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My intrepid Mercatus Center colleague Veronique de Rugy explains that the CHIPS Act is simply another spasm of corporate welfare [2]. Two slices:
Industrial policy is making a comeback. For those of you under the age of 50, this is just another term for corporate welfare—a lovely name for the unlovely practice of a government granting subsidies, protective tariffs, and other privileges to politically influential industries or companies. It’s often done in the name of some lofty goal such as strengthening national security or ensuring that America is a leader in the “industries of the future.” But the outcome is always the same: wasteful, unfair, unsuccessful, and unjustified. Oh, and it invariably grows the budget deficit.
The latest form of industrial policy is Congress’s CHIPS Act of 2022, a bill meant to subsidize the semiconductor industry [3] by channeling taxpayer money to build up domestic production capacity and combat feared Chinese computer-chip supremacy.
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What about the argument that China is subsidizing its chip producers and thus threatening our technological leadership? Yes, China subsidizes its chip industry, but this doesn’t guarantee their subsidies will work. If U.S. politicians could for a moment stop treating every Chinese action as a threat, they would see that the Chinese semiconductor industry is both quantitatively and qualitatively weak. In fact, many of the companies subsidized would go under without the government’s help. That’s hardly the sign of a vibrant industry. These subsidies are more like life support than super-vitamins.
China not only imports somewhere around 84 percent of its chips, but its civilian sector is dominated by those made in America. Chinese-made chips are used mostly by the military; these chips are absent from nearly all the high-value industry segments. In other words, Beijing’s efforts to create a powerful chip industry have failed for two decades. We can safely assume that this failure will continue for decades to come.
By contrast, the U.S. chip industry is extremely profitable. These firms invest massive amounts of money in research and development—18 times the dollar amount of their Chinese-subsidized competitors.
AIER’s Phil Magness, writing in the Wall Street Journal, cuts through the politicized confusion over the definition of a recession [4]. Here’s his conclusion:
While recognizing its limitations, the traditional definition of a recession provides a functional rule of thumb to interpret events as they unfold. The NBER determination is a rigorous and reputable historical indicator for dating the beginning and end of business-cycle troughs, but it isn’t suitable for real-time policy determinations.
The president’s economic team should think twice before discounting the risk of a recession. After all, they stumbled into the current inflationary crisis after a year of trying to manipulate the language: Inflation was “transitory” and therefore of little concern until it eventually topped an annualized 9%. Let’s not stumble into a recession because the White House has political priorities that conflict with economic reality.
Projects to clear out fire fuel often face substantial delays. New research [6] from the think tank where I work, the Property and Environment Research Center, found that it takes an average of 3.6 years for efforts to clear downed, unhealthy and too densely grown trees to move from the required environmental review to on-the-ground work. For prescribed burns, the delay is even longer, 4.7 years. And these are the averages. Many urgently needed projects take much longer.
While many bureaucratic, technical and fiscal obstacles affect these delays, red tape and lawsuits are substantial contributors. Fuel-reduction projects are more likely to require an environmental impact statement, the most extensive level of review under the National Environmental Policy Act, than other projects that are covered under NEPA. The process exhaustively analyzes a project’s environmental impact and requires that potential impact be compared with many other hypothetical projects. It can take more five years to complete.
Eric Boehm reports on this bad news: “Schumer, Manchin strike deal to raise taxes, cut the deficit, spend billions on climate change.” [7] (DBx: To be clear, cutting the budget deficit is good, although it’s much better done by cutting spending rather than by raising taxes.)
Matt Ridley isn’t impressed with attempts to discredit the lab-leak theory of covid’s origins [10].
Ian Miller decries the unscientific and cruel ‘official’ covid narrative [11]. A slice:
There’s simply uncritical acceptance that what he [high-level U.S. covidocrat Ashish Jha] says is fact, because he is the one saying it. Data, science and evidence are unnecessary when it comes to authorities repeating inaccurate talking points.
The straw man – pronounced dead nearly two years ago – is newly terrorizing Wuhan [12]. A slice:
Wuhan, the central Chinese city that was the epicenter of the early Covid-19 outbreak [13], locked down a district of about 1 million people due to four asymptomatic cases, as the nation’s leaders maintain their zero tolerance toward the virus, a policy that has cast a shadow over both the national and global economies.
Don Boudreaux and I wrote this piece for the WSJ [15] a year ago. How on earth are there still people who harbor the dangerous and expensive fantasy that is zero covid?
Jeffrey Tucker recalls the day that Fauci wrecked American freedom [16]. A slice:
What began as two weeks turned to a presidential election decided by mail-in ballots (safer that way, they said), closed schools, Grandma locked in a retirement community alone, no weddings or funerals, ruined small businesses, destroyed educations, the rise of massive substance abuse, some $10 trillion in government spending and $6 trillion in money creation that generated historic inflation, vaccine mandates that cost millions of jobs and still didn’t end the pandemic, and legal chaos in which judges and legislators themselves seemed powerless as the administrative bureaucracy of the country ruled every town.
el gato malo is rightly critical of the lying, arrogant, and authoritarian Fauci [17].