A New Industrialist roundup
American thinkers are realizing we need to build, build, build. What comes next?
Six years ago, I wrote a pair of Bloomberg columns predicting the rise of an intellectual movement that I called New Industrialism — though I was sure that people would name it something else. Basically, the idea was that America wasn’t investing enough (i.e., not building enough productive capital), and that we needed a new economic outlook that emphasized building more stuff. Now that movement is springing to life before my eyes, so I think it’s time to take stock of where we are.
I had the idea after reading the book Concrete Economics: The Hamilton Approach to Economic Growth and Policy, by Brad DeLong and Stephen S. Cohen. In that book, DeLong and Cohen argue that economic policy works best when the government gives the people a concrete vision of what they’ll be getting. If we simply throw up our hands and leave everything to the market, they argue, we’ll simply have an economy based on finance. But they stop short of envisioning exactly what to promise the American people.
Now those ideas are starting to emerge. The main purpose of this post is to bring together a list of the people I see arguing for some kind of New Industrialist program (like I did with my Techno-Optimism Roundup last year). But first, I want to tell my very condensed version of how we got to this point.
How we got to New Industrialism
The first thing that motivated New Industrialism was the China Shock. Unlike the scares about Japanese and European competition in the 70s and 80s — which proved mostly salutary for the U.S. economy — the shock from China joining the world trading system in the early 2000s was real, and American manufacturing did get hollowed out to some degree. People who tell you that the U.S. manufactures as much as it ever did before have talking points that are over a decade out of date; industrial production in manufacturing has never exceeded its peak in 2007, and is barely higher than in 2000:
The China Shock caused many economists, and even more policymakers, to rethink the free trade consensus that had prevailed in previous decades. Trump was the first to break the mold, but Biden hasn’t gone back, retaining Trump’s tariffs on China and vowing to reshore American supply chains.
The Great Recession obviously dealt another terrible blow to American manufacturing. That recession, and the financial crisis that sparked it, prompted a general realization that our economy had become too financialized. People began to worry that we had become an economy specialized in selling houses and speculative assets back and forth to each other, while the rest of the world — particularly China — made all the useful stuff. That vision was exaggerated — the U.S. still retains a sizeable manufacturing sector, and imports from China only ever represented 2-3% of our GDP. But the trend was clearly in the wrong direction.
The third big shock was Covid. In the early months of the pandemic, America struggled to manufacture enough tests, enough masks, and enough ventilators, while China seemed to do just fine. In fact, that situation reversed a year later — the U.S.’ ability to rapidly scale up mRNA vaccine manufacturing was nothing short of miraculous, while China started to struggle. But those early difficulties drove home the drawbacks of being a country that outsources much of its manufacturing.
And all this time, there has been another slow-moving crisis — the housing shortage. In fact, nationwide rents have only outpaced incomes by a little bit, but in big cities the crisis has become acute. And by now it’s very clear that we just aren’t building enough. Housing starts per person were already anemic in the 90s and early 00s, but after the bubble burst they fell off a cliff and haven’t recovered:
So these crises showed Americans what we couldn’t build enough of: Houses and manufacturing industries. There’s also infrastructure, which is a crisis that hasn’t even fully made it into the public consciousness yet because we keep ponying up the increasingly ridiculous amounts of cash needed to pay our overpriced construction costs. And of course there’s the ever-pressing threat of climate change, and the need to deploy massive amounts of green energy.
But if the New Industrialist movement is the child of crisis, it’s also the product of hope. The triumph of mRNA vaccine science, combined with the sudden cheapness of renewable energy, fueled a burst of techno-optimism; suddenly, lots of Americans are realizing how many scientific efforts seem to be coming to fruition at the same time, and are getting excited about the possibilities. Meanwhile, an exuberant pro-density urbanist movement has started to capture mindshare among the youth and among some policymakers, and is even now winning a few early legislative victories.
So there’s my condensed version of how we got to this moment. Now for the roundup of thinkers who have started to embrace the idea of Building More Stuff. (Keep in mind that the term “New Industrialist” is just my way of categorizing and mentally keeping track of all these ideas — it’s not a term I insist that anyone use, it’s not meant as a competitor to terms like “supply-side progressivism” or “the abundance agenda”, and it’s not something I expect to be very popular…)
New Industrialist Roundup
Ezra Klein: “The Economic Mistake the Left Is Finally Confronting”
Ezra is one of America’s foremost liberal pundits. In a New York Times article last September, he laid out his vision of what he called “supply-side progressivism”:
[L]ook closely and you can see something new and overdue emerging in American politics: supply-side progressivism…
I want to widen the definition of “supply,” a dull word within which lurks thrilling possibilities. Supply-side progressivism shouldn’t just fix the problems of the present; it should hasten the advances of the future…
Climate change is the most pressing example…In a world where two-thirds of emissions now come from middle-income countries like China and India, the only way for humanity to both address climate change and poverty is to invent our way to clean energy that is plentiful and cheap and then spend enough to rapidly deploy it.
Or take health care…We should combine price controls with new policies to encourage drug development. That could include everything from more funding of basic research to huge prizes for discovering drugs that treat particular conditions to more public funding for drug trials…
[W]e need to look for the choke points in the future we imagine…And then we need to fix them.
Derek Thompson: “A Simple Plan to Solve All of America’s Problems”
Derek Thompson, the man who first got me into op-ed writing, has spent the last few years trying to look beyond America’s age of division and unrest and imagine positive, productive things we could focus on. That line of thinking came together in a January piece in The Atlantic, in which he defines something he calls the “abundance agenda”. It sounds pretty similar to what Ezra Klein is thinking, though less obviously weighted toward the progressive side of the political divide.
In the past few months, I’ve become obsessed with a policy agenda that is focused on solving our national problem of scarcity. This agenda…would harness the left’s emphasis on human welfare…It would tap into libertarians’ obsession with regulation to identify places where bad rules are getting in the way of the common good. It would channel the right’s fixation with national greatness to grow the things that actually make a nation great…
This is the abundance agenda…
Health care: The U.S. has fewer physicians per capita than almost every other developed country, in part because our medical-residency system has for 40 years constricted the supply of U.S. physicians…Meanwhile, the American Medical Association…has in the past few decades blocked nurses from delivering care and impeded foreign-trained doctors from practicing here…
Housing: Homes have become famously unaffordable in many coastal cities…The culprits are largely regulations that prevent the construction of taller apartment buildings that can hold more units…
College: Elite colleges are…hardly expanding the total number of admissions; their share of total enrollment has actually been shrinking; and they’re admitting fewer of the low-income students who gain the most…
Transportation: Building big infrastructure projects on time and on budget has become nearly impossible, even in liberal states…[E]ndless and expensive impact analyses and environmental reviews have ground our infrastructure construction to a halt. From 1900 to 1904, New York City built and opened 28 subway stations. One hundred years later, the city needed about 17 years to build and open just three new stations…
Energy and climate change: Clean-energy technology has made huge strides in the past decade, but we’re not deploying it fast enough…
We should aim for abundance of comfort, abundance of power, and abundance of time.
Alec Stapp and Caleb Watney: “Progress Is a Policy Choice”
Stapp and Watney have recently launched a new think tank, the Institute for Progress. I’ll be interviewing them soon about their plans. But their manifesto makes for very good reading:
The future we got is much weirder and more uneven than the one that we were promised. While software has succeeded in eating the world, it hasn’t been enough to cure our cultural malaise. U.S. life expectancy was flatlining for years before the pandemic and just suffered the largest drop since WWII. The pace of scientific progress has been slowing. And, shockingly, more than two-thirds of Americans believe that today’s children will be worse off financially than their parents…
Despite these worrying trends, there are genuinely exciting — potentially game-changing — discoveries on the horizon…
So how do we reconcile the shortcomings of American institutions with this profusion of possibilities before us?
We’ve identified three initial areas that we think meet this test and where we intend to spend most of our time and attention:
Metascience – How can we change the incentives within science to produce more breakthrough research?…We need more experimentation and diversification in the way the U.S. government funds cutting-edge science…
Immigration – How can we attract and retain superstar talent from around the globe?…Through both legislation and executive action, the U.S. urgently needs to start taking a proactive approach to recruiting global talent…
Biosecurity – How can we prevent future pandemics and accelerate progress in the life sciences?…We need to advance metagenomic sequencing capabilities that can quickly detect new viruses. We need to invest in wastewater surveillance systems…We need to build mRNA vaccine manufacturing capacity…We need to leverage these systems to fight existing diseases…
[P]ublic policy isn’t only a bottleneck — it can also be a catalyst for innovation.
Remarks by Secretary of the Treasury Janet L. Yellen at the 2022 'Virtual Davos Agenda' Hosted by the World Economic Forum
Janet Yellen is the Treasury Secretary, which means she’s basically in charge of crafting President Biden’s economic policy framework. And in her recent speech at the virtual Davos summit, she sounded an extremely New Industrialist note:
What we are really comparing our new approach against is traditional “supply side economics”…It is, unquestionably, important to properly implement regulation and maintain a pro-growth tax code, but they are not sufficient and can often be overdone. Modern supply side economics, in contrast, prioritizes labor supply, human capital, public infrastructure, R&D, and investments in a sustainable environment…
Modern supply side economics seeks to spur economic growth by both boosting labor supply and raising productivity, while reducing inequality and environmental damage…
Importantly, the Biden Administration’s economic strategy embraces, rather than rejects, collaboration with the private sector through a combination of improved market-based incentives and direct spending based on empirically proven strategies. For example, a package of incentives and rebates for clean energy, electric vehicles, and decarbonization will incentivize companies to make these critical investments…
[Biden’s agenda would make] it easier for working-age parents to participate in the labor market…to boost potential GDP growth…
[W]e are proposing wide-ranging investments in human capital—from early childhood education to community college, apprenticeships, and worker training…
[L]ong-overdue investments in infrastructure—such as broadband, as well as ports, roads, and rail—should benefit American families, workers, and businesses…[W]e are investing in new energy infrastructure and support for R&D to incentivize innovation in renewable energy technologies.
Katherine Boyle: “Building American Dynamism”
To be blunt, New Industrialism cannot happen without buy-in from the private sector. So it’s encouraging to see Andreessen Horowitz, one of the country’s leading VC firms, talking explicitly about the need to build physical infrastructure. Marc Andreessen’s 2020 manifesto, “It’s Time To Build”, has coalesced into a specific program to invest in the country’s physical and human infrastructure. In a recent essay, a16z general partner Katherine Boyle fleshes out some of the firm’s plans. They sound like the private-sector complement to what Yellen was talking about:
The prevailing trend of the 2020s is not that we’re destined for decline. It’s that the technology sector is augmenting and improving the functions of institutions…Indeed, I believe the only way to reverse the course of stagnation and kickstart nationwide renewal post-Covid is through technologists building companies that support the national interest. I call this American dynamism…
[I]t’s not only capital investment where the private sector is helping government. When politicians panicked at the supply chain crisis at the Port of Long Beach in November 2021, the man to get on a boat and figure out immediate solutions was not an elected official but Ryan Petersen, founder and CEO of Flexport…[F]ounders like Ryan are doing important civic work and pushing solutions forward…
It’s now easier to solve critical national problems through startups. For one, many of these companies and their respective problems require large capital investment…[I]t’s clear investors are actively looking for opportunity in government sectors: the global capital glut is a boon for capital-intensive companies with venture-scale return profiles…
We believe technology is the font of this reversal [of pessimism], and the only immediate way to kickstart American renewal is through startups building for critical problems.
Vitalik Buterin: “The bulldozer vs. vetocracy political axis”
Vitalik, the founder of Ethereum, is another smart person who is starting to think about politics in terms of progress vs. stasis rather than in terms of left vs. right. His recent essay includes diagrams and examples. But I think the clearest example of what he’s talking about is how Joe Manhcin has stymied Joe Biden’s agenda by withholding his crucial Senate vote. Manchin and Biden are both known as centrist Democrats, but Manchin represents a centrism of stasis and obstruction, while Biden represents a centrism of progress and dynamism — a vivid illustration of two poles of Vitalik’s axis. Anyway, here are excerpts from Vitalik’s essay:
Let us consider a political axis defined by these two opposing poles:
Bulldozer: single actors can do important and meaningful, but potentially risky and disruptive, things without asking for permission
Vetocracy: doing anything potentially disruptive and controversial requires getting a sign-off from a large number of different and diverse actors, any of whom could stop it
Note that this is not the same as either authoritarian vs libertarian or left vs right. You can have vetocratic authoritarianism, the bulldozer left, or any other combination.
The key difference between authoritarian bulldozer and authoritarian vetocracy is this: is the government more likely to fail by doing bad things or by preventing good things from happening? Similarly for libertarian bulldozer vs vetocracy: are private actors more likely to fail by doing bad things, or by standing in the way of needed good things?…
Sometimes, I hear people complaining that eg. the United States (but other countries too) is falling behind because too many people use freedom as an excuse to prevent needed reforms from happening. But is the problem really freedom? Isn't, say, restrictive housing policy preventing GDP from rising by 36% an example of the problem precisely being people not having enough freedom to build structures on their own land? Shifting the argument over to saying that there is too much vetocracy, on the other hand, makes the argument look much less confusing: individuals excessively blocking governments and governments excessively blocking individuals are not opposites, but rather two sides of the same coin.
And indeed, recently there has been a bunch of political writing pointing the finger straight at vetocracy as a source of many huge problems.
This is only a small taste of recent writing and thinking that falls under my broad New Industrialist rubric. There are some more politicized efforts whose manifestos I didn’t include, but which definitely deserve a place in the conversation here. New Consensus, the think tank that came up with the Green New Deal, is trying to shift the environmental Left away from degrowth and neo-pastoralism and toward ideas of industrial policy and green infrastructure. American Compass, a conservative think tank, is trying to shift the Right away from laissez-faire and toward industrial policy, putting intellectual flesh on the bones of Trump’s pro-manufacturing bloviation.
And there are books here that I didn’t mention above (simply because they’re hard to excerpt from), such as Bill Janeway’s Doing Capitalism in the Innovation Economy. (Bill also wrote a great guest post on Noahpinion last year, about what lessons to take from the New Deal.)
Also, check out Geoff Kabaservice’s excellent interview with Philip Zelikow, about how America can become a can-do nation again.
There are also some great new media sites dedicated to exploring ideas that feel very New Industrialist to me. These include:
Works in Progress, a monthly publication that brings together essays from leading thinkers in the area (not to be confused with Derek Thompson’s very similarly-named but also very awesome and relevant newsletter, Work in Progress)
Jim Pethokoukis’ substack, Faster, Please!, a great roundup of news about technology and progress
Brian Potter’s substack, Construction Physics, which is all about construction technology
Matt Clancy’s substack, What’s New Under the Sun, which explains cutting-edge economics research about science and innovation
Semi-Literate, a substack about the semiconductor industry
Jose Luis Ricon’s blog, Nintil, which covers a bunch of interesting topics in great depth, but focuses the most on metascience
Alexey Guzey’s website, which is in a similar vein
The Progress Forum, run by Jason Crawford’s Roots of Progress think tank (you can find lots of good stuff at their website)
Dan Wang’s newsletters from China, in which he talks about Chinese industrialism and muses on how the U.S. could match it’s strengths
Gena Gorlin’s Substack, Building the Builders, which appears to be devoted to roundups like this one
I’ll add more to this list as I find them. And of course, I will try to do my part!
So New Industrialism is really taking off. But no one quite knows what it’s going to look like yet. As you can see from Yellen and Boyle’s very different views of public-private cooperation, it’s not clear what roles the sectors will play, or whether they can learn to work together as effectively as they did in World War 2. And politically, it’s not yet clear whether the Right or the Left will ultimately own the mantle of New Industrialism, or whether they’ll compete to push the agenda forward. Nor do we know much yet about which specific policies will successfully restore America’s ability to build big.
We are in an era of bold, persistent experimentation. Our task now is to refuse to let that era fizzle out — to refuse to allow it to fall prey to cynicism, social exhaustion, vetocratic obstructionism, or relentlessly destructive zero-sum ideological and partisan wars. Getting America building again has to be Job #1.
I would submit the Apple TV+ series _For All Mankind_ as a product of the zeitgeist of this "we should make and do stuff again" moment. It's structured as an alternate history -- what if we _hadn't_ given up on the push for manned space exploration? But it's hard to come away from it without thinking, "Maybe we should start trying this again!" (I _strongly_ recommend the show if you haven't seen it yet.) _The Expanse_ definitely tapped into this a little bit, as a vision of a humanity that muddled through our problems, and still has serious inequality problems but has managed to implement a UBI that keeps the masses up to, at least, a _slightly_ better level of subsistence than many have today. But _For All Mankind_ feels more optimistic to me. There's one plot point towards the end of the first season I'm not thrilled with (like, the whole Mission Control team touched the idiot ball for a few seconds?) but overall it's excellent.
"economic policy works best when the government gives the people a concrete vision of what they’ll be getting. If we simply throw up our hands and leave everything to the market, they argue, we’ll simply have an economy based on finance"
This is absolutely correct Noah. Here is the proof:
A. The EPA and DOT set time based techinical goals: mpg, %CO2 tailpipe emissions. This was economized by setting penalities for missing goals. The auto industry was then able to determine the economic value of things like - lighter weight (improves mpg), aerodynamic shapes (improves mpg), improved engine efficiency (mpg); on on-board CPU, sensors and actuators to measure - think - adjust engine performance to optimize fuel economy and engine power.
This is goal setting and leaving engineering and processes to industry. It worked very very well.
B. In contrast, we have the FDA Medical Device regulations. Here, the staturory requirements are NOT goals, but Process compliance. The Quality-Regulatory focus is often counter productive to engineering learning experience, continuous improvements.
I managed a lot in both industries so I speak from actual operational experience.