Opinion | The Pandemic Proves the Need for Industrial Policy | #corporatesecurity | #businesssecurity | #

Hundreds of companies across the United States are reinventing themselves to make equipment that is desperately needed to treat the coronavirus. That so many American manufacturers are rising to meet this pandemic with little coordination from the federal government reveals a deep altruism in our national character.

It also reveals something else: Our country is unable to meet an immediate need for critical medical supplies and personal protective equipment in the face of a crisis. The absence of adequate domestic production capacity for things like face shields and respirators, coupled with the frailty of on-demand global supply chains and our utter reliance on them — for everything from the ingredients in our medications to parts of breathing machines — has left us dangerously exposed during an international health emergency.

Mohawk Fine Papers and its United Steelworkers employees are shifting to medical gown and mask production. American Giant and other garment manufacturers are scaling up the production of medical-grade masks. Companies from Budweiser to Ford are churning out hand sanitizer and ventilators. These instances of private sector action are inspiring, but they won’t be enough.

Our policymaking is still behind the curve. President Trump is starting to selectively use the Defense Production Act, a law from the Korean War era that allows the president not only to order businesses to prioritize the manufacture of items deemed crucial to national security but also to subsidize them. This is something he should have done many weeks ago, and even still he’s mostly invoking it haphazardly with companies that draw his ire.

White House officials have floated for a few months an executive order meant to encourage domestic production of pharmaceuticals. But the hint of such an order generated a lobbying blitz from drug makers, including one spokesperson who told CNBC that “in times of crisis, a diverse supply chain is more important than ever.”

This is a blasé way of saying they’d rather protect their yawning profit margins than contribute to the country’s medicinal security. But many of our national political leaders aren’t ready to talk about this, either. The president has promoted himself as a champion of American manufacturing, but now he avoids addressing its shortcomings.

The Democratic challenger, Joe Biden, only recently began speaking about these supply issues, and mainly in response to Mr. Trump’s scattered use of the Defense Production Act. Congress had a huge opportunity to encourage the domestic manufacture of critical supplies and avoided it; it attached no strings to force manufacturing repatriation to the $500 billion it made available to big businesses about to be damaged by the economy’s collapse.

The bipartisan tendency of our politicians to salute workers and visit factories during campaign season, and then do little of substance to help factories expand and increase hiring, must end. This pandemic has most Americans rightfully concerned about their personal well-being — everything from their health, their job security and their ability to pay the rent or a mortgage is on the line.

But Americans are also now concerned with our national well-being. And one of the questions they are asking is this: How did it come to pass that we can’t make enough respirator masks or ventilators when we need them most?

The answer isn’t a blunt call for autarky. No serious person wants the economy to revert to closed borders and walls around our nation. But while globalizing supply chains may make sense in textbooks, the outsourcing we’ve encouraged by decades of this trade policy and corporate profit-seeking clearly has its limitations. And manufacturing critical supplies domestically will require significant policy shifts.

Whenever Congress and the administration decide on next steps for our national well-being, they must move beyond bromides for the working class and put into place a sensible industrial policy, one that combines the power of American ingenuity with the capabilities of public investment.

Such a policy should incentivize re-industrialization via the tax code. It should encourage it with its traditional power of the purse — which means expanding Buy America provisions that prioritize domestic manufacturers in federal contracting bids to virtually all spending.

Companies that dip into the huge fund Congress almost unanimously made available to the Treasury Department in the recent $2 trillion stimulus package should be expected, when applicable, to bring more of their manufacturing operations back into the country and to devote far more resources to skills training to prepare for their work force needs.

Trade enforcement should be more stringent. While critics are right to question the specifics behind some of President Trump’s tariffs, these tariffs shouldn’t be removed until we see quantifiable and reciprocal change on the part of China and other international competitors, many of which banned exports of medical supplies at a critical time.

And lastly, a national effort should be made to identify and then prioritize the industries where a lack of a domestic manufacturing ecosystem leaves the country extremely vulnerable. We’ve known about an overdependence on imports in supply chains for pharmaceuticals and medical equipment for years, though it was easier to ignore when our nation wasn’t in crisis.

The Defense Production Act is being invoked to call out and force individual companies to make these supplies. That may be a successful short-term bludgeon, but expanding the act’s use to organize a national manufacturing strategy to meet this moment would be much better than the current piecemeal approach to producing the millions of items health care workers need to handle a surge of sick Americans.

The next national emergency could be an attack on our power grid or water supply or a natural disaster that brings global supply chains to a screeching halt. Do we have the battery production capacity to turn the lights back on immediately? Can we produce turbines to keep our dams operating? In a crisis, could we make a smartphone in the United States to ensure Americans can continue to communicate?

The United States is going to have to weather the coronavirus crisis with a manufacturing sector that isn’t constructed to meet it. We must address that shortcoming before the next crisis arrives, and we should start now. It’s time for a 21st century Arsenal of Democracy: One that will both see us through future crises and revitalize an economy that desperately needs rejuvenation.

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