That’s where I am today, giving a presentation on the importance of manufacturing in the US and what to do about it. (I’ll post my slides once I figure out how to do so…I know, very un-Netrootsy, but hey, gimme a break…I’m over 50…at least I’m here!) Figured it out! Here they are.
–these are better than average jobs: even while global competition has lowered the manufacturing wage advantage, the sector is still high value added and that’s reflected in the paychecks.
— manufacturing is a productivity leader (even with the measurement error problem I wrote about the other day) and a consistent source of innovation. Output per hour in the manufacturing sector has significantly outpaced that in the rest of the economy over the past 30 years and manufacturing firms are responsible for 70 percent of the R&D undertaken by private industry in the United States.
–governments in advanced economies, including our own, have always played an important role in promoting manufacturing. The economic rationale is the set of “negative externalities” that create barriers to entry, expansion, and innovation that no single, private firm can solve:
- Research Barriers: R&D can be prohibitively expensive and hard to capture profits (e.g. advanced batteries)
- Coordination Barriers: No single firm could coordinate national projects like the internet or smart grid
- Innovation Barriers: Firms need help morphing academic innovations into the production process
- Credit Barriers: Markets will underinvest when returns are particularly uncertain
- Exports: Firms need the federal gov’t to pushback against unfair trade practices that block our exports and artificially lower the prices we pay for the goods our competitors export to us.
For the record, the Obama administration has been quite good on at least the top four of those five, IMHO.