Industrial Policy’s Short-Run Booms Risk Long-Term Failures

Source: American Institute for Economic Research
by Ryan M Yonk & Jacob Bruggeman

“New York state’s GlobalFoundries (GF) received news of $1.5 billion in direct funding and $1.6 billion in loans from the US Department of Commerce. The funds will be used to renovate fabrication facilities in Malta, NY (an hour’s drive from AIER’s campus in Great Barrington) and Essex Junction, VT, and to build a new Malta facility that will make chips for cars, planes, defense systems and artificial intelligence. Politicians and the chip industry claim government funding will spur an additional $12 billion investment from GF and create over 1,500 manufacturing jobs and roughly 9,000 construction jobs over the next decade. … But this latest example of government backing of American chipmaking offers an opportunity to weigh the benefits and costs of subsidies in our society at the local, national, and international level.” (03/28/24)