From The Middle Out

One of the most depressing aspects of contemporary politics has been the descent from civil debate to playground taunts. Name calling has replaced reasoned disagreement, an unfortunate shift vastly accelerated by the election of a President whose maturity and intellectual development stopped somewhere around third grade.

I have been particularly annoyed by the revisionist and entirely unfair criticisms leveled at former President Joe Biden. One can grant his deterioration with age without ignoring or diminishing the quality of his leadership, his policy decisions and his appointments of highly qualified people.

Despite the accusations of the bratty child who currently occupies the Oval Office, Biden left Trump an economy that was recognized globally as the best in the post-pandemic world. His approach to economic growth wasn’t simply light-years more grounded and sophisticated than Trump’s ignorant championing of tariffs and fossil fuels–it represented a welcome break from less empirically-grounded approaches, seen in his insistence that economic growth happens not from “trickle down,” but “from the middle out.”

A transcript of a 2024 conversation from Pitchfork Economics–a podcast by David Goldstein and Nick Hanauer (one of my longtime favorites)–featured a conversation with Jared Bernstein, who chaired Biden’s Council of Economic Advisers, and it focused on Biden’s philosophy. As Bernstein explained,

Bidenomics starts from a framework that growth originates from the bottom up and the middle out. You asked for a contrast, and that’s very different than trickle-down economics, which not only doesn’t work—and that’s an empirical statement, not a judgmental one—but has in fact exacerbated inequality and damaged growth, particularly through an inability to make the kind of investments that you see our administration making. So let’s get to the pillars of Bidenomics because investment is one of them.

Empowering workers. Nick, you and I, as long as we’ve known each other, have talked about the importance of worker bargaining power. And in fact, that word power, those five letters, mean a ton to how economies function and yet they’re little-discussed in much of classical economics.

Pillar two: Investment. Reversing decades of disinvestment in our public goods and in many cases, partnering with the private sector to invest in domestic production in key areas where markets have consistently failed to provide adequate investment.

And pillar three: Competition and lowering costs. So those are the three pillars.

The podcast was taped in February of 2024, and Bernstein shared some data from that year, noting that the expectations for job growth in January had been for an additional 185,000 jobs, but 353,000 were created. The unemployment rate had been below 4% for two years. (And forgive my snark, but Biden–unlike Trump– hadn’t found it necessary to fire the statistician responsible for producing that data…)

As Hanauer noted, any reasonable examination of the empirical economic evidence available shows an absolutely consistent pattern: when you follow the policies that the Biden administration pursued, the results are higher job creation, higher GDP growth rates, and increased productivity— far better economic results than are achieved by cutting taxes for rich people.

Bernstein agreed, pointing out that growing an economy “from the bottom up and the middle out” produces strong demand from a vast majority of the population. The top 1%, however, is (duh!) only 1% of the population. When the vast majority are doing well, that not only boosts growth through consumption (this is a 70% consumer spending economy) it also  signals investors that the investment climate is good– reassuring them that consumer spending is strong and the broad middle class is strong.

Bernstein noted that the difference between the economics to which Biden subscribed and the older “trickle-down” is essentially the difference between economists who are “empirically driven”– economists who look at the real world results of policies, and reject elegant theories about how the world should work that rather clearly haven’t worked–and others.

But the “middle-out” approach is broader than encouraging demand. The supply side matters, too. Core to a healthy economy is the promotion of competition so that markets function properly. That means getting rid of junk fees, giving Medicare bargaining power, eliminating the overuse of non-competes, and other measures to ensure a vigorous marketplace. Bernstein quotes Biden: “capitalism without competition looks a lot more like exploitation.”

There’s much more in the linked transcript, and I encourage you to click through and read it. Biden inherited an economy just emerging from a global pandemic, and got far too little credit for bringing down the inflation that pandemic had produced. We’re now seeing what happens when an economic ignoramus assumes power, and blames all his own blunders on his predecessor.

The rich get richer…and we’re back to “trickle-down.”