Jason Furman on "Bideneconomics"

Serious analysis of economic mistakes by the Biden administration, at Foreign Affairs but free for now.

Basically, Jason Furman argues that overspending led to inflation, and trying to pre-empt market choices about what to manufacture etc. led to monstrous inefficiencies:

Biden arrived in office in 2021 with what he understood as an economic mandate to “Build Back Better.” The United States had not yet fully reopened after nearly a year of restrictions necessitated by the COVID-19 pandemic, which had suppressed activity in the service sector. Biden set out to restructure the country’s post-pandemic economy based on a muscular new approach to governing. Since the 1990s, Democratic economic policy had largely been shaped by a technocratic approach, derided by its critics as “neoliberalism,” that included respect for markets, enthusiasm for trade liberalization and expanded social welfare protections, and an aversion to industrial policy. By contrast, the Biden team expressed much more ambition: to spend more, to do more to reshape particular industries, and to rely less on market mechanisms to deal with problems such as climate change. Thus, the administration set out to bring back vigorous government involvement across the economy, including in such areas as public investment, antitrust enforcement, and worker protections; revive large-scale industrial policy; and support enormous injections of direct economic stimulus, even if it entailed unprecedented deficits. The administration eventually came to dub this approach “Bidenomics.” 

Biden’s advisers and some prominent economists proclaimed that the Build Back Better agenda would herald the beginning of a post-neoliberal era in which massive public investment in infrastructure and the domestic economy would better position the country for inclusive growth and the clean energy future. In their view, they were turning the page on the economic policies pursued by Presidents Bill Clinton and Barack Obama, which the Biden team implicitly argued were too focused on free trade, too timid on deficit spending, and too reliant on the welfare state to fix the gaps left as a result. Instead, in order to gain an edge in the competition with China, the United States needed a transformative agenda to revive domestic manufacturing and power the transition to green energy. . . .

Ultimately, the administration’s plans to transform the United States would be waylaid by a punishing bout of inflation.

All my leftish friends hate to be told that we can't do better than capitalism. They and I generally agree that capitalism is pretty good for most folks but bad for many; the difference is that they think we could do much better but I am skeptical. The same goes for Trump and other economic nationalists; they think we could do much better for Americans by telling the rest of the world to go to hell, but I doubt it.

All attempts to tinker with the market machine have risks. I think some of the risks we have taken have turned out very well, for example the Clean Air Act and the Clean Water Act. We can, and are, accelerating the move away from a fossil-fuel based energy system. But so far as I can tell we do not know how to do the thing many on both the left and the right want: to create an economy that does better by ordinary workers rather than enriching global capitalists, and that leaves most families feeling less economically stretched. We do know a few things that could help, like building a lot more housing, but all of those things also come with costs; in the case of building housing, it means changing neighborhoods in ways the existing residents hate, or bulldozing green spaces to build on; making traffic worse for everyone; bringing in immigrants to do the work; and enriching sleazy developers. I think national health insurance would be great, along with an expanded national retirement system. Politicians in Denmark and Norway often say the the existence of the strong social safety net is part of what makes their citizens free, since they can change jobs or start their own businesses without worrying about that stuff. But to implement those things in the US would mean raising taxes a lot, and nobody has been able to get Americans to agree to that.

If our problems were easy to solve, we would have solved them by now. We have not solved them because they are hard. I give Biden and his allies credit for trying, but the result was massive inflation and a second term for Donald Trump.

Addendum

Interesting thought from Matt Yglesias, who notes that Biden's attempt to blame higher prices on business failed: "We just had a live trial during the Biden years of the theory that being more hostile to business would rally working class voters to the Dem banner and it clearly didn’t work."