Joe Biden and Kamala Harris, the newly inaugurated President and Vice President of the United States, are proposing much that will have significance for investing. Up front is obviously their $1.9 trillion stimulus proposal. Some economists will argue that it is too large and risks overheating the economy, others will note that the comparatively smaller stimulus passed in the wake of the 2008 financial crisis was not nearly enough, and resulted in a painfully slow, decade-long recovery. More important than the amount is what they propose to spend it on.
Money earmarked to shore up federal data infrastructure in the wake of recent infiltrations and Biden’s inaugural address pledge to fight misinformation are important, and notable for investors in that they give the nation a more secure foundation on which to base economy and market activity. That is to say, the existential threat level is now somewhat reduced.
Some stimulus is aimed at stemming the pandemic, because of course the economy can’t run near its best as long as that is raging. There’s money for vaccine distribution, including for a jobs corps to physically give vaccinations. Other provisions will increase access to daycare, to help schools reopen, to provide more robust healthcare, and to raise the federal minimum wage to $15 an hour; all of these seem to be aimed at helping Americans who have been disproportionately impacted by the pandemic. Biden, Harris, and team will not get all of this through the political process, but they will get some of it, and the effect it has of signaling towards a more inclusive recovery is strong. In case we’ve forgotten, this is one of the primary functions of leadership.
The administration’s first day actions backed up the rhetoric. Executive orders signed almost immediately following the oath of office included rejoining the Paris climate accord (fulfilling a campaign promise) and the World Health Organization, a moratorium on new oil and gas leasing in the Arctic National Wildlife Refuge, ending the ban on nationals from seven mostly Muslim countries from entry into the U.S., ensuring the Census Bureau has time to complete an accurate count for each state and that the apportionment is “fair and accurate,” and delaying housing foreclosures and evictions until at least March 31, 2021.
These proposals and actions are largely motivated by a desire to drive socially inclusive economic growth, which is key, because any ideas of building back better or having a Green New Deal must enfranchise everyone to have their best chance of succeeding. The sharp risks of the climate crisis and worsening inequality can no longer be disaggregated.
In saying, “a cry for survival comes from the planet itself, a cry that can’t be any more desperate or any more clear now,” the new President in his inaugural address cited the climate crisis as on a par with partisan divisiveness, hate, and white supremacy. He’s right.
In economics, the manifestation of that is in the realization that the fixes to our problems have value, but the causes of our problems, over any time frame – but especially in the long run – do not. This is the whole premise of Next EconomicsTM: that the transition to a world economy that works without crossing planetary boundaries is possible, and more than that, inevitable. The transition has been going on, in fits and starts, for a couple of decades now, mostly because Next EconomyTM works better, and is economically more competitive. We view the transition at this point as irreversible.
The transition to a sustainably productive economy has not been and is not dependent on who sits in the White House. But, truthfully, time is short, and it does feel like a nice tailwind to now have American leadership that wants to give the world a fighting chance.
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