The new economic policy is big, green and mean, drunkenly wanted to steal Lenin from the mausoleum in Moscow

US Treasury Secretary Janet Yellen calls it “supply-side modern economics.” German Economics Minister Robert Habeck speaks of a “transformative supply policy”. Both represent new economic policies that will upend traditional economic assumptions and radically restructure the economy. But one after the other:

For a century, discussions about the right economic policy have been dominated by two economists: John Maynard Keynes and Friedrich Hayek. The representatives of the two camps are waging a battle reminiscent of the religious war between Catholics and Protestants and are fighting this battle with the same arguments.

Keynesians emphasized that occasional government intervention was essential to a healthy economy. That is why he should not be afraid of rising government debt and should stimulate demand with generous spending programs in a crisis. Keynesians tend to be in the social-democratic or left-liberal camp.

Hayek’s supporters want nothing to do with Keynesian output programs. These would only fuel inflation and burn money, they claim. Instead, they want to support the supply side, which means cutting corporate taxes, cutting bureaucracy and leaving the rest to the free market. Conservatives and neoliberals swear by Hayek.

The eternal war of religion seems finally over. In the United States and Germany, the left has recently invaded the traditional field from the right. They want to strengthen the supply side, but with a twist. “The idea behind this is that America can reindustrialize with the help of the government,” notes the “Economist” in its latest issue. “National security, neglected regions and industrial workers can be promoted, while CO₂ emissions can be drastically reduced.”

In Germany, meanwhile, the Green Economy Minister of all nations is singing the praises of the market economy. The energy crisis was overcome together by companies, households and politicians, according to Habeck, who also praises: “The economy has proven to be extraordinarily flexible.” That was mainly due to the market, Habeck continued. From this he concludes “that the social forces of the markets will continue to shape the economic substance of this country for years to come”.

In the US, the new love between the left and the market is already bearing fruit. When President Joe Biden steps before Congress today and delivers his “State of the Union” address, he can demonstrate an impressive track record of economic performance. Although the central bank is relentlessly raising interest rates, more than 500,000 new jobs were created in January. In total, more than twelve million new jobs have been created during his tenure. The unemployment rate has fallen to 3.4 percent, a level last seen during the boom years of the 1960s.

The programs of the “modern supply economy” gobble up huge state sums. Over the next ten years, $1.2 trillion will be invested in infrastructure. The production of semiconductors is subsidized with USD 280 billion, investments in clean tech with about USD 400 billion. But this time, the private sector is joining in. The chip manufacturers want to invest as much as the state. GM, Ford & Co. have also announced that they will set up new factories to take advantage of the electric car subsidies. At the same time, green projects such as hydrogen-powered plants are springing up like mushrooms after a warm rain shower.

companies participate

Credit Suisse analysts have calculated that Biden’s programs have led to private investment of about $1.7 trillion. “All of this is the sign of a massive shift in opinion,” notes The Economist. “Governments have successively pursued a completely different recipe for growth over the past 40 years: free trade, low taxes and relatively little regulation, especially when it comes to production locations. America has even complained when other governments pursued such economic policies.”

Politically, Biden’s economic success has not yet paid off. A Quinnipiac University poll released this weekend found that only 33 percent of those surveyed are confident in the president’s business acumen. However, Democrats are convinced that this will soon change, as most of the projects that have started – road and bridge repairs, broadband expansion, etc. – will not be implemented until this year.

Habeck and the Greens, on the other hand, are on the rise. They are currently doing significantly better in the polls than their coalition partners SPD and FDP.

Internationally, the new economic policy of the Americans and Germans not only generated enthusiasm, because it is associated with a no-go from the classical liberals: it has a strong protectionist streak. Only those who also produce in the US can feast on the Biden administration’s honey pots. People in Europe and Asia are loudly complaining about this. Countermeasures are already being taken. The EU, in turn, wants to put together a package of 200 billion euros that monkeys the American programs.

So the new economic policies, whether they are called ‘modern supply-side economics’ or ‘transformative economic policies’, will not make us forget the old quarrels. The traditionally liberal “Economist” already describes them as “big, green and mean” – and does not mean that as a compliment.

However, the magazine does not question the effectiveness of this policy. Sadly, it says, “Whether we like it or not. Mr Biden’s economic plan will fundamentally change the US economy.”