Industrial policies were a big bet for the Biden government. Warnings have been issued by knowledgeable individuals that might need to be more profitable.
The Biden government has put a lot of faith in industrial policies, like the CHIPS and Science Act and the Inflation Reduction Act of 2022, to bring manufacturers back to the United States.
Scott Lincicome, vice president of general economics at the Cato Institute, said, “If you look at the three pieces of legislation that were passed in the last two years, you’re looking at, give or take, more than $1 trillion in new government spending on industrial policy.” “And it could be even more if a bunch of tax credits have no end date.”
The U.S. government has spent tax money on guiding industry policy before. If industrial strategies work, they could bring in a lot of money.
“One example would be making mRNA vaccines for Covid,” said Ed Gresser, vice president and head for trade and global markets at the Progressive Policy Institute. “They gave a business a goal to reach, paid for it, and the business met the goal. That cost a lot of money, but most people would agree it was well worth it.”
Today, Washington’s policies are highly weighted towards two industries: semiconductors and electric cars.
Linicicome says the government shouldn’t favour certain businesses over others. Lincicome said, “Politicians and bureaucrats are not the best people to choose winners in the market.” “We’re going all in on electric cars right now, and there’s a chance we’ll push a technology that isn’t quite ready for prime time and push aside a technology that might be a better way to go.”
Some people are worried about the problem of bad management.
Jay Timmons, head of the National Association of Manufacturers, said, “We’re seeing a barrage of regulations coming out of Washington. Sometimes they’re inconsistent, and sometimes duplicates, but they’re all costly.” “Many of our manufacturing members say that four or more federal agencies control them, and sometimes those agencies give them different advice and have different rules. And that makes people less likely to spend and create jobs here in the U.S.”