The House is likely to vote soon on the Revitalize American Manufacturing and Innovation Act, which creates programs and a plan intended to increase manufacturing competitiveness. While Congress’s objective may be laudable, the legislation is counterproductive and creates more government dependence than innovation and competition. Congress should recognize that the true spark to manufacturing innovation will be through free-market reforms—not government programs.
We’re seeing a manufacturing resurgence in the United States—but not because of a government program of taxpayer-funded initiatives. Entrepreneurs and energy producers sparked a natural gas revolution that has dramatically lowered input costs for manufacturers. The boom in shale gas will save manufacturers tens of billions of dollars annually; in fact, a number of chemical, metal, and industrial companies have said in their Securities and Exchange Commission filings that shale gas drove demand for their products and also was a key component for locating their facilities in the United States. The National Mining Association is releasing a new report, U.S. Mines to Market, that discusses how mineral extraction and development is literally fueling the domestic manufacturing industry.
The bill (H.R. 2996) would create a government network for a manufacturing innovation program to facilitate the development of advanced manufacturing technologies and capabilities, increase the advanced manufacturing workforce, facilitate peer exchange, and address manufacturing challenges. All of these are activities that the private sector can and already do perform. Manufacturers will innovate, share best practices, and leverage ways to lower costs and gain a competitive advantage. Companies make these investments all the time if they believe that the technology is promising, worth the risk, and the best use of their investment dollars. They will build the workforce they deem necessary to meet the demand for their products. Furthermore, companies with similar interests can join together in these efforts by forming 501(c)6 trade associations. In fact, one such organization, the National Association of Manufacturers’ Manufacturing Institute, already purports to do many of the activities laid out in H.R. 2996.
To think that a government program would be more effective or is even necessary is simply wrong. In fact, these programs do more harm than good by creating dependence on the government to spend money on activities in which the private sector would invest if they felt near-term or long-term value existed for such investments. Further, the reliance on government programs creates technological stagnation rather than innovation by removing the incentive to innovate without the program. Thus, taxpayer dollars get “stuck” in these wasteful programs. Even if there are successful aspects within the government’s innovation program, it means that spending had merit and government funds are offsetting private-sector investment that would have occurred without the program in place.
Another section of H.R. 2996 would create and update a
strategic plan to provide guidance for Federal programs and activities in support of United States advanced manufacturing competitiveness. This section adds describing the progress made in achieving the objectives from prior strategic plans and analyzing factors that impact innovation and competitiveness for United States advanced manufacturing to the criteria for the strategic plan.
No government planning is necessary for manufacturing to thrive in the United States. Government action can increase domestic manufacturing, but the action to take is adopting free-market reforms for our economy.
Implementing free-market reforms to our tax, labor, regulatory, environmental, energy, and legal policies would dramatically increase competitiveness for all sectors of the economy. Several such reforms have already passed in the House. American manufacturers and industrial companies will flourish on their own with a good tax policy and laws that allow immediate expensing of machinery equipment that would encourage investment in both labor and capital.
Increased energy development and access to America’s resources would lower manufacturers’ input costs. Prohibiting the regulation of greenhouse gas emissions and other economically painful regulations that carry little to no environmental benefit will prevent skyrocketing energy costs for energy-intensive industries. Furthermore, enacting the Regulations from the Executive in Need of Scrutiny Act would require all major regulations (those with an economic impact of $100 million or more) to be approved by Congress before they could be implemented.
Supporters of H.R. 2996 argue that President Obama is already creating similar “manufacturing networks” on its own and that they are only trying to bring the President’s actions within the purview of Congress. The correct response to the President’s unilateral actions, however, is to stop them, either by defunding them or explicitly prohibiting them. Second, supporters of H.R. 2996 argue that its additional funding is fully offset from other wasteful programs within the government. Again, the correct action here would be to eliminate the other wasteful programs and put those savings towards deficit reduction—not to redirect them towards other misguided programs.
There are plenty of options for Congress to encourage economic development and promote American manufacturing. Creating more government programs shouldn’t be one of them.
