Sand in the Gears

How Public Policy Has Crippled American Manufacturing

American manufacturing has been on the decline for at least two generations. That fact is plain to any observer who travels through the Rust Belt of the Midwest, where the closing of steel plants and automobile factories has created ghost towns that dot the landscape. It is also clear from the dormant New England textile mills, whose owners surrendered their production first to cheaper mills in the Southeast before they, in turn, lost out to Asian labor. What caused this calamity, and what can be done about it?

Andrew O. Smith argues that we lost our manufacturing not simply to forces beyond our control, such as globalization and cheaper labor overseas, but as the result of misguided policies that are well within our abilities to reform for the benefit of manufacturing. Examining six areas of public policy—the tax system, health care, the legal system, workers' compensation, government regulations, and labor policy—Smith demonstrates that in each of these areas, current policy choices have created a hostile environment for manufacturing. Grounding his arguments not in polemic or ideology but in historical analysis and current research, Smith illustrates his points with real-world examples to show how a New Social Compact can fix the problems that manufacturers face, without sacrificing public policy goals.