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c..

U.S. Technological, Economic, and SocialDevelopment for the21st Century

267

clout. Interestgroupsare a major factor in determining,for instance, wherethe United Statesplacesits military bases,builds highways,digs

w a t e r w a y s . T h e c o u n t r y i s u n w i l l i n g t o a c c e p t m o r e p o l i t i c i z a t i o n , l e s s r e l i a n c e o n the marketplace.

Semi-TargetedReindustrialization

At the center of the continuum, between laissez-faire, supply-side economics on the right and industrial policy on the left, is the conception that what ails the country is overconsumption (public and private) and underinvestment, resulting in a weakening productive capacity. Signs of deferred maintenance and lack of adaptation to the new environment of expensive energy can be seenin most ele- ments that make up the infrastructure and capital goods sectors.

The suggestedcure is semi-targeted: Releaseresources to the private sector, but channel them to the infrastructure and capital good sectors, away from both public and private consumption. For example, if we cut governmentrevenuesby $50 billion through across-the-board cuts in personal income tax, the funds re- leasedmight well beused mainly to spurprivate demand for consumergoods and services; little rejuvenation of productive capacity might occur. On the other

hand, if those resources are guided to the productive sectorsof the economy-

not

to

specific

industries-.reindustrialization

is

much

more

likely

to

follow.

Thus, if part by

tax revenues are "lost,"

not just through tax cuts for individuals but in

allowing

companies to take accelerated depreciation when they replace

obsolete

equipment

or

replace

oil-based

or

energy-inefficient

equipment

with

equipment

that

is

energy-efficient

or

that

uses alternative

energy

sources, the

re-

leasedresources will revitalize, benefit: steel or textiles, rubber

without or rails.

determining which specific industry will The polity will setthe context; the mar-

ket will target.

Similarly, providing tax incentives for greaterR&D expenditures spurs on all suchefforts; it does not require any government trade desk or tripartite commit- tee to decide which R&D project is desirable. And if workers are provided with productivity-based incentives, so they can share directly in renewed economic growth, Washington need not be involved in determining which group of work- ers is eligible or to what extent; this is best done by managementand workers

within each corporation.

Critics suggestthat such reindustrialization will return the country to the nine-

teenth century post-industrial

and focus on "basic"

or "smokestack"

high-technology

industries.

The

prefix

turn,

but

it

should

not

be

taken

literally.

A

return

to

industries rather than on "re-" does point to a re- strong infrastructure and

capital

goods

sectorsdoes not require

a return to

the same mix

of

specific

indus-

tries. The return implied is to sectors, not to anachronistic

higher investment and innovation details.

in the productive

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