“When Klein raises these concerns with Commerce Secretary Gina Raimondo, she is astonishingly dismissive, issuing generalities such as ‘I consider it a fact that a more diverse work force is a more productive work force’....”
Ezra Klein’s response to Raimondo’s “fact”?
“I don’t disagree with her,” he immediately writes. These are literally the first words that follow her remarkable quote.
Raimondo is, indeed, “astonishingly dismissive.” And Klein, in turn, is astonishingly loyal to the party-line. Before he can argue that these conditions, admirable as he finds them, may not be ideal, he first is sure to demonstrate fealty to the “fact”. If it appeals to our ideals it’s a fact.
Klein is such a born puppet that even when he, at best once a year, musters the backbone to object to some idiocy on his own side, 80% of what he writes is throat-clearing to avoid people saying mean things to/about him.
The problem is that he’s ostensibly a journalist. Writing for the New York Times, no less. The standards are (or until quite recently were) higher than they are for an “influential player in politics.”
Ezra Klein is an "influential player in politics?" Whom does he influence, other than opinion writers like Noah Smith? Is Noah Smith also an "influential player in politics?" What about George Will? Or David Brooks? Or Nick Kristof? Or Megan McArdle? Which politicians do you suppose base their positions on opinion writers? Or which owe their jobs to the support of opinion writers?
“I consider it a fact that a more diverse work force is a more productive work force,” - US Commerce Secretary
When I sent to college, the slogan at UC Irvine was "our strength, our progress, depends on our diversity." The complete lack of evidence for the truth of that statement was irrelevant. It was a theological truth whose veracity was to be assumed and defended at all costs. In that sense, it was perfectly postmodern: when reality conflicts with your assumptions, reality must be wrong..
As sci-fi writer Phillip K Dick (he wrote Blade Runner) said years ago though: "Reality is that which, when you stop believing in it, doesn't go away." Eventually, any system built on a false view of man will fail. the only question is how much collateral damage it does along the way.
(And to be clear, I agree with Patrick Deneen, we've been building systems on progressively greater false views of man since at least the Enlightenment.)
It is this ideological spinelessness that makes me quite concerned about America in the mid to long term. It really seems like Americans are more ideologically brainwashed (by their own media) than people of rapidly developing countries - which doesn't bode well for the 'iterative feedback' that Noah wrote about.
DEI in all of its manifestations is anti-meritocracy and reduces America's competitiveness against
China. Noah, you don't need to "redpill" to embrace at least a qualified, more nuanced version of this position, even if it is controversial/verboten on much of the left.
DEI and ESG are both like Noah’s description of industrial policy. If you treat hem as boxes to be check, they are useless, but if you commit to smart implementation, they produce long-term returns. You achieve diversity by casting a wider net in recruiting, so you are hiring the best people from a bigger pool. Inclusion is as simple as giving people two more personal days instead of closing for Good Friday and Easter Monday. Sustainability and governance mean don’t use a bank that’s business model is based on interest rates never going up again. My company has focused on sustainability since we were spun off 7 years ago. An important part of the sustainability program is making sure we are still a viable business 50 years from now.
It’s easy to demonize DEI and ESG as touchy-feely hogwash, but they are really management models that focus on long-term success instead of just next quarter results. If the C-suites aren’t thinking about this stuff, you are setting you company up to be another Enron or SVB.
I'm fascinated by this view. Can you give some more information on your company, its practices, and the benefits you've seen?
At my former employer, "Diversity" seemed to be mainly an empty catchphrase - "We need a diverse workforce to deal with our diverse, worldwide customers", but the only diversity needed was to ensure we had enough Blacks, Hispanics, and women in our workforce. No explanation of how a Black perspective on structures engineering, or a female perspective on cost accounting, would be different, or help in any way.
Then, about 10 years ago, the company seemed to get serious. They bought into the consultants' goals, and they assigned senior executives with accountability to move the numbers. They announced they would achieve "gender parity" (without ever defining the term) by favoring women in all promotion decisions. One of our DEI executive champions highlighted a couple of studies that claimed that diversity got better business results in different industries, but didn't really attempt to apply it to our company.
But, there was no actual evidence of casting a wider net in recruiting - the company still favored a small number of upper-tier business and engineering schools, although the sheer numbers needed to support a rapidly growing customer base did require hiring some low-to-mid level people with different backgrounds.
But, how does DEI as a management model focus on long-term success? Does your DEI program ignore quantified goals, or are they a smokescreen to justify demographic quotas?
My suspicion is that many of these analyses have the causality wrong.
If your firm is effective at identifying talent and promoting without bias, you end up with diverse leadership - because gender/ethnicity/sexuality aren't really relevant to most jobs. If you examine which firms are most successful, these are the ones you find. But the diversity is not causal...
One frequently cited study says that large corporations with at least two women on the board of directors had superior returns to the rest of the market. One woman wasn't enough to make a difference, and three or more were no better than two. Aside from causality (did firms perform better because they had women directors, or did they choose women directors because they were large and profitable, and wanted to establish social justice qualifications), it turns out that the study authors determined the sexes of directors based on first names, with no verification.
My suspicion is that most of these analyses are no better than numerology. There are so many numbers available that it's easy to find spurious correlations if you look hard enough. When you find a "good" correlation, you publish a paper, and are widely quoted, and the DEI industry has more "proof" of the value of their services.
I'm certainly not claiming that women, or Blacks, or Hispanics, or foreign recruits can't be excellent employees. But the assertion that "diversity", however defined, is necessary for superior performance, is an ideological claim with no substantiation.
And yet, as I assess potential employers, I do see it as a negative flag if they have a homogenous leadership team. Perhaps they have simply had bad luck with their diverse hires, but more likely it reflects a defective corporate culture that values being "similar" more than being excellent.
But corporations that simply rig their leadership profiles by quotas are doing me a disservice! They might still be political and dysfunctional, [but they are hiding it by visually resembling a more merit-driven company! Ironic, I suppose.
Meritocracy's design flaw is that it is a high-entropy, inherently unstable system that ultimately self-destructs.
The task and purpose of a meritocracy is a mechanism for desert (not the landmass, but the object form of the word that gives us the verb meaning of deserve). People must engage in competition to risk failure or earn an intangible award of moral or psychological worth to couple with a materially scarce good or social position. Homo sapiens as a species is hardwired to conflate material good or privation with being deserving of the outcome; it's called the just-world bias.
If meritocracy is a worthwhile mechanism in one system, then it follows that meritocracy as a first principle can be applied in any and all systems as a mechanism for desert. All of existence is a competition, and in every competition there must be a winner and a loser. Over time, however, the accumulation of losers will overwhelm the meritocracy -- the entropy principle of disorder and disintegration. (This is the rightists' great terror -- the challenge from below.)
Meritocracy also faces the leftists' great terror -- corruption from above. Meritocracy inevitably gets captured by its winners, who venerate the ideology but inevitably use meritocracy as leverage for economic, political and/or cultural hegemony. Meritocracy inevitably begets cronyism, nepo babies, failsons/daughters, toadies and flatterers in a social arrangement of entropic decadence.
I think you're being overly optimistic by suggesting "well, we need to learn what works and what doesn't, but we can fix it later"
We already know what works and what doesn't! The problem is the politicians aren't willing to prioritize and make tradeoffs.
To take another example, CA HSR has been going on for nigh on 20 years now. Have they failed to produce a high-quality, reasonable cost rail system because of lack of feedback? No, they've failed because they haven't implemented best practices, their needs haven't been streamlined, and governments and project management have refused to make the tradeoffs need to implement the best practices.
I don't understand your argument. Which "best practices" has California's High Speed Rail not implemented?
It seems to me that California High Speed Rail is failing because it never had a prospect of success. To achieve its stated objectives, it would have had to build stations inside (not outside) Los Angeles and San Francisco, and build tracks to reach them. This alone was impossible without liberal use of eminent domain to take the land, coupled with eliminating multiple veto points on construction. California never considered either of these things.
Then, they would have to do the same for the entire length of the railroad. Again - no effort to do so, and no political support for doing so.
And this doesn't even address the insurmountably unfavorable economics of building and operating a high speed train for the potential passenger volume to be carried.
California's High Speed Rail is as close to perfect an example of US industrial policy as we're likely to see. It's economically unviable, will never achieve most of its stated objectives, but nevertheless waste enormous amounts of public money.
There was a time when a huge swath of government subcontractors didn't exist because the government just employed diverse people directly. Historically, this was a ticket to the middle class for many immigrants and others would not otherwise have had that opportunity. I would argue that a lot of the inefficiencies of government come from this idea that outsourcing government (thanks, Al Gore) is automatically better. The largest group of employees in the country are government employees. The second largest group of employees in the USA are government contractors, who do much of the key work of our government without the salaries and benefits of actually being government workers.
Also worth noting: these "everything bagel" requirements are not strange new asks for private companies. These are ordinary, routine requirements for doing business with the US government. I don't see anyone complaining about the military industrial complex having to jump through these same hoops. In fact, there are already systems in place for handling these things, with knowledgeable folks wrangling the requirements. Maybe a fab maker should hire some, instead of trying to slide by being subjected to the same rules as every other company.
"These are ordinary, routine requirements for doing business with the US government."
This is exactly right. I work for a government contractor and I’ve been surprised how much these very common government contracting requirements are of interest to Noah and Ezra. Whether they’re right or helpful is a different argument but any large company like Intel that has a federal business would not be surprised by any of these requirements and should have already been preparing for them.
One note: if you work on a government contract, your employer is beholden to *most* of the same rules as the federal government as far as benefits. It's common practice in the defense contracting industry to just give all employees the same federally required benefits because it's cheaper from an HR/accounting labor perspective (and it saves page space in your proposals sometimes). The biggest contractors can save money by not doing this by virtue of economies of scale, though.
"The McNamara-O’Hara Service Contract Act (SCA) requires any contractor or subcontractor that performs services on federal accounts in excess of $2,500 to pay employees at least the wage rates and fringe benefits prevalent locally, or the rates outlined in the predecessor contractor’s bargaining agreement. "
This is not the same thing as benefits equivalent to ones that government employees receive. FERS and a 401(k) are not the same, for example.
I think the big obstacles to a steady approach at the federal level are Congressional dysfunction and the nature of the Democratic coalition. If you have to stuff everything into one big omnibus bill that meets some arcane Senate rules, everyone in the coalition wants their bite since another one isn't coming.
Of course, there are plenty of solid blue states that do dumb everything bagel politics and stumble over their own bureaucracies. There's no excuse for that kind of paralysis.
"We should expect to see this pattern repeated again and again. Industrial policy will hit challenges and stumbling blocks, and each of these will instantly be trumpeted by both ideological libertarians and opponents of progressive social policy as a reason to scrap the entire idea of using the government to promote investment. I also expect this premature doomerism to prompt some progressives themselves to rally around the existing approach and insist no changes at all need to be made."
Insofar as the quoted segment concerns libertarianism, this is not doomerism. The libertarian position on this subject, which I share, is that government should neither subsidize nor inhibit. This is reflective of a deep and abiding OPTIMISM regarding the human condition in general and the United States of America and its people in particular.
Libertarianism is an attractive ideology (to me, anyway) because it takes as a core tenet the imperfectability of humans. In reality, we have the evidence of thousands of years of failed attempts to perfect humanity, and the millions or billions of corpses, and at least the same numbers of slaves, or near enough thereto, that have been the result of these attempts. Still, most of our modern ideologies and philosophies take for granted that humans can, indeed, be made perfect through just the right policy or just the right pull of a lever or just the right means of worship, etc. etc. ad infinitum. At best, this is deeply ignorant. At worst it is evil. Most of the time it's just plain bad.
The continual attractiveness of this belief is dismaying, but not that mysterious. It is a fact that humans, in general, are illiberal and believe in imposing their beliefs on their neighbors in general and dissidents in particular (from a "well-intentioned" desire to perfect them, of course). This popularity does not make illiberalism correct. In fact, it makes it incorrect.
In this context, we are expected to believe that the same government that created the stasis subsidies will not only roll them back but replace them with better policies (after a period of trial and error no less!!) that will not merely remove the impediments but correct the problems the impediments have caused? I think fucking not.
I think pure rollback is the best we can expect and the most we should want. Experimentation in the other direction, however well-intentioned, is just another experiment in perfectibility. We know how they end, how they always end. We'll end up with just as many terrible ossified policies (perhaps especially if it's done by trial-and-error, as Noah advocates here). There's nothing more permanent than a temporary (or, god forbid, an emergency) government program.
Humans will never be perfect, so simply make them secure in their essential rights (life, liberty, property) and allow them to interact with each other as equals. Neither subsidize nor impede (government contracting is mostly fine at bottom). Make pluralism the only option (I don't care if you have to erode democracy a bit to do this! the voters want concentration camps!). Government was never and will never be trustworthy. You can never trust it to make good decisions, let alone to respect your rights. Government did the most damage to your rights and enacted the worst stasis subsidies when trust in government was highest. As Chris Hayes (lol) said: "leave people alone and mind your own goddamn business."
I wasn't done reading the article when I wrote the above. Lo and behold, more idiocy:
"Both of these instinctive, tribalist reactions must be resisted. The truth is that industrial policy can work, but it’s difficult and tricky to get right. Whether we succeed or fail, we’re going to make a lot of mistakes along the way. Because we don’t know the exact right mix of policies ex ante, we have to “cross the river by feeling the stones”, as Deng Xiaoping said."
No. It's not too much to expect to get the answer right the first time. I'd submit that the Framers largely nailed it. We've been more or less fucking up what they got right ever since. Again, just aim for rollback.
"So all the howling about permitting and onerous subcontracting requirements and “Buy American” provisions that you’re hearing right now — including from Ezra Klein and from Yours Truly — are just part of the process of figuring out how industrial policy works. We’re kicking the tires on our modern state to see what it does well and what it does poorly."
I would simply not do it.
"Observing the results each step of the way, we’ll correct our course."
Nope.
"Just like for a tech startup, it’s ok to fail at first if you pivot nimbly."
Ah yes, that's what I associate government with: nimbly pivoting. If a startup doesn't nimbly pivot, it goes out of business and some affluent people have to cut back on Starbucks for a few weeks. If government doesn't nimbly pivot, it kills people and raises taxes.
"Biden and the Democrats, however, have a media that’s able to swiftly point out what they’re doing wrong."
lol, lmao. When I think of "the media" I immediately think of "swift, trenchant and effective criticism of Democratic politicians and policies." Case in point: Ezra Klein's doormat reaction ("I don't disagree with her") to Raimondo's astonishing dismissiveness.
I’m curious how you would respond to Gordon Blizzard’s response below.
The valid concept in libertarianism was captured in 1767 by the Scottish philosopher Adam Ferguson, who noticed that a lot of what we would call progress is the result of human action, but not of human design.
Likewise, all of the top-down ideologies aimed at perfecting humans are secular versions of creationism that arose after Darwin debunked to myth-based versions. And they have been murderously destructive.
But still, societies have the constant problem that people in power work to expand and monopolize their economic and political power at the expense of fairness to the less powerful.
Are you referring to this response from Gordon Blizzard?
"Libertarianism is a blithe ignorance of political economy, that owning more property might in fact bring more power, that winners in fact keep on winning because having won before means you're more likely to win again. They won't even ban inheritance to create their bizarre frictionless surface of political economy."
My response would be that this betrays a profound lack of understanding of how the economy works or develops. To take the example of the US, most of the "rich" families of 1900 have little or no influence today. The Rockefellers still exist, and even had a couple of influential politicians back in the 1970s, but controlled no major corporation, and never controlled national politics.
The Fords still exist, and still control their foundation and (barely) their corporation. The Fords almost lost control of Ford Motor Company in 2008, but worked hard to save the company. The "rich" owners and leaders of GM were wiped out, because they accepted defeat rather than acting as if their lives depended on keeping GM going.
Rich people who built their own companies (often) keep winning because they are exceptionally good at running large and innovative companies. Think Steve Jobs, Bill Gates, Michael Dell, Warren Buffett. But none of these have children who are likely to take over their companies. The United States, and to a lesser extent other English-speaking countries, have a great deal of turnover among their business and government elites. They also have a great deal of turnover among their leading corporations. Continental Europe and Japan, with their larger commitment to statish management of the economy, have a great deal less.
I'm not following. Are you saying that the large corporations from the early 1900s are even more powerful now? This doesn't really stand up to examination. Of the 50 largest US corporations in 1917, only 18 were still in the top 50 in 1967, and only 5 were still in the top 50 in 2017. This includes companies merged into other large companies that were in the top 50 - for instance, Standard Oil of New York (#15 in 1917), Magnolia Petroleum (#41 in 1917, and Virginia Carolina Chemical (#49 in 1917) were all merged into Mobil (#15 in 1967) and ExxonMobil (#8 in 2017). https://www.forbes.com/sites/jeffkauflin/2017/09/19/americas-top-50-companies-1917-2017/?sh=71ef15321629
You could go back further: in 1869, the two largest corporations in the world were Union Pacific Railroad and Central Pacific Railroad; by 1917, they weren't in the top 50 US corporations, and the only railroad in the top 50 was Pennsylvania railroad (#29). By 2017, no railroad was left in the top 50.
Are you claiming that corporations in aggregate have more power today than in the past? It's certainly true that many people have claimed for well over a century that corporations dominate the economy and the government, stealing the substance of the people. Are you claiming this as "more power than ever?" I wouldn't know how to begin to demonstrate this claim - do you have any ideas?
If I haven't grasped your claim, could you be more explicit?
Mmm. You seen to be going about this backwards. Rather, start with the question: "how many of the current billionaires inherited their money, and how many exist who did not inherit money?"
The topic was "power", not "billionaires". Mr. Blizzard seems to take it as axiomatic that they are the same. My claim is that they are different. It doesn't really matter how many billions the descendants of John Rockefeller or Cornelius Vanderbilt control - they don't have much political influence, or control of any large corporations. The obvious exception is the Fords, who maintained family control over their company.
That's an interesting thing to say, given how much time, money, and effort is spent obscuring the facts of that exact claim. More relevantly, you might want to look at the Wikipedia article on, for example, the Rockefellers, and pay particular attention to the section labeled 'politics'. Since 1959, 48 years after the standard oil monopoly was busted, there have been three governors and one lieutenant governor from the family. That does not say "not much political influence" to me.
Sure, there were several influential family members, especially in the 1950s. A couple levels up I recognized that the Rockefellers had a couple of influential politicians in the 1970s. My mistake - I had remembered Winthrop as a senator, whereas he was actually a governor.
Since 1973 (the last 50 years) there are two members of the family listed - one governor/senator, and one lieutenant governor. The governor/senator was presumably influential in West Virginia, but lieutenant governors aren't particularly influential - have you even heard of Susan Bysiewicz?
The problem with libertarianism is that it assumes people will trade, when in reality people will just take. You need to solve the monopoly of violence problem first, but as soon as you do, you have given away far too much for anything that follows to be libertarian.
Libertarianism is a blithe ignorance of political economy, that owning more property might in fact bring more power, that winners in fact keep on winning because having won before means you're more likely to win again. They won't even ban inheritance to create their bizarre frictionless surface of political economy.
It's an ideology by and for propertied elites who demand everyone else be their serfs or die.
Rich people owning and running businesses hardly have boundless power, even under pure libertarianism which exists only as an idea (it’s funny how progressives always blame libertarianism for all kinds of problems when there are in fact no libertarians or even fake libertarians in power anywhere). Any employee has a right to leave a company, so there is far from boundless power over them. Libertarians don’t oppose private sector labor unions either. As far as boundless power over the planet, the only entities that even come close to doing that are powerful governments like the PRC and USA. Apple may have power over their devices and platform, but nothing forces anyone to use them. Same for Google, Tesla or Exxon.
No one needs to be forced to eat or breathe except maybe prisoners (of governments, not corporations). I am free to not have a roof over my head, and only a government would restrict me from being homeless (although not so much on the west coast of the US). And only government laws force me to wear clothes. Not having every basic need provided by the government doesn’t make one powerless. If you call this reality a teenage viewpoint, yours is more of a preschool one.
At the ground level of small business, libertarianism is perfect. Building a business is already hard enough -- don't let government make it harder. And I'm pretty radical in this. For example: if you have under 5 employees and under $1M in revenue, I would say immunity from most environmental reviews, most zoning regulation, even minimum wage and maybe some child labor laws. I want people to start businesses because they promote real independence and have lots of beneficial side effects: social activism, local trust, community engagement, etc.
As a company gets larger though, it needs to face more regulations. Libertarianism simply can not accommodate the fact that concentrated power (whether political or economic) can easily work against the common good. The old adage applies: "if you owe the bank $100,000, it's your problem; if you owe the bank $100 million, it's the bank's problem."
To see a simple example of this in action: whether your local bookshop carries your book doesn't really matter. however, if Amazon refuses to carry your book, it matter enormously. Libertarianism can't handle the difference between those, which is why I am no longer a libertarian.
A well-researched and well-written article, and I have only one minor quibble with it. Politicians are notoriously short-sighted. Usually, they can't see past the next election, and the public is even worse regarding any long-term thinking. The ideas you are proposing are excellent, but they take time, and I wonder if any politician can think in that time frame. One advantage of private enterprise is learning from failure and continuing toward the desired goal. With political efforts, any failure is used by the opposing party as an effort to condemn the entire idea - the famous "We told you so."
Possibly, this time things will be different, but I doubt it.
“ideological libertarians” are in short supply these days. Elon Musk’s Tesla rescued from bankruptcy by a sweetheart $4.1 billion loan from the government. Musk moves back to California and play nice guy with Governor Newsome on the heels of collecting $1.2 billion to make some of Tesla’s charging stations open to the public. SVB speaks for itself. It didn’t even have a compliance officer. I’m not saying these examples of government assistance were bad ideas. They served a good purpose. But keep this in mind, because Musk and his ilk just play libertarians on TV.
A lot of libertarians crossed the Peter Thiel Memorial Bridge, opened 2009.
The cornerstone: "But I must confess that over the last two decades, I have changed radically on the question of how to achieve these goals. Most importantly, I no longer believe that freedom and democracy are compatible." (Thiel, "The Education of a Libertarian," Cato Unbound)
Industrial policy doesn't have to succeed right away. But, before committing to it, it would be nice to have some prospect that it could succeed in any way, and on any timeframe.
To start: What is the purpose of industrial policy? Is it to revitalize some "key" industries? To protect national security? To achieve widespread prosperity? To advance social justice? And how, exactly, are any of these objectives defined?
Second: Can anyone provide any examples of industrial policy "working" anywhere in the world? For a time, Japan was held up as the example of industrial policy done right: support of the automobile and electronics industries produced world leaders, and Japanese society reaped the benefits. However, Japanese society was also held back by Japanese employment laws (restricting labor mobility), laws protecting small retailers and distributors (which gave retirees or others forced out of large corporations a chance to earn a living), and import restrictions, which reduced choices and standards of living for Japanese consumers. Also, Japanese industrial policy called for 3 auto manufacturers, with no space for Honda; Honda succeeded despite Japanese industrial policy, not because of it.
If Noah thinks the "good" parts of Japanese industrial policy can be separated from the "bad" ones, he should explain how. But even that level of approval should be tempered by Japan's industrial policy, round 2, which targeted robotics and artificial intelligence - the results have had minimal or no success, and no detectable benefit to Japanese society.
If Noah thinks Chinese industrial policy is the success, he should take account of the gigantic misallocation of capital, and precarious health of the banking sector, that he has already noted.
If excessive regulation and veto points for new construction are the obstacles to successful industrial policy, they are also the obstacles to any successful economic development. They shouldn't be torn down to help favored projects; they should be torn down to allow the entire economy to grow and thrive.
If industrial policy is used to establish American capacity for semiconductor manufacture, we should recognize that nearly any actions in this direction violate the basic rules and principles of the World Trade Organization - are we prepared undermine the system we led in establishing?
If industrial policy is the means to achieve progressive goals - whether equity, day care, union wage scales, they should recognize that these objectives don't attract majority support among voters in the country. I know, Noah doesn't really believe this, but it's true. If Democrats use industrial policy as a cover for pushing these goals, they will discredit industrial policy and lose support for the projects that are the ostensible purpose of the policy.
But, to get back to the original questions, what are the objectives of industrial policy, and why does anyone think they can be achieved?
OK - let's start with 19thC America and Germany. I'm not aware of anything that would pass for industrial policy in 19thC Germany, unless by "industrial policy" you mean "building a big military". For the US, there are 2 things I can think of - the transcontinental railroad, and tariffs. But you might be thinking of other things.
So, what were the objectives, what were the policies, and how did they contribute to the achievement of the objectives?
Well wasn't TVA, Bureau of Reclamation (Hoover Dam) and Bonneville Power Authority industrial policy in an earlier Era? We got it to work then, we can get it to work now because it is an overwhelming national imperative.
The column confirms that progressives will use any means possible. After all, the success of progressives shows that virtue signalling works. But on-shoring fab plants is of strategic importance, an importance that should push aside other interests, but does not. Changing the baked-in progressive biases cannot be done overnight, So lets build the fab plants in Canada. They ain't gonna happen here when lards bills for urgent with needless fat.
"This is not to say that progressive goals, such as a diverse workforce or a robust small business sector, are bad ones. But the methods that progressives are trying to use to accomplish these goals aren’t necessarily the right ones."
You have just enunciated the central thesis of neoliberalism except I'd say, "are generally the wrong ones."
But you are writing for progressives and need to be gentle.
U.S. industrial policy in the 1960s was not only the envy of the world, it was incredibly effective. All types of mistakes were made and corrected. Without an industrial policy, there are no railroads, interstate highway system, Silicon Valley, internet, and yes, AI/ML or SpaceX.
I just want to say this: Like "libertarians" generally, the Cato Institute is very good on some stuff -- immigration, drug policy --- and utterly stupid on nearly all macroeconomic economic issues. Their objections to industrial policy, grounded as they are in a silly, obsolete, ideology, can should be ignored.
And, even here in conservative Christofascist Indiana, they are being ignored. My Senators are both numbskulls, but one of them -- Todd Young -- was a sponsor of and hyper-zealous advocate for the CHIPS Act, and the other -- the even more odious Mike Braun -- spends much of his time touring the state promising subsidies and federal support for its farmers and manufacturers. Sure, these clowns will still, when prompted, wax rhapsodic about "free markets" and "capitalism" and vehemently denounce "socialism": But in the next breath, they'll be begging for nearly any all all forms of federal largesse for their constituents. In Red State America, libertarianism is dead.
Calm down, sweetie. I'm not a "commie" nor am I vegan (though I am vegetarian). And "atheist" is the wrong word to describe my beliefs about "god" because there is no meaningful concept of "god" to have any beliefs about.
I chose my handle simply to provoke humorless, sanctimonious gits. And look -- it works!
I agree with industrial policy goals, but we need to play to our strengths, which we seem to have lost site of. The top-down push for progressive goals in each project backed by "checkism" isn't going to work because it already hasn't. We need our entrepreneurs involved.
“When Klein raises these concerns with Commerce Secretary Gina Raimondo, she is astonishingly dismissive, issuing generalities such as ‘I consider it a fact that a more diverse work force is a more productive work force’....”
Ezra Klein’s response to Raimondo’s “fact”?
“I don’t disagree with her,” he immediately writes. These are literally the first words that follow her remarkable quote.
Raimondo is, indeed, “astonishingly dismissive.” And Klein, in turn, is astonishingly loyal to the party-line. Before he can argue that these conditions, admirable as he finds them, may not be ideal, he first is sure to demonstrate fealty to the “fact”. If it appeals to our ideals it’s a fact.
Klein is such a born puppet that even when he, at best once a year, musters the backbone to object to some idiocy on his own side, 80% of what he writes is throat-clearing to avoid people saying mean things to/about him.
It’s proven to be a great career strategy.
The problem is that he’s ostensibly a journalist. Writing for the New York Times, no less. The standards are (or until quite recently were) higher than they are for an “influential player in politics.”
Ezra Klein is an "influential player in politics?" Whom does he influence, other than opinion writers like Noah Smith? Is Noah Smith also an "influential player in politics?" What about George Will? Or David Brooks? Or Nick Kristof? Or Megan McArdle? Which politicians do you suppose base their positions on opinion writers? Or which owe their jobs to the support of opinion writers?
“I consider it a fact that a more diverse work force is a more productive work force,” - US Commerce Secretary
When I sent to college, the slogan at UC Irvine was "our strength, our progress, depends on our diversity." The complete lack of evidence for the truth of that statement was irrelevant. It was a theological truth whose veracity was to be assumed and defended at all costs. In that sense, it was perfectly postmodern: when reality conflicts with your assumptions, reality must be wrong..
As sci-fi writer Phillip K Dick (he wrote Blade Runner) said years ago though: "Reality is that which, when you stop believing in it, doesn't go away." Eventually, any system built on a false view of man will fail. the only question is how much collateral damage it does along the way.
(And to be clear, I agree with Patrick Deneen, we've been building systems on progressively greater false views of man since at least the Enlightenment.)
It is this ideological spinelessness that makes me quite concerned about America in the mid to long term. It really seems like Americans are more ideologically brainwashed (by their own media) than people of rapidly developing countries - which doesn't bode well for the 'iterative feedback' that Noah wrote about.
DEI in all of its manifestations is anti-meritocracy and reduces America's competitiveness against
China. Noah, you don't need to "redpill" to embrace at least a qualified, more nuanced version of this position, even if it is controversial/verboten on much of the left.
DEI and ESG are both detrimental to progress, the more these are required by government dictates the more our industry will fall behind
DEI and ESG are both like Noah’s description of industrial policy. If you treat hem as boxes to be check, they are useless, but if you commit to smart implementation, they produce long-term returns. You achieve diversity by casting a wider net in recruiting, so you are hiring the best people from a bigger pool. Inclusion is as simple as giving people two more personal days instead of closing for Good Friday and Easter Monday. Sustainability and governance mean don’t use a bank that’s business model is based on interest rates never going up again. My company has focused on sustainability since we were spun off 7 years ago. An important part of the sustainability program is making sure we are still a viable business 50 years from now.
It’s easy to demonize DEI and ESG as touchy-feely hogwash, but they are really management models that focus on long-term success instead of just next quarter results. If the C-suites aren’t thinking about this stuff, you are setting you company up to be another Enron or SVB.
I'm fascinated by this view. Can you give some more information on your company, its practices, and the benefits you've seen?
At my former employer, "Diversity" seemed to be mainly an empty catchphrase - "We need a diverse workforce to deal with our diverse, worldwide customers", but the only diversity needed was to ensure we had enough Blacks, Hispanics, and women in our workforce. No explanation of how a Black perspective on structures engineering, or a female perspective on cost accounting, would be different, or help in any way.
Then, about 10 years ago, the company seemed to get serious. They bought into the consultants' goals, and they assigned senior executives with accountability to move the numbers. They announced they would achieve "gender parity" (without ever defining the term) by favoring women in all promotion decisions. One of our DEI executive champions highlighted a couple of studies that claimed that diversity got better business results in different industries, but didn't really attempt to apply it to our company.
But, there was no actual evidence of casting a wider net in recruiting - the company still favored a small number of upper-tier business and engineering schools, although the sheer numbers needed to support a rapidly growing customer base did require hiring some low-to-mid level people with different backgrounds.
But, how does DEI as a management model focus on long-term success? Does your DEI program ignore quantified goals, or are they a smokescreen to justify demographic quotas?
My suspicion is that many of these analyses have the causality wrong.
If your firm is effective at identifying talent and promoting without bias, you end up with diverse leadership - because gender/ethnicity/sexuality aren't really relevant to most jobs. If you examine which firms are most successful, these are the ones you find. But the diversity is not causal...
One frequently cited study says that large corporations with at least two women on the board of directors had superior returns to the rest of the market. One woman wasn't enough to make a difference, and three or more were no better than two. Aside from causality (did firms perform better because they had women directors, or did they choose women directors because they were large and profitable, and wanted to establish social justice qualifications), it turns out that the study authors determined the sexes of directors based on first names, with no verification.
My suspicion is that most of these analyses are no better than numerology. There are so many numbers available that it's easy to find spurious correlations if you look hard enough. When you find a "good" correlation, you publish a paper, and are widely quoted, and the DEI industry has more "proof" of the value of their services.
I'm certainly not claiming that women, or Blacks, or Hispanics, or foreign recruits can't be excellent employees. But the assertion that "diversity", however defined, is necessary for superior performance, is an ideological claim with no substantiation.
And yet, as I assess potential employers, I do see it as a negative flag if they have a homogenous leadership team. Perhaps they have simply had bad luck with their diverse hires, but more likely it reflects a defective corporate culture that values being "similar" more than being excellent.
But corporations that simply rig their leadership profiles by quotas are doing me a disservice! They might still be political and dysfunctional, [but they are hiding it by visually resembling a more merit-driven company! Ironic, I suppose.
Meritocracy ain't all that it's cracked up to be.
Meritocracy's design flaw is that it is a high-entropy, inherently unstable system that ultimately self-destructs.
The task and purpose of a meritocracy is a mechanism for desert (not the landmass, but the object form of the word that gives us the verb meaning of deserve). People must engage in competition to risk failure or earn an intangible award of moral or psychological worth to couple with a materially scarce good or social position. Homo sapiens as a species is hardwired to conflate material good or privation with being deserving of the outcome; it's called the just-world bias.
If meritocracy is a worthwhile mechanism in one system, then it follows that meritocracy as a first principle can be applied in any and all systems as a mechanism for desert. All of existence is a competition, and in every competition there must be a winner and a loser. Over time, however, the accumulation of losers will overwhelm the meritocracy -- the entropy principle of disorder and disintegration. (This is the rightists' great terror -- the challenge from below.)
Meritocracy also faces the leftists' great terror -- corruption from above. Meritocracy inevitably gets captured by its winners, who venerate the ideology but inevitably use meritocracy as leverage for economic, political and/or cultural hegemony. Meritocracy inevitably begets cronyism, nepo babies, failsons/daughters, toadies and flatterers in a social arrangement of entropic decadence.
I think you're being overly optimistic by suggesting "well, we need to learn what works and what doesn't, but we can fix it later"
We already know what works and what doesn't! The problem is the politicians aren't willing to prioritize and make tradeoffs.
To take another example, CA HSR has been going on for nigh on 20 years now. Have they failed to produce a high-quality, reasonable cost rail system because of lack of feedback? No, they've failed because they haven't implemented best practices, their needs haven't been streamlined, and governments and project management have refused to make the tradeoffs need to implement the best practices.
I don't understand your argument. Which "best practices" has California's High Speed Rail not implemented?
It seems to me that California High Speed Rail is failing because it never had a prospect of success. To achieve its stated objectives, it would have had to build stations inside (not outside) Los Angeles and San Francisco, and build tracks to reach them. This alone was impossible without liberal use of eminent domain to take the land, coupled with eliminating multiple veto points on construction. California never considered either of these things.
Then, they would have to do the same for the entire length of the railroad. Again - no effort to do so, and no political support for doing so.
And this doesn't even address the insurmountably unfavorable economics of building and operating a high speed train for the potential passenger volume to be carried.
California's High Speed Rail is as close to perfect an example of US industrial policy as we're likely to see. It's economically unviable, will never achieve most of its stated objectives, but nevertheless waste enormous amounts of public money.
There was a time when a huge swath of government subcontractors didn't exist because the government just employed diverse people directly. Historically, this was a ticket to the middle class for many immigrants and others would not otherwise have had that opportunity. I would argue that a lot of the inefficiencies of government come from this idea that outsourcing government (thanks, Al Gore) is automatically better. The largest group of employees in the country are government employees. The second largest group of employees in the USA are government contractors, who do much of the key work of our government without the salaries and benefits of actually being government workers.
Also worth noting: these "everything bagel" requirements are not strange new asks for private companies. These are ordinary, routine requirements for doing business with the US government. I don't see anyone complaining about the military industrial complex having to jump through these same hoops. In fact, there are already systems in place for handling these things, with knowledgeable folks wrangling the requirements. Maybe a fab maker should hire some, instead of trying to slide by being subjected to the same rules as every other company.
"These are ordinary, routine requirements for doing business with the US government."
This is exactly right. I work for a government contractor and I’ve been surprised how much these very common government contracting requirements are of interest to Noah and Ezra. Whether they’re right or helpful is a different argument but any large company like Intel that has a federal business would not be surprised by any of these requirements and should have already been preparing for them.
One note: if you work on a government contract, your employer is beholden to *most* of the same rules as the federal government as far as benefits. It's common practice in the defense contracting industry to just give all employees the same federally required benefits because it's cheaper from an HR/accounting labor perspective (and it saves page space in your proposals sometimes). The biggest contractors can save money by not doing this by virtue of economies of scale, though.
"The McNamara-O’Hara Service Contract Act (SCA) requires any contractor or subcontractor that performs services on federal accounts in excess of $2,500 to pay employees at least the wage rates and fringe benefits prevalent locally, or the rates outlined in the predecessor contractor’s bargaining agreement. "
This is not the same thing as benefits equivalent to ones that government employees receive. FERS and a 401(k) are not the same, for example.
I think the big obstacles to a steady approach at the federal level are Congressional dysfunction and the nature of the Democratic coalition. If you have to stuff everything into one big omnibus bill that meets some arcane Senate rules, everyone in the coalition wants their bite since another one isn't coming.
Of course, there are plenty of solid blue states that do dumb everything bagel politics and stumble over their own bureaucracies. There's no excuse for that kind of paralysis.
"We should expect to see this pattern repeated again and again. Industrial policy will hit challenges and stumbling blocks, and each of these will instantly be trumpeted by both ideological libertarians and opponents of progressive social policy as a reason to scrap the entire idea of using the government to promote investment. I also expect this premature doomerism to prompt some progressives themselves to rally around the existing approach and insist no changes at all need to be made."
Insofar as the quoted segment concerns libertarianism, this is not doomerism. The libertarian position on this subject, which I share, is that government should neither subsidize nor inhibit. This is reflective of a deep and abiding OPTIMISM regarding the human condition in general and the United States of America and its people in particular.
Libertarianism is an attractive ideology (to me, anyway) because it takes as a core tenet the imperfectability of humans. In reality, we have the evidence of thousands of years of failed attempts to perfect humanity, and the millions or billions of corpses, and at least the same numbers of slaves, or near enough thereto, that have been the result of these attempts. Still, most of our modern ideologies and philosophies take for granted that humans can, indeed, be made perfect through just the right policy or just the right pull of a lever or just the right means of worship, etc. etc. ad infinitum. At best, this is deeply ignorant. At worst it is evil. Most of the time it's just plain bad.
The continual attractiveness of this belief is dismaying, but not that mysterious. It is a fact that humans, in general, are illiberal and believe in imposing their beliefs on their neighbors in general and dissidents in particular (from a "well-intentioned" desire to perfect them, of course). This popularity does not make illiberalism correct. In fact, it makes it incorrect.
In this context, we are expected to believe that the same government that created the stasis subsidies will not only roll them back but replace them with better policies (after a period of trial and error no less!!) that will not merely remove the impediments but correct the problems the impediments have caused? I think fucking not.
I think pure rollback is the best we can expect and the most we should want. Experimentation in the other direction, however well-intentioned, is just another experiment in perfectibility. We know how they end, how they always end. We'll end up with just as many terrible ossified policies (perhaps especially if it's done by trial-and-error, as Noah advocates here). There's nothing more permanent than a temporary (or, god forbid, an emergency) government program.
Humans will never be perfect, so simply make them secure in their essential rights (life, liberty, property) and allow them to interact with each other as equals. Neither subsidize nor impede (government contracting is mostly fine at bottom). Make pluralism the only option (I don't care if you have to erode democracy a bit to do this! the voters want concentration camps!). Government was never and will never be trustworthy. You can never trust it to make good decisions, let alone to respect your rights. Government did the most damage to your rights and enacted the worst stasis subsidies when trust in government was highest. As Chris Hayes (lol) said: "leave people alone and mind your own goddamn business."
I wasn't done reading the article when I wrote the above. Lo and behold, more idiocy:
"Both of these instinctive, tribalist reactions must be resisted. The truth is that industrial policy can work, but it’s difficult and tricky to get right. Whether we succeed or fail, we’re going to make a lot of mistakes along the way. Because we don’t know the exact right mix of policies ex ante, we have to “cross the river by feeling the stones”, as Deng Xiaoping said."
No. It's not too much to expect to get the answer right the first time. I'd submit that the Framers largely nailed it. We've been more or less fucking up what they got right ever since. Again, just aim for rollback.
"So all the howling about permitting and onerous subcontracting requirements and “Buy American” provisions that you’re hearing right now — including from Ezra Klein and from Yours Truly — are just part of the process of figuring out how industrial policy works. We’re kicking the tires on our modern state to see what it does well and what it does poorly."
I would simply not do it.
"Observing the results each step of the way, we’ll correct our course."
Nope.
"Just like for a tech startup, it’s ok to fail at first if you pivot nimbly."
Ah yes, that's what I associate government with: nimbly pivoting. If a startup doesn't nimbly pivot, it goes out of business and some affluent people have to cut back on Starbucks for a few weeks. If government doesn't nimbly pivot, it kills people and raises taxes.
"Biden and the Democrats, however, have a media that’s able to swiftly point out what they’re doing wrong."
lol, lmao. When I think of "the media" I immediately think of "swift, trenchant and effective criticism of Democratic politicians and policies." Case in point: Ezra Klein's doormat reaction ("I don't disagree with her") to Raimondo's astonishing dismissiveness.
I’m curious how you would respond to Gordon Blizzard’s response below.
The valid concept in libertarianism was captured in 1767 by the Scottish philosopher Adam Ferguson, who noticed that a lot of what we would call progress is the result of human action, but not of human design.
Likewise, all of the top-down ideologies aimed at perfecting humans are secular versions of creationism that arose after Darwin debunked to myth-based versions. And they have been murderously destructive.
But still, societies have the constant problem that people in power work to expand and monopolize their economic and political power at the expense of fairness to the less powerful.
Are you referring to this response from Gordon Blizzard?
"Libertarianism is a blithe ignorance of political economy, that owning more property might in fact bring more power, that winners in fact keep on winning because having won before means you're more likely to win again. They won't even ban inheritance to create their bizarre frictionless surface of political economy."
My response would be that this betrays a profound lack of understanding of how the economy works or develops. To take the example of the US, most of the "rich" families of 1900 have little or no influence today. The Rockefellers still exist, and even had a couple of influential politicians back in the 1970s, but controlled no major corporation, and never controlled national politics.
The Fords still exist, and still control their foundation and (barely) their corporation. The Fords almost lost control of Ford Motor Company in 2008, but worked hard to save the company. The "rich" owners and leaders of GM were wiped out, because they accepted defeat rather than acting as if their lives depended on keeping GM going.
Rich people who built their own companies (often) keep winning because they are exceptionally good at running large and innovative companies. Think Steve Jobs, Bill Gates, Michael Dell, Warren Buffett. But none of these have children who are likely to take over their companies. The United States, and to a lesser extent other English-speaking countries, have a great deal of turnover among their business and government elites. They also have a great deal of turnover among their leading corporations. Continental Europe and Japan, with their larger commitment to statish management of the economy, have a great deal less.
Their children might not be in power, but the AIs they created (Corporations) are and have consolidated more power than ever.
I'm not following. Are you saying that the large corporations from the early 1900s are even more powerful now? This doesn't really stand up to examination. Of the 50 largest US corporations in 1917, only 18 were still in the top 50 in 1967, and only 5 were still in the top 50 in 2017. This includes companies merged into other large companies that were in the top 50 - for instance, Standard Oil of New York (#15 in 1917), Magnolia Petroleum (#41 in 1917, and Virginia Carolina Chemical (#49 in 1917) were all merged into Mobil (#15 in 1967) and ExxonMobil (#8 in 2017). https://www.forbes.com/sites/jeffkauflin/2017/09/19/americas-top-50-companies-1917-2017/?sh=71ef15321629
You could go back further: in 1869, the two largest corporations in the world were Union Pacific Railroad and Central Pacific Railroad; by 1917, they weren't in the top 50 US corporations, and the only railroad in the top 50 was Pennsylvania railroad (#29). By 2017, no railroad was left in the top 50.
Are you claiming that corporations in aggregate have more power today than in the past? It's certainly true that many people have claimed for well over a century that corporations dominate the economy and the government, stealing the substance of the people. Are you claiming this as "more power than ever?" I wouldn't know how to begin to demonstrate this claim - do you have any ideas?
If I haven't grasped your claim, could you be more explicit?
Mmm. You seen to be going about this backwards. Rather, start with the question: "how many of the current billionaires inherited their money, and how many exist who did not inherit money?"
The topic was "power", not "billionaires". Mr. Blizzard seems to take it as axiomatic that they are the same. My claim is that they are different. It doesn't really matter how many billions the descendants of John Rockefeller or Cornelius Vanderbilt control - they don't have much political influence, or control of any large corporations. The obvious exception is the Fords, who maintained family control over their company.
That's an interesting thing to say, given how much time, money, and effort is spent obscuring the facts of that exact claim. More relevantly, you might want to look at the Wikipedia article on, for example, the Rockefellers, and pay particular attention to the section labeled 'politics'. Since 1959, 48 years after the standard oil monopoly was busted, there have been three governors and one lieutenant governor from the family. That does not say "not much political influence" to me.
Sure, there were several influential family members, especially in the 1950s. A couple levels up I recognized that the Rockefellers had a couple of influential politicians in the 1970s. My mistake - I had remembered Winthrop as a senator, whereas he was actually a governor.
Since 1973 (the last 50 years) there are two members of the family listed - one governor/senator, and one lieutenant governor. The governor/senator was presumably influential in West Virginia, but lieutenant governors aren't particularly influential - have you even heard of Susan Bysiewicz?
I'm not going to buy the article. Could you cite the parts that disprove my statements? And which statements do they disprove?
Thanks.
The problem with libertarianism is that it assumes people will trade, when in reality people will just take. You need to solve the monopoly of violence problem first, but as soon as you do, you have given away far too much for anything that follows to be libertarian.
With a title like that, I've got to read it. Just put it on hold from my library. Thanks.
Libertarianism is a blithe ignorance of political economy, that owning more property might in fact bring more power, that winners in fact keep on winning because having won before means you're more likely to win again. They won't even ban inheritance to create their bizarre frictionless surface of political economy.
It's an ideology by and for propertied elites who demand everyone else be their serfs or die.
Rich people owning and running businesses hardly have boundless power, even under pure libertarianism which exists only as an idea (it’s funny how progressives always blame libertarianism for all kinds of problems when there are in fact no libertarians or even fake libertarians in power anywhere). Any employee has a right to leave a company, so there is far from boundless power over them. Libertarians don’t oppose private sector labor unions either. As far as boundless power over the planet, the only entities that even come close to doing that are powerful governments like the PRC and USA. Apple may have power over their devices and platform, but nothing forces anyone to use them. Same for Google, Tesla or Exxon.
Nobody forces you to breathe or eat or live under a roof or wear clothes, so people with the control over resources don't actually have any power.
This is a teenagers' understanding of political economy, that you can punt the question of who controls all of society's resources.
No one needs to be forced to eat or breathe except maybe prisoners (of governments, not corporations). I am free to not have a roof over my head, and only a government would restrict me from being homeless (although not so much on the west coast of the US). And only government laws force me to wear clothes. Not having every basic need provided by the government doesn’t make one powerless. If you call this reality a teenage viewpoint, yours is more of a preschool one.
Are people still free to sleep under bridges? I know a lot of anti vagrant laws have been passing lately.
Increasingly I think we need a 2-tier system.
At the ground level of small business, libertarianism is perfect. Building a business is already hard enough -- don't let government make it harder. And I'm pretty radical in this. For example: if you have under 5 employees and under $1M in revenue, I would say immunity from most environmental reviews, most zoning regulation, even minimum wage and maybe some child labor laws. I want people to start businesses because they promote real independence and have lots of beneficial side effects: social activism, local trust, community engagement, etc.
As a company gets larger though, it needs to face more regulations. Libertarianism simply can not accommodate the fact that concentrated power (whether political or economic) can easily work against the common good. The old adage applies: "if you owe the bank $100,000, it's your problem; if you owe the bank $100 million, it's the bank's problem."
To see a simple example of this in action: whether your local bookshop carries your book doesn't really matter. however, if Amazon refuses to carry your book, it matter enormously. Libertarianism can't handle the difference between those, which is why I am no longer a libertarian.
Preach, Brother Noah!
A well-researched and well-written article, and I have only one minor quibble with it. Politicians are notoriously short-sighted. Usually, they can't see past the next election, and the public is even worse regarding any long-term thinking. The ideas you are proposing are excellent, but they take time, and I wonder if any politician can think in that time frame. One advantage of private enterprise is learning from failure and continuing toward the desired goal. With political efforts, any failure is used by the opposing party as an effort to condemn the entire idea - the famous "We told you so."
Possibly, this time things will be different, but I doubt it.
“ideological libertarians” are in short supply these days. Elon Musk’s Tesla rescued from bankruptcy by a sweetheart $4.1 billion loan from the government. Musk moves back to California and play nice guy with Governor Newsome on the heels of collecting $1.2 billion to make some of Tesla’s charging stations open to the public. SVB speaks for itself. It didn’t even have a compliance officer. I’m not saying these examples of government assistance were bad ideas. They served a good purpose. But keep this in mind, because Musk and his ilk just play libertarians on TV.
A lot of libertarians crossed the Peter Thiel Memorial Bridge, opened 2009.
The cornerstone: "But I must confess that over the last two decades, I have changed radically on the question of how to achieve these goals. Most importantly, I no longer believe that freedom and democracy are compatible." (Thiel, "The Education of a Libertarian," Cato Unbound)
He's put money and movement behind these words.
Industrial policy doesn't have to succeed right away. But, before committing to it, it would be nice to have some prospect that it could succeed in any way, and on any timeframe.
To start: What is the purpose of industrial policy? Is it to revitalize some "key" industries? To protect national security? To achieve widespread prosperity? To advance social justice? And how, exactly, are any of these objectives defined?
Second: Can anyone provide any examples of industrial policy "working" anywhere in the world? For a time, Japan was held up as the example of industrial policy done right: support of the automobile and electronics industries produced world leaders, and Japanese society reaped the benefits. However, Japanese society was also held back by Japanese employment laws (restricting labor mobility), laws protecting small retailers and distributors (which gave retirees or others forced out of large corporations a chance to earn a living), and import restrictions, which reduced choices and standards of living for Japanese consumers. Also, Japanese industrial policy called for 3 auto manufacturers, with no space for Honda; Honda succeeded despite Japanese industrial policy, not because of it.
If Noah thinks the "good" parts of Japanese industrial policy can be separated from the "bad" ones, he should explain how. But even that level of approval should be tempered by Japan's industrial policy, round 2, which targeted robotics and artificial intelligence - the results have had minimal or no success, and no detectable benefit to Japanese society.
If Noah thinks Chinese industrial policy is the success, he should take account of the gigantic misallocation of capital, and precarious health of the banking sector, that he has already noted.
If excessive regulation and veto points for new construction are the obstacles to successful industrial policy, they are also the obstacles to any successful economic development. They shouldn't be torn down to help favored projects; they should be torn down to allow the entire economy to grow and thrive.
If industrial policy is used to establish American capacity for semiconductor manufacture, we should recognize that nearly any actions in this direction violate the basic rules and principles of the World Trade Organization - are we prepared undermine the system we led in establishing?
If industrial policy is the means to achieve progressive goals - whether equity, day care, union wage scales, they should recognize that these objectives don't attract majority support among voters in the country. I know, Noah doesn't really believe this, but it's true. If Democrats use industrial policy as a cover for pushing these goals, they will discredit industrial policy and lose support for the projects that are the ostensible purpose of the policy.
But, to get back to the original questions, what are the objectives of industrial policy, and why does anyone think they can be achieved?
OK - let's start with 19thC America and Germany. I'm not aware of anything that would pass for industrial policy in 19thC Germany, unless by "industrial policy" you mean "building a big military". For the US, there are 2 things I can think of - the transcontinental railroad, and tariffs. But you might be thinking of other things.
So, what were the objectives, what were the policies, and how did they contribute to the achievement of the objectives?
Well wasn't TVA, Bureau of Reclamation (Hoover Dam) and Bonneville Power Authority industrial policy in an earlier Era? We got it to work then, we can get it to work now because it is an overwhelming national imperative.
The column confirms that progressives will use any means possible. After all, the success of progressives shows that virtue signalling works. But on-shoring fab plants is of strategic importance, an importance that should push aside other interests, but does not. Changing the baked-in progressive biases cannot be done overnight, So lets build the fab plants in Canada. They ain't gonna happen here when lards bills for urgent with needless fat.
"This is not to say that progressive goals, such as a diverse workforce or a robust small business sector, are bad ones. But the methods that progressives are trying to use to accomplish these goals aren’t necessarily the right ones."
You have just enunciated the central thesis of neoliberalism except I'd say, "are generally the wrong ones."
But you are writing for progressives and need to be gentle.
U.S. industrial policy in the 1960s was not only the envy of the world, it was incredibly effective. All types of mistakes were made and corrected. Without an industrial policy, there are no railroads, interstate highway system, Silicon Valley, internet, and yes, AI/ML or SpaceX.
I just want to say this: Like "libertarians" generally, the Cato Institute is very good on some stuff -- immigration, drug policy --- and utterly stupid on nearly all macroeconomic economic issues. Their objections to industrial policy, grounded as they are in a silly, obsolete, ideology, can should be ignored.
And, even here in conservative Christofascist Indiana, they are being ignored. My Senators are both numbskulls, but one of them -- Todd Young -- was a sponsor of and hyper-zealous advocate for the CHIPS Act, and the other -- the even more odious Mike Braun -- spends much of his time touring the state promising subsidies and federal support for its farmers and manufacturers. Sure, these clowns will still, when prompted, wax rhapsodic about "free markets" and "capitalism" and vehemently denounce "socialism": But in the next breath, they'll be begging for nearly any all all forms of federal largesse for their constituents. In Red State America, libertarianism is dead.
A commie has no credibility calling any economic policy silly or obsolete.
Calm down, sweetie. I'm not a "commie" nor am I vegan (though I am vegetarian). And "atheist" is the wrong word to describe my beliefs about "god" because there is no meaningful concept of "god" to have any beliefs about.
I chose my handle simply to provoke humorless, sanctimonious gits. And look -- it works!
I agree with industrial policy goals, but we need to play to our strengths, which we seem to have lost site of. The top-down push for progressive goals in each project backed by "checkism" isn't going to work because it already hasn't. We need our entrepreneurs involved.
Check out https://joelelorentzen.substack.com/p/an-invitation-to-know-how