Behind the Curve: Can Manufacturing Still Provide Inclusive Growth?

"The biggest driving force behind politicians misleading the public about trade is the desire to restore a lost heyday of highly paid manufacturing jobs for men without college degrees. This book provides a comprehensive, global, and factually grounded rebuttal to this hope. Full disclosure: Its author, Robert Lawrence, is my colleague at Harvard and the Peterson Institute for International Economics, but I am recommending this because it is the most reliable and comprehensive book on a very important topic. Lawrence shows that the decline of manufacturing employment in countries around the world (yes, it is also declining in China) was not primarily the result of free trade or other policy choices but instead mostly due to technological advances that require fewer people in production and changing consumer tastes. As people get richer, they buy more services. Moreover, policies that attempt to help protect manufacturing are at best ineffectual and at worst can set back inclusive growth by raising costs for consumers or hurting other workers. He argues for alternative policies to help workers cope with the continued changing economy. Lawrence does not sugarcoat the economic situation facing workers in the United States and around the world. He chronicles the fall and then rise of inequality and the people and places that have fallen behind. He also recognizes that the decline of manufacturing played a role in these problems. But he is passionate—or I should really say analytical—about why industrial policy is such a limited and often counterproductive way to solve these problems given that the vast majority of workers facing challenges are not in manufacturing and new manufacturing will employ fewer and fewer workers. Instead, Lawrence pushes for more support for people rather than industries, focusing on assistance for transitions, apprenticeship programs and wage insurance for older workers who cannot get a better paid job."