ntil quite recently, the issue of supply chains has been absent from America’s policy agenda. Our supply chains have been guided nonetheless by government action for the past twenty years—not ours, but Asia’s and especially China’s. America has an industrial policy, namely off-shoring. State support for capital-intensive manufacturing, the hallmark of the Asian model since Japan’s 1868 Meiji Restoration, shifted industrial output from the United States to Asia. Together with this shift, American manufacturing employment fell to about 11.4 million from almost 20 million in 1980.
The so-called neoliberal consensus in the economics profession rationalized the hollowing-out of America’s industrial base. A liberal economist believes in free trade; a neoliberal talks about free trade while seeking rents from subsidies provided by foreign governments.
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