A word about manufacturing, prompted by Biden’s “buy American” proposals. It is important to distinguish between production and employment. +

Manufacturing production exerts outsized influence on a nation’s innovative capacity and productivity. It is important to have sensible industrial policies that promote it. And it’s possible to reinvigorate manuf in the sense of preventing a decline in MVA/GDP. +

Employment is another matter. Labor content of manufacturing has been in decline for a very long time (flip side of rising productivity) and I think it’s virtually impossible to reverse employment-deindustrialization. No nation has managed to do it. +

The future of jobs is in services: health, education, retail. That’s where we need to focus, both to create productive jobs and to ensure workers are provided with adequate say and job standards. Today’s industrial policies have to target services if the objective is good jobs. +

We’d like to believe that promoting innovation and good jobs are one and the same, and that a manufacturing oriented policy will kill both birds with one stone. I’m afraid that is not the case. Good jobs will require distinctly different policies that don’t look like yesterday’s.

Having said all of this, on the whole I believe Biden’s proposals go in the right direction.