Five Governing Principles when we think about state meddling in markets:

First: The default position must be free men and free markets, with the state’s role limited to enforcing the rule of law.  A complex and evolved economy has invited more and more intervention, yet the state’s severe limitations in knowledge and in incentive scream for a limited role in policymaking to impact economic outcomes.

Second: The economic law of trade-offs must be front and center in this debate.  As economics fundamentally deals with the allocation of scarcity – of scarce resources used in the meeting of the needs of humanity – we do not have the luxury of calling for greater public policy without earnestly counting the cost.  Sometimes we may deem the cost worthwhile.  But any attempt to view public policy as immune from the law of trade-offs or some sort of free call option is naïve at best and dishonest at worst.

Third: The role of public policy should be to remove impediments to productive activity.  A proactive role beyond that exceeds the legitimate function of government.

Fourth: When government is in a position to exert policy pertinent to economic activity, we must observe the law of subsidiarity.  In other words, if the new right were calling for a resurgent localism from townships and city councils, I may have beef, but I’ve less of it than this pollyannish view of Washington DC.

Fifth: Price discovery is vital.  Interventions impede price discovery.

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Five reasons to reject “New rRght” aspirations for more government intrusion into markets:

First: It. Doesn’t. Work.  The history of government programs and use of public policy to drive promised outcomes is demonstrably clear that it doesn’t work, the unintended consequences are severe, and the lack of knowledge and alignment of incentive create what all systems of “no skin in the game” create – corruption, grift, incompetence, failure, a breakdown of public trust, skyrocketing deficits, good money chasing after bad, and so forth and so on.  This is as reliable as death and taxes, the other two things most increased public policies create.

Second: Cronyism and rent-seeking run amok. This is the real by-product of greater public policy.  This is what we are debating.  We are picking the degree to which the government will pick winners and losers.  We are asking the hand of the state under a false pretense of neutrality to put its finger on the scale of economic outcomes.

Third: Lack of accountability in a misdiagnosis of problems. The belief is that various elements of economic life have stagnated or otherwise failed to deliver on hopes and promises.  My deep concern is that in pursuing greater public policy to bring us to a better economic outcome, we would be missing the incalculable damage CURRENT public policy has already done to create the problems we all lament – excessive fiscal interventions, distortive and cronyist regulations, and the most underrated culprit, an arrogant monetary policy that has favored asset-holders over productive activity.  We should not give them more keys to more kingdoms.  

Fourth: Mission creep: the policymakers are not trustworthy. Consider the long-heralded CHIPS Act celebrated by economic nationalists and perhaps the signature legislative feat of the Biden administration.  I freely accept the prima facieappeal of some attempt to incentivize greater semiconductor manufacturing in the United States, and certainly various national security advantages to diversifying our sources of such.  Yet even if one swallowed the idea that massive corporate welfare to Intel and Taiwan Semiconductor is a good idea, two companies whose combined net profits the last three years are over $100 BILLION, the mere increase of public policy in this case immediately revealed the almost comic error of this thinking.  

My friends, the increase of public policy to impact economic ends creates a large and insurmountable chasm between technocratic rhetoric and implementation reality. Even the most well‐​intentioned and theoretically sound plan is susceptible to legislative sausage‐​making, K‑Street meddling, bureaucratic capture, and other facets of public choice economics.  Apparently domestic construction and U.S. semiconductor output was so important to our well-being that it required $50 billion of taxpayer money being given to a few companies whose net income in a couple years already tops the GDP of some states.  And yet, apparently it wasn’t that important since the program was dismissed if companies did not provide an “equity strategy” discussing the specific steps they’d take “to promote diversity, equity, and inclusion, to attract economically disadvantaged individuals,” to make commitments to ‘build affordable housing,’ and to provide a “Supplier Diversity Plan” mandating coordination with minority‐​owned, veteran‐​owned, and women‐​owned businesses.” If you thought the end run here was economic activity and are a little distraught to see the hijacking of the bill by the diversity czars who have taken over higher education, at least take comfort in the fact that the climate czars got their teeth in it, too.  The CHIPS act now requires a “Climate and Environmental Responsibility Plan,” a legal commitment to use renewable energy to the “maximum extent possible” and a “description of strategies for minimizing the potential for adverse impacts to the local community, including communities with environmental justice concerns.”

My point is not how unfortunate these addendums to the CHIPS ACT are – though I surely find them unfortunate.  My point is how INEVITABLE these addendums are.  Those screaming for greater public policy in economic life are screaming for just this – runaway government regulation that sacrifices the stated intent for bureaucracy, rank culture grab, and abusive and distorted components of governmental social agenda.  I ask those of you in the room – how many of you believe well-intentioned policy interventions would most of the time NOT go the exact same way the CHIPS Act did?

Fifth. The entire pretense of a national emergency calling for Washingtonian interventions of policy to free markets towards better aims ignores and excuses the greatest cause of our malaise – that which is neither caused by public policy or able to be solved by public policy – and that is a cultural epidemic of irresponsibility, of poor work ethic, of inadequate labor dynamism, of societal despair, of disdain for religion and church, or character, morality, and goodness, of the actual institutions that can generate progress in our economic life without the incalculable cost of cronyism and resource misallocation that a greater use of the hand of the state fully guarantees.

David L. Bahnsen is the Founder, Managing Partner, and Chief Investment Officer of The Bahnsen Group, a national private wealth management firm with offices in Newport Beach, New York City, Minnesota, Nashville, and Bend, Oregon managing over $4 billion in client assets.

David is consistently named as one of the top financial advisors in America by Barron’s, Forbes, and the Financial Times. He is a frequent guest on CNBC, Bloomberg, and Fox Business and is a regular contributor to National Review and World.