The whole talk about "reverse" market crash (real estate and stock market) basically argues that we are nowhere near done with inflation and that we might actually experience "hyperinflation" in the near future combined with accelerating poverty levels across the nation or going thru a historical economic depression...those are the extreme conditions that have produced the reverse market crashes in most examples I've seen. I personally don't see anything that extreme coming, but who knows.

The reaction of European governments to the IRA is a perfect illustration of why Globalization, as it currently stands, doesn't work. It creates a global market, but not global citizens. People still belong to their countries, not the globe. To protect their citizens, individual European countries will compete with each other, because their citizens are ultimately who they're held accountable to (ideally). The US sent its manufacturing base to China, which was great for "the global market", and terrible for the citizens of the United States. So you either need to move past the idea of the nation state, or you have to abandon the idea of an unrestrained global market. You can't have both over the long term.

I'm glad someone told this story clearly. Neither the President's communications team nor his campaign seem capable of doing so.

I'm glad to see America rebuilding it's industrial core. For far too long, we've freely given away our consumption and production of goods. Time to bring more back to the United States and ensure that we have a certain industrial capacity for both our own consumption and national security reasons.

It is not the end of globalization. It is moving to avoid the complete annihilation of select manufacturing in various economies. It is a recognition that when you build here, you also have a chance to protect the workers, the environment, and the customers here. It is reducing potential liabilities.

Surprised I never grasped what the hell the IRA is... this was really eye opening about how big a deal this is in historical perspective... and really well done. Much obliged!!

With Market tumbling, Inflation Soaring, Is the stock market actually getting better or could this be the regular new year market manipulation to entice new investors? I'm currently sitting on $500k inheritance and just wondering what better assets than stocks to invest in right now

My Step-dad is from Holland. He told me, through this ACT, the U.S. bought a LOT of very expensive chip-manufacturing machines from the only company in the world that makes them - which is based in Holland. I have to admit, Biden surprised me here.

Geopolitics aside, the fact that Mexican labor is now 1/3rd the cost of Chinese labor means pure economics alone will force the American industrial base to relocate closer to home. If the current rate of factory build out continues alongside our energy independence, U.S. can reach pre-WW2 levels of economic isolation within 10 years. And I'm all for it!

There’s still going to be global trade, but supply chains become more disperse across geographies and the United States is bringing strategic manufacturers closer to home…here and Mexico. With automation, AI, less transportation costs, etc costs will be slightly higher at first then lower over time, but quality will be much better. Also the leverage China currently has over us is significantly reduced.

Very good for the US citizens. I hope we in the EU can pass some similar policy to help our citizens as well. We need to get rid of our dependence on cheap countries production. We have eastern Europe for that.

- Overview of Inflation Reduction Act's objectives (0:10) - Discussion on reshoring and reducing China dependence (0:23) - Analysis of job creation and investment impact (3:29) - Insights into international reactions and economic shifts (7:48) - Consideration of the act's long-term sustainability and global influence (11:01)

I thought Biden was part Irish but I’d never had thought he would support the IRA to such an extent, especially without backlash from the British.

Industrial policy is good and biden deserves more credit for taking these steps. It's insane how much industrial capacity has been lost after the cold war ended.

This is an excellent step. Hopefully it is the first step to give America the confidence to tackle the rising cost of living, education system, prison system, and other issues facing our nation.

It is fantastic that America is finally investing significantly in upgrading its infrastructure and supply chains! Seeing manufacturing return to America after years of outsourcing is truly beautiful! Make More In America!

I love it. Bring everything back where many of the technologies were invented. Good for the American workers and the US economy.

Since Biden took office, there seem to have been more unfavorable results in America. These results include effects on the markets, such as price declines and sharp increases in inflation, as well as bank failures. I wonder if the sudden increase in interest rates will help value investors or if it would be wiser to stay away from the stock and financial markets for the time being.

Great video, a number of the most eminent market experts have been expressing their views on the severity of the impending economic downturn and the extent to which equities might plummet. This is because the economy is heading towards a recession and inflation is persistently above the Federal Reserve's 2% target. As I'm aiming to create a portfolio worth no less than $850,000 before I turn 60, I would appreciate any advice on potential investments.

The more free, clean energy any society has, the STRONGER that society’s economy IS!

Globalization has destroyed American manufacturing. In business it's all about the profits. My previous employer has gone as far as removing distillation columns, and relying on China for raw feed.

The IRA basically gives the US an industrial policy which it has lacked for the past 4 decades or longer.

GE General Electric (GE) is a multinational conglomerate that manufactures products to serve many industries, including renewable energy, aviation, healthcare, and appliances. The appliances division of GE was purchased by the Chinese-owned Haier company in 2016. Four years prior, the same company acquired the New Zealand appliance maker, Fisher & Paykel. When the Haier company acquired GE, they wisely retained the right to use GE brand names through 2056. Today, Haier manufactures GE, Hotpoint, Cafe, Profile, and Monogram branded household appliances. Question. How do you seperate us from China when US owns a lot of the China Companies and a lot of the China companies own USA companies?

Usually I would think that Governments shouldn't subsidize their companies just to pull production on shore. This makes for a very distorted market where the market is not functioning and money is wasted. Stuff will be produced inefficiently and innovation is stifled. BUT I see 3 exceptions: 1. If it is something that your society cannot do without and the supplier econonmies are not diverse enough. For example a country that does import all of it's food and can only import it from a single country is gambling with their future. If they can they should and must create some food production on shore. 2. If it is a global distaster like climate change that has been known for decades and every country is still moving incredibly slowly. The progress in carbon reduction clearly outweighs a little damage to the global economy. And I don't think it's even a contest long term. The benefits outweigh the disadvantages by so much. 3. If you are currently dependant on a hostile autoritarian regime, you should lessen your vulnerability. We shouldn't depend on China for solar technology and receive all fossil fuels from Russia and Saudi Arabia. These are not countries you should stake your existance on. Especially with all the rising tensions. It is probably ok to depend on fellow working democracies. You shouldn't depend on a dictator that wants to ruin or conquer you.

I found this documentary very well done. The IRA & Chip Act was well intro'd within the video and the comments from the various individuals helped to provide multiple points of view from the US administration, general financial folks, some domestic producers, and our EU point of views. I truly enjoyed the highlighting of the use of statecraft and establishment of working with other nations for the US to make the efforts of the IRA to work. From South Korea, to trade with Canada & Mexico, etc. Liked & subscribed. Please keep up the great content. Cheers!

After half a century of watching Asia eat our lunch because they had smart industrial policy and we didn't, I'm very happy to see that we've finally come around. FT, thanks for this. The number of people who have no clue about the IRA is enormous.

How awesome would it be if Canada-US-Mexico developed a system where they each benefited from their unique resources and abilities.

when it comes to energy - we never were in the era of free-market globalisation

They don’t care about the environment. Here is what is really going on - Declining Profits: Reduced profitability in China compared to previous levels. - Loss of Control: Companies' realization that they couldn't control China as easily as they thought, unlike their influence in U.S. politics. - Return to the U.S.: Factors prompting companies to relocate operations back to the United States.

Private Equity will be relentlessly working against this effort. Unless PE is deincentivized its pointless. PE has been at the tip of the de-industrialization spear for the past 40 years taking over companies, offshoring jobs to increase margins, and leveraging them up creating zombies. The trillion dollars of dry powder currently in the PE war chest focused on economic destruction will be like a hundred mile an hour head wind to this effort over the long term.

Excellent portrayal of the Inflation Reduction Act and how it's perceived domestically and internationally. I'm glad I watched this.

🎯 Key Takeaways for quick navigation: 00:01 🌍 *Introduction to the Inflation Reduction Act* - The Inflation Reduction Act is a significant piece of legislation designed to reshape the US economy, address climate change, and secure supply chains. 01:03 💡 *Key Provisions of the Inflation Reduction Act* - The IRA includes $370 billion in tax credits, loans, and grants to incentivize domestic manufacturing. - It focuses on decarbonizing the economy, reshoring supply chains, and reducing dependence on China. - The Chips and Science Act complements it, encouraging semiconductor research and production. 02:55 🌞 *Impact on Clean Energy and Manufacturing* - The IRA aims to reduce emissions by 40% by 2032 with tax credits. - It stimulates more than $220 billion in clean manufacturing and clean technologies. - The legislation transforms regions like Georgia into advanced-energy manufacturing hubs. 06:51 ⚡ *Importance of Domestic Manufacturing* - The IRA encourages the production of strategic commodities like solar technology within the US. - It creates jobs, boosts local economies, and reduces dependence on foreign sources. - States like Georgia benefit from incentives and subsidies to attract manufacturers. 07:56 🌐 *Global Trade Implications* - Critics view the IRA as protectionist, similar to Trump's policies, and it may lead to trade tensions. - Europe reacts with skepticism, fearing subsidy wars and damage to international relations. - The legislation challenges the notion of market-driven globalization. 10:46 🤝 *International Relations and Climate Agreements* - The IRA's focus on domestic production affects international climate agreements. - Countries seek critical minerals agreements and free trade deals with the US. - It shifts the dynamics of global cooperation and trade relationships. 13:55 🌎 *Climate Change and Industrial Strategy* - The IRA marks a shift from market-driven policies to government-led industrial strategies. - It challenges the traditional approach to economic policy. - European companies increasingly invest in the US due to its fiscal incentives. 17:12 ⚖️ *Balancing Climate Goals and Economic Realities* - The US faces a dilemma between cutting emissions and re-industrialization. - China remains a critical supplier of essential components for clean technologies. - The choice between climate targets and domestic production may create challenges. 20:12 🔄 *Distorted Markets and Economic Security* - Government intervention in markets can lead to distortions and long-term economic security issues. - Cheapest is not always best, as reliance on cheap fossil fuels can have consequences. - A balance between government guidance and private investments is needed for decarbonization. 21:41 🔗 *The IRA in the Context of Global Supply Chains* - The IRA comes after a period of strained global supply chains, emphasizing the need for change. - Competition can drive innovation and cost reduction in the clean energy sector. 22:10 🌐 *Global South and Impact of IRA* - The IRA's impact on the Global South raises concerns about the fairness of climate policies. - Developing countries may struggle with the financial burden of transitioning to cleaner technologies. - The need for a balanced approach to development and environmental goals is highlighted. 24:09 🇺🇸 *Political Implications of IRA* - The IRA has unexpected bipartisan support, with 80% of the investment going to Republican districts. - Potential political shifts, such as a re-election of Donald Trump in 2024, could impact the IRA's future. - The tax credits embedded in the legislation for 10 years may pose challenges for future administrations. 25:36 🏭 *Role of Government in Post-Neoliberal Politics* - The IRA represents a departure from traditional neoliberal economics, acknowledging the government's role in addressing global warming. - Challenges like permitting, supply chains, and interest rates exist, but the government is investing in environmental solutions. - It marks a shift towards a more active government role in ensuring public goods, particularly in combating climate change. 26:58 🌍 *Changing World Order and Free Market Ideals* - The IRA signifies a departure from traditional American advocacy for free markets and free trade. - The US's shift towards a different economic policy challenges the existing world order. - The era of free-market globalization is undergoing significant changes, driven by the IRA and similar policies. Made with HARPA AI

so, competition between nations/regions based on R&D/tech innovation will take over from: 'who can find the world's most exploitable workforce and environment' ? sounds bloody good to me.

The irony of Europeans complaining about protectionism and subsidies.

A fantastic summary of the Inflation Reduction Act and our strategy to fight global warming. Great reporting, wonderful editing and presentation of the material

Even with 25% tariff, it’s still cheaper to import solar panels from China!😮😢

Thank you for the video, this cleared up the IRA quite a bit. Also just interesting to see the political rhetoric: you have the GOP touting this as a pro-China agenda when it really just seems like the continuation of protectionism. I'm not an economic expert, but it also seems like the fight against climate might also be a fight against globalism. I'm really fascinated to see what the next 20-30 years looks like.

Hi FT, I have been watching FT Film on UKposts since very long. I find the discussions very insightful and very comprehensive. I, like many Indians, do not recognize the participants in such Videos. It will really help us all understand the context better if you keep on showing the names and organizations or country of the speakers and participants in such FT Film videos. Thanks Vikram Shah, Ahmedabad, Gujarat, India

This will change America forever."If done Right"

“I’m from the government and I’m here to help” the meaning behind this still stays true, Mr.Wolf.

If you wanna hear music , you gotta pay for the band. Investing heavily in environmentally-sustainable, in-country, productive capacity is by far the best long-term way to keep inflation under control.

I think reducing reliance on China is more focused towards self sustenance and guaranteeing the flow of goods over a nationalistic endeavor of dominance. Good video though.

No one was wearing a hat in this video, but there was plenty of cappin'

The goal is to continue to be economically dominant. China is currently hitting a middle income gap, and the Western markets are working to avoid economic contamination. Western markets did the same thing when Japan entered the middle income gap at the beginning of the lost decade. It’s just much more substantial now because of the growth of globalization since the 1990s.

Not only is it a MUST for the US, but for all the West. If we don't invest, if we don't rebuild, if we don't control our own sources of many of these technologies, it would decimate Western economies. We can't be at the whim of foreign countries who's stated goal is to more or less put us in the category of the past. Plus, someone has to invest in clean energy….we need so much more investment than even this.

Love how the trailer for Freyr's "clean energy factory" in Georgia shows them demolishing an old growth forest.

Thanks for this! Very instructive and places many of the key Government vs Market actors in front of your audience.

I love how they named it Inflation Reduction Act, to pass it through the government.

The state has always been an actor in the economy and Xi based a lot of his industrial strategy on prior American principles/actions of WW2 and the Cold War. Ultimately government can and does chose winners but in our case the state had often opened whatever knowledge and technology researched/gained back to the private sector to do with as they pleased. Fundamentally, free markets can't or are unwilling to focus long term and the state can.

Weird, how the factories have no solar panels on their roofs.

The conflation of policies aimed to 1. boost domestic manufacturing and 2. encourage a transition to low-carbon energy generation is a good example of why modern day policy making is so dominated by public perception/PR.

The USA will actually be richer if they reshore their industries. The problem is that the billionaires will have to pay more. There was no reason for globalisation except for the benefit of a few global elite.

Consider this: Artificial abundance / cheapness of fossil fuels is the basis of those offshored jobs and overstretched supply chains. In terms of energy efficiency, it is absurd to see raw materials shipped across the world to take advantage of poor labourer areas then shipped back as finished products. The only way it seems to make sense economically is that the cost of shipping (i.e. the cost of fuel) has been kept artificially low. In short, it doesn't really make economic sense, and it sure as hell does not make engineering sense. We call this false effficiency "cheap" only because the true costs are deferred and sloughed off by the market as "externalities" which we are told not to think about, but which come back to haunt us later in the form of disasters, illness, and conflicts. Not to mention becoming dependent on those foreign jurisdictions which might exert brutal leverage over us in times of crisis, forcing us to betray our own best interests. If acts like this in the US and similar measures in other nations can restore some actual rationality and actual efficiency to not just manufacturing and supply chains, but push economies to adopt the overall-more-efficient clean energy as their basis, then people should be all for it.

I appreciate this video, because it is easy to understand from the perspective of the layman like myself, it is filled with insights (that are fresh ways of looking at things, at least to me) and it doesn’t seem to have a particularly sharp partisan leaning.

Shipping every single product we buy across the entire world has been a climate disaster. It does need to change.

American needs to be self sustaining first and forever.

permitting reform is another huge piece of legislation that needs to be passed or a lot of this money is going to be eaten up by lawyers and consultants and not construction and factory workers.

I hope it will also be like this in Europe, that we ourselves produce the things we use, because it is miserable there is nothing to work in Europe

Taiwan TSMC (in Taiwan) makes 90+% of ALL semiconductors used in devices from cell phones to automobiles. Semiconductor manufacturing in the US (now) is very limited.

This is such a well-informed and comprehensive review of the IRA and its potential global impacts. One thing that was always funny to me was how a certain group of politicians lambasted the bill as reckless, "socialist (lol)" spending and yet those same politicians were the quickest to jump at the subsidies it brought to their state and take credit for them. Not to mention how protectionist the bill is.

The world is sure changing and the IRA would imply a higher degree of opposition between western values and principles and those of non-democratic regimes. Governments in the developing world ought to be taking note and acting accordingly. Excellent documentary, thanks!

Product quality and safety matter. I am frugal enough to pay more for appliances that don't break down.

I thought THIS was what the rich people were supposed to be doing with those budget-busting tax cuts they'd been getting for decades? Looks like they actually WERE just hiding most of it away. Who would've thought they'd be so short-sighted and greedy?

And states wonder why people don't want to have kids to grow up in this fxd up world anymore. It's all about "us not them" instead of finally getting down to work on a peaceful and livable world. Sides are what will tear us all apart.

A similar initiative is imperative for nuclear power with a state-private consortium offering a handful of models of reactors

Why not do geothermal? Now we have to figure out what to do with the univesal waste (aka batteries)

The glass is not half way empty. It's 3/4 empty. 😡

In a world where governments have interfered, funded, tweeked, and legislated against and for certain industries for politial gain by lobbyists and politicians, the more i understand market forces to the biggest, fattest fallacy ever. We're in a situation where governments are run by corporations for corporations.

This is normal, every time in global history when the dominant superpower gets challenged economically, they tend to pull back on free trade. It happened with Spain, Britain and now it's happening with America.

The Financial Times staff has put together a great do documentary on the Inflation Reduction Act, which shows the talent of its people. The act wisely focuses on revitalizing the energy transition (under the motto "America first"), thus addressing the war against climate change, unemployment, and a economic model that leaves globalozation behind. It is really great to live in the US during these times because it is a "fundamental shift" in the way americans were running the country. Ť

This should be viral. Our dependence on other countries is actually dangerous for our economy.

Great job @FinancialTimes well documented I appreciate it.

23:15 ah the “give me your natural resources and we will help you fix the problem we cause” good argument

This was a really informative piece. Thank you FT! Also, loved the montage of past US Presidents at the end, subtle 😂

People living in poverty can't exactly be too strict on what to do when they need money for food and shelter

Wow america is back like 70 and major industrial power ,midwest, rust belt begin new make over is incredible

I expect long term the US and EU will come to an agreement, but the EU's fundamental complaint seems to be about a political failing in European institution building. I appreciate how hard it is politically to solve the fiscal authority problem in the EU, but it's frankly kind of irritating hearing the EU complain because the US has solved the basic function of a state to enact fiscal policy while the EU has not solved it. It's kind of at the heart of why states are powerful, and why the EU isn't a state yet. The EU can mostly get by when dealing with states as a not quite state because the EU is economically masssive compared to most states, but when they're re dealing with the US or China the EU's incomplete nature holds them back, and the US and China (and India) will never act as "not real states" just to level the playing field for the EU. The EU has to solve this problem or they'll never be able to treat as equals with the US or China, or any other state that gets into the same weight class as the EU, US, or China.

Ultimately, addressing these challenges involves ongoing efforts from both the government and the citizens to foster trust, understanding, and collaboration. Open and transparent communication can be a key factor in bridging gaps and working towards a more cohesive and responsive society.

Unfortunately, going head to head with Samsung TDI is an absolutely COLOSSAL undertaking. The global battery industry is pretty locked up rn.

Not a single mention of Nuclear!

In today's changing economic scene, it's wise to diversify your investments. Consider a mix of traditional assets like savings accounts, stocks, and bonds, along with dynamic options like cryptocurrencies. This strategy helps guard against inflation and economic uncertainty. Staying informed and blending traditional and innovative investments is key for financial resilience. Samuel Peter Descovich played a vital role in making my portfolio a success.

Remember what preceded this. The US made 'energy independence' their main driver of the federal government. This meant huge subsidies going into tar sands, oil in shale formations, deep Gulf oil, and fracked gas. The foreign policy became militaristic, destroying oil producers, and when not that, confrontational, blockading Venezuela, Iran, and Russia. That is because if energy costs are too cheap, US fossil fuels can't make money, even with all the subsidies. So the IRA is just the next stage of all this. That means the US will feel it is forced to make sure that the rest of the world is stuck with energy costs that exceed the US's, and the US won't have cheap energy. So it's more expensive energy costs and more wars and trade blockades. It's like only China and Russia can even try to stand up against the US.

Why why why was it named Inflation Reduction Act?

Investing in intermittent power without storage is a Quixotic quest. Germany presently has 4 times the nameplate of Intermittent energy production, but in only account for half of all the actual electricity production. If it not for the ramping up of natural gas and coal generation of electricity in Germany (plus last year's very mild winter) the German economy would have completely collapsed. Solar and wind generally produce electricity when it is least needed (during the day and in the warm seasons) and collapses the it is most needed (at night and in the winter).

Who doesn't love public money for their private businesses and their personal bank accounts? Who loves no accountability when they go bust after sucking up that free money?

It's not inflation if companies are setting record profits. That's price gouging.

Heard of Norway. They made massive hydro power investments in the 50’s-70’s giving limitless clean cheap energy as a bedrock of their prosperity & energy sovereignty.

What a surprise that us corporation’s sold American jobs to China, and now the us has suddenly realised its needs to actually make things. And secure its future and provide security for jobs and the country.

In the 90s I conducted several technology strategy projects for EU solar start-ups. The US was the inventor of photovoltaic panels for it space programs. But by the end of the 80s investment in PV was just a drip feed and they had ditched it all under the oil lobby. Europe then 'dabbled' in PV, but it took the Chinese to pick-up the baton and run. As a consequence they reduced the price of solar panels by around 70% from 2010 to 2020. I say: hats off to them! It took a long time for the US to wake up to the long term damage they created with their short term strategies. But if the US wants to do something big, it still can. I only hope the democrat administration is maintained, otherwise you can forget this reversal.

As both an American who resides in the US and a born and raised European I am split about this. I understand both sides. I believe that as an American the country will benefit greatly from the IRA. Manufacturing is one of the -if not the biggest- reasons the US manage to win in WW2. Shipping manufacturing abroad to an ideological and geopolitical adversary is not a good way of preparing for potential conflict. When I say conflict, that could mean trade war, regular war or some kind of cold war. Cheap products are good and useful, but as a country you do not want lower your manufacturing capacity. And cheap products come with the hidden price-tag of lower salaries and less jobs and job security. Now as a European, I understand the frustration as well. Europe also had a lot of factories and manufacturing. However after the US led the globalization transition, most European countries willingly or not adapted by shutting down their factories and transitioning to service based economies. Now the US has shifted it's policy, but European countries cannot do that as fast or with the volume that the US is doing it. Europe is not a single country. And the economies (GDP) of all the countries together is much less than the economy of the US. As it stands, European countries will fall behind even more that they already have. The IRA could trigger a subsidy war within the EU and undermine the single market. Since the EU is more bureaucratic and requires more time to pass something as big, this will make it hard for Europeans to compete. And that could make EU -US relationships worsen. I guess only time will tell what actually happens.

Inflation, bank collapse, severe drought in the agricultural belt, recession, food shortages, diesel fuel and heating oil shortages, baby formula shortages, available automobile shortages and prices, the price of living place.

Isn't it funny that Europe rarely complains with such sternness regarding China and its market-undermining practices, but as soon as the US does something similar, all hell breaks loose? Why? They benefit from China to a degree, and I say that because whether Europe sees it or not, China is already replacing their advantages in green tech and cars - just ask Germany. Europe has been slow and reluctant to diversify, especially regarding German car manufacturers. Eventually, they'll be obsolete due to China. Who needs enemies when you've got those sorts of "allies"? The US isn't going to wait around and shouldn't; it has repeatedly warned them about Russia and China and their lack of urgency, particularly in military readiness and securing supply chains is on them! Nord stream 2 all over again. Smh.

Securing supply chains is directly related to reducing inflation

Globalization doesn't stop. It's been going on since the first trading vessels and caravans set forth across the ancient world. But globalization changes. Like a living organism, human civilization wants to survive, and it will do what it needs to do for that purpose. Sometimes that means things change.

I'm all for making what we buy and use here - let foreign made products be luxuries - like it used to be. But I thought there was something about the renewables that used elements only obtained in Africa and China via slave labor and unreliable supply?

As always, the EU is very meek in its dependence on China. We should bring back manufacturing in the United States.

You did not mention the war between centralized power producers and independent power producers. Duke energy is one of the largest power companies does not want me - the consumer - becoming my own power producer for many reasons. A Bill of Rights for the consumer who wants to become their own power producer is desperately needed. Don't make solar panels cheap for the consumers while keeping in place their preferred status.

Europe is being forced to accept that it needs a foreign policy and it needs to look at nationalisation of industries in the green sector.

I think US should charge across the board 20% tariff on all imports to help reduce national debt and grow home grown industries!

Many Chinese companies have set up manufacturing facilities in Mexico. Chinese just move part of their production to Mexico to capitalize on the free trade agreement between USA, Canada and Mexico. Chinese goods are still exported to the USA even though they are not made in China.