Five Takeaways from the Roosevelt Institute’s Progressive Industrial Policy Forum

On October 7, the Roosevelt Institute gathered with more than 200 policymakers, activists, and scholars from around the country in Washington, DC, for a daylong forum: “Progressive Industrial Policy: 2022 and Beyond.” Organized by the Roosevelt Institute and co-sponsored by the William and Flora Hewlett Foundation and Omidyar Network, the event featured a series of dynamic keynotes and panel discussions reflecting on the rise of and prospects for industrial policy in the US. Watch the event sessions here.

It’s difficult to overstate how rapid industrial policy’s rise has been in progressive thinking and US policy more broadly. In 2019, the International Monetary Fund called industrial policy “the policy that shall not be named.” Around the same time, the Roosevelt Institute published our Industrial Policy and Planning: What It Is and How to Do It Better report. As the title suggests, our view at the time was that most of our readership would have little idea what industrial policy even was, and the few who did know would associate it with the military industrial complex or unprincipled corporate welfare that drains taxpayer resources. 

Yet, as we show in the 2019 report and its August 2021 follow-up, industrial policy is ubiquitous. Whether or not it is named as such, industrial policy means any government policy that encourages resources to shift from one industry or sector to another, thereby deciding which, whether, and how industries survive and thrive. While this definition might seem broad, it serves as a useful contrast to neoliberalism, which holds that the role of government is to set high-level rules for the economy, but to leave it to market actors and forces to decide whether—say—all, some, or no semiconductors are made in the United States, or whether Bitcoin miners or green aluminum producers should have priority access to hydropower energy.

In the time since our report, industrial policy became a leading component of new thinking and legislating. While championed under different names—a liberalism that builds (Ezra Klein, New York Times), a modern American industrial strategy (Brian Deese, National Economic Council), a new productivist paradigm (Dani Rodrik, Harvard University)—policymakers and pundits have embraced affirmative industrial policy because it meets the scale of our challenges on climate, COVID, trade, and supply chains. Rejecting the idea that the US has operated or can operate on purely free-market principles, today’s industrial policy thinkers view the state as having a central role to play in resolving questions like which industries rise and fall, how are they structured, and how they produce the goods and services our citizens need. 

Building off decades of organizing through the global justice movement, Occupy Wall Street, and the Green New Deal, the last 20 months have seen a number of major wins for green industrial policy: $369 billion in clean energy and $250 billion in lending under the Inflation Reduction Act (IRA). $50 billion for the semiconductor industry and $170 billion in advanced research in the CHIPS & Science Act. $550 billion in the Infrastructure Investment and Jobs Act (IIJA). Executive branch actions like supply chain reviews and invocation of the Defense Production Act (DPA) to maximize the domestic supply of clean energy.

The Roosevelt Institute’s progressive industrial policy forum gave us a chance to zoom out from this breakneck pace of policy wins, and reflect on the lessons learned. From my perch as Director of Industrial Policy and Trade, five major lessons stand out.

• Everything is climate now.
• We need to rewrite the rules—domestically and internationally.
• Equity is not a sideshow; it is central to all policy.
• Policy needs to build power.
• Liberalism needs to learn to build again.

Everything is climate now.

As the Roosevelt Institute’s Suzanne Kahn and Rhiana Gunn-Wright wrote in the foreword of our recent issue brief series, given the scale of the challenge posed by the climate crisis, all economic policy is climate policy. That’s as true for industrial policy and supply chains as it is for other policy domains. As John Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation, said in his opening keynote to our forum, “A few years ago . . . I might have detailed for you how climate change models predicted profound changes for every sector of our economy and every community in our country. Unfortunately, we no longer have to predict the future. We just have to turn on CNN.” 

With changing times comes changing policy. Podesta noted: “I returned to the White House to help work across the entire Biden-Harris administration to deliver on the transformational promise of the Inflation Reduction Act, which is the single most ambitious legislative measure ever to accelerate building a clean energy economy and to combat climate change . . . I’ve been working on these issues for a very long time, and for most of that time, saying the United States needed a national industrial strategy was not an idea that was taken very seriously by people inside or outside of government . . . Together, these bills give the federal government an unprecedented set of tools to advance a modern American industrial strategy to strengthen our supply chains from everything from raw materials like critical minerals to consumer products like heat pumps and energy efficient appliances.”

We need to rewrite the rules—domestically and internationally. 

To make this clean energy transition of our industries doable, public policy needs new frameworks. As Ambassador Katherine Tai, the US Trade Representative (USTR) and Presidential Cabinet member, put it in her keynote address: 

Trade has got to be about more than just unfettered liberalization, cheap goods, and maximizing efficiencies. Now, we have not sworn off market opening, liberalization, and efficiency. But it cannot come at the cost of further weakening our supply chains, exacerbating high-risk reliances, decimating our manufacturing communities, and destroying our planet. We need to update the playbook and bring more people in, so that more get pieces of a bigger pie.¹ 

Heather Boushey, member of the Council of Economic Advisers, concurred, adding here and here, “We’ve come to the realization that markets need a little, and in some cases, a lot of help to make sure that the market delivers on goods and services that are in the national interest . . . [yet] We do not have the analytic toolbox or analytic infrastructure or the data” to understand all the things we need to understand about this economic transition. “We desperately need new tools.” 

Equity is not a sideshow; it is central to all policy.

As the Roosevelt Institute’s Lew Daly and Rhiana Gunn-Wright have noted, the Biden administration’s Justice40 investment policy requires that 40 percent of the “overall benefits” of federal investments in seven major climate-focused policy areas should flow to disadvantaged communities, having the potential if implemented well to repair some of the worst harms of systemic racism. 

In his keynote address and conversation, Deputy Secretary of the Treasury Wally Adeyemo, took up these themes. 

“Using the federal government’s scale to unleash the economic potential of communities that have too long faced barriers to their full participation is critical to building sustainable economic growth in this country,” Adeyemo said. “That’s why the CHIPS Act includes workforce and research investments targeted at both underserved geographies and institutions like Historically Black Colleges and Universities that will help broaden opportunity to enter STEM fields.”

Policy needs to build power.

A growing body of scholarship—from Roosevelt Institute scholars and beyond—argues that durable policies need feedback loops that both deliver material benefits and help build political constituencies and power to defend those policies against retrenchment. 

This new thinking informs how policymakers are designing programs. As Podesta put it in his remarks, “Thanks to the generous credit enhancements for paying prevailing wages and employing registered apprenticeships [in the IRA], developers will have strong incentives to put union labor to work in clean energy.” 

Jigar Shah, director of the Loan Program Office at the Department of Energy, touted the proactive facilitating role of government: 

We’ve frankly been having an extraordinary dialogue with the unions around what they want and with the CEOs around what they want. You can imagine the gulf was very wide, but they weren’t wide because they wanted different things. They were wide because neither one of them understood the other. And so I think that we’ve been able to close that gap tremendously. And so we’ve been able to take the caricature out of the minds of the CEOs and say, actually, here is the value of working with unions. 

In her remarks here and here, Mary Kay Henry, the International President for the Service Employees International Union, noted that government needs to be doing more for more workers and sectors, and in particular for the care industry that was dropped from the package that became the IRA: “Our union was jubilant about the passage of the Inflation Reduction Act; and heartbroken and enraged about the exclusion of the Black and brown women in this nation that do care work either for our elders or for children.” She noted how precedents at the state level on government convening fast-food workers, owners, and franchisees present models for federal action in 2023 and beyond. 

Liberalism needs to learn to build again.

During the neoliberal era, government capacity to engage in bold and fast-paced industrial policy was weakened; rebuilding that capacity is central to the challenge ahead. As Roosevelt President and CEO Felicia Wong said in her opening remarks, “what we do next locks in our next economy . . . Which agencies are built? Which agencies are rebuilt? How do agencies work with each other? How government up and down our federal system, governments up and down our federal system really work. This is going to hardwire power in place for at least a generation, and it will be much harder to rewire once that is in place.” 

This moment’s “critical juncture-ness” came across in numerous ways in our implementation-focused panel led by Vox senior correspondent Dylan Matthews.  

Mike Schmidt, director of the brand new CHIPS Program Office at the Department of Commerce, noted that we “are now in the business on a higher level of showing that government can deliver. That government can do big hard things [and] restore faith in public institutions.” 

Natasha Sarin, counselor for tax policy and administration at the Department of Treasury, part of the team leading new investments in the IRS, added, “This is about embracing challenge . . . thinking about building the IRS’s brand in a meaningful way [as] the largest administrator of federal benefits in the government. It is responsible for implementing the President’s green agenda. It is responsible for lifting millions of children out of poverty by advancing the child tax credit.”  

Speeding up and improving governing was also the top policy recommendation from both the AFL-CIO’s Brad Markell and Ørsted’s Maggie Lemmerman, who spoke from green labor and green energy perspectives, respectively. 

The challenge before us is figuring out how to build democratic control and accountability into an industrial policy that must build quickly to address the crises we face.     

Full videos of the event are available here, along with links to further reading from the Roosevelt Institute and important new books from our forum moderators that document how we are moving past neoliberalism: Homecoming: The Path to Prosperity in a Post-Global World, by the Financial Times’s Rana Foroohar, and The Middle Out: The Rise of Progressive Economics and a Return to a Shared Prosperity, by The New Republic’s Michael Tomasky.

Thanks to Sunny Malhotra for research assistance.

1. As Henry Farrell, the SNF Agora Professor of International Affairs at Johns Hopkins School of Advanced International Studies, put it on Twitter, “such words would once have been unthinkable at USTR”—once a primary guardian of the neoliberal playbook.