06 February 2012

Romer on Manufacturing Policy

Writing in the NYT, Christina Romer (professor at UC-Berkeley and former chair of President Obama’s Council of Economic Advisers) finds the justification for a "manufacturing policy" to be wanting:
As an economic historian, I appreciate what manufacturing has contributed to the United States. It was the engine of growth that allowed us to win two world wars and provided millions of families with a ticket to the middle class. But public policy needs to go beyond sentiment and history. It should be based on hard evidence of market failures, and reliable data on the proposals’ impact on jobs and income inequality. So far, a persuasive case for a manufacturing policy remains to be made, while that for many other economic policies is well established.
Where is she wrong?