National Economic Council director: “Strategic public investments to shelter and grow champion industries is a reality of the 21st century economy.”
Brian Deese, the director of the National Economic Council at the White House, gave a speech today to the Atlantic Council where he outlined the Biden administration’s plan for what he called an “industrial strategy,” which is something the Alliance for American Manufacturing has been calling for, for like, I don’t know, a decade? Yes, it’s been a decade.
Anyway, Deese said we need one now:
“Persistent inequality in the United States is slowing economic growth and risks fracturing the democratic stability upon which our economic success depends. And the approach of our competitors and our allies has changed rapidly. We should be clear-eyed that China and others are playing by a different set of rules. Strategic public investments to shelter and grow champion industries is a reality of the 21st century economy. We cannot ignore or wish this away.”
Deese went on to list the pillars of what he said will make up this strategy: supply chain resilience, public investment, public procurement, climate resilience, and equity. It’s an interesting speech, which you can watch here. Or heck, read it. It will provide useful context going forward, as the Biden administration continues to push Congress for a major infrastructure spending package and Congress moves major legislation like the US Innovation and Competitiveness Act to support the domestic growth of strategic industries.
HOWEVER: We were particularly interested to hear his response to a question from the event’s moderator, Financial Times editor Rana Foroohar, about domestic procurement policies – also known as Buy America. Please forgive the long quote, but hey, it’s interesting:
First, this is an issue that the president feels strongly about — that when we’re using federal taxpayer dollars to purchase or to invest that money should go toward American workers and American production. And we are working hard on a set of reforms to laws that have been on the books since the 1930s. The Buy American Act has been the law of the land for decades but has never really been enforced, has never really been a focus. And the president is committed to actually delivering on the laws as they exist and making sure that that is the case. …
At the same time, our approach is not one in which we want to bring all production here into the United States. We don’t want to draw lines from our allies, or to suggest that it’s actually the right economic strategy to try to produce everything here in the United States. And that’s why focusing on working with partners and allies is a core part of our supply-chain resilience and supply-chain-strength strategy, that, in fact, by partnering with allies to have more predictable supply, by partnering with allies to focus on the challenges of global overcapacity that that threaten economies collectively, we can actually have a multilateral approach to this set of issues.
Last week Robert Kuttner in the American Prospect wrote a column on the rising popularity of economic nationalism, first under President Trump and now under the Biden administration. He wrote:
Economic nationalism has two meanings. One is that it’s OK, and necessary, for the state to involve itself in the economy. The other is jingoistic—my country at the expense of others: America First, Trump-style. The first one makes sense, the second doesn’t.
At the end of the day, we can expect a kind of economic nationalism that includes other democracies that play by comparable rules. This is a welcome shift from the Clinton-Obama era, when ideologues tried to make everyone play by laissez-faire rules — and paradoxically made us sitting ducks for China’s state capitalism.
You can find the Deese’s speech to the Atlantic Council here.