The Future of Bidenomics
Plus everything bagels and quick hits
Today, I explore what is in store for Biden’s industrial policy (with a side of everything bagel) before highlighting a few Quick Hit interesting reads on different topics, including a couple on AI and one on how universities should respond to a Conservative government. I hope you enjoy it!
Future of Biden’s Industrial Policy
We are now ten days from Trump’s inauguration. While the incoming administration creates uncertainty and worry across huge swathes of policy, one big-ticket economic question concerns the future of Bidenomics.
Under Biden, the US invested hundreds of billions of dollars in a major industrial strategy to boost domestic manufacturing and protect the US’s lead in advanced technologies. This strategy was part of a wider geopolitical competition with China. While Trump and various Republicans are certainly on board with the why of competing with China, they are not necessarily aligned on the how.
This recent piece in Axios takes a look at what might be next for this signature policy. It dives into a past paper for the Manhattan Institute by Stephen Miran, Trump’s pick to chair the Council of Economic Advisors. Miran is, unsurprisingly, critical of Bidenomics, is against the heavy subsidies for EVs, prefers a focus on supply-side reforms, and thinks that the wider requirements around labour, environmental policy and other regulations “make the US too inhospitable to manufacturing.”
In this, Miran echoes a common criticism from various parts of the US political spectrum that Biden’s industrial policies were “Everything-Bagel Liberalism.” This is the concept that policies try to achieve too many things and thus fail to do any of them effectively and is something by no means limited to Biden or progressive policies.
explored the problems of everything bagels in her excellent Policycraft newsletter this week. Ashley highlighted an interesting article on the need to find a balance - going from one extreme to the other where you don’t think about the wider context of the policy and potential unindented consequences is no answer either.Ideally, policies should be nested within a coherent, wider agenda with a clear direction of travel to reduce the need for any single initiative to engage in this kind of everything bagel approach. I’ve called for this before regarding Canada’s AI Strategy, for example. Individual initiatives shouldn’t try to accomplish everything, but they also need to pull in the same direction and not be cross-purpose, as many policies often are.
However, theory and practice are two different things, of course. One reason why mandates for employer child care offerings accompanied EV and chip subsidies is that Senators Manchin and Sinema refused to back the original Build Back Better plan that would have invested heavily into the care economy and human infrastructure - something the US desperately needs. In those circumstances, there is a logic to try and use other means to get at problems that need urgent addressing. How to avoid that is tough.
At any rate, when it comes to the core planks of Biden’s landmark economic agenda, we’re probably looking at the rollback of significant parts. In an ideal world, Canada would be ready to take advantage of this and identify opportunities to attract beneficial investment. Instead, we lack an industrial strategy and are headed into months of uncertainty as the Liberal leadership race plays out, followed closely thereafter by a federal election.
Quick Hits
AI Can’t Solve Government Waste – and May Hurt Vulnerable Americans - There is a lot of hype out there about how AI can be used to make government more efficient (often promoted by the same companies selling AI). There are certainly huge inefficiencies in government, and there is a role for AI in digital transformation. However, that is not the same as the vision that some people have of using it to cut costs and headcount. This piece by Kevin De Liban and Alice Marwick for Tech Policy Press brings some needed skepticism, arguing that “the idea to use AI to cut government is as bad as it is blustering.” In a context where government programs are already underfunded and under-resourced and where AI already deployed in government has proved to be “generally opaque, difficult to contest, and susceptible to bias and error,” then AI has the potential to do more harm than good. Looking at the mixed track record of AI use in the private sector, they conclude that it “is unlikely to achieve a grand scale of efficiency. And integrating AI into government would just make the public sector more dependent on the wealthy tech companies that own it.” Lots to be wary of.
Microsoft surprises analysts with massive $80B AI investment plans for 2025 - I want to include this to once again highlight how Canada’s $2 billion (over 5 years) Sovereign AI Compute Strategy is a rounding error compared to the scale private sector investment. The amount of money companies are putting towards AI is astronomical - especially given that, as that article points out, this is being spent on a technology “that has yet to prove its profitability.” Given that our $2 billion is spread over multiple years, multiple programs, and multiple parts of the AI value chain, I’m not sure we’re going to be seeing big returns on that investment.
Preparing Canadian Universities for a Conservative Government - Finally,
over at the newsletter takes a look at how universities can respond to a political change of guard in Ottawa. Kyle highlights how research budgets are likely to be coming under increased security and that universities are going to be under pressure to demonstrate their economic impact - something only a few are able to demonstrate convincingly. Yet Kyle believes this can be an opportunity to change the policy agenda when it comes to deep tech research commercialization, which will help lead to the exact types of economic impact that we want to see.I recommend pairing Kyle’s piece with this one from Alex Usher at Higher Education Strategy Associates from December on the changing role and expectations of universities and how they are caught in a “conflict of their basic institutional logics.” I agree with Alex's argument, and I think it has big implications for making the transition towards better-commercializing technology that Kyle is calling for. How that plays out is anyone’s guess!