National Industry Policy in America

U.S. National Industrial Policy

The National Industrial Policy (NIP) has been defined in different ways by many scholars. Johnson describes it with simple words as "...a plan by a government to promote growth of key strategic industries or sectors in a country" (Johnson, 2011). It is very clear that industrial policies are created to develop and establish industries within a country. The government undertakes and promotes such industrial policies by using many beneficial industry mediums and policy implementations such as tax exemptions, lessening of tax amount, industry-favoring plans, and trade protections. Some other scenarios such as government-initiated mergers and protection against the acquisition of foreign company takeovers are also practiced. The United States does not have one, even though the government knows the great benefits of competitiveness in the world economy. I personally agree that a National Industry Policy is beneficial for the United States.

According to Johnson, the United States does not have a national economic and industrial policy; because politics are dominated by conservative ideology that believes in letting the markets decide instead of the people decide through the government. Furthermore, he states that "...American workers are losing out from not having policies to promote development of specific industries, such as wind and solar energy. It is time to pick a winner: develop an economic/industrial policy that restores the competiveness of our manufacturing sector" (Johnson, 2011). As a result of not having National Industrial Policy, the United States has suffered a decline in its manufacturing base in exchange for dependence on wealth creation through financial assets.

Since the start of the global financial crisis, the United States economy has been facing one of the main challenges in the history of the country, unemployment. A National Industrial policy would benefit the United States tremendously. It would generate jobs for millions of people, helping the country decrease its unemployment rate from its current 9.2 percent (The United States Bureau of Labor Statistics), and it would increase its competiveness in the world market place. Yet, in order to compete with world, it needs to go back and restore its manufacturing industry. The manager for the world's biggest bond fund at Pacific Investment Management Co., Bill Gross, states "What we have been able to apply in the last 20 years is financial based employment structure where the magic of finance and asset appreciation generated jobs. That model no longer applies. We need to go back to the manufacturing roots of this country as opposed to the financial roots" (Walker and Keene, 2011).

China has become a superpower and mostly because of its implementation of a national industry policy. According to Bartholomew and Wortzel (2009), China's industrial policy is characterized by three main goals: The creation of an export-led and investment-led manufacturing sector; 2. The creation of jobs sufficient to reliably employ the Chinese workforce; and 3. An emphasis on fostering the growth of industries such as manufacturing and high technology products that add maximum value to the Chinese economy. China adopts, modifies and abandons other economic policies in order to meet these primary goals.

Furthermore, it is stated that "China's industrial policies have had a profound effect in the U.S. economy. The trade deficit with China in goods reached $266 billion in 2008, resulting in slower U.S. economic growth and fewer jobs here than if the trade relationship were more balanced between imports and exports. Witnesses differed as to the degree that the overall U.S. trade deficit would decline if the trading relationship between the two countries were brought into balance. But it is significant that the U.S. deficit with China represented 33 percent of the total U.S. trade deficit with the world and 42.6 percent of the deficit with non-oil-exporting countries.2 In addition, it is not just the size of the deficit that policymakers should examine, but the changing nature of its composition. The United States in 2008 ran a record $72.7 billion trade deficit