On Biden and the role of government in life
One image that will capture the change from the Trump administration to the new Biden administration is the image of President Joe Biden sitting at the Resolute Desk with a two-foot stack of executive orders that were written to undo the executive orders instituted by President Trump.
As I was watching Biden sign that stack of executive orders reversing the executive orders of his predecessor, I was struck by the enormity of the problems facing the incoming administration and American citizens. Every problem — every executive order can also be thought of as an opportunity to change the direction of America. The list of challenges include climate change; racial injustice; immigration; voting rights; health equity; public infrastructure; wealth inequality; small and minority business development; student loan debt; homelessness; hunger; women’s rights; the opioid crisis; and, of course, the pandemic.
The new administration is boldly trying to address all these complex problems, which got worse over the last four years under the previous administration.
As a society, prior to President Donald Trump, we had two basic camps or economic/political philosophies that addressed society’s problems and the role of government. Trump introduced a third camp that included fringe groups like QAnon, neoNazis and the KKK. A recent survey indicated that fully onethird of self-identified Republicans stated they mainly agree with the conspiracy theories of QAnon, and another 23 percent agree with some beliefs of the cult. It is hard to believe that 33 percent of Grand Old Party voters believe Democrats eat children.
Despite the fringes that became mainstream within the Republican Party, their economic beliefs were largely unaffected by the cultists. Republican economic orthodoxy remained for limited government if not outright anti-government. Our recent election was a referendum on whether we choose to solve society’s problems by primarily relying on the private sector, or we rely on a mix of the private sector and a functional and competent government.
Former Trump adviser and now-pardoned Steve Bannon pushed Trump and the Republican Party to dismantle what they labeled the administrative state. The Republican Party viewed the public sector as the “swamp” and the “deep state,” something to be destroyed, not celebrated or cherished. The outgoing administration’s modus operandi was that markets solve problems and government create problems.
Ronald Reagan famously said in 1964: “This is the issue of this election: Whether we believe in our capacity for self-government or whether we abandon the American Revolution and confess that a little intellectual elite in a far-distant capital can plan our lives for us better than we can plan them ourselves.”
The seductiveness of this approach is that the pursuit of personal gain ultimately benefits society at large. In the words of Gordon Gekko in the 1987 movie, Wall Street, “Greed is good.” Adam Smith’s 1776 economic opus, “The Wealth of Nations” provided the blueprint showing how market forces in a world of small businesses (the butcher, the baker and the candlestick maker) provided benefits to all consumers. We do not live in Adam Smith’s world, yet we continue to be influenced by his views.
In the process of destroying the administrative state, corporate taxes are reduced, and in their approach ultimately eliminated. It was Reagan economist Arthur Laffer who came up with the myth that reducing taxes on the rich not only increased economic activity, it increased government revenues and reduced budget deficits. In this world, the environment is left to the decisions in corporate boardrooms. Wealth and income inequality is dealt with by economic growth, and if for some reason people remain homeless, hungry, poor, uninsured and economically insecure it is because they are not sufficiently motivated, or they lack the intellectual ability to care for themselves. Republican economic orthodoxy is a one-trick pony — reduce taxes and everything will be OK.
Republican orthodoxy was correct in the sense that the wealthy did become wealthier. It is simply math — reducing taxes on the rich results in the rich keeping more of the earnings that were made possible by a government designed to protect their interests above all other interests.
According to findings by the Pew Research Center, the share of total national wealth going to upper-income families (over $187,000 in annual income) increased from 60 percent in 1983 to 79 percent in 2016. Over the same period, middle-income America’s share of total national wealth declined from 32 percent to 17 percent.
The challenges listed above are related to this issue of income and wealth distribution and the role of government. These things don’t just happen. The alternative the Biden administration offers is to allow competent government to address these important tasks. Government is not and cannot be the only solution, but competent government can be part of that solution. A government that believes in its ability address society’s problems has a chance to be successful compared to one that believes that government is the problem.
Fred McKinney is the Carlton Highsmith Chair for Innovation and Entrepreneurship and director of the Peoples United Center for Innovation and Entrepreneurship at the Quinnipiac University School of Business. He is on social media at @drfredmckinney.