It was good to see President Biden finally acknowledge yesterday what anyone in America with a school-age child, job in a front-facing industry, or overseas travel plans has known for months: U.S. policy regarding COVID-19 testing has been a piping hot mess. What the president didn’t mention, however, was that the administration’s most recent plan for at-home rapid tests — announced in December in response to extreme public frustration about empty drug store shelves and long testing lines — was actually Biden’s sixth promise to subsidize and plan our way to testing abundance via the type of “industrial policy” that’s all the rage in Washington these days. Nor did the president note that the biggest impediment to American testing abundance hasn’t been a lack of subsidies for domestic manufacturing capacity, but instead the Food and Drug Administration’s onerous standards and processes for approving rapid tests — one of which (from MIT lab E25Bio) was reportedly ready in March of last year.

As I explain in Barron’s today, the United States’ continued rapid testing situation is not only a frustrating look at failed political promises and persistent regulatory sclerosis, but also a cautionary tale for U.S. industrial policy advocates:

Since September, even as the Delta variant raged, the FDA has approved only a handful of additional tests. Two of those [emergency use authorizations], moreover, came only in late December pursuant to the administration’s “accelerated” process—one that still took several months, even though the applicants were large, reputable foreign producers whose tests were long ago approved elsewhere. Given the Omicron variant’s speed and the basic logistical hurdles to getting newly-approved tests into Americans’ hands, the current surge may be over before the administration’s latest policy moves can have an impact. Having more rapid tests in February 2022 may be useful for future outbreaks, but we really needed them months ago.

America’s continued testing scarcity has real and unfortunate consequences.… However, in this debacle lies a valuable lesson for American policymakers who today promise to revive domestic production of “critical” goods using the same types of industrial policies that fared so poorly for rapid tests during the pandemic. These advocates claim that various “market failures” require government interventions to boost national production and achieve strategic national objectives. They ignore, however, the current government policies thwarting those goals; how simply removing regulatory, trade, and other restrictions could rapidly achieve them; and the resources wasted by government attempts to use industrial policy to reinvent the free market’s wheel.

In the testing debacle, all three errors came to life. The Biden administration wasted 11 months and countless taxpayer dollars trying to boost domestic test production when what was most needed was to remove existing regulatory barriers and let the global economy do its thing. Indeed, that’s just what E25Bio’s chief researcher did after abandoning her quest for FDA approval. Instead, she worked to provide cheap, reliable rapid tests to high-risk American communities. She successfully flooded her local test market with $2 tests as good FDA-approved $20 ones by using imported “experimental” tests authorized abroad but not here at home. No grand industrial policies needed.

Like I said, lessons abound. You can read the whole thing here.