Dude, Where’s My Industrial Policy?

Increasingly people are asking about our country’s plan for restoring and reinventing the economy. And that means thinking about manufacturing – the root of economic power. How will we revive American manufacturing and being back the good-paying jobs manufacturing creates?

Just look at the growth of China, Korea and other countries that have been following their own plans for growing their industry. On Friday Ian Welsh, asking at Open Left [1] why the U.S. is hemorrhaging good manufacturing jobs, described examples of industrial policies of a few other countries:

For good chunks of the 2000's, the Chinese government spent about 10% of their entire GDP keeping the Yuan undervalued. Other countries, like Japan and Korea also worked hard to keep their currencies undervalued (or the U.S. dollar propped up, depending on how you want to look at it.) This made their goods more competitive than they would have been otherwise and the direct result was the loss of U.S. manufacturing jobs.

Tuesday, Scott Paul and Leo W. Gerard also pointed out [2] that other countries have manufacturing policies.

This is the untold story of protectionism: the barriers that other governments erect to block American goods and the mercantilist measures they utilize to gain market share in the U.S. These practices range from China's currency misalignment and massive industrial subsidies to non-tariff barriers in Korea and Japan.

Even the “Green Jobs” efforts face competitive problems from countries that have industrial policies. Tuesday Mike Elk pointed out [3],

The president correctly views the green economy as the pathway to economic recovery. But if the windmills, solar panels and other key building blocks of that economy are made in China, we'll only end up in deeper debt.

Not having a clear forward-looking policy is hurting us. But this isn’t really accurate, because even if you don’t have a policy you have one, because it IS a policy not to have one. A vacuum is a policy. So current American policy appears to be:

• Send manufacturing plants to other countries that do have proactive industrial policies.

Face it, if we do not have an active and engaged industrial policy we are handing the business over to those who do. And they do. And we are. Meanwhile there are interests who benefit from this (lack of) policy and fight to keep it as it is.

Some argue that a policy of sending our jobs to poorer counties is a good thing, because it reduces poverty in those countries. But does it? Look at Mexico’s decline in the wake of NAFTA. When the workers in those countries are exploited and receive substandard wages, or the countries do not protect our planet’s environment, the world’s economy and environment are dragged down and everyone loses. If they were paid fair wages they would be able to purchase goods made here, and everyone would benefit. Of course, if they were paid fair wages the jobs probably wouldn’t be sent there, would they?

President Obama’s “stimulus” is a crucially important stopgap measure, but it doesn’t do enough even to cover the slack in demand from consumers and businesses. The package’s investment in infrastructure is a start but is a drop in the bucket after years of neglect and maintenance deferral. Its “Buy America” clause is important, because we need to concentrate American economic stimulus on the American economy or it will be so diluted as to be useless.

But this is really just stopgap, holding actions, temporary, makeup, back-fill and after-the-fact reaction. Where is the comprehensive, thought-out, forward-looking plan for bringing our economy back up and into the future? Where is the discussion?

Friday Sen. Sherrod Brown of Ohio summed it up, writing at The Huffington Post [4]:

Not too long ago, the ticket to the middle class was straightforward. Work hard, play by the rules, and you'll have something to show for it -- a good wage, a secure job and home, and a solid pension.

. . . Job loss and wage stagnation figures reflect a decade's long decline in U.S. manufacturing, a decline that has shattered the American dream for millions of Americans.

[. . .] We need a national plan -- a national manufacturing policy -- that aligns federal actions with the goal of strengthening our manufacturing sector. [emphasis added]

Wednesday Bob Borosage asked [5]:

“We haven't even begun an adult conversation about the fundamental question of America's global economic strategy. What is the economy we will build out of the ashes of the old?
. . . We can't go back to borrowing $2 billion a day, largely from the Chinese, to serve as consumer to the world. We can't go back to an economy in which finance captures 45% of the nation's profits. We can't keep shipping good jobs, technology, and manufacturing capacity abroad and expect to sustain a broad middle class at home. We've got to start making it in America again.”

So what can we do? Sen. Brown wrote,

To realize our full potential, we must stop ignoring the challenges that manufacturing faces. We need a national plan -- a national manufacturing policy -- that aligns federal actions with the goal of strengthening our manufacturing sector.

Mike Elk’s post noted,

Today, the Senate Environment and Public Works Committee is holding a hearing on Capitol Hill with governors and mayors to look at ways the U.S. can adopt a comprehensive manufacturing job policy that makes sure that the green economy keeps jobs here in America. Through a series of measures, including incentives for companies to stay in America, "Buy America" provisions and trade law reform, lawmakers like Ohio Sen. Sherrod Brown are hoping to keep green jobs in America.

These are voices, asking what we are going to do and making suggestions. Yet this fundamental question is not broadly discussed. This is not a comprehensive policy planning process, led from the top.

Where is your voice in this? What should our national plan for manufacturing? Or, more broadly, what is our national plan for restoring jobs and for restructuring our economic system in ways that work for all of us? It is time to start discussing it. Let’s see if we can get this going in the blogosphere.