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FT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.
The author is director of economic policy research at the American Enterprise Institute.
Donald Trump and Joe Biden differ in many important respects, but they do not agree with the broad consensus that had largely governed economic policy for decades before Trump's 2016 presidential campaign: business in general. and both reject the consensus in favor of free enterprise. This is bad for businesses, workers, and consumers.
Consider free trade and industrial policy. Officials from both administrations have made clear calls for abandoning the international economic order established after World War II in favor of a new agreement that relies more on government planning than market outcomes.
But Trump and Biden's break with the past goes beyond protectionism. Ronald Reagan chose to use his final speech as president to praise immigrants. “We lead the world,” he said. “For we, alone among nations, bring together people from every country and corner of the world, our strength. By doing so, we continually renew our nation and In contrast, President Trump has accused immigrants of “poisoning the blood” of America. Mr. Biden, while less extreme, has surprised his supporters by not being friendly towards immigrants and the businesses that rely on them.
And while Bill Clinton declared that “the era of big government is over,” Biden abandoned decades of consensus on competition policy in favor of a “big business is bad” standard. I'm about to try. This opens the possibility for regulatory discretion and political mischief to play a greater role in antitrust enforcement.
This is bad for businesses, workers and consumers. Take President Trump's tariffs, for example, which increased the cost of intermediate inputs to domestic manufacturers' production, inviting retaliation from other countries. Consumers paid higher prices for goods made with imported materials, and manufacturing employment declined given higher input costs and retaliation. Biden then chose to keep them.
In their second terms, neither Trump nor Biden appears likely to take any serious steps to address America's long-term fiscal imbalances. Both oppose cutting projected spending on Social Security and Medicare, the programs most responsible for the nation's long-term debt trajectory.
In his 2001 inaugural address, George W. Bush said: “America, at its best, is a place where personal responsibility is valued and expected. Promoting responsibility is not looking for a scapegoat, it is a call to conscience. Sacrifice is necessary, but it is a place where personal responsibility is valued and expected. But both Trump and Biden are reluctant to demand more personal responsibility from Americans, preferring instead to indulge in separate narratives of grievance, victimhood, and class divisions. I like it.
Of course, Trump is also a threat to basic social stability. Thanks to his efforts to undermine confidence in election integrity and divide Americans along racial and class lines, the likelihood of political violence in 2024 has become disturbingly high. . If he becomes president, he could weaken international alliances and even force the United States out of NATO. While further corporate tax cuts would be welcomed by businesses, it would be an illusion to think that this level of volatility will not have a negative impact on their long-term profitability.
Especially if Trump is the next president, the business world will want to bow down. This is understandable, but wrong. Corporate leaders should stop getting involved in all social developments as if they were columnists. But you need to speak up about issues that directly impact your business. Unlike 2016 or 2020, they now have direct evidence of the harm caused by protectionism, industrial policy, and aggressive regulation.
They should be more vocal about the positive role they play in society and should defend free enterprise more broadly. This is easy to argue. In recent decades, hundreds of millions of people around the world have been lifted out of crushing poverty. And you need to be clear that you need to treat your customers, suppliers and workers well if you are to benefit in the long run.
No one yet knows how the 2024 election will play out. Although the nomination race has just begun, I believe that Nikki Haley's policies are far superior to both Trump and Biden, and she remains on the Republican ticket. If elected, Mr. Trump could be much more moderate than his rhetoric suggests, while Mr. Biden's second term could be more pro-business than his first.
However, business leaders should not become complacent. Neither party is entirely on their side, so they need to rally support among politicians, celebrities, and opinion leaders to assert their values and the values of free enterprise.
