INDUSTRIAL POLICY FOR THE UNITED STATES
Investment banker Fasteau and economist Fletcher, both members of the Coalition for a Prosperous America, present a wide-ranging critique of the economic orthodoxy that holds unfettered free trade as alwaysa blessing. In reality, they argue, America’s pro-free trade policies have led to the offshoring of crucial industries, including the production of military equipment and medical supplies that are critical to national well-being, and the replacement of stable, well-paying manufacturing jobs with low-wage service and retail jobs. They call for a comprehensive, protectionist industrial policy that would nurture “advantageous industries” that underlie an innovative, high-tech, high-wage economy, and for a monetary policy that would end the overvaluation of the dollar that produces trade deficits by making American products artificially more expensive than those of foreign competitors. The authors flesh out these ideas in intricate case studies of industrial policies around the world; they discuss China’s ruthlessly effective program of boosting exports through unfair trade practices as well as the evolution of various American industries, like the decades-long saga of the Big Three automakers’ loss of market share. They conclude with detailed policy proposals, which include leaving the World Trade Organization, raising tariffs on imports, and providing manufacturing companies with a raft of government loans and tax breaks. Fasteau and Fletcher synthesize a wealth of data and economic history into an incisive analysis of the workings and pitfalls of free trade. They convey all of this in lucid, accessible prose that manages to turn complex technical arguments into pithy, down-to-earth aphorisms. (“Growth is about turning Burkina Faso into South Korea, not about being the most efficient possible Burkina Faso forever,” they write in a tour-de-force debunking of the theory of comparative advantage.) The result is a lucid diagnosis of America’s economic decline and an ambitious, hopeful program for reversing it.
