What does the White House have against private sector investment?
That blunt question comes to mind after the Obama administration’s decision to block the $13 billion expansion of the Keystone XL oil pipeline. If it were an isolated incident, perhaps it wouldn’t matter all that much. But consider it in the context of the Administration’s recent pattern of hostility to private sector investments.
The Keystone decision comes not long after Obama’s Department of Justice sued to block the $39 billion acquisition of T-Mobile by AT&T. That lawsuit follows an earlier one by the National Labor Relations Board against Boeing for its decision to invest three quarters of a billion dollars to build a manufacturing plant in South Carolina.
"All of the Administration’s moves share something else in common, however, something that helps give the public a clearer picture of the Administration’s overall approach to the economy. Every decision reveals a deep faith in government planning."
Other obstacles to private sector investment include cancellation of planned sales of gas drilling rights in the Western Gulf of Mexico and in the Atlantic, along with the EPA blocking oil drilling off the northern coast of Alaska.
It’s not as if the Administration is against all investment. It touts its public investments in education, smart grid technology, highway infrastructure, wind and solar, high-speed rail, and more every chance it gets. But when it comes to private sector investment, the administration has often found something to dislike.
A cynic would note that each of these decisions to block private investment has the backing of a key constituent of Obama’s political base. Green groups have strenuously opposed both the pipeline and new drilling. Digital activists and progressive public interest groups have opposed the telecom merger. And unions opposed Boeing’s decision to expand in a right-to-work state.
But cynicism only gets one so far. After all, unions are strongly in favor of the pipeline and new drilling since the investments would lead to lots of new union jobs. And the communications union workers who would be affected by the telecom merger are in favor of AT&T’s purchase of T-Mobile.
All of the Administration’s moves share something else in common, however, something that helps give the public a clearer picture of the Administration’s overall approach to the economy. Every decision reveals a deep faith in government planning.
“Planning” is an unfashionable word today. It’s a term that was in much wider circulation back in the days of Soviet-era industrial planning, Mao’s five-year plans, the nationalization of British industry and the like.
Contrary to its most extreme critics, the Obama administration is nothing like the totalitarian planners who wrecked Europe, Russia, and China. But it is remarkable how much Obama exhibits the hallmarks of the planning mentality.
The great critic of government planning Friedrich Hayek described the differences between planners and advocates of free markets this way:
“The dispute between the modern planners and their opponents is, therefore, not a dispute on whether we ought to choose intelligently between the various possible organizations of society; it is not a dispute on whether we ought to employ foresight and systematic thinking in planning our common affairs. It is a dispute about what is the best way of so doing. The question is whether for this purpose it is better that the holder of coercive power should confine himself in general to creating conditions under which the knowledge and initiative of individuals are given the best scope so that they can plan most successfully; or whether a rational utilization of our resources requires central direction and organization of all our activities according to some consciously constructed blueprint.”
In its recent moves to block private sector investors from planning as they see fit, the Obama administration is relying on its own blueprint for what the future must look like. It is rejecting the idea that “the knowledge and initiative of individuals [be] given the best scope so that they can plan most successfully.”
We also see the Obama’s administration’s “consciously constructed blueprint” at work in its overhaul of the nation’s healthcare system; its planning the shape of America’s financial sector; its planning for job growth via government stimulus spending programs.
Hayek was opposed to planning on philosophical and pragmatic grounds. He opposed planning because he valued liberty, and because he thought government planning was doomed to fail. If Hayek is right and the planning can’t work, what then?
Perhaps the Administration will be mugged by the reality of high unemployment and an anemic recovery and change course. History suggests it still can. After all, even the technocratic Carter administration, no stranger to the planning temptation, was humbled enough to recognize that the federal government’s multi-decade experiment with industrial regulation had largely failed. President Carter took several critical initial steps toward significant regulatory liberalization, steps that deserve some credit for launching the massive economic boom of the 1980s.
Nick Schulz is editor-in-chief of American.com and the DeWitt Wallace Fellow at AEI