2024 Annual Report on the Health of Democratic Capitalism: Taking a Closer Look at Industrial Policy
Review a digital summary of our 2024 Annual Report on the Health of Democratic Capitalism or access the full report at the link below.
In its newly released signature report, the Denny Center for Democratic Capitalism at Georgetown Law confirms that government interventions in the market economy, also known as industrial policy, have increased in number exponentially since 2010. While the increase in interventions is certain, the effectiveness of industrial policy actions is much harder to measure. Industrial policy has been around for a long time, and some of the oldest forms – tariffs and import rules – have governed global trade between nations for centuries. As the volume of industrial policy increases both within the U.S. and globally, understanding how it is being used and its resulting impacts are increasingly important.
Brian Deese, Director of President Biden’s National Economic Council, declared in October 2022 that it was time for America to embrace a modern industrial policy as the administration promoted three significant industrial policy-related actions: (1) the Bipartisan Infrastructure Law, (2) the CHIPs and Science Act, and (3) the Inflation Reduction Act. Other voices urge caution: “The wisest way to pursue industrial policies is to target the identified problem as precisely as possible while minimizing damaging side effects on international cooperation, trade openness, and domestic economic performance,” according to Martin Wolf, the chief economic commentator at the Financial Times.
Within this context, the Denny Center’s 2024 Report on the Health of Democratic Capitalism revisits key datasets from its 2023 Report and, in addition, takes a closer look at the extensiveness and effectiveness of industrial policy. This year’s report raises important new questions including:
- What level and which kinds of industrial policy are appropriate in market economies to steward a healthy level of market competition?
- Should governments embrace a “less is more” approach, using fewer interventions with more limited scopes to improve the likelihood of success?
- What can leaders across our institutions do to support and improve impartial evaluation of industrial policy performance?
- How can business leaders and lawmakers work together to facilitate communication and partnership between public and private sectors without creating new opportunities for regulatory capture?
- Should corporate boards and management teams factor the overall well-being of society into the company’s long-term strategy – including government fiscal standing and the health of the broader market economy?