“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.”
– Wall Street Journal. ($)
A couple of follow-ups:
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.
For a fascinating insight into the arguments and geopolitical tensions around silicon chips (and the role of Taiwan), I recommend Chip Wars, by Chris Miller.
Every time I look at Joe Biden and his allies, and particularly at Biden, a machine politician with beady little eyes and wandering hands, I think of an Ayn Rand villain.