In a recent speech to the Manhattan Institute, acclaimed hedge fund manager and potential Trump administration treasury secretary nominee Scott Bessent drew a stark line in the sand, declaring that centrally planned economies are doomed to failure.
Bessent argued that Joe Biden’s reliance on statist economic policies centered around central planning had inevitably led to disaster, a catastrophe that should have been foreseen. Contrasting this with the economic legacy of Ronald Reagan, Bessent contended that Reaganomics had paved the way for unprecedented middle-class expansion by removing suffocating regulatory burdens imposed by previous administrations.
While Reagan unleashed American economic dynamism, Bessent criticized Barack Obama for reviving intrusive federal technocracy, a trend that he believes continues under the Biden administration with equally disastrous results. By pushing aside free-market principles in favor of central planning, Biden and his policies have failed to deliver prosperity.
Bessent highlighted a crucial point – presidents do not create jobs; they create favorable conditions for job growth. Trump’s initial success rested on minimal intervention in the economy, with tax reform, deregulation, and fair trade policies leading to non-inflationary growth and significant wage increases.
However, Bessent’s staunch defense of tariffs as a means of ensuring fairness in trade clashes with the reality that such protectionist measures often amount to central planning. Trump’s tariffs, extended by Biden, create artificial barriers that benefit specific industries while undermining overall economic growth, as Bessent himself suggests.
Furthermore, Bessent critiqued Biden’s spending spree and the inflationary consequences of corporate welfare, cautioning against harmful prescriptions like price controls that could stifle economic growth. As Trump seeks to enforce stricter credit card interest rates, treading dangerously close to price-fixing, Bessent warns against further entrenching harmful economic practices.
Finally, Bessent underscored the dangers of ballooning debt, exacerbated by Trump’s substantial spending during his first term and worsened by Biden’s policies of expanding the regulatory state. The imperative to trim bureaucratic excess and streamline government operations becomes ever more crucial in the face of mounting debt burdens.
In essence, the failure of central planning transcends political affiliations, as Bessent astutely points out. The inherent flaw lies in the inability of social engineers to grasp the complexities of economic growth and technological advancement, rendering central planning an inherently flawed strategy regardless of its proponents. Rather than merely trading one form of technocratic control for another, a shift towards more pragmatic, growth-oriented policies is imperative for sustained prosperity and economic vitality.
