What is Bidenomics? –  Reshaping America’s Economic Landscape

• About: Bidenomics is a term that has been increasingly used to refer to any and every policy choice made by the Biden administration.

• Similarity with Reaganomics: Even though it does not have a particular idea behind its introduction, it is akin to the policy measures taken by former US President Ronald Reagan.
  • Reagan’s policies aimed to provide tax cuts to the businesses in a bid to incentivize economic activity as well as reduce the role of the government in the economy.
  • The aim was that the resultant benefits of lower taxes and faster economic growth would trickle down to the broader economy. However, over time, the rich have gotten rich while the poor have not had prosperity.
• Pillars of Bidenomics:
  • Making smart public investments in America.
  • Empowering and educating workers to grow the middle class.
  • Promoting competition to lower costs and help entrepreneurs and small businesses thrive.
• Goals: Enhancing Infrastructure, Security, and Opportunity for All
  • Introduction of policies that improve the USA’s physical and digital infrastructure.
  • Policies that reduce its trade dependence on rivals such as China.
  • Introducing measures to raise the living standards and opportunities available for the middle 40% and the bottom 50% of the US population. 
  • Make efforts to boost job creation within its borders.
• Measures Under Bidenomics:
  • The government is planning to raise $737 billion via more and higher taxation.
  • The government will make spending worth $500 billion towards investments in clean energy and in reducing healthcare costs.
  • Introducing steps to prevent the concentration of economic powers in the hands of the few and to empower labour unions to safeguard labour rights.
• Success of Bidenomics:
  • GDP Growth: According to data, US economic growth is just 1.4% below the pre-pandemic trend. This indicates a robust economic growth.
  • Inflation and Recession: The sudden increase in the interest rate by the US Fed, to control historically high inflation, has not caused a recession. This indicates that economic recovery is on path.
  • Employment Generation: Rate of unemployment has fallen sharply since Biden took charge. The US economy continues to create millions of jobs at a fast rate.

Bidenomics: Addressing Economic Struggles and Inequality in America

• The United States is suffering from effects of a raging pandemic, elevated unemployment, disrupted supply chains, and thousands of small businesses at risk of closing.
• The existing economic model had long standing challenges that prevented American growth including rising inequality and disinvestment from communities across the country.
• The administration realized that slashing taxes for the wealthy and big corporations, shrinking public investment in critical infrastructure and education, and failing to safeguard market competition were not working. Thus Bidenomics came into being.

Assessing Criticisms: The Challenges Surrounding Bidenomics

• Voter Opposition: Bidenomics has not been able to convince voters about its positive impact on the nation’s economy. A polarized voter base will be difficult to convince.
• Subsidy Race: Bidenomics, which involved providing subsidies for people, could start a global subsidy race, which could potentially increase inefficiency and inequity.
  • It could set a wrong example for developed and developing economies of the world.
• Income and Wealth Inequality: Bidenomics has not been able to improve income and wealth inequality that many may have expected.
  • The real income growth of the American middle class has remained in the negative territory.

Bidenomics: Shaping Economic Stability and Global Leadership

• Prevent Policy Shock: A stable economic policy is critical for the world.  A failed economic policy could result in another policy shock for both the US and the global order.
• Long-term Vision: The economic policies of former President Trump were short-sighted and prevented expansion of globalization. Bidenomics has tried to reverse some of his economic policies.
• Blue-print for future economy: Even outside the US, Bidenomics is believed to be the blueprint for the kind of change that people want. The interventionist approach of Bidenomics is being appreciated.
• Geopolitical Dominance: One of the components of Bidenomics is supporting domestic businesses. It aims to achieve key geopolitical goals of countering US’s global rivals such as China.

Understanding Abenomics: Japan’s Economic and Geopolitical Strategy

• Abenomics refers to the economic and social policies carried out by the Japanese government in 2012 during the tenure of late Prime Minister Shinzo Abe.

• Objective: The aim of the policy is not just economic prosperity but also acting as a counter–balance to China in the Indo-Pacific and reducing reliance on the US for defense.
• Policy Pillars: The policy constitutes of three pillars:  monetary easing from the Bank of Japan, fiscal stimulus through government spending and enacting structural reforms.

Conclusion:

Bidenomics has the right intention when it seeks to reduce widening economic inequalities in the country. In order to show positive results, policies must be given enough time to succeed.