Supporters of Vice President Kamala Harris are certainly dealing with disappointment, but one of the mainstays of the Biden-Harris administration — “industrial policy” — won big Tuesday. That’s because it’s already been embraced by both sides. President-elect Donald Trump loves high tariffs, and Harris loves big subsidies for big business, and to some extent vice versa.

That, my friends, should disappoint us all. Industrial policy is one of the most dangerous economic illusions of our time.

Often presented as a populist program, it is usually implemented in a way not unlike the worst buddy programs. According to my friend Sam Gregg, an expert on this issue for the American Institute for Economic Research and author of the excellent book The Next American Economy—industrial policy “involves attempting to alter the allocation of resources and incentives in certain economic sectors that would otherwise occur if entrepreneurs and businesses were left alone.”

It is also known by another name: central planning.

Industrial policy instruments include the provision of subsidies, tax preferences, trade protection, preferential financing and regulatory advantages. To be sure, we already have plenty of it, including a tax code full of special interest breaks and a budget full of costly subsidies. What makes industrial policy distinct is that it chooses certain economic activities to promote in attempts to reorder our economic landscape – sometimes even for cultural reasons.

Democrats are using it to force a transition away from energy sources they dislike. They use mandates, subsidies, and tax incentives to permanently change the way we consume energy nationwide, whether we like it or not. Meanwhile, many Republicans want to impose tariffs that push more people into manufacturing jobs and encourage women to stay at home so that America looks more like the 1950s.

Both sides want to coerce some people into activities that are not in their best interest. So to achieve a national order that intellectuals and politicians prefer to the current one, the economy must suffer.

While industrial policy can direct funds to specific goals or industries, it often fails to deliver on its promises and contribute to the real improvement of our culture and communities. When governments try to steer industrial development through subsidies, specific tax breaks, and preferential treatment, they inevitably distort market signals that allocate resources efficiently.

A clear example is Boeing. Decades of subsidies and special treatment have not made the company more innovative or competitive. Instead, they have produced a culture of dependency where political connections trump customer satisfaction.

The same pattern repeats itself across industries from green energy to semiconductors. Government intervention does not create sustainable competitive advantages for America; it creates politically protected incumbents who become experts in lobbying rather than innovation. When occupiers lose their edge and their projects fizzle, they come back for money. Politicians who hate to see their “national champions” fail give more subsidies and tariffs.

Some people worry that this will happen to Intel. Despite being the biggest recipient of the Biden administration’s semiconductor industry policy — the federal CHIPS and Science Act — Intel is struggling with money, largely due to bad business decisions. That Traffic lights rEPORTStop Commerce Department officials and members of Congress are weighing whether they will have to release more documents to the company because “Intel is seen as too strategically important to be allowed to fall into serious trouble.”

Protecting a company from market discipline guarantees that it gets worse rather than better. It doesn’t help that politicians often burden beneficiaries with counterproductive requirements. Take the news that the Environmental Protection Agency handed out $3 billion in Clean Ports Program funds from the Inflation Reduction Act on the strict condition that the ports not use automation. Welcome to the stone age of industrial policy, where “keeping America competitive” doesn’t mean keeping costs down for us consumers through efficiency.

Another major problem with industrial policy is that money goes to companies that don’t need it and do things that would be done without subsidies. National Magazineit’s Dominic Pino remember told us that another big beneficiary of the CHIPS Act, Taiwan Semiconductor Manufacturing Co., “announced its intention to invest $12 billion in building (a) facility in Arizona in May 2020. That was more than a year before the introduction of the CHIPS Act and over two years before it becomes law”.

I wish I had better news. Unless Trump and Congress initiate a move away from central planning, we will pay a heavy price.

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