ICYMI: Bidenomics is Leading an American Manufacturing Renaissance
September 8, 2023
Key Point: “The second lesson I draw is that Bidenomics is working — big time. President Biden promised to help America outcompete authoritarian China and to heal some of the economic divides at home. Both those goals are being achieved.”
New York Times: Opinion | The American Renaissance Is Already at Hand
By David Brooks
- Two megatrends have shaped American life since the 1980s: The rise of China and the hollowing out of American industry.
- China’s economic boom prompted a thousand predictions — that it will soon surpass us as an economic power, that the 21st century is going to be a Chinese century, that America is an aging, decadent nation destined for second place.
- The hollowing out of American industry fed the sense that capitalism is betraying the middle class. America has a parasitic financial sector, but we don’t make things anymore. Manufacturing jobs got outsourced to China and Mexico, and wages stagnated.
- These two trends contributed to the sense that America is in decline — to the angry, gloomy pall that has settled over political life.
- But it’s beginning to look as if those two megatrends are reversing.
- Since late 2021, investment in the construction of manufacturing facilities has more than doubled.
- Much of that boom is happening in the mountain West, the Upper Midwest and parts of the Southeast. Chips, electric vehicles, renewable energy sources and batteries are being manufactured in places like Michigan, Kentucky, Minnesota and Arizona.
- Over the last few years, for example, scads of tech firms have decided to invest in manufacturing plants in formerly rust belt Ohio: Intel ($20 billion), Amazon ($7.8 billion), Google ($3.7 billion). According to a Hoover Institution study, Ohio in 2020 attracted almost 14 times more new capital projects per capita than California.
- In short, capital, construction and manufacturing are flowing back into many places that have taken their hits. Since 2011, according to the Federal Reserve Bank of San Francisco, wage growth has “accelerated more for high school graduates than for college graduates.”
- What lessons are we to draw from these two ongoing turnarounds? The first is that there’s a lot of resilience and dynamism in America’s brand of broadly free market capitalism. As I’ve noted before, in 1990 the European and American gross domestic products per capita were nearly neck and neck. Since then, America has surged ahead. American labor productivity increased by 67 percent between 1990 and 2022, compared to 55 percent in Europe and 51 percent in Japan.
- The American economy, especially in the Midwest, is kind of like that. Many of those places have experienced economic decline, but governments and people have shifted and adapted, and they are bouncing back.
- The second lesson I draw is that Bidenomics is working — big time. President Biden promised to help America outcompete authoritarian China and to heal some of the economic divides at home. Both those goals are being achieved.
- According to the Treasury Department, over 80 percent of the investment made through the Inflation Reduction Act is going to counties with college graduation rates lower than the national average. Nearly 90 percent of investments are being made in counties with below-average weekly wages.
- American politics is dysfunctional, our social fabric is in tatters, but somehow our economy is among the strongest in the world. Our economic competitors stumble and fall; we stumble, and somehow bounce back.