Jose Luis Magana/AP Photo
Robert Zoellick, then president of the World Bank Group, speaks at a news conference during the IMF/World Bank Annual Meetings in Washington, September 24, 2011.
“The economic thinkers who generate the intellectual energy for the Biden administration are on a mission: to slay their elders, figuratively speaking, from the Clinton and Obama eras. The revolutionaries do not just want to devise new policies; they are demanding an ideological transformation to rewire the political mind of the Democratic Party.”
So began a fascinating broadside against Bidenomics that ran on the op-ed page of The Washington Post last week. One source of its fascination is that it was written by Robert Zoellick, a former U.S. trade representative who’d served in four Republican administrations, but never in a Democratic one, much less for Clinton or Obama. That Zoellick took umbrage at what he considered an all-but-Oedipal revolt suggests that what Biden’s upstarts are slaying is really the old bipartisan Washington consensus, the Reagan Age belief that countries did better when they relied on markets, not government, to address what ailed them.
Zoellick levels four charges in his indictment of the Biden Bros and Gals. First, by not giving priority to balancing budgets, they were “tearing down the legacy of former [Clinton] treasury secretary Robert Rubin,” who “reassure[d] bond markets and investors.” Second, their trade and antitrust policies disregard the effect on “costs and efficiencies” by prioritizing “blocking foreign competition, helping unions, doing away with fossil fuels and experimenting with new regulations.”
Third, they’ve rejected the idea that markets will address our national needs, instead “offering subsidies in exchange for favored policies—including preferred technologies, limitations on imports and exports, unionization and child care.” Fourth, and perhaps most outrageous to this former Republican trade rep, “their industrial policy uses tariffs, rules of origin and ‘Buy American’ requirements to block foreign competition.”
In sum, it’s a capitalist-globalist’s chamber of horrors that focuses recklessly and relentlessly on benefiting the American people.
Where to begin? How about wondering how, in the same breath, Zoellick opposes “block[ing] foreign competition” (Charge #4) from nations whose workers make one-tenth of what American workers make, while at the same time opposing Biden’s revival of antitrust policies (Charge #2) to promote domestic competition. The administration isn’t actually “blocking” foreign competition from comparably developed economies, of course, but it is seeking to reverse Zoellick-negotiated policies that turned a blind eye to China’s mercantilism. As MIT’s David Autor and other mainstream economists have documented, this practice flooded the U.S. market with artificially low-priced goods and devastated U.S. industries. As for Biden’s antitrust policies, they not only reduce prices for U.S. consumers but also enable American workers to find better-paying jobs by breaking up cartels that keep wages low. Both the trade and antitrust policies are devised to help American workers, just as Zoellick’s Reaganomic trade and antitrust policies had the well-documented effects of suppressing American workers’ incomes and sending their jobs overseas.
Biden is bringing investment to the nation’s economically abandoned regions as no one has done since Franklin Roosevelt.
As to relying on the markets to address the nation’s economic needs, it was the absolute cessation of private investment in rural America in the years following the 2008 financial crash, as documented by the nonpartisan Economic Innovation Group, that set off the chain of events that caused the rise of “deaths of despair” in those very regions.
By enacting and implementing those industrial policies that Zoellick so abhors, Biden is bringing investment to the nation’s economically abandoned regions as no one has done since Franklin Roosevelt brought hydropower to the then economically underdeveloped South and West, and to all rural America through the Rural Electrification Administration. Nearly 90 percent of Biden’s clean-energy investments, for example, have flowed to counties with below-average wages, and about 65 percent have gone to counties with above-average poverty rates.
And then there’s Biden’s prioritization of economic recovery over balancing the budget. That’s indeed the polar opposite of the emphasis of the Obama administration, whose Bowles-Simpson Commission recommended slashing spending in December 2010, when unemployment rates still stood at nearly double digits. Fortunately, those recommendations weren’t taken, but the spending constraints that were enacted did keep unemployment high for nearly a decade, at great expense to the rates of employment, family formation, and homebuying among millennials. By contrast, Biden’s American Rescue Plan stimulus refloated the American economy faster than it ever had been, boosting consumer purchases to the point that businesses quickly began to rehire and expand.
Oh, the horror.
Zoellick is certainly right that Bidenomics does run counter to the policies and, in a sense, the philosophy of both the Clinton and Obama administrations. That’s because many of the key policies of both administrations, like those of the Republican administrations that bookended them, were abject failures. Clinton’s trade policy, which sounded the starter’s gun to corporate flight to China, and deregulatory policies, which contributed greatly to the crash of 2008, measurably reduced American living standards. Obama’s turn to deficit reduction during the Great Recession ensured they’d remain reduced.
Among the glaring realities that Zoellick can’t permit himself to see is the fact that younger Americans, who bore the brunt of those policy errors, overwhelmingly favor the policies he opposes. When it comes to a policy like “Buy American,” most Americans of all ages support it. Indeed, every poll ever taken on NAFTA and on establishing permanent normal trade relations with China showed clear majorities opposing them; it was really only the clout that Wall Street had in both parties that pushed them through the Congress.
For that matter, a clear majority of House Democrats voted against both measures. For that matter, most Americans (over 70 percent in all recent polling) favor unions, and a hell of a lot of them would appreciate help in meeting the cost of child care, to cite just two of those extraneous considerations to which Biden, according to Zoellick, is giving too much weight.
The subtext of Zoellick’s rant is that he considers the Trumpified Republican Party to have abandoned the Reaganistic romance with free trade, and he had hoped that the Democrats, at least, might have kept some of its spirit alive in the modified form of both Clinton and Obama. Now that the Democrats have made clear they repudiate that course as well, where’s a guy like Zoellick to go? The answer, I suspect, is to No Labels, whose positions, to the limited extent they take positions, appear to embrace every failed economic policy of the past 40 years: deregulation, no industrial policy, climate indifference, wage stagnation, and reliance on the market to solve our woes. Bob Zoellick, you’ve found your home.
