Joe Biden′s legacy and his landmark bills on industrial policy will outlast his political reputation – Europe must take notice

As Joe Biden leaves the stage as the 46th President of the United States, we have seen a comeback of industrial policy. During his presidency, Joe Biden introduced a series of landmark bills such as the Inflation Reduction Act (IRS), the bipartisan Infrastructure Bill, as well as the Chips Act. With these bills, he enabled America's first manufacturing-oriented industrial policy since the 1990s, creating a new economic model for supply-side economics and a template for other industrial countries to follow.

Deindustrialization: The Rust Belt, China

The US, as well as many other industrial countries, including the EU, have experienced a dramatic loss of economic output by industry and manufacturing. Job losses for the middle class, particularly in rural areas, have contributed to the political divide between urban and rural populations. The resulting rise of populism in the US, as elsewhere, as gave rise to the populists such as Trump's MAGA. The demise of industry is a direct consequence of decades of stagnant real wage growth by the middle class and the toll of deindustrialization and the polarization of our society. It becomes clear that the neoliberal model of “laisse faire” has not created the type of job and wage growth and given the floor to populist voices, including “closing the border”, and blaming immigrants on stagnant growth. By looking at the US, it becomes clear that without a reform on key economic foundation, our industry, we cannot expect lasting prosperity and broadly distributed social welfare.

Green investments and the rebirth of free trade

Joe Biden has introduced new supply side industrial policies that attract manufacturing back to the US and revert the longstanding industrial decline. Biden's economic policy uniquely focused on supply-side measures, boosting investments in factories such as for batteries, EV′s and renewable energy. ?These investments are not only critical to the decarbonization and net zero commitments of the US - they are also removing competitive advantage of China, ?which by its subsidy-fueled exports of green industry has created a dominant monopoly. Free trade is the very goal of liberal economics – but for too long, the dysfunctionality of the WTO has not been able to address this imbalances in trade. To credit Joe Biden, his policies effectively countered this imbalance.

Innovation, technological change in lieu of tariffs and subsidies

As a new economic model, Joe Biden introduced green investments as the main policy tool kit to revive growth. Trump's tariffs on China, or traditional demand-side subsidies, as seen in Europe, are comparatively weaker policy. The new economic model has created a vision for shared prosperity and technological change through innovation and investments into the future. Europe will take note – particularly as we are falling being on our own decarbonization commitments and as we continue to see a lack of competitiveness in greening our industry, starting from high emission sectors such as steel and cement, to our industrial backbone of car manufacturing and renewable energy. Demand follows supply. This is the most effective form of policy. The incentives for green investments have created a virtuous cycle, and Democrats as well as a future Republican President are not going to change this positive trajectory any time – because they have seen it works. This is Joe Biden's legacy.