The documentary "American Factory" is on fire.
But high wages and "laziness" are only part of the story, or even a small part. The decline of the US manufacturing industry lies in the decoupling of manufacturing and the country's strong innovation system.
Luan Qun, director of the Policy and Regulation Research Institute of the CCID Research Institute of the Ministry of Industry and Information Technology, and Zhang Xuejun, an associate researcher at the Industrial Policy Research Institute, believe that to truly understand the logic of the decline of the US manufacturing industry, you can read the book "Advanced Manufacturing: The New Innovation Policy of the United States". The book goes deep into the national policy orientation, business environment, infrastructure, and the subjective initiative of entrepreneurs, exploring the code for upgrading the manufacturing industry.
Advanced Manufacturing: America's New Innovation Policy, by William Bonvellian, peter singer, translated by Shen Kaiyan, Shanghai Academy of Social Sciences Press
Bias is also an observational perspective
In the book, the two authors very clearly express the attitude of Americans to the rise of China, especially the rapid development of China's manufacturing industry, which, although biased, provides us with a special perspective.
In the 1980s and 1990s, the United States was freed from the competitive challenges of Japan and Germany in manufacturing because the United States changed the theme of competition and triggered the information technology revolution. However, the United States in the first decade of the 21st century innovation has decreased significantly, and it has found that the proportion of manufacturing net output in global output in 2011 was surpassed by China, so the political and industrial circles as a whole fell into anxiety and put this account on China's head for no reason.
The book argues that China is based on innovation and a series of trade policies to achieve economic growth. The United States has always been highly concerned about trade issues, and almost all public discussions on manufacturing will involve trade. Some Americans also narrowly and radically believe that China is trying to build an Asian economic circle, paying for its partners at the cost of a trade deficit, which in turn is compensated for by the US trade surplus. The book even cites economist Carl Dahlman as arguing that China "deliberately hollowed out the competing economies of developed countries to finance other geopolitical rises." He even used the rising unemployment rate and falling wages in the areas occupied by Chinese-made products as an argument to try to convince American readers that China's accession to the WTO in 2001 has been affecting labor-intensive industries in the United States, causing a large number of jobs to move to China. It also stressed that although trade can also increase employment, trade jobs have not offset the jobs detracted from China's import competition. This view is very popular in the United States and has influenced the top of the political world.
The book also builds on Ricardo's theory of comparative advantage in trade and Samuelson's view, arguing that the previous innovation power advantage of the United States is not eternal, and when other countries (China) establish their own innovation systems, they can also gain an innovation advantage. Intentionally or unintentionally, the book reveals the real intention of the United States to accurately attack China's advanced manufacturing enterprises, that is, some Americans are very worried about China's establishment of its own innovation system. The book describes Japan as an "ally" and China as a "potential rival to national security."
Both decline and rise are linked to innovation systems
In addition to listing China-related data, this book also goes deep into economic theories and perspectives, and deeply analyzes the reasons behind the rapid growth of China's manufacturing value added.
The author mentions cost reasons such as cheap labor and cheap parts, as well as the exploitation by China of the operating mechanisms of multinational companies and the dividends brought by the information technology revolution, as well as the fallacies that smear the achievements of China's manufacturing industry, such as forced technology transfer, government subsidies, limited rule of law and intellectual property protection, but emphasize that these are not enough to explain the rise of China's manufacturing industry, and the real reason is that China has established a new link between process innovation and manufacturing. "China's innovative manufacturing model is good at scaling up quickly and reducing costs. The model integrates an unprecedented skill of managing speed, yield, and cost simultaneously, enabling rapid scale-up of production and significant reductions in unit costs. This capability allows China to expand even in highly automated and non-governmental priority or supported industries", "Elements of China's emerging production model include: (1) reverse design; (2) the use of foreign design; (3) cross-regional development of production enterprise networks", and so on. These summaries of other perspectives inspire us.
The United States still maintains the most powerful innovation system in the world, and also has a strong manufacturing demand, and the problem is mainly the correlation between the innovation system and the manufacturing system. And China is rising at this time, and the reason for the rise is precisely the correlation between the innovation system and the manufacturing system, so the United States launched the state apparatus to curb the development of China's advanced manufacturing industry, which it believes is an inevitable choice.
A holistic summary of vertical and horizontal cross-sectional blocks
The author cites a large number of economic works and articles, using the principles and methods of economics to deeply analyze every manufacturing problem they consider important, from the fiscal, tax, and monetary policies dominated by classical economics to the impact of high-level automation (artificial intelligence) on job opportunities. In particular, the status and role of small and medium-sized enterprises and start-ups in the national innovation system and manufacturing system have been given sufficient attention.
This book uses the method of economic history to sort out the synchronous development relationship between economics and manufacturing, especially from the history of the industrial revolution to summarize ten empirical enlightenments:
One is the promotion of the industrial revolution and economic development, the need for the combination of "mind and hand", such as the reason why Watt can improve the steam engine, to a large extent, depends on his collection of scholars and craftsmen in one; the second is the combination of manufacturing and science, most of the industrial revolution is triggered by front-line workers, and by mathematics and science to improve; the third is to have expert behavior, Watt suddenly inspired six years before the study of the engine, inspiration is based on years of concentration and learning accumulation; fourth, the expansion of industrial scale needs to work together in all aspects. Inventions will not automatically enter the economic field, but will go through simulation, production, demonstration, testing, testing and trial production; fifth, the industry must be patient, the government should support for a long time; sixth, it is necessary to combine technology, processes and business models; seventh, the support of the defense sector is important for each stage of the innovation process, because the defense department is easier to obtain funds and other resources than the general department; the eighth is to have a cross-industry-university-government manufacturing innovation organizational model to strengthen their respective advantages The ninth is that the information technology revolution is evolved by various departments to study and solve a series of technological challenges; the tenth is that production and innovation are interrelated, and if the United States wants to introduce a new manufacturing technology paradigm, innovative organizational change will become a task that must be completed.
This kind of overall summary of the combination of cross-spanning and longitudinal cross-section is currently lacking in China's industrial research institutes.
New manufacturing requires a new economics
The book also reflects on traditional economic theories based on real economic phenomena, arguing that fiscal and monetary policies dominated by classical economics cannot solve the problem of insufficient long-term investment and economic growth momentum, that is, short-term stability policies are not effective in solving deep-seated structural problems (this perspective can be used to explain supply-side structural reforms).
The 35-year deficit in manufacturing trade cannot be explained by business cycles, money transfers, and trade barriers, nor can it be addressed by monetary and short-term fiscal policies. Increasing productivity is the response strategy, which requires sustained investment in intellectual, human, organizational, and technological infrastructure, and a public-private asset growth model that emphasizes technology investment at the operational level. This is not to say that the government's short-term stimulus is unnecessary, but that it alone is not enough. This is a very sharp research method that goes deep into economic phenomena.
The book also cites the work of economists such as David Ottel, who examined the impact of Chinese import competition on U.S. companies' R&D funding and patents, and concluded that the more they imported from China, the less U.S. R&D and patents there were. Although this research result is inaccurate, it also shows from a certain perspective that between "manufacturing, innovation and trade", the importance of innovation is becoming more and more prominent, and then it has become a decisive factor. The author even questions whether the economic consensus on manufacturing is wrong, proposing a new concept of "innovation economics.". Perhaps, quoting Krugman's self-criticism, economics "takes pretty and dressed like mathematics as the truth" to some extent, economics is not wrong, but the world has changed, manufacturing has changed, especially China's manufacturing industry has changed, the United States to develop the economy needs new economics, but also needs to re-evaluate its own assessment of China.
The understanding is the same, the problem is similar
How to use innovation to open a new chapter in American manufacturing is the purpose of this book. The authors criticize that Americans have been busy following the "next big event" while ignoring opportunities in existing economic sectors, and that advancing cutting-edge technology is certainly a good thing, but what is the point if innovation cannot be extended to existing sectors? If innovation is limited to cutting-edge industries, it actually weakens the speed and quality of "our" economic growth. The author understands that the existing economic sectors mentioned in the book often refer to manufacturing.
In order to better develop advanced manufacturing, the United States has set up many industry and field research institutes, which can be understood as the American version of the Fraunhofer Association. The Fraunhofer model establishes a strong governance structure that ensures a clear strategy that supports priorities at the national level, while recognizing the autonomy of institutes. However, there are obvious differences between the American institute model and the German Fraunhofer model, one of the significant points is that the American institute has a time limit for obtaining federal and state government funding and preferential policies, and the 2014 US "Reinvigorating American Manufacturing Act" clearly has only a 5-year period, while the German Fraunhofer Association does not stipulate a time limit. It feels like the U.S. Institute of Advanced Manufacturing Innovation project is the "five-year plan" of the U.S. technology industry. In addition, the book also emphasizes that the German innovation system is "manufacturing-led", and brings small and medium-sized enterprises into the innovation system, and supports exports more than the United States, which are all places for the United States to learn.
Compared with the situation in China, there are at least two points that need to be reflected: first, the policy exit mechanism means higher requirements for the efficiency of policy implementation; second, the evaluation and process management in policy implementation reflect the level of industry governance, which is an important part of the modernization of national governance.
In short, this book focuses on the relationship between manufacturing and innovation, and explores ways to reconstruct innovation and reactivate American manufacturing. In the understanding of the manufacturing industry, China and the United States can be said to be the same, is the same, whether it is China and the United States, the manufacturing industry is the main body of the national economy, is the foundation of the founding of the country, the instrument of national rejuvenation, the foundation of a strong country. In the context of globalization in the 21st century, China's manufacturing industry needs some foreign examples for reference or comparison in the process of transformation and upgrading, in order to find a path more suitable for the development of China's manufacturing industry. Most of the problems encountered in the development of China's manufacturing industry now also appear in the study of the development of the US manufacturing industry in this book, which is where the reading value of this book lies.
Luan Qun recommended book list
The Third Industrial Revolution: How the New Economic Model Is Changing the World, by Jeremy Rifkin, translated by Zhang Tiwei, CITIC Press
Handbook of Innovation Economics, edited by Brownwin H. Hall and Nathan Rosenberg, translated by Shanghai Institute of Science, Shanghai Jiao Tong University Press
Code Economy: From Ancient Recipes, Cities to Blockchain, Artificial Intelligence, by Philip Olswald, translated by Gao Ziping, Wang Fenglong, and Cao Xianzhong, Shanghai Academy of Social Sciences Press
Are Robots Human? By John Frank Weaver, translated by Liu Hai'an, Xu Tieying, and Xiang Qin, Shanghai People's Publishing House
The Philosophy of Technology: From the Egyptian Pyramids to Virtual Reality, by b.m. Rozin and translated by Zhang Yifang, Shanghai Science and Technology Education Press
Column Editor-in-Chief: Gu Xuewen Text Editor: Gu Xuewen