The New Industrial Policy
March 3, 2023
Biden’s Semiconductor Plans Represent a New Vision for Our Economy
This week, the Department of Commerce announced new requirements for companies applying for funding under the bipartisan CHIPS and Science Act—aimed at boosting US semiconductor research and manufacturing—including not using funding for stock buybacks, complying with environmental permitting, and submitting plans to provide childcare for their workers.
These conditions signify an important shift toward federal policy that centers workers, families, and communities, Roosevelt president and CEO Felicia Wong explained this morning on Marketplace: “It represents government spending real money to crowd in private investment in sectors that they actually want to see grow.”
And as Roosevelt’s Todd N. Tucker and Lenore Palladino write in The Nation, the plan demonstrates the “critical realization that manufacturing doesn’t exist in a bubble; in order to be competitive, it must rely on fundamental worker protections such as collective bargaining and service-sector bulwarks such as subsidized child care and family leave.”
In particular, the first-of-its-kind childcare requirement will make it easier for women and parents to join the workforce, boosting labor force participation—which, as Roosevelt’s Mike Konczal explains, our economy needs to continue to grow.
“Just as we need physical infrastructure like roads to get workers to factories, we need social infrastructure—like childcare—that supports workers, too.” Konczal writes. “Solving these kinds of investment and coordination problems is where the government plays an important role.”
Read more in “To Increase the Supply of Workers, Our Economy Needs Childcare.”
What the Economy Needs for a Soft Landing
During the post-pandemic economic recovery of the past two years, we’ve seen the strongest labor market in half a century—and higher-than-predicted inflation.
As the Fed reckons with elevated prices, the question remains: What will happen with inflation next? In Vox, Konczal outlines three potential scenarios for the economy: a “hard landing,” a “soft landing,” or no landing at all.
“The soft landing scenario is the one policymakers would most like to see,” Konczal explains. “It would mean the US brought down inflation while ensuring a strong labor market.”
But what needs to happen for us to get that soft landing in 2023? For one, “the Fed needs to acknowledge the trade-offs it’s facing,” Konczal writes. “As the Fed wants to bring down inflation, it should ask itself how quickly and at what cost.”
Read more about what we need for a soft landing in “How the US Can Stick the Landing, Beat Inflation, and Avoid a Recession.”
What We’re Reading
Labor’s Struggle With Anti-Monopoly – The American Prospect
The Supreme Court Really Doesn’t Like Biden’s Student Debt Relief Plan – The New Republic