Well, there isn’t much question what the editors of the Wall Street Journal’s primary concern is today. They devoted both their featured editorial position (upper left corner) and their featured op-ed position (center column top) to it. It’s the federal government’s acquisition of 10% of Intel’s stock.
Rather than fisking or citing either of those pieces I’ll just give my opinion. I, too, think that having the U. S government acquire ownership of private companies either in part or in whole is a very bad idea. Inevitably, the purpose of such acquisition will not be either to produce more or put the company on a financially more solid basis. It will be to boost the fortunes of a mismanaged company, get a say for appointees or bureaucrats in the operations of the company, strengthen the company’s unions, or some other sketchy reason.
I’m also opposed to industrial policy in any form. That puts me at odds, apparently, with the WSJ and both political parties. The only sort of “industrial policy” in which the federal government should engage is tax policy. IMO the corporate income tax should be abolished (on economic efficiency grounds). For revenue we should depend more on consumption taxes than on income taxes. We should be taxing things we want less of rather than things we want more of. We tax employment. We tax income. We should be taxing consumption.
The problem with industrial policy in the U. S. is that we aren’t authoritarian enough, we aren’t socially cohesive enough, and we aren’t sufficiently observant of the laws for it to work effectively. Yes, that puts us at a disadvantage compared with China. We should employ solutions that rely on our strengths rather than foundering because of our weaknesses.
The best industrial policy we’ve ever had is the space program in the 1960s. It was focused on doing something quite specific and it created the modern U. S. economy. More recently, the best industrial policy we’ve had is “Operation Warp Speed”. Similarly, that was focused on accomplishing something quite specific. The way I’ve been phrasing it is that we’re relatively good at mass engineering projects.
This buy-in is a signal that Intel is dead, and it is an opportunity to dump any Intel stocks and bonds you might have.
The odds are pretty high that in a few years the US will not have any chip-making capacity other than Frito-Lay. Intel giant Intel chip fab project northeast of Columbus (very far from completion) is dead after several $ billion of waste.
While this fits under the broad rubric of industrial policy its not really a policy per se but rather just another act that may or may not expand to other companies that lets Trump further control the economy. It should be concerning how much control he taking with very little pushback. Anyway, what could go wrong with the govt owning the means of production?
TSMC is already producing 4nm chips in Arizona and is building a second fab to make 2 nm chips. Samsung is building in Texas.
Steve
Well, see YouTube, “TSMC’s $40 Billion Arizona Nightmare”
Initially, TSMC could not procure any chemical of sufficient purity for its chip manufacturing in the US. Everything was imported from Taiwan. Even now the plant loses about $10 million per year, and is maintained for political reasons. Other foreign chip manufacturers will also operate in the US for politics.
Moreover, TSMC is being sued for discrimination: Reddit: “Chipmaking giant TSMC hit with class-action lawsuit in the U.S. for bias, racism, and unsafe conditions — over 30 plaintiffs have accused the company of illegal practices at Arizona fab”
And then there is all the enviro featherbedding…
The US actually has an anti-economic policy. The federal bureaucrats are openly hostile to manufacturing in the US. They will have to be brought to heel, if we are to keep what manufacturing we have.