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An actual plan would look like the IIJA, IRA, CHIPS Act -- what Biden was doing, but act larger scale. The problem with globalization is not that free trade fai

An actual plan would look like the IIJA, IRA, CHIPS Act -- what Biden was doing, but act larger scale. The problem with globalization is not that free trade failed to create a surplus, it's that 150% of the surplus went to capital and -50% went to labor, which can and should be fixed with tax and spend. Instead, of course, we didn't tax capital and we spent the money on stupid wars. That said, good industrial policy includes tariffs too, but Democrats knew this! Biden wasn't allergic to tariffs! The 100% EV tariff (and EV subsidies and battery subsidies) happened during his administration. Aside from the fact that giving Elon everything he wanted was a massive political miscalculation, it was good industrial policy, we just needed more of it in order to affect the macro. That's the tragedy of it -- Democrats in office understood the macro picture and worked diligently and intelligently to fix it, the spurned labor interests in the MAGA movement understood what had hurt them and correctly rejected it, but the former didn't know how to message to the latter so a demagogue swooped in and here we are. The gonzo free-trade rhetoric of the Clinton era should never have happened, second best time to get rid of it was 10 years ago before Trump I, third best time was a few years ago before Trump II, but the fourth best time is now.

jandrewrogers 20d ago
An important point is that "capital" is essentially just another way of saying "investment". Investment is what creates opportunities and demand for labor. Strong demand for labor increases wages e.g. construction wages going through the roof because of data center investment. If you disincentivize investment, economic surplus tends to shift toward rent-seeking behavior which creates relatively little labor demand. Many economies in Europe are poster children for this phenomenon. Ideally you want an economy that strongly incentives investment over rent-seeking.
- smallmancontrov 20d ago
  Absolutely not! The word "investment" according to most definitions in most economics classes would encompass the activity of merging together all of the companies in a sector for mega rent extraction. They would even call that a successful investment! If you want investment to create jobs, you must ensure it is going somewhere with a track record for job creation. Historically, the export sector did a good job of employing people per unit investment while the asset sector did not. In general the point is that you have to check. There are circumstances in which tilting tax, labor, trade etc policy towards capital is actually good for everyone, in which trickle-down economics actually does work, but they are rare and specific, typically apply to developing economies, and are not nearly as universal as they are portrayed in the typical American econ class. Here's how you judge: look at interest rates. Real rates, not nominal rates. The price to rent money. Is it high? Then the economy knows how to productively deploy a marginal dollar of capital, as evidenced by people willing to pay to do it. Is it low? Then the economy has no idea how to deploy the marginal dollar of capital, as evidenced by its willingness to let you try for dirt cheap. In the latter case, proposals to shift tax, labor, and trade policy towards capital are simply propaganda put forward by the wealthy for purely self-serving reasons.
kennywinker 20d ago
> Democrats in office understood the macro picture and worked diligently and intelligently to fix it, I agree with everything you're saying except this bit. I don't think democrats were working to fix it in any fundamental way. They're too beholden to corporate interests to do anything that overturns that apple cart. They were trying to tweak the program slightly to make it less bad, sure. But that's not a real fix for such a broken capital/labor split.

jandrewrogers 20d ago

An important point is that "capital" is essentially just another way of saying "investment". Investment is what creates opportunities and demand for labor. Strong demand for labor increases wages e.g. construction wages going through the roof because of data center investment. If you disincentivize investment, economic surplus tends to shift toward rent-seeking behavior which creates relatively little labor demand. Many economies in Europe are poster children for this phenomenon. Ideally you want an economy that strongly incentives investment over rent-seeking.

smallmancontrov 20d ago
Absolutely not! The word "investment" according to most definitions in most economics classes would encompass the activity of merging together all of the companies in a sector for mega rent extraction. They would even call that a successful investment! If you want investment to create jobs, you must ensure it is going somewhere with a track record for job creation. Historically, the export sector did a good job of employing people per unit investment while the asset sector did not. In general the point is that you have to check. There are circumstances in which tilting tax, labor, trade etc policy towards capital is actually good for everyone, in which trickle-down economics actually does work, but they are rare and specific, typically apply to developing economies, and are not nearly as universal as they are portrayed in the typical American econ class. Here's how you judge: look at interest rates. Real rates, not nominal rates. The price to rent money. Is it high? Then the economy knows how to productively deploy a marginal dollar of capital, as evidenced by people willing to pay to do it. Is it low? Then the economy has no idea how to deploy the marginal dollar of capital, as evidenced by its willingness to let you try for dirt cheap. In the latter case, proposals to shift tax, labor, and trade policy towards capital are simply propaganda put forward by the wealthy for purely self-serving reasons.

kennywinker 20d ago

> Democrats in office understood the macro picture and worked diligently and intelligently to fix it, I agree with everything you're saying except this bit. I don't think democrats were working to fix it in any fundamental way. They're too beholden to corporate interests to do anything that overturns that apple cart. They were trying to tweak the program slightly to make it less bad, sure. But that's not a real fix for such a broken capital/labor split.