Opinion by David Ignatius: The U.S. will embark on a bold economic experiment — a bipartisan plan to bolster high-tech sectors with $52 billion in government investment. It’s not understood outside Washington, and without public support it won’t succeed.
in chipmaking grants. She’ll be discussing, too, an $11 billion program to build a National Semiconductor Technology Center and a network of federally funded innovation hubs that she likens to the old “Bell Labs” that did pathbreaking research a half-century ago.“This is more than just an investment to subsidize a few new chip factories,” Raimondo told me.
Let’s start with the economics. The idea that the government should incubate and sometimes steer economic development goes back to Alexander Hamilton. And public investment — in canals, roads, hydroelectric dams and, eventually, the internet and GPS satellites — helped build America over its first 200-plus years.
How will the Chips Act remedy that competitive problem? That’s what the subsidies are for. They will reimburse companies for the additional cost of building chip-fabrication plants in the United States rather than overseas. Maybe chips are so important that they deserve such subsidies. But what about cars, or airplanes, or cellphones? At some point, this departure from market measures of efficiency becomes dangerous in altering economic incentives.
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