Preferring work over wealth: How are America and its allies rewriting the rules of spending and trade?

Publishing a foreign affairs websiteForeign AffairsAl-Amriqi wrote a lengthy article about what he called the dramatic shift in economic thinking that is now taking place not only in the United States but also among many of its allies and partners.

The article written by Felicia Wong, president of the Roosevelt Institute, explains that this shift is the most significant development in the economy as it moves away from the long-standing neoliberal consensus in favor of a new, comprehensive vision of economic growth based on a preference for work over wealth, and the preservation of the planet profit.

In doing so, Wong said, the administration of US President Joe Biden is moving alongside newly re-elected governments in Canada, Germany and Japan, which are pursuing expansionary policies aimed at tackling inequality and decarbonizing the economy.

Meanwhile, she added, leaders in France, Italy and the United Kingdom are moving in a similar direction, using the tools of state power to promote human well-being and green industries.

Many of these leaders are also using the power of the European Union and national institutions to tame and tax the digital monopolies that are increasingly wreaking havoc in democracies around the world.

The writer pointed out that over the past six years – especially since the start of the “Covid 19” epidemic – leaders and decision-makers in many advanced democracies have concluded that deep structural reforms are necessary to confront the right-wing populism that brought former US President Donald Trump and other political figures to power.

The Biden administration and like-minded governments are rethinking this approach in favor of policies that seek to set new standards for international trade and use public investment to address issues such as income inequality.

The Biden administration and like-minded governments are rethinking policies that seek to set new standards for international trade and use public investment to address issues such as income inequality.

Washington consensus

The writer said that the broad international convergence around a new economic framework is important, because for decades there has been a similar convergence in the opposite direction, as international policy makers preferred trade openness above all in their pursuit of market liberalization and support for market-oriented rules of the World Trade Organization This was the so-called Washington Consensus, an approach that was couched in the 1980s on neoliberal ideas of privatization and deregulation, and now the Biden administration and like-minded governments are rethinking this approach in favor of policies that seek to set new standards for international trade and use public investment to address issues, such as income inequality.

Among the drivers behind Biden’s economic vision is his policy team’s acknowledgment that decades of trade liberalization have done real harm to voters, and popular discontent with trade policy was one of the critical dynamics of the 2016 presidential campaign.

The new administration, despite its departure from many of the policies of the Trump era, has continued to move away from trade expansion as a primary objective of economic policy, and Biden’s economic advisers have made clear that the United States will not seek the Trans-Pacific Partnership or any other trade agreement in this regard until approved Congress has key new domestic spending legislation and international negotiators are rewriting the rules of trade to include protections for workers and the environment.

According to the author, governments should focus less on trade agreements that focus on lowering tariffs per se (Getty Images)

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Among the measures proposed by Biden officials to reshape the international trading system are:

  • Restrictions on imports of carbon-intensive steel and aluminum
  • Relaxing intellectual property rules that protect corporate patents to better fight epidemics
  • Prioritizing locally produced goods with local supply chains

Such efforts to control the social effects of trade are in direct contradiction to the decades-old approach in Washington, which has sought to encourage unrestricted international trade.

She added that these Biden team’s efforts coincide with similar economic policies, such as the European Green Deal being implemented by other governments to combat climate change, fight international corporate monopolies, and enforce international tax rules.

This is why the official statement of the G7 summit in Cornwall last June was so different from the group’s statements in previous years. Instead of lamenting the “protectionism” and wait-and-see approach to climate change, the 2021 statement publicly acknowledges the gains. The asymmetric trade-offs, and sets targets to reduce carbon emissions by industry, according to the author.

Rewrite the rules

The G7 report includes several key points, including: not only is trade liberalization seen as an end in itself, and not only are tariffs at historically low rates, but a growing body of economic research has shown that since the 1990s many agreements have not The commercialization of the neoliberal era is particularly beneficial, and in many cases harmful, to workers in the United States and abroad.

Going forward, governments should focus less on trade agreements that focus on lowering tariffs per se, and more on leveraging trade in the services of stronger regulatory standards, particularly to encourage sustainable production.

The point is to encourage investment that will help desired new sectors of the economy to grow rather than focus on immediate consumption, and in fact declines in public investment help explain the supply chain problems now plaguing ports and industrial production.

Governments need to overhaul how they tax and regulate higher-income companies and profits (Getty Images)

In the new economic transformation – says Wong – governments must also invest towards specific policies, for example, scientists are developing many promising technologies to enable different industries to reduce carbon emissions more quickly, but to put these technologies into widespread use, they need to Governments to create and support markets.

By making large-scale investments in products such as green steel, governments can create markets and prepare new innovations for large-scale private sector investment, and they can also make public investments in new technologies that companies cannot or will not finance, in both cases governments can work with communities In and around new industrial facilities to ensure that they share the gains.

Finally, governments need to overhaul how they tax and regulate the highest-earning corporations and profits.

The landmark international agreement reached this fall to set a minimum tax of 15% on corporate profits is a step in the right direction, and for the first time more than 130 countries have pledged to commit to global minimum tax rates.

The best defense of democracy

In the United States and many other countries there are elements of a powerful new political economy agenda, yet translating the new approach into new rules will require countering the effects of corporate control when large private sector interests dominate government policy, a phenomenon that has hampered in the past few months ambitious efforts to maintain The cost of medicines is low.

In the United States, powerful interests in Washington have resisted the Biden administration’s efforts to enable Medicare to negotiate drug prices to make them affordable, and the German government has opposed loosening World Trade Organization intellectual property rules to facilitate access to a global vaccine.

The Cornwall Consensus has challenged rich countries to adopt a new economic view of the world in which the state can use its power to reduce the influence of corporations and provide new protections for workers and the environment.

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