EDITOR'S PAGE
A pro-industry strategy Edward G. Jefferson is chairman of Du Pont. He recently spoke before the Commercial Club of Boston. The following are verbatim excerpts from his prepared text. We should remember that while government, business, and labor have different perspectives, they do share important goals. No one would argue today that what's good for a given company is necessarily good for the country. But everyone should understand that what's good for the worldwide competitiveness of U.S. industry is both good and necessary for the country and the welfare of its citizens. Keeping in mind this goal, let me suggest specific elements of a pro-industrial national strategy. First, we must put our macroeconomic house in order. Heavy emphasis on monetary policy as a cure for inflation helped deepen the recent recession, contributing to a waste of human resources and productive capacity at home and financial distress abroad. Fiscal and monetary policies must be better harmonized if we are to enhance U.S. industrial competitiveness worldwide. A most pressing problem is the prospect of record trade deficits, caused in large measure by a dollar overvalued against the currencies of many of our major trading partners. For our part, we can address the dollar's overvaluation by reducing the high inflation-adjusted interest rates still prevalent in the U.S. Those interest rates will not fall sufficiently until massive federal budget deficits projected for 1985 and beyond are reduced substantially. My second point concerns trade. We continue to use 19th-century terminology to describe late 20th-century issues. The U.S. does not face a choice between "protectionism" and "free trade." The issues are far more complex—and the choices more subtle—than can be explained by such terms. We must insist that our trading partners live up to not just the letter of trade agreements, but to the spirit of open markets, if we are to avoid mercantilistic, beggar-thy-neighbor policies. A third key element of a pro-industrial strategy is a general strengthening of the nation's basic research establishment and accelerated application of new knowledge in industry. For a decade the level of R&D in the U.S. has been constrained because the overall rate of return from basic research and major development investments has often been below the cost of capital. Incentives from government can and should be used to raise the rate of return and increase industrial research and technology development in the U.S. Finally, a pro-industrial strategy should have an institutional focus—a permanent, bipartisan advisory council comprised of leaders from labor, government, industry, and the universities. The council would report periodically to the President and Congress. And it would be an advisory, not a policy-making, body. It should recommend means of improving the quality of information on industrial performance. For example, we currently rely too heavily on the Standard Industrial Classification Manual for our information about industrial performance. An advisory council should take a fresh look at the statistical base, modernizing it to reflect new realities. It should also monitor the international competitiveness of our industries and provide a forum for developing consensus on goals. Finally, I should emphasize that the points I have made do not comprise a comprehensive pro-industrial strategy for the U.S. Other facets of public and private policy should be continually re-examined in the light of current international competitive challenges. As I said earlier, an effective pro-industrial strategy is really a process in which industrial and government policies are developed not just to respond to changing world market conditions, but rather to anticipate them. D
Views expressed on this page are those of the author only and not necessarily those of ACS
February 6, 1984 C&EN
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