Trump’s ‘industrial policy’ is just bad economics
In a recent analysis, experts argue that relying on subsidies and tariffs will not effectively revive American manufacturing. Instead, the foundation for a robust industrial sector lies in enhancing productivity, fostering innovation, and nurturing competition. The article emphasizes that while government interventions like subsidies can provide temporary relief to struggling industries, they often lead to inefficiencies and a false sense of security. For instance, the automotive industry has seen significant government support over the years, yet this has not necessarily translated into sustainable growth or long-term competitiveness. The reliance on such financial assistance can stifle creativity and discourage companies from investing in new technologies or processes that could enhance their operational efficiency.
The article further illustrates that true industrial strength is built on the ability to adapt and innovate rather than on protective measures. Countries that have successfully revitalized their manufacturing sectors, such as Germany and Japan, have done so by prioritizing research and development, education, and a skilled workforce. These nations have cultivated environments where companies are encouraged to innovate and compete on a global scale, leading to advancements in technology and production methods. The U.S. must focus on similar strategies, including investing in workforce training and infrastructure, to ensure that its manufacturing sector can thrive in a competitive global market. By shifting the focus from subsidies and tariffs to long-term investments in productivity and innovation, the U.S. could establish a more resilient and dynamic manufacturing landscape that can adapt to future challenges.
Subsidies and tariffs won’t spur a manufacturing revival. True American industrial strength rests on productivity, innovation and competition.
