Biden shouldn’t repeat the mistakes of industrial policies past

The Biden administration has pursued a new and ambitious economic agenda, premised on the notion that the prevailing orthodoxy of the past few decades — specifically, the imperative to embrace free markets and free trade — was inadequate to the needs of the U.S. economy. That approach, according to the critics, gave priority to efficiency at the cost of inequality, a hollowing out of manufacturing and an overreliance on countries like China. President Biden, by contrast, has put together the largest program of public investment in the American economy in many decades, most of it designed to encourage a revival in manufacturing (specifically targeting the chip-making industry) and to transition the energy sector to renewables.

Initial data from the Treasury Department suggests these policies have succeeded. Spending on the construction of manufacturing facilities has doubled since the end of 2021, mostly for computers, electronics and electrical goods. Nonresidential construction spending in general is up roughly 15 percent since the passage of Biden’s big infrastructure bill, and private sector spending is up by almost three times as much as public sector.

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