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To Counter China, Some Republicans are Abandoning Free-Market Orthodoxy

Aug 26, 2020

Government intervention in the economy used to be anathema to conservatives. But when the Senate called a vote last month on legislation that would direct billions of federal dollars to semiconductor manufacturers, nearly every Republican supported it.

The measure, which has enough bipartisan support to be enacted this year, is the strongest sign yet that Republicans are shedding some of their laissez-faire orthodoxy to counter an unprecedented challenger to U.S. power — China.

“And weak manufacturing over time will undermine American innovation because it is often the people who make things who have the best ideas for new products, argues Oren Cass, a former policy expert at the right-leaning Manhattan Institute who recently founded a new think tank that is advising Rubio and others on industrial policy.

‘Where the engineering goes, that’s ultimately where the R&D goes,’ Cass said in an interview.

Cass, the Rubio adviser and founder of American Compass, favors a variety of steps to strengthen domestic manufacturing, including legislation that would require some businesses to buy technology that is made in the United States. If telecom companies were required to buy domestically made equipment for 5G wireless networks, he said, it would strengthen U.S. manufacturers and counter Chinese suppliers such as Huawei.

Cass and other conservatives say there is strong precedent for industrial policy in the United States. Alexander Hamilton, the country’s first treasury secretary, encouraged the United States to use import tariffs and “bounties,” or subsidies, to foster a strong manufacturing sector, which he saw as crucial to maintaining independence.”

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