For now, says David Victor, a professor of innovation and public policy at the University of California, San Diego, that’s fine. “It’s more like industrial policy à la carte,” he says. It’s based on what is politically possible, appeasing different interests, from labor to industry to climate activists. Now, says Victor, “we need to turn it into as effective industrial policy as possible.”
One challenge will be dealing with potentially conflicting priorities. For example, the climate bill’s generous tax incentives for electric vehicles come with a few stipulations. The EVs must be assembled in North America. What’s more, the battery components must be made or assembled in North America and the critical metals going into the batteries must be mined in the US or by its free-trade partners. That might boost long-term domestic manufacturing, creating jobs and building more reliable supply chains, but it also could create a bottleneck in EV production. If that happens, it could slow down efforts to reduce carbon emissions.
Various other trade-offs and choices loom as the country ramps up its technology investments. To help make better choices, Erica Fuchs, a professor of engineering and public policy at Carnegie Mellon, and her collaborators have started a pilot project, funded by the NSF, that will use advanced data analysis and cross-disciplinary expertise from a team of university researchers to better inform policy makers on technology decisions.
Called the National Network for Critical Technology Assessment, it’s meant to provide useful information on different options to meet various geopolitical and economic objectives. For example, given US dependency on China for lithium and the Democratic Republic of the Congo for cobalt, and given the risks of those supply chains, what is the potential value of innovations in battery recycling, alternative battery chemistries (such as ones that don’t use cobalt), and alternative extraction technologies? Likewise, there are questions around what parts of domestic battery manufacturing are most important for creating US jobs.
While much analysis has already gone into writing the legislation, says Fuchs, many more questions will come up as the government attempts to spend the allocated funds to best realize legislative goals. She hopes the project will eventually lead to a larger network of experts from academia, industry, and government that provide the tools to clarify and quantify opportunities emerging from US innovation policies.
A new story
Any new narrative that the government can promote innovation and use it to foster economic prosperity is still very much a work in progress. It’s not yet clear how the various provisions in the different pieces of legislation will play out. Perhaps most worrisome, the large jumps in funding for R&D in the CHIPS and Science Act are simply authorizations—recommendations that Congress will need to work into the budget anew every year. A switch in political mood could quickly kill the funding.
But perhaps the greatest unknown is how the federal funding will affect local economies and the welfare of millions of Americans who have suffered decades of lost manufacturing and declining job opportunities. Economists have long argued that technological advances are what drive economic growth. But over the last few decades, the prosperity resulting from such advances has been largely restricted to a few high-tech industries and has mostly benefited a relatively small elite. Can the public once again be convinced that innovation can lead to widespread prosperity?
One worry is that while the recent legislation strongly supports semiconductor manufacturing and assorted clean technologies, the bills do little to create good jobs where they are most needed, says Harvard’s Rodrik. “In terms of bang for the buck,” he says, investing in advanced manufacturing and semiconductors “is one of the least effective ways of creating good jobs.” There is, he says, a “kind of manufacturing nostalgia” and a belief that rebuilding this sector will bring the middle class back. But that’s illusory, he says, since today’s advanced manufacturing is highly automated, and facilities tend to employ relatively few workers.