From: lessgovt@gmail.com   
      
   Bidenomics Is Unsustainable   
   By Stephen Miran, Sept. 19, 2023, WSJ   
   The Biden administration claims its policies are bringing manufacturing jobs   
   back to U.S. shores. But strikes by auto workers, healthcare workers, and   
   Hollywood writers and actors demonstrate that key pillars of President   
   Biden’s economic agenda are    
   bad for American industry. By heavily subsidizing unionization, Bidenomics is   
   likely to raise production costs, drive more-frequent strikes, and erode   
   America’s international competitiveness.   
      
   The administration’s fiscal glut includes many taxpayer-funded incentives   
   for expanding industrial capacity. The Inflation Reduction Act’s climate and   
   energy subsidies are expected to surpass $1 trillion. While the inflationary   
   effect is obvious,    
   less appreciated is that these massive fiscal programs are designed to   
   stimulate unionization.   
      
   The Inflation Reduction Act’s manufacturing tax credits include   
   “prevailing wage” requirements, which force firms that take the money to   
   meet or exceed the average regional wage for that type of work. The   
   requirements prevent firms from competing    
   to reduce labor costs and effectively make unions wage setters. Forcing   
   nonunionized employers to pay the same wages as unionized ones is unionization   
   by other means.   
      
   In other programs, the requirements are even stricter. Applicants for the   
   act’s domestic manufacturing conversion grants are required to submit   
   “Just Transition Plans” describing how they will retain or expand   
   high-paying jobs. The application    
   states that “higher scores will be given to projects that are likely to   
   retain collective bargaining agreements.”   
      
   Higher real wages are good. But to be sustainable, they must be driven by   
   durable labor demand and productivity enhancements that make workers more   
   valuable. Higher wages set by government decree or union fiat only lead to job   
   losses. If wages are fixed    
   above market levels, companies will naturally seek to cut back on the labor   
   they use, resulting in a stagflationary combination of higher prices and lower   
   employment. That’s why the best policies for workers are those that foster   
   labor demand, not that    
   push wages above what the market will bear.   
      
   Consider this dynamic in the context of the auto industry. Ford recorded a $2   
   billion loss in 2022, and its CEO has made clear that meeting the United Auto   
   Workers’ demands for a 40% raise and a four-day workweek would drive the   
   company out of business,   
    resulting in job losses.   
      
   By contrast, China, a negligible force in global auto exports only two years   
   ago, is poised to overtake Japan as the world’s largest exporter in 2023.   
   European Union leaders, afraid China’s subsidized electric vehicles will   
   ravage the EU’s auto    
   sector, accuse its electric-vehicle maker BYD of “flooding” the European   
   auto market and are exploring import restrictions. While much of the U.S.   
   industrial base has already moved overseas, making ourselves uncompetitive by   
   deliberately pushing    
   production costs higher is a great way to lose the manufacturers that stayed.   
      
   The Biden administration’s policies erode rather than boost competitiveness.   
   The subsidies have spurred a building spree, with construction spending on   
   factories up by almost $100 billion over a year ago. But the workers employed   
   in all these new    
   facilities will likely be more unionized, and the administration has added a   
   host of other labor requirements to receive funding. That means costlier labor   
   and, very likely, more strikes.   
      
   Firms are tolerating unionization because of taxpayer subsidies. But   
   eventually those subsidies will dry up, either because they’ve run their   
   course in the original legislation or because politicians curtail or repeal   
   them. When that happens, sectors    
   built up around the Inflation Reduction Act will be left with enormously   
   uneconomic production costs, dead in the water if exposed to global   
   competition.   
      
   Mr. Biden’s economic vision can last only as long as the taxpayer keeps   
   paying for it and is unlikely to result in a sustainable increase in   
   manufacturing capacity or jobs in America. Any reindustrialization ushered in   
   by Bidenomics contains the seeds    
   of its own unraveling.   
      
   Mr. Miran is an adjunct fellow at the Manhattan Institute. He served as a   
   senior adviser at the U.S. Treasury, 2020-21.   
      
   https://www.wsj.com/articles/bidenomics-is-unsustainable-uaw-inf   
   ation-reduction-subsidies-wages-cbf8263c   
      
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