No reason to favor manufacturing

last updated 8 January 2015

Christina D. Romer

The New York Times

Everyone laments the decline of American manufacturing, said former Obama administration economic adviser Christina D. Romer. But there’s no good reason to give that sector of the economy special government support. Some argue that Washington should lend manufacturers a hand in order to create jobs, or bring them back from overseas. But “it’s not because of a decline in manufacturing” that we have high unemployment; we’ve been steadily losing factory jobs for 30 years, even when the jobless rate was low. It was the bursting of the housing bubble, Wall Street’s meltdown, and a huge drop in consumer demand that caused the 2008 recession, not a decline in manufacturing. Nor are these jobs a cure for the blue-collar unemployment problem. Today, manufacturing processes have become so complex that employers simply cannot afford to pay good salaries to workers with minimal education and specialized skills. As an economic historian, I appreciate manufacturing’s vital role in building our nation’s prosperity. “But public policy needs to go beyond sentiment and history.” We would foster more growth with strategic economic policies, like investment in education and infrastructure, than with targeted aid to manufacturers.