President Joe Biden has put his economic record at the center of his reelection bid. His State of the Union address in March highlighted his administration’s accomplishments. “I inherited an economy on the brink,” he said. Now our economy is the envy of the world. “Although polls show that many Americans are skeptical of such a claim, knowledge suggests that the U. S. economy is doing well. Unemployment remains low (3. 9%), inflation is down to 3. 5% from its peak of 9. 1% in June 2022, and customer spending is developing strongly even as GDP expansion has slowed from its most frenetic speed in 2023.
Biden can point to several laws passed during his term that contribute to this relative success. The Inflation Reduction Act (IRA), the CHIPS and Science Act (CHIPS), and the bipartisan infrastructure bill are at least partly to blame for recent progress. Leading to public investment totaling approximately $537 billion and spurring personal sector investment commitments estimated at $866 billion and expected to reach trillions, manufacturing sector investment added around 0. 4% to GDP last year. This wave of public investment comes at a time when British and European governments continue to flirt with austerity, even as their economic performance lags behind that of the United States. Biden’s large-scale investments in trade policy mark a break with previous administrations and have sparked a sea change in domestic and global policies. political debates.
But despite the statistics, many Americans still think the economy is rarely working well for them. Persistent structural weaknesses, in addition to weak laws on hard work, insufficient investment in education and available physical care, high debt ratios, and emerging sources of income and wealth inequality. , means that most Americans are not enjoying the benefits of the current recovery. Citing summary figures to convince a public still earning a few pennies won’t help convince the skeptical electorate that doesn’t believe the formula works for them.
To convince Americans that a second term will allow them to reap the full benefits of Biden’s new trade policy, the administration will have to move forward with implementing the structural reforms needed to effectively expand the U. S. economy “from the middle up. “as announced by the U. S. government Unidos. La White House defined its economic ambition in June 2023. This will require a much broader and bolder approach, which will not hesitate to halt the strong financialization of the country’s corporate sector.
Since taking office in 2021, the Biden administration has pursued a timeline of economic renewal that explicitly seeks to move away from the old assumption that economic advantages will invariably “come” to ordinary Americans and from the trend toward relief from the deficit and austerity. that has hit the entire country. the world after the currency crisis of 2008. Management embraced investment-led expansion, largely through supply-side measures, adding grants, loans, tax breaks and other incentives. Biden’s approach to trade policy marks a notable shift. Although government intervention in the economy is nothing new (in fact, Silicon Valley would not have happened without it), American leaders have long refrained from pursuing trade policy because it ran counter to traditional wisdom that the state It simply deserves to create the situations for the markets. To function, the therapy market makes mistakes when they emerge and are otherwise kept out of the way. By making trade policy a centerpiece of his economic strategy, Biden has made imaginable a considered political debate about what kind of expansion the United States needs and who deserves to benefit from it.
Biden’s trade strategy has been implemented through laws such as the IRA, CHIPS, the bipartisan infrastructure bill, and the American Rescue Plan, with the aim of expanding the productive capacity of the U. S. economy and local investment, especially in troubled countries. Regions. These measures reflect a preference for promoting greater economic inclusion, a better standard of living and reducing greenhouse gas emissions.
Building a more inclusive and sustainable economy is an uphill battle, but an important one. The country’s corporate governance systems continue to prioritize the interests of shareholders over the broader set of actors that create economic value. Financial markets have become decoupled from the genuine economy. with investments concentrated in financial, insurance and real estate companies. In addition, companies in the genuine economy, such as those in the pharmaceutical and manufacturing sectors, spend more on percentage buybacks than on productive activities such as education workers, infrastructure modernization, and technology. and R&D.
To effectively deliver employee benefits, US trade policy will need to contribute to the status quo of a new social contract between the state and business and between capital and labor, focused on the usual intelligentsia and restoring public trust. public in the state. You can redefine the terms of those relationships. Governments can condition access to public investment and other states to obtain advantages to the corporate habit that maximizes public value. For example, a company that obtains government loans or tax advantages might be forced to ensure that the intelligence, facilities and technologies it produces remain available and affordable and to share its intellectual assets with those of others. more than $40 billion in pharmaceutical innovation through the National Institutes of Health, but still has to ensure that taxpayers who fund drug advancement are not charged higher-than-maximum prices. Although these situations were not incorporated into the production of the Pfizer-BioNTech COVID-19 vaccine, they were included in the Oxford-AstraZeneca vaccine because researchers at the University of Oxford made the long-term accessibility of the vaccine a condition for its collaboration. Public financing should also be accompanied by provisions requiring companies that receive public budgets to share a portion of their profits with the public sector and promote the reinvestment of corporate profits in productive activities, such as employee education and R&D. d.
It is true that Biden’s leadership has begun to move in this direction. CHIPS, for example, imposes situations on corporations that gain public support. Participating corporations cannot use the earned budget to make percentage buybacks and are required to implement employee education plans. , provisions to expand employee access to child care, and commitments to sustainable production practices. However, critics of industry unions are involved because such measures are too flexible and don’t go far enough. For example, they do not set minimum payment criteria for all beneficiaries. Corporations don’t save you buyback percentages at all, don’t require the network to get perk deals that help serve citizens in economically disadvantaged areas, or don’t guarantee employees’ right to organize.
Other critics say such measures blur the lines between trade and social policy and insist that the number one goal of public investment deserves to be simply increasing production and productivity. But companies are still interested in obtaining help through CHIPS: as of February, the government had obtained more than six hundred expressions of interest from companies in 42 federal states. Integrating social and environmental provisions into trade policy investments not only enables greater smart use of public money for the public; Such provisions can also make trade policy more effective. Climate-related provisions, for example, if well designed, can help drive transformations that will make US industries more competitive on a global scale (as was the case with the German metals sector, which benefited from conditional public investment to crisis relief). carbon emissions from metal production). ). Protecting workers’ interests helps maintain smart relationships between owners and workers, avoiding disruptions from actions like last year’s action by the United Auto Workers (UAW). This does not mean that trade policy deserves to become the means to promote all social and environmental priorities. Additionally, contracts between the public and private sectors must be thoughtfully and creatively designed to establish transparent criteria and purposes without being overly restrictive in how corporations will have to meet them, which could simply stifle innovation.
No trade policy will succeed if it ignores the interests of American people. As I explained in a previous essay for Foreign Affairs, the UAW strike underscored the importance of staff rights, representation, and fair compensation in the transition to a green economy. If staff producing EV batteries earn wages at industry standards, the green transition will not be a fair transition and, without staff and public involvement, will grind to a halt. Biden has continually promised to be the most pro-worker and pro-union president in American history. Although he has provided strong symbolic support (in September 2023, Biden became the first sitting president to join a picket line), he wants to do more in terms of policy. In addition to offering fair wages, employee training, and access to benefits such as child care (in the case of CHIPS), companies that serve the public could be required, for example, to allow employee representation on their forums, a more environmentally friendly approach. is not unusual in Europe and can encourage a long-term view of control and integrate valuable perspectives into decision-making, based on a direct understanding of business operations.
To advance a broader transformation – one that makes all companies, not just those receiving direct public aid, bigger – management must prioritize legislative reforms and tools such as sectoral bargaining to empower employees and control shareholder primacy. Employment contracts are negotiated between specific corporations and their staff. Sector bargaining requires staff, businesses, and government to sit down and negotiate criteria that are not unusual for an entire sector or industry, making sure that corporations that treat their staff well are not left at a disadvantage. This technique already exists in some states, such as California, Colorado, and Minnesota, which have passed laws creating forums or commissions composed of union, business, and government representatives to establish criteria for the entire industry.
Industrial policy can also contribute to achieving a broader objective. The government’s role is not to promote expansion for its own sake, but to direct expansion in a way that benefits more people and is sustainable. Similarly, their role is not just to deal with the crisis. with market failures, but also to shape markets. The business strategy has the potential to bring about immense positive change in many areas, including healthcare, housing, and the fight against climate change. This will require bolder action. Until now, U. S. trade policy has relied heavily on fiscal measures, such as those embodied in the IRA. But going forward, if Biden is re-elected, trade policy will leverage the full diversity of government powers to tame a broader diversity of policies. teams and institutions.
Take, for example, the country’s huge inventory market. The US federal government is the world’s largest buyer, spending more than $630 billion a year on products and services, making government procurement a difficult tool for shaping markets. By wisely choosing what to buy and from whom, the U. S. government can create new market opportunities for companies and catalyze investments and inventions that align with trade policy objectives and social and environmental goals. The government is already beginning to leverage this budget to create markets that drive innovation in critical industries; requires, for example, that public procurement of construction fabrics prioritize low-carbon options. Management deserves to expand this initiative to inspire carbon discounts in markets such as agriculture, aviation, shipping and other sectors where decarbonization is difficult. This can also increase the use of strategic purchasing for other objectives. For example, the government can simply condition purchases from pharmaceutical corporations on ensuring affordable access to their products.
A new national green progress bank would also allow for faster expansion of blank energy and low-carbon generation projects. There are national banks of progress all over the world. In particular, Germany’s national progress bank, KfW, has played a role in the country’s efforts to decarbonize its economy, providing loans, for example, to green generation corporations and solar and wind energy projects. The U. S. government could simply create a similar national bank, building on existing plans for a greenhouse fuel relief fund under the auspices of the Environmental Protection Agency. This bank, which works in partnership with green banks at the state level, would complement the diversity of tax incentives, subsidies, and other policy measures that are ultimately in a position to inspire decarbonization. For example, the bank could simply offer low-interest loans to help remove barriers. (largely similar to emerging prices caused by inflation) that are ultimately blocking the expansion of offshore wind installations.
Despite the strength of the U. S. economic recovery since the COVID-19 pandemic, Biden trails Trump, his Republican rival for president, in many key polls. Trump blames Biden for the struggles of many Americans, but the blame deserves to fall on the structural messes. that very few presidents have resolved. Biden wants to show that he will address the causes, not just the symptoms, of this malaise. To do so, you’ll need to convince the American public that you have a plan to build on the early successes of your business strategy in a way that will gain advantages for businesses and staff and create a resilient, sustainable, and inclusive (socializing) economy. Not only the dangers, but also the rewards.