The Washington PostDemocracy Dies in Darkness

Opinion Intel’s investment in U.S.-based semiconductor manufacturing is great news. We need more of that.

Intel chief executive Patrick Gelsinger speaks about his company's announcement to invest in an Ohio chip-making facility at a White House news conference Jan. 21. (Andrew Harnik/AP)
Placeholder while article actions load

Some good news for American workers and our national security: Intel announced on Friday that it intends to build a new semiconductor manufacturing plant in Ohio. There could be even more good news like this if the government committed to supporting more such investments.

Manufacturing provides good jobs for many Americans, especially those without four-year college degrees. They may not be cutting-edge or terribly exciting, as I know well. I spent two summers working on the line in a plant dipping silicon wafers in acid for eight hours a day to ensure there were no impurities. Standing on one’s feet moving wafers from one acid vat to another did not exactly tax the mind, but it did provide a steady income for my co-workers and their families.

The average manufacturing wage of $24 an hour may not sound like much, but it’s better money than many can make in retail jobs or in the leisure and hospitality sector. For many with only a high school diploma, it’s the difference between a shot at the middle class and life in poverty.

Semiconducting manufacturing is especially important to the country. Semiconductors are the lifeblood of the modern economy, as the global chip shortage has shown. That means that any world power must have an ample supply of them in case of conflict. Today, the United States is dependent upon Asian exporters such as Taiwan, South Korea and Japan for its chip supply. That exposes our economy to pressure from Communist China, giving Beijing another potential lever to expand its malign influence.

Follow Henry Olsen's opinionsFollow

The pandemic also exposed how dependent the free world is on goods manufactured in China or nations within its potential sphere of military influence. China produces nearly 29 percent of the world’s manufacturing output, roughly as much as the United States, Germany and Japan combined. Nearly half of the world’s supply of ingredients needed for medicines is produced in China, and Chinese firms dominate the world’s market for medical protective gear. China is also the world’s largest exporter of steel, and other Asian nations such as South Korea and Vietnam rely heavily on Chinese steel for their products. The list goes on and on, but the overall picture is clear: Outsourcing manufacturing to China and other Asian nations has created massive security risks even as it saved consumers billions of dollars.

It’s thus in the national interest for the U.S. government to bring as many of those jobs back as possible. This would raise wages for lower-skilled workers and create a virtuous circle that would likely increase the labor supply while also helping those most hurt by globalization. It would also reduce U.S. exposure to Chinese blackmail or blockade, enhancing our ability to maintain global leadership. The more the United States can produce domestically or in nearby nations far from Chinese influence, the more freedom of action we possess globally.

But this won’t happen without government intervention. Lower wages and weaker environmental laws abroad tip the scales in favor of shipping manufacturing offshore. Individual firms make investment decisions to pad their own bottom lines, not the nation’s. If we want more manufacturing at home to enhance domestic tranquility and national security, we will have to pay for it collectively. That means some combination of subsidy and tariff protection that will reverse the free trade consensus that has reigned for decades.

Overcoming that dominant paradigm won’t be easy. Economic libertarians will resist the increased government power that will come from this. Individual firms will be leery of the move, as many clearly benefit from the present arrangement and are unsure how they will fare under a new economic order. If the government tries to micromanage investments too much, it will inevitably pick many losers as well as winners. That is not only bad for the economy, but also raises the temptation for corruption.

The alternatives, however, are far worse. Great powers have lost wars when too dependent on overseas supply. Athens did not lose the Peloponnesian War to Sparta because its enemies took their city; it lost because Sparta successfully blocked the shipment of grain from the Black Sea that fed the city. Germany almost brought Britain to its knees in both world wars by using submarines to cut off the nation’s supply lines. This has never happened to the United States because it has always been largely self-sufficient. Globalization, however, has removed that ancient advantage and exposed America as a result.

U.S. domestic economic power allowed it to become the global superpower, facilitating the spread of freedom worldwide. Bringing manufacturing home, thus, won’t just enrich American workers; it will enrich the world.

Loading...