The New America Foundation today hosted a panel discussion entitled “Manufacturing A Better Future For America,” that stressed, logically enough, the compelling need to strengthen U.S. manufacturing. There is a disturbing lack of understanding among political leaders and economists of the critical role manufacturing plays in a modern economy. As Leo Hindery of the New America Foundation noted, a job in manufacturing is worth a lot more than a job in services. It pays more and every manufacturing dollar generates $1.40 in other sectors.
The panelists were clearly concerned about our country’s industrial base and alarmed by the exodus of so much manufacturing to other countries. Yes, we need tax reform, more capital investment, more R&D and more investment in workforce training. But some of the solutions they proposed were troubling, at least to me. If having an “industrial policy” means our government will finally realize how important manufacturing is and do its part to help us compete, I’m for it. If it means having bureaucrats in Washington pick winners and losers, that is a cure worse than the disease.
All of the talk about losing our industrial base is premature. The U.S. is still the world’s largest manufacturing country, by a large margin. Manufacturing contributes $1.6 trillion to our GDP and employs 12 million Americans directly, millions more indirectly. And before we go abandoning our commitment to free trade, we might take note that we enjoy a trade surplus in manufactured goods with free trade nations as we sell $80 billion worth each month.
Still, we have been much too complacent. We must make manufacturing a top national priority. As Akio Morita, the founder of Sony said, “The world power that loses its manufacturing base will cease to be a world power.”
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