There was a time when the idea that the U.S. government could and would do things to encourage industrial growth in America — including protecting U.S. companies from the unfair advantages posed by foreign competition that could produce products cheaper because they didn’t have to adhere to American laws about labor, safety, and environmental protections — was widely accepted and non-controversial.
But then Ronald Reagan was elected and Wall Street was in ascendance. And Wall Street wanted companies to be able to move operations and job overseas because Wall Street doesn’t now, and never has, put American workers and the environment ahead of naked greed.
Reagan and his Wall Street cronies — the people who really called the shots in his administration — shifted the debate away from wages and safety and good jobs, and onto the notion that “big government” had no place in “picking winners and losers” in the U.S. economy.
This is where the Biden administration’s greatest achievements may go down in history, because they have managed, in the short course of just one presidential term, to shift the balance of power away from Wall Street in ways that other Democratic administrations post-Reagan have failed utterly.
Writer Robinson Meyer over at The Atlantic has a very good piece posted that looks at the big picture on these Biden victories, for which Biden is still receiving too little credit from a mainstream media that loves to repeat Republican talking points:
The idea is this: The era of passive, hands-off government is over. The laws embrace an approach to governing the economy that scholars call “industrial policy,” a catch-all name for a wide array of tools and tactics that all assume the government can help new domestic industries get started, grow, and reach massive scale. If “this country used to make things,” as the saying goes, and if it wants to make things again, then the government needs to help it. And if the country believes that certain industries bestow a strategic advantage, then it needs to protect them against foreign interference.
The approach is at the core of how the IRA seeks to resolve climate change. Democrats hope to create an economy where the government doesn’t just help Americans buy green technologies; it also helps nurture the industries that produce that technology.
This reflects a homecoming of sorts for the United States. From its founding to the 1970s, the country had an economic doctrine that was defined by its pragmatism and the willingness of its government to find new areas of growth. “Yes, there was an ‘invisible hand,’” Stephen Cohen and Brad DeLong write in their history of the topic, Concrete Economics. “But the invisible hand was repeatedly lifted at the elbow by the government, and placed in a new position from where it could go on to perform its magic.” That pragmatism faded in the 1980s, when industrial policy became scorned as one more instance of Big Government coming in to pick so-called winners and losers.
The IRA is not the only bill intent on bringing back industrial policy. The two other large bills passed by this Congress—the $1 trillion bipartisan infrastructure law and the CHIPS and Science Act—make down payments on the future as well; both laws, notably, were passed by bipartisan majorities. They alone would be notable commitments to a different vision of the next decade. But it is in the IRA that these general commitments become specific, and therefore transformative.
Ever since the passage of the bipartisan infrastructure law, a massive achievement in itself, I have been amazed at what this administration has been able to accomplish. Yes, the change has been quiet and incremental, which means that much of it has escaped Beltway pundits who do not do well with quiet and incremental. Hell, the Inflation Reduction Act seemingly came out of nowhere because our pundit class was too busy writing Biden’s epitaph to realize that the very thing for which they most criticized Biden — have an alleged “lack of vision” — could not have been farther from the truth.
The future of a successful, vibrant America is an economy focused on American jobs in industries that might just save our dying planet. Biden is the first president to put us squarely on that path.