How Our COVID Response Could Lead to an Industrial Renaissance
Just as it was not an accident that the U.S. was unprepared for a global pandemic, it is not an accident that America is overly vulnerable to global supply chain disruption. The two phenomena are related: Four decades of purposeful neglect was engendered by an economics priesthood which any kind of national industrial strategy taboo.
The conventional economic wisdom was that it doesn’t matter what a nation produces (“Potato chips, computer chips, what’s the difference?”); that only companies, not nations, compete; that maximizing global, not national, economic welfare, matters most; that America should focus on its comparative advantage as revealed by the market; that market forces are adequate to ensure U.S. economic leadership; and that any attempts at prioritizing sectors would result in protectionism, having the government “pick winners and losers,” or some other variant of what they called crony capitalism. These positions were nonsensical before the onset of COVID-19. Today, they make even less sense.
Writing in The American Conservative, Rob Atkinson and Marshall Auerback argue that as policymakers consider how to reduce U.S. supply chain vulnerabilities, it is important to distinguish between two kinds of sectors and products.Some globally traded sectors are not all that technologically sophisticated. If the United States lost all capacity in such sectors, and for some reason later needed to ramp up production, it easily could do so because the production “recipe” and skills for making them are not all that advanced. There is currently a shortage of medical masks for healthcare workers, but it is being solved by quickly ramping up production domestically, and going forward it could be addressed by increasing the Department of Health and Human Services’ Strategic National Stockpile.