Is "Industrial Policy" the answer?

[benali72]

A lot of people here and in the press have commented on the NY Times article on why Apple makes all its products overseas.

This guy (Claude Prestowitz, a former US trade rep) believes the reason is because we lack an industrial policy to keep jobs and industry here, while our competitors in Asia very actively pursue such policies.

I tend to think he's right. Do you think he's correct, or have I just let myself be unduely influenced by a single article.

Read the short article here -- http://prestowitz.foreignpolicy.com/posts/2012/01/23/apple_makes_good_products_but_flawed_arguments

[I D Shukhov]

I looked for a  Henry Ford quote about how he felt somewhat guilty about inventing the assembly line.  I read somewhere that one reason he paid his workers so much was because he felt bad about how dehumanizing the work was.

A better reason appears here http://www.sermoncentral.com/illustrations/illustrations-about-suffering.asp:

Ford’s solution to the lack of worker motivation was to more than double the average salary, from $2.34 for a nine-hour day to $5 for an eight-hour day. Ford’s audacious offer more than solved his manpower problem. It made employment in his factory a sought-after prize. But even as he solved one problem, he created another. Ford’s workers, through their boredom, stress, alcoholism, and absenteeism, were expressing their struggle with a single question: What does my work mean? Ford’s answer: Work means money. And though the Model T has long since disappeared, Ford’s simplistic answer to the meaning of work still torments many of us today.

Does anyone else see something ironic going on?  For many years we were told not to worry about losing manufacturing jobs.  We were supposed to be in the Post Industrial era.  The jobs were dehumanizing and good riddance to them.  In the Information Age we'd all have clean, interesting jobs with plenty to go around.

Unfortunately, information is even easier to offshore.  Witness the uproar about pirating US media products.    Now we want the manufacturing jobs back.

I think bringing back manufacturing is going to turn out to be another failed magic bullet that is supposed to fix the problem of how the US can have our old economy back -- when we where head and shoulders above every other country in the world.

The best way I can see for change is better, personalized education with more emphasis put on psycho-social development.

 

[Carrie Cobol]

But we're still tied to the issue of having to pay for our living.  In order to pay rent/mortgage, food, utilities, etc, we have to have some monetary income.  Which means we need jobs.  I keep thinking that we're heading toward that Star Trek idealized society in a few of the alien races, where there was a large leisure class and a smaller class of people who did garbage collecting and food growing.  But I can't see how that type of economy would work because we're so closely tied to needing money to live.

There's also the issue people have started pointing out that R&D needs to be close to the manufacturing.  It used to be said that we could offshore the manufacturing and keep highly paid R&D here for our citizens.  But now we're offshoring R&D also.  I don't know if the two actually NEED to be co-located, but that's what some people are saying now.  If they're right, then we really do need to bring manufacturing back.

[TRexx]

The oft cited claim that Ford paid his workers $5.00/day is mostly a myth.

In 1914 when this happened, Ford's average wage was about $2.34 day. It was theoretically possible to earn $5.00 but most of it was in the form of profit sharing. There was a large and complex set of criteria which had to be met to reach this goal -- length of service, age, number and health of dependents and most importantly, character.  Ford wanted workers who were clean and sober.  So if you were 25, had worked there for a couple of years, and spent all your free time taking care of your widowed mother, wife and 4 kids, you might hit that magic plateau.

But it doesn't really matter. When the new pay scales were announced the media focused on "$5.00/day" (Imagine that. The media focused on one factoid and misreported the whole story. Aren't we glad they don't do that now?)    Ford knew a good thing when he saw it and had his PR machine hype up the story.  This let him attract good, dedicated workers.

[Origisaurus]

The oft cited claim that Ford paid his workers $5.00/day is mostly a myth.

A few years later, Ford announced the "six-dollar day".

In addition to attracting good workers, it also enabled them to buy the cars they built, making a good market for the cars and good testimonials.

A couple other "Henry" stunts.

When he couldn't get iron ore delivered  to his River Rouge plant at a price he wanted to pay, he built the Detroit, Toledo and Ironton RR to haul the ore in his own trains.  Not the only time FoMoCo has gone into business to compete with suppliers.  I don't know if it's still in operation, but Ford had a mine of high-quality silica sand and built a glass plant on top of it in St Paul, MN.  Providing most of the windows for Ford products.

In 1933, the First National Bank of Detroit went bankrupt and would no longer offer home loans to auto workers.  Ford led a group of auto executives to found Manufacturers National Bank to lend to auto workers and others.  A home loan not only gives a worker a decent place to live, but it locks him in to the area.  And the other banks lost many small depositors to MNB.  (First National emerged from bankruptcy as National Bank of Detroit, still going strong last I looked.)

[John Masterson]

Is it possible (I am honestly asking) that the powerful connected corporate interests in the United States would oppose an industrial policy that would bring work back to America?

America is a high standard of living country, and the wage needed to survive comfortably here is much higher than in Asia. It would seem that corporations prefer to partner with China and have China subsidize the situation so that American companies use Chinese labor at a much cheaper cost to the companies.

And that would be why we do not have the same industrial policy that Germany has, for example.

[TRexx]

America is a high standard of living country, and the wage needed to survive comfortably here is much higher than in Asia. It would seem that corporations prefer to partner with China and have China subsidize the situation so that American companies use Chinese labor at a much cheaper cost to the companies.

It's more than wages.  Companies that manufacture offshore don't have to worry about unions, child labor laws, OSHA, and all those other protections.

[John Masterson]

America is a high standard of living country, and the wage needed to survive comfortably here is much higher than in Asia. It would seem that corporations prefer to partner with China and have China subsidize the situation so that American companies use Chinese labor at a much cheaper cost to the companies.

It's more than wages.  Companies that manufacture offshore don't have to worry about unions, child labor laws, OSHA, and all those other protections.

Right.

It would be interesting to see if corporate leaders were asked to devise the ideal industrial policy for the United States to bring most of the job back here, what they would come up with.

[David Randolph]

There is always more than one part to the correct answer.

Industrial policy can set a macro environment. However, the problem with any "industrial policy" is corruption. It puts too much power into a few hands. "Power corrupts and absolute power corrupts absolutely." Thus, we have the rotating people going into government agencies to direct such policies, then rotating back into the very companies that benefited from their actions. The other side of "industrial policy" is that it is almost always geared towards preserving the 1% in their current line of business instead of directing the country into the future. Thus, we have the special provisions to help the struggling nascent oil business try to make money and the support for tobacco farmers.

In the long term, it is better for government to stay out of "industrial policy" than to let bureaucrats have that much power in their hands.

Instead, government's job is to try to maintain justice while dealing with a chaotic situation. (See the role of Sheriff in a gold rush town.) The main role that government has in "industrial policy" has to be protecting the rest of the citizens against abuse of power by corporations. We need "checks and balances".

When we let people have freedom to try to solve their problems, we do have situations like what we in IT have been enduring. But the end result is that we have the freedom to try new ways of generating money. In that freedom, yes, it is not fun to not have income, but we will find income as we allow ourselves to learn new skills and new ways of generating wealth - not income, wealth.