Make it in America

The Case for Re-Inventing the Economy, Andrew Liveris, Wiley.

“The world is entering a golden age of manufacturing.” When Andrew N. Liveris, CEO and Chairman of Midland, Michigan-based Dow Chemical, makes this statement during speaking engagements in the United States, audiences are taken aback. After all, this country is hemorrhaging manufacturing jobs, and American companies are moving offshore at the fastest rate in history. But at the same time, countless other countries around the world are working closely with businesses in an effort to attract companies in the “advanced manufacturing” sector, which offers high paying jobs in high-tech, state-of-the-art industries like microprocessing and robotics. “Make it in America” argues that the United States desperately needs to rebuild its once-impressive manufacturing base or face the consequences—including persistently high unemployment and a reduction in our standard of living.

The first order of business is to recognize that we have a problem, says Liveris, who reminds us that too often our political leaders pay lip service to the issue, arguing that we should revive the Rust Belt-type manufacturing jobs of the past, or worse, write off the manufacturing sector entirely. “[P]oliticians seem more concerned with providing transitional relief—job training and unemployment benefits—than they do with fixing the fundamentals that are causing the problem in the first place,” he begins, before noting that crisis-deniers argue that the U.S. can continue to prosper, even without a vibrant manufacturing sector, as long as we continue to create service sector jobs. What they fail to recognize is that “service sector jobs don’t add nearly as much value to the economy as manufacturing sector jobs do,” because at each step in the manufacturing chain, “value gets added to the product, and thus added to the economy as a whole.”

Even more disconcerting than the simple loss of manufacturing jobs is that when a country loses these jobs, it ultimately loses the R&D that follows. Put another way, the future iPads of the world won’t be “Designed by Apple in California” and built in China, they’ll be designed overseas as well. Liveris rejects the notion that the U.S. is losing manufacturing jobs largely due to labor costs, because “if cheap labor were the driving force behind where to locate a manufacturing plant, even China would be in trouble,” as there are dozens of countries with wages lower than China. Instead he attributes our decline to America’s failure to aggressively compete—and to develop a national strategy that addresses issues like taxes, regulation, and health care, all of which would “reduce the uncertainties of doing business” in the U.S.

This isn’t to suggest that Liveris favors less government involvement in business. “In certain key areas, we actually need more government, not less,” he writes, arguing that “for all the wisdom of the markets … there are important areas where markets, frankly, aren’t so wise.” For instance, “[t]hey cannot always ensure that consumers are protected or that the economic foundation we are building is solid.”

In the last two chapters Liveris lays out an ambitious policy agenda, one that asks business and government to work in concert. Among his many recommendations: Create a new—and substantial—manufacturing tax credit; make our R&D tax credit permanent; and change immigration policy to make the U.S. more hospitable for entrepreneurs. “We will not succeed without a comprehensive, national economic strategy,” he insists. “Education, energy, infrastructure, tax policy, immigration, regulation, trade—all are inextricably linked.”

Liveris acknowledges that it won’t be easy to change the thinking in Washington … and to stop the business community from viewing Washington as the enemy … and to get Americans to stop viewing manufacturing as a thing of the past rather than the future. But make no mistake, he says, the United States is at a strategic inflection point and like it or not, change is coming. “The choice is whether to drive those changes in the right direction, or to allow forces beyond our control to determine our future.” In other words, let’s start making it—whatever it is—in America.