Subsidies for childcare; paid sick leave: these are the kind of areas that need government funding in these hard times, said Robert Reich, former secretary of labour, on Substack.com. Yet as it prepares to close for the summer recess, what is congress gearing up to fund? In a rare moment of bipartisanship, the senate has agreed to fill the pockets not of ordinary Americans but corporate America. The Chips Act (or, Creating Helpful Incentives to Produce Semiconductors Act, to give it its full title), is a $52bn handout to US firms that make computer chips. Intel and other chipmakers claim they need this vast subsidy if they’re to build new chipmaking factories here and reduce reliance on imports from China, South Korea and Taiwan. “It’s pure extortion.”
The impetus for this giveaway, said Rebecca Heilweil on Vox, was the pandemic-induced global supply crunch for computer chips, which “made it harder to buy everything from cars and laptops to sex toys and medical devices”. But the shortage is now easing, said The Wall Street Journal, and the industry itself is raking in profits: in April alone, chip sales in the US rose by 41%. So taxpayers are being asked to subsidise firms “that don’t need their help”. And not just to the tune of $52bn. The bill offers another $24bn in tax credits, and in its journey through congress a further $200bn in funding for chip-related research has been added. It has morphed into a $280bn “bipartisan spendorama”, the effect of which will be to undermine competitiveness. History is littered with such examples.
It’s short-sighted to dismiss this as just another corporate welfare package, said Gillian Tett in the FT. In the 21st century, chips will have nearly as much geopolitical importance as oil: they’re …read more
Source:: The Week – All news