Podcast Summary
Bipartisan agreement on $250 billion industrial policy bill in response to China's growing dominance: Politicians from both parties came together to invest in high-tech industries to maintain America's technological edge and economic competitiveness against China
The recent bipartisan agreement and passage of a $250 billion bill in the US Senate, the biggest example of industrial policy in American history, can be attributed to the shared concern over competing with China in the global high-tech industry. This legislation, which injects massive amounts of capital into specific industries like semiconductors, autonomous vehicles, robotics, artificial intelligence, synthetic biology, quantum computing, and more, is a response to China's growing dominance in these areas. Despite political divisions, the senators recognized the importance of investing in these cutting-edge industries to maintain America's technological edge and economic competitiveness.
US-China tech competition: US aims for self-sufficiency in key industries by 2025: The US is prioritizing self-sufficiency in key tech industries to reduce dependence on China, due to concerns over military and economic power.
The US-China technological competition has escalated, with China aiming to be self-sufficient in key industries like semiconductors, autonomous vehicles, and advanced cellular networks by 2025. This has raised concerns in Washington, leading to a bipartisan consensus that the US cannot afford to be dependent on China for these technologies that drive the economy and defense sector. The US has begun to question its reliance on China for 5G networks, semiconductors, and synthetic biology, among others. The fear is that China's military and economic power could be used against the US, making self-sufficiency a priority. This shift in mindset is reflected in the recently passed bill aimed at boosting US technological competitiveness. China's dominance in these industries is seen as an urgent threat, and the US is responding by investing in research and development to reduce its dependence on Beijing.
Risk of Economic Dependence on China: The US risks becoming economically vulnerable to China if it doesn't invest in key industries and become self-sufficient. Historical examples of economic competition with Japan highlight the importance of maintaining industrial competitiveness and security.
The United States faces a significant risk if it does not invest sufficiently in key industries and become self-sufficient, as China could potentially turn off our economy or use technologies against us. This fear was illustrated through examples such as manipulated electric transformers and suspicious internet traffic routing. This issue has wiped out decades of partisan divide in the Senate over government investment in American industry, which dates back to the 1980s when Japan was a major economic competitor. The fear then was of becoming a "technocolony" of Japan, as American companies were being outcompeted in industries like semiconductors. These historical and current issues underscore the importance of investing in American industries to maintain economic competitiveness and security.
The late 1980s saw a political divide over government's role in boosting industries, particularly high-tech ventures: During the late 1980s, there was a political debate over government intervention in industries versus market forces. Republicans argued against it while Democrats supported continued investment, citing past successes.
During the late 1980s, there was a significant political divide in the United States regarding the role of government in boosting industries, particularly high-tech ventures. This debate was sparked by Japan's increasing investment in American industries during a time when some American companies were struggling. The Republican party argued against government intervention, believing that the market was best suited to pick new technologies. On the other hand, Democrats argued for continued government investment, citing past successes such as the space program and the Internet. This divide continued throughout the following decades, with major investments during the Clinton and Obama administrations leading to intense political debates. For instance, during Obama's tenure, the loan guarantee to Solyndra became a symbol of the administration's approach to free enterprise. Overall, this period highlights the ongoing tension between those who believe in minimal government intervention and those who advocate for government support in driving technological innovation.
The Solyndra controversy and government funding for R&D: Despite concerns about government funding for R&D potentially displacing private sector motivations, the current Senate proposal to counter China's economic influence faces less partisan opposition due to China's perceived threat to the US economy and military power, and a shift in Republican rhetoric under Trump.
The debate over government funding for research and development, as exemplified by the Solyndra controversy during the 2012 U.S. presidential campaign, has long been a contentious issue in American politics. This is due to concerns that such spending can displace the motivations and instincts of the private sector, leading to a perverse set of incentives. However, the current Senate proposal to spend large sums of money to counter China's economic influence is not facing the same level of partisan opposition. This is likely because China is seen as a more significant threat to the United States due to its economic and military power, and the shift in Republican rhetoric under former President Trump, who described China as a mortal enemy and cast the debate as a battle between democratic forces and autocracy.
U.S. Politics Unified by China Threat: The China threat has brought American politics together, leading to significant investments in the semiconductor industry and a long-term focus on competition with China.
Despite political differences between the current and previous U.S. administrations, the threat of China has emerged as a major unifying element in American politics. President Biden's call for the U.S. to come together to confront China marks a significant aspect of his national security philosophy. This consensus on the China threat led to the passing of a bill worth over $50 billion to invest in the semiconductor industry, an initiative started during the Trump administration. However, the competition with China has also raised concerns about excessive spending and turning the bill into a "Christmas tree" for various projects. Nonetheless, the fear of China has served as a catalyst for America to plan for the long term and get its act together, as seen in the past during the Cold War with Russia. The passing of this bill is just the beginning, as the U.S. still lags behind China and other countries in terms of research and development spending as a percentage of GDP. Overall, the debate over the bill highlights the importance of having an adversary to drive necessary actions for the betterment of the country.
Wealthy Americans paid minimal taxes 2014-2018: The 25 wealthiest Americans used tax loopholes, debt, and focus on traditional income over wealth to pay minimal or no federal income taxes between 2014 and 2018.
Between 2014 and 2018, the 25 wealthiest Americans, including Jeff Bezos, Michael Bloomberg, and Elon Musk, paid minimal or no federal income taxes. This was achieved through exploiting tax loopholes and deductions, borrowing large sums of money, and the U.S. tax system's emphasis on taxing traditional income over accumulated wealth, such as stocks and real estate. ProPublica, a news organization, obtained this data from the Internal Revenue Service. The episode was produced by Ashta Chaturvedi, Eric Krupke, Luke Vander Plaen, and Nina Potta, and edited by Dave Shaw, engineered by Chris Wood, with original music by Mary Lozano and Dan Powell.
