The once-beleaguered CHIPS Act has finally passed and will soon receive President Joe Biden's enthusiastic signature. The big ticket item in that legislation is $52 billion worth of subsidies for computer chip manufacturers, but once the bill's passage looked inevitable, it was stuffed full of additional spending. The CHIPS and Science Act's cost has now ballooned to $280 billion. And emboldened Democrats have already moved on to another spending spree with the Inflation Reduction Act, a slimmed-down version of Biden's "build back better" initiative.
Both bills reflect a cross-party shift toward embracing industrial policy—the idea that the government should jump into the economy with both feet and have fun getting wet. Facetiousness aside, the neoliberal era from the late 1970s through the 1990s—when economic thinking carried more political sway and resulted in massive deregulation of airlines, railroads, and interstate trucking and the privatization of the internet—is far behind us.
