Endless INDUSTRIAL POLICY

Industrial policy refers to deliberate government actions that affect economic activity more narrowly than the usual run of macroeconomic measures-for instance, by guiding and perhaps forcing investment and innovation in particular technologies and industries. After a generation in the political wilderness, the term can again be uttered in polite political company, and not just among Democrats urging green energy and clean manufacturing. The conservative US senator Marco Rubio (R-FL) has begun to argue for an "American Industrial Policy" to combat the rise of China. The term "industrial policy"-tarred by association with economic planning-had been largely unheard in American political circles since the Cold War ended, with unfettered capitalism seemingly triumphant. But the tools of industrial policy are an inescapable part of every market economy's policy kit. The question is not whether we should do industrial policy, but how to do it, and what ends it should serve. If the threat of China as Number One has been the most conspicuous spur to the rediscovery of industrial policy, another has been the nation's gaping inequalities in income and wealth. Indeed, these inequalities, growing in the United States for decades, and so brutally revealed this year, are traceable in considerable measure to the unacknowledged industrial policies whose ends were concealed by free-market dogma.The current flurry of interest and attention seems a bit of a replay, with variations, of past debates. Those earlier in the Cold War were over the arms race and space race, putting a spotlight on technology and science. Later the arguments centered around deindustrialization and new competitors that arose in Asia. Now we hear of "advanced computing, 'big data' analytics, artificial intelligence, autonomy, robotics, directed energy, hypersonics, and biotechnology"-this from the Pentagon's most recent statement of National Defense Strategy-reminding us also of past episodes of spinoff from military spending, as in semiconductors and computing, jet propulsion, Earth-orbiting satellites, and the internet. All but lost is the fact that US defense and intelligence agencies lavish their billions almost entirely on private industry. Bills such as the Endless Frontier Act (S.3832), introduced in May 2020, would boost government funding for science and technology more generally, especially at universities. Their advocates spotlight the significance of such funding for productivity growth and