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It's a matter of Bidenomics!

Discussion in 'BBS Hangout: Debate & Discussion' started by adoo, Jun 28, 2023.

  1. Os Trigonum

    Os Trigonum Contributing Member
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    https://www.wsj.com/articles/bideno...ial-policy-ac3f0a4?mod=hp_opin_pos_6#cxrecs_s

    Bidenomics: Chinese Capitalism With American Characteristics
    Using subsidies and mandates to pick winners and losers is a recipe for economic disaster.
    By Scott Hodge
    July 11, 2023 at 6:43 pm ET

    Joe Biden wants to take a page from China’s economic playbook. In a recent speech, the president officially embraced the term “Bidenomics” to describe his economic policies, which he characterized as the federal government “investing in key industries of the future, making targeted investments to promote domestic production of semiconductors, batteries, electric cars, clean energy.” In other words, the administration is pursuing a government-directed industrial policy using taxpayer subsidies and mandates to pick economic winners and losers.

    The administration is partly motivated by fears that the U.S. is falling behind China, where firms are openly subsidized by the government and have been gaining market share in industries once dominated by American companies. But three recent studies jointly authored by American economist Lee G. Branstetterand Chinese economist Guangwei Li suggest China’s industrial policy “successes” are overblown. China’s various industrial policies, such as “Made in China 2025”—which, like Bidenomics, targets direct subsidies, tax incentives and government loans to key sectors such as aerospace, robotics, energy-efficient automobiles and biopharmaceuticals—don’t just fall flat. They do more harm than good.

    The authors find “little evidence that the Chinese government picks winners—if anything, the evidence suggests that direct subsidies tend to flow to less productive firms rather than more productive firms.” Indeed, firms became less productive after receiving subsidies and showed little improvement in research and development spending, patenting or profitability. These results should give Bidenomics boosters serious pause.

    Government subsidies don’t improve Chinese firms’ productivity or profitability, but they do goose employment—at least in the short term. The Chinese government craves social stability, so the subsidies are as much a jobs program as they are an attempt to improve productivity and technology. The most visible measurement of success for many subsidy programs is the number of jobs created, not new technologies brought to market. Political considerations trump economic efficiency.

    Worse, China’s industrial policies have created a culture of corruption. Companies try to manipulate the system to their advantage. The most politically connected firms tend to get the most subsidies. Some firms cook the books to get government innovation grants while others reclassify unrelated expenses as R&D to qualify for more subsidies. Still others manipulate employment numbers to get subsidies.

    A notable example is the “Big Fund,” shorthand for China’s National Integrated Circuit Investment Fund. The Big Fund invested as much as $50 billion in dozens of China’s semiconductor firms as well as government “guidance” funds, which acted like venture capital firms. It was considered a huge success story until a series of corruption scandals surfaced in 2021 and 2022 involving many high-level executives affiliated with the Big Fund and recipient companies. The subsequent mass jailing of executives cast doubt on the program’s purported successes.

    The Chips Act and Inflation Reduction Act won’t necessarily lead to corruption, but the Internal Revenue Service has a poor track record of monitoring and evaluating corporate tax incentives. Independent estimates now put the eventual cost of the Inflation Reduction Act tax subsidies at more than $1 trillion. The Energy Department has an equally poor record of picking winners and losers—think Solyndra and Fisker Automotive.

    Bidenomics looks like a pale imitation of Chinanomics, which demonstrates why politicians shouldn’t play investment banker with taxpayer dollars. State-directed industrial policy undermines free enterprise and deprives entrepreneurs and innovators of the capital they need to improve consumers’ lives. Mimicking China’s folly surely isn’t in America’s economic interest.

    Mr. Hodge is president emeritus and senior policy advisor at the Tax Foundation.





     
  2. astros123

    astros123 Member

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    The requirements to qualify for the subsidies are that you pay prevailing wages ? If you establish your faculty in a disadvantaged community you get higher subsidies and if you use minority or union labor you qualify for even more credits ?

    What's wrong with the government pushing progressive policies alongside subsidies? It's never been done in the history and it's a new approach to government. You have to respect them
     
  3. adoo

    adoo Member

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    It's too bad that OT has not bothered to read the article. had OT done so, his BS meter would sound off the alarm.

    FDR had used a 2-prong approach to lift the US ecoomy out of the Great Depression,
    for the most part, Biden has been following the same approach to fight inflation and continue growing the economy.

    included in FDR's policies was the Government-directed National Industrial Recovery Act (1933)



    the intellectual dishonest author would
    • intentionally omitted to mention that FDR was the forerunner insofar as using Government-directed industrial development economic policies
    • have people to believe that China was the first one to used Gov-direct industrial development policies
      • in actuality, China's capitalism with Chinese characteristics started some 2 generations after FDR;s New Deal programs





    Bidenomics is a refinement / the 21st century version of FDR's New Deal programs
     
    #143 adoo, Jul 12, 2023
    Last edited: Jul 12, 2023
  4. astros123

    astros123 Member

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    Don't forget the stock market is booming also
     
  5. Os Trigonum

    Os Trigonum Contributing Member
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    https://www.wsj.com/articles/this-p...economics-2cea1641?mod=hp_major_pos1#cxrecs_s

    This Part of Bidenomics Needs More Economics
    Massive sums are being spent on industrial policy with little guidance from economic theory or research
    By Greg Ip
    Updated July 12, 2023 at 4:59 pm ET

    The U.S. has embarked on the most sweeping foray into industrial policy—the use of government resources to help favored sectors—in generations. Congress has enacted hundreds of billions of dollars of subsidies for semiconductors, renewable energy and infrastructure. President Biden, like President Trump before him, has used tariffs, export controls and “buy American” policies to both bolster domestic industries and counter China.

    Indeed, industrial policy in the long run may be a more consequential part of Bidenomics than Biden’s better-known and more controversial fiscal stimulus. But industrial policy differs in one crucial way from fiscal policy, and, for that matter, monetary, health, education and all sorts of other policies: It lacks a rigorous economic foundation.

    Scholars and policy makers have no agreed definition of industrial policy: Do tariffs count? The research and development tax credit? Tuition assistance? What about the goal: Is it to save factory jobs? Grab market share from other countries? Hold off China? Develop breakthrough innovations? Solve climate change?

    The risk is obvious. Without a coherent economic framework, industrial policy is more likely to fail and discredit the entire concept. This wasn’t a big deal when industrial policy mostly consisted of small-ticket projects. Federal loans to Solyndra, the solar manufacturer that went bankrupt in 2011, were only $535 million.

    Today, it is big bucks. The Trump administration’s Operation Warp Speed devoted $18 billion to developing and distributing Covid-19 vaccines. The Biden administration’s Chips and Science program is funneling about $53 billion toward semiconductor manufacturing and development. The Inflation Reduction Act might ultimately offer $1 trillion in aid to renewable energy. The Energy Department has $400 billion in lending authority at its disposal.

    Some are eager to do more. In April, Rep. Ro Khanna, a Democratic congressman representing Silicon Valley and an enthusiastic proponent of industrial policy, said, “Let’s have a CHIPS act for aluminum, for steel, for paper, for microelectronics, for advanced auto parts and for climate technologies.”

    This week I asked Khanna to explain his principles for doling out government support. He had plenty of beneficiaries in mind: aerospace, automobiles, machine tools, industrial robots, chemicals, medical technology, drugs and, above all, steel. “What is it going to take to get at least three American steel companies in the top 10?” he asked. And he was adamant that the beneficiaries should be deindustrialized towns such as Johnstown, Ohio, or Canton, N.C.

    What Khanna didn’t offer were clear economic criteria to determine which industries should be supported, and how much. The criteria, he said, is what Congress is able to pass. Khanna taught economics at Stanford University but said economists shouldn’t design industrial policy because they don’t appreciate the nonquantifiable costs of deindustrialization such as suicide, divorce and polarized politics. Industrial policy has “unquantifiable benefits for the project of American democracy” for which it is worth risking failures, he said.

    After this column was published, Khanna said on Twitter that the principles that should govern industrial policy include sustainable global demand, an export market, job creation, positive climate benefits, industrial strength and local feedback. “There is not a mathematical formula,” he said. “There is a difference between saying that economists shouldn’t be the final arbiters versus saying we don’t need economic thinking. Of course we need economic thinking.”

    All policies, from health to the environment, involve unquantifiable costs and benefits. Economics helps ensure those benefits are achieved effectively and efficiently. Money, from either taxpayers or consumers, isn’t infinite.

    Biden officials are aware of this. The Commerce Department has laid out fairly explicit goals for the Chips program, such as “reduce chokepoint risks flowing from geographic concentration,” and promised ongoing evaluation to ensure grant recipients are meeting their commitments.

    But just spending money as intended is no guarantee the objective is achieved. U.S. solar manufacturing has had years of federal and state subsidies and tariff protection and has failed to become globally competitive.

    Robert Atkinson, a longtime industrial policy advocate who heads the Information Technology and Innovation Foundation, thinks industrial policy, including Biden’s, is too often a “mishmash” of competing objectives—regional development, child care, climate change—that don’t address the main goal of making U.S. industries competitive internationally.

    Economics itself hasn’t been all that helpful; within the discipline, industrial policy is an orphan. The nonprofit National Bureau of Economic Research, the top clearinghouse for academic economics, only publishes a few papers each year on the subject, many about other countries.

    Harvard University’s Gordon Hanson, who does study industrial policy, says on health, education and the environment, economists believe there are lots of policies that leave people better off. On industrial policy, their biases are just the opposite.

    “The view, right or wrong, is that industrial policy is primarily done at the behest of special interests, and introduces welfare-reducing distortions. Our welfare theorems are based on having prices set by markets. If you say industrial policy is about getting prices wrong, economists are going to run away from it,” he says.

    Industrial policy research consists mostly of case studies. Advocates end up citing favorable ones such as the federal contribution to early computers and semiconductors; critics cite failures such as Solyndra or the nearly $1 billion New York state spent on a factory for Tesla that produces just a fraction of the promised solar panels.

    Hanson is among the economists trying to fix that. He and fellow Harvard economist Dani Rodrik are building such a data set of “place-based policies” designed to help poor regions, as Khanna purports to do, in hopes of understanding them as a package.

    Elsewhere, Réka Juhász of the University of British Columbia and Nathan Laneof Oxford University have founded the Industrial Policy Group to conduct empirical research; it has compiled a database of all potential industrial policy actions from 2009 to 2020.

    For his part, Khanna said he would welcome more research into industrial policy, which a bill he’s sponsored with Sen. Marco Rubio (R., Fla.) would provide for.

    Even if economists can someday say with confidence which industrial policies work, politicians won’t necessarily listen. But the information will be there if they want it.

    Appeared in the July 13, 2023, print edition as 'Where Bidenomics Falls Short on Data'.

     
  6. astros123

    astros123 Member

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  7. Os Trigonum

    Os Trigonum Contributing Member
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    from above quoted updated op-ed piece:

    After this column was published, Khanna said on Twitter that the principles that should govern industrial policy include sustainable global demand, an export market, job creation, positive climate benefits, industrial strength and local feedback. “There is not a mathematical formula,” he said. “There is a difference between saying that economists shouldn’t be the final arbiters versus saying we don’t need economic thinking. Of course we need economic thinking.”
     
  8. rocketsjudoka

    rocketsjudoka Contributing Member
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    I don’t disagree with that Biden is doing similar stuff to the PRC. The PRC spent a lot on building infrastructure and increasing domestic manufacturing. That’s why the PRC could not only become the factory of the World but could
    Also maintain its edge.

    The problems the author notes with the PRC is correct and corruption is a problem. That is certainly something to keep an eye on through any government spending. If you look at the PRC success in lifting more than a billion people out of poverty and dominating many industries it does show that capitalism with Chinese aspects might not be a bad idea.
     
  9. mtbrays

    mtbrays Contributing Member
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    It was dumb and irrelevant when Trump bragged about the S&P so we probably shouldn't do it for Biden either.
     
    Os Trigonum likes this.
  10. adoo

    adoo Member

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    interest titbids;

    Who’s Benefiting Most From Bidenomics?

    Red states, not blue ones, are seeing the biggest income gains.​


    In North Dakota, which Biden lost to Trump by 34 points, and where Biden’s net approval rating was negative 46 percent in March, personal income during the first quarter of 2023 rose 11 percent over the previous year.

    In Nebraska, which Biden lost by 20 points, and where Biden’s net approval rating in March was negative 36 percent, personal income rose 11.1 percent.

    In Montana, which Biden lost by 16 points, and where Biden’s net approval was negative 21 percent, personal income rose 8.3 percent.

    In South Carolina, which Biden lost by 12 points, and where Biden’s net approval was negative 23 percent, personal income rose 6.8 percent.

    All these increases in personal income exceeded the national average, which was 5.1 percent.

    The blue states were not so fortunate.

    California? Biden won the Golden State by 30 points, and his net approval rating there was 11 percent, his highest in the country. As Biden would say, God love ’em. But personal income was up only 0.7 percent.

    New York? Biden won the Empire State by 23 points, his net approval there was 3 points, and personal income grew 3.2 percent.

    Maryland? Biden won it by 34 points, his net approval there was 8 percent, and personal income grew 5 percent, a whisker below the national average.

    The author of this article opines that the rapid increase in wages that occurred during the labor shortage that followed Covid’s peak, a period known as the Great Resignation was heavily tilted toward low-wage workers.

    Because red states have poorer workers. If we’re just coming off a period of rapid wage growth for low-income workers, then it’s logical to expect the poorer states to show the biggest statewide increases in personal income.

    Red states are indisputably poorer than blue states.








     
  11. astros123

    astros123 Member

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  12. Os Trigonum

    Os Trigonum Contributing Member
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  13. astros123

    astros123 Member

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    Literally none of these things is what's happening. Unemployment record low, gdp growth solid with higher interest rates and we have stable prices. Why do you hate America winning so much?

    You realize biden saved your beloved amtrak right?
     
    #153 astros123, Jul 14, 2023
    Last edited: Jul 14, 2023
    pgabriel likes this.
  14. No Worries

    No Worries Contributing Member

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    Perhaps Red America has grown tired of all of Biden’s winning?
     
  15. adoo

    adoo Member

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    Who’s responsible for cooling inflation? Credit Biden, if not Bidenomics.


    The United States has had a run of good economic numbers lately, showing cooling inflation and ultralow unemployment. Some forecasters have ratcheted down their recession odds.

    Many on the left want credit for these conditions. Curiously, though, they seem to ascribe such cheerful results mostly to things the government didn’t do while ignoring the things it did.

    That is, if indeed the U.S. economy ultimately achieves a coveted “soft landing,” it won’t be because we did a bunch of kooky, experimental, heterodox things that progressive populists agitated for (and generally failed to get).

    who should get credit for the trend reversal?

    But if you instead define Bidenomics as “respecting Federal Reserve independence and not interfering with Fed decisions even when they’re unpopular,” then sure: Great job, Bidenomics!

    Or at least: Great job, Biden.

    The president has been terrific at staying out of the Fed’s way, something presidents don’t always do. When the central bank raised rates last time around, President Donald Trump went berserk. He declared the Fed chair whom he himself had appointed, Jerome H. Powell, an “enemy.” Trump also repeatedly threatened to fire Powell, a legally dubious action that would have roiled markets.
     
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  16. astros123

    astros123 Member

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    The craziest thing about this is we have 5.5% fed interest rates and we're seeing this level of hiring and manufacturing. Can you imagine whats going happen next year once we start cutting rates and business have access to capital easier alongside with all the subsidies? jeeez
     
  17. dmoneybangbang

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    The "free market" doesn't really do strategic industrial policy well, it literally outsourced a lot of our supply chains into China.
     
    rocketsjudoka and astros123 like this.
  18. adoo

    adoo Member

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    astros123 likes this.
  19. astros123

    astros123 Member

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  20. rocketsjudoka

    rocketsjudoka Contributing Member
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    This is another reason why I criticize Libertatianism. The market works primarily on short term cycles. It’s difficult for private companies to engage in long term planning and then it’s only the largest companies that can do so because they have the resources to do so.
     

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