Incentivizing New Industry

It is almost impossible to change consumer behavior. Our Government imposes regulations because consumer behavior has shown us if the CEOs and boards are not held to specific laws, they won’t do the right thing. That is why there are unions, and our country continues to have horrific train derailments. There are others, but let’s stick to incentivizing.

When the industry is incentivized through Government taxes, it is incredible how things change. Just look at what is happening with solar energy and electric vehicles. Not so much the people’s will but the tax deductions or losing market share in the case of electric vehicles.

The Federal Government began accepting applications for a $39 billion semiconductor subsidy program, including a 25% tax investment credit for building plants on new tax structures for the semiconductor industry.

But with this are caveats that Biden wants to implement. The company must provide childcare, use low-emissions energy, pay wages at union prices, shun stock buybacks, and share profits with the Government that exceeds the agreed-upon threshold.

Who knows where this will all shake out due to lobbying, but conceptually this is smart. The Government is giving away the cash to build these businesses, and if they exceed, they should give back, and the Government could put it towards something else, perhaps like housing. Childcare is imperative, period. Paying a fair wage is too.

It is unclear if this is the future of how Government operates, but it is one of the few things I have seen over the years that makes sense and breaks some glass.