Building the Case for Industrial Strategy
The argument for an industrial strategy begins with the failures of present policies. The indictment is not concerned with the relative simplicity or elegance of competing economic theories but with actual results in the world marketplace. The case for an industrial strategy is not primarily about compassion, or about full employment, or even about economic growth. While we desperately need a compassionate economic policy, full employment, and sustained economic growth, these are goals. The industrial policy debate is not a debate about goals, but means. The argument rests on the premise that the old means must be changed because the world marketplace has changed fundamentally during the last three decades. Industrial strategy concerns how the United States (U.S.) should adjust to the new world market. America also needs sound and consistent macroeconomic policies, a tax policy that is not at war with fiscal policy, and a fiscal policy that allows for a more expansive monetary policy. Yet macroeconomic policies alone will not protect America’s position in a world marketplace where the primary issue is the relative competitiveness of individual industries.