A change we can believe in

by Benjamin G. Maynigo, Esq.*
“In this finite world, there are no such things as problems; there are only challenges or opportunities”.
The economic problems that we currently face reminded me of the above quotation which I heard growing up and growing old from my late parents.
The challenges presented by the automotive, financial services, real estate and other U.S. industries have inspired me to also revisit a study I conducted when I was pursuing a Master of Laws degree majoring in International Trade Law. The study occurred in the 1980’s but I see its relevance in today’s conditions. Hence, this presents a rare opportunity.

The bailout of the financial services industry (Wall Street, Banking, Insurance, etc.) and the proposed assistance to the automotive and real estate industries are necessary government interventions. They are required to save these industries from total collapse.
The situation also presents an opportunity to develop a new industrial policy. This policy would target certain industries that generate more employment, reduce if not totally eliminate the trade deficit, and more importantly, increase the international as well as domestic competitiveness.
The United States is a staunched advocate of free trade, and industrial policies are inconsistent with it. The issue, however, is not whether there is free trade but whether there is fair trade.
Studies show that all highly developed countries including the United States, Japan, Germany, and the Newly Industrialized Countries (NICs) became industrialized because they all practiced what is called “Industrial Targeting”. This means that they all took coordinated government actions to direct productive resources to help domestic producers in selected industries become more competitive.
Japan targeted its auto, mining, transportation, petroleum & coal products, non-ferrous metals, iron and steel, and electrical machinery industries. Korea did it also to its automobile, computer, semi-conductor, telecommunications, heavy electrical equipment, pharmaceutical, shipbuilding, steel, textiles and apparel industries. Taiwan fully supported its auto, informatics, computers, electronics, semi-conductors, telecommunications, machine tools, robotics, petrochemicals, shipbuilding, steel, textiles and apparel industries. Germany, through its industrial policy, dominated the world in medium and low intensity Research and Development manufacturing.
The two emerging giants – China and India, are actively pursuing their own respective industrial policies. The Chinese government provides education, export subsidies, and preferential loans to high technology, electronic products, integrated circuits, iron and steel, science and entertainment industries.
The U.S. has been a virtual partner of the military industrial complex. It provides some assistance to exporters, small businesses, small and minority-owned firms and some other interest groups. It provides billions of military and economic aid to several countries despite its budget, trade and current account deficits. Ironically, it has to borrow money to give to others.
Critics of the bailout and stimulus packages claim that the US is mortgaging the future, but it could also be investing for the benefit of the future – especially if the funds are utilized to support a sound, coordinated and effective Re-Industrialization Policy. Despite the dominance of free traders in the current and next administrations, government support to the financial services industry is undeniable.
Targeting it, assures a viable economic capitalist system worldwide under U.S. leadership. The industry should include making the dollar the strongest and most stable currency as one of its main goals.
The automobile industry as a target is a must. With financing, technology assistance in product development, and active cooperation by the workers, the industry should end up with marketable and energy-efficient cars. Energy and environment-related industries are obvious targets. Energy independence and control of the environment are visions benefiting the future.
Food Processing, Medical Equipment, Metal Fabrication, Plastics, and Information Technology are growth industries targeted by the private sector that would grow faster with government support. All of them are employment generating, export oriented, and technology-driven.
Obama’s plan to build a $44 billion broadband network allowing the rural areas equal access to information and education is an investment for the future. Technology can multiply the value of an asset exponentially. It should and would propel the economy through a re-industrialization policy. Such a policy is a change we need.
(Maynigo is Chairman and CEO of First Convergent Communications Worldwide, Inc. He has Master of Laws (LL.M.), Master in Business Administration (MBA) and Master of Arts in Human Resource Development (M.A. HRD) degrees.)

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