A case for developing a US industrial policy
Shaping up as a prime 1984 election issue is ''industrial policy'' - a hot debate over to what extent, if at all, the government should meddle in the workings of the vast United States economy.
Democratic aspirants for the presidency, backed by the AFL-CIO and many lawmakers, want to create a government apparatus analagous to Japan's famed Ministry of International Trade and Industry (MITI). The Reagan administration wants no such thing.
On Sept. 30 the Monitor published a forceful argument against an industrial policy in an interview with Charles L. Schultze. Today's interview with another distinguished economist, Nobel Prize-winner Lawrence R. Klein, explores a different point of view.
Even with full economic recovery, says Professor Klein, the US economy will suffer from structural problems that the private sector by itself cannot handle.
Some form of industrial policy, says Dr. Klein, will be needed - government programs tailored to help specific sectors of the economy, including unemployed workers in declining industries and young people unable to get a foothold in the job market. Government intervention in the economy, he says, should aim at restoring America's competitive edge in world markets.
Klein is Benjamin Franklin Professor of Economics and Finance at the University of Pennsylvania and the Wharton School. He also chairs the scientific board of Wharton Econometric Forecasting Associates.
Excerpts from the interview follow:
Q What is meant by an industrial policy?
It means getting economic policy beyond the macro level into the sectoral level and making policy for sectors - not only for industries, but for age groups, dealing with youth unemployment; or for productivity groups, the retraining of displaced workers. It means having a series of economic policies that impact on specific sectors of the economy.
Q What are the basic premises that underlie proposals for a US industrial policy?
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