Tuesday, January 05, 2010

The First Rule Of Industrial Policy

This is a society in deep, deep trouble and the fixes currently in the works are in no way adequate to the enormous challenges we’re facing. For example, an end to the mantra of monthly job losses would undoubtedly be welcomed. But even if the economy manages to create a few hundred thousand new jobs a month, it would do little to haul us from the unemployment pit dug for us by the Great Recession. We need to create more than 10 million new jobs just to get us back to where we were when the recession began in December 2007. What’s needed are big new innovative efforts to fashion an economy that creates jobs for all who want and need to work. Just getting us back in fits and starts over the next few years to where we were when the recession began should not be acceptable to anyone. We should be moving now to invest aggressively in a new, greener economy, leading the world in the development of alternative fuels, advanced transportation networks and the effort to restrain the poisoning of the planet. We should be developing an industrial policy that emphasizes the need for America to regain its manufacturing mojo, as tough as that might seem, and we need to rebuild our infrastructure.

One of my longstanding pet peeves is that everyone in the US pretends we don't have an "industrial policy" because that implies naughty state intervention in certain sectors. But of course we have lots of naughty state intervention in certain sectors, we just don't do it even notionally for any good reason. We prop up the single family homebuilding industry and the automobile industry (even before the bailouts). We prop up certain agricultural sectors. We favor big business over small. Now we're massively propping up one skimmer industry - the financial industry - and are about to prop up another skimmer industry - health insurance.

So, yes, by design or accident we have industry policy. We should recognize that and then decide what we should be doing instead of pretending we don't have any.