The U.S. economy and economies worldwide are out of balance and still adjusting to the effects of COVID-19, the Russia-Ukraine war, higher energy prices, persistent inflation and the rapid rise of high-tech global firms. As a result, Germany’s long-standing manufacturing boom has ended, China’s economic growth is headed south and America is registering pale GDP growth assisted by COVID stimulus spending and large government subsidies designed to make the nation less dependent on fossil fuels and imports from other countries (especially China).
With lots of shaking going on, a presidential campaign is gearing up. President Joe Biden, hoping for four more years, is determined to use the powers of government to redistribute income to his party’s favored interest groups and address what his administration sees as fundamental social problems involving equity, equal opportunity and environmental decay. “Woke” is one of those terms whose definition sometimes depends upon the person using it, but we can apply it to much of his bundle of issues.
Biden’s first three years in office, with political successes and setbacks, have demonstrated this commitment. His administration struggled to cancel student loans, found ways to raise construction workers’ wages by regulation, pushed for a renters bill of rights, and even worked to establish regulations to protect workers from laboring in unusually hot weather. Biden has also added new tariffs to those imposed by the Trump administration and set in motion administrative orders for more domestic manufacturing research and development funded by federal agencies.
The opposition seeking to replace Biden, led in polls by former President Donald Trump, appears just as dedicated to avoiding the woke movement entirely.
Looking ahead, is there a path between the two major political forces affecting the U.S. political economy? Or will the nation succumb to one or the other?
A hint of an answer may be found in an earlier period in the nation’s history: the 1912 presidential election. Democrat Woodrow Wilson, then New Jersey’s governor, was running against former Republican president turned third-party candidate Theodore Roosevelt. This was a time, like now, when new industries were expanding rapidly and the nation’s economy was experiencing growing pains. In familiar ways, there was concern about revamping the nation’s antitrust laws to keep big business in check, how to respond to growing economic competition from abroad, and how to deal with the burgeoning banking industry that operated without meaningful federal coordination. (The Federal Reserve system was started in December 1913.)
In the face of all this, Roosevelt called for a “New Nationalism,” higher tariffs and regulating large industrial firms as though they were public utilities. In contrast, Wilson unveiled his “New Freedom,” which emphasized lower tariffs, income taxes to replace lost tariff revenue, a new federal central bank, amending antitrust laws, and a federal interstate trade commission, which in 1914 became the Federal Trade Commission.
Wilson argued that American enterprise should be unleashed, but not unregulated. He sought stout guardrails to bring greater consumer protection while, through intense competition in open world markets, forcing U.S. businesses to be more innovative and productive. Wilson won and successfully pushed much of his agenda through Congress. In a time of turmoil, New Freedom trumped New Nationalism.
What about 2024? Is it possible for us again to escape the extremes that might accompany more nationalism or more wokeism? The past offers some hope. Maybe, once again, someone will emerge with a call for a New Freedom and increased reliance on free-market capitalism.