I recently came across an incredible article that was an absolutely joy to read. It encapsulates research from vastly disparate corners of mainstream economics into a single page, and makes an excellent attempt to guess the nation-building canvas that Bidenomics is trying to paint - and the future trajectory of America. The original article can be found here, in all its Keynesian glory: https://noahpinion.substack.com/p/bidenomics-explained
1. Vision of Bidenomics: To maintain America's global economic competitiveness, while following Japan's lead in achieving more equitable wealth distribution.
2. 3 Pillars of Bidenomics: Cash benefits, Care jobs, Investment
3. Cash benefits while temporary, are a sign of what is to come. The most significant is Child Allowance - a unconditional sum of $3,000 annually per child - which is basically a pilot test of Universal Basic Income. If it gains enough political will, it may become permanent.
4. Care jobs will be the last jobs to be automated by machines, and investments in this sector tend to have the lowest ROI from a GDP context. It also tends to disproportionately employ women. Focusing R&D and innovation into this sector will help empower women; together with the large Child Allowance stipend described above (following in Japan's footsteps in 2012, which saw a rise in female employment).
5. Investment policy will be spearheaded by Government - harkening back to the days of the military industrial complex and space race - where outsized government R&D budgets resulted in "government labs" where innovations trickled down into the private sector. This time, the government lab objectives will be in revamping the electrical grid, preparing America for a carbon-free future, and repairing existing infrastructure. Notably, it's not just "knob-turning" government incentives like tax breaks or subsidies to nudge the private sector into the right direction - this time the government will be getting down and dirty in the trenches alongside them.
6. Since America can no longer compete on cost and the global economic center will shift eastwards towards Asia, the overarching vision is to lay a 2-track economy. Track 1: Refocus America's vast knowledge sector (representing 20% of the economy) into an information export powerhouse (generating 80% of GDP); and Track 2: Gear the remaining 80% of the domestic sector to redistribute the wealth earned from Track 1 in an equitable manner.
7. Track 2 is basically following in Japan's footsteps. While Japan has stagnated in terms of GDP growth over the past few decades, it has managed to distribute that GDP more equitably amongst its population, and achieve one of the most equal distributions of wealth among developed nations. The author describes Japan as the most successful "corporate welfare state".
8. When more people are given a chance to generate productivity, that will also lift GDP. Hence the future of American GDP growth is to create more opportunities for more people, rather than the old way of throwing more money at the problem.
9. The government increasing Taxes on the wealthy and being directly involved in Investment is basically a wealth redistribution policy. Together with the aforementioned pillars of Cash benefits and Care jobs, programmatic spending will enable the govt to raise minority groups up.
10. Cons 1: Big Government meddling in industrial policy (rather than just knob-turning) is a big no-no in economic theory. This is definitely going off the beaten path, and will invite opposition from conservatives. However a strong opposition will also serve as good watchmen to police government initiatives.
11. Cons 2: Raising massive debt and printing money to invest in Care and Construction sectors (two of the lowest ROI sectors) may lead to unwanted inflation. Unprecedented coordinated monetary and fiscal policy will help, but any mistake that deviates from theory could result in huge productivity sinks.
12. Cons 3: Offering unconditional Cash benefits & Minimum wages has long been seen as welfare state initiatives that give people less incentive to work. However an increasing body of empirical research has shown that that may not necessarily be the case.
13. Summary: Bidenomics is a massive paradigm shift in fiscal policy, equal in magnitude to the likes of Reaganomics and FDR's New Deal policies that went on to inform future policy for decades. Mistakes will be made on the way, but the alternative is to persist with outdated Reaganomic methods that have not borne fruit since the early 2000's, which is not the best option either.