Joe Biden is finally touting his accomplishments: record-breaking job "creation," a drastic reduction in the annual deficit, a long streak in reducing the inflation rate, and heavy investment in infrastructure. Finally, billboards are going up at federally funded infrastructure projects around the country, explaining to passersby that these much-needed construction repair and replacement projects supporting local and state economies are due to the bi-partisan infrastructure bill promoted by President Biden. In other words, voters are finally being alerted to how Bidenomics is benefiting them personally.
Much of what has become known as "Bidenomics" involves direct involvement of the government in the workings of the economy. This has prompted Republican pundits and politicians to bemoan the expansion of government, reflexively using the standard litany: wasteful government spending, tax and spend liberalism, and, when they're really lathered up, "Socialism." And yet they are first in line when the ribbon cuttings are in their state!
Because this reflexive litany, particularly the socialist label, is so prevalent in republican discourse, we can infer that it must earn substantial acceptance in focus groups. Actually, however, Bidenomics is pro-capitalism. Modern capitalism requires an efficient public sector. Bidenomics invests in public sector projects designed to aid the functioning of the private market system; these are investments the private market won’t make on its own.
Consider a few examples of how Bidenomics complements the market.
Streets, roads, and bridges. Transportation networks complement the market system by enabling the movement of goods, services, and people. Society has chosen in nearly every case to have these transportation elements provided by government. Moreover, unlike market goods that typically are financed with revenue from prices buyers pay, these transportation elements are paid for by taxes. Unlike President Trump, who kept promising -- but not delivering -- "infrastructure week," President Biden has begun to deliver an infrastructure decade.
Broadband internet service. The result of providing Internet by private firms was predictable: putting people in rural areas as well as poor people in urban areas at a great disadvantage in business competition and educational achievement. In rural areas there are typically great distances between people; the market "cost-recovery" price would have to be very high to stretch the service to them. Although urban citizens live more compactly, for many affordability is still a problem.
Under Bidenomics, serving all these people becomes a public responsibility. The largest asset the nation has is the talent of its people, and internet access is crucial to the development of that talent.
Wind and solar energy. The "free market model" developed over 250 years beginning with Adam Smith makes it clear that competitive firms have an incentive to reduce the cost of production and distribution of their products by emitting greenhouse gases. A competitive free market will not control emissions; just the opposite. The quality of the atmosphere is a public good; preserving it becomes a public responsibility.
Those same principles of economics suggest two ways to address the emissions problem, either by taxing emissions to reduce their profitability or by subsidizing substitute cleaner forms of energy. The first option meets with public hostility, so Bidenomics addresses the emissions problem by subsidizing the installation of wind and solar energy sources in order to speed up the transition away from fossil fuels.
Battery Technology. One part of the Bidenomics project is to subsidize US firms to speed up the discovery and rapid development of battery technology. The policy aim is to permit a motorist to charge the EV battery in a matter of minutes and to get a much longer range between charges. Why won't the free market produce batteries for the increasingly popular electric vehicles, or "EVs?" A couple of reasons. First is the emergency nature of the effort to reduce carbon dioxide emissions by fifty percent by 2030. Secondly, some of the rare earth metals necessary to make batteries come from unstable and hostile parts of the world. Consequently, what is needed is an effort the scale and scope of the Manhattan Project. There will be plenty of work for the firms in a competitive marketplace once the battery discoveries are made available.
On shoring and "Friend shoring" of MicroChips. Most modern appliances and heavy equipment -- washing machines, refrigerators, new cars, and farm equipment -- are controlled by microchips. The Peoples Republic of China is capable of providing all the chips to meet the US Industry and military needs and do it at lower costs than other trading partners. However, as was demonstrated during the pandemic, microchips from China are vulnerable to cut-off. Such cutoffs would recur in a new pandemic, and certainly if hostilities broke out. As free-market principles demonstrate, we cannot leave such strategic matters up to the free market. Consequently, part of Bidenomics includes expanding the manufacturing of chips within the United States.
$35 Price cap on insulin. Insulin is a lifesaving drug for diabetics. Despite being invented over 100 years ago, contemporary variants of insulin are patented, providing producers with protection from competition. Before Bidenomics, the price of insulin was very high, often $1000 a month, well above what's necessary for a fair rate of return. Diabetic patients clearly do not enjoy the benefits of a free market, competitive ideal. Instead, a government-imposed price ceiling of $35 per month can produce the ideal outcome when the monopolized market mechanism will not.
Bidenomics is Pro Market
The United States economy has always been an interrelationship between the public and private sectors. As the free-market principles of economics demonstrate, one cannot rely on free markets when the preconditions for efficiency do not exist. Much of the public debate is over how economic responsibilities are divided between the two sectors.
As the above examples show, Bidenomics blends the powerful forces of the market with government investment in the provision of physical and social infrastructure, as well as regulations that redirect these market forces to the common good. This happens best when the public sector is directed by representative government, while the private sector is directed by the price system.