A 1977 Reason magazine review of Friedrich Hayek’s “Law, Legislation, and Liberty (Vol. 2) noted Hayek’s contention “that the prime public concern should be, not to provide for particular needs, but to maintain conditions for a spontaneous order … where people provide for their own needs.”
The book’s chapter “The Mirage of Social Justice” contains a section on the tribalism of “ ‘Social’ or Distributive Justice” and its incompatibility with “The Discipline of Abstract Rules” applicable to the entire society.
“So long as the belief in ‘social justice’ governs political action,” Hayek wrote, “this process must progressively approach nearer and nearer to a totalitarianism system,” as the attempted eradication of each “injustice” expands the state.
Fast forward to 2022. The Biden administration has anchored the pursuit of “social justice” in such a way that limited government cannot be sustained. We have noted some of these developments in earlier essays with respect to agencies’ “regulatory plans” in the Unified Agenda of Federal Regulations, but here take a deeper look.
Wherever social “injustice” is detected, progressives’ remedy is usually wealth transfers; Hayek and others used the term “distributive justice.” Accompanying redistribution are controls of the payer and recipient alike, and enrichment of administrators and consultants.
Foremost during Biden’s first week was an executive order with a “whole-of-government” framing that has defined the administration. In Executive Order 13985, “Advancing Racial Equity and Support for Underserved Communities through the Federal Government,” Biden declared:
Our country faces converging economic, health, and climate crises that have exposed and exacerbated inequities, while a historic movement for justice has highlighted the unbearable human costs of systemic racism. Our Nation deserves an ambitious whole-of-government equity agenda that matches the scale of the opportunities and challenges that we face.
In a December 2021 update on E.O. 13985, the administration boasted:
From the first day in office and every day since, the Biden-Harris Administration has taken a historic approach to advancing racial equity, including directing every agency across the whole of the federal government to address the lasting impacts of systemic racism.
Equity in this framing does not mean equality of opportunity or equality before the law, but rather equality of outcomes.
Donald Trump, too, issued executive actions on themes like “critical race theory,” wokeness, structural racism, and preservation of historical statues. These all were revoked by Biden along with Trump regulatory streamlining more generally. The public had a taste of these tensions in transgender restroom use policies set forth in controversial federal guidance documents during the Obama administration. One can legitimately argue such matters should be left to states and localities, and be correct. However, the takeaway here is that the Biden administration’s energized federalization is removing as an option the ability of citizens to escape federal programs or avoid being required to fund them.
Various “justice” programs (environmental; health; racial) are embedded even in the new bipartisan $1.5 trillion Omnibus spending package.
Biden’s “equity” is referenced specifically in the titles of seven executive orders, and mentioned in several of the others, including rationalizing the pursuit of open-ended “benefits” in Biden’s day-one “Modernizing Regulatory Review” directive. Biden’s whole-of-government equity agenda is not the only one so dubbed (“climate crisis” and “competition” industrial policy are others we’ll address later), but it is the center of gravity.
A prominent example is the Office of Management and Budget’s July 2021 declaration that “Progress towards equity requires both a sprint and a marathon,” in its Study to Identify Methods to Assess Equity: Report to the President. This report was prepared in response to the aforementioned E.O. 13985 on “Advancing Racial Equity and Support for Underserved Communities through the Federal Government.” Other agencies, such as the U.S. Department of Agriculture, have also responded to voice their solidarity in expanding government services, never eliminating nor privatizing them, on the basis of race and identity characteristics. There were early indications of what the Biden administration would bring, as the “Office of the President Elect” declared that, in pursuit of Covid-influenced economic relief, “Our priority will be Black, Latino, Asian, and Native American owned small businesses, women-owned businesses, and finally having equal access to resources needed to reopen and rebuild.”
The Department of Education in 2021 sought comment (“Proposed Priorities—American History and Civics Education”) on its preference for prioritizing taxpayer grants for the training of teachers and students to favor the potential awardee’s embrace of the systemic racism ideology, the “1619 project” promoted by the New York Times, and the “anti-racism” work of Ibram X. Kendi. In the 2021 Federal Register on page 20,349, the Department appealed to an “ongoing national reckoning with systemic racism” and the “urgency of improving racial equity throughout our society, including in our education system,” in service of is intent to favor grant applications that “[t]ake into account systemic marginalization, biases, inequities, and discriminatory policy and practice in American history.” Note that the Department of Educa tion went from being slated for axing under Reagan and again in the 1990s Republican “Contract with America Era, only to expand via “No Child Left Behind” under George W. Bush.
Biden’s E.O. 14031 asserts that “Our Nation has also seen again that anti-Asian bias, xenophobia, racism, and nativism have deep roots in our Nation,” with no context and assignment of group rather than individual perpetrator responsibility for recent violence against Asian-Americans.
At the Interior Department, place names across the nation deemed derogatory are to be stricken. The point is less whether a re-naming is a good or a bad idea, but to underscore that such decisions increasingly cannot be made locally or privately.
As agencies embed the equity agenda, new laws and regulations do as well. For example, Department of Transportation Secretary Pete Buttigieg has promised program-by-program equity-based allocation of “clean” infrastructure funding, justified in part by the “racism that went into [prior] design choices.” In fulfillment, a November 2021 Federal Highway Administration information request regarding forthcoming guidance proclaims:
The recently enacted Bipartisan Infrastructure Law invests in the deployment of electric vehicle (EV) charging infrastructure as one of many important ways to confront the climate crisis. … The Federal Highway Administration] is especially interested in comments suggesting ways that the guidance could promote equity in the deployment of EV charging infrastructure under these programs.
Such identity-based policymaking and spending are inherently regulatory and intertwined with picking winners and losers, and have in some instances induced blowback, as well as been declared illegal. Pushback has included court filings by some states calling “crude and odious” the Securities and Exchange Commission’s approval of a Nasdaq quota and diversity rule for corporate boards. In another example, a $4 billion loan forgiveness program from the Department of Agriculture rooted in the American Rescue Plan initially targeted non-white farmers, embodying a “restitution” program deemed unconstitutional. Nonetheless, Biden’s E.O. 13985 has instructed the U.S. Department of Agriculture (USDA) to embark on an open-ended pursuit of “Identifying Barriers in USDA Programs and Services; Advancing Racial Justice and Equity and Support for Underserved Communities,” and the establishment at USDA of a “Racial Equity Commission” These kinds of programs make the scaling back of the USDA—which should actually be a priority—increasingly less politically possible.
Other examples have involved financial regulatory proposals regarding new anti-redlining rules and increased spending in the Treasury Department’s State Small Business Credit Initiative for what the federal government deems disadvantaged groups. Spending and regulatory interventions undertaken to relieve one economic crisis can become a floor for or even cause of a subsequent one, exemplified by the fact that the just-noted credit program comprises a reboot of one begun during the 2008 financial crisis recession.
Already overly enmeshed in private housing, the federal government is implementing housing equity with vigor. One example is a Federal Housing Finance Agency (FHFA) rule on “benchmark goals” for “single-family and multifamily mortgages on housing that is affordable to low-income and very low-income families.” The Department of Housing and Urban Development’s (HUD) “Affirmatively Furthering Fair Housing” rule requires active integration and desegregation of neighborhoods across the nation by recipients of HUD funds has been reinstated by Biden. The rule notes that “the AFFH obligation requires a funding recipient to consider existing segregation, including racial segregation, and other barriers to fair housing, and then take meaningful action to address them.” Recipients are required to “take proactive steps towards fair housing in this manner, beyond merely refraining from discrimination.” HUD is also reinstating a “disparate impact rule,” which as Bloomberg put it, “bars seemingly neutral policies in lending, renting and selling that result in discrimination.”
A federal government already deeply entangled in personal health care has brought the equity campaign further to bear there as well, creating among other things a COVID-19 “Health Equity Task Force” aimed at an “Implementation Plan and Accountability Plan for mitigating inequities caused or exacerbated by the COVID-19 pandemic and for preventing such inequities in the future.” In addition, a system of Medicare bonuses for doctors that implement “anti-racism” plans and that favor “trauma-informed care” for persons of color enduring “multi-generational trauma” induced by racism is underway. The new rule advises that doctors can boost reimbursement rates if they “Create and implement an anti-racism plan using the [Center for Medicare and Medicaid Services’] Disparities Impact Statement”:
The plan should include a clinic-wide review of existing tools and policies, such as value statements or clinical practice guidelines, to ensure that they include and are aligned with a commitment to anti-racism and an understanding of race as a political and social construct, not a physiological one.
The Department of Health and Human Services has released guidance on treatment of “long COVID” on which symptoms could qualify as a disability under the Americans with Disabilities. In this environment, the rise of diagnoses for climate-change induced health problems around the world is likely in the offing, along with their eventual reimbursement by Medicare. The administration is also allocating billions in taxpayer funding for equity-related “global health programs.”
The equity agenda can have ironic anti-equity consequences. In its pursuit of increased Internal Revenue Service (IRS) funding, evidence indicates the IRS historically targets not Wall Street but those who are at a disadvantage and lack the will or ability to fight back. Meanwhile, a Consumer Financial Protection Bureau (CFPB) regulatory proposal implementing Dodd-Frank’s Section 1071 would require lenders to collect data on the race and gender of small business loan applicants and send it to the CFPB.
Equity sympathies do not extend to those affected by overregulation, however. Biden revoked a Trump directive on “Protecting Americans from Overcriminalization through Regulatory Reform” and regulatory “bill of rights” provisions (“Regulatory Relief to Support Economic Recovery”) that had been part of pandemic relief for businesses pulling the wagon as dinstinct from riding in it. A rule clarifying religious exemptions for federal contractors allowing certain discrimination is also under revocation, meaning that some contractors must affirm what the Department of Labor regards as non-discrimination. Granted, that is a cost of accepting federal dollars, but federal contractor compliance is not the end goal of the equity agenda.
An irony of intervention is that there continues a post-pandemic transfer of wealth upward. That may not be unintended, though. The North Star of progressives is the universal basic income. No one currently in charge seems to care about what Hayek had to say about the prerequisites for social order.