The US protectionist spiral

Since 1945, the global economy has operated under a system of rules and standards dictated by America. This system enabled unprecedented economic integration that spurred growth, lifted hundreds of millions out of poverty, and helped the West defeat Soviet Russia during the Cold War. Today, this system is in peril. Countries are rushing to subsidize green industry at the expense of traditional industries, and to restrict the movement of goods and capital. Priority is given to national gain rather than mutual benefit. The era of zero-sum thinking has begun [fondée sur le principe du jeu à somme nulle, dans lequel la somme des gains et pertes des joueurs est égale à zéro, elle équivaut en économie à l’absence de production comme de perte des produits, ndt].

When Joe Biden abandoned free market rules

The old system was already in the hot seat, with the United States having less interest in maintaining it after the global financial crisis of 2007-2009. But President Joe Biden’s abandonment of free market rules in favor of an aggressive industrial policy has dealt him a further blow. The United States has released major subsidies, amounting to $465 billion, for green energy, electric cars and semiconductors. The payment of these subsidies is conditional on a local production requirement.

“Viewed from Washington, a strong industrial policy is quite attractive. And it reflects the hope that state intervention can succeed where private enterprise has failed, and reindustrialize the central regions of the United States.”

Bureaucrats tasked with reviewing foreign investment in the United States to prevent undue outside influence on the domestic economy now themselves wield influence over sectors that account for 60% of the stock market. These officials are banning the export of ever more products – including, to China, advanced electronic chips and the equipment used to manufacture them.

Seen from Washington, a strong industrial policy is quite attractive. It could help seal the ascendancy […]

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