Made in America, or: how soon they forget

Posted by judy on 12.08.08 3:00PM under fixing things

Does anyone remember “Made in America – Regaining the Productive Edge,” published in 1995 by Michael L. Dertouzos, Richard K. Lester, Robert M. Solow? My favorite part of the conclusion:

Understanding the root causes and agreeing in principal with a broad set of imperatives is a still a far cry from the relentless resolve that we feel will be necessary of the U.S. to revitalize its industrial performance. Regrettably, the kind of will and purpose that we believe will be required is not yet pervasive, even though much progress has been made. Perhaps it is too early, and a few more economic tragedies must take place before the process of awakening becomes widespread.

Are we there yet?

“Made in America” is the report of the commission appointed by MIT President Paul E. Gray in November 1986 “to identify what happened to US industrial performance and what we and others might do to help improve the situation.”

It’s an analysis of US industrial problems, with detailed recommendations on how to help the US regain our productive edge. And guess what! There’s an industry study on the auto industry. In the first paragraph in the study, they ask the question

How did the auto industry, a bulwark of the American economy, lose it’s strong competitive position?

In retrospect, it appears a crucial event was Detroit’s decision to concentrate on the “family-size” car, which allowed overseas competitors to capture other market segments. The most important other segment was that of compact cars, imports of which grew rapidly after the oil crisis in the early 1970s.

The bold is mine. Deja vu all over again.

In an article on the release of the report (1989), Prabhat Mehta writes

The culmination of a two-year, eight-industry study, Made in America examines the causes of the recent slowdown in US productivity growth and makes recommendations for improved economic performance. It cites six problems relating to productivity performance: outdated strategies, short time horizons, technological weakness in development and production, neglect of human resources, failures of cooperation, and government and industry at cross-purposes.

Recommendations for improvement include specific proposals for industry reform and larger macroeconomic imperatives. Focusing upon international markets and the importance of technology and education, the macroeconomic recommendations call for a focus on “the new fundamentals of manufacturing,” the cultivation of a new “economic citizenship,” a blend of cooperation and individualism, adaptation to an emerging world economy, and provision for the future through investment and education.

This is a great book, and tragically, still absolutely relevant. Besides the mea culpa issues for the auto industry that are parroted in the media and on Capital Hill, the authors cite major productivity weaknesses, including short-term research and development horizons, neglecting technological best practices and improvement, neglecting education and training (a topic Krugman has championed for coping with a global economy), and government and industry at cross-purposes in the use of tariff and trade laws. There’s plenty of blame for the auto industry, but plenty to go elsewhere too, like universal health care, which our competitor businesses don’t pay for; like an education system that addresses the reality of a changing workforce in the face of global free trade; and like a government that doesn’t leave critical, long-term R&D to to the profits-focused free market. Just to start…

Update: Read on MIT’s website, “With over 300,000 copies in print in eight languages, Made in America is the best-selling title in the history of MIT Press.”)

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