What’s Wrong With U.S. Manufacturing Policy

 

The Brookings Institution’s Martin Baily has an informative article, “what’s wrong with U.S. manufacturing policy,” in a recent issue of the Wall Street Journal.
Capture1Says Mr. Baily, “Of the 5.7 million manufacturing jobs that disappeared in the 2000s, only 870,000 have returned so far, according to the Bureau of Labor Statistics, and the claim that millions more are coming back is nothing more than a myth. … If the U.S. is serious about promoting a recovery in manufacturing, it will stop measuring success by the number of people employed in the sector and start supporting the technological advancements that are making factories more productive, competitive and innovative.”
CaptureAccording to Mr. Baily the technological shift taking place is powered by three developments:

  • The internet of things in which machines are able to communicate with each other.
  • Advanced manufacturing including 3-D printing, new materials and more accurate digital logistics.
  • Distributed innovation in which crowdsourcing is used to find solutions to technical challenges more quickly.

Such advances must be supported even if it means putting robots in place of workers.  It follows that:

  • there will still be good jobs in manufacturing for those with big data, programming and other specialized skills
  • a shortage of qualified workers means we want highly qualified immigrants to stay in the U.S. instead of returning to their home countries
  • propping up uncompetitive jobs with tax breaks and subsidies won’t work for long and just interferes with introducing a lower corporate tax rate to drive new investment
  • new trade agreements strengthen U.S. manufacturing by reducing foreign barriers to U.S. goods
  • Displaced workers Should be supported with retraining programs especially through community colleges
  • Government can further help with infrastructure improvements and expedited permitting processes.

Conclusion:  U.S. manufacturing will continue to thrive in a rapidly changing environment as long as it is properly supported with intelligent government policies.