If you want to understand just how much American politics has changed over the past ten years, look no further than President Joe Biden’s visit to a picket line of United Auto Workers strikers outside a General Motors plant in Belleville, Michigan. Using a bullhorn, Biden said that the autoworkers deserved the 40 per cent pay increase demanded by the union.
As a rule, US presidents have avoided lining up behind any side in industrial disputes. Even strongly pro-union presidents like Harry Truman and Franklin Roosevelt saw their primary responsibility as being to serve as mediators in such conflicts. After all, when it comes to the economy, presidents are supposed to think about many other things, ranging from growth-rates to international competitiveness, besides the demands of unions.
The last time a sitting president became involved to this degree in an American labour dispute was in 1981 when Ronald Reagan fired 11,345 striking air-traffic controllers who, backed by their union, had ignored an order to return to work. That action encouraged many large private employers over the next two decades to resist union militancy. The number of major strikes subsequently declined dramatically.
America is now light years away from that world. One of Biden’s motivations for directly associating the highest political office in the land with a union picket line is that he – like all politicians – knows that every poll indicates that Americans are deeply worried about the economy.
We have good reason to be worried. The inflation-adjusted average wage is below its pre-pandemic level. Likewise, inflation-adjusted income for the median household was lower in 2022 than it was in the previous three years. Visiting a union picket-line in Rust-Belt America was one way for Biden to signal that he cares, especially about blue-collar Americans.
But Biden also knows that many of those same working class Americans voted for his likely 2024 Republican opponent, Donald Trump, in 2016 and 2020. In both elections, Trump was perceived by many blue-collar workers as more sympathetic to their needs than many Democrat politicians.
Biden understands that he needs a significant portion of those blue-collar Americans to support him if he is to carry the electoral votes of mid-Western states like Michigan and Wisconsin in 2024. So does Trump. It isn’t for idle reasons that Trump is also meeting very publicly with autoworkers in Michigan.
But what’s most disturbing about this is that both Biden and Trump are effectively aligning themselves with policies and practices that are, to no small degree, responsible for many of the economic challenges facing these regions of America.
One reason why the automobile industry is struggling in places like Michigan is because of the Biden Administration’s efforts to push car companies via the carrot of subsidies and the stick of regulations ever faster in the direction of manufacturing electric vehicles.
American consumers, however, have proved resistant to buying EVs. For many Americans, EVs are simply out of their price range. Other Americans are aware that EVs require endless recharging and have a much more limited driving range than gas-powered vehicles. Car dealerships throughout America are subsequently full of EVs that few people want to buy.
The other piece of the EV puzzle is that they require less workers to make them than cars that rely exclusively on fossil fuels. In short, the Biden Administration’s eco-driven interventionism is costing autoworker jobs.
Precisely how the Administration squares this with its public support for striking UAW workers is unclear. Such is the political cul-de-sac into which attempts to keep both middle-class environmentalists and blue-collar workers on-side have led the White House. It also helps explain why the UAW has yet to endorse Biden’s bid for reelection in 2024.
Underlying all this, however, is another factor that you are unlikely to find mentioned by either Democrats or Republicans trying to secure support in Rust-Belt states.
A high rate of labour conflict in any industry typically leads to low productivity and declining investment in that economic sector. That turns out to have been a factor in manufacturing employment’s decline in America. A recent Journal of Political Economy article illustrated how the persistence of such conflict in Rust-Belt manufacturing states like Michigan, Wisconsin, Ohio and Pennsylvania over several decades contributed to approximately half of the decline in manufacturing employment throughout the region.
Such facts don’t fit the narrative pushed by many Democrats and Republicans that typically blames foreign competition for the drop-off in manufacturing jobs in America.
The same narrative insists that the protectionism promoted by Trump, and which has largely been kept in place by Biden, is the solution. Yet there have been some indications that protectionism over time could render economies less competitive and even undermine their productivity, breed cronyism, and constitute a hidden tax on 330 million American consumers.
From this standpoint, Biden’s stopover at a UAW picket line and Trump’s visit to autoworkers in the very same state symbolise just how dysfunctional American politics and the conduct of economic policy have become. For election reasons, Biden and Trump are effectively supporting mindsets and policies that have undermined – and will continue to undermine – an economic sector and the job-prospects of workers that they claim to care about.
That’s not a recipe for American economic greatness. It’s a program for politically engineered decline.
Samuel Gregg is Distinguished Fellow in Political Economy at the American Institute for Economic Research and author, most recently, of The Next American Economy: Nation, State, and Markets in an Uncertain World