Conservatives are misguided by adopting large-scale government industrial policies

Conservative arguments against big government manufacturing policies are similar to and contradictory to vegetarian arguments about eating meat. Despite constant push from Democrats and Republicans for big government, conservatives have long supported the idea that the economy works best when government power is not used to impose its will on the people.

Unfortunately, a few self-styled conservatives on Capitol Hill believe that a top-down approach to empowering the government would restore America's manufacturing capacity and would be good for America, as long as the right leadership is at the helm. I want to believe it. However, that is not the case.

That's the reality Governments are largely responsible for the economic conditions seen in the Rust Belt and other regions across the United States, where industries have suffered and jobs have gone overseas. Burdensome regulations, crippling taxes, and rising inflation are forcing small businesses and American industry to make difficult decisions.

But recently, Sen. Marco Rubio (R-Fla.) has argued that industrial policies that simply allow bureaucrats in Washington to decide what American workers need and decide the winners and losers of American society He developed his own “conservative arguments'' regarding the issue. economy.

It's important for conservatives to get this right. Contrary to Mr. Rubio's claims, those of us who support free markets value industrial power. Manufacturing is important. But the type of industrial policy promoted by Mr. Rubio has failed and will continue to fail. This results in bureaucrats favoring certain industries, misallocating resources, and forcing companies to invest in lobbying and political influence rather than jobs and productivity. It traps taxpayers in bad investments that they cannot live on without continued bailouts and investments that would have been made anyway – often for purposes that intersect with other government policies. Or it is done for clearly political purposes.

The direct costs of subsidies, regulation, and bureaucratic controls are compounded by the loss of jobs, wages, and investment that would have occurred if the private sector had invested in economically sustainable businesses. This is why industrial policy has repeatedly failed. One need only look at the massive industrial policy failures of South Korea, Germany, and China, especially the latter's infamous EV graveyard, subsidies and resulting overproduction and lack of demand.

But we can also simply look to our own past in the United States. Conservatives need no reminder that billions of dollars were wasted on companies like Solyndra during the Obama administration.

Bidenomics, which Rubio himself has criticized harshly, is industrial policy in its purest form. This too has undoubtedly failed to increase manufacturing output. In fact, a recent report from the Tax Foundation found that despite the large taxpayer subsidies provided by the Inflation Control Act and the CHIPS Act, “compared to CBO's projections as of May 2022, nonresidential private fixed It was found that total investment growth did not exceed expectations. ”

Additionally, the Inflation Control Act's massive subsidies for electric vehicles have failed to meaningfully boost EV sales, as consumers find the products expensive and unreliable. Tesla recently announced a 10% reduction in its workforce due to weak demand for electric vehicles.

To his credit, Mr. Rubio does not claim that Mr. Biden's industrial policy has been a success. He argues that governments need to “get serious about deregulation and allowing reforms to create a competitive business environment in which industrial policy actually works.” But therein lies the problem. Industrial policy cannot be achieved without increased government involvement, which in turn opens the door to the very overregulation that Mr. Rubio is complaining about. This overregulation costs the average manufacturer and small manufacturer $29,100 and $50,100 per employee, respectively.

The data is clear. The government is very good at spending taxpayer money, but very bad at converting that spending into actual, sustainable manufacturing investments that benefit American workers.

A great example of this is the CHIPS Act, which Mr. Rubio wisely voted against. The company is already failing to meet backers' promises, with several companies delaying promised expansions. Companies are forced to invest in radical DEI initiatives and are exposed to other regulatory hurdles, causing promised investments to be delayed or moved to other countries.

Conservatives believe that the American economy will function and grow if the government does not get in the way. So why don't they practice what they believe?

Rubio concluded his puzzling discussion by saying, “This will not be easy, especially as Biden and his allies in Congress put the interests of lobbyists and activists ahead of the interests of the nation.” Unfortunately, there is no difference between Biden and other politicians and leaders when it comes to picking winners and losers in the market. Regardless of political party, industrial policy always creates an environment in which priority industries, or those with the most powerful lobbyists, proliferate at the expense of economic growth.

Big government industrial policy is doomed to fail, but freeing manufacturers from Washington's stranglehold can meaningfully stimulate industrial investment and raise wages for American workers. Free market reforms to taxes, regulation, energy, infrastructure, and education could reduce the size and scope of government, strengthen U.S. manufacturing, and enable businesses and industries to grow, return, and invest in the United States. There is sex.

David McIntosh is a former Republican congressman from Indiana and chairman of the Club for Growth Foundation..