The Importance of Implementing a New Industrial Policy for America’s Future
In a recent column in the Financial Times, Rana Foroohar discusses the need for a new industrial policy in America. Industrial policy refers to the practice of government intervention to encourage specific sectors of business and industry for the overall advancement of the economy. While it has been a long-standing taboo at the national level, Foroohar argues that implementing a new industrial policy is crucial for the future success of the country.
Foroohar points out that industrial policy has actually been a part of the American economy since its earliest days. Alexander Hamilton’s “Report on Manufactures” proposed tariffs and incentives to promote arts, agriculture, manufactures, and commerce. Although Congress rejected Hamilton’s report, they did adopt most of his tariffs, initiating various projects to incentivize westward expansion. This historical evidence shows that industrial policy has always played a role in shaping the American economy.
In more recent times, industrial policy has proven to be successful. Examples include the creation of Google through a grant from the National Science Foundation, the development of the Boeing 707 that revolutionized the civilian jetliner industry, and even the invention of Cheetos snack crackers derived from military foodstuff innovation. These successes demonstrate the positive impact that a well-implemented industrial policy can have on innovation and economic growth.
However, Foroohar acknowledges that industrial policy has also been corrupted by politics. The support for Solyndra, a solar panel manufacturer, by President Barack Obama is one example. Despite these instances, properly implemented industrial policy has been largely successful.
One aspect that Foroohar emphasizes is the need for a macroeconomic industrial policy. Currently, most industrial policies in the US focus on specific industries or companies rather than broader elements of the economy. Foroohar highlights the lack of engineering graduates and the poor state of primary education as areas that need immediate attention. The United States is graduating far fewer engineering students than needed, and the education system ranks below industrial Europe and Japan. These shortcomings hinder the development of high-value industries and compromise national prosperity.
Furthermore, the United States faces challenges in terms of legal and regulatory hurdles, an aging industrial plant, and fiscal issues. The excessive regulations imposed at various levels of government, outdated infrastructure, and misallocation of capital and human resources through a complex tax code all hinder economic growth and efficiency.
To address these issues, Foroohar proposes a new take on industrial policy. The goal should be to make the United States a global leader in high value-added manufacturing, technology, and post-secondary technical education. This requires investing in primary and secondary education to create a highly educated workforce, upgrading existing infrastructure, streamlining regulations, and achieving fiscal responsibility.
Foroohar concludes by urging the next president, as well as governors and mayors, to appoint bipartisan committees to review and eliminate unnecessary regulations. Additionally, fiscal goals should be set to reduce federal spending and align it with revenues. By implementing these measures, the United States can become the industrial, technical, and innovation capital of the world.
In an increasingly dangerous world, where some adversaries embrace ideologies that challenge the principles of this republic, embracing a new industrial policy is crucial to ensure the country’s future success. Just as the United States excelled as the “Arsenal of Democracy” during World War II, it must now prepare to be the industrial, technical, and innovation leader in a rapidly changing global landscape.
In conclusion, implementing a new industrial policy is imperative for America’s future. By focusing on macroeconomic elements, such as education, infrastructure, regulations, and fiscal responsibility, the United States can position itself as a global leader in innovation and economic growth. It is time for leaders to embrace this mission and pursue it with vigor and resilience.
