June 18, 2024

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‘Money Doctor’ Steve Hanke says Biden industrial policy is turning America into Europe

2 min read

In June 2021, Brian Deese, the director of Joe Biden’s National Economic Council, planted a flag in the ground. “I am excited to lay out our vision for a 21st-century American industrial strategy,” he said in a speech at the Atlantic Council in Washington, DC. This is a playbook to “strengthen our supply chains and rebuild our industrial base, across sectors, technologies, and regions.”

From his perch at the nearby Johns Hopkins University in Baltimore, the “money doctor” was watching on with shock. 

Steve Hanke is the “privatization” guru who served as a senior economist to the Council of Economic Advisors in the Reagan Administration. He’s traveled the world advising presidents from Argentina to Indonesia to Venezuela, including stints guiding Ecuador and Montenegro to successfully “dollarize” by dumping their wobbling currencies for the greenback, and he even helped craft free-market reforms in the former Socialist Federal Republic of Yugoslavia. Hanke noted to Fortune that even the French are amazed by the shift in America’s political economy. Quips the economist, “When France tells you that your industrial policy’s over the top, you know you’re in trouble. The Biden folks never talk about how U.S. policy is looking more and more like Europe’s. The Biden agenda could be sporting a beret.”

Industrial policy is generally defined as government action that promotes, or directly subsidizes, the health and growth of favored sectors or companies over others. Put simply, it’s state intervention that steers money to different places than it would go if channeled by the market’s unfettered currents. The principal features are cash subsidies, tariffs, quotas, tax breaks, easy credit, and technical requirements used to curb imports and protect domestic producers. 

Hanke refers back to the Inflation Reduction Act, a grab-bag of policies that seeks to turbo-charge investment in key areas identified by the White…

Shawn Tully

2023-11-11 06:00:00

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