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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is director of economic policy studies at the American Enterprise Institute
Donald Trump and Joe Biden differ in many important ways, but both reject the broad consensus that largely governed economic policy in the decades before Trump’s 2016 election — one that is generally supportive of business and in favour of free enterprise. This is bad for businesses, workers and consumers.
Take free trade and industrial policy. Senior officials from both administrations have explicitly argued for abandoning the international economic order built after the second world war in favour of a new consensus that relies more on government planning and less on market outcomes.
But Trump and Biden’s break with the past goes beyond protectionism. Ronald Reagan chose to use his last speech as president to praise immigrants. “We lead the world,” he said, “because, unique among nations, we draw our people — our strength — from every country and every corner of the world. And by doing so we continuously renew and enrich our nation.” Trump, in contrast, charges immigrants with “poisoning the blood” of America. Biden, though much less extreme, has surprised his supporters by not being friendlier to migrants and the businesses that rely on them.
And where Bill Clinton declared that the “era of big government is over,” Biden has attempted to throw out decades of consensus in competition policy in favour of a “big business is bad” standard. This opens the door to a greater role for regulatory discretion and political mischief in antitrust enforcement.
This is bad for business, workers and consumers. Take Trump’s tariffs, which raised the cost of intermediate inputs to production for domestic manufacturers and invited retaliation from other nations. Consumers paid higher prices for goods made with imported materials — and, after factoring in higher input costs and retaliation, manufacturing employment decreased. Biden then chose to keep them in place.
In a second term, neither Trump nor Biden seem set to take serious steps to address the US’s long-term fiscal imbalance. Both oppose reducing projected spending on Social Security and Medicare, the programmes 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. Encouraging responsibility is not a search for scapegoats, it is a call to conscience. And though it requires sacrifice, it brings a deeper fulfilment.” But neither Trump nor Biden are comfortable calling Americans to greater personal responsibility, preferring instead to indulge their separate narratives of grievance, victimisation and class division.
Trump, of course, is also a threat to basic social stability. The odds of political violence in 2024 are uncomfortably high thanks to his efforts to undermine faith in election integrity and divide Americans along lines of race and class. As president, he would weaken international alliances and could even pull the US out of Nato. While a further round of corporate tax cuts would be welcome by businesses, it is fantasy to believe that instability of this magnitude would not hurt their long-term profitability.
The business community will be tempted to keep its head down, particularly if Trump is the next president. This is understandable but wrong. Corporate leaders should stop weighing in on every social development as if they were columnists. But they should be vocal about the issues that directly affect their business. Unlike in 2016 or 2020, they now have direct evidence of the harm caused by protectionism, industrial policy and aggressive regulation.
They should be louder about the positive role they play in society and champion the free enterprise system more broadly. This is an easy case to make — in recent decades it has lifted hundreds of millions of people out of crushing deprivation around the world. And they should make it clear that being profitable over the long run requires treating customers, suppliers and workers well.
No one yet knows how 2024’s election will unfold. The nominating contests have only just begun, and Nikki Haley, whose policies I believe to be far better than either Trump’s or Biden’s, remains in the Republican race. If Trump is elected, he could end up being much more moderate than his rhetoric suggests, while Biden’s second term could be more business-friendly than his first.
But business leaders should not be complacent. With neither party squarely in their corner, they need to build support among individual politicians, public figures and opinion leaders, making the case for their value — and for that of free enterprise.
