Editor's Page -- Half-Hearted Efforts Endanger Competitiveness

Dec. 21, 2004
We need to address bigger issues than economic recovery.

The U.S. economy is showing encouraging signs of life: Productivity is way up, businesses have started hiring, and some economists say the positive trend will take hold this time. Still others aren't convinced. They call attention to the unfinished work of strengthening U.S. business competitiveness in the face of intensifying competition. Certainly many in the manufacturing community are not happy with the Bush Administration's performance. In a survey conducted this past summer by IndustryWeek and the Manufacturing Performance Institute, Cleveland, manufacturing executives were asked to rate the federal government's performance in assisting the U.S. manufacturing sector. The results? A whopping 73.5% of respondents said it was abysmal (26.8%) or poor (46.7%). Only 3.4% answered that it was good, and a miniscule 0.2%, excellent. One can only imagine what the response would be today. After dancing around "the manufacturing issue" all summer, the Bush Administration has come up with . . . nothing. The long-promised high-level report on manufacturing, conducted by Commerce Undersecretary Grant Aldonas, still awaits release after being repeatedly postponed. The promised new position of assistant secretary for manufacturing at the U.S. Department of Commerce, announced with great fanfare by the President himself over four months ago, remains unfilled. The $106 million Manufacturing Extension Partnership program, which by most analyses pays for itself in saved or created jobs and tax payments from the beneficiaries, is ignored as Congress recommends slashing 60% of its funding. And that's not even counting the Administration's ham-handed efforts at using tariffs to redress surging imports, a strategy and execution that defy coherent analysis. Perhaps less well known is that the general business community also has some doubts about current U.S. economic policies. Results of a survey conducted by the World Economic Forum (WEF) as part of its Global Competitiveness Report 2003-2004 indicate that business executives are troubled by, among other things, the growth of the federal budget deficit to 3.4% of GDP and the extent to which government subsidies introduce distortions in the economy, such as is the case with farm aid. These factors, according to Augusto Lopez-Claros, chief economist of the WEF, were among those that caused the U.S. to drop to second place, from first, in the Global Competitiveness Index ranking this year. He adds that other survey results that were not incorporated into the Index, but that were tabulated by the WEF, include concerns about the influence of legal political donations on the Administration's policy decisions and the U.S. government's refusal to comply with some international agreements. The WEF's findings suggest that a few public policies currently supported by the Bush Administration and other public policy makers should be revisited with an eye to strengthening U.S. business competitiveness. However, signs that the U.S. economy is improving are already beginning to overshadow calls for such an assessment, and that's a shame. The message from the Bush Administration to manufacturers is loud and clear: We've done enough. Also, the President shows no signs of being concerned about any of the other issues uncovered in the WEF survey results. Whether our general economy regains its strength or not, our nation's business competitiveness -- and especially our manufacturing base's competitiveness -- is facing unprecedented challenges. The job of strengthening our nation's economic competitiveness is not finished. Indeed, with the new and ever-changing competitive challenges, the job of optimizing public policy may never be done. We need to send that message to Washington. Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.

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