of career bureaucrats, most of whom have never run a successful business, empowered to regulate business activities in minute detail. The Order empowers them to decide what promotes competition and what blocks it. They can decide who has a monopoly, who has too much market share, who needs to be cut down to size, all without recourse to courts or other remedies. Where are the provisions for challenging the actions of these bureaucrats? Will it be like the IRS where challenges to rulings must go to their captive court? Who besides a Fascist would think that a good idea? Of course, there will be no corruption – the career bureaucrats will always be fair and make the best decisions for all concerned and will never be swayed by the temptations of bribery, influence, revolving door jobs, and other inducements.
Now that may seem alarmist. Maybe they really are concerned about keeping American businesses competitive and productive. After all, in a global economy we have many competitors so perhaps they are going to address some of the issues that hamper our ability to compete on the world stage. Strangely, though, the Order is not about foreign competition, but rather mostly about competition between American firms.
One provision of the Order suggests that non-compete agreements be abolished since they keep workers from moving freely between jobs. Sounds like a good idea, no? But what if you have an executive familiar with the business’s customers who leave to work with a competitor? Even without taking confidential materials, if they don’t have a non-compete agreement, they could share that customer information with their new employer and take business away from the former. But of course, that encourages competition, right? Maybe a better term would be predation.
What about technology businesses? Many small firms rely on trade secrets to operate. Patents are difficult to obtain and enforce, and many smaller firms don’t have the resources to pursue them. For some, it might not even be possible to secure a patent since it is the “know-how” of the employees that provides their advantage. Under the Order, however, that knowledge represents an unfair advantage and can be considered anti-competitive. What happens when a competitor reports that firm to the “Competition” enforcers who then force the firm to share its advantage or face regulatory sanctions? Can the State now force firms to give hard-won knowledge freely to their competitors in the name of promoting competition? Why should anyone bother to innovate and make the effort to develop new products and technologies if they must then share them with a competitor who contributed nothing to the effort?
Another provision eliminates the need to have an audiological exam prior to getting hearing aids, claiming as justification that such examinations make hearing aids prohibitively expensive for most who might benefit. The claim is that eliminating such a requirement would allow hearing aids to be sold over the counter much more cheaply. What it ignores is that an audiological exam can detect many conditions besides hearing loss, including many brain and nerve cancers that can be fatal if not caught early. Hearing loss or other anomalies are often the earliest signs of these conditions, and audiologists are trained to look for such signs so that measures can be taken while there is still time. The cost of an audiological exam is a small part of the cost of providing hearing aids and has a high benefit for the customer/patient.
Those examples may sound trivial, so let us look further. Normally, the SEC is responsible for approving mergers and acquisitions of large firms where such an event might result in a market monopoly. However, there are lots of smaller firms that are not so regulated. To the Biden administration, that is a serious oversight that must be addressed. Under the Order, nearly any merger or acquisition will be subject to scrutiny. Perhaps two local grocery stores want to merge to take advantage of better purchasing power and provide better service. Should they need to ask permission of the Federal government in order to do that? Which agency will be responsible, or will they have to obtain approval from several? What if a local dentist wants to buy the practice of another doctor who wants to retire? What if that means that there would only be one dentist in the community – a clear anti-competitive monopoly condition that must be prohibited to protect the people.
Oh, and they want to prohibit businesses from sharing information on wages, salaries, and benefits, presumably so they can’t collude against workers. Does that mean that it will be illegal to participate in salary surveys – you know, those surveys that help workers decide what sort of salary offers might be fair and reasonable?
They also want to examine how chicken and beef are marketed as if that was not already a heavily regulated activity. Can’t have too many regulations to keep people safe. Likewise with beer and wine. Perhaps it is not enough to be drunk with power – something more liquid might be necessary. Indeed, the whole area of food products and agriculture is virtually an open field ripe for regulatory plowing.
Of course, they also want to tackle the high prices of prescription drugs. Everyone knows that Big Pharma is gouging consumers by charging huge prices for drugs that only cost pennies to make. Forget that as a simple rule of thumb it can cost a Billion dollars to develop and obtain approval for a new drug. Unless the company can make that billion back in sales, that will likely be the last drug they make. If it is a limited market – say only a million doses total, then they would have to charge $1000 per dose just to break even. Most of the cost of new drugs is already in the expenses of regulatory compliance. But of course, it makes sense to punish US drug makers for overcharging and instead import cheap drugs from Canada and India, and China where regulatory conditions are much less strict.
The Order goes on for thirteen fine-print pages of the Federal Register. The examples above are just a few of the things that are explicitly called out in the Order. Those are just the tip of the iceberg. What most of the Order does is call for all the regulatory agencies to produce, in the next two to four months, their proposals for new regulations addressing issues they believe affect competition between businesses and how they plan to address them. This is an open call to bring out their wish lists.
What ambitious bureaucrat cannot think of a dozen new regulations to address “fair” business practices? Want to offer a sale with special low prices – clearly anticompetitive. Have a unique product that only your firm makes – clearly monopolistic and you must be forced to set up a competitor to make that product, too. Have some new business practices that are much more efficient so you can provide goods and services at lower cost – unfair competitive advantage, naughty, naughty.
Set your imagination free. The horizon for new and creative regulation is unlimited. Businesses need your wisdom and insight, especially if you just got your first job out of school with your new Political Science degree.
Including the Attorney General’s office in the group makes sure that the new regulations will have teeth in them. Step out of line with the new regulations and you can be persecuted, excuse me, prosecuted to the full extent of the regulation. Go to jail, go directly to jail, don’t pass Go.
The Order ends with:
“This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.”
In other words, you can’t object, you can’t question, you can’t sue them if you disagree. Welcome to the new Fascist States of America.
By David Robb
Photo by Jacobsland Partners at Flickr.