In a remarkable and comprehensive book, 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. [more...]

I’ve been dipping into the proofs of a substantial book, Industrial Policy for the United States by Marc Fasteau and Ian Fletcher, due out in September. It will prove a significant resource for anybody interested in the issue. The book starts with the economic case for strategic government interventions in the supply side structure, arguments that have been gaining traction recently as the ultra-free marketism paradigm fades in the US and elsewhere. The authors focus particularly on increasing returns and technological innovation. They bring a certain zero-sum mentality to the analysis – the US must win, other countries must lose – which I don’t share; the technological frontier is broad and granular. But the demolition of the idea that a ‘free’ market is the way to organize the economy at a time of significant structural change is spot on. [more...]

I saw an advance copy. It's a very ambitious book, but I daresay Fasteau and Fletcher pull it off. It's a comprehensive economic and historical argument that economic success requires industrial policy, that America used to do it very well, that our adversaries (read "China") do it today, and that we should get back in the game. I found the theoretical economics surprisingly easy to grasp (these guys write well) and the historical parts (other countries but especially the US) absolutely fascinating. There's a whole history out they don't teach you! Their analysis makes sense of a heck of a lot of problems the US has been having that our establishment, liberal and conservative both, just hasn't had a clue how to deal with. Interesting take on both Biden and Trump, whom the authors see as clumsily starting to turn the tide, though the US still has a long way to go. Read this book if you want to understand the next 20 years of economic events in this country. [more...]