The University of Massachusetts Amherst

New Industrial Policy Requires Reforms

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In a new Boston Review article titled "Why Biden’s New Industrial Policy Won’t Work Without Reforms,"  Lenore Palladino, Assistant Professor of Economics and Public Policy, tackles the problems with the new Inflation Reduction Act. 

“The Inflation Reduction Act (IRA) is, according to many, the most important piece of legislation to combat climate change ever passed in the United States. It includes provisions on lowering the cost of prescription drugs, sets a new corporate minimum tax, and shores up enforcement capacity at the IRS.”

The article examines the green industrial policy provisions in the Act that are meant to take the country a substantial way toward compliance with the Paris Agreement goals. It is these policies, actively promoting investments and some industrial sectors rather than others, that comprise a “new moment” in industrial policymaking. But, Palladino argues, a host of neoliberal corporate policies that prioritize shareholder wealth over broader public purposes will stymy opportunities for transformation if not addressed.

“Specifying clear guardrails to limit corporate extraction and promote public benefit—including limits on extractive behavior and preferences for companies that include workers and the public in the innovative process—will be crucial in attempting to meet U.S. industrial policy goals.”

Her article meticulously specifies the types of guardrails needed to shape corporate behavior in ways that benefit workers, limit extraction and more equitably share risks and benefits between private firms that receive public funding and the government.

Lenore Palladino is an Assistant Professor of Economics and Public Policy at the University of Massachusetts Amherst, a Research Associate at the Political Economy Research Institute, and a Fellow at the Roosevelt Institute.

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