In Defense of Everything-Bagel Liberalism
Critics warned that the Biden administration put so many conditions on the grants it offered to semiconductor manufacturers that the centerpiece of its industrial policy would fail.
In Defense of Everything-Bagel Liberalism
Critics warned that the Biden administration put so many conditions on the grants it offered to semiconductor manufacturers that the centerpiece of its industrial policy would fail. Those conditions turned out to be key to the program’s success.
by Joel Dodge
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In a 2023 New York Times column, Ezra Klein coined the term “everything-bagel liberalism” to describe the phenomenon of projects that liberals favor getting weighed down by seemingly ancillary requirements liberals impose on them. He noted, for instance, that in California, strict labor and environmental standards embedded in various pieces of legislation passed by the Democratic legislature over the years have made it too costly and time-consuming to build subsidized housing for the homeless.
This same problem, he warned, would imperil one of the centerpieces of the Biden administration’s economic policy: the CHIPS and Science Act. Klein praised the aims of this flagship legislation to reshore semiconductor manufacturing with a $39 billion fund to attract companies to the United States. But in the administration’s implementation of the bill, he discovered a plethora of conditions the government would have to use to evaluate prospective grantees that worried him—ranging from applicants’ commitments to workforce development for racial minorities and women, to environmentally friendly operations, to community investments in transit, housing, and child care, and more. Klein warned that this litany of priorities that were not directly related to the main task at hand—bringing semiconductor manufacturing to the U.S.—risked overwhelming the core enterprise. “The government is adding subsidies with one hand,” he wrote, “and layering on requirements with the other.” An industrial policy mission as complex as bringing back semiconductor manufacturing calls for “an intensity of focus that liberalism often lacks,” he concluded.
Klein resumed his critique of the Biden administration’s industrial policy approach in his book Abundance, coauthored with The Atlantic’s Derek Thompson and released in March—and the two were hardly alone. When the administration first issued the CHIPS Act funding guidelines, Catherine Rampell of The Washington Post wrote that the requirements were the latest example of how “virtually every ambitious program gets saddled with too many other unrelated objectives to do any of them well.” Matthew Yglesias wrote in his Slow Boring newsletter that if promoting semiconductor manufacturing is an important national goal, then the administration should “act like it’s important and say that other causes need to fall by the wayside.” The blogger Noah Smith likewise bemoaned liberals’ “laundry list” habit of “inserting every goal into every project.” Senator Ted Cruz and a dozen of his Republican colleagues got in on the action too, blasting the administration in a letter for including “application requirements that are ancillary to accomplishing Congress’s stated goals or otherwise squander taxpayer dollars on social policy objectives.”
The argument that liberals inadvertently produce scarcity by entangling their own projects in a web of competing priorities is a central tenet of what’s become known as “abundance liberalism”—an emerging policy movement, of which Klein and Thompson are among its most prominent proponents. And in certain contexts, they are right. For instance, I’ve argued in these pages in favor of permitting reform to accelerate the building of clean-energy infrastructure, and elsewhere have endorsed using the Defense Production Act to bypass procedural barriers for important green projects.
But just as too many conditions can doom a project in some contexts, so can too few conditions spell doom in others. Indeed, despite all of the op-ed page consternation, the CHIPS Act’s everything-bagel conditions turned out to be a nothingburger. When stacked up against high-profile economic development failures of the recent past, the CHIPS Act shows that a little bit of everything-bagel liberalism is actually quite useful to crafting effective and politically sustainable industrial policy. When government is handing out vast sums of taxpayer dollars to private industry, the best and only way to achieve public ends is to put the right conditions on the money.
It’ll be years, of course, before we can know for certain whether Joe Biden’s CHIPS Act achieves its goal of rebuilding an internationally competitive advanced microprocessor fabrication industry on U.S. soil—and whether it can withstand Donald Trump’s vendetta against the “horrible” law enacted by his predecessor. But by many measures, the CHIPS Act is already achieving its aim of creating a domestic alternative to the existing geopolitically fraught Taiwanese-dominated semiconductor supply chain. The act’s semiconductor grants program wound up “vastly oversubscribed,” according to Biden’s commerce secretary, Gina Raimondo. The Department of Commerce received some 600 statements of interest from companies seeking to build semiconductor fabrication facilities (known colloquially as “fabs”) in the United States, collectively requesting $70 billion in funding—nearly double the amount available under the law. To take one prominent example, the Taiwan Semiconductor Manufacturing Company (TSMC) received a grant to create a new plant in Phoenix, which is now up and running and achieving chip production yields that outpace the company’s Taiwan plants—a key mark of success. In March, the company announced plans to more than double its investment in Arizona.
The administration’s supposed gauntlet of conditions held back very few suitors. In fact, many of the “extraneous” conditions were directly tied to significant industry needs.
In Abundance, Klein and Thompson singled out the Biden administration’s funding preference for CHIPs Act applicants who “create equitable work force pathways for economically disadvantaged individuals,” including “building new pipelines for workers.” However, workforce development is a critical concern for semiconductor reshoring: The meager existing domestic chip industry in the U.S. means that the country has few skilled workers available to staff new fabs, posing a stark bottleneck for new investment. Indeed, in 2023, TSMC’s new fab in Phoenix was forced to delay production in part because of the shortage of skilled workers.
Nonetheless, Klein and Thompson (along with many other critics) expressed particular dismay over the administration’s consideration of whether a CHIPS Act applicant would arrange for either onsite or local child care for its workers. Yet the industry itself seemed entirely nonplussed by this requirement. In an interview with Oren Cass of American Compass, Scott Gatzemeier, an executive at the semiconductor manufacturer Micron Technologies, explained, “What keeps me up at night [is] getting the workforce for these fabs and building the workforce for the future,” noting that his firm was actively exploring “nontraditional pathways [to] reach out and get more people coming in … At Micron, we’re building a daycare right across the street from our [Idaho] headquarters.” He added, “We’ve already purchased the land [at our coming] New York site to do that [too].” Semiconductor firms are providing perks like child care because it’s a smart strategic choice to attract and retain the skilled workers they need to succeed.
Klein and Thompson’s list of apparently dispensable funding preferences also included the administration’s encouragement of a “climate and environmental responsibility plan.” However, environmental impacts are hardly an abstract concern for chipmaking: Semiconductor manufacturing is a famously water-intensive process, with the typical fab consuming volumes of water each day equivalent to roughly 30,000 households’ usage. When Micron was deciding where to open its next production site, it ultimately chose Clay, New York, over Austin, Texas, in part because of central New York’s superior access to a reliable water supply. Indeed, as Micron explained in a 2024 financial filing, its “manufacturing and other operations in locations subject to natural occurrences and possible climate changes” could “result in increased costs, or disruptions to our manufacturing operations.” If anything, legitimate environmental concerns weren’t emphasized enough in the CHIPS application process, with TSMC opting to locate in notoriously water-constrained Arizona.
Abundance also made at least one notable omission from its list of Biden administration conditions for semiconductor firms. According to a 2023 New York Times report, Raimondo informed governors that the administration would favor applications from firms that had received state and local assurances “to have permitting sped through” normal review processes to expedite the construction of new fabs. That abundance-friendly funding criterion was reported by none other than Ezra Klein.
All of which makes the CHIPS Act an awkward poster child for everything-bagel liberalism run amok. Indeed, in fretting about condition overload, Klein and Thompson might well have their worries backward. To understand the value of industrial and economic policy with conditions, consider what such a policy without conditions looks like: the brief saga of Amazon in New York City.
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Joel Dodge is the director of industrial policy and economic security at the Vanderbilt Policy Accelerator.
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