Does the US Government Need to Encourage Manufacturing?

The New York Times Magazine ran a story today about the Obama’s administration’s experiment with “industrial policy,” encouraging certain industries with start-up funds to increase their initial viability.  Compared with other countries, particularly China and Japan, the U.S. has largely avoided such policies in recent decades. 

The U.S. government funds billions of dollars of scientific research each year.  However, it fails to provide funding to transform that promising research into viable industries that will create jobs.

Internet companies like Facebook and Google are remarkably successful financially, but create few jobs (2000 at Facebook, about 25,000 at Google).  On the other hand, manufacturing companies that are less successful financially create tens of thousands of jobs (General Motors still employs over 200,000).

The vast majority of people in the U.S. aren’t going to live as well as past generations unless we rebuild a technology-based manufacturing infrastructure.  But, we can do this.  Taxpayers are already subsidizing some of the best technology research in the world.  But, we have to take the next step and provide funding for emerging industries to translate that research and build their factories here.

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