New Report: Reindustrialization and the Failures of Bidenomics

Aggressive supply-side reforms would enable the U.S. to onshore production in a time of foreign unrest

NEW YORK, NY — Ongoing wars in Israel and Ukraine have made the national-security argument for reindustrializing the American economy more timely than ever. In a new Manhattan Institute report, adjunct fellow and former U.S. Department of Treasury advisor Stephen Miran discusses the problems with the Biden administration’s industrialization strategies and advocates both supply-side reforms and national security reforms to improve America’s industrial foundation. 

“Bidenomics”—a series of legislation that includes the CHIPS Act, the Infrastructure Investment and Jobs Act, and the climate-focused Inflation Reduction Act—has wagered its reindustrialization efforts on subsidizing climate transition technology like electric vehicles, which are proving to be unprofitable sectors. The U.S. can’t afford to maintain subsidies indefinitely. And given the lack of consumer demand without subsidies artificially lowering costs, these investments will likely collapse in a second wave of deindustrialization. 

In addition to boosting inefficient sectors, Bidenomics is thwarting efficient ones. As Miran explains in the report and a new article for City Journal, it has imposed onerous additional costs on industry, from incentives for unionization to special environmental restrictions. These requirements raise the cost of domestic factories and labor relative to foreign competitors, providing longer-term incentives for our remaining industrial base to move offshore in pursuit of cheaper production—an outcome that works against the goal of expanding our industrial plant and supporting American business. 

A better way to boost American industry is to pursue a combination of aggressive supply-side reform and support for defense-driven procurement. First, supply-side reforms and curtailments to the regulatory state will make it cheaper to produce in Amerca. Second, defense-driven procurement is dual purpose in that it stimulates manufacturing in sectors critical for national security and generates positive economic spillovers in technological progress, research and development, and investment. 

Click here to view the full report.