Since assuming office, President Joe Biden has implemented an economic agenda known as Bidenomics, aiming to replace the dominant greed based Chicago-school economic approach with a more effective and inclusive set of economic principles. This article examines key elements of Bidenomics, comparing it to past policies and exploring its potential to drive job growth, address income inequality, and promote competition.
Job Growth: Contrasting Strategies
A notable distinction between the Biden and Trump administrations' lies in their approaches to job growth. The Trump administration relied on "trickle-down" theory, promising that tax cuts for the wealthy would benefit everyone. This policy proved ineffective. In contrast, Bidenomics adopts a "bottom-up" approach that prioritizes support for the middle class and working families.
Questioning Trickle-Down Economics:
Trickle-down economics, the belief that shifting wealth to corporations and the rich via tax cuts and other direct payments would eventually benefit the entire population, has been proven false based on historical evidence. The tax cuts enacted under Reagan, Bush, and Trump primarily benefited the wealthiest Americans and corporations, leading to a significant concentration of wealth and increasing income inequality. This approach failed to generate widespread economic growth and instead resulted in lower living standards and lower life expectancy (see chart below) for the average worker.
Bidenomics challenges this flawed policy by prioritizing the needs of the middle class and working families. Through initiatives such as the Child Tax Credit, increasing the minimum wage, expanding access to education and healthcare, and supporting small businesses, Biden aims to stimulate economic growth from the ground up. This approach recognizes that a robust economy is built on thriving working and middle classes.
Globalization's Pitfalls and Manufacturing Job Losses:
Globalization, once hailed as a driver of economic growth and efficiency, has contributed to significant declines in wages and employment for American workers. Outsourcing and the decline of domestic manufacturing led to job losses and social instability in many communities (see Detroit). While globalization was supported by mainstream economists worldwide, including former U.S. Department of Labor Secretary Robert Reich, Nobel prize winners Paul Krugman and Joseph Stiglitz, it is crucial to acknowledge its negative impact on Americans. For instance, the COVID-19 pandemic revealed vulnerabilities in the supply chain, such as the reliance on China for critical supplies like masks.
President Biden acknowledges the need to strike a balance between global cooperation and American jobs. His focus on revitalizing domestic manufacturing through strategic investments, incentivizing reshoring, and promoting fair trade practices aims to create opportunities for American workers. By fostering innovation and supporting industries critical to national security, Bidenomics is well positioned to help rebuild the US manufacturing sector and ensure economic resilience.
Addressing Corporate Concentration and Restoring Competition:
Another significant aspect of Bidenomics is the commitment to addressing increasing corporate concentration and power. Executive Order 14036, titled "Promoting Competition in the American Economy," signifies a step towards restoring fair competition. By cracking down on anti-competitive practices, increasing scrutiny of mergers and acquisitions, and promoting consumer choice, the Biden administration aims to create a level playing field that benefits businesses and consumers alike.
Conclusion:
Bidenomics presents a pragmatic departure from failed economic policies of the past. By prioritizing job growth, challenging trickle-down economics, addressing the negative consequences of globalization, and restoring competition, President Biden aims to rebuild the economy in a more inclusive and sustainable manner. While the success of Bidenomics will be measured over time, its focus on equitable growth and shared prosperity holds promise for the future.