Attack on manufacturing policy

Today’s Financial Times has an amusing attack on manufacturing policy from Jagdish Bhagwati. Why I find it amusing is that Bhagwati falls into the same that he accuses other of: unwarranted presumptions. He perpetuates the simplistic myth that it is either manufacturing or services. In fact, as I’ve noted earlier, boosting manufacturing also means boosting services, both direct manufacturing-related services and indirect services. I am also surprised that an economist who has made his name in trade theory is mouthing the notion that the US economy can thrive with only non-tradeable services.
The economy is a complex mix of manufacturing and services — almost to the point that the terms are becoming meaningless. As “services” and “manufacturing” continue to fuse, we need a policy that transforms manufacturing and increases productivity in services. After years of neglect, attention is finally being paid to the manufacturing side of the equation. Bhagwati’s gratuitous attack on that attention is distracting and wrongheaded.
That such a defender of economic orthodoxy as Bhagwati feels it necessary to attack manufacturing policy is an interesting sign in and of itself. That means that manufacturing policy is finally being taken seriously. Good!

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