Biden’s vision for economy leans on liberal inspiration
Campaign’s retro plans harken to 1933’s leaders
Democratic presidential candidate Joe Biden promises a new vision for the United States economy, but his plan has a decidedly retro flavor that harkens to his party’s most ambitious leaders.
The former vice president rolled out an economic agenda that Presidents Franklin Roosevelt and Lyndon Johnson would readily recognize and embrace. By collecting more taxes and directing more investment, the federal government would play a more significant role in the economy than at any point in the
past 50 years.
“I do think we’ve reached a point, a real inflection in American history. And I don’t believe it’s unlike what Roosevelt was met with,” Biden told the New York Times. “I think we have an opportunity to make some really systemic change.”
No one can claim the Democrats are not offering a stark contrast to President Donald Trump’s policies, which are best summarized as reducing taxes, slashing regulations, cutting government and allowing the Law of the Jungle to prevail.
Biden is arguing for a return to tax-and-spend liberalism as the country enters an economic downturn that probably will force us to rename the 2008 Great Recession. To consolidate support, he plans to throw money at social justice and environmental causes to level out the country’s balance of wealth.
Middle-class workers take center stage in the Biden plan, with the federal government spending $400 billion to buy American-made products and investing $300 billion in domestic research and development.
The campaign’s rhetoric is straight out of the union-driven, jingoistic 1970s, promising a “pro-American worker tax and trade strategy.” He promises policies to bring manufacturing back to the U.S., capitalizing on the anger surrounding shortages for foreign-made personal protective equipment.
Biden would invoke the Buy American Act of 1933 and double-down on American businesses as the federal government’s preferred vendors. The Obama administration tried to ban such provisions in global trade deals to promote fair trade.
Trump accuses Biden of plagiarizing him, but every presidential candidate makes such promises. Other than taxing Americans who buy foreignmade goods through tariffs, I struggle to identify a Trump initiative that led to long-term rehiring.
Biden also promises to expand federal contracting to include people of every “race, ZIP code, gender, gender identity, sexual orientation, disability, religion or national origin.” In other words, he plans to spread the money around to fight income inequality.
Again, we flash back to oldtimey affirmative action. Progressives correctly observe that businesses owned by white men have sewn up federal contracting for too long, but lobbyists and conservatives will argue that this is not the way to fix it.
Folks worried about China will like Biden’s plan to boost federal research and development spending. He wants to focus on the same sectors as China: clean energy, batteries, artificial intelligence, telecommunications and next-generation computing.
Again, Biden’s advisers reach back to previous Big Government eras for inspiration. Under Johnson, federal research and development support was 2 percent of GDP in 1964, compared to only 0.7 percent last year.
In contrast, every budget Trump submitted to Congress slashed total spending on research and development.
When it comes to economic policy, the Trump-Biden race is a proxy for the old debate between John Maynard Keynes and Friedrich Hayek, arguably the 20th century’s most influential economists.
A World War I veteran, Keynes believed that an economy carefully managed by elected governments could bring peace to the world and minimize social injustice, thereby fostering prosperity. He argued governments should spend their way out of recessions and repay their debts with taxes on the wealthy during good times.
Hayek, who also fought in the Great War and yearned for peace, argued that central government planning, no matter how well-intentioned, always will devolve into totalitarianism as leaders assume more and more authority. He insisted governments only should enforce the rule of law and provide a safety net for the neediest. Otherwise, governments should let economic forces do what they will.
Keynes’ approach dominated global thinking from the Great Depression to the late 1970s, when inflation ravaged America and Europe. Ronald Reagan, Margaret Thatcher and other conservatives took Hayek as their inspiration, and liberals folded under corporate pressure, leading to the present condition.
After years of growing economic inequality, and with a global pandemic degrading our health and economy, humans face a dramatic choice. Do we let the virus and recession run their course, or do we try to manage them with the few tools we possess?
More importantly for world peace, do we unite to fight the virus, or do we adopt a bunker mentality? Our presidential candidates offer a clear choice.