Excerpt:

On June 28, President Joe Biden took to the stage in Chicago to drum up support for his economic agenda, which his own team has taken to calling “Bidenomics.” The speech was part of a broader publicity tour, “Investing in America,” with the president and his cabinet traveling the country trying to get the American people to see Biden’s economic policies as successful and popular.

Bidenomics isn’t a new philosophy. If you look at what’s been enacted and what’s still being proposed, it becomes clear that all Biden is doing is ramping up the federal government’s industrial policy. And industrial policy has, unfortunately, been around for a long time—as have its effects. When governments pursue industrial policies, they attempt a form of entrepreneurship. And in doing so, they divert scarce resources and capital away from the production of goods and services that people actually want, freed from the feedback of the market.

Consumers on the free market can opt out of any exchange for any reason. That’s why capitalist-entrepreneurs can only make profits if they produce things consumers value. When they don’t, they are stuck with the losses. Economic losses are a motivating signal that the resources used in a line of production would be better used elsewhere.

How does Bidenomics fit into all of this?... Political officials are using tax dollars to acquire resources that they then allocate to new production lines... using tax-funded subsidies to get private investors to fund projects they wouldn’t have chosen otherwise. All these tax dollars pouring into new projects allow the administration to brag about creating jobs and producing stuff, which sounds good in a campaign speech, regardless of whether the end consumers value these things as the best use of scarce resources.

From a purely practical standpoint, the federal government cannot help but be a terrible entrepreneur because it is immune from economic losses. The American people are legally prohibited from opting out of their payments to the government as they are allowed to do with any other organization. As such, the government can spend decades on wasteful projects of little to no value and face no direct economic consequences. On top of that, the lack of feedback can allow the government’s operations to drift further away from reality as scarce resources go wasted and consumer needs go unmet.