The clash of Bidenomics and MAGAnomics

Make Me Smart September 19, 2023 Transcript

Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.

Kai Ryssdal 

Alright, let’s just go and do it. Let’s just go and do it. Everybody I’m Kai Ryssdal. Welcome back to Make Me Smart, where none of us is as smart as all of us.

Kimberly Adams 

And I’m Kimberly Adams, thank you for joining us, everyone on this Tuesday, September the 19th. And because it’s Tuesday, that means it’s time for our weekly topic on, weekly show on a single topic. Got those mixed up. Any who, today, we are talking all about Bidenomics,

Kai Ryssdal 

Which is, of course, President Biden’s co-opted name for his economic plan, which we’re, I love that. Anyway, we’re gonna discuss that with Mark Blythe. He’s a political economist at the Watson Institute for International and Public Affairs at Brown University. Mark, welcome back to the pod. It’s great to have you back.

Mark Blyth 

It’s great to be back.

Kai Ryssdal 

What do you think of the of the co-optation? Of the Bidenomics thing? I mean, first it was the GOP doing using it derogatorily. Do you think he will have success the president in trying to rebrand?

Mark Blyth 

You know, who originally invented it?

Kai Ryssdal

Bidenomics? No, I don’t.

Kai Ryssdal

I think it was actually Ed Luce from The Financial Times, I think he can literally lay claim to be his thing. That’s fine. But anyway, the thing is the profit. The lack of clarity on provenance tells you a lot about selling the concept. Here’s the problem. Remember Reaganomics? We spoke about it a while ago in an episode, you can you can put that on a t-shirt. It’s really simple, right? Goes tax cuts, good. The state bonds markets, awesome. That’s it, boom you’re sorted. Now Bidenomics is not like that, because there’s no t-shirt slogan. Second thing is it’s not like a body of well economic ideas like Keynesian macroeconomics are one of these things. So what is it? It’s actually a kind of a reaction to three things. The first one is the Democrats woke up to the fact that for the past 30 years, the American working class has been getting the short end of the stick, and they no longer vote for them. The second thing is globalization was awesome for shareholders and firms pray good for consumers. But for workers not that great. And it turns out when you give away your industrial base to basically your number one competitor is bit of a problem. And the last one is climate change is real. And it doesn’t matter whether you think it’s real, or I think it’s real, or China thinks it’s real. And do you really want to have all the skills, technology and everything needed for climate change abatement in the hands of someone who’s a strategic competitor? No. So it all crystallizes in the CHIPS Act and the IRA and marked Bidenomics. It’s basically industrial policy. It’s not a set of ideas.

Kimberly Adams

That for sure does not fit on a t shirt.

Mark Blyth 

No, absolutely not.

Kimberly Adams

So I mean, how then does Biden go about explaining this, all of that to people as a good thing, aka worthy of him being reelected?

Mark Blyth 

Well, you can see how he’s struggling to do this. Right. I mean, it’s like it’s right from his campaign before he was even president. He kept banging on about good union jobs. Right. Okay, fine. I think the most generous estimate is 78% of American private sector workers are in unions. This is about reindustrialization. This is about bringing back industry, the United States, depending on how you count it, it’s about 11% of GDP. So the vast majority of us don’t really have any contact with what’s been rebuilt. And I think that’s a real struggle for the President and trying to sell this as like, this is really important thing. It’s crucial for America, but you’ve got nothing to do with it, bit of a hard sell.

Kai Ryssdal 

So let me let me frame it a little bit differently, what the Biden administration and I’ll be curious as to your thoughts. So what the Biden administration is trying to do here, is reengage the government with the economy of scale not seen, maybe since Lyndon Johnson, but possibly as far back as FDR. Is that fair?

Mark Blyth 

Yeah, I think that’s fair. I think that’s exactly what they’re trying to do. If you look at the amount of spending that goes through the IRA, the tax credits, the subsidies for investment for the private sector, it’s very different from let’s say, the 1930s. In the 1930s, you were going out and building the Hoover Dam because you didn’t have one. Now we’ve got one, we don’t want to build one of those. But what we do want to do is build battery factories. What we do want to do is build windmill facilities, right? And that’s very different, but at the same time, you know, it’s all it’s all a thing. It’s all a piece. It’s really about reindustrializing America, haven’t figured out that giving an awful lot to China was probably not the smartest move.

Kimberly Adams

Sorry I’m still stuck on this point that you made about, you know, something like 80% of us are working in the services sector and Biden’s hammering in about the other 20%? Is there, are those the voters that he needs?

Mark Blyth 

So the easiest way to sell this is to sell it to the people who are already going to vote for you, right? Most Democrats, we do a partisan split. Most Democrats are like, yep, climate change, yes, we should do something about it. So if you front load, the fact that this is really about America, getting serious about decarbonization, and getting a technological lead and a physical footprint and how to do this stuff, because this is going to be the energy of the future, etc, etc. Then what you’re going to do is have all the people who are already going to vote for you go, “Yeah, about time,” and everyone who’s thinking about voting you go, “maybe that’s not what I want.” And definitely all the Republicans will lose their minds. So it has to be about something else. So what do you do you make it about China? It’s about strategic competition. How many people really vote for foreign policy? Not that many. So it’s just a tough one to get this into a messaging box. Again, it’s not like Reaganomics, tax cuts good to state bad. What was the other one? I can’t even remember.

Kimberly Adams

Markets great.

Mark Blyth

Markets, great, Markets, awesome. Markets, great. Exactly.

Kai Ryssdal 

So how long do you suppose, just since we’re in the politics of this thing, let’s keep going. How long do you suppose Biden has? We are now 14ish months away from the election? How long do you suppose he has to change the perception of his message? Because he polls on the economy now like 39, 40%? Does he have six months? Eight months? Does he have until like late spring? Where are we?

Mark Blyth 

I think about it less in terms of that because honestly, what really matters is four or five states and what the marginal four is going to do in turnout and all that sort of stuff. Rather than messaging this, I think about this as facts on the ground, I believe there’s something in the region of 10 to 12, battery factories opening up just in and around Georgia, the whole of tornado ally is basically being showered with IRA money for wind development, etc, etc. Loads of these things are going into Republican districts. Now, if you create a factor that employs 6,000 people directly and 10,000 people indirectly, the chances are, they don’t want to see the subsidies that make that happen go away. So if you manage to basically to create kind of material interests on the ground and maintaining the subsidies and this types of policy, then that can be enough to move the needle more than perhaps the narrative itself.

Kimberly Adams

So we’ve talked in passing about the IRA and the infrastructure law, and you know, the CHIPS Act, how are these policies actually going so far? I mean, they became law, he’s still not pulling grade on the economy, but how well are these new policies actually working to achieve the goals they laid out to do?

Mark Blyth 

Well, it’s obviously it’s a long-term play, you’re not going to see everything in a year. But if you simply look at pledged investment, as a few websites, or the track this stuff, you’re talking somewhere in the order of the initial spending on the green side of the bill was some 360 billion or something like this, the pledged investments that have been leveled up on top of us are basically about the same order of magnitude on top of what’s been pledged. So you’re talking something that’s, you know, a significant chunk of change online already with the equivalent to the stimulus that you did during COVID. If you map this out for another year, and those investments continue. So there’s a lot of money pledged there’s a lot of ground being broken. What’s really big and quite interesting about this is the kind of second order problems. So you get friendly with Korea, again, because of money, your allies, and they’ve got better batteries than you. So you get them to open up a factory in I think this was Kansas or someplace last night, great. Let’s do this, and then look around to go, oh, we have a problem. What is it? We don’t have any workers with any of the skills we need to do this? Right, because when you get rid of your industrial base, you no longer have those types of workers. So it’s one thing breaking ground and giving someone a subsidy, but you still got to find the workers. So you know, this is not exactly a linear process.

Kai Ryssdal 

How did it happen? Sorry, if I could just back up historically here for a minute, how did it happen that we gave away our industrial base?

Mark Blyth 

Because it was so profitable to do so Kai. I mean, yeah, but for the short, the short answer was, let’s look, we think about a state like Wisconsin has been sort of, you know, one of the deindustrialized states and it’s true. But Wisconsin lost a third of its industry, not to foreign countries, but to Right to Work states. They were getting away from the high-cost union. So they went to Texas and then after Texas, they went to Mexico. And after Mexico, once China joined the WTO, boom, let’s go let’s move the whole supply chain and because they’ve got a comparative advantage and very cheap labor, very good infrastructure and environmental despoliation, which our EPA won’t allow us. So let’s go for it. The net result was we had factories for consumption called Walmart, they had factories production, and the two of them were intermediate by the dollar. So long as you were a shareholder, it was awesome. If you were a worker in any other states, that was a tragedy.

Kai Ryssdal 

So that took decades to do, right. Sorry to jump in here. But that took that took decades to do, how long does it take to undo if we can?

Mark Blyth 

Now see, this is why he got the focus on green tech. It’s not just the fact that it’s necessary. It’s the fact that we know how to do it. It’s not that complex, it’s really about basically redoing the power source for your grid and upgrading your grid. It’s about wind, it’s about solar. These are all known knowns. It’s simply then about getting the scale of investment needed to get that in there. Now, here’s the other side of that story. The other viable, if you will, business model in the United States, four states and think about going from Alaska to Oklahoma to Kansas, down to East Texas, all the way out to Mississippi, Alabama, come up to West Virginia, is the core of the Republican coalition. What do they do? They do farms, they do fuel, they do fertilizer. They are what I’ve called in writings, the carbon coalition. And what is the IRA? The IRA is a mortal threat to their interests. Because if you decarbonize who needs carbon? So when we think about the election that’s coming up, think less about the personalities and think about it as a clash of business models. The Democrats want to decarbonize because we have to, and the other side of the country says, “Yeah, we may have to but if you do, you turn me into the Midwest 20 years ago, I don’t want that.”

Kimberly Adams

Last week, when Biden was talking about this, he contrasted Bidenomics with what he decided to call Trumpian MAGAnomics, which gets right at what you were talking about these competing business models. Do you think that’s an effective messaging way around this?

Mark Blyth 

But again, only to the people who you’ve already got in your pocket, right? So all the young people, if you look at surveys, right, climate skews young, you’ve already got them, they’re not gonna vote Republican. They’re not MAGA folks, whereas on the MAGA side, it’s like, you want me to double down on carbon for the next 10 years, when the world’s carbon short and prices are up $100 a barrel, nearly? Let me just get loose.

Kai Ryssdal 

So so I don’t want to I don’t want to end on a downer. And we don’t have to, because it’s our podcast, we can whatever we want.

Mark Blyth 

But that’s why you bring me on. Seriously, what do you expect? That’s what you bring me on very occasionally. Let’s be honest.

Kai Ryssdal 

Oh man, so so look, we are politically polarized in this country, in a way we haven’t been in a century. Plus, we are facing an existential crisis, that many people in this country, including the elected leaders of many people in this country, refuse to acknowledge is real or has to be dealt with. And I guess the question is, what do we do with this? And I don’t expect you have an answer. But But this, it seems unsolvable?

Mark Blyth 

Well, if you, you want to put a very positive spin on what Biden has been doing, let’s move it away from Biden, right? Let’s think about this as what America needs to do, right? The real source of our power lies in the fact that we have the dollar, everybody uses it to buy everything needed around the world from everyone else. The reason they have dollars is because we import tons and the export stuff to ask, that’s kind of how the world works. Now, if you lose the dollar, if other people start using other currencies then we have a problem for us, because then we wouldn’t have this unlimited checkbook. Now, if we double down on a carbon model, and the rest of the world continues with a green transition, which is exactly what will happen. Then Europe goes closer to China, we stay out of the conversation, they move a generation ahead on green tech, they start to have the patents, the IPR, the intellectual property rights and the products that you need to live in a warming world. And we come back to the party 10 years later on, it turns out, nobody needs carbon anymore. And then you don’t need dollars anymore. So this is a very big problem for the United States. You might not like the idea of decarbonization. But denying it is probably more dangerous, and not just for the climate effects.

Kai Ryssdal 

Alright, so look, so this goes to us. And I don’t want to drag this out. And I’ll let you go in a second. But this goes through a conversation Kimberly and I had yesterday on this podcast, which which was in no small part, how government doesn’t work in America. And part of what we came to was, or maybe what I came to, I don’t want to characterize what Kimberly was saying, but you cannot possibly have decent policy of any stripe, any policy, just to do anything. When one party wants to govern and the other party’s idea of governing is denying actively the other party, what they want to get done. So you oh wizened political economist. It spells it spells not great things, right? Because we can’t get there from here, if our politics is the way it is today.

Mark Blyth 

You know, we’ve been through this before, though, that’s a political scientist at the LSE, whose name escapes me now who wrote a paper on this. And it’s how in the south, once the civil war was won, what southern elites did was they realized the higher taxes were on the way for reconstruction. So what they did was they deliberately hollowed out their state, the underfunded, they cut jobs, they cut pay for people who aren’t in the state. And we’ve been doing a kind of equivalent for the past 30 years, you know, rah, rah, the entrepreneur, the private sector is great markets are wonderful. Anyone who works for the government is a loser, blah, blah, blah. And then you discover the if you want to do the really big things in life, you don’t get that done by the free market, you get that done by the balance sheet of the state. And when you’ve spent 30 years hollowing out, you have to figure out that you might need to build it back up. And what we’ve got is really a contest between one party that wants to build it back up, and one is quite happy to see it hollowed out.

Kai Ryssdal 

So so not that not to go too deep down the Civil War metaphor here, but what we’re looking for is the better angels of our nature, right?

Mark Blyth 

Indeed, it is, or at least an election where the IRA survives. And then you double down on those investments. And then you create the facts on the ground that make it very hard to reverse them. Think Obamacare, once it’s on the books, right? Very hard to get rid of.

Kai Ryssdal 

Right, Mark Blythe at Brown, always a ray of sunshine Mark, always a ray of sunshine.

Mark Blyth 

I try to be that shaft of darkness through the light.

Kai Ryssdal 

Thank you so much. I really appreciate talking to you.

Mark Blyth

All right, bye, bye.

Kai Ryssdal

Bye, take care.

Kimberly Adams

You know, he reminds me of something that we talked about when the CHIPS Act was originally passed. And I hadn’t thought about it in the same context for the IRA. But of positioning a lot of these investments in very crucial districts. Totally, totally and, and I was thinking of it more of a lens of, you know, elections and getting reelected. But this idea of positioning them in these key districts for the survival of the programs, is also very interesting. Because if you know, you put all of these plans in Texas or Georgia or Missouri, you know, those voters are going to want to keep those jobs in even if they don’t elect people who, you know, are aligned on those sort of carbon goals. They will definitely elect people who will not get their jobs taken away.

Kai Ryssdal 

Right. Right. Well, it’s like defense procurement.

Kimberly Adams

And I was just thinking like the F15.

Kai Ryssdal 

Right I don’t remember what plane it was or what big weapons system it was. But there’s something in the in the Pentagon’s arsenal, which has a supplier or a factory or something in every congressional district. That’s right in 435 congressional districts. And that’s kind of what this is, you know?

Kimberly Adams

Yeah. Yeah. So interesting. All right. We would love to know what you all think about Bidenomics, or perhaps MAGAnomics are these two competing systems or even that framing of it? Our number is 508-827-6278, also known as 508-U-B-SMART. You can also email us makemesmart@marketplace.org. And we will be right back.

Kai Ryssdal 

All right, here we go. News, Kimberly Adams.

Kimberly Adams

Yeah, this is my other one that I wanted to get to yesterday, but we were talking and it was interesting. So yeah. It’s about the UAW strike in general. It’s a Politico story, headline, why it seems like everyone’s going on strike on Biden’s watch. And it has seemed like that why there are so many strikes. And it has to do with this idea that Biden has presented himself as the most pro union president in American history when we had our person on a couple weeks ago, months ago, and I remember, they were saying Biden’s most pro union president, but in some ways that’s actually putting backing Biden into a corner when it comes to all of these strikes that have the potential to do real some serious damage to the economy. Just when he needs the economy to be doing great. He’s heading into his election. Now, obviously, these workers are advocating for things that you know, they view is very, very important. But if you look at the rail negotiations, which is listed in this article, they sort of go through some of the big fights that have happened on Biden’s watch the rail negotiations where the White House very famously stepped in and got, you know got ringed for it. Basically, what I didn’t know is that, remember how we were talking about the the sick leave and how upset the workers were that the White House stepped in and the deal was made without the sick leave. Apparently, some railroads individually came to agreements with their unions on paid sick leave in the months following those negotiations. So some of it did actually end up working out. But UPS Teamsters and remember, that’s when the head of the Teamsters was like, stay out of it. And it was an open threat port negotiations on the West Coast, Hollywood strikes going on. And it it’s, you know, Biden has tied himself so closely with the unions, it makes it very difficult for him to not back them in these fights, even if it means it’s going to cause problems for him in an election year, which is the price of the game.

Kai Ryssdal 

Totally, totally. I saw some piece today speculating on whether or not Biden was gonna go walk the picket lines with the UAW members who were out, which would be huge and I believe unprecedented. But right next to it was an article about how Mary Barra the CEO of GM is Biden’s best buddy on EVs cuz she wants to spend billions of dollars on EVs and Biden, of course, in the IRA and all of that, it was all about EVs. So it’s, it’s he’s, that’s why he gets the money, right.

Kimbelry Adams

And now, some of these, you know, companies are saying that if plants shut down, they might not reopen.

Kai Ryssdal 

Right, right. You know, tough times, tough time. Here’s mine. It’s a quickie. It’s a data point. And it’s a it’s sometimes the headline is a little bit misleading. There’s a headline in The Wall Street Journal today that says “The Feds next challenge: $100 oil.” The Wall Street Journal is talking about that, because Brent crude, which is the international benchmark is bumping up against $100. A barrel is about 94 and change right now on its way up. The 12 month high on Brent crude is like $98 barrel. And you know, once it crosses 100 bucks, big mental level there, and and it’ll be, you know, all over the news. But I would submit it’s not really the Feds next challenge, sure it is an inflation issue. And I understand that, but really what it is, is a challenge for American consumers who are going to be spending more out of pocket and thus not being able to spend other things on other things, including stuff like, oh, I don’t know, student loan payments that are just starting again, but also everything else in this economy that consumers have to keep buying, so the economy keeps going. So oil is going up. The Fed is looking at it. I would think about consumers. Gas, by the way,at the Shell station next to my house. 5.99 a gallon this morning. Oh, yeah. Welcome to California.

Kimberly Adams

This reminds me of that point you made was it yesterday about Macy’s hiring for the holidays?

Kai Ryssdal 

Oh, I know. Well, well, yes. Right. However, comma, there’s a piece in Bloomberg today,

Kimberly Adams

Wait for people who didn’t, who didn’t hear Macy’s.

Kai Ryssdal 

What do you mean, people who didn’t hear it? God? Sorry. Just get it in.

Kimberly Adams

Just in case just in case someone doesn’t listen to everything that Marketplace puts out. Basically, Macy’s is hiring significantly fewer, is it fewer or was it right on brand?

Kai Ryssdal 

It’s within spitting distance, but far fewer than two years ago.

Kimberly Adams

Yeah. In terms of seasonal holiday workers with the idea that people are likely going to be shopping less, at least in stores this holiday season.

Kai Ryssdal 

I’m glad you said at least in stores, because there’s a piece in Bloomberg this morning saying that Amazon is going to hire 250,000 workers, which is a big jump from last year. So people are not doing brick and mortar. We’re all doing online. And lots of it.

Kimberly Adams

Wow. Yeah. So but still spending it seems. Right. I don’t know if we take like snapshots of our of our own personal economy. Like over the summer. I was feeling very optimistic. And I ordered this new patio set. Well, it’s still summer but beginning of the summer, I ordered this new patio set. And then I came back from vacation and I was like, I spent a lot of money on vacation. I probably don’t really need a new patio set. And so I cancelled the order and got a refund. Because it hadn’t come yet. And I was just like, how many people are sort of reevaluating? You know, this time of year heading into the winter. You had you know, your Beyonce Taylor Swift, vacation, international travel summer for those who are fortunate enough to be able to do so. And then you’re just like, yeah, it’s time to pull back.

Kai Ryssdal 

Yeah, yep.

Kimberly Adams

Okay, that is it for the news. Let us move on to the mailbag.

Mailbag

Hi Kai and Kimberly. This is Godfrey from San Francisco. Jessie from Charleston, South Carolina. And I have a follow up question. It has me thinking and feeling a lot of things.

Kai Ryssdal 

Ok we’ve spent some time of late including on the pod today talking about President Biden and the economy, who gets credit where credit should be given and how people are feeling about this economy the vibes right. And we got this.

Jenny

Hi, this is Jenny from Omaha, Nebraska commenting on Kai’s commentary related to President Biden getting credit for the economy, also in that census bureau report, not just the median household income, also the drastic increase in child poverty over the past year, I think there was some sort of increase by 140%. So families are feeling really, really deeply. And I think that’s important to note too, as we talked about federal policy and how it can help out people.

Kai Ryssdal 

Totally, we should also point out, you know why that happened, right? There’s a child tax credits required, right? And also the expiration of a lot of COVID aid unrelated to the child tax credit. So there’s a lot going on, but but absolutely true. Absolutely true that the child poverty in this country is up by an unconscionable amount. Right.

Um, one more last week, we were talking about Andy Weir and what he learned he was answering the make me smart question. And he mentioned that he didn’t know how to spell the word eyesore and he spelled it I-C-O-R. And I pointed out that in fantasy writing, there’s the word ichor. A lot that references that’s used to talk about dragon’s blood. I’m that person. Anyway, a listener called in to tell us more about Ichor.

Anna

This is Anna from Jacksonville, Florida. The word is Icord spelled I-C-H-O-R. And the dictionary says it’s the either the ethereal fluid in the veins of ancient Greek gods or a thin watery or bloody discharge. So yes, it definitely shows up in a lot of fantasy writing, but not just about Dragon. Thanks.

Kai Ryssdal 

Oh my goodness.

Kimberly Adams

I love that other people resonated on that. My little fantasy…

Kai Ryssdal 

Thin watery or bloody discharge, yes. Okay, so moving on, quickly as we possibly can. This week’s answer the Make Me Smart question, which is once again should you be wanting to answer it What is something you thought you knew, but later found out you’re wrong about?

Maggie

Hey, this is Maggie from Okeechobee, Florida. And something I thought I knew that I later found out I was wrong about was that cows eat everything in sight. So we bought nine acres about four years ago, we have been turning it little by little into a hobby farm. So of course we wanted to put cows on it. We have two cows, they are a little over one years old each and they don’t just eat feed and they don’t just eat grass. They eat palm trees. They eat my regular trees, fruit trees, pretty much anything in sight that they can eat, they will eat so cows eat everything. Who knew?

Kai Ryssdal 

I definitely did not know that. I thought it was like grass and you know, wheat and feed and stuff.

Kimberly Adams

Clover and stuff. Yeah, definitely didn’t know that. And you must go to the website. So you can see this very cute photo that Maggie sent us of her cow literally munching on a tree it’s and I realized that in all the sort of imagery you see of like cows and farm settings, they are not by palm trees.

Kai Ryssdal

That’s true. That is true.

Kimberly Adams

At least in the United States, you know.

Kai Ryssdal 

That is true, alright your answer to the maker’s mark question can come to us one of a couple of ways 508-U-B-SMART or makemesmart@marketplace.org. And and that’s that. That’s where we go

Kimberly Adamas

Make Me Smart is produced by Courtney Bergsieker. Ellen Rolfes writes our newsletter. Today’s program was engineered by Drew Jostad with mixing by Jay Siebold. Our intern is Niloufar Shahbandi.

Kai Ryssdal 

Ben Tolliday and Daniel Ramirez composed our theme music. Our senior producer is Marissa Cabrera. Bridget Bodnar is the director of podcasts. Francesca Levy is the executive director of Digital and on demand. Marketplace Vice President and general manager is Neal Scarbrough.

Kimberly Adams

Do you even read any fantasy? Hell?

Kai Ryssdal 

No. I’m not a fantasy guy. My second oldest son is a huge fantasy guy. Not me. Yeah.