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Industrial Policy in the Real World
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Industrial Policy in the Real World

Mike Watson

Historians and commentators will wrestle with Donald Trump’s legacy for some time, but one of his most significant accomplishments was the shake-up of the Republican Party’s economic platform. His appeal among working-class voters, especially in the Midwest, invigorated a wing of the party that has grown increasingly concerned with the country’s economic future. These national conservatives are clamoring for an industrial policy that would promote American manufacturing and reshoring, which it views as the surest way to revive the American economy and solidify the GOP as the party of the working class.

For others on the right, Trump unleashed a skepticism of the free-trade consensus that has dominated politics for the last three decades. Though they are less determined to pursue a holistic industrial policy than are manufacturing advocates, these conservatives nonetheless support shoring up domestic industries seen as vital to national security. Their case has become all the more urgent in recent years thanks to the rise of China and the Covid-19 pandemic, the latter of which exposed America’s dependence on foreign manufacturers for emergency supplies. In short, for both emerging factions on the right, industrial policy is an idea whose time has come.

In their estimation, the Republican Party’s pro-business agenda is responsible for particularly bad policy, and the American people have suffered for it. Nathan Hitchen offers a distilled version of the industrialists’ critique in an October 2020 essay for the American Conservative. “American society,” he writes, “has settled for a contract exchanging production for consumption, long-term prospects for near-term profits, and commonwealth for private wealth.” He favors replacing this “economist view” with what he calls the “statesman view,” the essence of which “is that there is a statesman at the helm of government building up the body politic for the good of the whole people.”

Not every advocate of industrial policy would go so far as to argue for one individual to make all the decisions — particularly if they have substantial disagreements with whomever happens to occupy the Oval Office. Nonetheless, most do place their faith in a few far-sighted public servants making decisions and implementing policy according to the national interest.

Just as the Tea Party rarely tired of quoting James Madison and Thomas Jefferson on the perils of big government and the virtues of checks and balances, the emerging industrial-policy factions on the right ground their arguments in the American founding. They insist that the framers wanted the country to have an active, centralized industrial policy, that the establishments in Washington and New York have thrown away this legacy for a mess of pottage, and that enlightened statesmen and technocratic experts can revive this tradition — and the American economy along with it.

Though some aspects of their criticism are well founded, the history of American economic policy provides as much a warning for industrial-policy advocates as it does a guide. A closer look at the past reveals the intractable challenges these would-be planners face, thanks in large part to the governing framework the framers established.

Read the full article in National Affairs

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