If first you do not succeed with really bad policy, try, try again.

There are a handful of journalists whom I follow simply because they are a reliable bellwether of Democratic Party thinking.  Noah Smith is one such.  He occasionally has insight but mostly his value is in articulating the party position.  

But sometimes, his pieces are astonishing in how disconnected they are from logic, evidence, or situational awareness.  This morning's piece, The wreck of Bidenomics by Noah Smith (subheading, Fortunately, we have a good idea of where to go from here) is an example.  

In it, he discredits himself at almost every turn.  What is most interesting is that it becomes clear exactly how he measures the success or failure of Biden's economic policies.  For most, this would be relatively easy - Did the policy achieve its stated outcome?  For Smith, in contrast, it emerges that his measure of economic policy success is the extent to which it enables further policy implementations.

It is worth reiterating a fundamental principle which most public intellectuals, indeed, most everyone, routinely ignores.  A nation's prosperity is dependent on its capacity to generate real productivity growth.  All policies must be assessed against this criteria - Does it increase national productivity.  

If it does not, then policies are simply government interventions to redistribute income and wealth.  And most public policies are neither intended to increase productivity nor do they achieve an increase in national productivity.

Smith confesses.

I had high hopes for Bidenomics. The combination of the Covid emergency, Chinese competition, and general American anger at long years of stagnation and inequality felt like they might motivate this country to get up off its butt and do something to improve the situation. And it felt like Biden’s people had a good, cohesive program for improving the situation, which I thought would be fairly effective. I wrote:

The tenor, pace, and scope of Biden’s economic programs proposals, and the muted nature of the ideological opposition, suggest that we’ve entered a new policy paradigm — much as when FDR took office in 1933 or Ronald Reagan in 1981…

The Biden program is multifaceted — it includes things like support for unions, environmental protection, student debt cancellation, immigration, and a bunch of other stuff. But it would be wrong to characterize his program as merely a grab bag of long-time Democratic policy priorities. Three approaches stand out above the maelstrom:

Cash benefits

Care jobs

Investment…

Cash benefits were at the center of the COVID relief bill that already passed…A child allowance [is] basically a pilot universal basic income program for families…

The new “infrastructure” bill includes tens of billions of dollars a year for long-term in-home care for disabled and elderly people…

The third pillar of Bidenomics is investment — government investment, and measures to encourage private investment. The former includes tens of billions a year in new research spending, massive construction of new green energy infrastructure like electrical grids and charging stations, retrofits of existing infrastructure (e.g. lead removal from pipes), and repair of existing infrastructure like roads and bridges.

Nowhere in this list is there a focus on productivity improvements.  First, "Covid emergency, Chinese competition, and general American anger at long years of stagnation and inequality" are of interest only to the extent that they motivate the public to change things.  That is political analysis, not economic analysis.

Second, where does he get the idea that Americans are angry about inequality?  Angry at slow productivity growth (and the income growth which comes with that) certainly.  But inequality?  That is a left wing and Democratic Party article of faith, it does not reflect actual American concerns.  In Gallup surveys and the like, when asked to list concerns, "Inequality," if it shows at all, is usually down there in the teens of twenties as a concern.  It is curious what Smith is looking at which says otherwise.

15 months later, it’s looking like my optimism was unwarranted. Yes, FDR and Reagan both accomplished much less than they wanted (their policy revolutions were completed by their successors). But they accomplished something, at least — FDR the New Deal, and Reagan a giant tax cut and anti-union policies. In comparison, Biden’s two legislative achievements have been:

1) A Covid relief bill that was marginally smaller than Trump’s, and

2) An infrastructure bill that was good and necessary but really just plugged a hole from the previous decade of disinvestment.

For most of us, the question would be, should be, did the Biden economic policies deliver what was promised and did they improve national productivity?  Smith appears fixated on fundamental change as the measure of success.  FDR accomplished that and Reagan accomplished that.  Smith's concern is that the failure in the public eye of Biden's economic policies will not allow such a fundamental change.  

That is a cramped, narrow political perspective, not a view focused on the well-being of Americans.

Smith then has a long section laying out how unpopular Biden's policies have been and why that bodes ill for Democratic Party policies.  

The easiest explanation for the failure of Bidenomics is simply that there was one recalcitrant Senator, Joe Manchin, who personally refused to allow it to succeed. And in some narrow sense, it’s true. With a 50-50 partisan split in the Senate, and Republicans unwilling to break ranks to support Biden’s Build Back Better bill, Manchin could essentially dictate economic policy. Many pundits and legislators believed they could craft some compromise that would meet Manchin’s demands, but it is now pretty clear that no such compromise was ever really on the table.

Smith's assessment is correct, it is not Manchin's fault but he never looks at why the Biden administration was not able to achieve any acceptable compromise.

The first big issue is not that Republicans completely rejected Biden's proposals.  The big issue is that Biden never sought to win any of them over.  That is how legislation is made.  Or at least, that is how it has historically been made.  Very few of our fundamental policies have been achieved through party line votes.  Everyone seeks bi-partisanship.  Which is a messy process of deal-making and compromising on promises and principles but it is how you get majority support.  

Biden never sought to engage with Senate Republicans.  It was a "my way or the highway" strategy which never had much prospect of success and indeed, failed.  It is worth noting that there was the same dynamic in the Obama White House.  Everything was all or nothing.  The White House, to the extent that it ever got involved, was always and only through its Congressional proxies.  There simply was no interest in compromise or horse-trading.  

The bigger surprise is that the Biden administration failed to negotiate with their own party member, Manchin.  For the past six or twelve months, Republican strategists have been sweating out the scenario where the Biden administration would win over Manchin's vote with some compromises.  His demands have always been pretty clear to everyone, and simple.  No spending which would be inflationary and no wasteful spending.

Those are pretty low bars.  But the Biden administration never got serious about those Manchin concerns.  

Biden knew there was a knife edge balance in the Senate, that he needed to win over at least Manchin and preferably some Republicans.  And he did not.  The failure is not Manchin's at all.  It was Biden's failure to horse trade and reach some acceptable compromise that was less than either party wanted but more than either could get on their own.  Biden chose to fail.

And Smith never addresses that.  

Smith's argument gets worse and worse.

But the failure actually goes a lot deeper than Manchin. One reason is that what I thought of as the first pillar of Bidenomics — cash benefits — turned out not to be as popular as many had hoped. The idea was that because the expanded child allowance was quasi-universal, it would garner broad support like Social Security did. Initial broad support for the policy seemed to validate that hope. But then, surprisingly, most Americans didn’t want to make the child benefit permanent. Whether that’s because Americans are in a stingy mood, or because they believe that government benefits should come with work requirements, or because they’re worried about the inflationary effects of cash benefits is not yet clear. But what is clear is that cash benefits failed to get the broad popular buy-in that FDR’s social insurance or Reagan’s tax cuts secured.

Climate investment ran into a similar problem. Despite accelerating heat waves, wildfires, and floods, Americans place a pretty low priority on climate action:

“Just 1% of voters named climate change as the most important issue facing the country, far behind worries about inflation and the economy. Even among voters under 30, the group thought to be most energized by the issue, that figure was 3%.” 

If people just don’t want what you’re selling, it won’t happen, even if it’s a good idea.

Again, Smith is focusing on the wrong thing.  Did cash benefits help improve productivity?  No, they were never meant to increase productivity.  They were meant to buy public favor by giving money to the public.  For Smith, the problem is not that the policy was economically beneficial or not.  The problem is that it was not popular.  Again with the public intellectual disconnect from the great American citizenry. 

Cash benefits for nothing has always been both bad economics and at best, iffy politics.  Takers love the idea, producers, who pay for those benefits, not so much.  

Smith acknowledges that climate investment has minuscule importance for the average citizen.  And is once again apparently surprised that climate investment, popular as it is with insider grifters and public intellectuals, just isn't supported by Americans.

But there’s a third big reason Bidenomics failed, and it’s that substantial parts of the program didn’t actually address the needs of the nation as much as I thought they would. 

Kudos to Smith.  It is rare that you hear a public intellectual, a leftist, or a Democratic Party ideologue confess "I didn't know what I was talking about."

He then goes into the evidence supporting that none of the three policies (subsidizing care jobs, focusing on inequality, cash benefits, public investment) had any likely prospect of increasing productivity.

The playbook inherited from FDR and the New Dealers, which is now embraced by the aptly-named Roosevelt Institute and many of the other progressives advising Biden on economics, is all about fighting depressions. It’s about mobilizing big government to take over when the free market has failed, pumping up aggregate demand, providing jobs, boosting wages, and carrying out needed investment.

This is the heart of the matter.  It is not the role of governments to fight depressions or mobilize big government to replace the free market, increase demand, provide jobs, boost wages, or make national investments.  Yes, that's Democratic Party policy, but it is not the constitutional role of our government.  Nor has the Democratic Party ever delivered on it.  It would appear that Smith has never read Amity Shlaes' The Forgotten Man which documents why FDR's approach, which Smith so much admires, prolonged the American Great Depression far longer than was experienced anywhere else in the world.

Smith believes in a set of policies which have never worked and did not work this time either.  Instead, they made the situation far worse with incredible amounts of capital destruction, mal-investment, stock market collapses, and soaring inflation.  All in fifteen months.

What has Smith learned from all this?  Nothing. His prescription for Democrats on how to move forward is . . . more of the same.

More regulatory intervention, more government investment, more transit, cheaper housing via government subsidies, establishing a national health system, more renewable energy, more investment in universities, more unions, more environmental protection, more student debt cancellation, more immigration.  

He ends with:

I believe this sort of progressive agenda would win broad support. Progressive policy advisors, think-tankers, and pundits should move away from the idea of providing mass employment, and toward the idea of providing mass abundance. Bidenomics is dead, but that doesn’t mean progressive economic policy is dead. We don’t have to repeat the 1980s here. Progressives just need to pivot, and offer America more of what it needs today instead of more of what it needed in 1933.

Smith is a representative spokesman of the Democratic Party and of the Platonist tradition.  Philosopher Kings decide on behalf of everyone.  No need for individual freedoms or agency or property or laws of constitutional republics.

All those things get in the way of pursuing more bad policy hoping for different outcomes than in the past.  

Bidenomics is progressive economic policy and they both together are dreadfully destructive to the well-being of ordinary Americans.  Yet both Smith and the Democratic Party are, apparently, still ready to give it one more go.  Perhaps it will work this time.

A truly astonishing set of admissions and incredible insight to the type of thinking which has created all this destruction in the first place.