By Robert H. Bork Jr. for RealClearPolitics
In the darkest days of the Soviet Union men were hauled away to the “Gulag,” or sometimes simply shot, for the vague crime of “wrecking.”
When trains derailed or were caught up in a railyard snafu – or a crop yield didn’t meet arbitrary Kremlin quotas – someone had to be called to account. It was inconceivable, after all, that the communist system or Stalin himself were to blame for the mess.
It had to be the work of saboteurs.
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Not to draw too invidious a comparison, but the Biden administration is now borrowing ideas from Sens. Elizabeth Warren and the formally socialist Bernie Sanders along similar lines to blame our current painful inflation on modern “wreckers.” In their telling, American business is guilty of reaping “illicit profits.”
On Thursday, the Department of Justice announced it will deal with “persistent price increases” with an initiative to “deter, detect and prosecute those who would exploit supply chain disruptions to engage in collusive conduct.”
Actual price collusion, of course, has long been a crime in the United States. What is happening at DOJ, however, is disturbing. Prosecutors are allowing themselves to be used as political hand puppets in the Biden administration’s theater of the absurd, furthering the idea that the annual 7.5 percent inflation rate is due to greedy companies exploiting supply chain issues left over from COVID-19.
A humble objection: Could the real wreckers of the economy instead be those who are hunting for scalps?
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Wrecker No. 1 might well be Federal Reserve Board Chairman Jerome Powell. Under his purview, the monetary supply increased from $15.5 trillion in February 2020 to more than $21.6 trillion today. Robert Heller, who served on the Fed with legendary chairman Paul Volcker, told The Washington Post: “Neglecting to pay attention to the money supply is again leading the Fed into dangerous inflationary territory – just like half-a-century ago.”
Wrecker No. 2 might well be the Biden administration, congressional Democrats, and the complicit Republicans who doused the economy with an almost $2 trillion stimulus bill last year, despite the fact that 2021 opened with a blistering 6 percent growth rate.
Wrecker No. 3 could be the progressive champions of the “blame business” caucus in Congress and the policies their rhetoric supports.
Consider Sanders, who tweeted “that corporations are using ‘inflation’ as an excuse to jack up prices so that they can make record-breaking profits to enrich CEOs and wealthy shareholders.” First, notice the quotation marks around the word inflation, as if the rising prices of eggs, meat, milk, and gasoline were not real concerns for the average American.
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Sanders’ economic theory is even more preposterous. Inflation has been low since Ronald Reagan’s first presidential term. What is the likelihood that evil corporations waited like cicadas to spring out of the ground after decades to conspire against the American consumer? Compare that theory to the likelihood that the inflation we’re seeing is a monetary phenomenon caused by overspending and overprinting.
Another example: Warren blames business concentration and monopolies for inflation, especially the grocery business. She blames greedy grocer CEOs for food inflation. This is simply ignorant. The margins for grocery stores are notoriously low, about 1 percent, in a retail business famed for its cutthroat competition.
Then there is Sen. Amy Klobuchar, who is putting theory into action. She is seeking to overthrow the antitrust consumer welfare standard – which evaluates mergers, acquisitions, and business practices by their impacts on the consumer – and replace it with vague antitrust standards that protect workers, suppliers, and competitors from “unfair” competition.
Progressives have recently begun to tout their expansive antitrust enforcements as a way to fight inflation. But we know what works. The consumer welfare standard oversaw vast growth with low inflation in the American economy for decades. What is the likelihood that reversing this policy with progressive antitrust measures would gum up the gears of business and create even more inflation?
Count on the jumble of progressive antitrust interventions in the economy fueling more inflation. And when this happens, don’t be surprised that there will be a need to ferret out more “wreckers.”
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Washington is rife with rumors that Klobuchar wants to pass her antitrust legislation as a steppingstone to the Democratic nomination for president in 2024. If true, it is hardly surprising. What is difficult to comprehend is why so many Republicans – from Rep. Ken Buck to Sen. Chuck Grassley – are actively supporting Klobuchar’s measures that would subject the economy to more government control.
Republicans would do well to remember that heavy-handed government control almost always breeds new economic crises. When this inevitably happens, the architects of failed policies will protect themselves politically by hunting for scapegoats. Today it is the companies and their “illicit” profits. Tomorrow don’t be surprised when they come looking for you.
Syndicated with permission from Real Clear Wire.
Robert H. Bork Jr., is president of the Antitrust Education Project.
The opinions expressed by contributors and/or content partners are their own and do not necessarily reflect the views of The Political Insider.