A Response to Bhagwati

Yesterday, we posted a short article from the Financial Times by Jagdish Bhagwati that argued against emphasizing the role of manufacturing in the recovery. Today we post a response to that article by Ken Jarboe at The Intangible Economy.

Jarboe writes that

boosting manufacturing also means boosting services, both direct manufacturing-related services and indirect services. I am also surprised that an economist who has made his name in trade theory is mouthing the notion that the US economy can thrive with only non-tradeable services.

The economy is a complex mix of manufacturing and services — almost to the point that the terms are becoming meaningless. As “services” and “manufacturing” continue to fuse, we need a policy that transforms manufacturing and increases productivity in services. After years of neglect, attention is finally being paid to the manufacturing side of the equation. Bhagwati’s gratuitous attack on that attention is distracting and wrongheaded.

– The Editors