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Two centuries ago, the concept of the “Hegelian dialectic” emerged in western philosophy to explain the development of ideas in history. German philosopher GWF Hegel proposed that a new idea (or “thesis”) sparks a reaction (the “antithesis”) as the historical pendulum swings, eventually leading to a “synthesis.”
As President Joe Biden gears up for the 2024 election, we should reflect on this notion. Over 40 years ago, Ronald Reagan embraced a shift towards free-market, free-trade policies known as “Reaganomics.” It stood in contrast to the postwar consensus that advocated for government control in markets and commerce.
Now, a new “antithesis” in the form of “Bidenomics” is taking shape. In a recent speech, Biden explicitly endorsed this label, highlighting a departure from the “trickle-down economics” of Reaganomics.
Bidenomics emphasizes “smart investments in America” to foster a bottom-up and middle-out approach to economic growth, prioritizing industrial policy and government oversight in markets. While some investors may be uneasy with this language, as it challenges the Reaganite framework they have benefited from, it is crucial to pay attention to the key points outlined in Biden’s speech.
Firstly, these policies aim for a longer-term structural reset rather than providing immediate economic benefits. The focus is on creating a path for future job growth and prosperity.
Secondly, Bidenomics encompasses a mix of initiatives, including support for green innovation, infrastructure investments, curbing corporate monopoly power, worker retraining, and implementing an “America first” trade policy to strengthen critical supply chains.
Thirdly, Bidenomics reflects a broader shift in the Western zeitgeist, with many of its ideas stemming from the environmental, social, and governance movement. It is worth noting that even the Trump administration embraced certain aspects, such as “America-first” trade policies and government intervention in supply chains for national security reasons.
Fourthly, Bidenomics is expanding its influence beyond the US. The UK’s opposition Labour party sees it as a potential blueprint for their own policies.
Lastly, although the specifics of Bidenomics are still evolving, they have already led to significant economic surprises, such as the launch of the Inflation Reduction Act and the unexpected growth in manufacturing investment. However, there is no guarantee that the pendulum swing will continue, especially considering public sentiment and concerns over inflation and government debt.
Nevertheless, the term “Bidenomics” is likely to shape the zeitgeist and endure beyond Biden’s political career. Investors would be wise not to ignore its impact on American policymaking.
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