Erik Loomis - whom I rarely agree with, but enjoy reading for that reason - points out that America is re-industrializing without a real industrial "policy." Industrial policy is broadly a legacy of mercantilist economics and is popular in neo-mercantilist economies like China's. Basically, the government either sets conditions or nudges or subsidizes certain industries or outcomes. The US government decided that having most of our computer chips come from East Asia was actually a huge problem, so we are now subsidizing and promoting chip manufacturing here in the states. That's industrial policy.
Beyond that, we are unlikely to see the government get involved in saying, for instance, that the US should produce X metric tons of aluminum. That's simply not part of our economic DNA and it smacks of central planning.
There are two models of industrial policy that are instructive. One is China's and the other is Germany's.
China's has obviously proven amazingly capable of shepherding a country from abject poverty to an industrial colossus. The so-called "Beijing Consensus" was an answer to the Washington Consensus on free markets and free trade. Beijing says that you can plan your way to prosperity, and you don't have to bother with that pesky democracy. There are some very real questions about how sustainable China's industrial policy is. The "ghost cities" and the looming demographic crisis in China suggest that the inefficiencies of the Beijing model can only be masked for so long.
Germany, however, has done a better job of wedding industry and labor into a tripartite coalition to guide -together - the German economy.
America simply isn't going to go down either road. At best, we will give tax breaks and subsidies to certain industries, maybe guaranteed markets, like with renewable energy.
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