Initial Thoughts on Biden Manufacturing Plan
This has been a plan a day kind of week. Tuesday, supply chains. Wednesday, unity commission. Today: THE BIDEN PLAN TO ENSURE THE FUTURE IS “MADE IN ALL OF AMERICA” BY ALL OF AMERICA’S WORKERS. (joebiden.com/madeinamerica/)
The plan envisions the biggest overhaul to the Buy American Act since the policy was put into place in 1933, and reverses some of the loopholes that were first introduced by the Carter administration in 1979.
Much like Elizabeth Warren’s Economic Patriotism manufacturing plan, Buy and Hire American requirements would be extended as conditions to government R&D support. (medium.com/@teamwarren/a-…)
And while many candidates like to rally around the Buy American flag, rare are those that commit to changing trade rules at the WTO and elsewhere to make it real.
And note that it’s also reciprocal, which would allow other countries to build up their own industries. While such changes would have been hard in normal times, these are not those. The US has a lot of leverage on how we rebuild global order after Trump. (thenation.com/article/archiv…)
While investments of the kind envisioned in the plan could be seen as trade-restricting on one account, by another account, trade flows have been artificially distorted by the class war German and Chinese elites have waged on their working classes. Indeed, the US serving as a sort of buyer of last resort to support vital industries is exactly what @M_C_Klein and @michaelxpettis call for in their latest book. (Highly recommended.) (books.google.com/books/about/Tr…) To wit:
Then, there’s the linkages. Use state power to put the finger on the scales in favor of rebuilding organized labor — which aids in the fight against income inequality.
Another linkage to fight economic concentration.
Addressing structural racism and regions left behind — linkage, linkage.
Carbon adjustment fee to address climate chaos. More linkage.
And, in the spirit of plans put forward by Buttigieg and Sanders, favor union density as a goal in and of itself. I’d include that as a target on the front end in any renegotiated trade deals (so that we’re not left having to wait for workers to exercise rights on back end).
The plan ends with the trifecta foreshadowed in Tuesday’s Supply Chain plan:
1. Reshoring.
2. Stockpiling.
3. Fixing trade rules.
There will be cries of protectionism over much of this plan. I think this misapprehends the moment. The alternative isn’t a world where the US gives up on structuring markets. The alternative is a tariff-first approach. This plan is relatively targeted, emphasizing critical industries, left behind groups and regions, and fixing rules with US allies.
(For those interested in the Carter 1979 shift through the Trade Agreements Act (for the Tokyo Round of GATT), here’s the relevant text — which was carried through in the 1994 Uruguay Rounds Agreement Act that set up the WTO. (govtrack.us/congress/bills…))
(Adapted from this thread.)
