Most Democrats I know are positively giddy about Joe Biden’s presidency. This man is like a political Yoda, harnessing the Force of government to turn round the worst economic crisis since the Depression in 100 days. His Jobs Plan, Covid crisis management and moves to shift the country to a system that rewards work not wealth involve changes many had hoped to see for decades. The agenda includes higher labour standards and a fairer tax system, investments in healthcare, childcare and education, and more resilient supply chains. Even Republicans are on board with things like better roads and broadband.
Some of what Biden is proposing, such as using union labour in federal contracts and defending US trade interests, can be done with the stroke of a pen from the White House. But the multitrillion-dollar stimulus programmes will have to pass through Congress. That depends on keeping Democrats’ slim House majority (the Senate is split 50-50). Even if plans pass, implementation will be complex.
Practical details of many of the programmes — how they would roll out, which agencies (state or federal) would be in charge, and how they would be funded — are still scant. But as more concrete plans emerge, it’s probable that they will involve trade-offs between myriad interest groups. That’s when the hard work really begins.
First, there are the usual considerations to be made between politics and policy, which are particularly important in advance of the midterm elections, where Democrats risk losing their margin of support in the House.
Surveys show that both Republicans and Democrats want infrastructure investment in new bridges and broadband. The question is where the money flows first. A large percentage of building trades unionists voted for Donald Trump in the last election. Those voters, many of whom are in swing states, want early spending on shovel-ready projects that will put large numbers of labourers to work quickly, something the president acknowledged in his address last week to Congress, calling his jobs plan a “blue-collar blueprint” for “building back better”.
Rebuilding bridges and roads is certainly necessary and provides opportunities for ribbon cutting. But bolstering broadband in underserved communities, some of which are rural but many of which are in large urban areas, is arguably even more important. Yet such efforts are less visible. Initial investments would go to equipment rather than people, and the process of laying cable and fibre is slow moving. The same thing goes for things such as bolstering semiconductor supply. Building a foundry takes years, not months.
That underscores the tension between short-term versus long-term priorities. US capital markets and in particular venture capitalists want quick results and big exits. But rebuilding the industrial base and transitioning to a green economy is a multi-decade proposition. It may require an entirely new long-term funding system, such as a public infrastructure bank, not to mention a commitment to industrial policy.
It will also require the support of allies. Bridging the gap between what will sell at home versus what sells abroad may be the president’s biggest challenge. In his Congress speech, Biden said he has had conversations with world leaders who believe that the US “is back” but want to know “for how long?” Europeans understandably want to be able to count on American political stability before they commit to liberal democratic alliances around trade, tax and technology, particularly given the importance of China-EU trade ties.
Europe and America need each other and should be working together to develop a digital alliance that provides a liberal-democratic alternative to state-based surveillance capitalism Beijing-style, or the unfettered Big Tech monopolies represented by the Silicon Valley groups. But even if Europe realises that its long-term interests are best protected by strengthening ties with Washington rather than Beijing, Europeans and Americans have different corporate stakeholders that are lobbying for priority and protection.
Witness, for example, Apple and Google fighting Bayer, Siemens and BASF over patent rules and who gets what share of the value of the 21st-century digital economy. Or European concerns about US data regulation. Germany will be ground zero for how all this plays out, as the US pushes the country to choose between various 5G and chip systems. In this battle, German exporters, which sell both to the US and China, have much to lose. As one lawyer representing powerful US labour interests told me recently: “Germany is trying to have it both ways with China, and they can’t.”
Neither can Biden be both a pro-labour president and one who appears to go easy on Big Tech. Silicon Valley is a huge lobbying presence in Washington, with politicians of both stripes in its pocket. The Uberisation of more kinds of work, the failure of union activists to organise at technology companies such as Amazon, and the argument that platform monopolies shouldn’t be broken up because they need to stay big to defend America’s national economic interests all threaten Biden’s vision of “work not wealth”. This political Yoda’s battle has only just begun.
rana.foroohar@ft.com
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Source: Economy - ft.com
