The Federal Centralization Economy

A new hybrid of the command economy is being adapted to replace the last traces of a free market economy. The federal government, through the increase of administrative regulations and bureaucrat oversight is forcing a dangerous planned economy with dire consequences. It will not resemble the Soviet style of government ownership, because many business decisions will no longer rest with owners, but will need conformity to rules that benefit favored enterprises.

Investopedia explains the old version of the ‘Command Economy’ as a planned economy. "Command economies are unable to efficiently allocate goods because of the knowledge problem - the central planner's inability to discern how much of a good should be produced. Shortages and surpluses are a common consequence of command economies. A free-market price system, on the other hand, signals to producers what they should be creating and in what quantities, resulting in a much more efficient allocation of goods."

Allocation of resources and distribution of government-approved products will become common as innovation and real competition are reduced. The reach extends to all parts of the economy. The loss of personal freedom is inevitable as the increased hordes of federal bureaucrats embed themselves into every aspect of the economic process.

Charles Goyette offers a critique of this kind of a Command Economy.

"The Central Plan of the command economy is incompatible with dissent, disagreement, individual preferences, and your own plan, whatever it may be. If the Central Plan is to prevent foreclosures on homeowners who can’t pay, then the plans of individuals whose resources will be used to prevent those foreclosures must give way. If your individual plan and the Central Plan are in conflict, you will have to give up your plan."

You can see this transformation with every new crisis. The federal government claims that with more legislative authority, the technocrats will be able to manage better the complexity of business activity to foster an equal opportunity society. In realty all that comes from this intrusion is a rush to the bottom for the masses, while the state/corporate partnership spreads an even wider net over commerce.

Few public officials challenge this development. Gary Galles expresses the magnitude of the problem in Centralized government at the expense of the American tradition.

"In America today, for every problem, a national "solution" is proposed, regardless of how individual or local the issues are. Whether we consider housing, education, energy, transportation, finance, labor, automobiles, health care or insurance, we are overwhelmed with ever more "federal government knows best" policies and programs centralized in Washington. And what it does not mandate, the federal government manipulates with its ability to massively redistribute income."

The entire motivation behind a top down economy is to limit the opportunities of those on the bottom rung of the ladder. The glowing political promises are never fulfilled because the federal bureaucratic micromanagement system is designed to protect the big corporatist patrons, while adding costs to upstart ventures that attempt to challenge market dominators.

The Wall Street Journal gives an even starker viewpoint of the financial sector in An Economy of Liars.

"The idea that multiplying rules and statutes can protect consumers and investors is surely one of the great intellectual failures of the 20th century. Any static rule will be circumvented or manipulated to evade its application. Better than multiplying rules, financial accounting should be governed by the traditional principle that one has an affirmative duty to present the true condition fairly and accurately—not withstanding what any rule might otherwise allow. And financial institutions should have a duty of care to their customers. Lawyers tell me that would get us closer to the common law approach to fraud and bad dealing."

The result of the controlled economy drives an even greater concentration of wealth and power into a few hands. The managerial class of the conglomerate monopolies welcomes their ill-gotten partnership with regulators. The power to regulate is the ability to eliminate any business that applies independent strategies that challenge Big Business.

Just examine the acceleration of market share consolidation since the 2008 financial collapse.

The Long Marriage of Centralized Power and Concentrated Wealth warns of this ominous trend.

"Economic centralization and consolidated power are thriving in the wake of the financial crisis, as both tend to increase when the public is panicked and willing to cede more power and control to the very institutions that have already egregiously abused what power they previously possessed.
Over the last few months, we have become all too familiar with the phrase "too big to fail," which acknowledges that economic centralization on such a large scale, whose efficiency and virtues we have heard praised for decades, represents a grave threat to the health of the national economy during a normal correction."

The sorry state of the economy is not an accident. The master plan is decades in the perfection of the instruments to cripple free enterprise. The uninterrupted expansion of federal agencies breeds the sentiment that more regulation benefits the economy. Such nonsense is proven false, but the central planners refuse to reduce their intrusion, much less dissolve into oblivion.

The Sovietization of the economy under the Obama administration is the latest effort to impose central planning. The vain egalitarian beliefs that promote more and bigger government are inventions of the Big Business cartels that seek to eliminate any competition. Only vibrant and independent businesses can generate employment opportunities and rebuild from a failed centralized economic model.

The Federal Government will do all in its power to kill small business because there is no intention of returning to a self-sustained economy. The dependency society is the central planner’s dream. As long as commissar bureaucrats manipulate the natural business cycle, the real economy will never rebound from the manufactured destruction, meant to destroy free enterprise. The intense rush to criminalize economic conduct leaves little hope that the technocrats will retire voluntarily into the sunset. If you ever want to regain true prosperity, the system needs to bury central planning.

James Hall - July 18, 2012