No Apology Needed for Industrial Policy
Liveris noted the important connection between building high-value products in America and innovation. “We build a virtuous cycle of innovation and value creation that leads to the next generation of products, and the next and the next,” he said, adding, “where production goes, innovation always follows.”
Liveris said countries like China have learned the value of the co-location of manufacturing and research and how it leads to rapid economic growth. “When companies like Dow go to China, I get red carpet,” said Liveris. “When companies like Dow go to Washington, I get red tape.”
He warned that China is not the only nation to have this vision of a robust manufacturing sector. “All the emerging countries have this vision of a national manufacturing sector. They are all clustering new technologies, new products with innovation centers. Manufacturing is attracted to their country and from there, they build a human pipeline. They are doing it in relatively short times. The cycle is compressing.”
These countries, he said, are developing “comprehensive, detailed national advanced manufacturing strategies,” he said. Countries are competing with companies such as Dow, he noted.
To compete effectively, Liveris said, the U.S. needs to make a collective effort to support manufacturing. He urged the development of innovation hubs and manufacturing centers throughout the U.S. that would support breakthrough technologies and greatly increase exports.
“We don’t have to start from scratch,” he said, referring to the advanced manufacturing plan produced by the Obama administration. That plan identified 11 technology platforms, he said, that America has the “inventory, institutions, universities, and talent to win at today.” He added that the country needs “thoughtful policy” and aggregate effort to win this competition. “If this sounds like industrial policy, I make no excuse,” Liveris said.
Liveris pointed to three vital elements that the U.S. should tackle to enhance its competitiveness:
Energy: The U.S. has many energy resources but leverages too few of them for its economic advantage, Liveris complained, with energy prices too often set by speculators, not producers. He called for a national energy policy that provides manufacturers, who consume one-third of the energy in the U.S., with more clarity and predictability concerning energy availability and cost. He also urged patience regarding the development of alternative energy sources. “New technologies are risky. Solar and wind will take time,” he said, adding “Are we frightened by one or two failures?”
Human Capital: Global companies such as Dow face a “talent deficit” in finding workers with science and engineering educations and technology skills. “400,000 graduates are needed by the nation’s companies in next three years and we’re not on track to produce them,” he said. He urged a national effort to “reskill” high school and community college students for technical jobs.
Business Climate: America needs a change in its business climate, Liveris said. He pointed to polls that one out of three CEOs and three of four small business owners believe “complex and expensive regulations are stifling America.” He called for collaborative regulations based on cost-benefit analysis, a lower corporate tax rate and adoption of a territorial tax policy.
