This is the seventh in a series of articles from FreedomFest 2021, an annual libertarian-oriented conference hosted by Dr. Mark Skousen, an economist and Presidential Fellow at Chapman University in California. This article covers a panel discussion on The Hologram’s America Last agenda and its adverse effects on businesses. The panel included Alex Salter (associate professor of economics at Texas Tech University), Hannah Cox (libertarian-conservative writer, activist, and commentator), Guy Bentley (director of consumer freedom at Reason Foundation), and moderator Elizabeth Nolan Brown (senior editor at Reason magazine).
Salter: Government spending and the budget – it’s not good for America. The macroeconomic wave that Biden brought into the government is bad. Fiscal policy should only be used as a last resort used to be the consensus position. All of that has been thrown out the window. Government is crowding out business activity, resulting in a negative impact on business growth. Biden’s crew is going way beyond Keynes. Even Keynes believed that the budget needed to be balanced within the economic cycle (a semblance of fiscal responsibility). The political class cannot be counted on to cut spending in good fiscal times. Biden is using the federal budget as top-down control of federal resources to influence all economic activity. Debt service costs are going to explode when interests return to normal levels (they are historically low now). Deficits Are Future Taxes (DAFT). The bill is going to come due at some point; there will have to be tax increases to pay for those deficits. That will be the biggest negative impact on businesses moving into the future. The scale and scope of the federal government is so gargantuan that there will never be a return to fiscal discipline and a balanced budget. We are going to see a general economic slowdown as a result. Lower productivity of private sector business is in store. The economics profession has changed its tune. We learned that supply-side considerations dominate fiscal policy. If the economy underneath fiscal policies is weak, fiscal measures can’t fix real economic problems. Politics selects people and power.
Cox: Biden is engaged in a war against small businesses. There are 60 million independent contractors in this country (more than just the gig economy). Last year California passed AB5, reclassifying what it meant to be an independent contractor. Prop 22 was passed to change AB5. The unions are pushing the PROAct at the federal level, which does the same thing that AB5 tried to do. The requirement for independents is that they have to provide services not consistent with the general services provided by a given business (e.g., a media company couldn’t hire an independent contractor to deliver/augment media services). The unions want their power back in states that passed right-to-work laws. People don’t want to be tied to a 9-to-5 job anymore. The PROAct would shift that trend back to unionized labor. Independent contracting is really beneficial for people because it gives them flexibility in their employment situations, as well as provides people choices and opportunities. This is the American Dream, not the unionized environment being pursued by the Democrats/Left who want the union dollars and in-kind contributions of union labor during campaigns. Independent contracting is particularly beneficial to new/young entrants to the workforce. Trump changed the definition of independent contractors (if you set your own hours, you are an independent contractor). The Biden regime will likely succeed in changing that Trump-era definition.
Bentley: Biden’s corporate tax plan is my topic. The UK cut real spending and corporate tax rates years ago; the economy responded favorably (Thatcher’s tax cuts). Biden wants to increase corporate taxes to 28% (higher than most countries in the EU). These taxes are taxes on capital – a bad idea. Corporate taxes burden individuals and consumers, ultimately. Biden is planning to reduce all of the Trump corporate tax cuts. Then there is the UN gambit for a global minimum tax rate of 15%. This would allow countries to tax countries where their operations are, not where their headquarters are located. This disproportionately affects US companies. It would also undercut tax competition among countries. Hopefully, the US Congress will nix this global minimum tax because the Constitution requires Congress to initiate all tax bills. Tax avoidance and tax competition are key to economic growth.
Brown: anti-trust laws deal with unfair restraint of trade, unfair competition, etc. These are vague and left to the interpretation of the political class. Consumer welfare standard (consensus since the 1980s): we shouldn’t be focused on competition per se but rather how they impact consumer welfare (narrowly defined about price but includes other factors). The Biden regime wants to do away with this standard for anti-trust enforcement; consumer choice should not matter in their view. It’s all about Democrats deciding that a company is “too big.” Their goals: raise fees of acquisitions and mergers, prevent tech companies from having multiple lines of business, change the packaging of services provided by large companies making it more annoying for consumers, etc. Their rules will not solve the content moderation problem of social media, however (which are the real problems that people have with the tech companies). Some Republicans are on board with Democrats in doing these things, too, who want to punish tech companies while not getting to the root cause (First Amendment violations). Biden is doing things by executive order for now. They have big plans. Promoting competition and small business are their goals (vaguely defined) as opposed to promoting consumer welfare.
Salter: while the Biden regime may talk about “free trade” and reducing tariffs, they will likely leave tariffs where they are because many businesses benefit from the protection of tariffs.
Salter: if we keep the rate of government growth within the rate of growth of population. Gradual skids are what we will see because US securities remain in wide demand around the world. We just need to control the rate of growth.