Policy Scholars, VCs Gather In Miami To Reboot The US Economy

A recent panel discussion “The Geopolitics of Industrial Policy: All Carrot, No Stick?”at the Lincoln Reboot conference in Miami explored US national security and re-industrialization of the US economy. The group explored various definitions and iterations of industrial policy (government efforts to promote specific sectors of the economy) including its origin with Alexander Hamilton’s Report on the Subject of Manufactures (1791) advocated for the modernization of the American economy to break economic dependency on slavery in the South and supersede England in manufacturing.

Geoffrey Cain, Senior Fellow at Lincoln Network, author of The Perfect Police State referenced Vannevar Bush, co-founder of Raytheon, first tech policy advisor to a President (FDR), a progenitor of the Manhattan Project and the National Science Foundation. President Eisenhauer continued this with Apollo space program, interstate highways, and Cold War industrialization, important GOP policy strains which one can still see today. Another important US Big Science/Big Government project was ARPAnet.

This century’s industrial policy is networked, transdisciplinary, entrepreneurial, and international, though there were important entrepreneur scientists like the Intel founders Grove, Moore, and Noyce; Hewlett and Packard and so on. Today one thinks of computer giants like Steve Jobs, Elon Musk, Bill Gates, and Craig Venter with the human genome.

In the last half-century Democrats branded themselves as the party of science and tech and cited the government’s role to plan the technological economy, educate its students, and ensure employment for its workers (through unions). Republicans, on the other hand, have espoused a set of principles: freedom, property rights, and limited government. Notably the GOP advocated for simplification and reduction of taxes and incentives for investment and innovation. However the panelists showed how both parties have failed Americans on cybersecurity, making meaningful incentives to reshore chipmaking, and failing to provide an educational system to create America’s technological labor force

Semiconductors were a key topic of discussion, including the recent CHIPS and Science Act. The US once produced majority of the world’s chips. That has fallen to a single digit percentage today. While States announced new fab starts in New York (Micron), Arizona (TSMC), Ohio (Intel), Texas (Samsung), this level pales in comparison to what Taiwan, Singapore, South Korea, and Japan produce. Julius Krein, Editor of American Affairs, described a failure of bipartisan policy to achieve meaningful competition, and opined on whether venture capitalists could manage the chip investment better. Heritage Foundation tech policy fellow Dustin Carmack noted the failure of the Act to bolster security. US policy could hobble China in semiconductors but greenfield domains like AI, robotics, autonomous driving, supercomputing and the Metaverse are up for grabs.

A key critique of semiconductor policy is that allow US companies to sell the means of production to China, albeit with some restrictions. Far from decoupling, the US has increased interdependence with China for technology, eg Apple’s partnership with Chinese military fab YMTC, to say nothing of the most visited domain by Americans, TikTok.

Panelists explored whether states can do a better job. Florida governor Ron DeSantis’ Executive Order 22-216 prohibits Florida state and local government entities from procuring technology products and services from companies owned by, controlled by, or domiciled in China. Florida’s economy rivals the GDP of Mexico, and DeSantis’ simple but significant policy not to buy Chinese government products and services outperforms the efforts undertaken at the federal level with its piecemeal restrictions and systematic workarounds.

A penal on Florida vs. California debated how industrial policy is playing out today, as people and capital flee blue states for red states like Florida, Texas, and Arizona for enterprise and freedom from tax. The conference opened with wunderkind Miami Mayor Francis Suarez who detailed Miami’s transformation to the “capital of capital.” In recent years Miami has accrued more than $1 trillion in assets under management in addition to some $40 billion in direct investment in the city’s economy (whether from fintech entrepreneurs or Latin American immigrants who buy houses and set up accounts at the local Bank of America branch with certificates to transfer the value of gold held in banks in Peru).

The emerging Titanium Economy and its associated manufacturing renaissance across the US was billed as a solution, but sadly most federal policy makers fail to recognize its promise.