The remaining portions would be spent to support industrial policy and what has commonly been called “pork barrel” projects. Of the suggested spending, 26 percent would back the administration’s proposed industrial policy, which would favor domestic manufacturing and green technology.
A key instance of this is the offered $174 billion to be paid to win the electric vehicle (EV) market. It is not clear from the White House’s guidance paper how much of that cash would be spent on building hard assets such as EV charging stations, nor do we know how much would be spent on federal payments to promote the purchase of such vehicles.
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Industrial policy was particularly well-used in Japan and South Korea from the 1950s to the 1980s to serve the steel, shipbuilding, and car industries, all of which became world-class. Shipping those items allowed the countries instantly to industrialize more extensively and eventually become full governments.
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At the time, such industrial policies were authorized by the other democracies of the world because those—and different east-Asian territories and nations—were seen as a barrier against communist regimes in North Korea, the Soviet Union, and China.
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China won its civil war against the faction that had to retreat to Taiwan in 1949 and the Korean Conflict was contested from 1950 to 1953.
Under the rules of the modern World Trade Organization, though, governments are usually not allowed to finance products being exported.
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The last half of the Biden Administration’s proposed “infrastructure” legislation, or 52 percent, would go toward projects which usually might have been called “pork barrel” projects.
Such plans consider political interests more than they strive to maximize the economic benefit. For instance, there may be much merit in contributing $400 billion to caregivers, whom the Biden Administration points out are mostly women of color. Whether to spend that money is a legitimate political decision Americans can make. However, it is not infrastructure.
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The full, 25 page White House briefing paper is published online.
The increased size of government coupled with unprecedented spending in response to the pandemic could serve to hinder economic recovery efforts, according to a new report.
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Moreover, based on the growth of government about per-person spending and the size of the economy, an additional excessive increase of government post-COVID could hinder prosperity for Canadians and their families and slow economic growth, the report found.
Fraser Institute economists Jake Fuss and Nathanial Li note in their report that the expanded spending began before the pandemic, with per-person spending jumping from $8,063 to $9,500 between 2015 and 2019.