Monday, June 7, 2021

What Can Unite America's Parties? Beating China

It looks like Congress is about to pass a major piece of bipartisan legislation, the American Innovation and Competition Act.

Faced with an urgent competitive threat from China, the Senate is poised to pass the most expansive industrial policy legislation in U.S. history, blowing past partisan divisions over government support for private industry to embrace a nearly quarter-trillion-dollar investment in building up America’s manufacturing and technological edge.

The legislation, which could be voted on as early as Tuesday, is expected to pass by a large margin. . . .

And while the bill’s sponsors are selling it in part as a jobs plan, the debate over its passage has been laced with Cold War references and warnings that a failure to act would leave the United States perilously dependent on its biggest geopolitical adversary.

The fear is that American manufacturers are falling behind China's in key areas, including logic chips, silicon wafers, and telecommunications. China hawks see the Chinese firms who make these things as arms of the Chinese government, and worry that back doors allowing Chinese spies to read all communications are built into Chinese equipment. Of course many people around the world assume that US companies have done the same for the NSA, which is one reason why the argument against Chinese spying has not moved many nations to switch their cell tower purchases from Huawei to US firms.

This started as a research bill but it has grown to 2,400 pages as lobbyists have worked on it, so we have to assume that it includes lots of goodies for US firms in these industries. I'm not really bothered by that; it seems to me that not becoming dependent on Chinese technology is worth it. They, after all, recently launched a five-year effort to wean their industries from dependence on US technology.

I wonder how much the recent Covid-related supply bottlenecks, which American car makers say have cost them $2 billion in sales, are driving support for the bill.

Effects on "jobs" will of course be small, especially for regular manufacturing workers. These things are made in robotic factories that don't use very many workers, and of course the software involved is often worth more than the hardware. But I am still cheered to see the two parties working together for what they see as US interests.

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