WEBVTT NOTE This file was generated by Descript 00:00:01.580 --> 00:00:07.360 More than 19 million Americans held a job in manufacturing during the peak in 1979. 00:00:07.680 --> 00:00:11.710 Since then, that number has tumbled by nearly 36 percent to just 12. 00:00:11.710 --> 00:00:14.450 5 million in November 2021. 00:00:15.270 --> 00:00:19.069 In comparison, non farm employees grew more than 65 00:00:19.070 --> 00:00:20.669 percent during the same period. 00:00:20.830 --> 00:00:21.880 There are several reasons for this. 00:00:22.360 --> 00:00:28.200 One is that manufacturing steadily is becoming a more complex industry where 00:00:28.200 --> 00:00:32.439 you need more people with advanced degrees and Professional certificates 00:00:32.780 --> 00:00:36.710 over the last 50 years, certain industries that just aren't 00:00:36.760 --> 00:00:38.030 really well suited for the U. 00:00:38.030 --> 00:00:38.170 S. 00:00:38.170 --> 00:00:43.250 Economy, particularly labor intensive, low wage manufacturing 00:00:43.250 --> 00:00:48.050 and things like textiles or furniture, um, have moved offshore. 00:00:48.349 --> 00:00:49.355 But now The U. 00:00:49.355 --> 00:00:49.495 S. 00:00:49.525 --> 00:00:54.445 is spending big on industrial policies to bring manufacturers back to America. 00:00:54.655 --> 00:00:59.084 Industrial policy is the use of some sort of government power, either legal 00:00:59.184 --> 00:01:04.004 power or taxing power or tax abating power or some other thing to have the 00:01:04.004 --> 00:01:06.994 economy start producing some things that the government thinks it needs to 00:01:06.994 --> 00:01:08.794 be producing and maybe isn't producing. 00:01:08.884 --> 00:01:10.214 If you look at. 00:01:10.215 --> 00:01:15.215 The three pieces of legislation, the Chips and Science Act, the Bipartisan 00:01:15.225 --> 00:01:19.685 Infrastructure Bill, and the Inflation Reduction Act, you're looking at 00:01:19.774 --> 00:01:26.144 more than a trillion dollars in new government spending on industrial policy. 00:01:26.524 --> 00:01:30.145 Not all economists believe the government should be playing favorites. 00:01:30.435 --> 00:01:38.505 Politicians and bureaucrats are ill suited to pick winners in the market. 00:01:38.765 --> 00:01:43.760 If the Federal government, um, so puts its thumb on the scale on one 00:01:43.830 --> 00:01:49.260 side, there is inevitably going to be some sort of, um, loser. 00:01:49.630 --> 00:01:51.119 So how exactly is the U. 00:01:51.119 --> 00:01:51.249 S. 00:01:51.280 --> 00:01:53.770 government convincing manufacturers to return? 00:01:54.359 --> 00:01:55.899 And will its bet pay off? 00:01:59.080 --> 00:02:00.510 This isn't the first time the U. 00:02:00.510 --> 00:02:00.630 S. 00:02:00.660 --> 00:02:03.430 government has directly interfered with the free market. 00:02:03.580 --> 00:02:04.870 Industrial policy in the U. 00:02:04.870 --> 00:02:05.050 S. 00:02:05.050 --> 00:02:07.080 was started by Alexander Hamilton. 00:02:08.090 --> 00:02:08.930 He, he, he, the U. 00:02:08.930 --> 00:02:09.100 S. 00:02:09.100 --> 00:02:11.629 was weak in terms of making things and we knew we had to be 00:02:11.629 --> 00:02:13.019 strong, we had to make cannons. 00:02:13.510 --> 00:02:15.230 muskets, whatever. 00:02:15.549 --> 00:02:19.320 And so they put on a heavy tariff walls that made it not 00:02:19.320 --> 00:02:20.429 economic to import things. 00:02:20.429 --> 00:02:22.280 And therefore, companies here started to make things. 00:02:22.739 --> 00:02:25.019 And we're a great country significantly because of that. 00:02:25.329 --> 00:02:28.639 However, experts say the recent initiatives from the Biden 00:02:28.639 --> 00:02:30.619 administration are unprecedented. 00:02:31.065 --> 00:02:34.165 The United States government has in the past used subsidies. 00:02:34.165 --> 00:02:37.545 It has used tariffs and buy American protection. 00:02:37.695 --> 00:02:43.795 Um, but the scale of what we're playing with now is far, far bigger than 00:02:43.855 --> 00:02:45.234 anything we've done in the recent past. 00:02:45.784 --> 00:02:49.534 Government incentives ranked second on reasons why manufacturers 00:02:49.554 --> 00:02:50.625 are returning to the U. 00:02:50.625 --> 00:02:50.915 S. 00:02:51.289 --> 00:02:54.679 According to the National Institute of Standards and Technology. 00:02:54.759 --> 00:02:57.599 He asked manufacturers and distributors, to the extent that 00:02:57.599 --> 00:03:00.470 you get product components from offshore, why do you do that? 00:03:00.480 --> 00:03:01.709 Why don't you get them here? 00:03:02.160 --> 00:03:02.929 And they said price. 00:03:03.069 --> 00:03:08.319 If the government can lower that cost of production through subsidies, it 00:03:08.359 --> 00:03:12.655 makes production more attractive in the location that the government wants it. 00:03:12.895 --> 00:03:16.135 The new incentives from the Biden administration focus on 00:03:16.165 --> 00:03:20.264 two specific sectors, electric vehicles and semiconductors. 00:03:20.865 --> 00:03:25.324 For instance, the Inflation Reduction Act of 2022 employs tax credits 00:03:25.575 --> 00:03:28.515 to encourage the manufacturing of clean energy in the U. 00:03:28.515 --> 00:03:28.755 S. 00:03:29.065 --> 00:03:33.595 Since its enactment, at least 45 billion dollars in private sector investment. 00:03:33.745 --> 00:03:36.545 has been announced across the supply chain, according 00:03:36.545 --> 00:03:37.685 to the Treasury Department. 00:03:37.785 --> 00:03:40.755 The EV battery tax credit is 7. 00:03:41.515 --> 00:03:47.245 5, 000 per new car, and then a 4, 000 credit when you sell 00:03:47.245 --> 00:03:48.465 the used car to somebody else. 00:03:48.524 --> 00:03:48.724 U. 00:03:48.724 --> 00:03:48.854 S. 00:03:48.854 --> 00:03:53.235 manufacturing costs isn't that much higher than doing it in China, for example. 00:03:53.465 --> 00:03:56.695 And therefore, It would clearly be more profitable to do it here 00:03:56.695 --> 00:03:59.045 than it would be to ship it, make it there and ship it here. 00:03:59.494 --> 00:04:01.374 So the the incentives have been 00:04:02.184 --> 00:04:02.664 huge. 00:04:02.954 --> 00:04:07.584 Meanwhile, the Chips and Science Act of 2022 set aside 50 billion 00:04:07.584 --> 00:04:11.024 dollars to boost America's competitiveness in semiconductors. 00:04:11.650 --> 00:04:14.730 The Semiconductor Industry Association estimates that the act 00:04:14.730 --> 00:04:20.430 has attracted over 210 billion in private investments across 22 states. 00:04:20.979 --> 00:04:25.669 We make a fair amount of them, but we are highly reliant on a relatively small 00:04:26.040 --> 00:04:29.420 set of sources, especially Taiwanese. 00:04:29.480 --> 00:04:33.040 One of the lessons that not only the government have drawn from the 00:04:33.360 --> 00:04:38.810 COVID is that semiconductor sector is at the core of a lot of advanced 00:04:38.840 --> 00:04:42.400 manufacturing and even a lot of mid level consumer goods manufacturing 00:04:42.510 --> 00:04:46.440 and that you can't really afford an interruption of semiconductor supply. 00:04:47.710 --> 00:04:48.529 All major U. 00:04:48.529 --> 00:04:48.659 S. 00:04:48.659 --> 00:04:52.330 defense systems today rely on semiconductors in order to function. 00:04:52.730 --> 00:04:56.340 The Biden administration has referred to the reshoring of semiconductors 00:04:56.400 --> 00:04:58.540 as a matter of national security. 00:04:58.660 --> 00:05:04.740 There is a theoretical case for industrial policy, particularly in 00:05:05.060 --> 00:05:07.039 national security related technologies. 00:05:07.090 --> 00:05:12.380 Free markets just simply can't account for that national security issue. 00:05:12.720 --> 00:05:16.390 And the Defense Department is not a big enough buyer to. 00:05:16.635 --> 00:05:22.055 In itself, in its own demand to ensure that we have sufficient onshore supply, 00:05:22.255 --> 00:05:26.595 if successful, industrial policies can also potentially lead to big payoffs. 00:05:27.025 --> 00:05:30.434 The development of space industry, we now have a large 00:05:30.455 --> 00:05:32.335 commercial space launch industry. 00:05:32.445 --> 00:05:36.145 That investment of public money in space science is now 00:05:36.165 --> 00:05:37.545 having a big commercial payoff. 00:05:37.765 --> 00:05:41.175 Another example would be the development of mRNA vaccines for COVID. 00:05:41.265 --> 00:05:43.325 They put out a goal for business. 00:05:43.565 --> 00:05:47.244 to do when they finance it and the business is delivered on it and that 00:05:47.394 --> 00:05:49.974 cost a lot of money but I think most people would say it was well worth it. 00:05:50.184 --> 00:05:52.634 But there are also strong cases against them. 00:05:52.704 --> 00:06:01.624 Politicians and bureaucrats are ill suited to pick winners in the market. 00:06:01.694 --> 00:06:08.834 The real economy is insanely complex involving millions of people and millions 00:06:08.835 --> 00:06:12.064 of transactions every single day. 00:06:12.074 --> 00:06:19.474 What is Potentially strategic today might change dramatically tomorrow. 00:06:19.565 --> 00:06:23.984 We are head first into electric vehicles today. 00:06:24.024 --> 00:06:27.554 We're running the risk of, you know, pushing a technology that 00:06:27.554 --> 00:06:28.965 isn't quite ready for prime time. 00:06:29.194 --> 00:06:33.184 And in the process, sidelining a technology that maybe turned 00:06:33.184 --> 00:06:34.244 out to be a better approach. 00:06:34.395 --> 00:06:39.184 Industrial policies are also susceptible to the biases of the politicians involved. 00:06:39.304 --> 00:06:43.414 The reality is that Any industrial policy must make it through a political 00:06:43.414 --> 00:06:48.224 process that is inevitably influenced by political actors, whether that 00:06:48.224 --> 00:06:50.604 is interest groups or lobbyists. 00:06:50.804 --> 00:06:55.565 So all of those political influences really are a corrupting force. 00:06:55.754 --> 00:06:59.655 The Micron plan in upstate New York, well, that just happens to be where, um, 00:06:59.655 --> 00:07:01.784 Senate Majority Leader Chuck Schumer's. 00:07:01.825 --> 00:07:02.794 home state, right? 00:07:02.835 --> 00:07:05.684 We see the Intel plant in Ohio. 00:07:05.924 --> 00:07:09.895 Um, well, Ohio is, of course, a very politically important state 00:07:09.895 --> 00:07:11.265 for the presidential election. 00:07:11.655 --> 00:07:16.984 So you might be running the risk of having projects located in places that are more 00:07:16.984 --> 00:07:19.334 politically important than they are. 00:07:19.499 --> 00:07:22.549 strategically sound commercial investment. 00:07:22.710 --> 00:07:24.999 There's also the issue of hidden costs. 00:07:25.320 --> 00:07:30.029 If the federal government, um, so puts its thumb on the scale on one 00:07:30.080 --> 00:07:35.570 side, there is inevitably going to be some sort of, um, loser 00:07:35.629 --> 00:07:38.359 electrification, uh, batteries. 00:07:38.770 --> 00:07:42.020 That is an area where we know we have to invest. 00:07:42.299 --> 00:07:46.280 We can do that with incentives, but at the same time, we can't penalize through 00:07:46.280 --> 00:07:52.539 the regulatory system, uh, other forms of, of energy production or development. 00:07:52.950 --> 00:07:56.829 Ultimately, critics point out that it isn't the government's job to pick the 00:07:56.830 --> 00:07:58.759 winners and losers in a free market. 00:07:58.770 --> 00:08:03.799 My view is that I have no idea what's the right industry or the wrong industry. 00:08:03.800 --> 00:08:08.989 Um, and I think that as long as we've implemented the right. 00:08:09.489 --> 00:08:15.650 Market based policies to make investing and producing here, um, 00:08:15.749 --> 00:08:20.219 affordable and attractive, um, the market is going to figure that out. 00:08:21.319 --> 00:08:24.650 Total construction spending in the manufacturing sector has seen an 00:08:24.660 --> 00:08:29.780 increase of over 106 percent since November 2021, when the Infrastructure 00:08:29.780 --> 00:08:31.900 Investment and Jobs Act was passed. 00:08:32.299 --> 00:08:33.100 That means the U. 00:08:33.100 --> 00:08:33.250 S. 00:08:33.250 --> 00:08:36.780 has spent more money building factories than schools, health care 00:08:36.780 --> 00:08:38.770 centers and even office buildings. 00:08:38.949 --> 00:08:42.770 Still an open question, but I do think you see electronics and 00:08:42.829 --> 00:08:47.659 semiconductors sector companies that had been here, again, seeing the U. 00:08:47.659 --> 00:08:47.779 S. 00:08:47.780 --> 00:08:50.590 as a place they want to make things and others considering it. 00:08:50.995 --> 00:08:54.325 So I think that's a, it's a, it's a positive story and the administration's 00:08:54.325 --> 00:08:55.595 right to claim a bit of credit for that. 00:08:55.885 --> 00:08:59.615 Experts suggest a broader policy could have brought more significant 00:08:59.645 --> 00:09:00.855 and efficient improvements. 00:09:01.225 --> 00:09:06.015 I think they, instead of spending so much on, on the incentives that they did have, 00:09:06.274 --> 00:09:07.615 they should have spread it around more. 00:09:07.955 --> 00:09:14.155 And, and taking other actions that would have, um, leveled the playing field. 00:09:14.165 --> 00:09:18.865 The most obvious one, especially given the technologies that we're 00:09:18.865 --> 00:09:21.215 looking at, is on immigration. 00:09:21.525 --> 00:09:28.075 The fact is that a lot of the smartest people in the world can't get to the 00:09:28.075 --> 00:09:34.425 United States to work here and support the types of technologies that the government. 00:09:34.770 --> 00:09:39.300 Says, um, are critical to national security and the future of the U. 00:09:39.300 --> 00:09:39.420 S. 00:09:39.420 --> 00:09:39.990 economy. 00:09:40.220 --> 00:09:45.620 And you're hearing from really across, uh, the industries in this tech space, 00:09:45.930 --> 00:09:48.380 the need for more high skill immigration. 00:09:48.439 --> 00:09:52.860 The labor shortage is perhaps the biggest challenge that manufacturers have to face. 00:09:53.555 --> 00:09:57.865 82 percent of manufacturing companies today are seeing a shortage of workers. 00:09:58.155 --> 00:10:01.874 The National Association of Manufacturers estimate that 2. 00:10:01.874 --> 00:10:05.424 1 million manufacturing jobs could go unfilled by 2030. 00:10:05.655 --> 00:10:07.265 The rest of the world has the same problem. 00:10:07.305 --> 00:10:10.255 This is not a unique problem for the United States. 00:10:10.304 --> 00:10:11.635 We just need more workers. 00:10:11.834 --> 00:10:15.704 Part of that rests on our public schools. 00:10:15.964 --> 00:10:19.625 Primary and secondary education needs to focus on the amazing opportunities 00:10:20.495 --> 00:10:24.694 available in manufacturing, about half of which do not even require 00:10:24.694 --> 00:10:26.454 anything beyond a high school degree. 00:10:26.454 --> 00:10:31.605 So you don't have to amass hundreds of thousands of dollars of college debt. 00:10:31.814 --> 00:10:35.259 So you're kind of setting yourself up for a challenging and an exciting future. 00:10:35.430 --> 00:10:39.710 Exciting career that will pay well and provide an incredible 00:10:39.710 --> 00:10:40.970 quality of life for your family. 00:10:41.220 --> 00:10:44.710 Nevertheless, the rising trend in reshoring has brought back 00:10:44.740 --> 00:10:48.660 what the manufacturing sector has needed the most excitement. 00:10:48.750 --> 00:10:53.429 People used to believe manufacturing was cool until the factory in 00:10:53.819 --> 00:10:56.559 their small town got shut down and their work moved to somewhere 00:10:56.559 --> 00:10:57.789 else and everybody lost their job. 00:10:58.060 --> 00:11:03.790 As it comes back and it proves itself to be excellent careers again for, for 00:11:04.030 --> 00:11:10.470 millions of extra people, that will create excitement, uh, we'll have better 00:11:10.470 --> 00:11:16.839 trained people, more productive, more enthusiastic and, uh, a rebirth of U. 00:11:16.840 --> 00:11:16.990 S. 00:11:16.990 --> 00:11:17.670 manufacturing.