Writing in the Financial Times, Janan Ganesh correctly describes the inherent contradictions of New Right populists who, though boasting of draining the swamp and elevating a little guy, push policies that further empower the elites:
Populism, which sets itself against the elite, against the “deep state”, is going to leave it more powerful, not less. The technocrat, vilified so recently, will be the string-pulling figure of our age, dispensing subsidies, guiding this economic sector, shunning that one. Corporate leaders will have an ever tighter and more collusive relationship with government, not as a corrupt byproduct of the system but as a central feature of it. Populism was meant to take the governing class down a peg or two. Its main legacy will be something close to the opposite. . . .
The elites are going to be stronger and more incestuous as a result of populism, a movement dedicated to their downfall. Perhaps we should have seen the paradox coming. Populists have a rebellious style but a paternalist agenda. They hate the so called blob, but want it to shape much of the private sector. They resent elites, but more often for abdicating power — over markets, over national borders — than for hoarding it. They have a thing for direct democracy but also for Singapore. This is a movement that was always in two minds on the question of faceless authority.
The contradiction is most obvious on the US right.
This is absolutely correct (there is more at the link). I have long warned the same about industrial policy. Industrial policy is thought to be a populist policy because it’s ostensible purpose is to benefit the common people by creating “good manufacturing jobs” — while also increasing wages, improving living standards, and fostering innovation. If you were to believe those who defend industrial policy, its use can also challenge the power and influence of large corporations and financial interests that might exploit workers and neglect consumers. Industrial policy is thus portrayed as a way to empower the people and protect their interests against the elite establishment.
But nothing could be further from the truth. In fact, by directing resources toward specific (and often large) companies, generally for the benefit of those companies’ shareholders and high-skilled workers, industrial policy is the opposite of populist. In fact, industrial policy in practice unavoidably fuels cronyism since it requires the government to artificially direct resources toward certain industries (semiconductor, green energy, manufacturing) and, hence, away from others. Also, once the government is in the business of providing support to businesses, it becomes attractive for more and more companies to build political connections and lobby for their own government granted privileges.
Take the “CHIPS+” legislation. It’s an attempt to bolster America’s semiconductor industry with $52 billion in subsidies and tax credits. Subsidies that go to one industry, and one industry only, is obviously cronyism. Meanwhile, the Inflation Reduction Act is a cornucopia of subsidies and tax credits to green-energy companies, including the biofuel industry and other Republican-supported special interests.
And for all the talking about industrial policy being a way to rein in the power and influence of large corporations and financial interests, these subsidies often go to large companies that by no stretch of the imagination need subsidies. Semiconductor subsidies are showered on large established companies to build factories the construction of which is already underway and would continue with or without subsidies. I am willing to predict now that when all is said and done, the policy won’t accomplish what it is setting out to do but many corporate shareholders will be happy with policy.
Industrial policy also requires massive bureaucracies to develop, implement, and oversee the distribution of subsidies and government favors shifting more power to the same unelected bureaucrats who populists claim they want to neuter. Imagine the large apparatus that is needed to decide who gets the semiconductor subsidies, to make sure that these companies are complying with labor-union, child care and/or buy-American requirements, and such. Imagine the amount of power you must give to bureaucrats to enable them to decide who can export what to which country and on what terms. In other words, industrial policy cannot help but enlarge the administrative state.