10 Leaders The EconomistJanuary 30th 2021
1M
odern presidents of the United States do not sit in the
Oval Office for long before reaching for the pen. Since en-
tering the White House on January 20th Joe Biden has signed
nearly 40 executive orders and proclamations. Many are wel-
come; some are crucial. He is overturning some of the harshest
immigration restrictions imposed by Donald Trump and restor-
ing America’s support of the Paris agreement on climate change
(see United States section). One of Mr Biden’s edicts, however, is
an early economic-policy mistake: the tightening of rules oblig-
ing America’s federal government to prefer domestic suppliers
to foreign ones. It could be a sign of worse errors to come.The “Buy American” agenda is long-running. A law passed in
1933 requires the federal government to prefer domestically pro-
duced goods to foreign ones; it is reinforced by an unwieldy mass
of similar state and local rules. The stimulus Mr Biden oversaw
as vice-president after the global financial crisis targeted Ameri-
can suppliers with American supply chains. President Trump is-
sued reams of executive orders aiming to favour domestic firms
over their foreign competitors. One of his rule changes, which
raises the bar for an item to be considered American-made and
increases the mark-up over global prices which domestic firms
can charge, has still to come into effect.The folly of Buy American
President Biden’s protectionism sullies his economic agendaWorld tradeT
he mood intheEuropeanUnionisgrim.Only2%ofitspeo-
ple have been vaccinated, compared with 7% in America and
11% in Britain (see Europe section). The slower the roll-out, the
more die and the greater the economic harm will be.
Hence news that AstraZeneca (az), an Anglo-Swedish vac-
cine-maker, may supply less than 40% of the doses the eu ex-
pected in the first quarter has sparked fury. Amid the recrimina-
tions, politicians are arguing that, if azrefuses to make up some
of the shortfall with supplies from its plants in Britain, then the
eushould retaliate by stopping exports to Britain from plants in
continental Europe. That would be a grave error. There are better
ways for Europe to speed up vaccination. They need to be taken
as urgently as efforts to stop another economic slump.
Europe’s problems stem partly from bad
luck. One of the vaccines it ordered suffered set-
backs in clinical trials. Others have hit teething
problems in production. But they are also self-
inflicted. The European Commission took
charge of buying vaccines, but it was inexperi-
enced and slow, signing deals months after Brit-
ain. It got bogged down in haggling with drugs
firms over liability and price—mere details in a
pandemic. The contract with azis confidential, but it seems to
stipulate only that the firm makes best efforts to supply doses.
Threatening drugs firms and nations is a way to vent frustra-
tion, but it is dangerous. Were the euto embargo supplies of the
Pfizer vaccine, it would prevent Britons from receiving their sec-
ond dose, because Britain has delayed the booster. Were every
country in the intricate vaccine supply chain to threaten trade in
everything from specialised glass to syringes, global vaccine
supplies could choke. The euwould be sabotaging its claim to
stand for the rule of law, the ultimate source of its authority. It
would do better to focus on ironing out vaccine logistics, to offer
firms help and to consider adopting the British strategy of delay-
ing the second dose until supplies are more plentiful.Theeconomic consequencesofEurope’s vaccine lag also
need to be dealt with urgently. Levels of economic activity will
suffer in the first half of this year, and the recovery will be pushed
back still further. That will impose more pain on workers and
firms, and also raises the risk of prolonged stagnation. Low
growth and low inflation could become a permanent feature of
the euro area, rather as they are in Japan. The imf’s new forecasts
suggest that the euro-zone economy will remain 6% below its
pre-covid trend by the end of this year (see Finance section). In-
vestors expect inflation in five years’ time to languish at a puny
1% or so. By contrast America’s output is expected to be back on
track by then, with inflation of over 2%.
You might think that Europe’s leaders would be unveiling big
spending plans. Across the Atlantic, the White
House hopes to unleash nearly $2trn in stimu-
lus, stoking fears of overheating later in the year.
The euhas agreed on a €750bn ($900bn) recov-
ery fund, to be financed through jointly issued
debt. But this is being disbursed too slowly, so
there is still too little stimulus in the euro area.
Its fiscal deficit is forecast to narrow by more
than two percentage points this year, in part as
temporary measures expire. There is no point in relying on the
European Central Bank to step in: it has run out of ammunition
and has little capacity to stimulate the economy more.
To avoid becoming like Japan, Europe must spend like Amer-
ica. This is sinking in at last. Helge Braun, an adviser to Angela
Merkel, this week warned that Germany’s “debt brake”, which
aims to limit public borrowing, may not be restored for years.
Bruno Le Maire, France’s finance minister, has called for Europe’s
budget rules to be “re-evaluated to take into account reality”.
Still, the danger is that Europe takes too long to respond. Ponder-
ous decision-making has already slowed Europe’s vaccine roll-
out. That will take a toll in lives and livelihoods. All the more rea-
son to ensure that red tape does not delay the recovery, too. 7Shot in the foot
Total vaccine doses
Per 100 people
12
9
6
3
0
Dec 20 Jan 20 2021EUUSBritainFussy decision-making has slowed Europe’s vaccine roll-out—and threatens its economyEurope’s lockdown