Time to Revisit 'Industrial Policy'


9-28-09, 10:28 am

Original source: Diary of a Heartland Radical

All different kinds of data suggest that the economic circumstance of American workers has been declining since the current recession began in 2007. More troublesome is data that suggests that most workers have experienced declining economic security for at least thirty years. Increasing unemployment and shrinking wages, despite modest employment and wage gains in the 1990s, has been persistent.

-For most workers, including the college educated, real wages today are lower than they were in the 1970s.

-Rates of unemployment have grown over the years, doubling between 1999 and 2009. Unemployment rates are a third higher for African Americans and Latinos.

-There has been a sea change in employment as manufacturing labor has dipped below 15 percent of the work force. The sectors with most employment growth include health care, fast food, hotel work, and transportation. Generally higher paying manufacturing work is being replaced by low wage service labor.

-During the last forty years most manufacturing jobs have been transferred to other countries where wages are low, the right to form unions is limited, and costs for health and retirement benefits are minimum.

-There has been a qualitative shift in investment to financial speculation and away from manufacturing.

-Meanwhile, worker productivity in the United States has increased.

Rick Wolff, University of Massachusetts economist, reported that worker productivity increased by over 6 percent in 2009 as unemployment increased. He wrote that “…these numbers show that employers got a huge increase in output from each employee, while what they paid to their employees imposed on them a decrease in the goods and services they could afford.”

In addition Wolff reports that in July, 2009, factory utilization has declined to 65 percent (compared to 79 percent from 1972 to 2009). In other words, thirty-five percent of our current manufacturing capacity is lying idle.

An examination of data on mergers and acquisitions, rates of profits, and aggregate profits would suggest that since the 1980s many of the largest corporations and financial institutions have been the beneficiaries of declining worker standards of living. It seems that the trajectory of the U.S. economy is towards a high profit/limited jobs and wages economy.

In recent days politicians, economists, and pundits are indicating that the recession may be coming to an end. Financial institutions have recovered, their CEO salaries are going up, and some have resumed their risky loan practices. Daily stock market reports indicate that stock prices rise on days when corporations announce large worker layoffs. At the same time we are told that unemployment might stay the same or even rise for the foreseeable future.

It appears that without significant change most jobs will become obsolete due to capital flight, increased financial speculation, declining investment in manufacturing and infrastructure, the indiscriminate application of new technologies, and declining purchasing power and consumer demand.

All this suggests that those who argue that the capitalist system creates a system of growing gaps between wealth and poverty and as a consequence induces the general immiseration of the population have historical experience on their side.

Leaving aside a discussion of the long-term consequences of capitalism, there is a need to act now to create and maintain high wage jobs. The call for “industrial policy,” which some policy analysts introduced in the 1970s, needs to be revisited. Industrial policy signifies a concerted government policy to revitalize old industries and create new ones.

One kind of industrial policy that would be appropriate for the twenty-first century is the green jobs agenda. This approach would combine our massive environmental and job needs. To use an historical analogy, to save the lives of millions of Americans, a New Deal green jobs agenda must become part of our future.

Today our discourse on the global economic crisis, at the G20 meeting, in the halls of Congress, and at presidential press conferences, is all about finance capital, not about jobs and wages. In reality there are now two economies; one, the economy of finance capital; the other, the peoples’ economy.

The former economy is all about resuscitating a high profit/limited jobs and wages economy. The project of a progressive majority is to raise to the level of debate how to resuscitate a peoples’ economy.