Donald Trump has been reelected president of the United States — and now, Joe Biden has entered his lame duck era. In the pages of the New York Times and Washington Post, eminent thinkers will ponder the ramifications of Trump’s second term and will shower praise on the Biden administration’s accomplishments. Unfortunately, I am neither an eminent thinker nor a writer at the New York Times, so it is not really my place to write such a retrospective — nor, in my view, is it proper to praise the administration.
During the Biden presidency, a so-called “new centrism” emerged as the politically dominant ideology — one that challenged the “free-market ethos” that made taboo ideas such as subsidies, protectionism and harsh restrictions on immigration. This new centrism moved beyond the so-called “neoliberal” era of the past 40–50 years — which thinkers like Oren Cass (on the right) and Matt Stoller (on the left) indict as prioritizing complex mathematical models that yielded benefits for free trade and lower barriers to immigration over intangibles like coherent communities and manufacturing prowess.
Yet, the analytical capacities of these so-called “post-neoliberals” are often found lacking. New York Times columnist David Leonhardt, in “Ours Was the Shining Future,” places part of the blame for the end of the “golden age” of the New Deal Era and the subsequent rise of neoliberalism on the rise of immigration post-1965. This is a tempting narrative — it allows one to blame foreigners for structural problems endemic to an economy undergoing massive technological shifts — but unfortunately for its hawkers, it is also wrong. The best empirical evidence we have about the effects of immigration — sudden or long-term — on native-born workers’ wages suggests that they are slightly positive, if anything, since immigrants and native-born workers are more often complements than substitutes.
If the post-neoliberals’ analysis in the realm of immigration was bad enough, the quality of economic analysis when it comes to trade is downright nonsensical. Cass’s group, American Compass, proposed a global tariff, starting at a rate of 10% and ratcheting upwards 5% per year while the country runs a trade deficit — in an attestation to the post-neoliberals’ influence, Trump all but adopted this proposal during his presidential campaign. This tariff plan is, for lack of a better word, disastrous.
The reason the United States runs a trade deficit has nothing to do with the composition of industries and everything to do with our institutional stability. The balance of trade and currency exchange rates are intimately linked together — the dollar, as the global reserve currency, is a highly sought-after commodity; foreigners obtain dollars by exporting goods and services to the U.S. When a tariff is implemented, Americans purchase fewer goods from abroad, meaning foreigners obtain fewer dollars. As a result, the price of the dollar goes up abroad, and exports from America become more expensive. The net effect of a tariff on the balance of trade is approximately zero — with a side effect of more expensive imports, of course.
However, despite these glaring incapabilities in their reasoning, the Biden administration all but adopted their policies in name. In 2019, Biden opposed Trump’s tariffs on the basis of their negative effects on consumers — then as soon as he took office, he not only kept Trump’s tariffs on various Chinese goods, but also expanded import tariffs on crucial infrastructure such as solar photovoltaic panels and doubled down on the disastrous Made in America standard (which drives up the cost of federal procurement with little benefit). The story that Biden’s defenders tell to justify these actions is one of national security — that in maintaining and implementing these tariffs, the U.S. will maintain its industrial base and competitive edge in the technology of the future.
Certainly, there have been a number of accomplishments under Biden that fall under the banner of post-neoliberalism. The CHIPS Act and Inflation Reduction Act have partially yielded large increases in manufacturing construction — bolstered by fear of China, both the Republican and Democratic parties are especially willing to lavish subsidies on “strategic” domestic industries to protect them from national security risk.
This wave of policy emphasizing domestic industry comes at the same time that support for immigration has cratered in recent years — the share of Americans saying immigration should be decreased has regressed to the levels of the mid-1990s. Faced with this wave of anti-immigration sentiment, the best the administration had to offer were tepid words of support for immigrants’ dignity, while maintaining the current excessively restrictive immigration system. Meanwhile, the few programs that the administration implemented to facilitate easier immigration, such as the parole program for Cubans, Haitians, Nicaraguans and Venezuelans (CHNV), were severely curtailed or canceled outright.
The Biden administration, egged on by this new post-neoliberal intellectual trend, finalized the inward turn Donald Trump started. In pursuing a backward-looking dogma that believes muscular industrial might is the sole measure of domestic well-being, the administration turned its back on the historic source of our strength — our openness to trade and immigration.
As Adam Posen, president of the Peterson Institute for International Economics, warned in 2021, this will ultimately prove to be America’s undoing. Rather than strengthening America, the Biden administration will ultimately prove to be its downfall.
Contact Avinash Iyer at iyera@oxy.edu
