Bidenomics Is Industrial Policy By Another Name
President Biden has called his economic policy “Bidenomics” and at the same time he has embraced expanding the social safety net for Americans.
Bidenomics seems to be old fashioned industrial policy by another name. For instance, the administration is pushing a buy American strategy. Anytime the government becomes involved in picking which industries will receive their largesse, winners and losers have been created. This behavior never ends well for the economy over the long haul.
The companies receiving the preference plow some of their government profits into electing the pols that have helped them or will help them continue the gravy train. That stymies new technologies and products from entering the market. Companies become ossified producing inferior products because they have a ready market bereft of competition.
Fossil fuel companies are a great example of how government interference using subsidies and preferences has allowed outdated energy sources to be more viable than an open market would without interference. This is especially true with coal which should have taken its place alongside wooden wheelwrights and buggy makers by now.
Sure, Biden wants to push green technologies and has no qualms subsidizing what today may be cutting edge. Green technology is something most Americans want. But once entrenched because of government favoritism these green manufacturing companies will have very little incentive to innovate.
They become part of a protected class that never ends. Government interference fossilizes markets. Companies continue without competition, weakening the economy in the long run.
The same goes for directing government to buy products from American-only manufacturers. There are problems with that strategy. It incentivizes companies to charge more than their foreign competitors and still win the contracts.
It is true they are producing American jobs. But because those companies become less and less adaptive, fewer new jobs are created in the years to come. Ultimately taxpayers end up on the short end. It guarantees that the American people will have less of everything government pays for. Our government can spend only so much even with deficits.
Biden believes that only unions can raise the wages of workers in spite of the wage gains for all that have accompanied his first two years in office. He longs for a nostalgic era that only a few Americans were ever part of. By making sure that all jobs on a government project are unionized, it holds minorities and women back from competing for a place on those projects since unions have long been a White male preserve.
Government should not interfere with the ability of labor and management to collectively bargain. That means it needs to have a neutral position. Neither management nor labor should exploit the other. Government needs to enforce the rights of both without coercion of either.
What can be good about Biden’s social policy is how it wants to expand social services to people. Companies don’t have families or illness or suffer old age. Childcare, medical care, pensions, and even affordable housing is where tax money should be going.
Companies are not people or citizens. They are vehicles to maximize economic operations and investment. Unions are not people or citizens either they are entities that should be allowed at if wanted by their members to bargain collectively with companies in the marketplace.
Government in both management and labor should be neutral. The government’s responsibility is to make sure the playing field is equal and that markets function as intended without interference or favoritism. It is individuals who need government help…not any other artificially created entities like companies or unions.
