Josh Hawley Thinks the White House Can Force an Aluminum Plant To Stay Open

“The modern presidency has tremendous powers, of course, but this is still quite the stretch. Hawley is asking the White House to engage in central planning at an absurdly micro-level—and there is, thankfully, no law that actually allows the president to order a factory to continue producing aluminum if its owners have decided to stop.
Even so, the fact that Hawley is even making this request illustrates something important about how Republicans now view the relationship between government and business. It also says something about how the failures of protectionism will spur calls for more protectionism. And, finally, about how the phrase “national security” has become warped beyond recognition to justify further governmental intrusions into the economy.”

“It might shock Hawley and some of his colleagues to learn that the Defense Production Act is not a set of magic words that allow presidents to do whatever they’d like. In fact, all the law does is require that businesses fulfill orders from the government before other orders from private customers.

That’s because it is a law meant to be used during wartime. Here’s how it works: Let’s say there’s a war going on and the U.S. military desperately needs 10,000 widgets to ensure victory, lasting peace, and blah blah blah. The Pentagon sends a guy to the widget factory in Albuquerque to request those 10,000 widgets, but the owner of the factory says the 10,000 widgets sitting on his lot have already been purchased by his friend Bob and that the government will have to wait until the factory can produce another 10,000 widgets—so come back in two weeks.

Ah, but wait! The president just signed an order invoking the Defense Production Act for widgets, so now the guy from the Pentagon gets to cut the line. He can buy those 10,000 widgets, and Bob has to wait for the next set to come off the assembly line.

That’s what the Defense Production Act allows. It can’t conjure up new solar panels or additional supplies of insulation out of thin air. It doesn’t allow the government to put a gun to anyone’s head and force them to make baby formula or to keep an aluminum smelter running.”

“Remember those 10 percent tariffs on imported aluminum imposed by then-President Donald Trump in 2018? That was naked protectionism, and the announced closure of this Missouri smelter seems like pretty good evidence that it failed. There’s other evidence too: As Hawley points out in his letter, this is the third aluminum smelter in the U.S. to announce plans to downsize in recent months. Unfortunately, the failures of protectionism only ever seem to spur calls for more protectionism.”

California’s Attack on Gig Work Predictably Drove Workers Out of Jobs

“California’s attempt at forcing gig workers to become traditional employees backfired by driving many of those workers out of their jobs.
In the wake of a new law (Assembly Bill 5) that was intended to reclassify many independent contractors as regular employees, self-employment in California fell by 10.5 percent and overall employment tumbled by 4.4 percent, according to a study released Thursday by the Mercatus Center, a free market think tank housed at George Mason University. In professions where self-employment was more common, the effects were more dramatic, and in some fields employment declined by as much as 28 percent after A.B. 5’s implementation.”

Biden’s manufacturing boom is underway. But the jobs haven’t followed yet.

“Companies rushed to break ground on new factories in hopes of winning those federal incentives, driving industry spending on construction to record heights. And politically, Democratic advisers said, the building frenzy provides signs of progress that Biden can point to in nearly every state.
“By the end of the election, every voter in battleground states is going to hear this story about what he’s done to invest in America’s economic future,” said John Anzalone, the founder of Impact Research and a longtime Biden pollster. “That is just not a message that Trump has.”

Yet central to Biden’s story of a manufacturing comeback is the prospect of thousands of new jobs spurred by his new laws — and so far, those have been slow to materialize. While Biden often touts the nearly 800,000 manufacturing jobs created during his presidency, the vast majority came prior to passage of the IRA and CHIPS, when Americans’ surging demand for goods during the pandemic drove a rapid industry recovery.

Since then, hiring has stalled as the economy evened out, with manufacturing-centric swing states like Michigan, Wisconsin and Pennsylvania actually losing factory jobs in 2023.

Those conditions have left Biden selling a manufacturing jobs boom that may not arrive in full force until well after November. Most companies that broke ground after Biden’s economic bills became law in August 2022 won’t have their new plants up and running until later this year — at the earliest. In high-profile setbacks for the White House, chipmakers TSMC and Intel have both signaled plans to delay production at their newest U.S. factories until 2025.”

3 Economic Myths That Need To Die

“Not only do we Americans still produce an enormous economic output, but the U.S. also continues to be a dominant force in manufacturing. A recent paper by the Cato Institute’s Colin Grabow even reports that American manufacturing surpasses the output of Japan, Germany, and South Korea combined. We are the world’s second-largest manufacturing economy and, better yet, we are a global frontrunner in critical sectors such as automotive and aerospace.”

“government spending is not inherently efficient or effective. It often leads to a misallocation of resources, bureaucratic inefficiencies, and unintended consequences that exacerbate the problems government aims to solve. And when government fails, its mistakes are hard to correct. It’s a sharp contrast with the dynamic and adaptive nature of free markets. The collective decisions of millions of individuals freely spending and investing their own money are incredibly effective at allocating resources, responding to consumer needs and driving innovation. And when the market fails, people with their own money on the line don’t hesitate to change course.”

State Governments Promised Private Companies More than $10 Billion in Subsidies Last Year

“Governments often make deals with private companies, offering generous subsidies to encourage development in their respective states. The year 2023 was unfortunately no exception.
According to a new report from Good Jobs First, a watchdog group that tracks economic development deals, 16 states promised more than $10 billion to private companies last year. The group counted 23 “megadeals,” which it defines as any agreement involving at least $50 million in subsidies to a private company.”

Georgia Taxpayers Lose $160,000 for Every Job Created by Film Tax Credits

“A new audit of Georgia’s Film Tax Credit program found that the state “loses money” on the program. A lot of money, actually: about $160,000 for every job the program creates. Georgia is now spending about $1.3 billion annually on the program, but it generates a return on investment of just 19 cents per dollar, the auditors conclude.”

“There’s no doubt that Georgia’s program has influenced where movie and TV production takes place. The new audit concludes that the program has induced “substantial economic activity in Georgia,” but that’s simply evidence of the fact that lighting a lot of money on fire will eventually produce some heat. The underlying numbers suggest that Georgia’s subsidies are doing a poor job of generating economic growth or creating jobs.”

California’s New Minimum Wage Is Predictably Killing Food Delivery Jobs

“A new California law will require that most food-service workers get paid at least $20 per hour starting next year.
But hundreds of pizza delivery drivers in the Los Angeles area are about to discover Thomas Sowell’s famous adage that the true minimum wage is zero.

Pizza Hut announced Wednesday that it would lay off about 1,200 delivery drivers in Los Angeles, Orange, and Riverside counties, CBS News reported. Pizza Hut franchises are outsourcing delivery to third-party apps like GrubHub and UberEats as a cost-saving measure in advance of the new law taking effect.”