Down with Bidenomics

When addressing partisan political issues, we prefer to avoid the views of political partisans. Unfortunately, we are not remotely qualified to opine on economic matters, so we are obliged to find someone, somewhere to present the issues and to lead our reflections.

And that means, we need to identify someone who not only knows the field but who has integrity. We do not want to be played by a political partisan disguising himself as an objective analyst.

For that, among other reasons, we have occasionally reported the views of Harvard economics professor and former member of two Democratic administrations, Lawrence Summers. We recall, wistfully, in early 2021, that Summers predicted that the Biden stimulus bill would produce inflation.

Not only was Summers right, evidently, but he showed exemplary integrity in breaking from Democratic Party talking points. I was going to say, consensus, but  politicians are more likely to promote partisan talking points.

One suspects that Summers is not looking to join another Democratic administration. Given his advanced age he is probably more concerned with maintaining his reputation than becoming yet another Democratic Party hack.

One is not surprised to see that his more recent remarks have not been covered by the mainstream press.

Just the other day, Summers expressed his fear that the Biden program of onshoring manufacturing was going to produce more inflation. True enough, everyone is touting the virtues of onshoring, and everyone has decided that we should not rely on the big, bad Chinese. And yet, some of us have pointed out that our country does not have the human capital, for example, to build advanced semiconductor manufacturing facilities. Besides, if a foreign country can produce goods more cheaply than we can, the result will be higher prices. It stands to reason.

Besides, we have labor unions and their contracts will necessarily increase the cost of goods.

Summers expressed it thusly:

I am profoundly concerned by the doctrine of manufacturing-centered economic nationalism that is increasingly put forth as a general principle to guide policy.

Onshoring feels good, and will continue to feel good, until the bill comes due.

Taking issue with a basic tenet of Bidenomics, he said:

It is wrong to suppose that manufacturing-based economic nationalism is a route to higher incomes or better standards of living for the middle class.

As it happens, Summers prefers the free market to excessive government regulation. He disapproves of the Federal Trade Commission’s efforts to block corporate mergers. He suggested that the FTC, under chairwoman Lina Khan, seems to believe that all corporate mergers and takeovers should be prevented.

And yet, Summers suggests, what if said mergers, like Microsoft’s purchase of Activision, end up producing more efficiency and lower prices?

Summers prefers marketplace efficiencies over government regulations. Evidently, the Biden administration has disputed Summers’ remarks, but it is certainly refreshing to see a Democrat with integrity offer a sane and sober analysis of the current Democratic administration.

At a time when mercantilism is all the rage, it is not such a bad thing for an economist to recall Adam Smith. And it is not such a bad thing for him to explain why inflation has been so stubbornly high.

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