Bidenomics Isn’t Working – Especially For The Little Guy

“Bidenomics” is the newest buzzword the White House hopes will take hold of the public's imagination in time for the 2024 election. What does the term really mean?

Nothing new or different, really. It's more of the old fashioned big government ideas and practices that, once upon a time, Bill Clinton declared were “over.” But Bidenomics also revives the old and discredited idea of industrial policy. What is industrial policy?

Industrial policy generally refers to efforts to promote specific industries that the government has identified as critical for national security or economic competitiveness. The Roosevelt Institute's Todd Tucker has defined industrial policy as: “any government policy that encourages resources to shift from one industry or sector into another, by changing input costs, output prices, or other regulatory treatment.”

Or, more simply: government picking winners and losers. With taxpayers money, of course.

The Biden administration, Democrats overall, and quite a few Republicans (even some who style themselves as “conservatives) have no problem with industrial policy, and have given it the bipartisan stamp of approval:

In the US, industrial policy is no longer a taboo subject. There is bipartisan support for the Creating Helpful Incentives to Produce Semiconductors and Science Act (CHIPS Act), which aims to revitalize the US semiconductor industry. More than 90 percent of advanced chips, crucial for defense and artificial intelligence (AI), come from Taiwan Province of China—which raises concerns about US industry vulnerability in case of an attack. To address such risks, the US government is allocating $39 billion in funding from the $280 billion CHIPS Act to support the development of advanced semiconductor manufacturing capability. The Biden administration's industrial policy is far-reaching, and at least two semiconductor manufacturing clusters are planned by 2030. Funding recipients also face extensive conditions, such as a 10-year ban on expanding advanced chip capacity in China and a commitment to affordable childcare. These policies are part of the administration's broader approach to industrial policy, which also includes $370 billion in subsidies for clean energy in the Inflation Reduction Act.

All of this subsidizing and playing favorites is done under the guise of national security, job creation, equity…whatever excuse is required.

Just don't pretend there's any economic rigor behind it all. As the Wall Street Journal's Greg Ip writes:

Economics itself hasn't been all that helpful; within the discipline, industrial policy is an orphan. The nonprofit National Bureau of Economic Research, the top clearinghouse for academic economics, only publishes a few papers each year on the subject, many about other countries.

Harvard University's Gordon Hanson, who does study industrial policy, says on health, education and the environment, economists believe there are lots of policies that leave people better off. On industrial policy, their biases are just the opposite.

“The view, right or wrong, is that industrial policy is primarily done at the behest of special interests, and introduces welfare-reducing distortions. Our welfare theorems are based on having prices set by markets. If you say industrial policy is about getting prices wrong, economists are going to run away from it,” he says.

As well they have (and should). Using state power to expropriate resources from one group or activity and handing them to another for reasons that change with the political winds, distorts just as it corrupts.

In other words, it fits with Frederic Bastiat's 173 year-old definition of “legal plunder”:

…how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

That's the beating heart of industrial policy (which Republicans and Democrats are just fine with), and the core of Bidenomics.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.

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