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Outside the Box: Republicans and Democrats actually agree that America must be a tech leader. Here’s what this means for the U.S. economy and jobs.

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This is an excerpt from an essay titled “2022’s seismic shift in U.S. tech policy will change how we innovate,” published as part of MIT Technology Review’s 10 Breakthrough Technologies 2023

It was the perfect political photo op. The occasion was the September 2022 groundbreaking for Intel’s
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massive $20 billion chip-manufacturing complex in the suburbs of Columbus, Ohio. Backhoes dotted a construction site that stretched across hundreds of flat, empty acres. At a simple podium with the presidential seal, President Joe Biden talked about putting an end to the term “Rust Belt,” a name popularized in the 1980s in reference to the Midwest’s rapidly declining manufacturing sector.

“ Three major bills promise hundreds of billions of dollars in federal investments to transform the nation’s technology landscape. ”

It was a presidential victory lap after the passage of some landmark U.S. legislation, beginning with the infrastructure bill in late 2021. Together, three major bills promise hundreds of billions of dollars in federal investments to transform the nation’s technology landscape. While ending the Rust Belt might be typical political hyperbole, you get the point: the spending spree is meant to revive the country’s economy by rebuilding its industrial base. 

The dollar amounts are jaw-dropping. The bills include $550 billion in new spending over the next five years in the Infrastructure Investment and Jobs Act, $280 billion in the CHIPS and Science Act (which prompted Intel to go ahead on the Ohio construction), and another roughly $390 billion for clean energy in the Inflation Reduction Act.

Among the investments is the most aggressive federal funding for science and technology in decades. But the greatest long-term impact of the legislative flurry could come from its bold embrace of something that has long been a political third rail in the U.S.: industrial policy. 

What’s changed now is that the new legislation, which passed with some degree of bipartisan support in Congress, signals a strong appetite across the political spectrum for the U.S. government to reengage with the country’s industrial base. 

The U.S. legislation passed over the past year is really a series of different industrial and innovation strategies. There’s a classic industrial policy that singles out support to the chip industry, a green industrial policy in the Inflation Reduction Act (which is often called the climate bill) that broadly favors specific types of companies such as EV manufacturers, and other spending choices and policies scattered throughout the bills that aim to create new jobs. Arguably the most important provisions, at least according to some economists, are those designed to boost federal support for research and development.

According to the Semiconductor Industry Association, the CHIPS Act has “sparked” some $200 billion in announced investments, with multiple huge new fabs planned across the country. The list is impressive: Micron Technology
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says it will spend up to $100 billion over the next two decades on its new facility just outside of Syracuse, N.Y., while Taiwan Semiconductor Manufacturing Company
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the world’s largest chip maker, announced plans to spend $40 billion on a pair of fabs in Phoenix. Even as the semiconductor industry slogs through a sudden downturn, the massive new manufacturing facilities, along with the needed networks of supporting equipment, chemicals, and tools to run them, portend an era of unprecedented growth for the U.S. in domestic chip production. 

Something similar is happening with EVs and the lithium-ion batteries that power them. With the passage of the climate bill and its generous tax incentives for electric vehicles has come announcements of new battery manufacturing. As with the semiconductor fabs, the explosion of battery manufacturing will produce of a boon in related industries to build up domestic supply chains. Redwood Materials is building several large new facilities to recycle batteries, extracting metals such as lithium and cobalt needed in batteries to power the next generation of EVs.  

Numerous other sectors could benefit from the federal spending spree, especially from the hundreds of billions for clean tech. There is $8 billion for clean hydrogen and $10 billion for carbon capture, including support for facilities that grab carbon dioxide directly out of the air, an experimental new technology. 

But what has really caught the attention of many interested in strengthening innovation in the U.S. is the $174 billion for scientific R&D and technology commercialization in the CHIPS and Science Act. The National Science Foundation (NSF) alone gets $81 billion over the next five years. Some $20 billion goes to a new NSF directorate to support emerging technologies including artificial intelligence and quantum computing. The bill also authorizes $10 billion for regional technology and innovation hubs to be built around the country. 

“ Can the American public be convinced that innovation can lead to widespread prosperity?  ”

It’s all meant to rebuild America’s industrial base, recognizing the critical role that new technologies like artificial intelligence will play in its future economic growth. But any new narrative that the government can promote innovation and use it to foster economic prosperity is still very much a work in progress. 

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 past 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 American public be convinced that innovation can lead to widespread prosperity? 

One reason for renewed optimism is that today’s technologies, especially artificial intelligence, robotics, genomic medicine, and advanced computation, provide vast opportunities to improve our lives, especially in areas such as education, health care, and other services. If the government, at the national and local level, can find ways to help turn that innovation into prosperity across the economy, then we will truly have begun to rewrite the prevailing political narrative.

David Rotman is editor at large of MIT Technology Review. For more information on the 10 Breakthrough Technologies 2023, visit MIT Technology Review’s website at technologyreview.com.

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