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February 12, 2021 (My birthday!)

How Biden Must End Corporate-Run Industrial Policy

Plus, another body blow for the Fight for $15

 

Then-Vice President Biden and Chinese President Xi Jinping at Andrews
Air Force Base in Maryland in 2015. (Carolyn Kaster/AP Photo)

The Chief

It took a few weeks, but Joe Biden finally got on the phone with his
Chinese counterpart Xi Jinping. The call took two hours
,
and Biden reportedly challenged Xi on China's human rights record, its
military aggression, and its "coercive and unfair economic
practices," while holding out hope that the two countries could work
together on fighting the pandemic and climate change.

Biden is trying to build an international coalition to deal with China,
while keeping Trump-era tariffs in place until an internal review is
conducted. He warned loudly of China "eating our lunch
"
on infrastructure, another big priority. Biden has also launched a
Pentagon task force

on China, and the Indo-Pacific division of the National Security Council
is the biggest, and stocked with China hawks
.
The entire NSC will be working on China

in some capacity.

If it wasn't clear to everyone why China should be a priority before
this week, the story I've previously covered

about the global semiconductor shortage should clear that up. The global
auto industry now expects $61 billion in losses

because of the lack of computer chips, which dominate auto production
these days (all the better to force authorized dealer repairs on the
vehicles). This cannot be turned around quickly, as the lead time for
semiconductors is half a year.

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The reasons for this shortage perfectly explain why you don't want to
leave industrial policy to corporations acting in their own
self-interest. COVID-related closures of auto factories led
semiconductor producers to shift resources to consumer electronics,
which were spiking in demand during lockdowns. This worked its way
through the supply chain and created a shortage, as demand for autos was
miscalculated. It takes a long time to build or reconfigure factories to
ramp up capacity. And we don't have that capacity here, because as
much as 70 percent of all chips are made in Taiwan.

Corporations loved this centralization and just-in-time logistics when
they profited from it, but the shortage has them begging the Biden
administration to ramp up domestic production. So far the Biden team is
mostly looking busy by conducting 100-day reviews
.
Meanwhile, China, whose relationship with Taiwan is fraught to put it
mildly, is a decade ahead of the U.S. and counting in building a
domestic semiconductor industry
,
using massive tax incentives to onshore chipmakers.

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These supply chain vulnerabilities are scattered throughout industries
. We
took notice of them in medical supplies and prescription drugs when the
pandemic first hit. The U.S. trade deficit is at a record high

(so much for getting sick of winning by bringing back all those jobs),
and offshoring is now a national security issue, with key components of
practically everything made for national defense produced in China or
elsewhere.

Even where companies have produced goods here in America, they can't
get them sold, because of dominant buying relationships that wind their
way through China. This story

about N95 mask makers who simply cannot get into markets, often because
of slightly cheaper Chinese goods, but mainly because power buyers lock
hospitals and medical facilities into contracts that require the
existing goods be purchased.

This too is industrial policy, it's just managed by corporations who
have incentives to abandon U.S. workers. The Biden team has talked about
democratizing industrial policy
,
through promoting advanced manufacturing sectors and stateside
production, with strict Buy American guidelines creating a market. This
is disregarded as something Soviet but it springs from a tradition
dating back to the Founders
.
We have always invested in our self-sufficiency, with a detour in the
neoliberal era.

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There's a danger that a stated industrial policy just devolves into a
lobbying competition. Explicit guarantees are needed so favored
companies don't lapse into the usual preoccupations of American late
capitalism, by engineering federal subsidies out to executives and
investors. And there's a danger that we've already ceded too much
ground. China has 93 lithium-ion battery factories
;
we have four.

China has figured out a way to enable the U.S. industrial sector to
collapse

from within, attracting corporations with cheaper labor costs. We
haven't really pushed back on the concept that corporate
responsibility only extends to its shareholders, and the inevitable
drift of this laissez-faire approach has now built in economic, social,
and security vulnerabilities. We need more than studies or shibboleths
about economic patriotism. We need to do the work.

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Two Against the World

When it was just Joe Manchin expressing doubt about including a $15 an
hour minimum wage in the COVID relief bill, I thought he could be run
over. But the quieter centrist, Arizona's Kyrsten Sinema, is firmly
opposed. "The minimum wage provision is not appropriate for the
reconciliation process," she told Politico
.
"It is not a budget item. And it shouldn't be in there."

Democrats were gamely trying

to keep the minimum wage hike in the bill, but it appears doomed. They
certainly would have had a much better argument had the Congressional
Budget Office not deviated from consensus research

and scored the bill as costing money rather than saving it. Now the
deficit hawk appeal is out.

I think the proper move once this, as it appears, goes out of the
package, is to put the standalone bill on the floor repeatedly until
Congress approves it. Sinema and Manchin's objection is procedural; if
they also object to a very popular underlying policy let them, and their
Republican colleagues, do it in public.

What Day of Biden's Presidency Is It?

Day 24.

We Can't Do This Without You

Today I Learned

* You can hear me on Left, Right & Center
again today, tune
into KCRW at 4pm ET/1pm PT. (KCRW)

* The administration confirmed the purchase

of another 200 million vaccine doses. (Axios)

* Dr. Fauci predicts that most Americans will be able to get vaccinated
by April
.
(Los Angeles Times)

* There's that Bidenomics again: smaller deficit means that the
infrastructure package may not get offset

with tax increases. (New York Times)

* Medicaid work requirements are being rescinded
.
(Washington Post)

* CFPB needs to get involved in vaccine scams
.
(Vox)

* 25,000 asylum seekers with active cases will be allowed in the United
States

next week. (Associated Press)

* One million pensions could be saved through a provision

in the COVID relief package. (HuffPost)

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