State Capacity in Short Supply: Assessing the Biden Administration’s Industrial Strategy

After decades of witnessing factories shutter and production move overseas, the political class in Washington seems finally to have woken up to the consequences. A once-in-a-century pandemic laid bare the costs of industrial weakness, and a generation-defining geopolitical contest with China has further raised the stakes. The importance of supply chains and domestic production to the nation’s economic well­being and national security can no longer be dismissed as fanciful or fringe analysis. The neoliberal economic consensus that underlays the policies of deindustrialization and globalization has come under scruti­ny, and while it may continue to hold serious sway in the halls of power, it no longer enjoys an intellectual monopoly there. Politicians are, after all, responsive to the public mood—and many of them, including both the current and prior president, seem to have understood that the public wants something new.

The public policy implications of that fracturing consensus for the nation’s present economic challenges are as yet unknown. For all the posturing about changing economic course and reinvesting in America, the American government has yet to offer a coherent, unified economic strategy and corresponding policy program. In many respects, that is the domestic policy challenge—and opportunity—of our time: to chart a course out of the neoliberal quagmire and toward an economy that genuinely supports national power, economic resilience, dignified work, and shared prosperity.

But it is near impossible to navigate a new course without first getting one’s bearings. Navigators must be clear about where they are, and how they got there. A long-term strategy can only be so helpful without the essential, preliminary exercise of diagnosis. That is why we were encouraged, in February 2021, when the Biden administration directed seven cabinet-level departments to conduct yearlong supply chain assessments across six sectors: defense, public health, information and communications technology (ICT), energy, transportation, and agri­culture. At first blush, this was just the sort of exercise that the federal government should undertake to inform a national economic strategy suited to the nation’s challenges.