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The CHIPS Act and Industrial Policy, Explained


Industrial policy mostly fell out of favor during the presidency of Ronald Reagan.

Credit: Getty Images

The United States is going to start making more of its own electronics, and taxpayers are going to pick up a good chunk of the tab.

Congress has passed the CHIPS Act, a bill that devotes billions of dollars to the research and manufacture of semiconductor chips used in "the nation's smartphones, cars, computers, medical equipment, and weapons systems," Barbara Sprunt reports for NPR. The bill had support from both Democrats and Republicans, who say it "will lower U.S. reliance on China for chip manufacturing, which they say poses a national security risk."

In the CHIPS Act — and in the new climate bill backed by Sen. Joe Manchin (D-W.Va.) — some observers see the United States drifting from free-market philosophies in favor of "industrial policy," giving the federal government a firmer hand in shaping the American economy. Even a few conservatives are on board. "What we are doing is industrial policy unlike people of my free-market background have done before," Sen. John Cornyn (R-Texas) said after the CHIPS Act passed. Is the United States really returning to an era of industrial policy? Why? And how will that shape the nation's future economy?

 

From The Week
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