Thursday, May 6, 2021

Joe Biden’s ‘Buy American’ ain’t bad, it’s necessary

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Your position depends on where you sit, as Rufus Miles, aide of three US presidents, put it. It’s a saying about self-interest and prospect that has come to be known as Miles Law. And that’s a phrase worth remembering when thinking about Joe Biden’s willingness to tighten the “Buy american»Federal government procurement requirements.

For union activists and some American businessmen and policy makers, provisions that increase the purchase of domestic products seem obvious. Why shouldn’t American taxpayer dollars support American jobs when possible?

But from the point of view of governments Europe, Canada and other allies of the United States, it looks like the new administration is just putting a nicer face on Donald Trump’s “Make America Great Again”.

It is not. As president, Mr. Trump spoke a lot about the working class but had no real plan to help working people. Mr. Biden does. Arguably his buy-American approach will not help his goal; Indeed, the Financial Times editorial board has already.

But purely economic arguments ignore the political challenges facing the Biden administration, which are arguably bigger than those faced by Franklin Roosevelt in the 1930s. This president has to deal with not only a raging pandemic, but also calls for racial justice, marked class divisions, an environmental crisis and, above all, a loss of confidence in the government among part of the electorate.

The past five years have made it clear that a large portion of the American population thinks that capitalism and liberal democracy are broken, and the United States the economy has become oligopolistic. Considering the level of US corporate influence and monopoly power, I would say they have good reason to do so.

Over the next 18 months, before his mid-term in the United States, Mr. Biden must convince Americans that his administration exists to serve them at large, not just the 10% of households that own more than 80% of the market. scholarship holder. If he cannot and the Democrats then lose control of Congress, its ability to carry out much of the rest of its agenda, which includes re-engagement with the rest of the world, will disappear.

Today, many Americans view the past decades under Democratic and Republican administrations as too focused on global rather than local interests. There is strong evidence to support this conclusion. A recent UN report explained how the past 30 years of laissez-faire globalization have disproportionately benefited multinationals and the Chinese state compared to anyone or anything else.

The drop in the cost of imported goods has not offset the fact that rising prices for other things that define the middle class – education, health care and housing – have eaten away at any income growth enjoyed by the nation. Most households over the past two decades. That, rather than models of Ricardian business economics – which arguably ignore the complexity of Chinese state capitalism or financialized global markets – is the lived reality of swing voters. This US administration must keep its eyes on both.

US Treasury Secretary Janet Yellen, while very data-driven, has set a formidable tone on this front. In a “first day” message to her staff, she is committed to going beyond the textbook economy and staying focused on “humanity under data”. Interestingly, she also spoke of the need to tackle not only the immediate challenges, but “an economic crisis that has been building for 50 years”. It was a nod to decades of falling working class wages.

The Biden administration is filled with people like Ms. Yellen who know that in order to better engage with the world, the United States must solve its problems at home.

The United States isn’t the only part of the world protecting itself, either. Europe’s new trade deal with China may be good for German exporters (just like Nord Stream gas pipeline project with Russia). But this is hardly compatible with those high labor and human rights standards that Europe allegedly supports. It could also make it more difficult to forge a new transatlantic alliance with the United States in areas such as digital regulation, which the EU pushed the minute Biden took office.

The lack of real resolution of disputes between investors EU-China trade agreement also stresses that Europe is not grappling with the “one world, two systems” problem. One good thing the Trump administration has done was publicly acknowledge what many people have been thinking privately for some time – that current trade models and deals are not equipped to cope with the messy economic and political realities of the world. . today.

In fact, many of the neoliberal rules and structures that currently govern markets were put in place in response to European fascism that emerged at the turn of the 20th century. Policymakers then wanted to connect global capital and business in order to crush nationalism.

Today, by contrast, it can be argued that too much economic globalization has benefited a select group of stakeholders, and thus has in fact supported political extremism in the United States and Europe.

Mr. Biden’s “Buy American” plan is not a silver bullet to the economic problems of this new world. But it’s a politically intelligent nod to the fact that we are one.

rana.foroohar@ft.com

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