It is popular to say, “Government should get out of the way.” Political candidates of a certain stripe say this. Business leaders say it, particularly manufacturing business leaders. I say it. What do we all mean?
Government cannot help but have an impact, whether on manufacturing or on any other significant aspect of our interconnected society. The gorilla that stops menacing my corner of the cage will still make its presence felt by sending people fleeing from a different corner. What’s more, some of how government “gets in the way” is widely seen as good—such as stopping crime and improving roads. Therefore, the question ought to be: In what specific ways should government reduce or redirect its current energies? Concerning manufacturing, what would a policy of reduced government impact look like?
Here are four specific ways that I think government could profitably serve manufacturing not by stepping forward, but by stepping back from exertions it makes today:
1. Relax immigration restrictions for people educated in manufacturing. Other countries educate engineering-related professionals at rates that dramatically outpace the United States. Over time, our public schools should be equipped to better prepare students for opportunities in these fields. In the meantime, let’s invite these qualified people from other countries to come meet the skilled manufacturing needs that employers are currently unable to fill. Many of these people will become some of our most devoted citizens.
2. Reimburse employers for part of their training efforts. This step might seem like a subsidy rather than stepping back, except that government funds training today in ways that arguably work against manufacturing. Workers obtain training in skills that do not match employer needs. Instead, the resources should be directed toward supporting employers’ training efforts for their own specific and available jobs. After all, getting more people into high-value work is a societal good, and training imposes a risk for the employer given that the employee can take his or her training and leave. Therefore, within reasonable bounds of accountability, allow employers to directly benefit from the public funds we allocate to training.
3. Simplify taxes. The practice of assisting certain industries or activities with tax incentives has worked cumulatively to produce a tax code that seems arbitrary and unreliable. The burden of this impedes long-term capital investment in particular. Credits, deductions and other intricacies should be pruned from the tax code, and the means of reinstating them should be made difficult. Damaging as high taxes are, uncertain taxes—or unfair ones—are worse.
4. Mandate approval windows. What amount of time is reasonable for a manufacturer seeking to build or modify a plant to get an answer to that request? Whatever the duration, we should enshrine it in law. Here is a mechanism: If the window is, say, 90 days, then a request still unanswered after that time would leave the regulators and be presented to the state or local legislature for vote. Because neither group would want that outcome, the existence of this device would encourage regulators to expedite responses and encourage legislators to scale back regulatory hurdles.