Again and again (and again and again) we hear — and learn the hard way — that our “keep government out of it” approach to economic and manufacturing policy is hurting us. The countries that see themselves as countries and therefore have national strategies — where the ecosystem of an industry and/or sector is coordinated and nurtured by government strategies — are doing much better than the countries where leaders think “government interference” is a problem. We send our companies out to compete against organized national systems, and the result is we lose our jobs, factories, infustrues and economy. And maybe one day our country, too.

We’re A Country. Deal With It.

Here’s the important thing to understand, even if you think the idea of “countries” is out of date, and don’t think of the United States as a country is important anymore: Others see themselves as countries and they organize their countries to win as countries. And you don’t live in those countries. They see us – this geographic region we live in — as a country, even if we do not, and they plan their efforts accordingly. They attack us as a country and you happen to live in the geographic region called a country that they are attacking. So as they seize the jobs and factories and industries from our country all of us who happen to live within the geographic borders that we refuse to call a country lose out economically, whether we believe we are part of this country or not. This means we have to respond as a country regardless of whether our ideology says we shouldn’t. We are under economic attack as a country, so national government still matters as the only force capable of organizing a national response.

This Time, Brookings Is Saying It

This time, a Brookings study looks at manufacturing, and concludes that it is special to an economy, creating more jobs than other endeavors. Making things is what brings the income and generates the innovation that supports the service sector. “Manufacturing is the major source of commercial innovation and is essential for innovation in the service sector.”

Reuters: Lack of national policy hobbles U.S. manufacturing: study

Lack of a public policy on manufacturing is the main obstacle to a vibrant factory sector in the United States, according to a study which also dismissed the notion that high wages are frustrating growth.

Between June 1979 and December 2009, the country lost 41 percent of its manufacturing jobs, the study said. The loss of factory jobs worsened further, with manufacturing’s total share of employment falling to 8.9 percent in December 2009 from 13.2 percent in 2000.

“Countries in continental Europe as well as Canada are performing much better. They shed much fewer jobs, particularly over the last decade and many have higher wages,” said Wial, who co-authored the study, told Reuters.

“They have policies and strategies for trying to retain manufacturing jobs and higher wages, and we really don’t.”

From Brookings: Why Does Manufacturing Matter? Which Manufacturing Matters?

American manufacturing will not realize its potential automatically. While U.S. manufacturing performs well compared to the rest of the U.S. economy, it performs poorly compared to manufacturing in other high-wage countries. American manufacturing needs strengthening in four key areas:

  • Research and development
  • Lifelong training of workers at all levels
  • Improved access to finance
  • An increased role for workers and communities in creating and sharing in the gains from innovative manufacturing

These problems can be solved with the help of public policies that do the following:

  • Promote high-road production
  • Include a mix of policies that operate at the level of the entire economy, individual industries, and individual manufacturers
  • Encourage workers, employers, unions, and government to share responsibility for improving the nation’s manufacturing base and to share in the gains from such improvements

The Brookings research warns, “The nation need not and should not passively accept the decline or stagnation of manufacturing jobs, wages, or production. American manufacturing matters because it makes crucial contributions to four important national goals.”

  • Manufacturing provides high-wage jobs, especially for workers who would otherwise earn the lowest wages.
  • Manufacturing is the major source of commercial innovation and is essential for innovation in the service sector.
  • Manufacturing can make a major contribution to reducing the nation’s trade deficit.
  • Manufacturing makes a disproportionately large contribution to environmental sustainability.

Click for the full Brookings paper: Why Does Manufacturing Matter? Which Manufacturing Matters? A Policy Framework

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.

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About the Author

Dave Johnson

Dave Johnson (Redwood City, CA) is a Fellow at Campaign for America's Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California. Dave has more than 20 years of technology industry experience including positions as CEO and VP of marketing. His earlier career included technical positions, including video game design at Atari and Imagic. And he was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.

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