When one of the two major American political parties is proud of embracing an anti science stand I don’t see much hope for an enlightened American industrial policy. Republicans embrace one thing the profit motive and the quicker the better. An industrial policy is thinking in decades not quarters.
4
To compete with China, we'd have to let wages drop to $10,000/year, eliminate all environmental regulations, and zap OSHA.
Not happening.
1
Industrial policy is not a good idea. Government officials cannot predict which industries will be successful or important in the future, especially when compared to the deep and well-established capital markets we have in the US. If government officials had that kind of clairvoyance, they'd be getting rich in the stock market.
There are many historical examples of failed industrial policy, such as in Latin America, pre-1990 India, or pre-1980 China. Industrial policy caused the greatest humanitarian disaster since World War II, the Great Famine in China, where the government over-invested in "strategic" heavy industries while ignoring market signals of agricultural disaster. Citing only the "successful" examples of industrial policy is like citing only successful hedge funds to argue that active management is better than passive management. And even the "successful" historical examples of industrial policy like South Korea and Japan are just developing countries that copied US technologies and business practices to get to about 2/3rds of our GDP before stalling out. These countries failed to surpass the US and therefore do not have many lessons for the US.
1
While I agree with the need to improve the industrial policy I think much of our efforts should be turned to our infrastructure. Every major period of growth and advancement in history was preceded by significant improvement in infrastructure. Whether it be opening the trade route to the Far East, being able to circle the globe by boat, finding our way through the Cumberland Gap then Lewis and Clark opening the west along with steamboats on the Mississippi and Ohio rivers, the transcontinental railroad, or the interstate highway system, all of them led to major economic growth and prosperity. Now our infrastructure is crumbling, productivity loss is significant from highway congestion, and the lack of advancement in our rail system contributes to making the problems with our highway system even worse. We have got to deal with this issue in a major way.
18
I think both parties have worked for some form of industrial policy for many years but they simply differ on which industry or portion of the economy they want to support. To generalize, Republicans support the oil and defense industry while democrats favor health care and in the last 10-15 years climate focused industry or improvements. Our lack of competitiveness compared to China comes down to our form of government which we are all thankful for but unfortunately comes with the caveat of discordance of opinion and sluggishness.
5
This is an easy essay to write because there are no solutions. Of course, there are problems. The US cannot compete with the government regulated economy of China and the horrific wages of the lower Chinese workers. The federal deregulation of industries during the 80s and 90s was the horrible answer to China but you cannot suppress US wages and expect workers to take part in the marketplace. As industries look toward the next decade, it is key that the Congress and the president protect workers. It can be done if we have less extreme voices in Congress leading the charge.
9
You can actually argue this point more generally. We’ve been sold a bill of goods with the idea that the private sector will miraculously provide everything that needs to be done. The private sector doesn’t do much basic research, because there is no immediate competitive advantage in doing it. But if we don’t invest in it we’ll be playing catch-up later. You won’t have the startups exploiting the technology if no one is around when it’s discovered. That’s true even if many ideas don’t pan out.
You can make the same kind of argument for infrastructure. Unless you’re going to put tolls on bridges and only build them in rich areas you’re not going to get it. But it’s needed for the strength of the country.
The fact that governments can make mistakes doesn’t mean there is no job to do. The private sector can solve the problems it’s good at, but the rest won’t get done.
I’d also like to point out that we already today have an important example of industrial policy here—and we’re doing a bad job of it. By aggressively denying climate change and subsidizing the fossil fuel companies, we’ve tilted the playing field against electric cars in this country. And driven the world‘s leading manufacturer almost out of business.
42
@Jerryg
Exactly right. I've always described the choices as "A needle in the finger today or a white-hot poker in the eye later."
5
Japan used a form of industrial policy when encouraging the development of Keiretsu, a conglomerate of businesses aligned in a single industry yet maintaining operational independence. As Japan sought to develop their economy, they selected certain sectors in which to invest, and equally important, a major bank that would provide initial significant funding and then exit (with profits) when the industry attained sustainability. Car manufacturing and technology were two such examples.
It’s a model that the United States should use, to propel it forward in emerging sectors that offer promising returns and in many cases, societal benefit. Given how business operates on global scale, the United States needs to go big or go home. If the latter, we will be the poorer for it.
16
This conservative idea that less government is always better is just ridiculous, and the folly of this idea is now obvious. The public and private sectors in the USA work best for the consumer when they act as a team. This fact was proven to me in my career, and it’s proven now in the economy since this administration has tried to eliminate the public sector role in all cases. Now we see clearly because of their policies.
Corporate business decisions focused on the bottom line do not always work out best for the USA and consumers. You can’t have a successful business if that business’ operations and products wreck the economy, damage the environment, and undermine the consumer.
The worst part of Capitalism is the unrestrained Capitalist. Government must regulate the “animal instincts” of the Capitalist leader. Our system used to be the best in the world precisely because we found the right balance between private and public freedoms. Trump’ approach will undermine this balance, and is causing us increasing peril.
28
What this column misses is that "A successful American industrial policy" will rely heavily in investing in science. The problem for America is that the GOP thinks, as Rudy Giuliani elegantly stated,"Truth Isn't Truth." What this means is that the GOP, and "Michigan Man of the Year," don't believe in science or objective reality. This will make it hard for America to compete in the future with the rest of the world.
12
Let's get real: The GOP refuses to spend heavily to regenerate our aging infrastructure. The Trump administration will not advocate for an infrastructure bill, instead claiming it wants to see more "public-private partnerships," which inject a profit motive into infrastructure. Marco Rubio's Florida rejected funding for a high-speed rail system offered to it with federal funding by the Obama administration (Connecticut took the funds and created a highly successful commuter rail system linking Hartford and New Haven).
The divide on infrastructure policy is stark: Democrats understand the need for it, advocate for increased investment, and make clear that they will raise taxes on the wealthiest Americans to fund it. The GOP and Trump are refusing to raise spending on infrastructure, contrary to what Mr Krein claims.
55
@Sean
Agreed that the GOP and Trump have refused to spend significant money on infrastructure. But it’s worth remembering that the president campaigned on infrastructure. So they can’t blame this on the voters - spending on infrastructure was supposed to be part of the deal if the country elected Trump.
The way this is supposed to work, I thought, is that if one side promises something most people want, including people in the opposition party, and then reneges on the promise, then the opposition party hammers that home during the next campaign. The Democrats often frustrate me by not doing that. It’s almost enough to make a person put on a tinfoil hat and start muttering about the Trilateral Commission.
But there seems to be a general lack of persistence with the Ds, perhaps rooted in a belief that the voters are too stupid to understand and too easily riled up.
Ds like to tell the story of the voter who told Adlai Stevenson that every intelligent voter in the country was for Adlai. Stevenson is supposed to have replied “That won’t be enough.” Hardy har har. But his opponent was Eisenhower, for crying out loud, that’s who the voters elected, and that doesn’t seem like a stupid choice to me.
Please, Ds, this time campaign as if we’re not stupid. And point out when the president broke a campaign promise.
Marco Rubio lost all credibility after seeing FL students gunned down in Parkland and still not supporting any effective gun control measures, and especially getting weapons of war off our streets. Industrial policy? The Republican industrial policy for decades has been to fully support industrialists, including rich tax breaks, and weaken labor. He probably thinks he isn't doing enough for the poor industrialists.
29
So good to see this article. Our reductions in basic, applied and exploratory research and engineering development and the channeling of business profits into stock buybacks rather than research, development and business expansion are so short sighted.
I applaud this effort to bring attention to the industrial policy issue. We could do so much to improve the future security and prosperity of our citizens - and our country's ability to compete in the world.
Please keep the discussion going.
27
Before Milton Friedman’s Ayn Randish Mogadishu-like economic theory of a “free-for-all” economics, aka “Neoliberalism”, the government was involved in R&D that it shared with the private sector and the country soared! The CDC’s Anthony Fauci just indicated that because some infectious diseases are localized before they become pandemics, Pharma companies are not as interested in researching a cure because the ROI is small. So, the CDC seems to launch research for new infectious diseases and gets to a point where it’s gone through a level of “showing promise” that’s then passed on to Pharma companies. Ebola is one such case. Imagine that! The government should get back in the business of helping all industries, as China is doing, as South Korea and Japan have done. “ Vulture investors” should be sent to Siberia; Yes, that Siberia!
2
No, it shouldn't. Technology is in a race to replace people. And within 5-10 years it's going to be a problem like you won't believe. Automation/Robotics/AI will be replacing both blue and white collar jobs. No one is safe from this. Law, accounting, advertising, et al. all replaceable by machine learning.
What the gov't needs to prepare for an implement is an UBI or there will be bloody revolution. Even that aside conspicuous consumption must end. Growth must end. We need to downshift to a more agrarian based lifestyle. In WWII over 70% of households all had victory gardens to supplement their own needs and provide food for the troops. We will need the same model to feed everyone. If not it's going to get ugly and messy like you can't even imagine. The end is nigh and technology isn't the solution.
"After decades of economic mismanagement, prominent figures in both parties are finally awakening to this reality, and a new consensus on the need for a strong industrial policy is beginning to emerge."
Maybe a renewed commitment to hard truth, equal opportunity, hard science, hard economics, hard recognition of the crazy racism that holds back the country would open things up a little.
The writer misses the key to industrial policy: price competitiveness. Companies source and site offshore because the Ex-Works price is, on average, 30% lower. All of the proposals in the article will not overcome that gap and offshoring will continue. Price competitiveness requires some combination of a 20% lower USD, a VAT like other countries and a much stronger skilled workforce. The Reshoring Initiative's proposal is at http://www.reshorenow.org/blog/competitiveness-toolkit-draft/.
I just heard the Fresh Air interview of Christopher Leonard, the author of Kochland: The Secret History of Koch Industries and Corporate Power in America. It pertains to this article, and made me even more sure that our planet is done for.
The Koch brothers have the Republican Party in the palms of their hands. The brothers believe no government is good government, unless it serves the needs of their monolithic company. So they will undoubtedly play dirty tricks to make sure no new government industrial action is taken, especially on anything that might help the climate crisis. I can imagine that Marco Rubio is even now in the Koch brothers sites to be taken down, for even speaking to AOC.
Not surprisingly, Trump has performed about 99% of the items on the Koch’s wish list. They don’t like his tariffs, and they probably don’t like his volatile nature, but he is helping them to achieve their goals now so that even if he loses to a Dem, our country will be hobbled for years.
2
This will not fly!
Historically, you are right. Once upon a time, we had virtually free Land Grant Universities. NOAA traces back its history to 1807. USDA to 1862. FDA to 1906. FTC to 1914. A friend of mine commented that these organizations were exemplars for the rest of the world to copy. [I left out NASA for my inability to do justice in limited space]
DARPA involvement in building the Internet was the last. It was more because DARPA wanted a network designed that cannot be nuked. If the Soviets nuked part of the network, then the rest of the network would be alive and reroute traffic.
But that was then. Today. Anything remotely close to these attempts would be considered left wing radical even from Moderate Democrats.
Sorry. Dead on Arrival!!
1
@Deep Thought
Nonsense. There's likely to be some pushback initially, as you are doing, but it's becoming so obviously needed that it will come to happen. Even Jamie Dimon has come out recently saying that businesses should include worker, environmental and societal concerns, not just shareholder value. The time is ripe. Maybe it's dead on arrival in the current governmental environment, but everything is dead on arrival now. This dystopia will not last forever.
3
@Deep Thought No. Actually it is the Republicans who have opposed R&D and have opposed forward thinking businesses. That is why Silicon Valley and the other tech hubs in the US are all Democrat. And that is why the first thing Trump did on getting into office was to try to slash R&D spending.
The problem with Industrial Policy is agreeing on which industries to help. Republicans will generally agree to help industries that enrich their wealthy donors, in other words, industries that don't need an industrial policy. Democrats will generally agree to help industries that benefit the future economic and environmental health of the country and the world as a whole (except when they too want to help industries that enrich their wealthy donors).
@Tom Udell, You have a point about which industries will be "helped" as we go along. But! If there existed robust retraining programs and unemployment insurance payments to those who lose out on economic disruptions, then it wouldn't be so painful. NAFTA-like agreements *could* have these kinds of supports built into them.
This is all fine and good.. The US will do the R&D but the problem will be: Do we manufacture here using expensive US labor and/or robots .. Or manufacture overseas using cheap labor and/or robots. ??
I was hoping that they agreed that Marco Rubio is a spineless, amoral, hypocritical, narcissistic politician like his president and seemingly the rest of his party these days. Of course, they did not. However, any agreement with Marco Rubio may as well be written in smoke in the clouds because he will back out of anything and everything.
7
@AlexMcC - one up on "Rubio is a spineless, amoral, hypocritical, narcissistic politician like his president" - I cringe every time he bows to that ludicrous hateful white house-sitter. Rubio - get a spine will ya?
2
Can I plead for one with with a front page article featuring a junior congresswoman? Apparently (from reading this paper) she is only one of four new members of the House. Who knew? Who cares?
Largely true. And it's good and maybe kind of healthy that we now apparently can begin to talk about what has been called "The policy that can't speak its name." Maybe desperation has chased away some ideology demons.
Some requirements and suggestions. Environment cannot be a side issue. It has to be front-and-center to the entire thing. We must address ultra-serious problems like climate change, water, and species diversity directly through the economic side. Many ideas our ther e on how to do this. Also, as this article hints, equity also has to be a big part of it. There likely will be other issues within the social sphere that will need fresh perspectives. The public needs a meaningful role in helping to decide priorities. It cannot be token. One aspect of this should be technological forecasting, projecting, to the degree feasible, the indirect negative impacts, including what to say "no" to, or how to minimize the problems. Not all innovations have to be technology-centric, or not fully. Social innovations should be included. Regulatory ones, too. It is important to keep "politics" out of this as much as possible. It won't be easy in these cynical times. It has to be realized going into it that there will be some failures. Discussion of why these failed is important, but for the point of learning lessons, not for political scoring.
Finally, what other ideas are out there that, like this one, cannot be discussed? Perhaps we can accelerate the time to mainstream lag.
1
The real issue isn't 5G or giving money to tech companies. The issue is income inequality and the fact that when at age 55 you're shown the door you haven't been able to save for retirement and have no chance of starting over. That is where the focus should be.
2
What to the winners do right:
Take education seriously. The purpose of education is education, not social goals like the sports team, diversity, inclusion or the prom. This requires a cultural change, not government action.
Make education useful. That means apprenticeships after high school, not watered-down college for those who don't want to be there, and STEM for those who do go to college.
Increase the savings rate. That's the ultimate source of capital investment, and productivity. China's high savings rate powered it from poverty to a middle income country in 30 years. China did it with decrees; we need incentives.
1
Marco Rubio is about as dependable as Donald Trump.
9
"Many Republicans and Democrats agree: Governments should intervene to help the industries and technologies of the future."
US has been telling its allies not to buy Huawei products because its projects were supported, technically and financially, by the Chinese government. Essentially, the US narrative is that such supports turn Chinese high-tech companies into "state-run" companies, with the implication that China can then dictate which information these companies have to share with its various security agencies.
It then begs the question: doesn't the same logic apply to US companies when they receive technical and financial help from the US government to develop "technologies of the future"?
Admittedly, "intervene to help" is a very clever wording. The word "intervene" is used here to impart "guide" and/or "direct", without using those words with their broad implications.
Essentially the wording is intended to veil the fact that we are potentially talking about the US government providing financial support to these companies in exchange for directing them how to produce their products. The "direction" that will be provided may include adding to the basic designs hidden back-doors and hibernating viruses. It may also involve creating legal obligations for the companies to share with the government some of the data they will be collecting.
2
government should not be in the business of picking and choosing which industries should receive government support. once a constituency is built up for a particular business or industry its almost impossible to let it go bankrupt if its failing, or shut it down if its harmful. just look at how difficult it is to shut down the oil and coal industries even though they are ruining the environment.
3
USA should stay on course with what it has been doing, fight big government, don't interfere with private business initiatives, don't waste tax dollars subsidizing business enterprises. Stay away from corporate welfare.
To do otherwise would be hypocritical. USA is waging a trade war with China, criticizing their Made in China 2025 Plan. Don't copy China. Don't betray Ayn Rand. USA, USA, USA.
The current US industrial policy mostly represents high stakes Las Vegas Gambling. Plenty of venture capital to bet on the next Facebook but very little to put towards the basic business that employs the masses and actually produces something of value to society.
Having government set the policy is not necessarily a good idea either. Politicians get involved and good business judgment is thrown out the window. The only businesses the government funds now are ones too risky for the venture capitalists and usually fail, like Solyndra.
Government needs to focus on setting the stage- providing a high quality infrastructure, solid educational institutions that are affordable to the masses and tax policies that reward the things you want to encourage.
2
More than fifty years ago two presidents realized and acted on what you are advocating. When JFK promised to put a man on the moon before the end of the 1960s that was his way of dealing with Russia's Sputnik technology leapfrog. He knew the public would understand and support it better if it were marketed in a simple idea like the moon shot. When JFK was assassinated LBJ had plenty to deal with from the civil rights movement to widespread poverty in the US to the Vietnam war which Ike and JFK had started. But LBJ never took his eye off the moon and he got it done. As a result, the US leaped to the top of the world in physics, astronomy, engineering and computer technology. That is why Mission Control in Houston is the Johnson Space Center.
Everyone who supports Rubio's and Ocasio-Cortez's ideas on government funding of technology should remember the first moon landing of 50 years ago.
2
@James Ricciardi
Wrong. The space program diverted smart young engineers into a waste of their talents on a pointless project.
It was like a few mountain climbers climbing Everest, rather than ordinary people being physically active to stay healthy.
"What Alexandria Ocasio-Cortez and Marco Rubio Agree On"
You say that like it's supposed to be surprising. Anyone who's been paying attention knows that Rubio is a big-government neocon who loves public spending.
Not that he's exceptional: even before Trump, actual small-government conservatives were a dying breed. Today, they're almost extinct.
2
"What Alexandria Ocasio-Cortez and Marco Rubio Agree On"
The world revolves around them and the rest of us are just on for the ride?
3
"But now a growing number of politicians and intellectuals — left and right, “populist” and “establishment,” from Senator Marco Rubio to Senator Elizabeth Warren, Representative Alexandria Ocasio-Cortez to Senator Josh Hawley — are finding common ground under the banner of industrial policy."
So why in the universe does O-C's name get in the headline over one of the top presidential candidates?
1
@Karen A freshman representative over three Senators?
@Karen - have you considered that Representative Alexandria Ocasio-Cortez still has credibility? Rubio may have been a candidate, but in 2019 Rubio is a sad trump lackey pretending trump's moronic insults never happened... SAD.
1
I agree we need to spend more on pure research. A caution on planning is that the planners do not see what is coming. Bill Clinton, to his credit, used to hold big meetings with folks who were very talented and good in their fields. As I recall, when they were forecasting future trends, they all missed the coming of the internet. So, if the U.S. wants to prop up domestic industries like other countries do, so be it. But, do not fall into the trap that the planners will know what they are doing.
4
@Robert
Correct. Predictions are usually wrong. They not only missed the internet, but choose the space flight boondoggle over integrated circuits (fortunately, the private sector took care of that).
It won't happen as long as the 1% controls the GOP and the GOP is in power. The 1% doesn't want an industrial policy, because that investment is pre-ordained for a purpose they don't control. The 1% would rather have the tax cut and have itself control where and how capital is invested.
For the 1%, the U.S. is just another tranche in their diversified investment portfolio. Their country of birth or the issuing country of their passport are quaint but irrelevant abstractions. The majority of the 1% have secondary (or even primary) residences in other countries, and can easily float between countries, depending on factors such as the political winds, social unrest, and now, climate change impact.
In order to support an industrial policy, one would have to care more about what happens in the U.S. than elsewhere. For the 1%, its more about spotting trends and being earliest. The U.S. down, China up. Whatever. For the 1%, its about being the first to spot that, and making money from it.
7
@Polyglot8 If you haven't noticed, the 1% also owns the Democratic party.
4
These proposals would create government protected oligopolies. The relatively few famous companies that politicians care about will be protected and artificially dominate key industries without having to compete. The consumers (everyone else) will pay higher prices for inferior goods and services.
3
This is a broad survey of the ills eating away
at the foundations of the economy and society. The various prescriptions promoted to try and kickstart the country in
a more useful direction are however unclear about how much funding would be needed to accomplish anything significant, nor where this could come from.
In rubio's usa today op-ed from a few days ago, he confined himself to tackling only the sustainability of infrastructure in light of the challenges global warming is going to present over the next 40 years. He was, however, unclear who was paying for it and how much it would cost.
So, any recipe to address this failing state, to be serious and constructive. has to come up with realistic funding mechanisms for broadly defined but achievable goals. This can't be done without repealing the tax scam of 2017, and starting all over again with a more intelligent program. It may also be impossible because bipartisanship no longer exists.
One basic issue ignored is how student debt may be limiting American students from pursuing STEM graduate level
programs. The loss of competitiveness is in part due to
the skill deficiencies in advanced engineering/science fields. This is partly due to debt overhang and partly due to the mediocre level of precollege education. We are obviously not
nurturing, inspiring, and educating enough young students even to contemplate mastery of advanced skills.
Indeed, we are simply not nurturing enough people.
The US mobilization for WW1 was a complete mess. This happened even though US industry had been supplying the same allies in that war for three years. Our troops ended up using British and French artillery and other weapons. The big flow of new ships only arrived after the War, only to be anchored unused in reserve fleets then scrapped before the next war.
Between wars, the Army and Navy studied "industrial mobilization" with great intensity. They were not caught unready again. They had industrial policy ready to go. They were ready for WW2, ready to create the Arsenal of Democracy, exactly what had not happened the last time.
After the War, many people including my mother were employed for a year or more just to preserve the story of what worked and what didn't, to be ready for the next time. We were proud of our industrial policy, we'd learned a lot, and we meant it to be remembered.
So we've been there more than once, done that various ways, and we do know. It is all written down and stored away.
Eisenhower was one of those young officers between the wars who spent years studying industrial policy, to be ready the next time. "Amateurs talk about tactics, professionals talk about logistics."
When Eisenhower was President, he had industrial policy. He had good people doing it, and it was important to him.
We don't have an Eisenhower in the White House. He was Republican, but not this.
4
@Mark Thomason I admire Ike, who warned us about the military-industrial complex. His warning is as urgent, if not more today. Shoring up the military-industrial complex is hardly what we should be doing.
1
@Roberta -- Right.
We must never forget what else he said on this, "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed. This world in arms is not spending money alone."
To be ready to mobilize is not the same as to pile up arms and maintain a large force.
Industrial policy should make it possible, and make a lot more happen too. It need not turn us into the Soviet state of permanent military mobilization.
To defend ourselves is not to launch small wars all around the globe, many all at once.
But how many black women must be included in a research team to qualify for federal funding? Is there any doubt that our progressive paragons will tie the industrial policy with “fighting intersectional cisheteropatriarchy or empowering marginalized communities?” I am not at all optimistic that sensible and long-term industrial policy can be implemented in the US.
1
Rubio voted for the 2017 Ryan / McConnell / Trump tax cut that will increase the deficit from $600 Billion to $1 Trillion.
So what does that say about Rubio?
Marco Rubio and I may agree in this case.
On the other hand, Marco Rubio doesn't have a lot of credibility.
So whatever Rubio thinks is irrelevant to me.
5
To this industrial policy, I would add invest in education.
4
When I see pharmaceutical ads for drugs that treat afflictions affecting one in a million, costing hundreds of thousands of dollars, being shown on TV channels that used to pitch nothing more expensive than garden hoses and acne cream, I know that this is an industry that has more money than it knows what to do with. It can also be concluded that none of this money is being used for basic research. Big Pharma resembles nothing less than the cosmetics industry, which likewise spends most of its money on marketing.
4
Odd timing of all of this coincides with Supply side economics and Milton Friedman's "Shareholders above all else" mantra.
Do you mean they were wrong?
4
In fact, there is no evidence whatsoever in this now revised essay that proves that Alexandria Ocasio-Cortez and Marco Rubio agree on anything that Krein claims. Indeed, there is only one reference at all in the entire essay to Ocasio-Cortez.
Highly misleading, and fails to prove its claim.
4
I don't mind an AOC in Congress compared to a few Rockefeller/RINO Republicans because AOC will take a stand on some economic issues that the Romneys will turn their nose up on, support replacing lower-income (and tech) workers with lower paid immigrants, and reach out to Dems on social issues so that they can get their votes in order to put business first.
Romney, of course, vowed to be better than Kennedy on gay rights while in MA, which went away when it was later time to get the Republican nomination because $$ is what counts not beliefs.
1
This is a really nice version of what many people THOUGHT they were going to get by voting for trump. The good news is that many Americans recognize the problem and are willing to support solutions - the bad news is that we need to elect competent leaders who will act in good faith to get us there. That disqualifies every single republican (except maybe Mike Bloomberg). Can't wait until we truly start on the project of making America great again!
3
Despite all the propaganda to the contrary, markets abhor innovations until they become popular. Innovations tend not to fit with the way things work and the customer bases are always small for too long for most endeavors to recover costs in a timely manner. Plus any existing and profitable product which serve about the same needs struggle to keep the innovations from becoming popular.
In our history, government has assured that clearly advantageous innovations have been able to surmount the constraints of the marketplace.
3
If the United States had an industrial policy 20 years ago, China would not be running away in the 5G wireless race today.
4
"Economists almost universally insisted that state interventions to improve competitiveness, prioritize investment in strategic sectors and structure market incentives around political goals were backward policies doomed to failure"
These must be the economists who sat in the back of the classroom during their education, and never learned that without the govt initiative, we would not have high tech, big pharma, the airlines etc.
7
@Ed Watters Gov intervention is probably why we have oligopolies with price gouging power in each of these industries.
3
By making our healthcare system single payer, businesses would not have the expense of subsidizing employee healthcare insurance. Furthermore, people would be able to go out and start their own businesses or change jobs for better pay and benefits.
8
Companies, at least the publicly traded ones, would just use the health care savings to buy back more stock. More regulation is needed to ensure that doesn't happen.
1
In telecommunications we slit our own throats by letting our telecommunications systems industry be purchased by foreign entities who never intended to keep the industry "on shore". This did not occur yesterday. It occured over the past two decades. Both Democrats and Republicans share the blame for the dissolution of our technical capabilities in that field..
2
I've worked most of my career in that industry, and I somewhat disagree with you. Lucent, Motorola, and Nortel committed suicide. Carly Fiorina was one of the major culprits. When Alcatel, Nokia, Lenovo, and the rest picked up the pieces oh, there was little left but carrion.
3
@KC Like you I've 20 + years in that industry.....Independent of the source of the incompetence that led to the financial ruin of the industry, it should have been viewed as a matter of national security to keep control of the companies within the U.S....Our politicos had the power to do that....but they were too busy collecting their global economy cash to protect the interests of the country...Now they whine about the loss of technology...go figure...
1
We will never have a good industrial policy until we get money out of politics. Right now the oligarchs rule. Our policy is whatever makes the oligarchs rich. Until we get money out of politics and use the data that is available to make good decisions the Chinese will run rings around us.
Join makeitfair.us. Look up the American anti-corruption act. If we are to compete we have to change the system. Get involved.
5
The Reshoring Initiative believes the U.S. should counter China’s economic growth initiatives with an aggressive industrial policy. We can lift U.S. manufacturing by 40%. Ending the manufacturing stagnation of the past 30 years depends on our success in reducing our trade deficit, equaling about five million manufacturing jobs at current U.S. productivity levels.
The Reshoring Initiative has developed a Competitiveness Toolkit (http://www.reshorenow.org/blog/competitiveness-toolkit-draft/) for selecting the optimal mix of national policies to improve the U.S. price competitiveness needed to substitute domestic production for imports. New technology adoption and up-skilling our workforce is imperative. New technologies and automation help developed countries like the U.S. reduce the labor hours required to produce goods and shift jobs toward higher skilled workers where the wage gap is smaller. Availability of a skilled workforce is critical for industry retention/expansion.
Although there are continuing concerns regarding China’s structural issues including industrial policies that favor state-owned businesses, the U.S. has limited control over China’s initiatives. However, we have unlimited control over our competitiveness initiatives and our ability to achieve our ambitions. Let’s collaborate to support American competitiveness and rebuild a U.S. manufacturing powerhouse.
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It does make sense: replace the "incoherent policy" of tax cuts and tariffs, essentially a laissez-faire policy where industry is on its own without government intervention---replace with a policy where the government actively intervenes , i.e., "industrial policy."
Laissez-faire had its place when production was basically small-scale and R&D could be handled by a small group---but no longer. The whole industrial process has grown in complexity and the government can no longer rely on factories to do the right thing--as they will move slowly into the untried and necessary new developments.
The state must now intervene for international competitiveness.
The most frightening part of this article is that we no longer spend heavily on R&D. We have cut basic research. We no longer make all the new inventions; other countries do. Our administration seems to be carrying over its intellectual laziness to industrial growth and development.
Our administration puts too much faith in its own genius and too little effort to learn and develop more advanced industry.
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So what has all that public debt we’ve accrued in the last 20 years bought? Absolutely nothing.
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From Krugman's disavowal of Germany's debt obsession, to a former Trump voter's insistence on domestic stimulus, to the Upshot's admission that unemployment is not tied to inflation, the New York Times is slowly coming around to the economics of modern monetary theory.
I hope the paper looks more seriously at MMT's proposal of a public, counter-cyclical job guarantee. Many serious economists have shown that it would not cause runaway inflation. It would save this country from a downward laissez-faire spiral, and if the jobs are green industrial, it is one of few options that can save this planet from burning.
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Funny, I thought we did have an industrial policy: Whatever corporate lobbyists want, they get. You mean to tell me this "industrial policy" has not resulted in a high rate of economic growth, full employment, and steadily rising median household income? Oh, I'm so disappointed. I'll bet Elizabeth Warren has a plan for that.
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Throughout history future progress has always been obstructed by the present businesses. They want to continue as is, no competition, no new ideas. Fossil fuels are a great example.
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It's a little bit funny when America actually starts to debate on the merits of a state guided capitalism. What next? If the state can interfere with manufacturing goods, maybe the state could also implement fair (socialist) social policies too regarding minimum wages, free medicare etc. Just like every other advanced Western nation.
The horror!
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The media continuously trots out the same 2 or 3 vague tech categories as proof that the hyper-diverse 17 TRILLION dollar U.S. economy is some how a laggard in the global stage. Just because bureaucrats in China decided to heavily subsidize a few artificially big companies does not make them the industries of the future.
Consumers and investors need the opportunity to decide which industries and products will succeed. They don’t need industrial planners to pick the industries for them based of very limited information and unlimited political rhetoric.
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No major bipartisan bill of any policy, that effects real change will ever even get a vote with Mitch McConnell controlling the Senate.
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So you want the US to pursue “industrial policy” do you? Well, think Chernobyl. How’d that out?
@Blue Dog Well, I will compare the many many disasters done by private companies to all done by government. I think the government will look good. Oil spills, chemical spills, food poisoning, climate disasters, recessions from poor economics and corruption etc.
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The question always is, who will control industrial policy? Ideally industrial policy would be an agreement between business, government, workers and the consumer, in other words a balanced capitalist system. Instead it seems we have devolved into a place where the bonds of trust no longer exist and everything turns into a matter of 'special interest'. Businesses focus on profits, government becomes about social power, workers focus on survival and getting the best deal they can and consumers getting things the most cheaply and the best quality. but in the end none of these sectors are separate and only cooperation will save us from ourselves.
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I'd be willing to bet there are many issues on which democrats and republicans can agree, in principle.
But in practice, people give them money not to.
Money in politics is what allows Mitch McConnell to ignore the wishes of 90% of the country on background checks for gun buys.
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The SBIR program at NSF and NIH was critical to getting our startup company off the ground. VC's were not interested because of the modest size of the market potential and concomitant returns. Fixing healthcare by removing the need for small companies to provide insurance would also be helpful.
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Our government spent over a billion dollars to develop a waste-to-energy solution to Climate Change in the 1980s and early 90s---- it was called the Integral Fast Reactor (IFR). The IFR program was killed in 1994 by none other than Al Gore.
The successor to the IFR is the GE-Hitachi PRISM reactor that can consume and destroy spent nuclear fuel and obsolete nuclear weapons, turning them into abundant, clean, safe and affordable electricity.
Want to learn more? Google GE-Hitachi PRISM and look around the web site for their promotional 4 minute video. (Recommend that you turn off the annoying sound track.)
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DOA: The Kochs will tell McConnell to kill it.
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But an industrial policy depends on society, it does not happen in a vacuum, and in the United States society has been in crisis for over half a century. Some contentious issues have been resolved, though. A more diversified practice of sex, while not without problems ,is less problematic than the fight against diversity. More tolerance of soft drug use is mitigating a particular racial and class and cultural injustice. The #me too is vigorously fighting the cavalier abuse of women. There remains the opioid crisis to address, urgently. However, that 45% of the electorate who support Trump indicates, before anything else, unhappiness and discomfort. There is widespread malaise, there is anomie (fancy word for copping out), there is exhaustion. The society balks. So to make real an industrial policy, the country needs to rebuild society. The financial sector extracts so much value from society that it society is now beginning to convulse and also die by pieces. And there is, oddly, TOO MUCH capital, swirling around in speculation. The Democrats are right to want to move left and forward, invest in health, education, community, welfare. But if they try to do this too suddenly, the society will seize up and things will get worse. And the propaganda machine of the right -- blindsided and hopped up by its sudden accession to power -- is very powerful and sometimes quite hidden. So: forward and left but with caution and in good order<, and society before industry, are my takeaways.
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I have been waiting to hear this. We have forgotten what it is like to have leaders and a government with ideas; political parties that actually debate proposals to help the country, and who compromise and pass legislation. We have forgotten what it is like to have a business community that only makes money, but also helps the nation. This used to be the most innovative, productive and can-do nation the world ever saw, but we somehow lost all that. Let's get it back and start solving our problems.
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@Madeline Conant
We lost all of that because we decided at some point that making money was more important than progress. This attitude is why we have a nearly decrepit communications system (why upgrade when you're still making money off the old system?), why we're behind in transportation technologies, computers, biological research (though we still hold a slim lead in pharmaceuticals), infrastructure and more. We're an estimated $3 Trillion behind on infrastructure investment. That's not going to come from businesses, and the 'Adopt a Road' program is a band-aid at best. Here in the DC area, we're seeing the selling of public roads wholesale to companies which charge tolls, but do little to improve them.
Science has been 'busnessified' in that all research is expected to address quarterly reports (with potential profit projections) - that's science; the field where you figure out how things work, not just take advantage of who things already work.
If we want to get back on track and be a global leader again, we need cooperatively as a nation to stop pursuing profit and money at all proverbial costs and recognize there are things that you just fund, not worrying about whether or not they will make money this business cycle.
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@Madeline Conant private business can only make money by providing goods and services that help the public. Otherwise no one would pay them and the business would fail.
The only entity that can take money from the consumer without their consent is the government. That is why big companies take advantage of the government to gain unearned competitive advantage. You would see more of that in every centrally planned industry that this article discusses.
What about climate change?
Increased production--the panacea of so many--is destroying the every environment in which human beings depend upon.
Without a SERIOUS decrease in production, in a very short number of years, human beings--along with animals and most plants--are going to die; i.e., become extinct.
And what do you think about THAT, my friends? (With a tip of the hat to Bob Dylan!)
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There are two ways to look at this: if Rubio and AOC agree on something, it must be a good idea. Alternatively, if Rubio and AOC agree on something, it must be a bad idea. Unfortunately, the second is the case. The government should stick to its knitting: building infrastructure, education and basic research. It isn't like it doesn't have enough to do there. With respect the industrial policy, the government is not good at picking winners (no one is). It is a recipe for cronyism and kleptocracy.
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@Mark Kuperberg, you suggest we eliminate all government subsidies then? I don't see that improving the economy. The concept of a "free market" is completely illusory.
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Amen. Recipe for crony capitalism.
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@Mark Kuperberg
Riight - and private industry invented the internet (DACA from DoD), HTML (Physicists at CERN in Switzerland), computers (British and U.S. governments to break Enigma with a shoutout to Mr. Babbage), programming (British and U.S. governments in WWII again), most industrial ceramics (NASA), plastics (NASA - starting to see a pattern here?), and more.
Business is just not very good at research. It's great at taking advantage of other people's genius and making money off it however. (and not paying any of those intelligent people back) Most of the serious groundbreaking research in the U.S. was performed at Universities and Colleges around the country with government funding. THAT's the stuff that's dying right now. Research doesn't create jobs right now (which is really what matters in a business cycle), but 25 years from now, usually be creating new industries. But we're not interested that anymore, are we? We're more interested in getting our pile of gold RIGHT NOW, because exploitation is always easier than creation.
That idea of immediate rewards led to our greed driven consumer economy of today. Greed in economics has always been there (read up on Mercantilism - it's what drives Republican policies today despite not having applied effectively to economic thought since the end of the 19th Century), but economists from Adam Smith onward have warned about making greed the sole motivator for an economy.
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Actually, Reagan supported Sematech, a successful industrial policy initiative to save chip making in the US. Republicans are only against industrial policy if Democrats are in charge, kind of like their policy on deficits. If we do pursue industrial policy, we need to ensure that labor has a place at the table so that all of the benefits don't accrue to the 1%.
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I have watched Marco Rubio for years. I do not think he believes in anything.
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It's too easy and cheap for old industries to buy and control US politicians. The oil industry is the prime example. Our economy, environment and national security would be strengthened by decreasing our consumption of fossil energy, yet we cannot do what is rational because our elected leaders are sold out to their big donors.
I would also point out that the typical US citizen has been brainwashed to believe that good environmental policy is antithetical to a good economy. This is because coal miners and oil and gas workers may lose jobs. The problem with that is that green technologies create way more jobs than the fossil fuels industry. The economy would actually thrive under the green new deal, even as fossil fuel industry workers suffer because they refuse to re-educate themselves. They are however, a significant minority, but one that gets a lot of press coverage because of the ability of the fossil fuel industry to get that perspective in the press. The question is always what will these workers do? But that is a dumb question. They should educate themselves and get a job. Here in the lowest unemployment ever (supposedly) they cannot find another job? I think they just refuse to learn.
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Article overlooks the fact that you have an industrial policy even if you have none. Also it overlooks the fact that the US has always used industrial policy from Hamilton's treasury to the American system to intercontinental railroads to homesteading to land grant colleges to the gi bill to interstate highways and beyond. And sadly a racist policy of refusing 40 acres and a mule to freedmen.
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" underlying neoliberal agenda"
When in the voting booth, remember these words.
Neoliberal equals status quo.
The country is prime for progress, the world is waiting for us to take the lead.
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@s.whether
Personally, I've always considered it comical that both Neoliberal and Neoconservative are both - well, conservative. Sadly, there are those who think that Neoliberalism is some form of extreme Liberalism. Both approaches have proven that what's needed is something like investing in our nation's people. Push education, innovation, curiosity, etc. Corporations and the wealthy need to be willing to take the occasional hit in profits for such investments, or a government willing to tell such people to pound sand while they invest.
I used to ask people that if we divided society into quintiles by wealth, which quintile produced the most genius? The answer is - none of them. Genius is generated by DNA, not wealth. Sadly, as a society, as focus almost solely on the impact of that wealthiest quintile (and not even all of that; presently we focus on only about 5% of our effective brainpower in the U.S.). If as a society (and that means government kiddies) we push education and innovation, we will lead in all new industries. Wages will be irrelevant because others will need to play catch-up. What frightens me is that it may be too late to switch paths, and we're stuck on a path to irrelevance in the world. We'll end up like the Republic of Venice in 1796. A small number had huge wealth, but overall the nation which had led for centuries was forced into voting itself out of existence by a poorer but more universally motivated nation (i.e. France).
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Write about industrialization. Fine. But, please don't compare Marco Rubio with AOC. They have almost zero in common. To suggest otherwise required tortured reasoning. AOC is divisive and her extreme positions will and have divided the Democratic party which must present a united front to defeat Trump.
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Our whole conception of what the economy is supposed to do must change. Economic growth is primarily the result of intentional actions of people; and by far the most important part of economic growth is technology.
I would go further and argue that what we're really interested in is technology: it's creation, use, and spread throughout the society, such that the maximum number of problems can be solved in our society. Economic growth is just a (limited) proxy for that.
With this in mind, a sound economic policy should be focused on maximizing technological outcomes.
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This a topic, industrial policy, needing more discussion. The author states: The federal government should also be spending more on basic research, which has declined significantly in recent decades as a percentage of gross domestic product. Already too much of basic research funding effectively functions as a subsidy for other countries. Because of a lack of scale-up funding or technical capacity or both, many inventions cannot be produced in the United States. Too often, the most promising ideas migrate to Asia, where the factories and, increasingly, the engineering talent and funding for non-software companies are. Also, the author state: "The deindustrialization of the United States has now proceeded to such an extent that even critical defense sectors are compromised. " Both are true. We are producing more science than we can consume and we have exported our engineering and factory work in other countries. So part of our Industrial policy must be to keep more engineering and factory jobs in the US and slow our deindustrialization. Our nation needs a mixture of research and production, not one and not the other. We are a nation of many talents, and we can't just be science and service jobs oriented. Our immigration policy needs to be considered with the same issues in mind. What interest do we wish to serve? More for the nation or more for other nations? It is balance we need, not one or the other.
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“Governments should intervene to help the industries and technologies of the future.“
The word “intervene” harkens back to an illusion of natural order and pure competition that was always just that, an illusion. Of course governments should help industries and technologies of the future. It’s not debatable, unless we allude to upsetting the illusory natural order.
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We have an Industrial policy managed by the military industrial complex. We have one in undermining industrial unions, lowering taxes on unearned income, farm policies that undermine family farmers, etc., etc. Near!y every state and city have industrial policies to primarily begger their neighbors by giving industries tax incentives to resettle in their locals. And then there is Trumpism curtailing immigration when our biggest problem is an aging population, undermining science and climate change abatement, cutting taxes to give growth a sugar high while failing to fund infrastructure. Stupidity is our real problem.
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@Dan
It's not stupidity, it's greed (remember, "greed is good"), which is the GOP ideology.
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@alecs maybe greed makes one stupid in all other areas... :D
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It is nice to see AOC shift from daily human rights outcry, to actual pragmatic solutions. (for once)
Omar and Tlaib should take note. Instead of waging a "BDS mission", PRIOR to their supposed "fact finding mission".
Pragmatism, and solution solving, is what we look for in leaders. :)
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The last time the U.S. flirted with the idea of industrial policy was in the 1980s, when Japan's competitive economy was giving America a run for its money. Japanese money was buying prime real estate across America, and there was genuine concern that Japan's economy was not only on its way towards surpassing America's, but that they had cracked the code to make an overall better economic model than the free market that we are taught is the best way to get things done. And yet after a lost decade that preceded an alarming aging rate, few would call Japan the prime economic model today.
During the same time as Japan's heyday, the flashiest product of industrial policy was France's Minitel, a precursor to the internet. While nobody doubts the value of the internet today, there are arguments to be made that a stubborn commitment to Minitel stunted the development in France of the internet as we know it today.
Industrial policy is hard because predicting the future is hard. It is one thing to harness existing technologies to catch up with the rest of the world, as the USSR did during the 40s and 50s, but it is another thing entirely when the future of technology can be so unpredictable - who could have guessed all of those video games would have led to an A.I. revolution?
When we think of how to handle industrial policy in this country, we must first and foremost be humble. Nobody can predict the future perfectly, so please don't be cavalier with my taxpayer dollars.
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This is probably the best column I’ve read in the NYT is quite a while.
The government needs to spearhead technology that takes us into the future.
I’ve long said that not only does government need to stimulate research but also profit by it.
Social Security funds could be lent to credit worthy individuals and businesses and for once, we could begin to replenish social security, as an example.
Mr. Krein, nails it. Wonderful column!
Maybe it’s time to blur the lines between the public sector and private?
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Which Republicans is this article talking about? It isn’t the GOP in Congress or Trump. All they do is create massive deficits by cutting taxes on the ultra rich, give breaks to the fossil fuel industry while ignoring tech savvy new areas of growth and spend nothing on infrastructure.
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