Is the government choosing winners and losers? : The Indicator from Planet Money Washington is doubling down on the industries it wants to see grow. From semiconductor chips to lithium-ion batteries, we trace where the money is going and why. And which part's got the European Union all bent outta shape.

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Is the government choosing winners and losers?

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When something is important to you and you want to see it grow, what do you do? Do you stand back, watch it stop and start, learning to stand on its own two feet in the process? Or do you step in, offer a hand, help it out?


Industrial policy is all about stepping in. It's about supporting industries that are considered strategically important. It's when the government might do things like restrict trade or subsidize industries. It might add tax credits. It might spend on research and development.

WONG: And after falling out of favor in policy circles for decades, Donald Trump's trade wars, followed by huge spending from the Biden administration, are signaling that industrial policy is back. This is THE INDICATOR FROM PLANET MONEY. I'm Wailin Wong.

WOODS: And I'm Darian Woods. And the boy is back, Jeff Guo.

WONG: (Laughter).

WOODS: Welcome to the show.

JEFF GUO, BYLINE: Hey guys. Oh, it's so good to be back.

WOODS: Today, for Indicators of the Week, we are going granular on industrial policy. We're going to look at some of the latest efforts to prop up industries from semiconductor chips to batteries. And we're going to find out why the European Union is mad about it.


WONG: Indicators of the Week industrial policy edition. We've got a very industrious colleague here. Jeff, what do you got?

GUO: Today, I want to talk about one of the Biden administration's big moves toward industrial policy. My indicator of the week is $39 billion. That is how much money the government is going to spend to bring microchip factories back to the U.S.

WOODS: Right, so this is part of the CHIPS Act that we heard about last year.

GUO: Exactly right. And applications for this money just opened up this week. And the idea is they want big companies like Intel, like TSMC in Taiwan, like Samsung - they want these big companies to apply for these subsidies and use that money to build cutting-edge chip factories. So it's a really big deal because this is, like, the biggest targeted investment the U.S. government has done in like - I don't know - since, like, World War II. And this kind of intervention really started to fall out of fashion in, like, the '80s.

WONG: Thanks, neoliberalism. Am I right?

GUO: It is exactly that. The whole neoliberal revolution in the '80s - it became really fashionable to take this hands-off approach to the economy. Like, we're just going to let the market sort it all out. We're not going to trust the government to pick winners and losers.

WOODS: That's one of the critiques of the CHIPS Act itself. How do we know this isn't just going to be a big corporate giveaway, and the government doesn't know who really is going to benefit the American economy?

GUO: Exactly. There is a lot of pressure on the government right now to make the right decisions. So this week, the Biden administration revealed what the application process for this money looks like. And we learned that the money is going to come with a lot of strings attached. For instance, in a lot of cases, companies are going to have to provide affordable, high-quality child care to their workers if they want any of this money.

WONG: We do have a child care crisis in this country.

WOODS: This is one way to do it.

GUO: There are a bunch of other strings, too, like, their guidelines about how chipmakers are supposed to spend their profits. Like, maybe they can't do stock buybacks, can't funnel the money to their investors. Maybe if the government thinks you're making too much profit, they can swoop in and take some of that away.

WOODS: That's, like, a laundry list of all the political frustrations that are happening at the moment.

GUO: Yeah. And so, like, one way to look at this is governments just trying to do their due diligence, make sure companies aren't just running off with this money. But another way to look at it is some of this stuff is kind of political. Like the child care stuff - that's been a big priority for the Biden administration. And that's one of the classic concerns with industrial policy in general, which is, do we trust the government to spend the money wisely? Do we trust that politics is not going to creep in too much?

WOODS: And do we trust TSMC as a good kindergarten?


WOODS: I'm picturing a lot of kids in lab coats. I think they'll learn a lot.

WONG: Bring your kids to work day every day.

GUO: Every day. But, you know, the chipmakers lobbied really hard for it. It's a huge pot, billions and billions of dollars. But they're not the only industry that is excited about this big return to industrial policy, right, Wailin?

WONG: That's right. So my indicator is $375 million. This is how much money the Department of Energy will loan to a company called Li-Cycle to help build a lithium-ion battery recycling plant in New York State. So the government announced the loan this week, and it says this recycling plant is the first of its kind in North America. Li-Cycle is a company that specializes in getting lithium and other materials out of used lithium-ion batteries on an industrial scale. So don't send them your cellphone.

GUO: Send them your Teslas.

WONG: Yeah (laughter), send them your Teslas. And Democratic Senator Chuck Schumer of New York was on hand for the big in-person announcement this week.


CHUCK SCHUMER: So it's a great day. You can feel the excitement in the air. It's electric.


GUO: Nice one.


SCHUMER: Now they're supposed to play the "Electric Slide" music.


SCHUMER: I remember that. Don't you?

WONG: Chuck Schumer did not end up doing the Electric Slide at this press conference, which maybe is for the best. But he did provide this other kind of visual aid.


SCHUMER: OK, this - see these little jars? The one on the right is lithium. The one on the left is cobalt.

WONG: Lithium and cobalt are some of the materials that you need to make lithium-ion batteries. So the government has this big plan to set up a domestic supply chain for lithium batteries by 2030. And the ability to recycle batteries, which is what this company does, is an important part of the plan because it means battery makers won't be reliant on, you know, China, which dominates the industry for turning raw lithium into the stuff that goes into batteries.

WOODS: And from what I understand, there is some lithium production in the U.S. already?

WONG: There is. Yeah, there's a little bit. But getting the stuff out of the ground is also kind of ruinous for the environment. And so - which is, like, not a good look for a clean energy future. So the U.S. is saying, well, we should develop the capability to reuse lithium and the other materials from old batteries. And here's something else I learned. When a battery gets recycled, it produces something called black mass. That's the name for the electronic waste that contains the good stuff, the lithium and the cobalt. It kind of sounds like the name of a heavy metal band, right?

GUO: A heavy metal band that specializes in covers of the "Electric Slide."

WONG: (Laughter).

WOODS: My indicator is related to yours, Wailin, because that 375 million that you're talking about - that money came from the Inflation Reduction Act, the other big industrial policy program under President Biden.

GUO: The inflation reduction actually about climate change. Wink, wink.

WOODS: Yes, exactly. So this program has been very controversial with our friends in Europe, so much so that a group of environmentalists from both sides of the Atlantic wrote a letter on Monday saying, Mama, Papa, stop fighting. The house is on fire.


WOODS: There are 41 environmental groups who are part of this. They were calling on the European Union to lay off the U.S. and not be so critical of the IRA. The backstory is that the Inflation Reduction Act has a lot of made in America provisions. Like, an electric vehicle charging station made in America can qualify for subsidies. But a charging station made outside of the U.S. would have trouble getting those subsidies. And because of that, over the last several months, the European Union has accused the U.S. of being discriminatory against European producers. And that's not Europe just saying, you're being mean. Discriminatory is a real, technical, legal trade word. And in this context, it means don't treat imported goods differently from those produced locally. So once something comes into the country, don't treat - I don't know - Italian Fiats different from American General Motors cars.

GUO: Treat other people's goods the way you want your goods to be treated.

WONG: It's like the golden rule of international trade.

GUO: (Laughter).

WOODS: Pretty much. Pretty much. So the EU - they've been threatening to take the U.S. to the WTO, the World Trade Organization. And these environmental groups are saying, hold on, give peace a chance. The common enemy here is global warming. And rather than complain to the WTO, the Europeans should focus on supporting its own energy transition. This group of letter writers want the U.S. and the EU to agree to what they call a climate peace clause, committing to not start trade disputes over climate policies.


WONG: You know what I think would help, though?

GUO: Oh, no. Oh, no.

WONG: If they all did the "Electric Slide" together in the name of trans-Atlantic unity.

WOODS: I didn't even know the "Electric Slide." Maybe I'll leave it between you two to do the banter. I don't even know what this is.

GUO: (Laughter) What is the "Electric Slide?"

WONG: This episode of THE INDICATOR was produced by Brittany Cronin and engineered by Katherine Silva. It was fact-checked by Sierra Juarez. Viet Le's our senior producer. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.

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