Currently, there is a shortage of semiconductor chips unfolding in the US. Such chips are indispensable to the manufacturing of computers, and so, if not addressed, the shortage could have catastrophic effects on all levels of the US tech industry.
And what is Joe Biden’s proposed solution to this problem? The same thing as his proposed solution to every other problem appears to be: throw ungodly amounts of money at the issue and hope it goes away.
Biden Prints Money and Offers No Solutions
Biden met with a number of major tech CEOs and business executives, as well as some advisors within his own administration, to discuss the crisis on Monday, April 12. The executives hailed from companies like GM, Ford, Google, and Intel.
The causes of the shortage are complex. Some say that this shortage is due to a combination of rising demand and collapsing supply chains that have been strained by the COVID-19 pandemic and its associated lockdowns.
While certainly a contributing factor to the problem, this cannot be all that is going on. Rising demand and falling supply for a good will lead to higher prices for that good, but this does not, on its own, trigger a shortage. If COVID-related supply chain disruptions were the only problem, we would still have semiconductors on the market, even if at much higher prices.
Rather, the ultimate causes of the shortage probably lie in the ongoing technological trade war between the US and China. Given how many semiconductors and semiconductor parts are manufactured in China, trade restrictions have cut off significant amounts of supply from the market.
Ultimately, there are only two viable solutions to the problem: either eliminate the trade restrictions, incentivize American companies to produce their own semiconductors by offering them special tax breaks, or do some combination of both.
But Biden doesn’t want to do either of these things. Instead, he wants to enact gargantuan spending bills that plunge the country further into debt and cause us to borrow even more from the future.
Biden’s infrastructure bill was recently touted as calling for $1.9 trillion in spending. Now, that figure has ballooned to $2.5 trillion. Before all is said and done, it may grow even higher.
His rationalization for this course of action is also hilariously bad. Holding up a semiconductor chip during his meeting, he said, “These chips, these wafers… it’s all infrastructure. This is infrastructure.”
By that logic, virtually any good, service, or industry can be taken over by the government on the grounds that it constitutes “infrastructure.” And indeed, as the division of labor intensifies, and things become ever more interconnected, it can become increasingly damaging to the economy to have governments disrupt the functioning of supply chains by trade restrictions and market-distorting spending.
Biden doesn’t realize that the kinds of government spending and control that he advocates for are actually the cause of the semiconductor shortage. Spending money and issuing edicts is all he knows how to do, so he will be guaranteed to bury us even deeper into this mess.