"President Joe Biden signaled last week that his administration will oppose Nippon Steel’s proposed purchase of US Steel. As a matter of electoral politics, it’s easy enough to understand. As a matter of economic policy, however — not so much."
Okay. I can accept that.
"The idea behind industrial policy is essentially that economic growth is too important to be left to the market. Instead, the state should deliberately cultivate leading industries in strategic sectors."
Sure. I agree with many of the points, on why US Steel should be put on the block. "Of course, to make subs you need steel, which is why there are good reasons to maintain a domestic steel industry. But Japanese ownership of US steel facilities is not a security risk. Not only is Japan a US ally, it is the key US ally against the key adversary, China." Except this line.
I think that there are many compromises made in industrial policy, but this is not one of them. Either you have domestic steel industry under US control, or you agree that to have it under overseas control by China or Japan. Since it is determined that US Steel is strategic, a national security concern - then deciding to keep it in the US for the US is a no-brainer. The only question is whether the cost is worth it. US Steel is the easiest example to analyse.
"The attempt to use subsidies to create a domestic semiconductor manufacturing industry, for example, is flailing, mostly because of the White House’s determination to attach many strings to every subsidy dollar in order to promote other progressive goals." Okay, US is NOT the leader in semicon production, it is playing catchup - in other words, it has no idea how the industry should be run. "Each deviation from technically sound policy may be defensible on its own terms.....Taken together, however, it amounts to an incoherent approach to policy." Now every policy cannot be so brittle that it cannot take a bit of disorder or small doses of Murphy. But the Japanese got a plant, approved, built and running in 24 months. And US is still talking.
It seems that the US is more afraid of being stiffed, promoting non-liberal goals - than actually catching up.
Why is this so? Because the US has 2 problems:
1. They have been out of the industrial policy game for so long that they failed to understand how it actually works. There are 2 types of industrial policies - 'Sputnik - I am behind' or 'OpenAI - I am in front'. Ther former? Do what it takes, BOHICA until you win.
2. US industry 'giants' have gotten lazy. They blame the unions, they blame dumping - but when the going gets tough (on the bottomline) they quit. (Toyota USA, Honda USA all thrive with the same conditions.)
My take: it will take 2 administrations to work on this problem and understand that tariffs is a short term speed bump. The real problem is US manufacturing has to wake up.