Yellen doesn’t see this as a tension. The government’s role is to step in when markets fail, and climate change is a market failure. “There are areas where you can say the private sector doesn’t have sufficient incentives to engage in applied research we need and that would easily pass a cost-benefit test,” she told me. “Environmental economics is one clear example of it.”But is climate change truly such an exception? Take the pandemic we’re living through now. The private sector doesn’t have the incentive to build and maintain the vaccine manufacturing capacity necessary to inoculate the world against rapidly evolving strains of a pandemic virus. Nor did it have reason to stockpile the masks and tests and assorted other materials we needed.“What we need is market shaping, not just market fixing,” Mariana Mazzucato, an economist and the author of “Mission Economy,” told me. “The usual mantra for the mainstream is if the state tries to do more than fix market failures, it’ll crowd out business. It assumes business already wants to invest. That’s not true. In most of these bold areas, business often is risk averse. We need to see the crowding-in effect, not just the crowding-out effect.”Alec Stapp, co-founder of the Institute for Progress, had a formulation here that I liked. “This isn’t about government controlling the means of production,” he told me. “It’s about government controlling the ends of production. Deciding what we are producing toward, what we are building for.”Beyond the climate provisions, the ideas that brush closest to that vision aren’t in Build Back Better. They’re in the United States Innovation and Competition Act, which Chuck Schumer, the Senate majority leader, shepherded through the Senate with 68 votes, and the COMPETES Act, which is the House’s version of the same bill. The proposals — which still need to be merged, passed again by both chambers and sent to Biden — authorize between $250 billion and $350 billion to reinvigorate American semiconductor manufacturing, rebuild critical supply chains, finance regional innovation hubs across the country, and much more. Too much more, to be honest. The bill ballooned to over 3,000 pages in the House, and is stuffed with errata. (Though I’m glad the House added support for admitting more high-skilled immigrants, which is the single easiest way to build our supply of talent.)“Part of the thesis of COMPETES is yes, we’ll do cutting-edge science research,” Representative Ro Khanna, a key backer of the bill and the author of the new book “Dignity in a Digital Age,” told me. “But we’re also going to pay attention to production and commercialization. We need to be a nation of producers. And that was one of the biggest obstacles: This sense of, are we diluting pure science? Are we making it too industrial and too commercial?”These are strange questions for politicians to agonize over. They reflect the long sweep of antigovernment rhetoric in America. Picking winners and losers means picking some losers. Venture capitalists can brag about their failures, but bureaucrats are flayed for them. That the Obama administration funded Solyndra is canon. That the same program threw a lifeline to a struggling electric car manufacturer named Tesla is trivia. Democrats have run scared from accusations of big government for decades, and so they continue to try to show that they will leave the market to its magic, the scientists to their beakers, and confine government to cushioning the blows or looking after the children.
