Thread by @LHSummers

@JakeSullivan46 is a very thoughtful leader and it's probably the most carefully intellectually developed exposition of the administration's philosophy that we have had to date.

Biden Administration's Industrial Policy
bloomberg.com/news/videos/20…

Certainly, he's right that the world has changed. He's right that China represents a new kind of challenge. He's right to emphasize after what we've seen in Europe with oil, other things, the importance of resilience.

But I was disappointed that the speech did not emphasize the central importance of importing low-priced goods. That is a substantial part of what determines the living standards of Americans.

That is a substantial part of what determines the competitiveness of American producers.

For example, we have 60,000 people working in the steel industry and 6 million people working in industries that use steel. When we raise the price of steel, we are hurting people.

I think that the administration is much too quick to move to industrial policy strategies on grounds of resilience.

Let me give you two examples.

The Jones Act was the resilience policy of 1920s. It says: Let's have all our shipping be on U.S carriers. That's made the price of heating oil considerably higher in New England all year. It screwed up our help to Puerto Rico after hurricane b/ we didn't have adequate capacity.

We had a major infant formula problem in this country that was related to “buy American” policies. That meant we couldn't turn quickly to European supply chains.

Of course, we're all for resilience. We're all for strong US producers and strong U.S. businesses.
But what I find missing in the approach is helping consumers, which after all is the middle class and is central to how people feel they're doing.

Also missing is recognizing the importance of cooperation in producing a more prosperous global economy that works to our benefit and the United States maintaining its commitment to other countries, which we have not done in the trade area for quite some time.

I think in their extreme preoccupation w/ manufacturing, their failure to consider consumers and reluctance to embrace cooperation in favor of more aggressive economic nationalism. I don't think they're quite in the place that will ultimately serve the long run interests of USA.