What America’s Bold New Economic Experiment Is Missing

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May 24, 2024

David Leonhardt, a seasoned writer and editor at The New York Times, discusses a transformative moment in American economics. He highlights a growing bipartisan consensus on government intervention in trade and technology, especially regarding China. The conversation reveals how infrastructure subsidies, tariffs, and technology restrictions are reshaping economic policy. Leonhardt also connects current shifts to historical crises that have sparked innovation, pointing to the need for a neopopulist approach to better align with working-class concerns.

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INSIGHT

New Washington Consensus

A new consensus is forming in Washington D.C. regarding technology, trade, and economic growth.
This involves increased subsidies, tariffs on imports (especially from China), and restrictions on Chinese technologies.

INSIGHT

Failure of Neoliberalism

The old Washington consensus (neoliberalism) prioritized minimal government intervention and free markets.
This approach, however, failed to deliver promised prosperity and global democratization.

INSIGHT

Bipartisan Cooperation

Despite political polarization, bipartisan agreements are happening in key areas like technology and trade.
These agreements have led to significant legislation, indicating a shift in economic policy.

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The news media is very good at focusing on points of disagreement in our politics. Wherever Democrats and Republicans are butting heads, that's where we reliably find news coverage. When right and left disagree about trans rights, or the immigration border bill, or abortion, or January 6, or the indictments over January 6, you can bet that news coverage will be ample. But journalists like me sometimes have a harder time seeing through the lurid partisanship to focus on where both sides agree. It's these places, these subtle areas of agreements, these points of quiet fusion, where policy is actually made, where things actually happen.

I’m offering you that wind up because I think something extraordinary is happening in American economics today. Something deeper than the headlines about lingering inflation. High grocery prices. Prohibitive interest rates. Stalled out housing markets.

Quietly, and sometimes not so quietly, a new consensus is building in Washington concerning technology, and trade, and growth. It has three main parts: first, there is a newly aggressive approach to subsidizing the construction of new infrastructure, clean energy, and advanced computer chips that are integral to AI and military; second, there are new tariffs, or new taxes on certain imports, especially from China to protect US companies in these industries; and third, there are restrictions on Chinese technologies in the U.S., like Huawei and TikTok. Subsidies, tariffs, and restrictions are the new rage in Washington.

Today’s guest is David Leonhardt, a longtime writer, columnist, and editor at The New York Times who currently runs their morning newsletter, The Morning. he is the author of the book Ours Was the Shining Future.

We talk about the history of the old economic consensus, the death of Reaganism, the demise of the free trade standard, the strengths and weaknesses of the new economic consensus, what could go right in this new paradigm, and what could go horribly wrong.

If you have questions, observations, or ideas for future episodes, email us at PlainEnglish@Spotify.com.

Host: Derek Thompson

Guest: David Leonhardt

Producer: Devon Baroldi

Links:

David Leonhardt on neopopulism: https://www.nytimes.com/2024/05/19/briefing/centrism-washington-neopopulism.html

Greg Ip on the three-legged stool of new industrial policy: https://www.wsj.com/economy/the-u-s-finally-has-a-strategy-to-compete-with-china-will-it-work-ce4ea6cf

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