Andrew Stuttaford writes for National Review Online about the continuing failure of government industrial policy.
There are many, many things wrong with industrial policy, from waste to capital misallocation to the opportunity it gives the political and bureaucratic class to use taxpayer money to pursue agendas unrelated to the policy’s supposed purpose.
And then there’s incompetence, another all-too-frequent problem.
The Financial Times:
Some 40 per cent of the biggest US manufacturing investments announced in the first year of Joe Biden’s flagship industrial and climate policies have been delayed or paused, according to a Financial Times investigation.
The US president’s Inflation Reduction Act and Chips and Science Act offered more than $400bn in tax credits, loans and grants to spark development of a US cleantech and semiconductor supply chain.
However, of the projects worth more than $100mn, a total of $84bn have been delayed for between two months and several years, or paused indefinitely, the FT found.
The reporters list some of the larger projects that are on hold, which include “Enel’s $1bn solar panel factory in Oklahoma, LG Energy Solution’s $2.3bn battery storage facility in Arizona and Albemarle’s $1.3bn lithium refinery in South Carolina.”
Taiwan Semiconductor Manufacturing Company has delayed the start of production at its second fab — part of its $40 billion project — by two years. That’s particularly unfortunate. As Adam Smith accepted, strategic and defense considerations can provide a good reason to support certain industries even if the results are suboptimal economically. The Biden administration has shown welcome signs of realizing that China has moved beyond traditional Great Power rival (which would be something to watch, but manageable) to opponent, and an extremely dangerous one at that. Under the circumstances, a substantial TSMC presence in this country is an obvious insurance policy against a blockade of Taiwan or worse.
