March 3, 2023

Semiconducting as Social Policy

The $280 billion CHIPS and Science Act may jumpstart our tech manufacturing sector, but at what cost?

There was a time when America led the world in technological manufacturing. That time has passed. In recent decades, we’ve outsourced production of computer chips to places like Taiwan, South Korea, and China.

“In 1990,” according to Fast Company, “almost 40% of the world’s semiconductors were produced in the U.S. Today, 80% of chip production occurs in Asia; only 12% are made in the U.S., half of which comes from Intel.”

This reality had many political, intelligence, and business experts warning that America was in a vulnerable position. After all, China’s control of the chip industry would force the U.S. into a dependent relationship with its primary geopolitical rival.

“In the digitizing world, power tools commonly come with Bluetooth chips that track their locations,” The Wall Street Journal reports. “Appliances have added chips to manage electricity use. In 2021, the average car contained about 1,200 chips worth $600, twice as many as in 2010. The supply-chain crunch that created a chip shortage brought the lesson home. Auto makers lost $210 billion of sales last year because of missing chips, according to consulting firm AlixPartners.”

Given all this, it seemed like good news when Democrats and Republicans (with President Joe Biden’s signature) voted to pass the $280 billion CHIPS and Science Act into law last year. The act may well reinvigorate our nation’s faltering semiconductor production. The question is: At what cost?

As they say, the devil’s in the details.

Democrats don’t fund anything without wanting something in return, and the CHIPS Act is no different. As the Journal reports elsewhere: “Some of the terms also reflected the administration’s social and economic priorities, such as diverse workforce and the use of union labor. Companies receiving incentives will be required to share part of their profits with the government and limit stock buybacks and dividends. Companies are also expected to use union workers.”

It’s another way of saying, If you want to run a business, you’re gonna be woke and broke.

Even The New York Times gives up the game: “The new requirements represent an aggressive attempt by the federal government to bend the behavior of corporate America to accomplish its economic and national security objectives. As the Biden administration makes the nation’s first big foray into industrial policy in decades, officials are also using the opportunity to advance policies championed by liberals that seek to empower workers.”

In other words, this is a socialist dream. The federal government funds an industry, takes profits from its businesses, and forces companies to implement wokeism to stay in the game. Thus, in one fell swoop, the U.S. semiconductor industry has been transformed into a giant welfare program for its workers.

When Bernie Sanders joins conservatives in opposition to a piece of legislation, we have to start asking questions.

One organization opposing the CHIPS Act was Americans for Prosperity, the libertarian-conservative advocacy group. “The United States didn’t become the strongest and most prosperous society in the history of mankind by emulating the Chinese government’s central planning,” said AFP, “and we shouldn’t start now. Furthermore, the litigation likely to result from injecting billions of taxpayer cash into the mix could actually delay key investments that would have otherwise moved forward. If we want to see more American investment, the U.S. government needs to stay out of the way.”

Unfortunately, too many Republicans are willing to go along with government subsidies. In the name of national security, they’re siding with Democrats to make government bigger and more intrusive.

“This is an excellent example of how national-security justifications for economic policy can and will be warped to suit the aims of politicians and bureaucrats,” writes Dominic Pino. “You were sold a bill that would help pay for some semiconductor factories; you might end up getting a Democratic commerce secretary attempting to transform American society.”

We’ll have to wait and see if China-style subsidies are going to accomplish anything good. Even before its passage, we were told the CHIPS Act would save America’s chip industry, but some think it’s too little, too late.

It seems most likely that American taxpayers have funded a giant leftist social experiment. And if that’s the case, we’ll still be dependent upon Asia for our cars, our iPhones, and our weapons systems, all while degrading our own infrastructure and culture.

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