Dusting Off Our Dusty Old Industrial Policy*
As Congress barrels toward an election that could see at least one house change hands, efforts to squeeze a few big bills into law are mounting. The one with the best chance (better than I expected) would drop $52 billion in cash and a boatload of tax breaks on the semiconductor
industry. Michael Ellis points out that this is industrial policy without apology, and a throwback to the 1980s, when the government organized Sematech to shore up US chipmaking. Thanks to a bipartisan consensus on the need to fight a Chinese challenge, and elimination of controversial provisions that tried to hitch a ride on the bill, there now looks to be a clear path to enactment for this bill.
And if there were doubt about how serious the Chinese challenge in chips will be, we highlight an undercovered story revealing that China’s chipmaking champion, SMIC, has been making 7-nanometer chips for months without making a public announcement. That’s a diameter that Intel and GlobalFoundries, the main US producers, have yet to reach in commercial production.
The national security implications are plain. If commercial products from China are cheap enough to sweep the market, even security-minded agencies will be forced to buy them, as it turns out the FBI and DHS have both been doing with Chinese drones. Nick recommends that policymakers read his Lawfare piece showing just how cheaply the US (and Ukraine) could be making drones.
Responding to the growing political concern about national security and Chinese products, TikTok’s owner ByteDance, has increased its U.S. lobbying budget to more than $8 million a year, Christina Ayiotis tells us; that’s an amount, I point out, that just about matches what Google spends on lobbying.
In the same vein, Nick Weaver and Michael question why the government hasn’t come up with the extra $3 billion to fund “rip and replace” for Chinese telecom gear. That effort will certainly get a boost from reports that Chinese telecom gear was offered on especially favorable terms to carriers who service America’s nuclear missile locations. I note that the Obama administration actually paid these same rural carriers to install Chinese equipment in the teens, as part of the 2009 stimulus law. I can’t help wondering why US taxpayers should pay those carriers both to install and to remove the same gear.
In news not tied to China, Nick tells us about the House’s serious progress on a compromise federal data privacy bill. It’s probably still doomed, given resistance from Dems (and maybe the GOP) in the Senate. I argue that that’s a good thing, given the bill’s egregious effort to impose “disparate impact” quotas for race, color, religion, nation
Article from Reason.com