Covid carved a partisan divide through the U.S. Democrats have been much more cautious/protective which manifests itself as generally lower infections/deaths but also much weaker economic outcomes. Omicron could perpetuate that. /1 My latest: wsj.com/articles/omicr…
2/ Especially after the initial spring/2020 wave in the northeast, infections & deaths have been higher in red states where social distancing has been lower. But job growth there has also been consistently stronger ...
3/ This reflects not just D vs R policies but D vs R attitudes e.g. as reflected in vaccine hesitancy and perceived risk from Covid, and attitudes are harder to change than policies ...
4/ Biden's game plan is vaccination ➡️ herd immunity. But what if attitudes to vaccination don't change? Mutations, outbreaks will keep recurring, maybe with Omicron, threatening to revive protective behavior with disproportionate economic effect in blue states.
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A polarized electorate and an agenda ill-suited to inflation are depriving Biden of the political benefits of a strong economy. My column. wsj.com/articles/why-b…
1/ Voters' opinion of the president increasingly drives economic perceptions, not vice versa. And opinions are increasingly focused on non-economic cultural, social issues. (See: Virginia, where 55% voters said economy was excellent/good but still voted against incumbent party)
2/ The lesson Team Biden drew from 2009 was that Obama's stimulus was too small. But Obama faced inadequate demand, Biden faces inadequate supply and his stimulus, on top of all the others, contributed to inflation. (How much is debatable but Rs and Manchin tout the connection)
Many things went wrong with our response to covid, but the fiscal response, to paraphrase Keynes, was magnificently right. The poverty rate dropped last year. GDP will soon be back to pre-pandemic trend. After 2008 it never got back. Column + caveats .... wsj.com/articles/how-t…
1/ The response was expensive. Adding 20 % debt to GDP is not a plausible remedy for every recession, esp since interest rates are likely to be higher in the future, not lower...
2/ Some of it was inefficient. PPP loans that didn't change recipient behavior. UI supplements that outlived their purpose and slowed labor market normalization. A final round of stimulus checks that added to inflation pressure.
1/ There are superficial parallels between Biden Admin's attack on corporate concentration and China's new crackdown on big tech. Both see large companies' agglomeration of information, data, market share, as a threat ....
2/ But Biden's program stems from a view that the government and corporations are among many countervailing forces in our society, and the balance has swung too far in favor of corporations (I'm just describing, not passing judgment, on ... their approach) ...
3/ Indeed, the neo-Brandeisians, as I describe in this week's column, see large agglomerations of economic power as antithetical to democracy. They are spiritual companions with libertarians who feel the same way about government power ... wsj.com/articles/antit…
Antitrust has long focused on efficiency and consumer welfare. A new generation of neo-Brandeisian trustbusters, led by FTC's Lina Khan, want to focus on the threat of concentrated economic power to democracy. A test case: Amazon's bid for MGM. My latest. wsj.com/articles/antit…
Louis Brandeis thought antitrust should constrain bigness for its own sake; true democracy required a multitude of economic actors. This influenced antitrust law for decades. But in the 1970s Robert Bork attacked it...
... for ignoring how size brought efficiency which raised consumer welfare. Thereafter antitrust law has been largely viewed through the prism of consumer welfare. Two big forces are pushing the pendulum back. First, growing evidence of monopoly power (wide profit margins ...
1/ A thread. Underlying the differences between neoliberalism and Bidenomics that I wrote about this week wsj.com/articles/how-b… is a different weighting applied to macroeconomic and microeconomic policy...
2/ If you accept the neoliberal default that macro can’t help when all capital and labor are employed, then microeconomic policy must be designed to use those inputs as efficiently as possible. But Bidenomics assumes we're almost always below potential …
and thus it’s okay to pursue microeconomically “inefficient” channels to raise demand (universal transfers, UI bonuses, high minimum wages, etc) because we are still going to end up with higher employment and incomes...
Bidenomics seeks to lower the curtain on neoliberalism. This column explains key differences between the old and new canon. E.g. Old: scarcity dominates, demand > supply. New: slack dominates, supply > demand... wsj.com/articles/how-b…
2. Old: Don't let fiscal policy push unemployment too low, or inflation will rise. New: unemployment has always been too high. Inflation is a remote risk, and less costly than persistent unemployment.
3. Old: Savings are scarce so deficits crowd out private investment. New: Savings are plentiful so deficits aren't harmful. 4. Old: Transfers should be targeted. New: Transfers should be universal. 5. Old: Incentives matter a lot. New: not really...