08 February 2012

ITIF on Romer and Manufacturing

At the blog of the Information Technology and Innovation Foundation Stephen Ezell posts up a lengthy response to Christina Romer's NYT op-ed on the non-specialness of manufacturing. Ezell writes:
Romer’s op-ed gets at least four critical points flat wrong. First, it conflates having a coherent set of policies and strategies to support U.S. manufacturers with them receiving “special treatment.” Second, it wrongly argues that manufacturing jobs are the same as all other jobs in the economy. Third, it misdiagnoses the central challenge facing the U.S. economy as a lack of aggregate demand when the real problem is faltering U.S. competitiveness, especially in the traded sectors of the economy, such as manufacturing. In doing so, her op-ed fails to recognize that the loss of manufacturing jobs has contributed significantly to the loss of U.S. employment, in terms of both direct and indirect jobs lost. Finally, arguments like this that manufacturing in the United States deserves no specific policy focus refuse to acknowledge the sophisticated strategies that dozens of U.S. competitors around the world have put in place to bolster the competitiveness of their manufacturing sectors.
I'll address some of Ezell's points in detail in forthcoming posts, as the Romer vs. Ezell perspectives are examples of a larger debate on manufacturing, innovation and the US economy. Let me preview my two cents by suggesting that Romer is more right than ITIF on this issue.


  1. Off topic -

    Don't know if you've seen this, Roger, but if you haven't I thought you'd want to:


    And this:


  2. I wonder how far off the ITIF is in some of it's reasoning considering that foreign labor and environmental regulation may be the top-two competitive edges against our entire manufacturing industry-- and an advantage that looks to only get wider considering the different cultures (and government regimes) involved (particularly for example, US and China).

    Even if innovation generates a boom in local manufacturing of high-skill employees and such, to me it just seems that the modern global economy has drastically shrunk the window that this particular advantage can be enjoyed by those that innovate. It seems it takes just weeks for non-inventors to take the idea of the innovators and plug it through their infrastructure and low regulation environment and immediately sap the competitive edge, effectively ending the run. Then all these employees are out of a job and the US economy efficiency is dragged down because those same people must negotiate possible re-training, re-education, or re-location in order to get plugged back in.