The Emerging American Industrial Policy

Abstract

A call for an American industrial policy has been attracting support across the political spectrum. Over the last few years, the US federal government has, arguably—and with little fanfare—created one. For sure, this isn’t the kind of top-down industrial policy practiced during the Cold War by Eastern-bloc nations behind the Iron Curtain. Yet it does involve picking winners and losers, but in a targeted manner that leverages market forces, as might be expected of a nation that values capitalism. This emerging American industrial policy is characterized by its focus on capabilities critical to national security, supported by resilient supply chains, and achieved through political consensus. Understanding its features will sharpen what has been, until now, a rather nebulous debate and inform policy makers, who can and should build on their handiwork through considered action. The US Congress, in particular, has a significant role to play, but only if it is willing to take advantage of its window of opportunity.