Second, we must also consider the actual return on these investments. When the government showers preferred companies with trillions of taxpayer dollars and numerous restrictions on foreign trade competition, the policies will inevitably produce something in the real economy. The question is what, exactly, all that government support is getting us. If, for example, the policies generate hundreds of billions of dollars in private manufacturing investment that eventually translates into dozens of vibrant, innovative, and globally competitive American factories and a sterling U.S. economy, then the federal government’s gamble will have paid off. On the other hand, declarations of policy victory today will look foolish in retrospect if government coddling results in a few such successes but as many or more failures—not just a few empty fields or moribund facilities but entire companies and industries that depend on continuous federal protection or support—and myriad unintended or unseen costs in the broader U.S. economy.
Today it is too early to definitively say what new U.S. industrial policy will produce. However, there are already signs that the subsidies and protectionism supposedly fueling a U.S. manufacturing “boom” are encountering problems both domestically and internationally—problems that could undermine the industrial policies’ objectives at great budgetary and economic cost, and ones that the United States has encountered many times before in previous industrial policy experiments.
…..
Today’s uncoordinated and predictable subsidy race raises several concerns. First, it could offset or even undermine the very domestic investments that the U.S. industrial policy is trying to encourage. Semiconductor subsidies, for example, were largely justified on the grounds that the United States’ share of global chipmaking has declined substantially in recent decades. However, as the Wall Street Journal recently reported, the Boston Consulting Group estimates that the semiconductor “building boom” here will—optimistically assuming everything announced actually gets built—boost the U.S. share of global chip production from 12 percent in 2020 to just to 14 percent in 2032, largely because other governments are also “stepping up” their own spending on these industries.
Vance Ginn is right that protectionists are wrong.
All of this is a classic illustration of how one policy blunder begets another, which begets another, and then another. EV mandates force consumers to buy cars that costly European climate policies force manufacturers to make in China. Then Europe imposes tariffs on those EV imports, raising prices for the EVs it forces companies to make and consumers to buy. This is the definition of economic masochism.
The solution to this non-conundrum is so obvious maybe someone in Brussels will spot it eventually. If Europe doesn’t want its auto makers and their suppliers to go out of business, the EU can allow these companies to make, and consumers to buy, whatever cars they want. If Europe is worried about unfair competition from China, it can stop requiring Europeans to buy EVs whose production Beijing subsidizes.
George Will is decidedly unimpressed with Alvin Bragg’s criminal case against Donald Trump. A slice:
Bragg campaigned in 2021 promising to continue trying to hold Trump “accountable,” noting that in the New York attorney general’s office he had sued Trump “more than a hundred times.” In 2023, seven years after a particular Trump misbehavior, but just in time to influence this year’s election, Bragg indicted Trump for “34” felonies. One dead misdemeanor (falsifying business records; the statute of limitations has long since expired) was resuscitated and carved into 34 slices. These were inflated into felonies by claiming they were done to facilitate a crime. (Bragg often has a progressive’s penchant for reducing felonies to misdemeanorsc— e.g., some first-degree robberies are now charged as petty larcenies.) Bragg says:
Trump used bookkeeping dishonesty in 2017 (about paying hush money, which is not illegal) to influence the 2016 presidential election. (A puzzling understanding of causation.) He was a candidate in the 2016 election he is accused of somehow illegitimately trying to influence. This violated a federal campaign finance law. (Enforcement of which Congress assigned to the Federal Election Commission, not to local district attorneys.)
Those lectures at the South Royalton conference half a century ago this year, have resulted in a vibrant and productive rebirth of the Austrian School of Economics. It has seen the refinement and refashioning of the original ideas for which the Austrian Economists were internationally renowned in the late nineteenth and twentieth centuries, and which have now been taken into numerous new directions of theoretical and public policy significance.
Here’s more wisdom and insight from Arnold Kling.
Constrain supply, and prices will rise. But that hasn’t stopped Biden from blaming energy companies—the same companies that reduced prices to record lows in relatively freer markets during the Trump administration. He’s now threatening them with tax hikes, which would be passed on and increase consumers’ costs even more.
…..
It’s nothing new to see politicians blaming others for the error of their ways. Long gone are the days of President Harry S. Truman’s “The buck stops here” philosophy. Our current president would be more successful if he reversed course, ending the spending orgy that’s undermining the American family and restoring a sense of fiscal responsibility to the nation’s budget.
