A surprising convergence around a once long-dead idea is emerging in America — economists and policy makers on both the left and the right are advocating for a new industrial policy. President Biden’s new economic plan included it as a key feature, and certain figures and think tanks on the right from Marco Rubio to American Compass have positioned industrial policy as a signature initiative.
This shift and emerging consensus is both imperative and inevitable, argues this report from the Niskanen Center that emphasizes the need to get this policy right. This would require three things, writes Steven K. Vogel, chair of the political economy program at University of California, Berkeley:
- Setting clear priorities.
- Deploying the appropriate policy tools.
- Structuring government institutions to limit political capture and maximize policy effectiveness.
Vogel concludes that the proper application of industrial policy is essential to overcome the daunting challenges American and western economies are facing. These take the form of climate change, weakened supply chains, and lack of competitiveness in global markets among many others.
“The United States has deployed industrial policy successfully in the past, and it can do so in the future. To meet the enormous challenges of the current moment, however, it will have to reform the institutions of industrial policy to limit political capture and facilitate implementation, and incorporate an even wider range of policy tools.”
