[jonnycomputer]

More Biden policy winning back investment in America, is my take.

Update:

People who may not have been following closely what Biden has accomplished during his Presidency might have questions.

In this case, the Inflation Reduction Act specifically has credits to encourage battery manufacture in the US.

https://www.orrick.com/en/Insights/2022/11/Section-45X-of-th...

More generally, the IRA and the Infrastructure Investment and Jobs Act, and the CHIPS act has encouraged investment in US manufacturing, which is surging.

https://www2.deloitte.com/us/en/insights/industry/manufactur...

[dmix]

US domestic manufacturing became a major theme in the last two prior US elections.

If you look at growth charts in US factory capital it started spiking just before the signing of CHIPS act which was pitched to congress in 2019, which was a bipartisan effort seeded from the Trump admin.

https://en.wikipedia.org/wiki/CHIPS_and_Science_Act

And the Infrastructure Investment and Jobs Act which Biden admin pitched to congress, which also got pretty smooth bipartisan support:

https://en.wikipedia.org/wiki/Infrastructure_Investment_and_...

But it's success will be defined on how successful the factories are, not just how many billions/trillions of free $$ the US gov gives to megacorps to prop up these projects. We've seen many, many gov-incentivized factory announcements that went no where. Or worse wasted a ton of time & money of local govs + small town employees. The Obama admin had a few really bad examples of this.

[seadan83]

> Or worse wasted a ton of time & money of local govs + small town employees. The Obama admin had a few really bad examples of this.

Indeed. China had even more examples, but overall they found the winners and boosted them. The US instead defunded and now China produces 80% of all solar panels in the world. It's similar for VC firm, for example, they'll invest in 10 companies and expect only a couple to be profitable.

> If you look at growth charts in US factory capital it started spiking just before the signing of CHIPS act which was pitched to congress in 2019, which was a bipartisan effort seeded from the Trump admin.

Do you have those charts available? I was initially going to give a commendation for pointing out the Trump's administration's role in the Chips act, but... the Chips act was passed in late 2022! "The bill was signed into law by President Joe Biden on August 9, 2022." [1]

What's more, while the CHIPS act was initially bi-partisan, it passed in a relatively partisan vote: "Every senator in the Senate Democratic Caucus except for Bernie Sanders voted in favor of passing the CHIPS Act, and they were joined by seventeen Republican senators" [1]

Bottom line, seems like this bill was presented to Senators* in 2019 and then took time to work its way through Congress. It does not seem the Trump admin had much to do with this (I would more says the CHIPS act was seeded from an initial bipartisan effort that originated in the Senate; there's no mention I see that the executive branch had anything to do with it in 2019; if anything, it seems that congress of 2019 and whatever role the executive had at the time both _failed_ to get the CHIPS act through; it was the next congress that got it done in 2022)

[1] https://en.wikipedia.org/wiki/CHIPS_and_Science_Act

* I'm not entirely sure if 'presented' to senators means there was an executive branch role. My reading of the wiki article is that it sounds like the original 2019 bill originated in the Senate. I just don't see anything that mentions the executive's role in 2019 or 2020.

[dmix]

You can find the growth charts here: https://home.treasury.gov/news/featured-stories/unpacking-th...

but these charts/analysis come from the White House so they are going to be a bit biased (how much is proposed vs real, etc).

I don't really see the value in debating the details of the policies as it's pretty clear Trump made rebuilding industry his #1 message, which was later co-opted by Biden in the 2nd election. Trump was just an utter failure at working with (a very hostile) congress and COVID destroying factory construction didn't help private industry either, or public spending priorities.

I also take issue with the idea China's success in manufacturing was a result of the gov choosing winners = a good thing. Gov as a giant VC sounds like a horrible idea, here in Canada they tried that in tech and it was an embarrassment. China's mass urbanization, huge cheap labour base, a culture of hard work, and the West happily destroying their own industry...it's easy to 'pick' winners in a flush market.

Rebuilding a dead one is different story.

[seadan83]

Those charts seem to indicate a spike after the CHIPS act was passed, rather than when it was proposed by the two bipartisan US senators in 2019.

> I don't really see the value in debating the details of the policies

> Trump made rebuilding industry his #1 message

Not debating policy. I don't see the evidence that Trump is linked to the CHIPS act. While that might be his message (as you claim), the evidence of him doing anything for that relative to the CHIPS act is lacking. The attribution beyond two bipartisan senators proposing the CHIPS act in 2019 is so far without evidence. Further, when the CHIPS act did pass, it was despite Republican opposition. In essence, there doesn't seem to be any evidence Trump had anything to do with the CHIPS act other than holding office while it failed to go anywhere in congress.

> I also take issue with the idea China's success in manufacturing was a result of the gov choosing winners = a good thing.

My claim is that without Chinese government support, China would not be producing 80% of today's solar panels. According to 'ucigcc', the Chinese government played a big role in creating a domestic market (demand) for solar panels. [1] Further: "Credit lines to expand manufacturing capacity were brokered and backed by local governments and state-owned firms, even in the years after the global financial crisis when the collapse particularly of European markets led to overcapacity in global solar markets. " [1]

Taking stock from [1], the Chinese government induced demand for solar panels (subsidized them), and supported the industries producing the solar panels.

From the same reference: "In 2015 the central government launched a so-called Top Runner program. Top Runner projects injected incentives to deploy advanced solar PV technologies and retire the production of dated technologies. Module cost continued to fall because of these incentives, while module efficiency continued to increase. Particularly installations of high-efficiency panels in Western China were able to achieve grid parity because of those incentive changes, yet broader issues, including the perpetual underfunding of the renewable energy fund, the low profitability of domestic manufacturers, overcapacity, and broader trade tensions remained unresolved."

The reference does not 100% back my claim, but I would say strongly supports it. It's hard to see the Chinese solar industry being the same without all of the government support.

> Gov as a giant VC sounds like a horrible idea

On its face, sure. Though, when there is a war or during the pandemic this cames into play. That is an extreme example, there are less extreme examples. In these extreme examples, the government shifts market forces by implementing price caps and forcing production. Governments do similar in less heavy handed ways all the time.

Reference [2] supports this notion, there is a history of governments selecting strategic industries, supporting them, creating demand for that industry - and then once seeded the industry has legs to run on its own. To do this, Governments can create entire markets, which in turn creates enough demand for suppliers to come online.

From [2]: "The emerging U.S. advanced battery industry represents a bold experiment by the federal government in direct financial support of private companies to establish a domestic manufacturing industry."

"The photovoltaic industry is an example of a U.S. high-tech sector that has lost global share but has a solid opportunity to re-emerge as a leader with the right mix of federal and state policy support. In the case of solar power, a deciding factor will be whether the United States will become a big enough market to support a large-scale, globally competitive manufacturing industry. Federal and state incentives will be essential for the next few years, until the cost of solar energy can compete against electricity generated from fossil fuels without subsidies. Another question is whether U.S. companies that focus on products incorporating promising new technologies will be able to survive surging imports of low-cost photovoltaic cells and modules based on mature technologies long enough to attain economies of scale. "

"This turn of fortunes is primarily due to strategic moves and investments in new technologies by U.S. semiconductor manufacturers. Yet, their success also rests on the important contributions of U.S. policy that was driven by an engaged industry. There were two additional interrelated elements to the U.S. success:10 The research consortium SEMATECH, a $200 million-a-year research effort co-funded by the federal government and most large American chip companies, accelerated productivity and innovation in semiconductor manufacturing based on a common technology roadmap and enabled a rapid decline in prices.11 Persistent trade negotiations and enforcement of previous agreements won commitments from Japan to open its market to U.S. semiconductors and curtail dumping in any world market.12 This was deemed essential to prevent the United States from becoming a high-priced island in a sea of underpriced semiconductors. Had that occurred, it would have severely disadvantaged downstream American electronics equipment producers compared with competitors producing abroad utilizing lower-priced dumped chips."

"The decline and resurgence of the U.S. semiconductor industry offers many useful lessons for policymakers and industrialists grappling with how to bolster other American high-technology sectors facing intense international competitive pressure. It shows that erosion of U.S. leadership in manufacturing is not irreversible as long as both industry and government are committed to cooperative action, both on trade policy and in well-designed research programs that will lead to innovation"

What are some examples of this? Tax-credits is a big one. Think of Tesla, sales were boosted because there was an EV tax-credit. Further, there is actually no Tesla without the US department of Energy. "In January 2010, the Department of Energy issued a $465 million loan to Tesla Motors to produce specially designed, all-electric plug-in vehicles" [3] Without that loan, Tesla would have been toast.

> China's mass urbanization, huge cheap labour base, a culture of hard work, and the West happily destroying their own industry...it's easy to 'pick' winners in a flush market.

While that might all be true - when China was building its solar panel industry - the market was not flush. To your point, the Solyndra example and the subsequent divestment are good examples of the US destroying its solar industry. The lack of subsidies for solar panel meant demand and production remained anemic, meanwhile there were strong subsidies given directly to oil companies. The USG effectively cut-off the tap before demand picked up, why would then any US company produce very expensive solar panels with nobody really to buy them? Now that the price has come down, China just dominates, it was their innovation and supports that created the conditions for that to happen.

> I also take issue with the idea China's success in manufacturing

I am being specific to the solar industry. A broader generalization to all of manufacturing would need its own evidence. Yet, there are broad over time and across many governments, examples of industries that got their roots from government support. The solar example is very salient because it was so notable with Solyndra and then the US not strongly supporting renewables, and then lost out big on that industry.

[1] https://ucigcc.org/blog/how-solar-developed-from-the-bottom-...

[2] https://www.ncbi.nlm.nih.gov/books/NBK100307/#

[3] https://www.energy.gov/lpo/tesla

[jonnycomputer]

So, one of the great things about the IRA is that it specifically carves out a space for start-ups and not just established firms.

[jonnycomputer]

Yes, but the CHIPS act was also signed by Biden. I think we can fairly credit him for seeing it through. Trump talked a lot about bringing manufacturing back, but he did not have the self-discipline to actually see any of it through; legislatively, Trump is a master of self-sabotage.

But it is true that the CHIP had bipartisan support, but the ones who supported it were not MAGA types, but people like McConnell.

[dmix]

Trump was the first president with no political, military, or even lawyer experience. And it showed, badly, when it came to congressional policy making.

But he no doubt was a major reason domestic manufacturing shot to the top of Biden's election priorities, after it was a major sticking point that Trump fared far better with the working class vs Hillary.

Even Michael Moore conceded back then that his messaging around rebuilding gutted industry was far better, so it's not surprising it was co-opted.

Which is a good thing, what matters is listening to people and getting results at the end of the day.

[edgyquant]

This is just not true. Trumps tariffs have been one of the biggest motivators of reshoring, which started under him. Yes the chips act is also great, there is no need to pretend one guy was useless and the other did all of the work its bipartisan and the two presidents work in this arena has complimented each other.

[thinkingtoilet]

I'm left of Bernie and voted for Biden but I tend to not like takes like this. Is there a specific policy that he championed that is responsible for this? To me, it's like when people cheer a 'record stock market' as an example of a president's abilities, but fail to mention every single modern president has had a record stock market at some point in their term.

[jonnycomputer]

Yeah, the Inflation Reduction Act.

https://www.orrick.com/en/Insights/2022/11/Section-45X-of-th...

More generally, the IRA and the Infrastructure Investment and Jobs Act

https://en.wikipedia.org/wiki/Infrastructure_Investment_and_...

https://www2.deloitte.com/us/en/insights/industry/manufactur...

There's also the CHIPS act.

By the way, anyone active in the green tech space knows that the IRA has been an absolute game-changer.

[thinkingtoilet]

Wonderful! Thanks.

[mywittyname]

> Is there a specific policy that he championed that is responsible for this?

This was something the President activity campaigned on (Build Back Better), pushed through Congress, and signed into law as The Inflation Reduction Act.

While it did little to reduce inflation (outside of medicine), it was a massive win for people who wanted more investment in clean power generation, more funds for the ACA, lower drug prices, and higher taxes on certain corporate entities.

[vlangber]

Several battery factories that were planned in Norway have scaled down their plans or have been cancelled due to the much better incentives in the IRA.