A controversial idea at the heart of Bidenomics
Planet Money
NPR
4.6 • 29.8K Ratings
🗓️ 23 February 2024
⏱️ 28 minutes
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Summary
That's the general term for whenever the government tries to promote specific sectors of the economy. The idea is that they might be able to supercharge growth by giving money to certain kinds of businesses, or by putting up trade barriers to protect certain industries. Economists have long been against it. Industrial policy has been called a "taboo" subject, and "one of the most toxic phrases" in economics. The mainstream view has been that industrial policy is inefficient, even harmful.
For a long time, politicians largely accepted that view. But in the past several years, countries have started to embrace industrial policy—most notably in the United States. Under President Biden, the U.S. is set to spend hundreds of billions of dollars on industrial policy, to fund things like microchip manufacturing and clean energy projects. It's one of the most ambitious tests of industrial policy in U.S. history. And the billion dollar question is ... will it work?
On today's show, Réka takes us on a fun, nerdy journey to explain the theory behind industrial policy, why it's so controversial, and where President Biden's big experiment might be headed.
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Transcript
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| 0:24.0 | This is Planet Money from NPR. |
| 0:27.0 | There are certain ideas in economics that have a scandalous reputation. |
| 0:36.0 | Like when it comes to how to run a country's economy, |
| 0:39.5 | there is one thing that economists have said governments should never ever ever do. |
| 0:45.2 | It was considered a kind of ludicrous crazy idea. |
| 0:49.0 | That's Rika U-House. |
| 0:50.4 | She's a professor of economics at the University of British Columbia, and this ludicrous, |
| 0:55.3 | crazy idea she's talking about, she studies it. It is called industrial policy. That is the general |
| 1:01.6 | term for whenever the government tries to promote specific sectors of the economy. |
| 1:07.0 | The idea is maybe they can supercharge economic growth by giving money to certain kinds of businesses, |
| 1:12.0 | or by putting up trade barriers to protect certain industries. |
| 1:16.0 | Now economists have long argued against this. |
| 1:19.0 | Was it fair to say that economists hated industrial policy? |
| 1:22.0 | Yes, I think it is fair to say that economists hated industrial policy? Yes, I think it is for us. |
| 1:24.5 | Yeah, economists for the World Bank |
| 1:26.7 | have said that few phrases elicit |
| 1:29.0 | such strong reactions as industrial policy. It's been called a taboo subject, one of the most |
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