The need to shore up America's productive capacity is widely recognized these days. Some refer to it as revitalization; some as renewal; I coined the term reindustrialization.But whatever the name, the thesis is that economic problems run deeper than high inflation, unemployment, and interest rates; that after decades of public andm private overconsumption and underinvestment the economic foundation -- the infrastructure and the capital goods sector -- has been neglected and needs the nation's attention and investment.
Most of the seven elements which one can discern as having been invested in the first industrialization of American need strengthening though they differ in the measure of trouble which afflicts them.
Briefly reviewed, transportation systems are particularly emphasized, with the railroads and the bridges vastly undermaintained, and the highways beginning to deteriorate. Communication links are in comparatively excellent shape. The cheap abundant energy which propelled the first industrialization is gone, probably forever. Programs to enhance conservation and develop new energy sources are beginning to come together but have a long way to go. R & D (research and development), the source of most innovation, is slackening. Human capital, a fancy label for the labor force, is not as motivated and well formed as it used to be. Financial/legal institutions have been caught in a regulatory jam. Capital goods, the plants and equipment, show signs of wear in several key industries, such as steel, textiles, rubber, and autos.
In summary, the picture is that of an "underdeveloping" nation; one which slips back a bit each year. While the American economy is far from "devastated, " at least a decade of strenuous efforts would be required to restore it to a level that could again promote, without undue stress for the nation's security needs, the standard of living, culture, education, and health most Americans got accustomed to and would rather not give up, and also pay for at least some basic social services.
How will the reindustrialization of America differ from teh first round? Obviously there will be technical differences. Instead of a Pony Express being replaced by Western Union, computers will call each other via satellites. And instead of oil replacing coal, coal will replace oil. Across the board, expensive energy will force major efforts to make American industry more energy-efficient, e.g., by replacing most autos and jets by a new generation.
Second, while the United States is much stronger, economically and militarily , than it was in, say, the 1820s, when the first round was initiated, in the age of long-range missiles and nuclear arms the need to maintain and update the forces on which deterrence rests is an inevitably huge cost, at least until much more substantial arms control agreements are readied and implemented.
Most important, reindustrialization will have to be carried out in a much more socially sensitive and responsive manner than the first round. No Haymarkets, children in the mines, or robber barons. Ethically, few Americans are inclined to pay that high a human cost for national economic growth. Practically, now that the various social groups, from labor to minorities, from women to children advocates, have found their voice and leaned to demand and gain a place in the polity, no industrialization actively opposed by them is likely to advance far or well.
Hence the call for a national accord on US priorities for the next decade must cut both ways: The various interest groups and social interests will have to moderate their demands; without some slowing down of "give me" there will be nothing left for rebuilding America's productive capacity. At the same time, the business community will have to stop trying to return the social clock to the early 19th century and continue to accept a wide sharing of the renewed wealth.