America is not already great

Joe Biden is the best domestic-policy president of my lifetime.

I wasn't expecting that, but his administration has defied my expectations. I would like for him to be re-elected. I am hungry for him to be re-elected.

I am very angry with Joe Biden as a foreign-policy president. Biden's foreign policy has made it difficult for me to support his re-election in the public, full-throated way that I would like to. Yes, when the alternative is Trump, Biden remains easily the better choice, even on foreign policy, on moral as well as practical grounds. But I am not at all happy with the Biden administration on foreign policy. I am chastened by my own moral vanity when I speak too highly of the person who has presided over the United States' policy with respect to Israel and Gaza.

Nevertheless, you should vote for Joe Biden. Vote for Joe Biden.

I think a lot of people who share my electoral politics are making a terrible mistake. I will mock it as the "America Is Already Great" mistake, after Hillary Clinton's response to MAGA. A lot of center-left economics pundits are telling us this is a fantastic economy, and that's why people should vote for Joe Biden. America is already great.

This is not a fantastic economy. I was going to hang this post on an article by Rogé Karma, The U.S. Economy Reaches Superstar Status, which pretends to "ask how [the economy is] objectively performing". There was lots I could object to in the piece.

But Karma gets it basically right in the end. (Of course!)

Indeed, the out-of-control cost of housing is perhaps the biggest black mark on an otherwise excellent economy. This problem started decades ago—since the 1980s, the median U.S. home price has increased by more than 400 percent, twice as fast as incomes—and got even worse during the pandemic, as the rise of remote work prompted millions of people to seek more space. Those rising prices have collided with higher interest rates to produce the most punishing housing market in at least a generation. Would-be homeowners can’t afford to buy, and many existing homeowners feel stuck in place.

Housing is one of several crucial categories, along with childcare, health care, and higher education, that have ballooned in cost in recent decades, putting a middle-class lifestyle further and further out of reach—what my colleague Annie Lowrey has called the “Great Affordability Crisis.” The past few years of high interest rates, which make borrowing money more expensive, have jacked up costs even more. And despite the recent good news, the U.S. still has lower life expectancy and much higher levels of inequality, poverty, and homelessness than other wealthy nations. For millions of people, getting by in America was a struggle before the pandemic and continues to be a struggle today.

Still, that doesn’t change the fact that the U.S. economy has had a remarkable four-year run, judged against both its own history or the international competition. A few years of good news isn’t enough to make up for 40 years of rising inequality and stagnant wages. But it’s a whole lot better than the alternative.

Professional-class pundits are used to talking about the economy in cyclical terms. We're not in a recession! Unemployment is down! The stock market is up! GDP numbers are up! This is a good economy, by definition, right?

No. What matters most is how the economy shapes lives and societies over time. Presidential performance is a secular, not cyclical, concern. We should not vote for a President based on whether, by some bit of luck or manipulation, unemployment numbers hit a new low or the S&P a new high just before the election. Presidents should not emulate idiot CEOs, who eviscerated our economy by chasing numbers — hard data! — they imagined to be sufficient statistics for their performance. A President's job is to see through the cycles and shape a better future. In my view, Joe Biden has made an excellent start at that.

But what is secular takes time to bear fruit. Joe Biden has just begun, imperfectly but hopefully, to reinvigorate America's industrial policy. The right way to promote this is the honest one: Big, important changes have been initiated in the structure of the American economy, but it will be too soon on November 5 to know how this experiment works out. The experiment includes dramatically strengthening labor unions, using subsidies and when necessary even tariffs to reshore critical industries, muscular antitrust enforcement that aims to undo concentrations of economic power and ensure vigorous competition. If the experiment is allowed to continue, it will also include higher taxes on the wealthy (as the Trump tax cuts will be allowed to expire for very high earners).

The question before voters is whether this experiment should be allowed to continue, or whether it should be aborted.

There's that story, undoubtedly apocryphal, where V. Lenin says, "After the revolution, there will be strawberries and cream for everyone." His interlocutor responds, But Comrade Lenin, what if I don't like strawberries and cream? Lenin replies, "After the revolution, you will like strawberries and cream."

That's what all the rhetoric trying to "convince ordinary people" that this is really, objectively, a great economy feels like to me.

The question of whether an economy is good is as "objective" as your preference for strawberries and cream. What matters for the economy, overall and longer term, is as well captured in the moment's economic statistics as GE's quality of management was captured in its August 2000 stock price.

There's no such thing as "objectively good". We don't all share the same values. We have radically diverse views about what a better future would look like. I want a prosperous future for us and so does Peter Thiel, but the shape of the worlds we aspire towards, what would count as prosperity, diverge. Some ways that the economy might "grow" bring the world towards Thiel's vision, others towards my own. Any delta between the GDP numbers of those growings is not the thing that matters.

Expansion is most of the business cycle. We spent the majority of the last forty years in a "growing economy". Most economists, most of the time, would have characterized it as a "good economy".

What did all that good economy, in a cyclical sense, compose to as a secular matter? A world that is Pottersville, not Bedford Falls. A world in which the "successes" who buy our media companies and endow our universities are con men and financial predators, rather than people who produce more and better and cheaper goods and services. A world in which it's hard not to juxtapose a booming stock market — yay! — with relentlessly expanding profit margins, companies "too big to care" (as Lina Khan memorably put it), private equity rolling up medical imaging and shutting down Red Lobster while blaming shrimp generosity rather than sale-leaseback financial engineering.

The American economy is dystopian, secularly. I agree that the Biden post-COVID cycle has not been so bad, has been pretty good along a variety of dimensions, although not as good as boosters protest too hard to claim.

It's a point of light in a bowl of shit. If the people who are speaking on Joe Biden's behalf keep missing that, don't be surprised if voters go with the other guy. As Ian Welsh put it today

This is the Brexit/Trump/Javier problem. To whit, when things are bad for a long time and nothing seems to help, people reach [for] something extreme. They know the status quo isn’t working and that things keep getting worse no matter who they vote for among the mainstream, so they look for someone or something completely different. Trump is a billionaire, but he doesn’t parse the same as normal politicians.

Don't sabotage Joe Biden's chances by making him out to be a normal politician. He's the only politician since Lyndon Johnson to begin to seriously try something different. Biden may "parse the same as normal politicians", but on questions of economy and society, he has been much more ambitious, much more bold, much more different than Donald Trump. He may be a fragile, senile, old man who farts on stage, but he's done the policy equivalent of Arnold Schwarzenegger benching 500 pounds.

Credit him with that. Stop damning him with faint praise about labor market leverage already beginning to fade, modest "real wage" growth against tiny baselines, stock market performance that mostly helps plutocrats and the professional class they employ, housing "wealth" that for all of us who do not own a home represents a crushing liability.

p.s. I want to dedicate a great deal more than this post to Eugene Lewis, who told me the Lenin tall tale.