Government subsidies are never free, and now we are learning the price U.S. semiconductor firms and others will pay for signing on to President Biden’s industrial policy. They will become the indentured servants of progressive social policy.
Democrats last year snookered Republicans into passing their $280 billion Chips Act, which includes $39 billion in direct financial aid for chip makers and a 25% investment tax credit. Republicans hoped this would satisfy West Virginia Sen. Joe Manchin, but after Chips passed he quickly flipped and endorsed the Inflation Reduction Act.
Now the Administration is using the semiconductor subsidies to impose much of the social policy that was in the failed Build Back Better bill. On Tuesday Commerce Secretary Gina Raimondo rolled out the new rules for chip makers and summed up the politics to the New York Times: “If Congress wasn’t going to do what they should have done, we’re going to do it in implementation” of the subsidies.
Ms. Raimondo is no socialist, but here she is doing the bidding of the Democratic left. Does she have a promotion in mind? She justifies this gigantic intervention in the private economy by claiming that chip makers won’t be successful unless they “find a way to attract, train, put to work and retain women.” But companies don’t need the government to tell them how to attract and retain workers. Ms. Raimondo’s mandates will merely raise business costs.
The irony is rich because chip makers have shifted manufacturing to Asia to reduce costs. Producing chips in the U.S. is 40% more expensive than overseas. One reason is the U.S. permitting thicket. But chip makers that receive federal largesse will still have to comply with more regulation under the National Environmental Policy Act.
Oh, and Commerce is also demanding that companies receiving more than $150 million share “with the U.S. government a portion of any cash flows or returns that exceed the applicant’s projections above an established threshold.” No buying back stock for five years either. What a wonderful life if you’re a politician. First, pile on regulation that increase business costs. Then dangle subsidies to drive your social policy and demand a cut of business profits in the bargain.
We took a lot of grief from the big-government right for opposing the Chips Act, but these conservatives look like chumps for voting for an industrial policy that is now an engine for progressive policy. And one subsidy is never enough. The chip subsidies are “a good first step,” Semiconductor Industry Association president John Neuffer recently said.
Welcome to French industrial policy, where the government pays business to invest in what, where and how government wants. Let’s hope it turns out better here.
By 2016, however, the WEF types who’d grown used to skiing at Davos unmolested and cheering on from Manhattan penthouses those thrilling electoral face-offs between one Yale Bonesman and another suddenly had to deal with — political unrest? Occupy Wall Street was one thing. That could have been over with one blast of the hose. But Trump? Brexit? Catalan independence? These were the types of problems you read about in places like Albania or Myanmar. It couldn’t be countenanced in London or New York, not for a moment. Nobody wanted elections with real stakes, yet suddenly the vote was not only consquential again, but “often existentially so,” as American Enterprise Institute fellow Dalibor Rohac sighed.
So a new P.R. campaign was born, selling a generation of upper-class kids on the idea of freedom as a stalking-horse for race hatred, ignorance, piles, and every other bad thing a person of means can imagine.
How can one champion basic political rights, but constrain the methods used to obtain such rights? It is this struggle to balance individual liberty and social order that marks the work of Edmund Burke and comprises the subject of this slim volume, Edmund Burke and the Perennial Battle, 1789 – 1797, edited by Daniel Klein and Dominic Pino. Burke’s work during these years highlighted the tension between political freedom and maintaining security and order in social settings. He opposed the French Revolution as an unnecessary overstep, but also provided a legitimate basis for challenging power and existing institutions to expand rights for those previously excluded by those in power. He argued that the desire for system change must always be tempered by respect for the existing culture and institutional structures that are embedded in a long history of social interaction.
Antitrust (competition) laws routinely are weaponized by business entities seeking to win advantages in the courtroom that they cannot win in the marketplace. Concerns about the consequences of the Illumina-Grail merger were not voiced by consumers. As the Journal suspects, it is plausible to conclude that the FTC’s opposition to the Illumina-Grail combination was instigated by “other companies working on early cancer detection [that] were years behind. They [the rivals] worried that Illumina’s head start and deep pockets could make it harder to compete.”
Johan Norberg correctly points out the relative success of Sweden’s partial privatization of Social Security (“How Sweden Saved Social Security,” op-ed, Feb. 23), but he omits the more compelling case for complete privatization, namely, ownership.
Diversification, both in timing and investment vehicles, virtually eliminates the bogus dot-com crash crisis scenario. Plus, there is no 40-year period in U.S. history, including the Great Depression, during which stocks haven’t outperformed money-market funds or their equivalent.
But the drafted participants in our Social Security system nevertheless have no ownership of the assets they are forced to contribute to nonexistent retirement accounts. Such assets go directly into the federal government’s general revenues. How much you pay in so-called payroll taxes and how much you receive at retirement is entirely up to 535 politicians. That is another way of saying it isn’t your money, which is why you can’t leave these hard-earned taxes to your loved ones—no inheritance under our mandated Social Security system. It is such a bad deal.
Edward H. Crane
President emeritus, Cato Institute
Falls Church, Va.
The Global Disinformation Index (GDI)—a British nonprofit that smeared Reason as an unsafe news website using dubious criteria—might want to take a closer look at newly uncovered disinformation being spread by… the website of the Global Disinformation Index.
GDI is partly funded by the U.S. State Department, and seeks to discourage advertisers from working with news outlets like Reason on the theory that we misinform our readers. (NewsGuard, a more transparent advising organization, rates Reason 100 out of 100 “for the highest adherence to journalistic practice.”) It has recently come under considerable criticism from conservative and libertarian news websites following the publication of an expose in The Washington Examiner.
GDI earned itself additional criticism this week, after the U.S. Energy Department endorsed the lab leak theory of COVID-19’s origins. Previous reports by GDI warned advertisers to blacklist news sites that attempted to blame the pandemic on a lab leak, and implied that any website asserting a cover-up on the part of the Chinese government was promoting racist disinformation with the capacity of harming Asian people. GDI’s messaging on the lab leak theory was clear and consistent: News websites that explored this topic should be demonetized.
“The greatest perpetrator of misinformation during the pandemic has been the United States government”