October 10, 2022—Free-market economies where business drives decisions based on supply and demand is still a concept. But many analysts are now asking how diligently is that concept being followed in practice?
‘New Rules’ for Business?
Writing for the Financial Times, columnist Rana Foroohar says business leaders now have new rules to follow to succeed. For one, they need to cozy up to political bigwigs in Washington, D.C.
It is not just that President Joe Biden and the Democratic-led Congress are enacting industrial policies, it is also a time of where the global economy is getting more competitive. Supply chains are regrouping and former trading partners are breaking up, or “decoupling.”
Ms. Foroohar says the U.S. government is not “yet in the business of picking winners and losers,” but it is well beyond a post-neoliberal era. Furthermore, globalization has ended, and perhaps for the best.
Biden’s Industrial Policy Means More Government In Production
Citing Biden’s economic blueprint released in September, Foroohar says the new rules for business means government policies for unionized labor, healthcare and childcare as well as more involvement in production.
“In particular, it wants to encourage the making of things, not just via the push to “Buy American”, but through a more fundamental shift in policy focus from distribution to production,” Foroohar wrote in today’s FT.
Supply Chain Resilience
Perhaps it’s not so top-down as Foroohar’s article suggests. As the world economy breaks up, it may just be smart for political leaders to ensure their citizens and companies can function. Shortages in food, medical supplies, consumer products, and —let’s not forget—toilet paper became the norm during the 2020-2021 pandemic.
As one of his first orders of business, Biden ordered a review of the U.S. supply chain. The White House and Congress have since been quite active in building resiliency to the U.S. supply chain with new laws and initiatives. Support for semiconductors was part of that.
However, Foroohar suggests the trend goes beyond that. It’s not just about building resiliency, it’s about creating a new economy. And academics and policymakers are rushing to draft it. Business leaders would be wise to find a seat at the table.
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