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America’s Manufacturing Renaissance Will Create Few Good Jobs

Many countries’ recent experiences show that boosting manufacturing employment is like chasing a fast-receding target. Automation and skill-biased technology have made it extremely unlikely that manufacturing can be the labor-absorbing activity it once was, which means that the future of “good jobs” must be created in services.

CAMBRIDGE – The United States is on a building spree in semiconductors. In early April, Taiwan Semiconductor Manufacturing Company announced plans to set up a third fabrication facility in Arizona to make the world’s most advanced chips, upping its investment in the state to $65 billion. TSMC’s investment is heavily subsidized by the US government under the CHIPS and Science Act, and the company will receive $6.6 billion in grants and is eligible for $5 billion in loans. It can also claim an investment tax credit of up to 25% of its capital expenditures.

This news follows Intel’s recent announcement that it will receive an even larger grant of $8.5 billion from the US government (along with $11 billion in loans on “generous terms”). The CHIPS Act allocated $39 billion for such grants, and additional deals are in the making. According to the White House, nearly $300 billion in manufacturing investments have been committed in the US just over the last two years.

President Joe Biden sees these deals as evidence of a manufacturing renaissance in the US. “Where the hell is it written saying that we’re not going to be the manufacturing capital of the world again?” he asks. His administration may not have much in common with the preceding Trump White House, but it certainly shares a preoccupation with reviving manufacturing.