The Problem With the ‘Abundance Agenda’

With much fanfare, the Biden administration announced this week the availability of the first subsidies for domestic semiconductor manufacturing facilities funded by the $52 billion bipartisan CHIPS and Science Act.

Yet, many of the people who support the law’s goals of subsidizing semiconductor production were surprisingly glum as they pointed to all the processes, mandates, and regulations the administration was attaching to this new money.

Manufacturers looking to get a CHIPS Act subsidy will have to abide by union wage mandates, provide child care for their workers, buy American materials, submit their new subsidized facilities to onerous federal environmental reviews, and potentially share any “excess profits” with the government.

The value of these new subsidies will be spread thin indeed as a result.

“Everyone acknowledges what we are trying to do here, in trying to make a larger, more globally competitive U.S. semiconductor industry, is a difficult challenge,” said economist Adam Ozimek to The New York Times. “Advocates of industrial policy should worry that not only is this going to fail, but it’s going to discredit industrial policy for a generation.”

Here’s how not to do industrial policy: https://t.co/yhqqgTLXVj

— Alec Stapp (@AlecStapp) March 1, 2023

Economics blogger Noah Smith was even more despondent this week when he declared the U.S. a “build-nothing country” for its failures to create not just more semiconductor factories but also solar farms, transit lines, housing, and more.

“America is spending all the money, and things still aren’t getting built,” wrote Smith.

This is an increasingly frequent complaint one hears from a growing set of liberal and left-wing writers. They bemoan America’s inability to convert monetary investment, both public and private, into actual physical things progressives have long wanted: more affordable housing, more renewable energy, more mass transit, and more stuff generally.

We’ve gotten worse at building these things, even as our need and desire for them has grown.

“The revolution in communications technology has made it easier than ever for ordinary people to loudly identify the problems that they see in the world. But this age of bits-enabled protest has coincided with a slowdown in atoms-related progress,” wrote Derek Thompson in an essay for The Atlantic last year. “Altogether, America has too much venting and not enough inventing.”

What’s both interesting and encouraging about hearing these gripes coming from a portion of the left is they’ve started to echo longstanding libertarian criticisms of the American regulatory state.

Government approval processes are overly long, burdensome, and deferential to third-party “stakeholders” for no discernible benefit. Excessive public meeting requirements, done in the name of community input, allow any old gadfly to delay billion-dollar projects. Special interests have erected reams of anti-competitive regulations that only serve to increase costs and strangle choice. The right to earn a living has been replaced with a need to beg for permission for doing anything new.

These “supply-side progressives” are calling to significantly liberalize or even eliminate much of this regulatory morass.

Smith thunders against “the country’s broken system of permitting, land use, and development.” Liberal blogger Matt Yglesias wants to significantly pare back the environmental review requirements in the National Environmental Policy Act and liberalize immigration until we have “one billion Americans.” The Atlantic‘s Jerusalem Demsas decries America’s “permission-slip culture” created by occupational licensing. The New York Times liberal columnist Ezra Klein says plainly that “regulators make it hard to increase supply” of everything from health care technologies to new workers. Everyone hates zoning.

They all want to peel back red tape in service of an “abundance agenda.”

Could this be the libertarian moment? Sadly, no.

While they see the flaws of the American state as she exists, these abundance agenda evangelists are still hopelessly chained to the idea that they can change her for the better.

The criticisms of the Biden administration’s implementation of CHIPS Act subsidies are a useful illustration of the limits of this worldview.

Supply-side progressives are raising hell over the ways regulatory roadblocks are undermining one of the largest expansions of federal corporate welfare in a generation. But investing huge sums of taxpayer money into semiconductor production is inherently a bad, wasteful idea, child care mandates and union work rules notwithstanding.

Indeed, we’ve been down this road before.

In the late 1980s and early 1990s, the U.S. government slapped tariffs on imported semiconductors, helped set up a public-private consortium of semiconductor manufacturers called Sematech, and showered an inflation-adjusted $1.2 billion on the consortium to pump out cutting-edge, globally competitive products.

The results, Reason‘s Eric Boehm recounted in his 2021 history of Sematech, were less than inspiring. The chips manufactured by Sematech were years behind the market. Com