Industrial Policy for the United States

Up until the middle of the 1970s, the Keyensian model of the economy-an intricate balance of private business, organized labor, and government regulation-that the US economy followed after the Second World War worked well. Union workers in such key economic sectors as auto manufacturing, steel producing, trucking, for example-were paid well enough to enter the middle class and attain such things as college education for their children and their own homes; this only applied, however, to approximately one-third of the US workforce.

Government intervened in the economy to prevent mass unemployment and steep drops in the stock market, which preceded the Crash of 1929; and the welfare system made sure that worked who were between jobs could have some income and purchase the goods they needed. Corporations tolerated unions at best. The “Pax Americana” meant that the United States remained the dominant industrial and military power of the world, since the other industrialized nations’ industrial plant was destroyed in the Second World War, and it asserted dominance over less-developed nations.

In 1973, that began to change. The OPEC oil embargo led to a rise in energy prices; such nations as Germany and Japan utilized new industrial plants, more up-to-date than US plants, to become competitors in world industry, particularly in auto sales; “stagflation-“ the phenomenon where inflation of prices and unemployment rose, which in the Keyesian tradition was not supposed to occur-occurred. The US trade deficit increased.

Corporations and their political allies promoted a series of policies known as “neo-liberal” economic policies, also called “supply-side economics,” which called for the deregulation of all industry, the elimination of the welfare system, the elimination of trade barriers between nations, and the elimination of protections for workers, meaning the repressing of unions. These policies were pursued by Margaret Thatcher in the United Kingdom, with her famous line “There is no alternative,” and Ronald Reagan in the United States. They spoke of the neo-liberal system as the only way out of the world’s economic difficulties. Much of the push for “supply-side” economics was motivated by ideology, a desire to end any control over corporations by government, unions, or any other entity.

However, among economic policy commentators, but heard of little in the commercial media, industrial policy was discussed, which would have led to greater government intervention in the economy than in the old Keyesian system. After the Second World War, Germany and Japan pursued policies of capital allocation, which went to business areas that would be strong business competators in the international market, while building up such infrastructure as highways, ports and sewers, and developing a skilled work force to support this system.

The advocates of industrial policy state that the government does already directly intervene in the economy, through defense spending and research and development. Also, these government grants and contracts make such firms more attractive to private investors.

Currently, government support of industries-such as tax breaks and subsidies- favors established industries. Corporations that have established themselves in communities, and had become the economic center of the community, attain favored treatment in taxes by local and state governments, after secret deals out of the public limelight. Newly-emerging industries, like in high-tech, do not receive such subsidies. Advocates of national industrial policy say the grant and subsidy-granting process would be more public and available to debate.

In industrial policy, the government would provide incentives for industries to restructure, and to retrain workers with new skills, to prevent unemployment. Also, the government must invest in such infrastructure as ports, bridges, waste sites, as being “public goods,” available to all corporations. Industrial policy must also invest in training workers for the skills they would need for these new jobs, along with education and occupational safety. Already, government procurement programs have led advances in semiconductors, synthetic rubber, antibiotics, and nuclear power, among other industries, for military and space exploration purposes, putting these firms at a competitive advantage.

At this point in our nation’s time, the labor movement needs to revisit the idea of a national industrial strategy; the only question is, who would have input in the planning of it.

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