- The Washington Times - Friday, February 11, 2011

MAKE IT IN AMERICA: THE CASE FOR RE-INVENTING THE ECONOMY
By Andrew N. Liveris
Wiley, $24.95, 208 pages

“The business of America,” Calvin Coolidge is often quoted as saying, “is business.” Almost 30 years later, Charles Erwin Wilson famously observed, “What’s good for General Motors is good for America.” Mr. Wilson could be forgiven for thinking that, as he was chief executive of GM at the time.

Business may remain the chief business of the American people, but the U.S. economy has changed greatly since the early to mid-20th century. For one thing, taxpayers effectively own General Motors, giving the country a real stake in what’s good for GM. The manufacturing sector no longer dominates. Manufacturing employment has been particularly hard hit in the current downturn, falling by about one-third over the past decade. During this time period, manufacturers experienced a net reduction of 5.6 million jobs.

The decline of American manufacturing is what concerns Dow Chemical Co. Chief Executive Officer Andrew N. Liveris in his new book, “Make It in America.” (It’s rather immodestly subtitled “The case for re-inventing the economy”). Its thesis is that the country has a dire need to rejuvenate manufacturing.

It is a serious subject, about which Mr. Liveris often writes seriously. The end of the Cold War gave U.S. employers access to the massive supplies of Chinese and Indian labor. To reduce labor costs and escape unfavorable business climates, manufacturers moved operations overseas. The Internet has enabled the offshoring of professional services jobs in information technology and software development.

Mr. Liveris laments, “We have allowed our manufacturing base to deteriorate, and we haven’t done nearly enough to revive it.” At the outset, he calls for “making our tax code more competitive, and our regulations more streamlined, so that doing business in the United States can be both cheaper and more efficient.”

But if you assume “Make It in America” is a free-market treatise, think again. The author isn’t kidding about his desire to reinvent the economy and, in some cases, the wheel. “Passivity is not a growth strategy,” he writes. “For too long, too many smart people have insisted that pursuing free market principles would help economies (at least the healthy ones) find the right balance.”

Action in the form of government intervention is what is required. “A look around the world reveals that the countries that are succeeding economically are not passive believers in free market fate,” Mr. Liveris argues. He cites China and Brazil as examples of countries “working to fulfill the promise of globalization and minimize its perils.”

Between 1995 and 2002, Japan - a country whose government is no passive believer in free-market fate - lost 16 percent of its manufacturing jobs. China lost 15 percent, and Brazil experienced a 20 percent drop. The United States didn’t lose manufacturing jobs at this clip until after the financial bubble burst. So is the rest of the world’s impassivity really helping?

Productivity gains have a lot to do with the hemorrhaging of factory jobs, an explanation Mr. Liveris mostly rejects when advanced by that noted economist Robert Reich, the Clinton labor secretary and co-founder of the liberal American Prospect magazine. The author argues that between 1989 and 2000, manufacturing employment mostly held steady despite a 3.8 percent increase in productivity each year. Between 2000 and 2007, productivity rose 3.7 percent a year, but 3.5 million jobs disappeared.

Mr. Liveris here raises an interesting argument and calls for new thinking. Yet when it comes to putting this new thinking into action, he mostly recites a tired and familiar agenda. An industrial policy; infrastructure “investments”; an environmental policy reminiscent of “cap-and-trade”; increased immigrant competition with American workers through an expansion of H-1B visas; better math and science education so Americans will, in theory, be ready to do the jobs that will actually be filled by people brought in through programs like the H-1B visa.

A cynic might note that this sounds an awful lot like the policy wish list for Mr. Liveris‘ business and that of that CEOs who wrote blurbs on his book’s back dust jacket. Mr. Liveris anticipates this charge, though he doesn’t really refute it. He has “no doubt that there will be cynics and skeptics who, upon reading this, will say that I am calling for nothing more than corporate welfare.” He concludes, “I don’t suppose there’s anything I can say to win over the skeptics.”

Well, he could have started by making an argument that sounded less like “What’s good for Dow is good for America.”

W. James Antle III is associate editor of the American Spectator.