“The AI policy is the latest manifestation of the White House’s approach to many economic issues: centralized government actions in an attempt to sidestep normal economic policies. It starts with high tariffs…. Then there is direct interference in the economy.”
President Donald Trump has launched a national industrial policy backing artificial intelligence in a self-proclaimed race against China for world AI dominance. It’s called the “Genesis Mission” (not to be confused with the 1997 Sci Fi Channel TV series Mission Genesis).
On Thanksgiving week (Nov. 24), Trump promulgated Executive Order 14303, “Launching the Genesis Mission.” It proclaims, “Today, America is in a race for global technology dominance in the development of artificial intelligence (AI), an important frontier of scientific discovery and economic growth.”
The executive order added:
In this pivotal moment, the challenges we face require a historic national effort, comparable in urgency and ambition to the Manhattan Project that was instrumental to our victory in World War II and was a critical basis for the foundation of the Department of Energy (DOE) and its national laboratories.”
DOE will be at the controls of the new mission. In an accompanying posting, DOE said that the “Genesis Mission will develop an integrated platform that connects the world’s best supercomputers, experimental facilities, AI systems, and unique datasets across every major scientific domain to double the productivity and impact of American research and innovation within a decade.” Whew!
For political reasons, the administration is likely to push back on calling its Genesis Mission “industrial policy,” although it fits the basic definitions quite closely. A conventional definition comes from the OECD:
Industrial policy refers to government assistance to businesses to boost or reshape specific economic activities, especially to firms or types of firms based on their activity, technology, location, size or age. Governments use industrial policies to address important economic, social and environmental challenges that markets cannot address on their own, such as to accelerate the green transition, or improve the robustness of value chains for critical products and services.
Today, industrial policy has a bad name among economic conservatives, in part because of past failures (does anyone remember the 1980’s U.S. Synthetic Fuels Corporation, born in the Carter administration and died in the Reagan administration?).
U.S. government actions to impel or impede private sector actions it wants to control go back to the days of the founding fathers, including the clashing economic visions of Alexander Hamilton and Thomas Jefferson and the early 19th century’s unbridled enthusiasm for canals across the Alleghenies.
The Trump mission positively glows with enthusiasm. It proclaims:
The Genesis Mission will dramatically accelerate scientific discovery, strengthen national security, secure energy dominance, enhance workforce productivity, and multiply the return on taxpayer investment into research and development, thereby furthering America’s technological dominance and global strategic leadership.
Might it also resolve the perpetual motion conundrum and cure chronic insomnia?
Writing this summer in the libertarian Cato Institute’s Regulation magazine, Canadian economist Pierre Lemieu said:
Rent-seeking guides industrial policy. For obvious reasons of incentives, free competition and financial markets are generally better at resource allocation than politicians and bureaucrats. Public choice analysis shows that government failures are generally worse than market failures.
Continuing:
Public choice economics has shown that it is an error to imagine ideal public policies and expect that politicians and bureaucrats will realize them. Government officials and agents have their own personal interests. Even if they did not, they cannot know all the required information about supply and demand, which can only be conveyed by the free-market prices that their interventions would disrupt… Industrial policy is necessarily industrial politics.
The AI policy is the latest manifestation of the White House’s approach to many economic issues: centralized government actions in an attempt to sidestep normal economic policies. It starts with high tariffs, right out of Hamilton’s mercantilist playbook. By most accounts, Trump’s first round of confiscatory tariffs have been a disaster and helped push up consumer prices. He has often backed down. Most recently he endorsed paying off soybean farmers to the tune of $12 billion because of the damage his tariffs did when China stopped buying U.S. beans, their best market.
Then there is direct interference in the economy. The White House demanded control of many important business decisions in return for approving the merger of U.S. Steel and Nippon Steel. DOE routinely overrides local businesses, state regulators, and regional electric system operators, who know the facts on the ground, in order to prevent closure of an uneconomic coal-fired plant. The U.S. acquired a controlling equity stake in the nation’s only significant rare earth minerals mine. The U.S. says it will use tribute from Japan to build, own, and operate civilian nuclear power plants.
That last overreach prompted a rare outburst of truth from a key DOE official, chief of staff Carl Coe, who told a Tennessee business group:
The role of having the government involved in private markets is sacrosanct — you just don’t do it. But this is a national emergency.”
The emergency is entirely concocted.
Conventional conservative columnist George Will in October excoriated what he labeled “national conservatives” who support Trumpism and his administration’s emulation of Democratic Party economic policy. “The national conservatives, he wrote, “also believe government should comprehensively intervene in the economy, politically allocating capital (and therefore opportunity) to improve on the rationality of free markets.” This ends with a lesson, according to Will: “What we learn from history is that we do not learn from history.”
And now, to advance its megalomaniacal AI obsession, Trump is moving to ban states from any regulations that might control development of AI data centers, which are pushing up electric rates across the country. Reacting to a move by Florida’s Republican Governor Ron DeSantis, Trump posted on his social media platform Monday (Dec. 8):
There must be only One Rulebook if we are going to continue to lead in AI. We are beating ALL COUNTRIES at this point in the race, but that won’t last long if we are going to have 50 States, many of them bad actors, involved in RULES and the APPROVAL PROCESS. THERE CAN BE NO DOUBT ABOUT THIS! AI WILL BE DESTROYED IN ITS INFANCY! I will be doing a ONE RULE Executive Order this week. You can’t expect a company to get 50 Approvals every time they want to do something. THAT WILL NEVER WORK!
And neither will national industrial planning work from the federal government.