bridges, vol. 33, May 2012 / Pielke's Perspective
By Roger A. Pielke, Jr.
Currently, politicians, academics, and pundits in the United States are arguing over the need for and consequences of innovation in the 21st century economy. One important part of this debate involves the role of manufacturing in employment and economic growth, and the degree to which public policy should focus on treating manufacturing as a "special sector" that deserves targeted government support. In this column, I'll provide a bit of an overview of this debate and some historical data on the role of manufacturing in the economy.
On one side of the debate you have the manufacturing romantics, who see the sector as occupying a special place in the economy, thus deserving unique support from government. For instance, Laura D'Angela Tyson, chair of the White House Council of Economic Advisors under Bill Clinton, has argued that "a strong manufacturing sector matters – and deserves the attention of policy makers." She makes the case that manufacturing is special because of its role in exports, its potential for employment growth, and its overwhelming role in supporting industrial investments in innovation.1
On the other side of the debate you have the manufacturing skeptics, who see the sector as one of many important sectors and not deserving of special government treatment. One representative of this position is Christina Romer, who also served as chair of the Council of Economic Advisors for Barack Obama. Romer writes: "Public policy needs to go beyond sentiment and history. It should be based on hard evidence of market failures, and reliable data on the proposals' impact on jobs and income inequality," and ultimately concludes: "So far, a persuasive case for a manufacturing policy remains to be made."2
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