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All posts by Rob Atkinson

Robot with Computer Chip

Robots Are Good for Us: Really, They Are!

The Smart Manufacturing Coalition recently conducted a survey of Americans to get their views of whether modernizing factories with advanced technology and automation was a good or bad thing for the economy.

Amazingly, nearly two-thirds of respondents said it either made no difference or actually hurt the economy. Half of those making $35K to $50K actually said it has hurt the economy.

Wow, have these people not taken economics? Do they want to go back to farms with mules and factories with hand files? Have they not read the newspapers about how our manufacturing sector has been decimated by overseas competition?

Well wait, they probably have not read those newspaper articles, not because most people no longer see that they have a civic responsibility to read the news, but because by and large, the media doesn’t write these stories. Rather, they almost always write that when it comes to explaining the decimation of U.S. manufacturing jobs, the cause is automation. In fact, as ITIF and others have shown, the loss of U.S. global competitiveness has accounted for over half of manufacturing job loss over the last decade.

I suppose

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What’s the Right Path for Manufacturing?

Originally posted on IndustryWeek.

Recently, I wrote about how the 2000s were a lost decade for U.S. manufacturing. Ensuring that the 2010s are not more of the same will require a robust national manufacturing policy to help producers in America become much more productive and innovative. Unfortunately, to date, Washington has not embraced such a policy.

The key question is why?

One reason is that there are three major camps in manufacturing policy and only one puts a national innovation agenda at the top of the list.

Camp 1: Manufacturing Doesn’t Matter, So No Need for a Manufacturing Policy

These advocates have a clear policy message regarding U.S. manufacturing. Don’t do anything specifically to help manufacturing. The reason? Manufacturing doesn’t matter. The members of this camp are numerous. Kenneth Green, a resident scholar at the conservative American Enterprise Institute (AEI), writes: “As long as China is selling us the products we need, the location of manufacturing isn’t really that critical for the economy.” Meanwhile, Columbia University’s Jagdish Bhagwati dismisses anyone who says manufacturing is important as suffering from a “manufacturing fetish,” while economic columnist Robert J. Samuelson writes that

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Budget jar

President Obama’s Budget Promotes Innovation but More Work Needs to be Done

Innovation is one of America’s most prized assets. If our country is going to successfully compete on the global stage over the course of the next several decades, we must develop the new technologies, businesses and industries that will allow us to keep pace. President Obama’s just-released budget for 2014 contains several key components that further this goal.

ITIF applauds the President’s $1 billion request to create a series of manufacturing innovation institutes that will help propel advanced manufacturing and rejuvenate a sector of our economy that has been hit especially hard over the past decade. The National Network for Manufacturing Innovation will create 15 advanced manufacturing centers across the country that will spur research, development and deployment of next generation technologies, products and processes. As ITIF has shown, improving manufacturing innovation is central to enhancing American competitiveness and furthering economic development and business creation.

On energy innovation, the President’s budget request continues to push for greater public investment in the development of new clean energy technologies. The budget proposes boosting clean energy research to nearly $5 billion, a 15 percent increase compared to the FY2013 Continuing Resolution (CR)

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Phone Phreaks, STEM Freaks, and STEM Education

I have just finished a fascinating book about the history of phone hacking from the 1950s to the 1980s, Exploding the Phone by Phil Lapsley. The phone system was one of the first communications networks in America, and as such, just like today, it attracted its share of amateur hobbiests who wanted to understand how it worked, including finding out how to make free long distance calls, conferences calls and the like. While Apple founder Steve Wosniack may have been the first to create a “blue box” using digital instead of analogue technology (a blue box is the term for an electronic box made to mimic sounds on the phone system in order to trick the phone network into doing what the user wanted) he was hardly the first young person to “hack” the phone system. It turns out that a whole network of folks—what became known as Phone Phreaks emerged, and many became loosely tied into a network that compared notes on best practices. Some were high school students bored with school and fascinated with telephony, others college students also bored with classes. Several of the most prominent were

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Letting the Fox in the Hen House: Why the U.S. Should Restrict Chinese Control of the IMF

Amidst the furor over the Sequester there is another critical policy issue being debated and it concerns the U.S. government’s role in the International Monetary Fund (IMF). The Obama administration is seeking Congressional authority to change the voting process at the IMF, and in particular, to give China a much larger role. But the last thing the U.S. government should be doing is strengthening the ability of China to shape IMF policy, especially given its unrepentant, mercantilist practices.

Established after WWII, the IMF was charged with overseeing the international monetary system and encouraging member countries to eliminate exchange restrictions that hindered trade. As a result, under IMF rules, each member country has agreed not to engage in “protracted, large-scale intervention in one direction in the exchange market.”

These are nice words but in practice they have been rendered largely meaningless. The IMF has proven unwilling to take action to curtail currency manipulation or similar egregious actions China and other nations have engaged in to distort global trade, hurt the U.S. economy and advance their domestic economic interests.

Case in point, the IMF’s Executive Board concluded its 2010 Article IV consultations

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North American X-15A-2

Ask Not What Innovation Can do for You; Ask What You Can do for Innovation

Nobel prize-winning economist Robert Solow is purported to have once said that “innovation is manna from heaven.” It may be in terms of its wonderful effects on our lives, but innovation doesn’t just fall from the sky. Innovation comes from one place: hard work and sacrifice.

Why do we care about innovation? Does anyone really want to pass on today’s medicines, computers, cars,  and planes to their kids? Hey kids, you get the same world we have, we didn’t improve it through innovation. Of course not. Despite the amazing innovations of the day, and the great benefits they provide us, any rational person wants what Samuel Gompers, the first head of the AFL, said he wanted: more (more wages for workers) and “when it becomes more, we shall still want more. That’s what most people want when it comes to innovation. But there’s a catch.

If we want more (then), have to have less (now). In other words, since innovation comes from hard work (e.g., investment) it means that we have to consume less today to get more innovations tomorrow. Someone has to spend the time doing the hard work

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Why the 2000s Were a Lost Decade for American Manufacturing

Originally posted on IndustryWeek.

In my inaugural article I tried to make the case for why Washington should care about manufacturing (Reason: it’s the key traded sector for the U.S. economy.)

But once one accepts the importance of manufacturing, the next question is how is the manufacturing sector doing? Is U.S. manufacturing healthy and not in need of a national manufacturing policy or is it in trouble and in need of smarter policies?

One key indicator to answer this question is change in the number of manufacturing jobs.

America lost 5.7 million, or 33%, of its manufacturing jobs in the 2000s. This is a rate of loss unprecedented in U.S. history—worse than in the 1980s, when BusinessWeekwarned of deindustrialization and worse than the rate of manufacturing job loss experienced during the Great Depression.

While U.S. manufacturing has clawed back, regaining about half a million of those lost manufacturing jobs since 2010, there’s little doubt that the 2000s constituted the worst decade for manufacturing employment in the Republic’s history.

Moreover, the recovery of manufacturing jobs is actually worse than in most prior recoveries.

In response to these statistics,

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Policy by “Sunday Drivers”

I understand that experts are not the only ones who have the right to comment on complex policy issues. And that experts are sometimes wrong and often ideological in their views. But at least with experts, they have spent time studying the evidence before offering their advice to policymakers. Alas, the same cannot be said of some Sunday newspaper columnists. Case in point, pieces by op-ed writers in the Post and the Times.

The first comes from Tom Friedman who makes the claim in “No to Keystone. Yes to Crazy” that “Nothing would do more to clean our air, drive clean-tech innovation, weaken petro-dictators and reduce the deficit than a carbon tax.” Really? As ITIF has shown, many European nations have a defacto carbon tax in excess of $400 a ton (ala their massive gas taxes) – a carbon tax 20 times higher than anything that is remotely politically possible in the United States and they have even fewer electric cars than we do. Carbon taxes don’t drive the kind of breakthrough zero carbon innovations the world so desperately needs; they lead businesses to tweak existing

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President Obama at budget meeting Roosevelt Room

Another Reason Presidents Shouldn’t Appoint Neoclassical Economists to the CEA

Not content with publicly contradicting the President that hired her once, Christina Romer is at it again, criticizing the President’s minimum wage proposal. Romer first criticized the President for having the audacity to say that manufacturing was more important than say, retail trade. For Romer, the former head of the President’s Council for Economic Advisers (CEA) under Obama, this was apostasy. Didn’t Obama know that all industries are equal and picking manufacturing for support was industrial policy? And with this latest critique, Romer is joining on the neoclassical pile attacking the President’s proposal to raise the minimum wage; which if you are a card carrying neoclassical economist is mandatory, or else they don’t let you attend the next AEA meeting.

Of course, as I pointed out, neoclassical economists like Romer analyze the minimum wage through the lens of their narrow and misleading doctrine, leading them to believe it distorts markets and leads to fewer jobs. But from an innovation economics perspective, a modest increase in the minimum wage will boost productivity and will not lead to net job losses. Romer would instead have government expand the earned

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Frame Breaking in 1812

Revenge of the Luddites

Originally posted on Ideas Lab.

With the iPhone 5 in stores and a new iPad Mini on the way, we seem to be in an era when innovation blossoms on a daily basis. Yet despite these much-ballyhooed examples, America could be achieving far more innovation if not for a growing anti-innovation “neo-Luddite” movement. Named after Englishman Ned Ludd, whose followers destroyed textile machines at the beginning of the Industrial Revolution, today’s neo-Luddites view innovation not as a force for progress to be encouraged, but as something to be stopped, regardless of the benefits innovation brings.

A generation ago, neo-Luddites were firmly ensconced in Europe, providing Americans with amusement and occasional frustration. Only in Europe could a government (the Swiss) restrict research into bioengineered plants because plants have “feelings” which deserve respect. Where else but in France would protesters uproot genetically modified grapevines at the National Institute for Agronomic Research while others “boss-napped” managers who had the temerity to announce layoffs when sales plunged.

If Europe embraces the “precautionary principle,” when it comes to innovation, America historically has embraced the “anticipatory principle.” Indeed, it’s hard to image Walter Ehret’s stirring 1950’s

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