Biden's National Industrial Policy

Biden's drive to move America to an all-electric economy is tantamount to Sovietization of the most important sector of the American economy - energy.

Industrial policy refers to government efforts to support particular industries that are considered strategically important, such as manufacturing or energy. While it is still popular in many countries, the creation and implementation of a formal government-generated industrial policy lost favor in the United States back in the 1980’s

More specifically, the Roosevelt Institute’s Todd Tucker has defined industrial policy as: “any government policy that encourages resources to shift from one industry or sector into another, by changing input costs, output prices, or other regulatory treatment.” Tucker is a big fan of industrial planning, having written about the “ad hoc measures that have advantaged the privileged few across industries and examines how racism, legalism, and neoliberalism have hindered the development of comprehensive industrial planning.”

If it sounds like national industrial policy is politicized central industrial planning, that’s because it is.

So it should come as no surprise the Biden administration is trying to revive national industrial policy, having overseen the passage of major industrial policy legislation, including the CHIPS and Science Act and the Inflation Reduction Act (spoiler alert – which doesn’t reduce inflation at all because it is a gift to the so-called “green” sector of the US economy).

I noted earlier that energy production is typically a part of industrial policy – but the non-production is also a part of politically driven policy, especially in the age of subservience to the green agenda, as we have already seen in Biden’s threats to the fossil fuel industry, abetted by some banks and funds in the private financial sector.

The push to “de-fossilize” America’s economy is focused on transforming our daily energy needs to electricity. Americans should be viewing this “transition” with the eye of a skeptic for many reasons. First among them is that not a single iteration of “green” energy generation – wind, wave, or solar – has the capability or capacity to meet America’s national electrical needs. The push for EV usage makes the possibility of a completely “green” economy even more remote because there simply isn’t enough electrical generating capacity now to satisfy the projected demand.

Elon Musk, head of Tesla, has expressed his concern, as has the head of Toyota.

The Wall Street Journal reported that Akio Toyoda, Toyota’s CEO, expressed that his disdain for EVs boils down to his belief they’ll ruin businesses, require massive investments, and even emit more carbon dioxide than combustion-engine vehicles. Says Toyoda, “The current business model of the car industry is going to collapse. The more EVs we build, the worse carbon dioxide gets… When politicians are out there saying, ‘Let’s get rid of all cars using gasoline,’ do they understand this?”

We have already seen blackouts and brownouts in California. Texas lost electrical power during an extreme cold spell a couple of years ago due to a policy mandate favoring “alternative” sources and not enough backup generation. Just this past year, Duke Energy and the TVA also initiated blackouts due to not enough primary generation.

It would seem a legitimate question why the Biden Administration’s de facto industrial strategy includes forced reliance on a constrained resource in lieu of the virtually unlimited resources fossil fuels represent.

Fossil fuels are much more difficult to regulate out of existence. They are generally not defined as public utilities and since they are primary energy sources provided by private companies, regulatory authority is limited to drilling and production from public lands. They can do it, but it is indirect and very difficult. Since access to private lands is much harder to block, the federal government prefers something it can control directly.

It is my opinion it is because electricity, being a secondary energy source (it must be generated from primary sources), can be centrally controlled. While the federal government may not own utility companies that generate the electricity, they do control public utilities and electrical transmission through regulation.

Control of electricity access also includes control over not only home use, it also includes industrial expansion. If you are a company in a disfavored industry, say the manufacture of firearms, you might be denied the opportunity to expand if the regulatory powers decide there isn’t enough electricity to go around.

That is something known as regulatory capture.

The concept of regulatory capture typically refers to a phenomenon that occurs when a regulatory agency that is created to act in the public interest, instead advances the commercial or political concerns of special interest groups that dominate an industry or sector the agency is charged with regulating.

Biden’s approach to a national industrial policy is one step away from Soviet style control and they are doing it under the radar.

Something of which our elected representatives in Washington should be made aware.