MILTON FRIEDMAN’S REVENGE: Biden and Harris Got the Economic Policy They Wanted, and Voters Hated It.
“Milton Friedman isn’t running the show anymore,” said then-candidate Joe Biden in early 2020, and he got elected and proved it. Never mind that Milton Friedman was never running the show — the federal government has by and large ignored his policy advice for decades. The Biden years generated takes like “The End of Friedmanomics” at the New Republic in 2021, or the retrospective “When Milton Friedman Ran the Show” from the Atlantic in 2023.
Democrats’ economic agenda the past four years was about as anti-Friedman as possible, and they implemented it successfully. This is a key point — Democrats can’t accurately say that their agenda was not tried.
The key tenets were government spending and regulation. The spending was to boost demand. Sometimes it was to boost demand for specific goods, such as electric vehicles or higher education. Overall economy-wide demand was boosted by massive budget deficits. Even with a growing economy, soaring stock market, and low unemployment, Biden wanted — and got — budget deficits as a share of GDP greater than those during the Great Depression.
The Biden administration’s regulatory burden far exceeded even the Obama administration’s. According to Dan Goldbeck of the American Action Forum, at this point in Obama’s first term, final rules imposed by his administration had cost $490 billion. Final rules imposed under Biden so far have cost $1.7 trillion.
Joe Biden’s “Investing in America” agenda was epitomized by major legislation that has passed into law: the American Rescue Plan Act, the infrastructure law, the CHIPS Act, and the so-called Inflation Reduction Act. These included major industrial-policy components, giving government more power to direct investment in specific sectors deemed vital to the national interest.
These laws were self-consciously and proudly advertised as big-government efforts to counteract the alleged failures of the free market. They were branded “pro-worker” by politicians and the press and included a bevy of benefits for labor unions and the strengthening of “buy American” rules.
Democrats aimed to and were praised for wanting to “run the economy hot,” meaning maintaining tight labor markets through continuous expansionary monetary and fiscal policy. This was supposed to be “inclusive” economic policy that would benefit low-income and racial-minority workers and reduce inequality.
Democrats invented the word “Bidenomics” to describe this supposedly new economic paradigm, which was really reheated Keynesianism with some “diversity” sprinkled in for extra flavor. Then, they stopped using the term, and it was adopted by conservative-activist groups such as Americans for Prosperity to denigrate the administration’s agenda.
When Democrats replaced Biden with Harris, they had an opportunity to also replace their unpopular economic agenda. They did not take it. Harris essentially ran a controlled experiment to test the hypothesis that the only problem with Biden’s economic agenda was that Biden was too old.
As with recent pro-Jimmy Carter revisionists (inspired perhaps by Ezra Klein’s 2009 defense of Jimmy Carter’s “Malaise Speech”), I eagerly await the thinkpieces built around the premise that True Bidenomics has never been tried!