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The writer served on the Council of Economic Advisers in the Biden administration and is a research fellow at the Harvard Kennedy School
Watching Labour announce its industrial strategy this week was both heartwarming and heartbreaking. It is a joy to see Labour run with ideas that we tested during the Biden years, ones that delivered a historic investment boom and new jobs across the US. Those successes give me hope that they will also foster competitive industries and good jobs across the UK. I am happy for the British people, but this heightens my despair as my country’s leaders gut such policies through chaotic executive actions, indiscriminate tariffs and a misguided tax cut bill in Congress.
Joe Biden sought to “change the economic paradigm”, rejecting trickle-down economics for a “middle-out economics” that invested in America. We grounded our strategy in investments in infrastructure and productivity-enhancing sectors such as semiconductors and clean energy technologies. Our agenda included three historic new laws — the bipartisan infrastructure law, the Chips and Science Act, and the Inflation Reduction Act — as well as plans to shape a fairer, more competitive market and to empower and educate workers.
Labour’s agenda reflects a similar approach, rejecting long-held beliefs about the proper division between government and markets in favour of what it calls a “practical and pragmatic view”. Their strategy prioritises investment in sectors with the highest growth potential, such as advanced manufacturing and clean energy. As in the US, core to its success are infrastructure investments.
I believe in this agenda because I saw it work. By the time Biden left office, investment in construction and new manufacturing facilities had more than doubled relative to the pre-pandemic period. We saw companies break ground on clean energy projects at a scale previously unimaginable.
Labour has put the UK at the front of the new global paradigm, setting them up to reap the benefits. However, given the loss of vice-president Kamala Harris in the election last November, it is important to ask if it’s political malpractice to follow this path.
I think not. Labour have several advantages. First, they have control over their government, unlike the divided governments without party discipline so common in the US.
Second, they are not compromising on kitchen table issues. In our case, senators (well, one senator) insisted we drop economic security policies that Biden fought for and the House of Representatives passed — a problem Labour doesn’t have. While we had no chance of passing legislation to boost housing supply, the chancellor of the exchequer has put £39bn towards reversing decades of under-investment in housing.
Third, Labour have given themselves time. Internal party debates delayed our agenda. While the progress made was significant, on election day, many of the tangible economic benefits were still in the future.
Both industrial strategies share a commitment to those too long left behind. As in the US, the UK economy has fractured, with inequality rising alongside decades of deindustrialisation. In a democracy, parties have to acknowledge this basic truth: workers and communities must see the benefits of the economic agenda. As chancellor Rachel Reeves has said, “where things are made, and who makes them, matters”.
In 2024, as chief economist for Biden’s “Invest in America” cabinet, I travelled to 19 states and saw manufacturers and community leaders cautiously excited that the federal government was helping to make their local economy thrive. I saw factories and infrastructure being built and people acting together to ensure that there would be enough housing, education and healthcare to meet their needs. The economic growth engine was revving up. While it wasn’t soon enough to tip the tide for us last November, I have hope for the UK.