President Biden has been called a lot of things, but Hamiltonian is not usually one of them. In spite of his economic successes, hardly anyone has thought to compare the president to the architect of the American economy.
And yet, more than any president in generations, Mr. Biden shares Alexander Hamilton’s fundamental vision for the country: America needs a strong industrial strategy to support its long-term security. Mr. Biden’s CHIPS and Science Act and his Inflation Reduction Act reflect this idea. These policies channel government money into the semiconductor, solar energy and electric vehicle sectors in the hope of reducing reliance on foreign producers and bolstering national security, while helping American companies become more competitive with Chinese state-subsidized industries.
Liberals are calling this government intervention the end of neoliberalism and a new “securonomics,” while conservatives are claiming that dangerous “Bidenomics” policies are hurting the economy and are an affront to the free market. In spite of this, by all indications, the policies seem to be working, and Republican states are benefiting. Ohio, South Carolina, Tennessee and Texas are taking billions in federal funds from the Inflation Reduction Act, and are reaping the rewards with the creation of tens of thousands of green-energy jobs.
As an economic historian, I can’t help being struck that this argument over industrial policy versus unfettered free markets has happened before, during the presidency of George Washington. It’s also hard to ignore the irony that Republican champions of historical originalism are attacking an economic playbook that looks much like the one written in 1791 by Hamilton when he was Washington’s secretary of the Treasury. While some historians have called Hamilton’s project for state support of American manufacturing a failure, the reality is that Hamilton’s plan was not only successful at the time, it also laid a template for almost two centuries of security-driven economic policy, which Mr. Biden is merely revamping.
Since the dawn of competition between militarized early industrial states in the 15th and 16th centuries, government economic strategy in the face of relatively hostile trading partners and even allies has paid major dividends for national wealth.
England had a long history of state involvement in the economy, with roots in Henry VII’s wool subsidies and protections, as well as monopolies under Elizabeth I. With the rise of imperial military competition in the 17th century, the wealth-bolstering relationship between trade and security became more apparent. Global commercial players could not compete in seaborne trade without industries that supported the navy. Ships were a precursor to high-tech industry: They needed complex parts, navigational technology, refined weaponry, a large skilled work force and managerial staff, and immense industrial ports and cities, which required state-supported monopolies, companies and subsidies.
In 1651, England passed its Navigation Laws to protect its shipping and fishing industries and to promote its naval prowess. A decade later, Louis XIV’s finance minister, Jean-Baptiste Colbert, emulated England’s long history of tariffs, subsidies and state industrial involvement that had given it advantages in wool, shipping and cannon making. When Colbert died in 1683, France had a superior navy and was in the process of becoming England’s major competitor in the textile market. The two countries had become Europe’s premier powers.
By the end of the 18th century, America was at the center of this competition for global dominance. With the young United States reeling from the Revolutionary War, and still facing economic and military threats from the British imperial behemoth, President Washington asked Congress in 1790 to “promote such manufactories” so that the country would be self-reliant “particularly” for “military supplies.” America had suffered from war supply shortages, and its leaders remained concerned by the British Prohibitory Act of 1775, a commercial blockade that had left the country unable to obtain basic staples along with technological and military necessities.
Following Washington’s address, the House of Representatives asked Hamilton for a plan to expand American manufacturing and counter related security risks. In December 1791, Hamilton presented it to Congress in the form of a short book called “Report on the Subject of Manufactures.” It was a rebuttal of laissez-faire economics and a blueprint for American state industrial policy.
Hamilton’s report challenged free market claims made by Adam Smith in his 1776 “The Wealth of Nations”that governments should not involve themselves in economic planning, and should, above all, count on agriculture over industry for economic growth: “No equal capital puts into motion a greater quantity of productive labor than that of the farmer,” Smith wrote. Hamilton was not persuaded. He expressed the concern that markets alone did not produce goods according to national security needs.
Rejecting Smith, Hamilton declared himself the economic heir to “the great Colbert,” and in this spirit, he sought to put America on a manufacturing course, claiming it was more “productive” than farming and also spurred military innovation. He insisted that America’s infant industries could not flourish on their own, in competition with the more developed ones of Europe. In other words, America needed a government that focused on developing technology suited for the military.
Hamilton claimed that Britain’s “immense progress” came not from agricultural trade, but rather from the cotton mill, something Smith never mentioned. According to Hamilton, the only way America could encourage home-grown iron and steel manufacturing for the gun industry was through strategic tariffs of 7 percent to 10 percent.
Hamilton’s policies slowly prevailed. With the support of James Madison, he managed to get the Tariff of 1790 enacted. Maintaining such policies was difficult given the opposition to the cost of subsidies from both Federalists and Republicans. However, constant worry about foreign threats meant that not only did Hamilton’s protectionist policy hold, it also gained traction as conflict with Britain exploded into the War of 1812, inspiring more tariff policies. By 1816, even Thomas Jefferson, an admirer of Smith and one of protectionism’s strongest opponents, had come to agree that a national manufacturing policy was necessary to the economy and to independence itself.
This shift enshrined a Hamiltonian tradition of industrial strategy based on national safety concerns as a hallmark of foreign policy under presidents of different parties. From the War of 1812 onward, Secretary of State Henry Clay continued Hamilton’s economic policy with his own successful “American System” of protectionism along with military and industrial investment in order to compete with British free market policies, which Clay saw as a national threat. Even after America had built an industrial base, Abraham Lincoln declared himself a supporter of this second wave of Hamiltonian security-oriented economics.
In the 20th century, national economic strategy continued to be central to Franklin Delano Roosevelt’s wartime policies, and to Cold War strategies of technological investment. The idea was that if America had a possible military weakness, the government would step in to foster the industries necessary for military defense. Silicon Valley grew, in part, from investments by the National Security Agency and the C.I.A. in radio wave military research at Stanford. Cisco and I.B.M. got off the ground with federal funds and contracts. Even as he liberalized the economy, Ronald Reagan maintained an industrial policy aimed at burying what his administration saw as “sunset” industries like steel and cars to focus on high-tech industries, like fiber optics, particularly useful for military purposes.
Times have changed, but the Hamiltonian roots of American economic policy remain in place. Though it is one of the most technologically advanced countries on earth, America lags in key industries. Market forces, along with Chinese subsidies, have made it that militarily essential American national industries depend on Chinese parts, expertise and manufacturing. American companies may yet have the capacity to meet strategic security needs without government intervention, but the development of the chip industry so far makes it fair to argue that they have not. As in Hamilton’s time, the market looks for profits before security.
Few on the right acknowledge that Mr. Biden’s CHIPS and Science Act and Inflation Reduction Act have also come as a response to the very state subsidies they complain about, and which have scored successes in supporting Chinese industry in the important domains of computers, cellphones, solar power and electric cars — China’s BYD has become the biggest electric vehicle producer worldwide, putting pressure on Tesla and other American companies. With recent chip technology breakthroughs, China is rapidly catching up to the United States in semiconductor capacity precisely because of state strategy and support.
Government intervention and research investment in semiconductors could be seen as a gamble, but they in no way constitute a radical departure for American policy. Mr. Biden’s economic plans look even more Hamiltonian in contrast with Donald Trump’s suggested 10 percent tariffs on all imports and 60 percent tariffs on all Chinese goods. Republican leaders have yet to weigh in on these disastrous proposals, in spite of leading economists of all stripes predicting dire consequences for the American economy, let alone security alliances, if they were adopted.
Hamilton’s main concern was that America compete successfully to build industry to defend itself. He was looking to protect the future prospects of a fledgling nation in a hostile world of industrially and militarily powerful countries, and he did not hesitate to bring the state into the equation. With neo-Hamiltonian securonomics, Mr. Biden is doing the same.
In an age of rising autocracy and militarism around the world, the president is thinking not just tactically in terms of the country’s economic well-being, but also strategically about how industrial policy is crucial to America’s security, in every sense of the word.
Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.
Here’s a timeline of key events in the bread price-fixing case.
Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.
Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.
Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.
Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).
Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.
June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.
Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”
Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.
July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.
Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.
This report by The Canadian Press was first published Sept. 19, 2024.
Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)
TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.
The S&P/TSX composite index was up 254.62 points at 23,847.22.
In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.
The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.
The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.
The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.
This report by The Canadian Press was first published Sept. 19, 2024.
VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.
Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.
The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.
“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.
“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”
Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.
The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.
The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.
Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.
More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.
Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.
“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.
Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.
“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.
Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.
Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.
Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”
“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.
This report by The Canadian Press was first published Sept. 18, 2024.
