The “Beacon of the World” is Faltering

We all know the image the United States has projected to the world over the past few decades. It was a “Beacon.”

It held two torches high: one labeled “Democracy and Freedom,” and the other, “The Free Market.”

The second torch, in particular, sent a message to the world: Open your doors for business. Don’t build walls. Let goods, capital, and talent flow freely like water. This is how we all get rich; this is how we achieve world peace. For a long time, America was the chief architect and head preacher of globalization.

But haven’t you felt lately that the light from this beacon is flickering?

It is no longer warmly inviting everyone to “come over.” Instead, it’s shouting “stay away,” and is busy stacking bricks to build walls at its own front door. The Statue of Liberty, once the symbol of openness and inclusion, seems to have quietly turned her back to pick up a mason’s trowel.

This raises a haunting question: Is the United States—the country that once championed free trade and viewed “planned economies” as a plague—quietly accelerating down a very familiar path toward the abyss?

Is it sliding toward the very enemy it once despised most: the totalitarian system?

Some might say I’m just being an alarmist. I know, it sounds crazy. How could the U.S. fall? It has the Constitution, the separation of powers, and the world’s most powerful civil society.

However, even the sturdiest fortresses often crumble from within.

Eighty years ago, before the smoke of WWII had even cleared, an Austrian prophetic thinker named Ludwig von Mises offered a chilling insight in his book Omnipotent Government. He argued that a nation’s journey toward totalitarianism and servitude rarely begins with the evil plan of a dictator. Instead, it starts from a seemingly benevolent and patriotic origin: government intervention in the economy.

Once that first domino is pushed, it triggers an inevitable chain reaction:

Eventually, state power becomes a runaway black hole, swallowing everything and dragging society into the void.

In past decades, scholars of the Austrian School used Mises’ theory to analyze the Soviet Union, Nazi Germany, and many historical tragedies. The fit was always startlingly accurate. But few thought that one day, after decades of globalization, we would need to pick up this same theory to examine the United States of America.

My task in this long-form essay is to apply Mises’ framework to the American landscape since 2017. I want to see if the path the U.S. is currently on overlaps with the trajectory Mises predicted.

The core question is this: From Trump’s loud “America First” and his tariff “big sticks,” to the Biden administration’s ambitious CHIPS and Science Act, to the restrictions on investment in China, drug price controls, and higher immigration bars—is the Great Ship of State known as America verifying, step by step, the terrifying prophecy Mises wrote 80 years ago?

I. The “Fatal Logic” of Interventionism (Theory)

Before interpreting recent economic history, we must first understand the theory—specifically, Mises’ theory of “Interventionism.” We need to spend enough time grasping the essence of this framework because it is the foundation of all subsequent analysis. Only when the foundation is solid can we see that these seemingly isolated and chaotic policies actually follow the same destined script.

1. The Origins and Internal Contradictions of Interventionism

Interventionism is a sugar-coated poison. Its origin is rarely malice; rather, it stems from an irresistible sense of “goodwill.”

Imagine a country, let’s call it Country A. The textile industry in Country A is struggling. Under market competition, workers’ wages have stabilized at $10 per hour. At this point, a politician full of compassion and a sense of justice takes office. He visits the textile communities, sees their meager lifestyle, and is deeply moved.

At a mass rally, he declares passionately: “$10 an hour is an exploitation of labor! It is intolerable for our citizens to live on the edge of poverty! I promise to raise the legal minimum wage to $15 an hour!”

The crowd cheers. The media praises it as a “historic step for labor rights.” The bill passes smoothly. Everything looks wonderful.

But Mises is the one who analyzes the consequences while everyone else is celebrating. He forces us to stay calm and look at the fatal ripples this “pebble of goodwill” creates in the economic pond.

The First Ripple: The Mutation of Costs. For the factory owner, this isn’t politics; it’s accounting. His labor costs have jumped 50% overnight. He isn’t a philanthropist; his primary mission is to keep the business alive. What does he do? He has only three options:

  1. Try to pass that 50% cost increase to consumers by raising prices.
  2. Maintain prices but cut costs by laying off workers or replacing them with automation.
  3. If his profit margins were already thin and he can’t raise prices or automate, he simply goes bankrupt.

The government’s “goodwill” has created its first “unintended consequence”: it intended to help workers, but it likely resulted in higher prices for everyone or higher unemployment for the very people who needed the jobs most.

The Second Ripple: Distorted Price Signals. Here, we must understand Mises’ concept of the greatness of “Price.” Market prices aren’t just numbers picked out of thin air by greedy businessmen. They are an incredibly complex information system. The $10 wage condensed countless pieces of data: the industry’s technical level, global cotton output, consumer demand, worker skill levels… It acts like a sensitive thermometer, honestly reflecting the true value of that job within the entire economic system.

When the government mandates a $15 wage, it’s like putting a hot hand over that thermometer. It doesn’t change the actual temperature of the room, but it distorts the information. This distorted price sends the wrong signal: entrepreneurs may wrongly believe demand is high enough to support such wages and make bad investments, while workers develop unrealistic expectations.

The Third Ripple: The “Addictiveness” of Intervention. This is Mises’ most profound insight. He pointed out that government intervention is “addictive.” Because the first intervention inevitably creates new, thornier problems, the government’s only solution to these new problems is to introduce more and stronger interventions.

In our story, the minimum wage led to inflation and unemployment. The public complains: “The government intervened, so why is life harder?” Does the government admit it was wrong? No. It says: “This isn’t a policy failure; it’s malicious price gouging by businesses and heartless layoffs by owners! I need more power to regulate prices and ban layoffs!”

To make the first intervention “look” effective, the second and third must follow. Price controls lead to shortages; banning layoffs leads to a loss of corporate vitality… the snowball grows until the government’s hand reaches into every corner of the economy. This is the tragedy of interventionism: it starts with “goodwill,” proceeds through a chain of uncontrollable “evil results,” and ends in a destination diametrically opposed to its original intent.

2. Why Domestic Intervention Inevitably Leads to Protectionism

Now, let’s take this story from a closed country and put it into an open, globalized world. Here, the evolution of the tragedy accelerates sharply. In an open international market, global trade plays two vital roles relative to a government’s actions.

First, it is a “Magic Mirror.” Remember the textile factory in Country A? Under domestic intervention, its production cost ($15/hr) is now much higher than its true economic efficiency. Meanwhile, the factory in neighboring Country B has no such intervention; its wages remain market-determined at $10.

The result? Country B’s fabric is high quality and cheap, flooding Country A’s market. Clothing manufacturers in Country A will unhesitatingly ditch expensive domestic fabric for imports. Country A’s textile mills now face total destruction.

At this moment, the international market—the “Magic Mirror”—reflects the failure and stupidity of Country A’s $15 wage policy with brutal clarity. It tells everyone: “Your government is doing something that defies economic logic!”

Second, it is a “Rein.” This sharp “pain” is actually a protective mechanism. It acts like a rein, pulling back the government’s carriage before it plunges off a cliff. Public anger and business failures create political pressure, forcing the government to reconsider or revoke the failed policy.

But we must think about the mechanics of politics. What is the first survival instinct of a government that needs votes and legitimacy? Is it to “admit a mistake”? No. It is to “hide the mistake.” When have you ever heard Trump or Biden say they were wrong?

When the “Mirror” shows an ugly truth and the “Rein” pulls too hard, the government’s instinctive reaction is to break the mirror and snap the rein.

How? The only way—and the only choice—is to build a wall and embrace Protectionism.

The politician gives a stirring speech: “Our textile industry is suffering from unfair competition! Country B is ‘exploiting’ its workers with low wages to commit shameful dumping! To protect our workers’ jobs and defend our industrial dignity, I am announcing a 50% tariff on all imported textiles!”

Magic happens. Country B’s $100 fabric plus a $50 tariff now costs $150. Country A’s textile mills are suddenly resuscitated from the ICU. They can continue to produce at high costs and sell at high prices. Jobs are saved, and the wave of bankruptcies is averted. The government, once a “failed intervener,” is rebranded as a “hero defending national interests.”

Conclusion (Mises): Protectionism is not an active, well-thought-out foreign economic strategy. It is a passive, reactive “political survival pill” and an “institutional fig leaf” used to cover up the failure of domestic intervention policies. It is a political maneuver that forcibly “externalizes” the costs of domestic policy failures and shifts the blame to foreigners.

Therefore, a government committed to broad domestic intervention must move toward protectionism. This isn’t a matter of “maybe”; it is a logical necessity. If it doesn’t, its interventionist lies will be exposed instantly under the sunlight of an open market.

This is the “Fatal Logic” of interventionism. It starts with a seed of “goodwill,” sprouts in the soil of “unintended consequences,” and ultimately bears the poisonous fruit of “protectionism.”

Once you understand this profound and somewhat cruel theoretical foundation, look back at the U.S. since 2016. You will find that the actions of both the Trump and Biden administrations have been meticulously providing the most vivid, living footnotes to Mises’ theory.

II. The Essence of “America First”

June 28, 2016. Monessen, Pennsylvania.

The name might sound unfamiliar to you. But decades ago, this was the heart of the American steel industry. Molten metal flowed, chimneys lined the horizon, and the air itself smelled like wealth. At this moment, however, all that remained were rust-stained abandoned factories and a group of people forgotten by the times.

On this day, a New York real estate developer wearing a red MAGA hat stood in front of a derelict aluminum plant. He wasn’t there to invest; he was there to “harvest” anger. That man was Donald Trump.

He delivered a speech to hundreds of disillusioned blue-collar workers—a speech that historians would later study as the “starting gun” for America’s great pivot. Trump didn’t talk about complex economic theories. He used simple, stinging language.

Then, he made a lethal and seductive promise: “From this day forward, it’s going to be America First!”

In this speech, Trump accurately identified two “scapegoats”: the North American Free Trade Agreement (NAFTA), which he called “the worst trade deal in history,” and China’s entry into the WTO, which he labeled “the greatest job theft in the history of the world.”

When he officially entered the White House in January 2017, the fulfillment of this contract began immediately. Within his first week, he signed an executive order pulling the U.S. out of the Trans-Pacific Partnership (TPP). This agreement, which the Obama administration had spent years building to establish a new generation of trade rules, was torn up effortlessly.

Next came the renegotiation of NAFTA. The process was filled with coercion and threats. Meanwhile, domestically, while the Trump administration claimed to believe in “small government” on paper, in practice, it engaged in clear “intervention” and “protection” for specific interest groups.

When the “cause” of domestic intervention is planted, the “effect” of seeking external trade protection is only a matter of time. But to launch an unprecedented trade war, domestic political demand isn’t enough; one must construct a perfect “enemy” theoretically and morally.

This task fell to a key figure: Peter Navarro. This Harvard-educated PhD in economics was a marginal figure in academia, but his extreme views clicked perfectly with Trump. He was appointed Director of the White House National Trade Council and became the “chief architect” of the trade war.

As early as 2011, Navarro had published a sensational book—Death by China. It provided the Trump administration with a complete “victim narrative.” In this story, the U.S. was no longer the leader and beneficiary of globalization, but an innocent, cheated “naïf.” China, meanwhile, was a calculating, unscrupulous “economic aggressor.”

On August 14, 2017, Trump signed a memorandum launching a “Section 301 investigation” into China—a unilateralist “big stick” where domestic law trumped international law. After nearly a year of “investigation,” this became the final “legal basis” for the trade war.

2018 was one of the darkest years in global trade history since WWII. Key strikes:

  1. Steel and Aluminum. 25% on steel and 10% on aluminum, citing “national security.”
  2. The $50 Billion List. 25% tariffs on $34 billion of Chinese high-tech goods, then another $16 billion by August.
  3. The $200 Billion List. After China’s retaliation, 10% tariffs on another $200 billion of Chinese goods—spanning handbags, furniture, seafood, and bicycles.

Trump uttered his famous, miscalculated quote: “Trade wars are good, and easy to win!”

This lighthearted remark kicked off a tariff spiral that would last for years. America had stepped onto the point of no return for protectionism. An even more ambitious “National Reconstruction Plan” led by the Biden administration was rising on the horizon.

III. The “Poisoned Apple” of Industrial Policy

In the spring of 2021, the atmosphere in Washington was thick with anxiety. A sudden global “chip shortage” had gripped the throat of the American economy. Automotive giants like Ford and GM were forced to shut down production lines simply because they lacked tiny chips.

On April 12, 2021, President Biden convened a high-profile “CEO Summit on Semiconductor and Supply Chain Resilience.” Holding up a silicon wafer, Biden declared: “These chips, these wafers… they are infrastructure. We can’t wait any longer.”

With those words, Biden performed a clever “bait and switch” of concepts. He redefined “chips”—a commodity whose production should be determined by market competition—as “infrastructure.” Once something is labeled “infrastructure,” the government can and should lead its investment and construction.

The CHIPS and Science Act of 2022 authorizes $280 billion, with the core being $52.7 billion in direct subsidies: $39 billion for manufacturing incentives, $11 billion for R&D, plus a 25% tax credit for equipment and factory construction.

The true “planned economy” nature lies in the “guardrail” clauses. Any company accepting federal funds is banned for ten years from any “significant transaction” involving advanced semiconductor manufacturing in “countries of concern” like China. Companies seeking over $150 million must share “excess profits” with the government, provide affordable childcare, prioritize American-made steel, and detail union involvement.

This isn’t just a support plan; it’s a National Plan. The state attempts to use administrative orders to plan every link of a high-tech industry—from investment and R&D to production and profit distribution.

The “American Ordeal” for Global Giants

TSMC: invested $40 billion in Arizona. But costs spiraled. TSMC founder Morris Chang noted bluntly: “The cost of making chips in the U.S. might be 50% higher than in Taiwan.” By July 2023, TSMC was forced to delay mass production from 2024 to 2025. Even with billions in subsidies, Arizona chips are 5–20% more expensive than those from Taiwan.

Intel: received $8.5 billion in direct subsidies and $11 billion in loans. But in early 2023, CEO Pat Gelsinger admitted the 2025 production goal might not be met. The core problem: they simply cannot find enough skilled workers willing to do the high-intensity work of chip fabrication in America.

The “Addiction” of Intervention

When the blueprint hits a wall, the government doesn’t reflect; it assumes there are “loopholes” to plug. From the CHIPS Act, the vines of regulation began to crawl across the entire tech sector:

  1. Export Controls: October 2022 saw the “strictest in history” controls—banning not just products but technical parameters.
  2. Ally Pressure: The U.S. pressured the Netherlands (ASML) and Japan (Tokyo Electron) to limit equipment exports to China.
  3. AI Restrictions: Restricting cloud providers like AWS and Azure from offering high-performance computing to Chinese AI firms.

IV. The Building of Invisible Walls

To ensure the “National Plan” works, the government must build dams to contain the two most unruly currents: Capital and Talent.

The Wall for Capital

On August 9, 2023, Biden signed an executive order banning or restricting U.S. private equity and venture capital from investing in three Chinese sectors: Semiconductors, Quantum Tech, and AI.

Historically, U.S. control was on “inbound” investment (CFIUS). This new order targets “outbound” capital. For the first time, an American entrepreneur’s own money cannot be spent without government approval. Once this door is opened, it won’t close.

The Wall for Talent

The government has used a “double-tap” strategy for talent: blocking the door (inflow) and locking the door (outflow).

  1. Blocking the Door: Trump tightened H1B visas. Biden raised application fees by 70%. Top talent is now choosing Canada or the UK over the U.S.
  2. Locking the Door: The “Exit Tax.” If you renounce U.S. citizenship, you must pay a massive capital gains tax on all assets. The fee to renounce citizenship has jumped from $450 to $2,350 in a decade. New proposals suggest taxing certain expatriates for 10 years after they leave.

When a country uses high costs to prevent people from leaving, it treats citizens not as free individuals, but as “resources” belonging to the state.

When walls, blueprints, and shackles fail to stop the rising tide of inflation, the government reaches for the last resort: Price Controls. The Inflation Reduction Act of 2022 grants the government the power to “negotiate” drug prices. If a company refuses, it faces a tax of up to 95% of that drug’s sales. This isn’t a negotiation; it’s a “price holdup.” Research from the University of Chicago predicts an 18% drop in R&D and 135 fewer new drugs over a decade.

The Military-Industrial-Digital Complex

Mises noted that protectionism breeds monopoly. The “Big Five” defense contractors (Lockheed, Raytheon, etc.) operate in an oligarchy secured by the “Rotating Door”—670+ former DOD officials moved to defense firms in 2022. As the “Tech War” deepens, the government needs “National Champions” (Google, Microsoft, Nvidia) to enforce its blocks. A “Digital Cartel” is forming under the name of “National Security.”

V. The Regression of American Rights

I must emphasize again: today’s America is not a totalitarian state in the traditional sense. It still possesses a strong tradition of liberty and a vibrant civil society. However, what we are witnessing today is not a “yes or no” state, but a “process,” a “trend.”

In November 2018, the Trump administration’s DOJ launched the “China Initiative.” In practice, this movement quickly devolved into a massive campaign of scrutiny and prosecution targeting Chinese-American scientists, characterized by heavy racial profiling.

Consider the most tragic case: Professor Gang Chen of MIT. A world-renowned expert in heat transfer, arrested at gunpoint by FBI agents at his home in January 2021. The charges were administrative and financial flaws, completely unrelated to actual “espionage.” In January 2022, the DOJ voluntarily dropped all charges, admitting they “could not meet their burden of proof at trial”—meaning they never had solid evidence to begin with.

This movement perfectly illustrates Mises’ logical chain: when a government begins to restrict the free movement of people and technology for its industrial plans, those restrictions inevitably evolve into an erosion of basic individual rights, such as the presumption of innocence and academic freedom.

“Environment Remodeling” via the “Twitter Files”

In late 2022, the “Twitter Files” revealed how government agencies—including the FBI, DHS, CIA, and even the Pentagon—maintained systematic, daily “cooperation” with platforms like Twitter:

The Retreat of Individual Rights

Individual rights, once considered sacrosanct, constantly retreat in the face of “national security,” “industrial competition,” and “public health.”

VI. The Dream of Autarky and the Inevitability of War

1. The Economic Mirage: Autarky

“Autarky” sounds like the ultimate form of “strength” and “security.” However, it is a dream built on economic ignorance. It fundamentally violates the most basic law of human prosperity: The Division of Labor and Comparative Advantage.

A heart surgeon could mow his own lawn, perhaps even better than a gardener. But he doesn’t, because spending those two hours on surgery creates far more value than the cost of hiring a gardener. Nations are the same. Autarky is a mad attempt to move against history—demanding that America be both the heart surgeon and the gardener.

2. The Political Urge: Absolute Control

If it’s so foolish, why do governments crave it? Because to a centralized government, “external dependence” is a “lethal threat.” For a quasi-totalitarian regime, predictability and controllability are paramount. Today’s “decoupling,” “de-risking,” and “onshoring” are modern variants of Autarky.

3. The Return of Conflict

When a country follows a path of Autarky and finds its own resources cannot support its ambitions, it is left with one last, ancient option: Plunder.

Mises pointed out in 1943 that the root of the world wars was Economic Nationalism. Today, “alternative wars” are already here: Financial Plunder (freezing assets), Technological Plunder (strangling competitors), and Geopolitical Plunder (deploying military force to secure supply chains).

Conclusion: Will America Become Its Own Former Enemy?

Let us link this chain to the abyss one last time:

  1. The Start: Populist labor market intervention (minimum wage, union privileges).
  2. The First Domino: Trade protectionism (tariffs).
  3. The Second Domino: Industrial planning (The CHIPS Act, subsidies).
  4. The Third Domino: Factor control (invisible walls, investment bans).
  5. The Fourth Domino: Price intervention (direct control of drug and energy prices).
  6. The Fifth Domino: Totalitarian tendencies (national security over individual rights).
  7. The End: The mirage of Autarky and the inevitability of conflict.

This chain started with a few tariffs and ended with the systemic erosion of liberty. America became a “beacon” because its founders were deeply suspicious of government power. Today, that system is being hollowed out from within.

America stands at a dangerous crossroads:

We cannot predict the future. But the wisdom of Ludwig von Mises is like an eternal lighthouse. It illuminates not only the ruins of history but every dangerous fork in the road leading to either slavery or freedom. The course of this lighthouse—America—now moves the fate of the entire world. Will it return to the bright seas of liberty, or sail headlong into the dark vortex called “Serfdom”?

Happy new year, and, we shall wait and see.