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BIDENOMICS: SPENDING TO RESCUE AMERICA
Bidenomics is a term coined in 2021 to describe the theoretical economic perspective of President Biden’s economic package for growing the American economy. Bidenomics contrasts with the previously dominant economic model, known globally as the Washington Consensus, which dominated the pro-Western economic policymaking and thinking since the 1980s.
Unlike in the Washington Consensus where scarcity is considered to be a key constraint, Bidenomics, like Keynesianism, assumes that potential demand for production inputs (including technology) is unlimited, and what causes a recession to exist is slack in funding, not scarcity. Thus injecting the adequate dose of funds to economic actors (households, firms, and governments) will hasten recovery from a recession, and as well ensure speedy post-recovery growth, provided the stimuli are properly targeted at the set of actors with severe purchasing power deficiencies. The global financial system is awash with surplus savings that can be procured to finance budgetary deficits, and additional funding is to be sourced from taxing the affluent class and rich corporations.
Fundamentally Bidenomics has reinvented and utilized Keynes’s liquidity trap as the typical recession scenario, where recovery requires that economic actors be supported with doses of additional purchasing power to regain confidence in the system.
However, taxing the affluent class to raise funds for the stimulus packages, renders the Bidenomists less Keynesian and more pro-Marxist. Instead of taxes, a more cooperative public-private-civil society framework can be put in place to ensure that affluent class support development and pro-poor programs voluntarily. And what the Bidenomics may not have considered is that the rich are experts in transferring the taxes charged on them to others.
And while the labor unions may help to protect wages/salaries, empowering them unnecessarily can create avoidable labor market bottlenecks and distortions, and retain a less productive workforce to the detriment of more energetic, innovative, and better skilled prospective employees.
With regards to foreign policy, Trump’s plans to engage in open win-win collaborative relationships with non-traditional allies appear jettisoned by the Biden team, who seem to be more interested in strengthening ties with its traditional allies. Undoubtedly, a policy stance that is perceived as punishing the affluent class and successful corporations can cause America to lose new investors.
Summarily, President Biden hopes to lower poverty using massive investment in infrastructures, raising child allowances; and offering tax rebates. While critics argue that the aspect of direct aid particularly may reduce overall interest in work, and is capable to causing more inflation, Bidenomics would prefer to consider the direct aid as an investment in the country’s future. Investing in children (the beginning of the lifecycle) as opposed to seniors (toward the end of their lives) distinguishes Biden’s plan as an investment instead of spending. Currently, the U.S. lags behind other OECD countries in many aspects of child care, and investing in children can yield economic benefits in the future; healthier, more educated kids tend to live longer, earn more like adults, pay more taxes, and lean less on the safety net.
The book is divided into seven chapters. The conceptual framework for Bidenomics is examined in Chapter One. How Bidenomics is related to Keynesianism is discussed in Chapter Two. Chapter Three explains how President Biden’s team has proceeded to implement the American recovery and growth package. Chapter Four is dealing with the K-shape recovery. The American Rescue Plan is discussed in Chapter Five, analyzed further in Chapter Six.
Unlike in the Washington Consensus where scarcity is considered to be a key constraint, Bidenomics, like Keynesianism, assumes that potential demand for production inputs (including technology) is unlimited, and what causes a recession to exist is slack in funding, not scarcity. Thus injecting the adequate dose of funds to economic actors (households, firms, and governments) will hasten recovery from a recession, and as well ensure speedy post-recovery growth, provided the stimuli are properly targeted at the set of actors with severe purchasing power deficiencies. The global financial system is awash with surplus savings that can be procured to finance budgetary deficits, and additional funding is to be sourced from taxing the affluent class and rich corporations.
Fundamentally Bidenomics has reinvented and utilized Keynes’s liquidity trap as the typical recession scenario, where recovery requires that economic actors be supported with doses of additional purchasing power to regain confidence in the system.
However, taxing the affluent class to raise funds for the stimulus packages, renders the Bidenomists less Keynesian and more pro-Marxist. Instead of taxes, a more cooperative public-private-civil society framework can be put in place to ensure that affluent class support development and pro-poor programs voluntarily. And what the Bidenomics may not have considered is that the rich are experts in transferring the taxes charged on them to others.
And while the labor unions may help to protect wages/salaries, empowering them unnecessarily can create avoidable labor market bottlenecks and distortions, and retain a less productive workforce to the detriment of more energetic, innovative, and better skilled prospective employees.
With regards to foreign policy, Trump’s plans to engage in open win-win collaborative relationships with non-traditional allies appear jettisoned by the Biden team, who seem to be more interested in strengthening ties with its traditional allies. Undoubtedly, a policy stance that is perceived as punishing the affluent class and successful corporations can cause America to lose new investors.
Summarily, President Biden hopes to lower poverty using massive investment in infrastructures, raising child allowances; and offering tax rebates. While critics argue that the aspect of direct aid particularly may reduce overall interest in work, and is capable to causing more inflation, Bidenomics would prefer to consider the direct aid as an investment in the country’s future. Investing in children (the beginning of the lifecycle) as opposed to seniors (toward the end of their lives) distinguishes Biden’s plan as an investment instead of spending. Currently, the U.S. lags behind other OECD countries in many aspects of child care, and investing in children can yield economic benefits in the future; healthier, more educated kids tend to live longer, earn more like adults, pay more taxes, and lean less on the safety net.
The book is divided into seven chapters. The conceptual framework for Bidenomics is examined in Chapter One. How Bidenomics is related to Keynesianism is discussed in Chapter Two. Chapter Three explains how President Biden’s team has proceeded to implement the American recovery and growth package. Chapter Four is dealing with the K-shape recovery. The American Rescue Plan is discussed in Chapter Five, analyzed further in Chapter Six.
49 pages, Kindle Edition
Published December 9, 2021
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