Since the early 2000s, most Americans have generally been dissatisfied with the economy and many are insecure about their place in it. The dissatisfaction peaked during the Great Recession of 2007 to 2009 but persists, even as the economy is growing and unemployment and inflation combined are roughly where they were during the relatively upbeat days of the Kennedy administration. This is a stubborn, long-term disgruntlement.
Unlike short-term economic dissatisfaction, which lends itself to tinkering with interest rates and budgetary trade-offs, long-term dissatisfaction suggests a deeper, structural problem with the economy that requires more drastic measures. It is perhaps the signature achievement of the Biden administration that it has recognized this problem — specifically, the increasingly centralized, unbalanced nature of economic power in the United States over the past four decades — and is trying to address it.
But this policy wisdom also presents a political challenge. The administration’s strategy is unconventionally bold and far-reaching — an attempt to replace today’s toxic form of capitalism with an earlier, fairer model of free enterprise. Viewed through the narrow lens of conventional economic thinking, that strategy is easily misunderstood or overlooked, perhaps especially by its would-be allies in the political center and on the center-left. Today’s familiar left-right economic debates, for example, in which the left wins by taxing and spending, and the right wins by cutting taxes, have precious little to do with the more ambitious vision of Biden’s administration.
Americans are desperate for a fundamentally different, fairer kind of economy, and Mr. Biden is working to give them one. The urgent challenge, politically, is helping voters understand that.
To appreciate the novelty of the Biden administration’s approach to the economy, it is worth remembering that over the past 40 years the orthodoxy on the center-left has been a “tax and transfer” strategy. It has meant tolerating or even encouraging corporate consolidation and profit while maintaining the expectation that those profits would be redistributed in the service of the less powerful and less well-off. The popular metaphor of a national pie suggested focusing first on growing the pie and then on dividing it up equitably.
This logic has been a favorite of those arguing for deregulation and tax cuts since the 1980s. It was also used extensively to promote the World Trade Organization and free trade policies: The idea was that increased profits would be used to compensate displaced workers later on. Today, the same thinking would permit mergers between credit-card companies like Discover and Capital One: Even if they were to charge higher rates and fees, we could always redistribute the profits later.
