What is in this article?:
Any effective manufacturing strategy has to include a robust “tech and talent” initiative, which would include a fully funded NNMI, a new system of “manufacturing universities” that promote training and applied research, stronger tax incentives for companies to invest in R&D, workforce training and new machinery and equipment.
Recently, I wrote about how the 2000s were a lost decade for U.S. manufacturing. Ensuring that the 2010s are not more of the same will require a robust national manufacturing policy to help producers in America become much more productive and innovative. Unfortunately, to date, Washington has not embraced such a policy.
The key question is why?
One reason is that there are three major camps in manufacturing policy and only one puts a national innovation agenda at the top of the list.
Camp 1: Manufacturing Doesn’t Matter, So No Need for a Manufacturing Policy
These advocates have a clear policy message regarding U.S. manufacturing. Don’t do anything specifically to help manufacturing. The reason? Manufacturing doesn’t matter. The members of this camp are numerous. Kenneth Green, a resident scholar at the conservative American Enterprise Institute (AEI), writes: “As long as China is selling us the products we need, the location of manufacturing isn’t really that critical for the economy.” Meanwhile, Columbia University’s Jagdish Bhagwati dismisses anyone who says manufacturing is important as suffering from a “manufacturing fetish,” while economic columnist Robert J. Samuelson writes that any talk of manufacturing renewal being critical to solving U.S. economic problems is “make believe.”
Lest you think these are just the musings of out-of-touch academics, such views are common in government as well. President Obama’s former economic policy head Larry Summers stated: “America’s role is to feed a global economy that’s increasingly based on knowledge and services rather than on making stuff.”
In addition, Christina Romer, former chair of the Council of Economic Advisors, dismissed President Obama’s very own manufacturing policy (after she left the White House) claiming that manufacturers didn’t need “special treatment” and that any claim as to why manufacturing is different is based on “sentiment.”
As I have discussed in Innovation Economics: The Race for Global Advantage, members of this camp make such claims because, like the famous “potato chips-computer chips” view advanced by a senior economics advisor for George H.W. Bush, they believe in the “car manufacturing-car rental, what’s the difference?” theory. And unfortunately, this is not a fringe minority. In my view, this camp holds an intellectual “market share” of at least 50% in Washington.