Many regular Americans and policymakers say they want the US to manufacture more things domestically. But when they ask economists how to accomplish this, I find that our most common response is to question their premise- to say the US already manufactures plenty, or that there is nothing special about manufacturing. It’s easy for people to round off this answer to ‘your question is dumb and you are dumb’, then go ask someone else who will give them a real answer, even if that real answer is wrong.

Economists tell our students in intro classes that we focus on positive economics, not normative- that we won’t tell you what your goals should be, just how best to accomplish them. But then we seem to forget all that when it comes to manufacturing. Normally we would take even unreasonable questions seriously; but I think wondering how to increase manufacturing output is reasonable given the national defense externalities.

So if you had to increase the value of total US manufacturing output- if you were going to be paid based on a fraction of real US manufacturing output 10 years from now- how would you do it?

I haven’t made a deep study of this, but here are my thoughts. Better ideas at the top, ‘costly but would increase manufacturing output’ ideas at the bottom:

Continue reading →