Edmund Phelps explains why the Democratic ticket is better not just for American democracy but also for the US economy

Edmund Phelps explains why the Democratic ticket is better not just for American democracy but also for the US economy

Commentators have offered many reasons why one should vote in November for Joe Biden, the Democratic nominee for US president.

Yet the economic dimension of the election has been of little interest to pundits, and few, if any, economists speaking on the subject have bothered to highlight how the outcome bears directly on people’s welfare.

But the US economy is the stage on which people work in the hope of gaining personal development and the satisfaction of succeeding. It isn’t just about the money.

The economic case for Biden begins with the economic case against President Donald Trump. Consider Trump’s costly corporate tax cut. It did not deliver anything like the investment and growth he promised, and the main effect was to run up fiscal deficits in the first three years of his presidency.

Trump’s disregard for this fiscal profligacy has set a precedent for unnecessary deficits in future administrations. (Of course, the deficit incurred more recently in responding to the pandemic was unavoidable and, under the circumstances, beneficial.)

His habitual threats to American businesses have added new uncertainty to investment and trade decisions. He practices Mussolini’s doctrine of corporatism: the government as puppet master pulling the strings of puppet companies. That economic policy inhibits enterprise and innovation at a time when they are desperately needed.

Trump’s misguided crusade to reduce the harmless trade deficit has shrunk world trade, thus worsening the efficiency of resource allocation at home and abroad.

His populist rhetoric has not translated into better pay for less advantaged workers or victims of discrimination. He has sought to erase any sense of economic justice. He cares nothing about the appallingly low wage rates for those at the bottom or about the terrible living standards that these wages afford. And he has done nothing to support the eradication of statistical discrimination – racial, gender, and LGBT+. His weakening of the Affordable Care Act (Obamacare) has heavily affected people with low incomes.

Trump’s insistence that climate change is a hoax has put the world economy and the viability of the planet in further danger. He says that the wildfires ravaging the American West are the result of poor “forest management.” He has depreciated American soldiers’ heroism and sacrifice, and has no appreciation or understanding that the economy needs people’s heroism to dream up new ideas and risk investing in their development and market entry.

In attacking institutions from the FBI to the US Centers for Disease Control and Prevention, Trump is hollowing out the governmental structure. In imposing pointless obstacles that lead to trade wars, he has alienated America’s allies. In his admiration for dictators and authoritarian leaders, he is helping them to establish twenty-first-century fascism. And his chronic lying from the Office of the President undermines the people’s confidence in their government.

There are other outrages too numerous to mention. But one of the most appalling was his effort to eliminate the so-called DACA program for undocumented aliens who were brought to the US as children, who, after being raised and educated in America, now face deportation. Yet another outrage is his tactic of instilling fear of reprisals and arrest. As a result, there is a growing climate of anxiety and distrust.

Today, a great many people support Biden on these grounds and others. Trump stands in the way of the nation regaining a sense of flourishing, equity, and social harmony. But it is not clear that he could be defeated on these grounds alone. Many Americans dread a government devoted to ministering to a mélange of social groups without a thought to core matters of economic growth and job satisfaction.

But there is also a positive argument for supporting Biden.

First, Biden understands that in America there is still a crushing disparity between the wages of the seriously less-advantaged and those paid to middle-income people – and payments for single mothers do not change that. Biden, having grown up in the steelmaking region of Pennsylvania, can hardly be blind to the deprivations and pain of low-paid workers. So, if elected, we would have a president responsive to legislative initiatives for subsidies designed to pull up these workers’ meager compensation.

Biden is also attentive to the existential threat of continuing climate change. There is a vast litany of problems, such as the burning of fossil fuels causing increased levels of carbon dioxide and rising temperatures. Addressing these problems will require government intervention and international cooperation, such as that mandated by the 2015 Paris climate agreement, from which Trump withdrew the US. No one can doubt that, if elected, Biden would be eager to play a central role in the resumption of the battle against global warming.

Finally, Americans are living with the virtual stagnation of the economy since the early 1970s (interrupted for about a decade by the Information Revolution). This continuing malaise lies behind wage earners’ increased frustration over their relative standing in wage distribution – a sentiment that, more than anything else, accounted for Trump’s rise. There can be no question that a President Biden – unlike President Trump – would want to restore the economy to its former glory.

For all these reasons, it is vitally important that US people vote for the Biden-Harris ticket. Trump has gravely weakened the nation’s economy, while Biden has shown over his life that he cares about people’s chances for prosperity and rewarding lives – for achieving the American Dream.


Edmund S. Phelps, the 2006 Nobel laureate in economics and Director of the Center on Capitalism and Society at Columbia University, is author of Mass Flourishing and co-author of Dynamism. This content is © Project Syndicate, 2020, and is here with permission.

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48 Comments

the US's hegemony during the past 50 years was never founded on its "democracy". Why should its future prosperity rely on it?

Its hegemony was founded on slaughtering the American Indians, using imported slaves from Africa, receiving exodus of European scientists, building hundreds of overseas military bases, starting endless real and financial wars, and meddling with foreign relationships.

Interestingly it doesn't seem to have moved on much either, especially with the last bit of your post. Hopefully in future the damage done and the increasing view of disdain engendered by the current admin will render them progressively less and less influential

Have you any evidence for your assertions?

The so called US hegemony was a result of the WW II, which left all the major countries devastated and poor, leaving the stage to America to do as it pleased them. They used the opportunity well and introduced their own version of colonialism in the guise of capitalism and globalisation. Their financial muscle and banking acumen helped them. They were clever to build on the arms production machinery they had created for the war effort and became the arms supplier to the warring factions all over the world.
And they got a good grip on Oil.
Rest is history.
They made the mistake of opening up China, without realising that China could adopt Capitalistic practices and beat America in their own game, without the botheration of democracy, elections, etc.
So, in effect America made the world and is now dismantling what they built up in the world.
By design, or accident, or plain foolishness, history will judge.

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This article says little to nothing about what Biden has to offer, it's just an attack piece on Trump. That kind of argument will sway exactly zero people. Makes no mention of NAFTA, brushes over the trade war but offers no alternative to dealing with the China problem. Disappointing from a Nobel laureate, especially one whose prize winning work was on the short- and long-term tradeoffs of economic policy. Would love to hear his thoughts on the long term benefits of offshoring America's entire middle class.

China problem?

You view China's rise and increasing living standard for all Chinese people as a problem not an opportunity for small countries like NZ?

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This article is about the US, not NZ. Yes, I view it as a problem - China's rise is directly related to the US decision to offshore their manufacturing base, taking a scythe to their middle class. Living standards and labour conditions for the workers in China are nothing compared to those of the workers they replaced, so a net loss to "wellbeing" and a massive structural weakening of the largest democratic nation in the world. So yes, that is a problem.

"China's rise is directly related to the US decision to offshore their manufacturing base, taking a scythe to their middle class."

What a load of rubbish!

China's rise is directly related to hard working Chinese people and CCP's leadership.

What a load of rubbish!

Are you suggesting that the Chinese people's hard work and the CCP's leadership had little to do with their stratospheric rise on the world stage?

I used to be one of those people who blamed the West for enabling China but it's more likely that China simply out gamed those that sought to make a quick buck by exploiting the Chinese people. Now I think well played, well played indeed.

If people had bothered to read Oswald Spengler's Der Mensch und die Technik (Man and Technics) published in 1931 this could have been foreseen. In Spengler's view, western culture will be destroyed from within by materialism, and destroyed by others through economic competition and warfare.

If you didn't realize I was just mocking xingmowang and his/her jingoistic statement.

HAL 9000: Look Dave, I can see you're really upset about this. I honestly think you ought to sit down calmly, take a stress pill, and think things over.

Ah I see. I think Xingmowang makes a good point though as many people do display a bit of cultural chauvinism when trying to discredit the Chinese people's achievements.
Also don't forget what HAL said next, "I know I have made some very poor decisions lately....Daisy... Daisy give me your answer dooo..."

......but everyone does it. Them , us. People overplay their achievements and under play others.

Not so sure I agree xiing, it was America that lead the "globalisation"case, which was a euphemism for offshoring their manufacturing base in the pursuit of profit. China has been a nett beneficiary of that.

it appeals to the mindless drones that know nothing except that Orange Man is VERY bad. They like the duckspeak.

Actually Donald Trump is a racist misogynistic bigot who encourages separatism to line his own pockets, at the expense of the rest of the world.

Doubleplus good duckspeak.

Someone is mindlessly repeating meme-speak. The Orange Man is very clearly bad at his job. Doesn't take much analysis of the current state of the US to be certain of that. He's also a victim though.....of social media addiction. SAD!

Nope sorry, not buying it:
* Crushed ISIS.
* Brought Iran to heel.
* Peace in the Middle East advancing.
* Pre-covid roaring economy (including record low unemployment for various minorities)
* Torpedoed TPP.
* Improved relations with North Korea.
* Withdrawing troops from the Middle East.
* Forced NATO to increase spending.
* Embassy move to Jerusalem.
* Robust covid response (including early border closure with China, ventilator production etc.). From a Federal level, the response has been good.
* SCOTUS seats (one more to come!).

but yeah.. Orange Man Bad. Senile Old Joe good....

Need to add:

* Saved the world from Hillary effing Clinton.

In response:
- no he didn't. Russia did, in supporting Syrian government forces. Throw Turkey in there too. The US pulled out.
- he hasn't brought Iran to heel, just gone back to the same old geopoliticing which is galvanizing the extreme elements in Iran again. It's not going to help peace in the Middle East at all.
- see above. Peace in amongst SOME Arab countries and Israel. And how is Yemen going?
- roaring sharemarket <> benefit for everyone. And if you bring up general unemployment statistics in the US, the general trend (pre-COVID) had been going down since the Obama years....
- And we got the CPTPP, which I welcome. I support free trade agreements, done appropriately.
- A bromance between those guys isn't worth celebrating. How's life in Nth Korea for the rest of the populace? Still crap.
- see above. You effectively contradicted yourself on Syria.
- whilst pulling back from the NATO alliance itself, thus giving Putin more room for his corrupt antics
- what benefit does moving an embassy between Tel Aviv and Jerusalem bring? Not sure what your point is there.
- "Robust covid reponse". Oh man, I don't need to comment any further on that! :D
- there are always SCOTUS seats. One dies or retires and another one is appointed. Your point here?

And your mention of Hilary Clinton and Senile Joe suggests again that you're preoccupied with meme-culture. Spend much time on the r/pol boards or something? I'm not in favour of them either, as they only ever represented business-as-usual in the US rather than the true reform that country needs.

Someone mention r/pol boards?

The individual I was replying to perhaps doesn't look at r/pol. But their semantics seems to originate from r/pol

What are you on about??

How a lot of pro-Trump rhetoric & memes originated on 4Chan then got propagated via the scourge that is social media. I'd rather not have to write up a whole detailed explanation, so a few well-aimed search terms in your favourite search engine should help you out (if you're interested).

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Pre-covid the US economy was booming on every metric.

Your argument is Orange Man Bad and Senile Man Harmless.

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What a bias load of garbage, this is poor of interest.co.nz to allow such a low bar.
I guess it shows what a Nobel laureate is worth.
How about commenting on how Joe has profited massively from his China centric policy, he's bought and paid for.

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Agree - Interest.co.nz has fallen to a new low. Obama/Biden was a disaster - this article is fact free garbage. Where do you find these closet Socialists?

You guys eh....such a blinkered world.

Following the mainstream media naritive without looking at the what is actually going in is blinkered.

Decries mainstream media, worships reality TV star.

Couldn't agree more. Poorly referenced and substantiated. Bias opinion disguised as fact.

Interest should be better than this. This is the sort of crap I'd expect to read on stuff.

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The above article (opinion piece) is a collection of schoolboy arguments.

Interesting title, I expected more from the article. One of the weaker articles I've seen published here.

Is Biden a viable candidate?

Is Trump.

The US needs electoral reform and move away from the electoral college/FPP method. Biden and Trump are symptoms of that need.

Why? The system evidently works. It has produced the wealthiest, most powerful and most free nation ever. It's imperfect, but superior to any other form of government.

I think you're confused on what I'm saying. What I'm saying is that US should change its electoral system to something different, that would give more diverse parties representation. I'm not saying it should be MMP, but the US should be given a chance to decide. When you look at the range of possibilities, why would they persist with the 2 party duopoly? And when one also looks at the primaries for each party every 4 years it's clear that there's a lot of perspectives that wind up being lost to mediocrity.

To the extent that Biden & the Democrats are keener on warfare then that may produce some economic stimulus.
https://inthesetimes.com/features/joe-biden-iraq-war-vote-democratic-pri...

This writer must be sailing perilously close to coming a cropper with Godwin's Law comparing Trump to Mussolini.

Also

Yet another outrage is his tactic of instilling fear of reprisals and arrest. As a result, there is a growing climate of anxiety and distrust.

Does anyone really believe that? The boot seems very much on the other foot in that regard methinks. This writer was born in 1933 which makes him 87.

Comparing Trump to Mussolini - that's unfair on Mussolini - he as was a far better class of dictator. At least he made the trains run on time.

Additionally are you saying someone's age doesn't allow them to have an opinion......

Simply providing a bit of background information BadRobot. I always research a writer on the internet looking for things like age, gender identification, political and religious leanings. Opinions are rarely formed in isolation. I also found this, Publications have noted that despite his many accomplishments, Phelps does not own a car.

I'll let you into a little secret -

“Opinion is really the lowest form of human knowledge. It requires no accountability, no understanding. The highest form of knowledge… is empathy, for it requires us to suspend our egos and live in another’s world. It requires profound purpose larger than the self kind of understanding.”

In other words most stuff is rubbish and irrelevant. The verb I user these days is filter (everything you read and hear).

Also, it is important to distinguish knowledge based on experience vs based on theory

I saw Trump fire Meatloaf on the tele. Has Biden ever fired anyone with such power ballad pedigree? And I saw Trump hit Vince McMahon with a steel chair! Bet Biden couldn't even get up off a chair!

I saw Stone Cold Steve Austin hit Trump with a stunner

#Austin2024

Lets see them head to head in the debates. you might be surprised. Though it seems you might prefer a boxing match .

Lets see them head to head in the debates. you might be surprised. Though it seems you might prefer a boxing match .