Joe Lamberti/AP Photo
Workers gather before President Joe Biden speaks at a shipyard in Philadelphia, July 20, 2023.
I was in Oregon last week, and I had the good fortune to traverse the beautiful Yaquina Bay Bridge. It is distinguished by four giant stone obelisks that bookend the span, narrowing to a point as they rise into the sky. In fact, several of Oregon’s coastal bridges feature Art Deco styling. That’s no accident; 11 of them were designed by the same architect in the 1930s, when the modernist look was popular and when so much U.S. infrastructure was installed, thanks to a flood of public-works spending as part of the New Deal.
The good people of Newport, Oregon, got a couple of things out of that bridge. Before it was erected, they’d have to ferry across Yaquina Bay to reach either shore; afterwards, travel was far less cumbersome. And the laborers who assembled the concrete and steel got steady work during the Depression, enough to support their families and increase purchasing power.
These benefits complemented one another. The bridge facilitated local commerce, as did having people in town with money to spend. As the scars of the economic downturn faded, the Roosevelt administration had a monument to its policy success. A boondoggle jobs program that didn’t build anything lasting would have been weaker; a public-works program that completed a bridge at low or no pay would have inspired scorn.
The dual goals of New Deal industrial policy, in other words, were inseparable. Joe Biden punctuates each speech on his 21st-century green update with this in mind, emphasizing the good jobs as much as the restoration of manufacturing or decarbonization. But Ezra Klein thinks they are separable, and in fact that they must be separated in order to hit the timeline necessary to reduce greenhouse gas emissions and solve the problems that matter in America. He elaborated on this view in The New York Times, rebutting my critique of his concept of supply-side progressivism, which argues that we need regulatory reforms on environment and labor to prioritize productive capacity.
If you haven’t noticed, productive capacity is being prioritized. Manufacturing construction in high-tech electronics, which the administration has subsidized through CHIPS and the Inflation Reduction Act, has quadrupled in the past year. Tens of billions in infrastructure spending has funneled to the states for road, water system, and internet upgrades. More clean-energy manufacturing facilities have been announced in the last year than in the previous seven combined. The economic impact of these policies has raised Morgan Stanley analysts’ growth expectations by four times their prior forecast, and may have forestalled a Federal Reserve–induced recession. If businesses are reluctant to build because of strings attached to federal funding, they’re not showing it.
But Klein thinks everything needs to go faster, and we need to break the coalitions, however well-intentioned, that may be holding this work back. If not, we risk an anti-government ascendancy, he says: “If union labor and Democratic governance are seen by the public as reasons that needed infrastructure remains endlessly unfinished and relentlessly over budget, that will, eventually, lead the public to demand alternatives.”
I too worry about the political consequences—of following Klein’s recommendations. For all his pessimism about expanding supply, I don’t think he appreciates how contingent the whole project is, and how it can all slip away. The unique circumstances of this industrial-policy moment make it even more critical that the jobs created be actually good ones, and right now that goal has not been fully realized. Leaving the people doing the work behind risks the same outcome as the too-slow recovery from the Great Recession, and even the same Republican president as beneficiary. If people don’t feel like they’re getting anything out of the return to building, they will surely reject it, and consequently reject a better future.
Cecille Engle Kennedy/Wikimedia Commons
The Yaquina Bay Bridge
THAT BRIDGE IN NEWPORT is already built. If government comes in to upgrade it—the type of thing that is one prong of bipartisan infrastructure law spending—the tangible effect for travelers is that the road will be shut down for a minimal period. In a country with mostly built infrastructure that requires maintenance, the tangible value of actually doing the maintenance is going to be hard to perceive, even if the real value of the bridge not collapsing is critical.
That’s also true of new factories making semiconductors and electric vehicle batteries. They’re vital to prevent supply shortages, but averting a delay on your flat-panel TV or new Chevy Bolt is hard to boast about. The same with renewable energy that keeps the lights on, or greenhouse gas reduction that avoids the worst consequences of the climate crisis. A devilish conundrum of the challenges of the moment is that solving them is almost by definition invisible.
When there are actual crises and government steps in to quickly fix them, that can have an impact. That was the dynamic of the I-95 repair in Philadelphia, which Klein tries to use as evidence for his position but which I think fits much better with mine.
My position has been that constricting rules that allegedly prevent action aren’t constricting at all if power demands action. In that case, auto commuters to Philadelphia from the most important swing county in one of the most important swing states (the county I grew up in, Bucks County, where Gov. Josh Shapiro’s wife is from and where he met her) were deemed important enough to cast certain construction rules aside for emergency expediency. The question is whether to focus on rules that are routinely avoided, or on getting advanced manufacturing and clean energy the same political weight as suburban drivers. My view is that the latter is the fastest way to get the former done, and it’s already under way.
Hopefully we won’t have many infrastructure disasters to make the benefits of government action real. Most of this necessary energy transition and industrial restoration will happen under the surface for the vast majority of the population. That makes it even more important that the jobs coming out of these policies are actually well paid and a step up from service-sector or other professions, to benefit the subset of workers involved. Community benefit agreements can also provide visible value. Unions don’t have to be part of the equation, I guess, though they’re the best model we’ve come up with in the last 200 years to more equitably spread prosperity. If the gains of industrial policy only flow to the executive suites, resentment will fester.
The unique circumstances of this industrial-policy moment make it even more critical that the jobs created be actually good ones.
We’re already seeing that happen. Twice-indicted candidate for president Donald Trump asked for the endorsement of the United Auto Workers recently, because the Biden administration’s EV policies were “destroying your business.” There’s a kernel of truth here: The UAW hasn’t endorsed Biden yet because they see the Big Three trying to redefine EV production, particularly in the battery plants being constructed jointly with overseas firms, as a different job class not subject to current union agreements. This creates a two-tiered system where unions will be corralled into declining gas-powered manufacturing, and eventually extinguished as the EV transition takes place.
As Jonathan Cohn wrote last week, UAW president Shawn Fain has been condemning the Biden administration for writing big checks for these battery plants without union protections. “The switch to electric engine jobs, battery production and other EV manufacturing cannot become a race to the bottom,” Fain has said. The UAW isn’t about to endorse Donald Trump, but if its members are mad enough about getting shafted in the industrial transition, they will.
Lowering unit costs on EVs is important to maximize take-up, and thanks to state and federal rebates and newer technologies, that’s within sight. But doing it on the backs of labor is political suicide. It also risks quality and even Klein’s coveted speed. The Prospect has written about how delays at TSMC’s semiconductor plant in Phoenix have been attributable to unskilled, non-union labor making elementary errors that set back production. The reason organized labor was brought in for the I-95 emergency was because they had the necessary expertise to get it done quickly, and that’s true of many of the projects in this industrial transition.
Klein says that “one of the major challenges of pro-labor politics in the United States is the public perception that unions often slow construction rather than make it better.” But while he says that perception is based in reality, the actual link he cites, a discussion of high public-transit costs, says that they are decidedly not due to unions, that there are other problems (bad contracting and the overuse of parasitic management consultants being primary), and that “anti-union explanations are harmful, not neutral.” I agree. Many European nations are heavily unionized yet build things at a fraction of American prices, and much more quickly.
BUT EVEN IF YOU’RE CONVINCED that unionized labor is sclerotic and expensive and an impediment to production, cutting them out creates the very real risk of losing the coalition necessary to sustain green industrial policy. I find it hard to believe that Klein neglects this point. There is no question that if Republicans win next year, they will nullify the Biden agenda. They’re already trying to.
Despite the disproportionate impact of manufacturing subsidies flowing to the redder South and Mountain West, House Republicans sought to kill IRA tax credits in their recent debt limit wish list, and in budget negotiations they are seeking cuts to infrastructure spending. Since most industrial-policy laws involve either direct spending or spending through the tax code, it will be trivially easy to use budget reconciliation to cancel the whole thing, along majority-vote lines. And even if Trump returns to office without a congressional majority, the president has so much discretion in handing out IRA and CHIPS grants that he could grind the project to a halt.
Status quo bias is powerful in U.S. policy; we saw how impossible it was for Republicans to repeal Obamacare. But that was because they became convinced that they had to replace it with something, which conflicted with their disinclinations to actually provide health care. If the jobs aren’t any good in the new industrial policy, if nobody but the executive class perceives a benefit from all this spending, repeal won’t have to be combined with a replacement.
The fortification against that scenario is a coalition with something at stake. By focusing on deregulation and lowering labor costs, Klein means to break that coalition, giving Democrats no means to fight. He says that refusing to “make a series of choices that radically change the way we build” will lead to climate catastrophe. So will making choices that give Republicans an easy path to cancel the building. Decarbonization at a speed deemed undesirable beats no decarbonization at all.
Gina Clear/The News-Enterprise via AP
Construction under way on the first of two manufacturing plants as part of the BlueOval SK Battery Park in Glendale, Kentucky, December 5, 2022
It’s also worth pointing out that the president based his entire program on delivering economic benefits. “When I think climate, I think jobs … union workers are the best workers in the world,” he said in a recent speech on Bidenomics. It’s going to be hard enough for him to fulfill this pledge, since the narrow majority that got the bills passed rolled back some of the labor conditions on the tax credits and grants. It’s harder when so much of the funding is pouring into right-to-work states, and corporations want to use the opportunity to knuckle down labor. And it’s even harder with a chorus of supply-side progressives telling him that worker wages are fundamentally not that important. As much as Klein protests, that’s what he’s saying through his emphasis. It reflects the Silicon Valley billionaire perspective of getting all this building done with non-union labor.
We have seen this movie before. The “Atari Democrats” and the Carter administration in the 1970s rejected the traditional New Deal coalition and set the stage for the Reagan Revolution. The abandonment of traditional working-class concerns in Democratic administrations of the past 30 years in favor of free trade and financialization paved the way for Trump. This vow to deregulate in the name of liberalism, to improve people’s lives without actually improving them, has a familiar, eerie ring. Given the political threats to the energy transition, I don’t think the coalition Klein thinks can lead the way is at all viable.
YOU’LL NOTE AT THIS POINT that I haven’t addressed housing, which was 2 percent of my original story but about 40 percent of Klein’s response. The simple fact is that my piece addressed federal industrial policy, and unfortunately the $327 billion in spending on housing in the original Build Back Better package was excised. (I don’t remember Klein speaking out about that, though maybe he did.) But if you want to talk about housing, I think there’s a recent example here that maps very well to this debate, that I can draw from the book I wrote about housing policy seven years ago.
In the early 1990s, a group of mortgage bankers decided that the property recordation system in place since the 17th century was too slow and outdated to meet modern needs. A private database would allow for quicker recording, faster securitization, and subsequently more capital for building. They created the Mortgage Electronic Registration System (MERS), without legislative approval or public debate, and essentially found a way around transferring title at county offices. Under this system, mortgages could be tradable instruments, and reducing frictions would create more housing opportunity for all.
There were just a few problems: The MERS database was incredibly sloppy, it facilitated a mountain of fraud in origination and securitization of mortgages, it led to a housing bubble that collapsed in the biggest extended recession in a century, and ten million families lost their homes, most through illegal document fabrication that polluted the nation’s courts and property registration system. Hurriedly prioritizing supply and throwing over the rules drove an indescribable disaster.
Now, America does need more housing, and it surely is too difficult to build in many cities. That said, I don’t think removing local housing constraints, while an important goal, is all that relevant to boosting domestic manufacturing or reducing carbon emissions at the federal level. (For example, the biggest constraint in decarbonization, figuring out how to get transmission lines built to connect clean-energy production to consumers, will require more rules, particularly on who pays for the construction, as Senate Majority Leader Chuck Schumer stressed this week.) But I do think the MERS story illustrates the dangers of spinning theories about how to accelerate production without taking into account power—the power of those who mean to exploit federal policy, and the power of those who will be exploited.
When I got this job at the Prospect, one of the first people I reached out to for advice on how to run a news outlet was Ezra Klein. He was generous with his time and keen with his insights. I appreciated that then and appreciate his views now. I don’t question his intent to advance meaningful progress for people and solve seemingly intractable policy problems. I just think he’s wrong about it.
