Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Podcast

A Conversation With Biden’s Former Top Economic Advisor, Part 2

Inside episode seven of Shift Key.

A BYD.
Heatmap Illustration/Getty Images

Few people have shaped Bidenomics more than Brian Deese. From 2021 to 2023, Deese led the National Economic Council at the White House, serving as President Joe Biden’s top economic aide. He’s now an Innovation Fellow at MIT, where he helps lead the new Clean Investment Monitor project.

In part two of Shift Key’s conversation with Deese, we discuss electric vehicles, the future of U.S.-China trade relations, and whether the Big Three automakers can survive.

Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.

You can also add the show’s RSS feed to your podcast app to follow us directly.

Here is an excerpt from our conversation:

Jesse Jenkins: I recently traveled to Australia in December. And there's a country that basically ceded its auto industry in the 1990s to early 2000. They basically said, you know what, we're done trying to compete and keep our domestic manufacturing sector alive. And as a result, now have very low tariffs for imports, everything's imported, and have embraced Chinese imports of vehicles, not just EVs, but also, you know, I was surprised to see all kinds of, you know, Chinese badged brands like SAIC and Great Walls Motors and Haval and others on the roads there.

So I guess the question, maybe just to frame it this way, you know, I have my thoughts on the answers too, but I'd love to get your direct answer is like, why don't we want Chinese cars on the roads here? Why don't we want a $16,000 EV, as opposed to in the same category as the Chevy Bolt EUV, which costs $10,000 more than that. Wouldn't that be good for American consumers, good for decarbonization? Talk through the thinking about how to balance those kinds of concerns.

Brian Deese: Yeah, so I've heard this expressed and in ways that was less thoughtful than your T up recently around, you know, damn it, we just need to decide if we like cheap electric vehicles more than we hate China and that's, you know, that's just, you know, as climate as climate forward thinkers, that question is stated as a leading question.

And I do think to really understand this, I think that that question starts from the wrong premise and then it ends up reaching the wrong conclusion implicitly in what it suggests, right? Because it starts from the premise that China's a market-based economy and a market-based actor, but more importantly, it starts from the premise that we're operating in a balanced and sustainable global trading regime and that why can't we just take the benefit of lower cost goods?

But if we step back, in terms of the global trading system, we have this enormous imbalance because China has this enormous excess savings. And what they're trying to do to try to solve the acute economic challenges that they face is to plow that into manufacturing with the explicit goal of trying to dominate, not just try to gain competitive edge, but dominate particular industries. And when they do that and then through explicit status strategies, they flood markets with cheap goods, we, the recipient countries, end up paying a lot of the cost of those Chinese subsidies and those Chinese policies.

Jenkins: What do you mean by that? Paying in what way?

Deese: We end up paying by our own industries, our own industries, our own capabilities being diminished and derogated in a way that they wouldn't have that imbalance not existed.

So I like to flip the question, right? And actually say, like China needs to decide if it loves this unsustainable, unbalanced, in many cases, illegal manufacturing strategy more than it loves the kind of, or more than it hates the kind of domestic reforms it would actually need to take to boost domestic consumption, produce more balanced growth as it becomes a more mature economy, and as it becomes a larger anchor of the global economic system.

And I don't have any illusions that China is going to engage in that, but I think some of the approach to this issue in the past has been predicated on the idea that if we in the United States operate by ignoring those realities and by trying to engage with by lowering trade barriers, that might induce China to move in that direction. And that, I think, is, that's an unsupportable hypothesis at this point.

Robinson Meyer: Where do you see this ending? Because what you're describing, I agree, is very well supported. The phenomenon you're describing where China's excess savings cause it to have all these manufactured goods that Chinese people can't buy and so therefore it has to export them to the world. That's like a flaw in the post-1945 global economy we set up, right? Because you are punished as a country if you have excess spending by your bondholders, by financial institutions. You are not punished as a country if you have excess saving. And so I think what worries people is that, well, we shut down our market to China in some regards, where does this eventually lead? Like, how do we eventually force a Chinese structural adjustment, it just starts to go quite dark places quite fast. So I guess where do you see this process that we're engaged in ending up?

Deese: I think the destination and the goal should be toward a more sustainable equilibrium, which doesn't mean a perfect equilibrium, but more sustainable equilibrium. And I think the answer to that for American policy, I think is some version of the policy mix that the Biden administration has put together: invest domestically in industrial capacity, impose costs on China where they're actually clearly in unfairly seeking to perpetuate that balance or to accelerate that balance by dominating in particular industries and also protect core technologies that are dual use and have national security implications.

That is hard, it's not easy, but it's possible to put an approach like that in place, and also to recognize that the goal of the strategy is not then to have China-free supply chains.

And when, again, President Biden's predecessor goes out and says he wants to eliminate imports from China over four years, that's utterly infeasible and shouldn't be our policy goal. It shouldn't be the way we think about what we're trying to accomplish. It shouldn't be the way we engage with the Chinese in terms of finding a more sustainable equilibrium.

But it is totally possible in the electric vehicle market for there to be a global market that is not so dominated by China that then there's no room to build competitive alternatives, right?

And we see this in the United States as well. I take your point, Jesse, about the Bolt that you made previously — $10,000 more than a BYD equivalent — but I bought my Bolt a year or two ago and it was sticker price equivalent with the ICE equivalent in the U.S. market before you take into account total cost of ownership.

You know now that particular car and the trajectory since then and we could get into we could get into company-specific decisions …

Jenkins: You can put that aside, yeah.

Deese: But you know, it's possible. I mean, Tesla as like, as a phenomenon, right? And we should be for creating the space for competition and for innovation and for the United States to maintain an important, resilient share in that. Now, that's hard.

This episode of Shift Key is sponsored by…

Advanced Energy United educates, engages, and advocates for policies that allow our member companies to compete to power our economy with 100% clean energy, working with decision makers and energy market regulators to achieve this goal. Together, we are united in our mission to accelerate the transition to 100% clean energy in America. Learn more at advancedenergyunited.org/heatmap

KORE Power provides the commercial, industrial, and utility markets with functional solutions that advance the clean energy transition worldwide. KORE Power's technology and manufacturing capabilities provide direct access to next generation battery cells, energy storage systems that scale to grid+, EV power & infrastructure, and intuitive asset management to unlock energy strategies across a myriad of applications. Explore more at korepower.com.

Music for Shift Key is by Adam Kromelow.

Blue

You’re out of free articles.

Subscribe to access Heatmap's exclusive climate and energy polling, award-winning journalism, and subscriber-only events, now just $99 $79.20/year.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Hotspots

Meta Data Center Federal Pipeline Review Due Early Next Year

And more of the week’s top fights around development.

The United States.
Heatmap Illustration/Getty Images

1. Richland Parish, Louisiana – Gird your loins for the coming fight over the Meta Hyperion data center’s gas pipeline.

  • On Wednesday, the Federal Energy Regulatory Commission laid out plans for an environmental assessment of the Entergy pipeline for the Meta data center under the National Environmental Policy Act and stated it’ll be issued in early January 2027. Federal agencies have been ordered by the panel to complete any remaining decisions on authorizations by April.
  • The decision to do an environmental assessment under NEPA will be controversial. The Sierra Club filed comments to FERC stating they wanted an environmental impact statement instead that took into account the environmental impacts of the data center being fed by the pipeline, as well as a review of the project’s cumulative impacts, as the activist group said they’re explicitly linked to the data center’s operations. “The power stations and data center are not remote or speculative developments unrelated to the proposed action,” their comments read.
  • This is quite similar to what’s playing out with the Green Chile pipeline in New Mexico for Oracle and OpenAI’s Project Jupiter, which we recently explained could turn into litigation with high stakes for future gas pipelines linked to data centers. But to me, this conflict with Meta feels like it has more at stake for this individual project, as it’s playing out while construction on gas power plants for the data center has been underway for almost a year after earlier being blessed by state regulators.
  • I asked Sierra Club what could happen next. Eric Huber, one of their managing attorneys, told me on Thursday, “I heard the EA is expected in January, but we are in wait and see mode and will decide on further steps when it comes out.” Meta and Entergy did not respond to a request for comment.

2. Spartanburg County, South Carolina – I have one last data center race to tell you to watch on Tuesday: South Carolina’s 4th, on the northern rim of the state.

Keep reading...Show less
Yellow
Plus

Is the Election Really About Data Centers?

Talking with Kevin Gundersen, the head of public affairs for Digital Realty.

Kevin Gundersen
Heatmap Illustration

This week’s conversation is with Kevin Gundersen, head of public affairs for data center developer Digital Realty. On Wednesday, Digital Realty released a fascinating poll as part of Infrastructure for America, a pro-data center organization that also includes Compass, Vantage Data Centers, and QTS. The poll pushed back on the idea that we’re currently in the middle of a “data center election”; instead, it found most voters are not expected to choose their national elected officials based on a politician’s stance on data centers.

I reached out to folks involved in the poll's release, and they put me in touch with Gundersen, whom I’ve met before and consider to be a straight shooter. He accepted my invitation to do a candid hot-seat chat about the findings, his thoughts on all the data center attack ads, and whether his industry’s actually recovering any ground with the American people.

Keep reading...Show less
Yellow
Politics

Why Project Certainty Is the Thorniest Part of the Permitting Bill

Can a key section of BAAJA be saved from unintended consequences?

Donald Trump and Congress.
Heatmap Illustration/Getty Images

Any bipartisan bill to update the nation’s permitting laws was always going to be a compromise, with advantages for the oil and gas industry as well as clean energy. Proponents of the Senate’s latest attempt at permitting reform have painted it as a delicate balance, a hard-won opportunity, and an all-or-nothing deal.

What, then, to make of drafting errors, or unintended consequences?

Keep reading...Show less