What is Bidenomics and why it might matter, to everyone.
A guided ramble through what could be a major economic moment.
We’re not economists. We’re not professional pundits or historians. And we’re not the first people to claim that we are living through the self-declared end of neoliberalism. That would be something which we believe everyone should be excited about.
To explore this slow revolution, here are a selection of interesting excerpts and recommended links with no paywalls:
(Aug 2023 - Robert Reich - The Guardian) Bidenomics is working… (we also love Robert Reich’s wider works, which can be explored through his Substack)
“The Biden administration has added three other critical ingredients: the threat (and, in some cases, reality) of tough antitrust enforcement, a pro-labor National Labor Relations Board, and strict limits on Chinese imports. Taken together, these policies are beginning to alter the structure of the American economy in favor of the bottom 90%. This restructuring has been difficult to achieve for the simple reason that the monied interests don’t want it. In Republican circles, the monied interests have preached the snake oil of supply-side economics, which legitimized giant tax cuts going mostly to the rich and large corporations. Those tax cuts – under Reagan, George W Bush and Trump – exploded the federal debt, fueled giant profits in the biggest firms and financial institutions, and stoked a surge in billionaire wealth but did literally nothing for average working people. Nothing trickled down. In Democratic circles, the monied interests have used neoliberalism – which has called for deregulation, privatization, free trade and the domination of finance over the economy. This orthodoxy pervaded the Clinton and Obama administrations. (I won’t bore you with my war stories, but trust me.) The result was similar to that of supply-side economics: wealth surged to the top, but average working people remained stuck in the mud. In contrast to both supply-side economics and neoliberalism, the Biden administration is focused on altering the structure of the economy.”
(April 2021 - Claudi Pérez - El País ) This gives a nice Euro vs US contrast, and it’s particularly interesting to read views from before anyone could imagine the inflationary pressures of the Russian invasion of Ukraine. Some highlights include:
“Joe Biden…voted enthusiastically in favour of Reagan’s tax cuts in the 1980s and he was vice-president to…Obama, who…ended up leaving Trump as his legacy…“Biden’s stimulus is the dawn of a new era,” economic historian Adam Tooze wrote. “It is the definitive break with neoliberalism,” according to the analysis of J. W. Mason of the Roosevelt Institute. “The pandemic is an opportunity to usher in change that restores protagonism to the state,” said Mariana Mazzucato…”
(Nov 2022 - Anthony Annett - Commonweal Magazine) This article really does what is says on the tin: ‘After Neoliberalism: ‘Bidenomics,’ Explained’. Among its many strong points, we agree with the argument that neoliberalism is an elegantly simple philosophy - let the market deliver the most efficient outcome. And in a field as complex as economics, wouldn’t Ockham’s Razor be a reasonable approach? But neoliberalism has failed to deliver on its promises. A wide range of economic indicators (US & UK in particular) demonstrate that growth and wages stagnated from the 80’s onwards, while inequality increased. The rich got richer…and everyone else stayed where they were or moved backwards. Some key excerpts:
“Some of Bidenomics is about protecting more people from the vagaries of modern capitalism by filling out the welfare state. But much of it—infrastructure, industrial policy, and climate action—works on the supply side, seeking to build out the productive capacity of the economy to meet the challenges of the twenty-first century.”
(Aug 2023 - Ezra Klein Show - New York Times) - Here’s a punchy little snippet from Rogé Karma in his discussion with Martin Wolf.
If you want to know the answer to the question he poses, check out the full show here, in the notes of which are lots of relevant links for further reading and research on this topic.
And here’s an image with an eery story for you: The Laffer Curve
This concept underpinned many neoliberal arguments in favour of low taxes. We’ll let you read the Investopedia article for a better explanation than we can give. But we love the fact that it’s one of those ideas that really was sketched on a restaurant napkin. And for whom was it sketched by Mr Laffer? Those chuckle brothers you might remember from a little event that kicked off in Mesopotamia in 2003 - Donald Rumsfeld and Dick Cheney! Well, if they’re fans of it, sign us up!
And here’s old Art himself, with the rich sense of humour you’d expect from a conservative economist!
If you’re still reading…and you got to the end of Art’s 3 minute explanation, we’d critique his final point by saying that, while the arithmetic effect is clearly a linear and consistent trend, the economic counter effect of raising taxes is not an equal and opposite force, since people are not exclusively incentivised to work for the sake of money.
And finally…really pleased that, despite it being such a short video, he took the trouble to credit the earliest known instance of the Laffer Curve to be the Islamic scholar Ibn Khaldun in the 14th century (and that credit also seems to appear in all the Laffer-authored pages we found so, nice one Art!). Although we much prefer the sound of the Khaldun Kurve. 😉