ICYMI: New York Times Opinion: Making Manufacturing Great Again

In case you missed it, New York Times Opinion Columnist Paul Krugman detailed how – after Donald Trump failed to deliver on his promise to revive the manufacturing sector – the Biden-Harris administration is delivering for America’s working families by helping create millions of good-paying jobs and producing a manufacturing boom in the United States. 

See excerpts below from the column. 

New York Times Opinion: Making Manufacturing Great Again
By Paul Krugman

  • Back when Donald Trump began his political rise, it was common for mainstream pundits to attribute his support to “economic anxiety,” to suggest that MAGA was an understandable, maybe even reasonable response to deindustrialization and the loss of jobs in the American heartland. You don’t hear that very much anymore.
  • As it turned out, Trump had no visible success in promoting manufacturing. But a funny thing has happened under his successor: Suddenly, investment in manufacturing has surged. What Trump’s trade policies didn’t achieve, President Biden’s industrial policies have.
  • The numbers are stunning. Here’s an annotated chart of manufacturing construction spending:
  • The Trump tax cut of 2017, which was sold as a way of promoting U.S. investment, didn’t have any visible effect. Neither did the trade war, which kicked off in earnest in mid-2018. But under Biden, manufacturing construction, as some people put it, has gone parabolic, more than doubling just over the past year.
  • It’s still really impressive. And there’s no real question about the causes of the surge. It’s being driven by two major pieces of legislation: the misleadingly named Inflation Reduction Act, whose actual core is subsidies for green energy, and the CHIPS Act (“creating helpful incentives to produce semiconductors” — call in the acronym police!), which is supposed to protect national security by promoting domestic production of, um, chips.
  • Why are Biden policies producing a manufacturing revival but Trump policies didn’t? Well, Trump’s trade policy was simply incompetent: Because it raised tariffs on industrial inputs as well as consumer goods, it raised costs and may well have reduced manufacturing employment. And the Trump tax cut was based on the belief that if you let corporations keep more of their profits, they’ll invest the money rather than use it to, say, buy back shares; this belief was proved wrong.
  • Biden’s industrial policies, by contrast, are largely focused on creating demand for U.S.-manufactured products, for example by subsidizing the purchase of electric vehicles. And business investment, while far less sensitive to tax rates than legend has it, is very responsive to demand.
  • And so we’re having a huge manufacturing revival.
  • So why should we consider Biden’s industrial-policy-driven manufacturing boom a good thing? Mainly because it’s part of an urgently needed transition to renewable energy that may be our last chance to avoid climate catastrophe. And the surge in U.S. manufacturing investment in particular partly reflects protectionist aspects of the legislation that are a bad thing in terms of economic efficiency — but were essential to the political deal-making that made it possible to tackle climate change at all.
  • So it’s good news that the boom is happening, indeed exceeding even the most optimistic expectations.