BusinessWeek’s latest cover story by Andy Grove (Intel co-founder and former CEO), “How America Can Create Jobs,” makes a strong case against traditional free market economics and in favor of targeted industrial policy to secure American jobs, adding to the growing consensus in favor of a public investment approach to economic growth.
Several of Grove’s arguments align with those in our latest report, “The Power to Compete,” which outlines a comprehensive federal strategy to secure U.S. leadership in the global clean energy industry, including a manufacturing development agenda. This contrasts to commentators like Thomas Friedman, who consistently argue that modest market incentives like a carbon price are enough to secure U.S. competitiveness.
According to Grove, high-tech domestic job creation depends on supportive public policy mechanisms, including targeted public investment, to achieve scaling and economic cluster formation. It’s not enough to simply create a friendly environment for start-ups. Unfortunately, the U.S. has lost large numbers of jobs in the computer and clean-tech industries because it has failed to implement a broader industrial development strategy, including investment in manufacturing capacity. Grove points to the state economic development policies of Asian countries as a potential model, which we examined as related to the clean energy industry in “Rising Tigers, Sleeping Giant“:
Our fundamental economic beliefs, which we have elevated from a conviction based on observation to an unquestioned truism, is that the free market is the best of all economic systems—the freer the better. Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.
