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INDUSTRIAL POLICY IS A GOOD IDEA, BUT WE DON’T HAVE ONE  
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James K. Galbraith
April 24, 2024
ScheerPost
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_ The American state has lost the capacity for concentrated and
decisive effort at the forefront of technology and the associated
science. _

Biden speaks in Largo, Maryland 2023. , The White House, Public
domain, via Wikimedia Commons

 

In a remarkable and comprehensive book, forthcoming from Cambridge
[[link removed]],
Marc Fasteau and Ian Fletcher provide a theoretical, historical, and
up-to-date review of industrial policies, in the United States and
elsewhere, as well as a decent summary of the main Biden initiatives:
the Bipartisan Infrastructure Law, the Inflation Reduction Act, and
the CHIPS Act, as of late 2023. Their goal is to justify, defend, and
extend the case for industrial policies, which they do with admirably
fair attention to unsuccessful past cases. Mine in this essay is
narrower: mainly to describe the specific goals of President Biden’s
programs, and to assess the likelihood of success given their
structure and methods.

My background on this topic dates back to 1981, when under my
supervision and editorship the congressional Joint Economic Committee
published a study, “Monetary Policy, Selective Credit Policy and
Industrial Policy in France, Britain, West Germany and Sweden
[[link removed]],”
which may reasonably be claimed as a forerunner of industrial policy
debates and initiatives for the United States.[1]
[[link removed]] John
Zysman and Steven Cohen, who co-authored the essay on France with me,
went on to found (with Laura Tyson) the Berkeley Roundtable on the
International Economy, a fertile source of later work on industrial
and technology policy. The JEC held hearings on industrial policy in
1983, and Kent Hughes, then of the JEC staff, went on to head the
Council on Competitiveness. Threads of these ideas formed part of Gary
Hart’s unsuccessful bid for the Democratic presidential nomination
in 1987-1988, in which I was again involved as an adviser. Tyson went
on to chair the Council of Economic Advisers under President Clinton.

Definition and Goals of Industrial Policy

Industrial policy is the use of state power and public resources to
build and maintain the capacity to produce specified lines of
manufactured products, thereby developing and sustaining the
associated techniques, technologies, and, among the working
population, the required engineering expertise and mastery of machines
and techniques. In the face of traditional textbook encomia to “free
markets,” one can justify such efforts, as Fasteau and Fletcher do,
by appealing to every caveat lurking in the back pages of any
competent text: externalities, public goods, time horizons,
uncertainty, and increasing returns. Further, there is the thought
that so long as other nations decline to adopt the free market
worldview, it may be prudent to hedge against the possibility that
they may know something the textbooks don’t.

An actual policy must be assessed against actual and not theoretical
goals; one does not advance a bill through Congress by claiming to
have discovered an externality. In American politics, it is useful to
distinguish between goals that appeal broadly to a concept of public
interest and those tailored to the narrower purposes of the power
elite. These are roughly – not entirely – identifiable according
to the forums in which they are emphasized – the campaign trail, for
example, versus (say) a congressional hearing or confidential
briefing.

Under the public interest rubric, one may fit a number of familiar
tropes: job creation is one, especially “good jobs
[[link removed]] at
good wages” (Rodrik, 2023). Export promotion is another, or import
substitution, allied to the vague concept of competitiveness, which
appears to mean the success of “American” corporations against
“foreign” rivals.[2]
[[link removed]] A
more concrete statement associates competitiveness with the trade
balance – one goal asserted by Fasteau and Fletcher is to reduce the
“trade deficit” to zero and make the United States financially
self-sufficient – though not necessarily in any particular good,
service or product line. Exactly why this would be desirable may not
be clear, but it plays well in public and may be counted as one of the
ostensible goals of the policy.

Lurking behind these broad objectives are some narrower ones, which,
though hardly hidden, play to a more focused gallery, including
interests with “skin in the game” – those seeking results that
benefit their own material interests. The most obvious is the case for
industrial policy as national security – to support the “defense
industrial base,” to secure the supply chain, to develop the next
generation of armaments, and so on. In this area the stated objective
of national defense and the pecuniary interests of military
contractors are closely allied, indeed impossible to disentangle.
However, while the former is a nebulous category whose very definition
rests on (and can be modified by) changing strategic doctrines, the
latter is a very precise question of (billions of) dollars and
(trillions of) cents. Similar pressures apply in other sectors, among
them pharmaceuticals, semiconductors, and civil aviation.

A second, related-yet-distinct concern is the “threat” from a
country designated as a “peer competitor” in economic terms. At
one time the Soviet Union held this position (thanks mainly to
Sputnik), later it was Japan; today the focus of this preoccupation is
China. Here the stated (or sometimes unstated) goal of the policy is
to shore up (or restore) a weakened position. The United States long
ago came to grips with the globalization of textiles and apparel; over
the past 40 years, it has largely – not entirely — accepted the
internationalization of steel, aluminum, automobiles, machine tools,
and much else, including (of course) oil. Semiconductors are today’s
leading example, especially insofar as today’s leading fabricator,
Taiwan, may someday be reabsorbed by its mother country

A third specific source of pressure for industrial policy concerns the
industries of “the future” – those exploiting new technological
possibilities, promising new arenas for private profit, meeting new
needs, or promising new pathways to national power and prestige. At
various times in the 20th century nuclear energy, the space race, and
the Internet played this role. In this century, motivated by climate
change, “renewable energy” has taken a leading place in this
niche, including the harvesting of solar energy for electricity,
battery storage, and transportation, the latter taking the peculiar
form of private cars rather than the well-established solution of
electric trains, subways and streetcars in compact cities – a model
long ago adopted in much of the world.

Who Decides Industrial Goals and Policies?

The question of which precise policies get adopted in a given place
and time is settled by the balance of influences in the
decision-making structure. In countries often described as
“authoritarian,” these decisions are largely reserved to planners,
planning commissions, and associated ministries, with substantial
control by engineers and other specialists; this was how Moscow
obtained its metro and how China built its vast new high-speed rail
network. It was also how France rebuilt its steel and railways after
World War II and later moved from coal to nuclear power in its
electrical systems. It was how the United States built the atomic bomb
in the 1940s and reached for the moon two decades later. Technological
choices are, by their nature, authoritarian to some degree.

In the United States today, Congress plays a central role in designing
and arbitrating choices of this kind. Within that institution, since
the early 1990s, professional expertise, once vested in the staff and
various technical appendages has been radically devalued, making
congressional decisions far more deeply influenced by outside
lobbies.[3]
[[link removed]] The
structure of these, in turn, has shifted with the changing balance of
power in the American economy, to the advantage of tech-sector
oligarchs and bankers, notably, along with Pharma, the military, and
other emerging sectors including bio-tech and now, artificial
intelligence. The role of unions, once quite powerful, has declined,
as has that of citizen activist organizations. Faced with the
realities of private power, US administrations have learned to tailor
their proposals to the requirements of potentially successful
coalitions. This has worked to reduce – practically speaking, to
eliminate – the formerly substantial influence of the academic and
scientific sectors. Today academics are called on, if at all, mainly
to decorate a previously-decided agenda.

Biden’s Industrial Policies and the Macro-Economy

The Biden industrial policy, represented by the three Acts previously
mentioned, has been widely celebrated for three reasons. First, it was
enacted, and on a substantial scale. Second, it overrode the austerity
lobby and their academic allies – the traditional doom-and-gloom
position of mainstream economists when faced with anything decided by
the government – and third, it weathered subsequent accusations of
responsibility, from the same quarters, for the quasi-inflation of
2021-2022
[[link removed]] (Galbraith,
2023a). So, for the first time in decades, the United States has a
plausible simulacrum of an industrial policy. The question to assess
is whether and to what extent this policy has met – or will meet –
any of its stated broad or narrow objectives.

Through the early months of 2024, the Biden programs have a strong
claim to having been a contributor to macroeconomic success. Economic
growth, while not spectacular, has been steady; unemployment has
remained low; investment in manufacturing, though no longer large in
relation to the whole economy, has been quite strong. An input-output
study (Pollin et al. 2023
[[link removed]])
published by the Political Economy Research Institute at the
University of Massachusetts – Amherst in September 2023 credited the
three bills together as likely to generate $300 billion in new
investments and 2.9 million new jobs, sustained for as long as the
spending continues. These estimates now appear optimistic, partly due
to a slow roll-out in the spending, discussed below, and partly
because estimates of the leverage (public dollars stimulating private
initiative) were aggressive. (Manufacturing employment as of March
2024 had gained seven hundred thousand jobs since 2021.) Yet the
economy has not crumpled – so far – in the face of major increases
in interest rates. And inflation, having peaked in June 2022, declined
through early 2024. Tax incentives can be credited with a role in the
strength of business investment and spending generally speaking,
although other factors, including relatively favorable resource costs,
expanding oil and gas production, and the serious problems facing
Europe, have also played a role.

Quite predictably, with steady growth and high interest rates
(supporting the exchange value of the dollar) the US trade and current
account deficits have risen sharply. While it is unlikely that any
parts of the Biden program would have yet yielded positive results for
the trade balance in any event, even if they had, the larger forces of
strong US growth and attractive conditions for capital inflow would
have overwhelmed them. Corresponding to the trade deficit is a very
large federal budget deficit, which in turn predictably ignites
renewed calls for retrenchment, especially against Social Security,
Medicare, and Medicaid. Budget projections are made to look very much
worse by adding prospective interest costs at the higher rates,
assumed to continue indefinitely, to the federal spending projections.

Yet another layer of macro effects, within which the consequences of
the Biden initiatives are embedded, concerns wages and corporate
profits. Profits have done very well, rising sharply after the Covid
debacle receded. Wages declined in real terms, as the cost of living
outstripped wage recovery in the quasi-inflation of 2021-2022, even
though for many households the difference was made up by earlier
relief payments. More recently real wages appear to have begun to
recover, but household incomes, which take account of multiple
earners, have not returned to pre-pandemic trends.

In sum, despite uninterrupted good news on the big three headline
indicators – growth, unemployment, inflation – the macro record of
Biden’s industrial policies has to be judged as somewhat mixed. The
trade effect so far is negligible; the budget effect could bring a
backlash, renewed austerity on key social programs threatens, and the
wage/earnings picture is not as rosy as that for profits.

Biden’s Industrial Policies: Specific Goals

The Bipartisan Infrastructure Law

We turn next to the specific goals of each element of the Biden
initiatives: the BIL, the IRA, and the CHIPS Act. Of these the
infrastructure law is easiest to evaluate, because, as Fasteau and
Fletcher report, it is spread out over some 7,000 projects in 4,000
communities; as of November 2023 the number claimed had risen to
40,000 (White House, 2023a); the data are however specified to be
“preliminary and non-binding.” Highways and bridges form the
largest component, absorbing over half of the money so far (The
Guardian, 2024). Other elements include airports, water systems, toxic
waste cleanup, extending broadband and the electrical grid, and some
protections for suppliers of steel.

The BIL is, in short, diffuse. The specific priorities served are
necessarily those of state and local authorities. While the funds are
no doubt welcome and the improvements are real, it is nevertheless the
case that the projects have few, if any, implications for
competitiveness or industrial productivity. They fade quickly into the
warp and woof of urban and suburban existence; their implications for
commercial endeavors largely benefit real estate developers, who have
no presence in the international economy. No grand vision and few
signature projects appear to have been built into the legislation; the
big ones include a new tunnel under the Hudson, another under the
Baltimore harbor, and a bridge in Cincinnati. The facts of diffusion
and decentralization, with something for everyone
[[link removed]] (Nichols
2024) undoubtedly helped the BIL to avoid partisan obstructions on the
way to becoming law.

The Inflation Reduction Act

A major purpose of the Inflation Reduction Act is to foster the growth
of renewable energy sources and uses, notably the electric vehicle
sector. The major method is tax credits for business investment in
renewables, and a tax rebate ($7,500) for purchases of electric cars,
as well as for appliances, batteries, and solar panels. The benefits
from these measures are limited to firms conducting a large share of
their activities in North America, especially the final assembly of
cars. Healthcare provisions were also included in the law, including
measures to reduce the price of pharmaceutical products; these are not
an element of industrial policy.

The tax subsidies have fostered an expansion of solar and wind
electricity generation and the construction of new factories for
electric cars in the United States. Advocates for clean power claim 83
new manufacturing plants have been announced; up to 170 either new or
expanded (The Economist, 2023). The White House claims many new
renewable energy projects, large and small, especially off-shore power
generation (White House, 2023a).

Nevertheless, the challenges facing renewable electricity generation
are daunting. In brief summary, electricity production has always,
heretofore, been a matter of one-way diffusion: electricity is
produced in high concentrations and distributed to consumers over a
network of wires and transformers. Production is of two types:
base-load, such as nuclear, coal, and hydro, which largely runs all
the time, and peak-load – for which natural gas is optimal, as it
can be switched on and off rapidly as needed. Renewables add the
complexity of a diffuse production system; the power is generally
collected from many relatively small sources (such as windmills; solar
farms may be larger) and transmitted to the consuming area over lines
that, in many cases, do not yet exist. According to the Department of
Energy, a grid expansion of more than fifty percent would be required
to move to a carbon-free system; given the need for highly-skilled
labor and the complexity and cost of electrical equipment – much of
it imported, this objective cannot be met; the current rate of grid
expansion, including renovations, is a small fraction of the required
rate. But renewables are also neither base nor peak; their output
varies with the weather, not with demand. So they need a further
element, which is electricity storage – a massive rechargeable
battery system for which the technologies do not yet exist, and,
possibly, may never exist, given the physics of batteries and the
limitations on the relevant resources.

Further, the large renewable energy projects the IRA envisions are
long-term and capital intensive; they require large fixed investments
up front, in the hope of operating for decades at low variable cost,
with the sunlight that powers them arriving free of charge. Their
economic viability is therefore a matter of the cost of capital, which
is a matter of the rate of interest. Since the product associated with
the enterprise – electricity – must compete at a price determined
by the fossil fuel competition and is entirely homogeneous to the
consumer, the margins to be expected from these investments are low.
Financing the capital at two percent is one thing, doing so at six or
seven percent is something else entirely. The Federal Reserve’s
movement to raise interest rates can be expected to wreak havoc with
such investments, and reports of project cancellations
[[link removed]] (McDermott
et al. 2023) are, therefore, not surprising. Front-end tax subsidies
will only carry a business project so far.

Finally, despite the grand stated goals, there is no compelling reason
to expect that the resulting tangle of new electricity generation,
efficient machinery, and “zero-emissions” transportation will
actually reduce emissions of carbon dioxide into the atmosphere. The
IRA explicitly promotes the growth of US fossil fuel production
[[link removed]].
Reductions in US CO2 emissions have been achieved, but they are due in
large measure to the substitution of natural gas for coal, and not to
large inroads by renewables into the production of electrical power.
Apart from this, Jevons’ Law – laid down 150 years ago –
provides the reason: new energy sources and more efficient uses
invariably add to total production and consumption rather than fully
replacing previous methods and uses. The law has not been repealed.
Nor will it be, in the US and globally, so long as fossil fuels are
accessible and cheap, and vastly more energy-productive (in relation
to their cost of extraction) than renewables.

Finally, the very nature of energy policy – even if successful, even
if economic, even if it were to make a noticeable contribution to
mitigating climate change – ensures that the political benefits of
the policy are likely to be small. Like roads and water pipes,
electricity fades into the background of daily life. Unless the policy
reduces energy costs, providing energy from renewable sources has no
benefits to industrial users either. And since current CO2 levels lock
in climate effects for decades hence, even the environmental benefits
– if any – will not be seen by most people in their own lifetimes.
In fifty or more years, the most favorable verdict that is possible
will be, “not as bad as it might have been.”

With respect to electric cars, it is also not obvious that the
resulting vehicles can be sold at a profit. By its own account, Ford
lost $4.7 billion on electric cars in 2023 or just under $65,000 per
vehicle (Bryce 2024, possibly an overstatement, but still). Tesla has
been discounting heavily, Hertz has given up on EVs for rentals, and
uptake of new electric cars appears concentrated in a handful of
high-income regions. Limitations on range, charging stations, and
capital cost of the vehicles may constitute enduring barriers to the
large-scale adaptation of EVs, perhaps particularly when compared to
hybrids, the option favored by Toyota – and therefore an import to
the United States. Outside the US, the Chinese competition has a cost
advantage, thanks to scale and highly automated production processes,
so there is little scope for US electric vehicles in third-country
markets.

The CHIPS Act

The main purpose of the CHIPS Act is to restore US manufacturing
capacity in semiconductors, partly at the expense of the
world-dominant facilities presently in Taiwan, and to impede or thwart
a competitive threat – so it is claimed – from China.
Semiconductor capacity is also claimed to be essential for military
and national security reasons, associated with reconnaissance,
surveillance, information processing, command-and-control, and other
functions.

Once again, the Biden policy has had a front-end effect. Most visibly,
the Taiwan Semiconductor Manufacturing Corporation has undertaken to
build “fabs” in Arizona; work is underway though not without
delays
[[link removed]] and
difficulties
[[link removed]] (Lee
and Wu, 2024; Ting-Fang and Li, 2024). Whether the factories will
function effectively is an open question; whether they will be
profitable is another. A report from Brookings
[[link removed]] raises
doubts (Hourihan and Chapman, 2023). Time will tell. Meanwhile,
Senator Elizabeth Warren and Representative Pramila Jayapal have
raised concerns
[[link removed]] that
the process of allocating funds under the act has been largely
delegated to a group of financiers drawn from Wall Street.

In the present and immediate future, we may reasonably expect the
following consequences of a reshoring policy for semiconductors:

* If the price of the resulting chips is higher than the world price
for equivalent capability, American consumers of end products will
either shift demand to goods made from offshore chips or pay more for
the local product;
* If the policy deprives China (or any other capable competitor) of
advanced semiconductor designs or production capabilities – e.g.,
lithography machines – they may be expected to accelerate their own
research and development in this area, as has been done with every
strategic technology in the past;
* If a competitor has control of an important precursor material, it
may be expected to use that control to its own advantage, as China is
doing with germanium and gallium. Measures to move raw material
sourcing away from China are in the legislation, but their
effectiveness is unproven.
* The government of Taiwan, facing the reality that US policy aims
to deprive it of its one greatest economic asset, may draw conclusions
and move toward an accommodation with the PRC.

The difficulty with competitive chess is that one’s opponent always
has the next move.

However, it may be that these consequences of a (hypothetically)
successful policy will not be felt, at least not soon, simply because
the policy itself may prove to be a chimera. According to the law, a
formal evaluation from the Governmental Accountability Office is not
due until 2025 – safely past the next election. But preliminary
evidence
[[link removed]] suggests
that the administering agency has received many proposals, made few
allocations and that only a small part of the $52 billion approved
under the Act had been spent as of a year after enactment
(Partsinevelos and Freda 2023). When (if) it is, it will be spread
over many relatively small research, development, and fab operations.
This approach contrasts quite sharply with the concentrated structure
of the semiconductor industry in Taiwan or elsewhere. But it is
well-suited to the American system of log-rolling, coalition building,
and the priority of narrative over results – to the system, in two
words, of money politics.

Conclusions

As noted earlier, the history of industrial policy is dotted with
successes, in the United States including nuclear power and the space
program, not to mention the Internet. In her 2021 book, _Mission
Economy,_ Mariana Mazzucatto gives a detailed description of a narrow
example, the development of the Lunar Excursion Module (LEM) by
Grumman for NASA in the Apollo program. These examples look nothing at
all like the Biden initiatives.

Why is that? The answer lies deeper than in the limitations or
disingenuousness of this or any other administration. Rather, the
American state has lost the capacity for concentrated and decisive
effort at the forefront of technology and the associated science. For
forty years – and especially since the early 1990s “Gingrich
revolution” in Congress and the triumph of neoliberalism in the
Clinton and Bush years – the US government has been working hard to
eliminate its own technical capacities. In their place, a
constellation of lobbies, privately funded think tanks, and
tax-subsidy farmers has grown up, many of them talented at projecting
the impression of scientific authority, which crowds out whatever
genuine authority may still exist. We can see this in every domain,
including climate, public health, and the cyber-sphere. And behind the
cacophony of a “marketplace of ideas,” legions of economists chime
in to advocate for decentralized, competitive, market-based solutions,
guided by price incentives, taxes, tax breaks and subsidies. It can be
little wonder, then, that when the government is called upon to
specify exactly how to proceed – for instance, to evaluate grant
applications or to judge the viability of a major private initiative,
it doesn’t know how – except, perhaps, by the path of least
political resistance.

There is yet a deeper reason. Ever since the launch of industrial
policy debates in the early 1980s, the commanding heights of the US
economy have been firmly held by high finance, and the overriding
objective of policy has been global power projection – financial,
technological, and military, with close interaction between
technological and military sectors. Hope for an industrial policy
oriented toward civilian competition foundered in the 1980s under the
high dollar and the flood of imports it induced, crushing the core of
American manufacturing and dislocating the engineers and skilled
machinists once employed in the sector. In the 1990s and beyond, the
Chinese juggernaut gathered momentum under the same umbrella,
gradually eroding the margins of high technology still dominated by
the US. Today, even US military production – a mainstay of remaining
manufactured exports – has large elements of foreign sourcing –
including in some notorious instances
[[link removed]] from
China (Hudson 2022).

Today, financial power – the dollar system — remains a cornerstone
of US economic strategy, long after the mid-twentieth century
industrial basis of that power disappeared and as its longer-lived
technological and military props have eroded. As every country that
ever experienced Dutch Disease has learned, there is a deep
contradiction between financial preeminence and industrial
competitiveness, which no amount of specific subsidy can erase, and
which trade protection cannot cure. It is impossible for a polity
dominated by Wall Street to acknowledge, let alone resolve, this
contradiction.

Today’s advocates and champions of industrial policy are, in many
cases, the same people
[[link removed]] (Galbraith,
2023b) who helped to pioneer the concept back in the early 1980s. Back
then, one could draw on the experiences of the United States from the
1930s through the 1960s, and on those of Europe in the years of
postwar reconstruction and social-democratic growth. The foundation of
scientists, engineers, machinists, and productive organization by
large industrial corporations appeared solid; industrial policy was,
or seemed to be, a task of setting out goals and coordinating
strategies. But time passes and things change. The Reagan years dealt
a heavy blow to the industrial core. The Clinton years enshrined
neoliberal mismanagement of the larger economy, mitigated only by the
rise of a very thin veneer of technical excellence in the information
sector. The relevant industrial personnel were not reproduced and to a
considerable degree, no longer exist. A quarter century has passed
since then. It is a tragedy – for America – that the concept of
industrial policy has taken hold (Wraight, 2024) perhaps thirty, or
even fifty, years since the capacity to do a proper job began to
decline.

To be fair, the Biden packages contain many good and useful things.
Jobs are created; roads will be repaired and bridges will be replaced;
the Internet may eventually reach the most remote backwaters of
Appalachia and the Vermont hills. Electric vehicles may find an
enduring niche in the transportation ecology, wind turbines, and solar
panels will add something to the electrical supply, and new uses for
batteries may be found. These developments may contribute to security
and self-sufficiency in domestic markets. Whether the US will regain
its lost edge in semiconductors seems less likely, as the
counter-currents of the high dollar and Chinese competence – as well
as control over both precursor materials and downstream markets –
appear very strong. Does the whole amount to an industrial policy,
creating new American competitiveness on the world stage? This seems
quite far from the case.

And will all the sound and fury make a difference to voters in 2024?
That too remains to be seen. But if so, it will be due mainly to
effective marketing of the narrative, and not much to actual
achievement of the stated goals.

References

Bryce, Robert, “Ford Lost $4.7B On EVs Last Year, Or About $64,731
For Every EV It Sold,” Substack, February 7,
2024. [link removed]

Fasteau, Marc and Ian Fletcher, _Industrial Policy for the United
States: Winning the International Competition for Good Jobs and
High-Value Industries, _Cambridge: Cambridge University Press, 2024.

Hourihan, M., Muro, M. and Chapman, M. R., _The Bold Vision of The
Chips and Science Act isn’t Getting the Funding it
Needs. _Brookings.edu,
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Hudson, Lee, “Pentagon to resume F-35 deliveries after Chinese
materials discovered,” _Politico_, October 7,
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Galbraith, James K., “The Quasi-inflation of 2021-2022: A Case of
Bad Analysis and Worse Response,” _Institute for New Economic
Thinking, _February 2, 2023. (Galbraith
2023a) [link removed]
[[link removed]]

Galbraith, James K., “Review of _A Fabulous Failure: The Clinton
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2023b)

Jayapal, Pramila, “Jayapal, Warren Raise Concerns about Commerce
Department Tasking Wall Street Financiers with Allocating $39 Billion
in CHIPS Semiconductor Funding,” Press Release, January 10,
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Joint Economic Committee, U.S. Congress, _Monetary Policy, Selective
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and Sweden, _A Staff Study, Washington: GPO,
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Joint Economic Committee, U.S. Congress, _Industrial Policy: The
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Lee, Jan Lanhee and Debbie Wu, “TSMC’s Second Factory in Arizona
Delayed as US Grants Remain in Flux,” _Bloomberg_, January 18,
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Manchin, Joe, “ICYMI: Because of the IRA, We Are Producing Fossil
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Mazzucatto, Mariana, _Mission Economy: A Moonshot Guide to Changing
Capitalism, _London: Allen Books, 2021.

McDermott, Jennifer. Matthew Daly, Michael Hill, and Mike Catalini,
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jeopardize Biden clean energy goals” Associated Press, November 4,
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Nichols, Hans, “Biden’s 2024 Goody Bags: Laws Pump Billions into
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Partsinevelos, Kristina and Cait Freda, “Semiconductor manufacturers
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Mainstream Economics,” _Post-Neoliberalism, _November 28,
2023. [link removed]

_The Economist_, “What the Inflation Reduction Act has achieved in
its First Year,” August 17,
2023. [link removed].

_The Guardian_, “US spends billions on roads rather than public
transport in ‘climate time bomb’,” February 29,
2024. [link removed]

Ting-Fang, Cheng and Lauly Li, “TSMC, Intel suppliers delay U.S.
Plants on surging costs, labor crunch,” _Nikkei Technology, _March
19,
2024. [link removed]

White House,_ FACT SHEET: Biden-Harris Administration Celebrates
Historic Progress in Rebuilding America Ahead of Two-Year Anniversary
of Bipartisan Infrastructure Law, _November 9,
2023. [link removed] (White
House 2023a)

White House, _FACT SHEET: Bidenomics is Boosting Clean Energy
Manufacturing for Offshore Wind and Creating Good-Paying American
Union Jobs, _July 20,
2023. [link removed] (White
House 2023b).

Wraight, Tom, “Rethinking the American Industrial Policy Debate: The
Political Significance of a Losing Idea,” _Journal of Policy
Histor_
[[link removed]]_y_
[[link removed]], Volume
36
[[link removed]] , Issue
2
[[link removed]],
April 2024, 191–214. DOI: [link removed]

**

James K. Galbraith holds the Lloyd M. Bentsen Jr. Chair in
Government/Business Relations at the LBJ School of Public Affairs, The
University of Texas at Austin. His next book, with Jing Chen,
is _Entropy Economics: The Living Basis of Value and
Production, _forthcoming from the University of Chicago Press. He
thanks Deepshikha Arora for research assistance and Thomas Ferguson
for useful comments.

Notes

[1]
[[link removed]] The
study was commissioned by the House Banking Committee and I organized
it over the spring and summer of 1980, participating in field research
in all four countries. In addition to the Zysman/Cohen duo, it helped
to launch the careers of the late Richard Medley, founder of Medley
Global Advisers, writing on West Germany, and Catharine Hill, later
President of Vassar, writing on the UK. Sweden was covered by Andrew
Martin, a distinguished specialist from the Center for European
Studies at Harvard. When Henry Reuss moved to chair the JEC in 1981,
that committee undertook to publish the study.

[2]
[[link removed]] In
an era of global multinationals where manufacturers are spread over
many countries, this is a dated idea, but it persists, partly because
companies ally themselves with states.

[3]
[[link removed]] The
abolition in the early 1990s of the Office of Technology Assessment
was one key step in the subordination of congressional initiatives to
business lobbies. This and the reduction of congressional staff were
parts of a deliberate strategy of House Speaker Newt Gingrich at that
time.

* Industrial policy
[[link removed]]
* military industrial complex
[[link removed]]
* China
[[link removed]]

*
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*
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*
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