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“Picking Winners” by Making the Rest of Us Losers

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Below are two letters that I sent yesterday to the Wall Street Journal.  Both are in response to this essay [2] whose author argues that America needs an “industrial policy.”  (This essay has many flaws beyond those that I highlight in my letters.)

John Hofmeister builds his case for a U.S. industrial policy on a foundation of falsehoods (“The U.S. Needs an Industrial Policy,” Feb. 8).

The most notable falsehood is Mr. Hofmeister’s assertion that American manufacturing is faltering.  In fact, America remains the world’s leading manufacturing country, one whose manufacturing output continues to increase.  For example, in inflation-adjusted dollars, the value of U.S. manufacturing output in 2007 was 8 percent higher than it was in 2000, 69 percent higher than it was in 1990, and 184 percent higher than it was in 1980 [3].

And while it’s true that the Chinese will one day produce more manufacturing output than do Americans, that eventuality is hardly surprising given that China is home to one-sixth of the world’s population.  Moreover, the fact that manufacturing outputs in newly industrializing nations such as China are growing faster than American output no more means that American manufacturing is in poor health than does the fact that a two-year-old girl is growing faster than her ten-year-old brother mean that the brother is shrinking, is in poor health, or is in need of a ‘height’ policy.

Sincerely,
Donald J. Boudreaux

and

According to John Hofmeister, “Where to stimulate job creation should be as obvious as the cosmetic smile on an elected official’s face: manufacturing.  Go where we’ve been” (“The U.S. Needs an Industrial Policy,” Feb. 8).

If Mr. Hofmeister’s logic is correct, his recommendation is too modest, for there’s an industry that once employed a far larger percentage of Americans than were ever employed in manufacturing: agriculture.

So if it’s wise to “go where we’ve been,” Uncle Sam should implement policies that create lots of agricultural jobs.  He can do so by outlawing farm machinery, fertilizers, pesticides, and refrigeration, as well as all packing materials invented after, say, 1900.  Just imagine the millions of jobs restored to that glorious industry that once employed nearly nine in every ten workers!

Now if Mr. Hofmeister nevertheless insists that Uncle Sam create more jobs in manufacturing, similar steps will be necessary.  For example, all post-WWII – aw heck, all post-WWI – advances in automation and inventory control can be banned from use, along with all use of modern computer technologies.  The resulting plunge in productivity will mean that many more workers will be required to produce the same amount of output that a single worker produces today.  And with all those workers shifted back to manufacturing, America would have fewer service-sector workers – folks such as pharmaceutical researchers, highly specialized physicians, and software designers – dragging down measured average wages.

What a recipe for prosperity that is!

Sincerely,
Donald J. Boudreaux

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