The Biden Administration spent much of 2023 making the case for its industrial policies. In speech after speech, senior Administration officials argued for the economic virtues of what they would alternately call “modern supply-side economics,” a “new Washington consensus,” or simply “Bidenomics.”

Yet, as we entered the 2024 election season, the topline message was different. In his campaign kickoff speech on the third anniversary of the January 6 insurrection, President Biden argued, “Whether democracy is still America’s sacred cause is the most urgent question of our time, and it’s what the 2024 election is all about.” [emphasis added]

This rhetorical shift may have been strategically wise, as voters continued to have bad vibes about the good economy, and it’s reasonable to think more voters dislike Donald Trump than agree with the President on a new approach to economics.

But substantively, it drops one of the boldest arguments that the Administration has made: that building economic abundance at home is key to preserving democracy at home and abroad. This connection was at the core of an April 2023 speech by National Security Advisor Jake Sullivan, who argued that past U.S. international economic policy had fueled job displacement and rising inequality and had thus “frayed the socioeconomic foundations on which any strong and resilient democracy rests.” Sullivan described the new industrial strategy as “the surest path to restoring the middle class, to producing a just and effective clean-energy transition, to securing critical supply chains, and, through all of this, to repairing faith in democracy itself”—not only in the United States, but also in our trading partners.

Is this argument plausible? Let’s break it into two parts: First, do bad economics weaken American democracy, and could better economics strengthen it? And second, can the United States export this dynamic abroad?

Polarization on the Homefront

The theory of why industrial strategy is good economics is straightforward enough. The COVID-19 pandemic and climate crisis have exposed the downside of leaving economic planning up to multinational corporations. In everything from clean energy to semiconductors to meatpacking to railroads, production has been offshored to geopolitical hotspots or concentrated in a handful of domestic chokepoints. These decisions may minimize costs for the individual firm, but they fail to account for the economic and national security risks that only government can safeguard against. Add to this the political and legal hurdles to meeting U.S. climate objectives through carbon pricing and regulation, and by inevitability (even if not by conviction), the policymaker is left with industrial policy as one of the only tools to make economic restructuring happen fast.

To be sure, this pivot is not to everyone’s liking. International economists like Adam Posen see domestic industrial policy as handouts to corporations that invite rent-seeking and could trigger foreign government retaliation, undermining climate and other goals. Heterodox economists like Daniela Gabor adopt a surprisingly similar stance, and worry that any green policy not run exclusively by the state risks turning government into a junior partner in a project directed by and for private finance. Commentators like Ezra Klein and Matt Yglesias fault the Administration for trying to be responsive to too many interests at once, and counsel a more singular focus on getting U.S. industry to cost competitiveness with countries like China and Taiwan. Meanwhile, Republicans lack a coherent critique, given that Donald Trump can’t or won’t adopt the party’s traditional libertarian stance that government has no business structuring the economy. (Trump’s trade and pandemic policies attempted to do just that.) Rather, they maintain that the green transition will hurt American workers and business competitiveness.

These criticisms deserve response, if only because they could force the Administration to make its industrial policy-democracy linkage—and the scholarship that supports it—more explicit. The starting point for any fair analysis needs to be the unique nature of a democracy capable of addressing the climate crisis at speed and scale. The climate crisis is a global problem, but in the absence of global government, the response to it necessarily comes from national ones. This means that any actions have to work, both substantively and politically, as a matter of domestic statecraft. Unsurprisingly, then, countries that successfully navigate energy and industrial transitions try to maximize winners and minimize losers, either explicitly through local content requirements that mandate use of domestically made inputs or implicitly through regulatory forbearance. The theory is that democracies that do not manage this process well may not be able to lower emissions, and politicians backing it could be punished at the ballot box. Likewise, if industrial strategy can be successful only if it prioritizes cost-shredding in the same way that companies did in the globalization era, the project should expect similarly shallow public support, if not opposition. In contrast, if industrial policy rebuilds the labor movement and contests monopoly power, this is a first step toward a lasting governing coalition and a supply-side liberalism that builds power. And indeed, scholars have shown that stronger unions lead to more democratic participation. Meanwhile, stronger economic performance leads to more satisfaction with democracy (which in turn boosts support for the basic democratic rules of the game), while there is little evidence that government that tries to respond to more constituency interests is less effective.

All of the foregoing centers the demand side of politics: how to get voters to support doing the things the climate experts tell us we need to do. But there is growing evidence that the rising inequality of the neoliberal era has fueled so much political polarization that voters increasingly view the desirability of democracy through a partisan lens, making the public a weak check on democracy-threatening politicians. Thus, the audience that may most need to hear the Bidenomics gospel is less the public itself, and more Biden’s fellow politicians.

Exporting a Foreign Policy for the Middle Class

It is notable that Sullivan’s speech was not delivered at Independence Hall, a union local, or some other more populist setting associated with democracy. Rather, it was delivered at the Brookings Institution, before an audience of foreign diplomats and international economics experts. This indicates some awareness that, in the short run, it is elites who need convincing that a new form of economic statecraft can be both democracy-promoting and in their self-interest.

In theory, this should not be a hard sell. Comparative politics experts have shown that authoritarians and populists rise to power on the basis of grievances that established political parties leave outside of political contestation, and the former maintain power when the latter refuse to absorb some of the grievances as their own. This dynamic was on display with Trump’s weaponization of trade politics in his 2016 campaign and is one reason progressive thinkers early on pushed for not letting him “own” the issue. (See, for instance, the prescient Democracy Journal symposium from 2018 featuring Jennifer Harris and Heather Hurlburt, who would both go on to work on trade for Biden.) Some experts have warned that Europe is sleepwalking toward a similar populist explosion, as the EU project is premised on taking much economic policy out of democratic decision-making. At the same time, President Lula in Brazil has argued that democracies will rise or fall according to their ability to fight economic inequality.

The difficulty that Sullivan’s agenda faces is rather with the substance. What precisely can the United States do with its trading partners that might help democracies help themselves? His speech was scarce on specifics. He mentioned the deal to establish a global minimum corporate tax, but Congress has not taken that up. He floated a new approach to trade that ditches the neoliberal all-of-economy approach of past deals and focuses instead on specific economic sectors. The metals-specific Global Arrangement on Sustainable Steel and Aluminum with the European Union is one such initiative; the a la carte sectoral approach of the 13-country Indo-Pacific Economic Framework for Prosperity is another. The sales pitch for these deals is that they are laser-focused on the most urgent challenges, like decarbonization, rather than further reducing what are already historically low tariffs. But as of this writing, neither initiative has been brought over the finish line. To be sure, simply not doing trade deals—and thus avoiding the perception or fact of trade-induced job displacement in swing states—may shore up democracy enough for Democrats to get through the next election and live to fight another day. But members of a diplomatic corps left to idle will fill up their days somehow, and for many, this has defaulted to attacking Biden’s signature policies for their supposed trade restrictiveness.

A second Biden term presents an opportunity to develop a more expansive international agenda, one that could more directly address inequality, democratic erosion, and the roadblocks to the clean energy transition. At the top of the to-do list: a resurrection of the Hoover-established, FDR-expanded Reconstruction Finance Corporation, as Saule Omarova and I called for in these pages. At the peak of its powers, this institution, essentially a Federal Reserve for industry, was able to leverage vast sums of capital to rebuild after the Great Depression and mobilize the economy for World War II. Critically, its funding operations were not hostage to the normal congressional appropriations process, and it flexibly stood up or wound down subsidiaries that specialized in everything from domestic synthetic rubber production to getting large companies to improve treatment of their workers to managing goods flows with European allies to pushing Nazi Germany out of Latin American capital markets. Many U.S. trading partners already have these types of public financial institutions to step in with low-interest funding when private capital can’t or won’t. Such funding would have been a lifeline to the offshore wind projects that were derailed by high interest rates and inflation in 2023, and it presents the most tangible way that the United States can rival the sheer financial scale of China’s Belt and Road Initiative. Money lent to overseas projects could be conditioned on maintaining or deepening democracy and labor rights.

A second strategy would be to make it significantly easier for American workers to exercise a full range of union rights, including sympathy strikes and sectoral bargaining across multinational enterprises. Current U.S. labor rights are linked too much to individual facilities. But as Scandinavian unions are showing with their cross-border and cross-industry pressure campaign against Tesla’s failure to sign collective bargaining agreements, Biden could build on the rhetorical support he’s offered to unions like the United Auto Workers by making it easier for them to develop at scale across the entire industry. That would give the United States more leeway to credibly tell foreign firms and lawmakers to back off the anti-union stance they often bring to their operations and lobbying here. Supporting unions and increasing taxes on the rich are perhaps the most concrete things the United States can do to break the inequality-polarization cycle.

Finally, we can further advance the idea that market access is a privilege, not a right. Goods and services that are imported and offered for sale to American consumers should be compatible with U.S. goals around decarbonization, boosting union density, and respecting democratic norms. Currently, the European Union leads the way on linking economic benefits to democracy—but recent experience with Hungary’s increasingly authoritarian government suggests that this mechanism works better on the front end as a requirement for new member states than as a credible disciplining device for current members. Quick trade penalties can better align elite interests (e.g., exporters) with values like maintaining democracy and empowering workers.

In short, there is every reason to believe that economic statecraft can play a role in restoring faith in democracy. But for this message to spread internationally requires a willingness on the part of the U.S. government to use foreign policy tools and leverage as aggressively for workers as we do for, say, wars. And yet, it’s not the first time that the role of government has been radically reenvisioned, whether it was shifting to emancipation and Reconstruction in the 1860s and ’70s, trust-busting and legalizing labor unions in the 1890s and 1930s, or moving from closed economies to global engagement in the 1940s and ’70s. Electing and appointing leaders with a vision of how to move past global neoliberalism is the first step; being willing to pick the fights at home and abroad to rein in footloose capital and expose the dead end of authoritarianism is the work to come.