The Rise of Bidenomics: A Paradigm Shift in American Politics and Economy

In late June, when President Joe Biden took the stage at the Old Post Office building in Chicago to declare a “fundamental break” from the “trickle down” economic paradigm that has ruled American politics for more than 40 years, he insisted the self-congratulatory name for his economic program was not his idea.

The Origins of Bidenomics

“Bidenomics” came from The Wall Street Journal and the Financial Times, Biden said. “I didn’t come up with the name,” he said. “I really didn’t.” Even if the name was unplanned, the fundamental shift it has come to symbolize was not.

A Break from Reaganomics

Bidenomics is the result of a conscious effort by the White House to undo a free-market paradigm that swept into Washington with President Ronald Reagan’s election — one that favored the private sector over the public, the financial well-being of the rich over the poor, the support of monopolies over small and local business, and the empowerment of bosses over workers.

The Key Tenets of Bidenomics

Bidenomics, as the president and his administration tell it, puts the government back in the driver’s seat through the direction of industrial policy in key sectors deemed important to national and economic security. And it prioritizes worker empowerment and competition through the reinvigoration of labor unions and antitrust enforcement.

The Changes Unfolding

The changes sweeping across government and the economy can be seen from almost every angle, from the unprecedented public investment happening through the Inflation Reduction Act, bipartisan infrastructure law and the CHIPS and Science Act, to the reversal of decades of pro-monopoly antitrust policy or the rewriting of the regulatory review process.

The Impact of Bidenomics

Private companies, spurred on by the government’s public investments in the economy, have already announced more than $500 billion in investments in factories across every single state. Manufacturing construction is booming. Unemployment has remained under 4% for the longest stretch in 50 years. The lowest-wage workers have seen significant wage gains, leading to a decrease in overall inequality. And, most importantly, as inflation has fallen over the past year, real wage growth finally outpaced the rate of price growth for the first time since the early months of Biden’s presidency.

The Path Forward

With his speech in Chicago, Biden is betting big that this good economic news will continue and allow him to run for reelection on the paradigm shift that is already underway. Finishing the shift will require successfully selling its start to the American public and contrasting it to the one his Republican opponents would put in place. Will the good news trickle down in time?

The Old Order: The Rise and Fall of Reaganomics

“In order to understand what this paradigm shift means, you have to start by asking, well, what was the paradigm before?” said Felicia Wong, president and CEO of the Roosevelt Institute, a left-leaning think tank and a key source for the administration’s economic ideas.

The New Order: Post-Neoliberalism and Economic Paradigm Shifts

The neoliberal order ran aground in 2008 with the onset of the global financial crisis and the Great Recession. The resulting recovery was slow and uneven, with the government failing to put enough resources into the economy to bounce back quickly. Political upheavals followed as the neoliberal economics of austerity and free trade provided no answers to the problems revealed by the crisis.

The Birth of Bidenomics

The four years of the Trump era saw great ferment in academic economic research and the think tanks associated with the Democratic Party, including the Roosevelt Institute and the Washington Center for Equitable Growth, which Boushey founded. The activism around Occupy Wall Street earlier in the decade and the presidential campaign of Bernie Sanders also provided a significant grassroots network capable of backing up new economic ideas.

The Pillars of Bidenomics

The pillars of what the administration is selling as Bidenomics came out of this period: the enactment of industrial policy through public investment, a reinvigoration of antitrust policy and the empowerment of workers.

The Resurrection of Industrial Policy

Chief among these policies is the resurrection of a robust and publicly stated industrial policy orchestrated through direct public investment. This idea of an economy curated by the government has received a variety of different names from economists including “new productivism,” “the mission economy,” “marketcrafting” and “the designer economy.”