Chief economist Brian Callaci gives his take on what the Biden administration aims to do differently though the realization of many inefficiencies in the current approach to economic policy.

If there’s one thing the White House and its critics seem to agree on, it’s that the Biden administration’s approach to economic policy—which it has branded “Bidenomics”—is a sharp break from how things have been done for the past several decades. “Forty years ago, we chose the wrong path, in my view,” Joe Biden said at an event in July 2021. But what exactly was that wrong path—and what is Biden’s economic team trying to do differently?

In the 1970s, policy makers faced a conundrum. The long postwar boom seemed to have sputtered out. Inflation was rising while unemployment remained high—a combination that mainstream economists had previously thought impossible. Political leaders were under pressure to figure out what was holding back the economy.

A group of economists from the University of Chicago believed they had the answer: regulations. According to these theorists, the ideal economy was one in which money and goods flowed smoothly according to the laws of supply and demand. But regulations on American business introduced friction into the gears of capitalism, stifling economic growth. To get the economy growing again, leaders needed to remove those regulatory obstacles. Call it tweezer economics: Pluck out the inefficiencies clogging up the market, and growth would come roaring back.

But the turbo-growth promised by the Chicago-school intellectuals never materialized. And so, in perhaps the most overlooked element of his economic agenda, Biden has thrown out the tweezers. Instead of trying to generate growth by removing micro-inefficiencies, his policies target growth directly through aggressive spending, creating a high-pressure macroeconomy. It’s an ambitious experiment. If that pressure can force businesses to step up their own competitive game and run more efficiently, Bidenomics could best the old order on its own terms.

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