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      Markets fall as US consumer prices see sharpest monthly climb since 2008

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      US consumer prices soared in April as post-lockdown demand and shortages drove up the cost of a wide range of goods, from used cars and home furnishings to airline tickets.The news triggered a further slide in markets unsettled this week by the threat of rising prices, which could force central banks to abandon zero0-interest rate policies that have helped stoke share prices. The Dow Jones index fell 1.3% in early trading and the tech-heavy Nasdaq lost 2.5%.The Consumer Price Index (CPI) climbed 4.2% during the month from a year earlier, the labor department said, the biggest 12-month increase since September 2008, the height of the financial crisis. The figure was significantly higher than economists had predicted.CPI measures the prices consumers pay for goods and services, including clothes, groceries, restaurant meals, recreational activities and vehicles. This month’s rise saw increases across the board and was driven by many factors.The Biden administration’s economic stimulus package has pumped money into the economy just as it reopens from coronavirus lockdown measures. Fresh demand for goods and services has also outpaced supply, which is still recovering from the lockdowns at the start of the pandemic, leading to shortages for a broad range of goods from lumber and steel to ketchup.Used car and truck prices in particular have surged as a global shortage of microchips has dampened production of new vehicles. The price of a used car rose 10% over the month and topped $25,000 for the first time, about $2,800 higher than in April last year, according to the research firm JD Power.The figures are inflated by a collapse in prices last year as the US economy shut down, but they still caught economists by surprise. Economists surveyed by Bloomberg had expected a 3.6% increase in CPI over the year and a 0.2% increase from March. The monthly increase was 0.8%. The news led US stock markets to fall again after a sharp selloff on Tuesday.The Federal Reserve has predicted a spike in inflation in the wake of the coronavirus pandemic but has said it believes it will be short-lived. Last month Fed chair Jerome Powell said the central bank was watching price increases but was not yet concerned about inflation, arguing “one-time increases in prices are likely to only have transitory effects on inflation”.Others are more concerned. Former treasury secretary Larry Summers has warned the US could face a period of high inflation unseen since the 1970s. Talking to Bloomberg TV he said it was “plain wrong” to suggest that inflation cannot surge unexpectedly.“It may be that a way will be found to bring it under control,” he said. “But as I look at $3tn of stimulus, $2tn of savings overhang, a major acceleration coming from Covid in the rear-view mirror, rates expected by the Federal Reserve to be at zero for three years even in a booming economy, record growth this year, major expansion of the Fed balance sheet, and much new fiscal stimulus to come – I’m worried.”Investors too are now worried that the rise in prices will be higher and more sustained than the central bank believes, and that in order to contain the price surge the Fed may have to increase interest rates sooner than expected from the near zero level it set in March last year as the pandemic struck.“April inflation data far exceeded market expectations,” the Economist Intelligence Unit wrote in a note to investors. “We had expected to see a big jump in year-on-year inflation in April, given the comparison to the depth of the recession in April 2020. However, the month-on-month increase in prices, coming on top of a 0.6% monthly increase in March, was surprisingly strong.”“We do not expect this increase to be replicated again in May, but this will still be enough to lift inflation expectations for the full-year 2021,” the Economist Intelligence Unit wrote. More

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      Yellen seeks to tamp down concern over US government spending under Biden

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      The US treasury secretary, Janet Yellen, on Sunday sought to tamp down concerns that Joe Biden’s plans on infrastructure, jobs and families will cause inflation, saying spending will be phased in over a decade.“It’s spread out quite evenly over eight to 10 years,” the former chair of the Federal Reserve told NBC’s Meet the Press.She said the Fed would monitor inflation carefully.“I don’t believe that inflation will be an issue but if it becomes an issue, we have tools to address it,” Yellen said. “These are historic investments that we need to make our economy productive and fair.”Addressing Congress on Wednesday, Biden said his “American Jobs Plan is a blue collar blueprint to build America. That’s what it is.”He has said his plans will be paid for by a series of tax increases on the wealthiest Americans, less than 1% of the population, and by raising corporate taxes. Some Democrats have expressed concerns such increases will slow economic growth.“We’re proposing changes to the corporate tax system that would close loopholes,” Yellen said.“This comes also in the context of global negotiations to try to stop the decades-long race to the bottom among countries in competing for business by lowering their corporate tax rates. And we feel that will be successful.The president has pledged that no family earning under $400,000 will pay a penny more in taxes“The president has pledged that no family earning under $400,000 will pay a penny more in taxes. And we’ve been assiduous in sticking to that pledge.”Republicans oppose corporate tax increases. The Louisiana senator Bill Cassidy told Fox News Sunday: “Academics would say if you raise taxes on corporations, you have lower wages, you have less investment, and you hurt shareholders. Think pension funds.“Now, if it’s OK to have lower wages for working people, it’s a blue collar thing. If it’s OK to have less investment, it’s a blue collar thing. But if you want higher wages, if you want more investment, if you want more efficient deployment of capital, than it’s anti-blue collar.”Speaking to CBS’s Face the Nation, the White House chief of staff, Ron Klain, countered Cassidy’s claims.Corporations, he said, “got that giant tax cut in 2017 [under Donald Trump]. What we’re talking about is just rolling some of that tax cut back. So we’re talking about putting the rate back up to 28%. It was 35% before that tax cut came. So corporates would still have a lower tax rate than the rate they had prior to 2017.“We think that 2017 tax cut didn’t meet its promise. You didn’t see massive investments in [research and development], you didn’t see wages go up. What you saw was CEO pay go up … So we think we can raise those taxes on corporations and fund the things that make the economy grow. Bridges, roads, airports, rail.”Republicans also oppose the scope of Biden’s infrastructure proposals, contending priorities such as expanding green energy, electric cars and elder and child care should not be pursued.“The administration needs to kind of be honest with the American people,” Cassidy said. “If you really want roads and bridges, come where Republicans already are. If you want to … do a lot of other stuff, well that’s a different story. Roads and bridges, we’re a lot closer than you might think.”Yellen would not speculate on whether Biden would accept a bill from Congress that does not include a way to pay for the spending increases he wants.“He has made clear that he believes that permanent increase in spending should be paid for and I agree,” she said. More

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      The first 100 days of Biden were also the first 100 without Trump – that’s telling | Robert Reich

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      By almost any measure, Joe Biden’s first 100 days have been hugely successful. Getting millions of Americans inoculated against Covid-19 and beginning to revive the economy are central to that success.Two-thirds of Americans support Biden’s $1.9tn stimulus plan, already enacted. His infrastructure and family plans, which he outlined on Wednesday night at a joint session of Congress, also have broad backing. The $6tn price tag for all this would make it the largest expansion of the federal government since Lyndon Johnson’s Great Society. But for most Americans, it doesn’t feel radical.Rather than bet it all on a single large-scale program such as universal healthcare – which Bill Clinton failed to accomplish and which Barack Obama turned into a target of Republican fearmongering – Biden has picked an array of popular initiatives, such as preschool, public community college, paid family and medical leave, home care and infrastructure repairs, which are harder to vilify.Economists talk about pent-up demand for private consumer goods, caused by the pandemic. Biden is responding to a pent-up demand for public goods. The demand has been there for years but the pandemic has starkly revealed it. Compared with workers in other developed nations, Americans enjoy few if any social benefits and safety nets. Biden is saying, in effect, it’s time we caught up.Even on the fraught issue of race, the contrast with Trump has strengthened Biden’s handBesides, it’s hard for Republicans to paint Biden as a radical. He doesn’t feel scary. He’s old, grandfatherly. He speaks haltingly. He’s humble. When he talks about the needs of average working people, it’s clear he knows them.Biden has also been helped by the contrast to his immediate predecessor – the most divisive and authoritarian personality to occupy the Oval Office in modern memory. Had Biden been elected directly after Obama, regardless of the pandemic and economic crisis, it’s unlikely he and his ambitious plans would seem so benign.In his address to Congress, Biden credited others for the achievements of his first 100 days. They had been accomplished “because of you”, he said, even giving a nod to Republicans. His predecessor was incapable of crediting anyone else for anything.Meanwhile, the Republican party, still captive to its Trumpian base, has no message or policies to counter Biden’s proposals. Donald Trump left it with little more than a list of grievances irrelevant to the practical needs of most Americans: that Trump would have been re-elected but for fraudulent votes and a “deep state” conspiracy, that Democrats are “socialists” and that the “left” is intent on taking away American freedoms.Biden has a razor-thin majority in Congress and must keep every Democratic senator in line if he is to get his plans enacted. But the vacuum on the right has allowed him to dominate the public conversation about his initiatives, which makes passage more likely.Trump is aiding Biden in other ways. Trump’s yawning budget deficits help normalize Biden’s. When Trump sent $1,200 stimulus checks to most Americans last year regardless of whether they had a job, he cleared the way for Biden to deliver generous jobless benefits.Trump’s giant $1.9tn tax cut for big corporations and the wealthy, none of which “trickled down”, make Biden’s proposals to increase taxes on corporations and the wealthy to pay for infrastructure and education seem even more reasonable.Trump’s fierce economic nationalism has made Biden’s “buy American” initiative appear innocent by comparison. Trump’s angry populism has allowed Biden to criticize Wall Street and support unions without causing a ripple.At the same time, Trumpian lawmakers’ refusal to concede the election and their efforts to suppress votes have alienated much of corporate America, pushing executives toward Biden by default.Even on the fraught issue of race, the contrast with Trump has strengthened Biden’s hand. Most Americans were so repulsed by Trump’s overt racism and overtures to white supremacists, especially after the police murder of George Floyd, that Biden’s initiatives to end police brutality and “root out systemic racism”, as he said on Wednesday night, seem appropriate correctives.The first 100 days of the Biden presidency were also the first 100 days of America without Trump, and the two cannot be separated.With any luck, Biden’s plans might prove to be the antidote to Trumpism – creating enough decent-paying working-class jobs, along with benefits such as childcare and free community college, as to forestall some of the rightwing dyspepsia that Trump whipped into a fury. More

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      The Guardian view on Biden’s 100 days: going big, but not big enough | Editorial

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      Joe Biden’s first 100 days in office signalled that the future does not have to be a rerun of the past. The US president’s speech to Congress this week made it clear that Trumpism was a warning from history, a reminder that no republic is guaranteed to last. The US remains in danger – its decline accelerated by an iniquitous economic model, and by leaders unable or unwilling to remedy it. It is a relief to find in the White House a president who wants to bridge divisions rather than widen them. Mr Biden should be praised for saying he will stop the rot and recognising the challenge to democracy posed by autocracy. But his response risks being undone by an obsession with containing non-existent fiscal risks.The Biden White House proposes spending $4trn, with about half the money used to rewrite the social contract. The rest will create jobs, with infrastructure investments to repurpose the post-Covid economy for a zero-carbon world. The problem is not that money is being spent to fix a broken society. Neither is it wrong to ask the rich to pay their fair share of tax. The problem is that Mr Biden says spending must be balanced by tax rises or savings from other government programmes.This is a self-imposed and self-defeating constraint. It seems bad economics to pay for every dollar invested in early childhood education when each greenback yields $7.30 in benefits. A number of centrist Democrats have already signalled their opposition to the proposed tax hikes. If Mr Biden wanted cash, he could back the Internal Revenue Service to go after the $1tn in unpaid taxes every year. With a razor-thin Democratic majority in the US Senate, there is a risk that privileging arbitrary fiscal limits will lead to laws not being enacted or spending being pared back to match reduced revenues.Mr Biden’s intention to bust a failed economic paradigm is a good one. It would be a scandal if it were sacrificed on the altar of budget neutrality. The threat to liberal democracy is not from fiscal incontinence but political polarisation. America has spent decades running up large deficits with no adverse macroeconomic consequences. In Washington, a debt crisis always seems to be coming. Yet it never arrives. The nation is increasingly endangered by growing levels of inequality, financial instability and ecological calamity. The Gilded Age looks egalitarian compared with the emerging concentration of riches. Either democracy must be renewed by freeing the state from ideological restrictions or wealth is likely to cement a less democratic regime.It makes little sense for Mr Biden to elevate balanced budgets when the country faces existential choices, a point recently made by two Obama-era White House economic advisers. No one doubts the sincerity of the Biden team. The question is whether they have subordinated the scale of the crises to congressional politicking. Columbia University’s Adam Tooze pointed out that the president’s climate spending amounts to about 0.5% of US GDP, an amount 10 times smaller than that required to decarbonise the economy. The economist Stephanie Kelton wrote that to accommodate such large expenditures, the Biden administration “would have to develop a robust plan with a focus on containing inflationary pressures”. These are the arguments that Mr Biden should be having with his party, not whether the wealthiest ought to pay for anti-poverty programmes.It is better to let the government’s fiscal balance settle to whatever level is required to deal with the multiple emergencies the US faces, given the spending and portfolio decisions of the private sector. It is not the case that the government’s ability to spend is constrained by budgetary accounting or temporary while interest rates remain low. The US Federal Reserve’s bond-purchasing programmes can control yields. Mr Biden’s economic team understands that a strong economy benefits the bottom half of America most. However, his spending plans threaten to centre the debate on reducing the deficit rather than rescuing the country. More

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      In his first 100 days, how has Biden handled the four crises he outlined?

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      In his inaugural address on 20 January, Joe Biden declared: “We will be judged, you and I, for how we resolve the cascading crises of our era.”The new US president outlined four crises facing America: the coronavirus pandemic, climate, economy and racial justice. Here is an assessment of his progress on each in his first 100 days:Coronavirus pandemicIn the first and more pressing crisis, Biden has been largely successful in changing the trajectory of the pandemic. Vaccine distribution has accelerated and the White House has been active in fighting hesitancy.The administration has also made a point of celebrating its milestones for vaccinating the public – in late April the Biden team passed the 200m shot milestone.There have been some bumps. The White House had to rethink its mass-vaccination site program while Johnson & Johnson had to temporarily halt distribution of its vaccine after a tiny fraction of recipients suffered blood clots. At moments the Biden team has had to fine tune and clarify statements on proper health protocols for staving off the pandemic.Dr Anthony Fauci, the chief medical adviser to the president, has also gotten into proxy sparring matches with Republican elected officials over the pandemic. But if Biden’s presidency is to be judged on the pandemic, the figures speak for themselves.Jeffrey Zients, White House coronavirus response coordinator, said at a press briefing last week: “This crucial milestone of 200m shots in less than 100 days enabled more than 52% of adults across the country to have at least one shot. That’s more than 135 million Americans who are on their way to being protected from this virus.“Importantly, seniors accounted for 80% of Covid deaths. But now, we’ve seen an 80% reduction in deaths and a 70% reduction in hospitalization among seniors, proving just how effective vaccination is in preventing death and severe disease. This significant progress in a short period of time is a direct result of our deliberate, whole-of-government, wartime effort.”But even as the Biden administration oversees the end of the pandemic, some states are still struggling with coronavirus cases. There is also the outstanding question of how the Biden administration will do in helping the rest of the world battle the pandemic. On Monday the United States announced it would start sharing its stores of AstraZeneca vaccines with other countries.Climate crisisEarly on in his presidency, Biden appointed former secretary of state John Kerry to be climate czar and elevated that to a cabinet-level position. He issued a number of executive orders reversing the Trump administration’s moves weakening car emissions and energy efficiency standards.In February, Biden restored the pricing standard for carbon to the level it was at during the Obama administration. At the time though that fell short of boosting the cost to the level some climate scientists were recommending. Later the administration increased the cost again to keep up with inflation.Last week Biden convened a summit with 40 world leaders to discuss the climate crisis. He said: “The steps our countries take between now and Glasgow [host of a UN climate change conference] will set the world up for success to protect livelihoods around the world and keep global warming at a maximum of 1.5C.“We must get on the path now in order to do that. If we do, we’ll breathe easier, literally and figuratively; we’ll create good jobs here at home for millions of Americans; and lay a strong foundation for growth for the future. And that can be your goal as well.“This is a moral imperative, an economic imperative, a moment of peril but also a moment of extraordinary possibilities. Time is short, but I believe we can do this. And I believe that we will do this.”Nevertheless, the Biden administration has had to grapple with trying to accomplish its climate change goals with a narrowly divided Senate. The threat of filibusters in the Senate makes it very difficult for the administration to see its policy proposals move through federal legislation.Economic recoveryCoronavirus vaccinations are up, unemployment is down and businesses are reopening. Whether he is talking about infrastructure or the climate crisis, Biden has been pushing a message hard for anyone on the left or right to disagree with: jobs, jobs, jobs.The economy added 379,000 jobs in February and 916,000 jobs in March, exceeding expectations. The unemployment rate now stands at 6%. Weekly unemployment claims have fallen to their lowest level since the pandemic began. Growth increased to 6.4% in the first quarter of 2021, up from 4.3% in the final quarter of last year.And the stock market has seen better returns in Biden’s first hundred days than under any president in the past 75 years, despite former president Donald Trump’s prophecy of a Biden crash.Promising to “build back better”, Biden moved fast to sign a $1.9tn rescue plan on 11 March. It was the biggest federal recovery effort in a generation and more than double the size of Barack Obama’s stimulus package that followed the 2008 financial crisis.The legislation, which gained no Republican votes in Congress, sent more than 150m stimulus checks to US citizens, extended unemployment benefits, expanded food assistance and boosted health insurance subsidies. Its historic expansion of the Child Tax Credit aims to cut child poverty in half.The pandemic has exacerbated inequality. The rescue plan did not include a federal $15-an-hour minimum wage but is expected to boost the incomes of the lowest 20% by 20%. After four decades of Ronald Reagan’s low tax, trickle-down economics, it marked a restoration of faith in big government.Then came a $2tn infrastructure bill, which is likely to take longer and face more significant amendments in Congress. Biden, again touting job creation, is proposing to pay for it by increasing the corporate tax rate to 28% – lower than the 35% it stood at before Trump but still a stumbling block with Republicans.In the meantime, experts predict that the US economy could grow as fast as 7% this year – a potentially strong tail wind for Democrats going into the 2022 midterm elections.Racial justice“The dream of justice for all will be deferred no longer,” Biden said in his inaugural address, and he appointed a historically diverse administration that includes, in the interior secretary, Deb Haaland, the first Native American to serve in cabinet.The administration vowed to embed racial equity in its policies as never before. The $1.9tn coronavirus relief bill, for example, $5bn for Black farmers, and was described as the most significant legislation for this group since Civil Rights Act more than half a century ago.Biden’s first 100 days also coincided with the trial of ex-police officer Derek Chauvin, found guilty of murdering George Floyd in Minneapolis. The White House is pushing for Congress to pass the George Floyd Justice in Policing Act, which aims to improve police training, curb use of excessive force and end techniques such as chokeholds.It shouldn’t take a whole year to get this done“George Floyd was murdered almost a year ago,” Biden said after the Chauvin verdict. “It shouldn’t take a whole year to get this done.”The contrast from last year, when Donald Trump sided with police against Black Lives Matters supporters, was startling. In a sign of Biden’s resolve to exert federal oversight over police, the justice department launched an investigation into the Minneapolis police department.But Biden has gone back on a campaign promise to create a national police oversight commission in his first hundred days, reportedly after consulting civil rights organisations and police unions and concluding it might be used by Congress as an excuse to procrastinate.Some observers suggests that Biden, 78, is not undergoing a personal transformation so much as keeping in step with the Democratic party, which belatedly recognises racial justice as a defining issue.Rashad Robinson, president of the group Color of Change, told the New York Times: “Biden is actually being Biden by being inside of all of the ways in which the current landscape is sending him messages. That is good, but I don’t want to be classifying this as some sort of out-front radical leadership. That would really not represent everything that could be possible if we leaned in more.” More

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      Amazon’s sales up 44% as US economy soars 6.4% in first quarter

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      Amazon’s sales increased 44% to $108.5bn in the first three months of the year as the company’s pandemic boom continued into 2021.The sales figures from the online shopping and web services giant came after the release of slew of positive economic reports that suggest the US is shaking off the worst of the pandemic recession.Amazon made a profit of $8.1bn for the quarter – $2.7bn a month – beating analysts’ forecasts after a series of better than expected results from tech companies and others.While Amazon profited throughout the coronavirus downturn, there are now signs that the economic recovery is spreading.The news came after the commerce department said the US economy took off in the first quarter, soaring 6.4% on an annual basis as rising vaccinations, a massive round of government stimulus and a steady recovery in the jobs market helped reverse some of the impact of the coronavirus pandemic.The annualized rate suggests the US economy is firmly on the road to recovery. In normal times US gross domestic product (GDP) – the broadest measure of the economy – grows at about 2-2.5% a year, but the pandemic triggered wild swings as the country went into lockdown and businesses shuttered.The news comes amid a flood of good news for the US economy. The corporate earnings season has seen many sectors of the economy from banking to automotive bouncing back from the pandemic. Apple too reported bumper results on Tuesday, the latest tech company to record booming sales during the pandemic. New York City, the center of the US pandemic last year, will fully reopen on 1 July, while 43% of the population has received at least one dose of a Covid-19 vaccine and more than a quarter of the US is now fully vaccinated.US stock markets set record highs again after the GDP report and copper prices, seen as key indicator of economic demand, rose to $10,000 a tonne for the first time since 2011.The outpouring of good news is all the more remarkable given the scale of economic woe the pandemic heaped on the US economy.A year ago US unemployment hit a post-second world war high of 14.8%, it has since fallen to 6%. The economy suffered its worst quarterly contraction in history last year, shrinking 32.9% on an annualized basis. It grew at 4.3% in the last three months of 2020 after recording a remarkable annual growth rate of 33.4% in the previous three months.“The increase in first-quarter GDP reflected the continued economic recovery, reopening of establishments, and continued government response related to the Covid-19 pandemic,” the commerce department said.Problems remain, the number of people filing for unemployment benefits each week is still high. On Thursday the labor department said 553,000 people filed for benefits last week. The number has been falling sharply but remains close to twice as high as pre-pandemic levels and the jobs market is still down 8.4m jobs.Racial disparities also remain. Black and Latino Americans suffered the hardest as the pandemic closed businesses across the US and their unemployment rates remain elevated in comparison with white Americans. Women, too, have been pushed out of the workforce by the shutdowns, triggering what some economists have dubbed a “shecession”. Lack of childcare and other issues have meant that 1.8 million women have left the workforce entirely.But the fast rollout of vaccines, the reopening of businesses and the Biden administration’s $1.9tn stimulus bill have boosted consumer confidence and fueled an impressive recovery.The US government sent cheques to 90 million Americans in March and consumer confidence is approaching pre-pandemic levels having risen for four months in a row. Consumer spending accounts for two-thirds of US economic activity.Consumption growth surged 10.7% over the quarter and the US savings rate grew to 21.0% from 13.0%. Capital Economics expects those savers to start spending now that Covid-19 restrictions are lifting.“With the elevated saving rate, households are still flush with cash and, now that restrictions are being eased as the vaccination program proves a success, that will allow them to boost spending on the worst-affected services, without needing to pull back too much on goods spending,” the economic forecasting group wrote in a note to investors. More

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      Existential challenges from China, climate and more demand new US industrial policy | Robert Reich

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      America is about to revive an idea that was left for dead decades ago. It’s called industrial policy and it’s at the heart of Joe Biden’s plans to restructure the US economy.When industrial policy was last debated, in the 1980s, critics recoiled from government “picking winners”. But times have changed. Devastating climate change, a deadly pandemic and the rise of China as a technological powerhouse require an active government pushing the private sector to achieve public purposes.The dirty little secret is that the US already has an industrial policy, but one that’s focused on pumping up profits with industry-specific subsidies, tax loopholes and credits, bailouts and tariffs. The practical choice isn’t whether to have an industrial policy but whether it meets society’s needs or those of politically powerful industries.Consider energy. The fossil fuel industry has accumulated “billions of dollars in subsidies, loopholes and special foreign tax credits”, in Biden’s words. He intends to eliminate these and shift to non-carbon energy by strengthening the nation’s electrical grid, creating a new “clean electricity standard” that will force utilities to end carbon emissions by 2035 and providing research support and tax credits for clean energy.It’s a sensible 180-degree shift of industrial policy.A proper industrial policy requires that industries receiving public benefits act in the public interestThe old industrial policy for the automobile industry consisted largely of bailouts – of Chrysler in 1979 and General Motors and Chrysler in 2008.Biden intends to shift away from gas-powered cars entirely and invest $174bn in companies making electric vehicles. He’ll also create 500,000 new charging stations.This also makes sense. Notwithstanding the success of Tesla, which received $2.44bn in government subsidies before becoming profitable, the switch to electric vehicles still needs pump priming.Internet service providers have been subsidized by the states and the federal government and federal regulators have allowed them to consolidate into a few giants. But they’ve dragged their feet on upgrading copper networks with fiber, some 30 million Americans still lack access to high-speed broadband, and the US has among the world’s highest prices for internet service.Biden intends to invest $100bn to extend high-speed broadband coverage. He also threatens to “hold providers accountable” for their sky-high prices – suggesting either price controls or antitrust enforcement.I hope he follows through. A proper industrial policy requires that industries receiving public benefits act in the public interest.The pharmaceutical industry exemplifies the old industrial policy at its worst. Big pharma’s basic research has been subsidized through the National Institutes of Health. Medicare, Medicaid and the Affordable Care Act bankroll much of its production costs. The industry has barred Americans from buying drugs from abroad. Yet Americans pay among the highest drug prices in the world.Biden intends to invest an additional $30bn to reduce the risk of future pandemics – replenishing the national stockpile of vaccines and therapeutics, accelerating the timeline for drug development and boosting domestic production of pharmaceutical ingredients currently made overseas.That’s a good start but he must insist on a more basic and long-overdue quid pro quo from big pharma: allow government to use its bargaining power to restrain drug prices.A case in point: the US government paid in advance for hundreds of millions of doses of multiple Covid-19 vaccines. The appropriate quid pro quo here is to temporarily waive patents so manufacturers around the world can quickly ramp up. Americans can’t be safe until most of the rest of the world is inoculated.Some of Biden’s emerging industrial policy is coming in response to China. Last week’s annual intelligence report from the Office of the Director of National Intelligence warns that Beijing threatens American leadership in an array of emerging technologies.Expect more subsidies for supercomputers, advanced semiconductors, artificial intelligence and other technologies linked to national security. These are likely to be embedded in Biden’s whopping $715bn defense budget – larger even than Trump’s last defense budget.Here again, it’s old industrial policy versus new. The new should focus on cutting-edge breakthroughs and not be frittered away on pointless projects like the F35 fighter jet. And it should meet human needs rather than add to an overstuffed arsenal.Biden’s restructuring of the American economy is necessary. America’s old industrial policy was stifling innovation and gouging taxpayers and consumers. The challenges ahead demand a very different economy.But Biden’s new industrial policy must avoid capture by the industries that dominated the old. He needs to be clear about its aims and the expected response from the private sector, and to reframe the debate so it’s not whether government should “pick winners” but what kind industrial policy will help the US and much of the world win. More

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      Are US corporations really taking a stand for voting rights?

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      Despite a wave of public statements by corporations opposing legislation that would make it harder for people to vote, election reform advocates doubt American capitalism is really coming to the rescue of American democracy.Activists are welcoming corporate involvement in the fight against bills introduced by Republicans in state legislatures across the US to erect barriers to voting that disproportionately affect people of color and other groups that often vote Democratic.Hundreds of companies and business leaders lent their names this week to a two-page ad declaring “we must ensure the right to vote for all of us”, published in the country’s biggest papers.But past corporate interventions in social justice campaigns, including statements of solidarity with Black Lives Matter protesters last summer, did not go far beyond words, activists say.The pursuit of lower taxes and lax regulations, meanwhile, has led corporations to continuously finance the Republican party’s most corrosive projects, from voter suppression to the takeover of the judiciary to the big election lie that led to the sacking of the Capitol in January, they say.“Of course we welcome corporate support against outrageous voter suppression efforts by GOP state legislatures that make it harder for voters, particularly from communities of color and other historically marginalized communities, to vote,” said Ben Jealous, president of People For the American Way.It does feel, on this one, that some of these companies are getting out ahead of a potential boycott from consumers“That reaction is no doubt driven by their fears of losing business from their customers in the midst of heated public anger over such aggressive and targeted voter suppression, and we hope they will put their money where their mouth is and take real action to stop such proposals.”Thenewspaper ad was organized by two African American business leaders – Kenneth Frazier, chief executive of Merck, and Kenneth Chenault, former head of American Express – who have said such bills are racially discriminatory, even as Republicans insist election security is their deepest concern.The corporate decision to speak out created a rare moment of discombobulation for the Senate minority leader, Mitch McConnell, who warned chief executives to “stay out of politics” before clarifying a day later, with no hint of self-consciousness: “I’m not talking about political contributions.”But the surface friction between McConnell and his erstwhile patrons belies the mildness of most corporate criticism of anti-voter laws and obscures companies’ ambivalence when it comes to taking a stand on voting rights, activists said.Large Georgia-based companies including AT&T, Delta Airlines and Coca-Cola did not voice concerns last month about legislation to restrict voting in the state until they came under public pressure. Their eventual statements were measured.“We are working together with other businesses through groups like the Business Roundtable to support efforts to enhance every person’s ability to vote,” said AT&T’s chief executive, John Stankey. “In this way, the right knowledge and expertise can be applied to make a difference on this fundamental and critical issue.”The same three companies declined to sign the ad published in the New York Times and Washington Post last week, referring media to their statements about Georgia, though similar high-profile clashes are playing out in Michigan, Arizona, Texas and elsewhere.Walmart declined to sign the ad, with its chief executive, Doug McMillon, who chairs the Business Roundtable, telling employees: “We are not in the business of partisan politics.”Walmart’s reticence was spotlighted by LaTosha Brown and Cliff Albright, co-founders of Black Voters Matter, in a statement that praised the newspaper ad as a “righteous decision to stand up to racism, disenfranchisement, and voter suppression” and criticized those who did not sign.“They – and all of these other companies – continue to issue misleading statements that create a false equivalency between securing elections and attacking voting rights,” Black Voters Matter said. “These corporations are pandering to a big lie that is being used to justify voter suppression. That’s partisan.”Michael Serazio, a professor of communications at Boston College, said corporations appeared to be taking a “proactive” approach on voting rights to protect their bottom lines.“It does feel, on this one, that some of these companies are getting out ahead of a potential boycott from consumers, before the boycott around the laws was going to kick off,” Serazio said.Corporations increasingly feel pressure from consumers and in some cases employees on social and political issues, Serazio said.“Without question, the broader trend over the last decade has been corporations responding to a perceived or real sense that consumers want them to take a stand on political issues that they wouldn’t have done before.”But corporations simultaneously shovel money into the coffers of the very politicians who engineer the policies the companies claim to detest.A report this month by Public Citizen, a government watchdog, found corporations had given more than $50m in campaign donations in recent years to legislators who advanced anti-voter laws and promoted Donald Trump’s big election lie.Josh Silver, director of Represent.us, a non-partisan elections reform group, said corporations have “an extraordinarily important role” to play in the struggle over voting rights and there was “cause for hope”.“But it’s also practical for them,” Silver said. “They have to choose whether to side with an increasingly authoritarian [Republican party], or the majority of their workers and their consumers.“This is not just altruism.” More