By Kumar David –

Prof. Kumar David

Here is my 4th of July special for readers surprised by zesty trends in America. Biden’s economic programme, Bidenomics, is shaping up, but it is uncertain whether it can power off into full flight because of dogged opposition of the Republican Party (GOP) but more because the consensus culture which prevailed since the end of the Civil War has evaporated. The country is more divided than I have ever seen before; not only in politics but across social attitudes. It’s not that people across the divide don’t talk to each other, they don’t even understand each other. What remains as a common factor is unalloyed consumerism. Trump was not the progenitor of right-wing extremism nor of its dystopian creed that intones: “Immigrants are rapists, Democrats are selling America to China and that WASP civilisation is imperilled”. He is only its most mendacious practitioner. The extreme divide commenced with the ‘hated’ election of a Black President spawning mass right-wing white-populism initially in the Tea Party Movement (KKK, John Birch Society and McCarthyism are its forefathers) and festering into today’s Trump-Base which has taken control of the GOP. Whether Bidenomics will erode this Base remains to be seen – I will make a  comment on that anon – but the GOP has turned so obstructionist that getting Bidenomics up and running is going to be tough. Unlike FDR who had thumping majorities in both houses of Congress, the Democrats today are faced with a 50:50 split in the Senate and depend on Kamala Harris’s casting vote which will be unusable if even one Democrat defects on any Bill.

In a recent article bearing the title “The Bidenomics Revolution” in the web-magazine Foreign Policy dated 9 June, Michael Hirsh argues that if Biden succeeds he “will cast 40 years of economic doctrine on history’s ash heap”. Hirsh argues that Biden wants to  “create a new paradigm: resurrecting America’s beleaguered underclass with a combination of education, health-care, and tax proposals and a new brand of industrial policy and economic nationalism that will, eventually, propel the United States past China. If he is able to follow through it will negate the ruling doctrine of Reaganomic trickle-down economics. Biden is setting his sights high, as revealed by the name he has given his program: the New Bargain, consciously echoing FDR’s New Deal”. Clearly he is seeking a new Social Contract expanding government support for the working class in a move that can obliterate the Trump’s base in the class. Biden, from a lower middleclass family, has suffered many tragedies in his personal life and he is trusted by workers. And unlike his immediate predecessor in office, he is not despised as a moral paraiha by the educated classes.

America’s white working-class (that is white workers without a college degree) is the now the smallest it has ever been. It is now 40% of the total adult population and will fall below 50% of the working-class by 2032 — an all-time low, and down from 70% three decades ago. It is losing wealth and income, amplifying economic insecurity. The attitude of white workers has split from that of college educated whites, it has turned Republican and joined the Trump-Base. Educated whites – what I call the modern working class which has deluded itself into believing that it is a middle class! – has benefitted from modest income gains, but not the working-class. Life expectancy of white workers has fallen due to social pressures, alcohol and opioid use. Nevertheless the blue-collar working class even when it declines to 30 to 35 percent of the population, will roughly be the same as the lower middle class. The proportion of Hispanics in the working-class will rise from 20% now to 32% by 2032, whites fall from 62% to below 50% and the percentage of Blacks and Asians in the working-class remain unchanged at 15% and 3%, respectively. Asian Americans (5.7% of US population) belong to well-off income groups and few are in the working-class.

Biden has long believed that deficit reduction and government inaction on public investment are responsible for America’s domestic social malaise and its global decline. He is a social-democratic grandpapa in a liberal suit and tie who shuns Milton Friedman’s monetarism and Friedrich Hayek’s neoliberal economics. He thinks the US lost global leadership because it regressed economically. His team believes that high GDP growth and a flourishing stock market generate wealth for the top 1% and therefore misses the point that prosperity must extend down to low-income communities. This makes his team a toned-down Americanised version of social-democracy.

Furthermore, Biden says if America doesn’t stand up for globalization and open markets, who will? In May he elaborated saying “America’s global leadership depends on the country’s economic resurgence. And that depends on major government investment in every kind of infrastructure, from interstate highways to internet connectivity to new climate-saving technology. The basis of foreign policy is in our stature in the world. We must be No. 1 in the world to lead the world in the 21st century. It’s a simple proposition”. In May, he declared that “100 percent of government investment will be guided by one principle: Make it in America.” Certainly there is a large degree of Make it in America economic nationalism in his outlook; but this unavoidable for any government expenditure plan. You can’t eat your cake without making it. Coopetition with China and Asia, in the economic sphere at least, will be heightened.

Projected ethnic structure of the working-class in America
Source: Valerie Wilson, Economic Policy Institute

The Chinese and Europeans have faulted Biden’s approach as Economic-Trumpism without Trump. Economic nationalism and anti-China rhetoric usually go together, but political confrontation can be avoided so long as welfare-economics at home does not become aggressive, zero-sum foreign policy directed at China. This can be avoided by an Administration bent on respecting international treaties and global climate correction. Hostility to human-rights violators is likely to become a flash point. Other capitalist nations are watching in disbelief as blue-collar fathered Joe tones down the ‘world according to finance-capital’ doctrine in favour of a spending plan that would make Keynes blink.

Biden has proposed his third $2 trillion economic expenditure plan in a hundred days (it may be trimmed to $1.2 trillion by a bipartisan deal in Senate) and claimed that his infrastructure spending scheme is the “the largest jobs plan since World War II.” In all he plans $7.5 trillion new spending, double America’s expenditure in inflation-adjusted dollars on WW II. Spending is focused on new state-led R&D, infrastructure and support for low-income Americans. The latter includes outlays on community colleges, health and child care, as well as federal spending in districts with concentrations of poor, black and less advantaged people. Luckily things are going well on the economic side: The World Bank has doubled its projection of US GDP growth from 3.5% to 6.8%, the fastest pace since 1984.

However, political opposition from the Republican Party is horrendous; it is determined to scuttle Biden’s spending Bills in the Senate. The GOP knows that if Biden’s New Bargain succeeds it will bury the Trump-Republican grip on the American working class for a generation. Hence many State Legislatures with a Republican majority are curtailing voting rights in a flagrant attack on electoral democracy and asserting control over the voting and counting processes. Local election officials affiliated to the Democratic Party are being removed. A threat to Biden’s programmes is that mid-term Congressional elections in 2022 will be “fixed”.

Biden’s splurge on reorienting the economy away from billionaires and towards the middle and working classes is also shifting the global ideological discourse. The Washington Consensus (neoliberalism) could well find its leading champion riding away into a semi social-democratic sunset. The unconditional virtue of free-markets, reproving state participation in the economy, privatization and foreign investment may be less forcefully shoved down the throat of developing nations hereafter. But don’t hold your breath for anything dramatic, it’s a matter of degree. In the eyes of the hard-left Biden is a lukewarm plain vanilla social democrat. Still for an American president – Wow! And of course don’t underrate America’s global sway for another generation. Rome declined for three hundred years before it finally fell.