Government constantly has to guard against policies that not only don't solve problems but actually make them worse. As the White House and Congress become increasingly obsessed with "industrial policy" and "reindustralization," this is worth remembering.
The subject that virtually no one has discussed in relation to these concepts is mobility. By that, we mean geographic (not social) mobility: the willingness of people to move and the factors that prompt them to do so. This is a dull topic, but it underlies both the attractions and the dangers of industrial policy.
Americans have always considered themselves a nation of movers, but the evidence is that we are becoming less so, especially when the moving is job-related. Hence, any policy that offers the prospect of stability is appealing; it promises to spare people and localities the uncertainty and possible hardship of involuntary uprooting.
The danger is that the promise will prove false: that government will find it impossible to provide ultimate security against changes unleashed by emerging technologies, shifting social habits and new patterns of world trade. If government policies simply delay changes that are bound to occur anyway, then the resulting disruption and dislocation may be more wrenching than necessary.
The reason lies in the nation's age profile. As the massive "baby boom" generation matures, the nation is slowly getting older. It's a lot easier for today's 25- and 30-year-olds to change jobs and homes than it will be in 5 or 10 years.
If all this seems too abstract, consider a real-life example. The Electric Boat Division of the General Dynamics Corps., which builds submarines in Groton, Conn., constantly needs skilled workers, mainly welders and shipfitters. A couple of years ago, the company sent a recruiting team to Youngstown, Ohio, after one of the local steel mills shut down. Electric Boat figured that many of the steelworkers would meet its job qualifications, but virtually no one accepted the company's employment offers.
Larry Dennis, Electric Boat's recruiter, thinks the workers weren't inclined to move because they were receiving substantial benefits under the trade adjustment assistance program and because they thought their plant might be reopened. A local group, financed in part by the federal government, was attempting to do just that. Two years later, the plant remains closed. Reopening cost are huge (estimated at $335 million), and it's questionable whether more steelmaking capacity is needed.
The possibility exists that "industry policy" will create comparable problems on a massive scale, especially if the policy aims at assisting specific industries or regions.
But this approach, if substantively dubious, derives a powerful political appeal from two factors: first, the widespread fear of economic stagnation and decline that grips much of the Northwest and industrial Midwest (which, perhaps just coincidentally, happen to be the regions where President Carter must do well to win reelection); and second, an emerging collective urge for more economic security. These seem to translate into a demand that government not only assure employment but also assure it at existing locations. g
The evidence of this demand lies partially in our public rhetoric. Over the past few years, "community" has become a favorite word of bureaucrats, special pleaders and speechwriters, in place of simpler terms such as "city" and "town." "Community" is intended to convey spiritural value, deemed worthy of preservation.
The proportion of people who move annually has declined slowly but steadily from the 1950s, when it was about 20 percent, to its current 18 percent. Interestingly, this decline has occurred when rising educational levels and younger worker ages (the baby boom again) normally ought to have meant more moving. Less than one-fifth of moves are between states, and of these only about half are related to jobs. The rest reflect such factors as retirement, school enrollment, the weather, marriage and divorce.
Companies are finding their top- and middle-level executives more reluctant to move. A recent survey by the Employee Relocation Council found that 44 percent of its corporate members experienced "significant" or "moderate" resistance to transfers. Economic reasons may be more important than family reasons. Many managers fear that moving from low-cost to high-cost areas, or exchanging an 8 percent for a 12 percent mortage, offset the benefits of higher salaries and more responsibility. The resistance persists despite huge company payments, now averaging $16,000 to move a family, that are designed to neutralize these costs.
A trade adjustment assistance program to provide funds to help workers search for new work and defray moving expenses has gone virtually unused. Of the 500,000 workers receiving trade adjustment assistance between 1974 and 1979, only 2,700 took jobs search expenses and only 1,700 actually relocated.
None of this means that Americans suddenly have struck their feet in cement. We are still more mobile than virtually any other people. But it does signify a shift in emphasis. Americans want the freedom to move but don't want to be forced. They want the option to enjoy familiar surroundings and old friends.
How can anyone argue with that, except to say that all freedoms are not always compatible? One of the forces that has favored economic growth in the South and West -- and the relative decline of the Northeast and Midwest -- is the freedom to seek warmth and sun.
The slow migration to the South and West typifies the sort of economic change that the government is almost powerless to halt. The danger of "industrial policy" and reindustrialization" is that they will result in misguided programs that try to prevent the unpreventable and, in so doing, bloat the bureaucracy and create unrealistic public expectations. It's worth recalling that in the 1960s government was going to "save the cities." A lot of dollars -- and disappointment -- followed.