The United States has a long and successful history for industrial policies, and as the Biden administration and policymakers consider new policies, some raise concerns with its “similarities” to China.
As Rob Atkinson writes in American Compass, there are three camps that address China competitiveness. The first is the free-markets, which aims to keep the state out of any role except to protect property rights. The second are the economists who, while acknowledging the existence of innovation and market failures, ask for modest government involvement. The third camp is major competitiveness legislation, which is occurring right now with the CHIPS Act and the Endless Frontier Act. These three camps combined will allow for the U.S. to meet the China challenge, while not emulating China’s “innovation mercantilism.”
If policymakers do not adopt robust industrial policies, the U.S. will see its advanced industries and technologies shrink, leading to harmful consequences in economic prosperity and national security.