Debate: Should the Federal Government Assume a Larger Role in Managing the Economy?

Two academics discuss the issue of whether the government should create policies for the industrial industry.

The resolve states: To promote prosperity among all income groups, the US government should adopt an industrial policy.

Arguing “YES” is Oren Cass, an author, the former chief policy adviser to Mitt Romney, and founder and executive director of the American Compass.

Arguing “NO” is Scott Lincicome, a senior fellow at the Cato Institute.

Cass started by saying that an important part of having a manufacturing industry is for military defense. This revolves around national security and resiliency.

Due to the complexity of creating something like fighter jets, materials such as steel and semi-conductors are needed. This is why there needs to be a strong industrial base regardless of whether America is in war or in peace.

He also notes that there is a decline in productivity, engineering ability, and innovation.

“That’s something that harms us all both as workers and consumers,” he said.

Productive people stem from the industrial sector, and this allows for the service industry to serve more people. However, without rising productivity, it can be very hard to get that out of an overly-service sector.

There are a few areas that the government can put policy in place. One area is that various companies will join together and fund research. Then, the government will match the money that they put in. Anytime innovation comes out of the research, the whole industry will share it.

Lincicome has argued that the industrial sector is doing very well. He noted that it is the 2nd in the world. It is currently outperforming countries such as China, Japan, and South Korea.

More people are buying goods than services, and this has led to the industrial sector to enter an economic boom.

He believes that the results of industrial policies do not work. From a historical perspective, the US has attempted to use industrial policies in the past and they have not worked.

In the 1980s, the government put policies in place to boost output for semi-conductors. Those policies failed.

He gave two reasons why this failed to work. The first reason is that the planners picked the wrong products to subsidized. The second reason revolved around political problems.  Large industrial companies lobbied around those policies.

In the concluding section, Cass argues this is not about creating a perfect world. This is about recognizing areas that need to be looked at.

Lincicome reiterated his point that there is no need for industrial policy, especially since they cannot solve the complex cultural and economic issues that plague America.

“We should be skeptical of the industrial policies we can feasibly implement,” he said.