In the political environment, there has been this growing focus on becoming a manufacturing giant or revitalising manufacturing. What steps are ideal for a government to increase manufacturing capacity and output.
How should a government improve manufacturing ?
byu/Dry_Hovercraft7042 inAskEconomics
Posted by Dry_Hovercraft7042
1 Comment
Hi there – economist here.
Question should be – why do we want to bring manufacturing back? Since the mid 20th century, manufacturing has become a less prominent part of the economy but that doesn’t mean output has lessened, just employment thanks to advances made in technology.
[https://www.aei.org/carpe-diem/the-us-produces-40-more-factory-output-today-vs-20-years-ago-with-5m-fewer-workers-technology-job-theft/](https://www.aei.org/carpe-diem/the-us-produces-40-more-factory-output-today-vs-20-years-ago-with-5m-fewer-workers-technology-job-theft/)
If you want to ‘bring back’ manufacturing, gov’ts have carrots (legislative programs like the CHIPS Act or tax breaks) and sticks (like tariffs). In theory, either could work but the haphazard way the Trump tariffs have been implemented have so far created more confusion for manufacturing firms and deeper research also shows that tariffs have not led to a manufacturing resurgence (https://www.brookings.edu/articles/not-your-grandfathers-factory-why-tariffs-wont-help-midwest-manufacturing/)