Three Democratic governors urged Congress yesterday to formulate a national industrial policy they said is needed to correct the country's basic economic problems and end the rampant unemployment in their states.
"Unless we develop a sound national strategy, many of our unemployed workers will become permanently unemployed; key industries in many states will not survive the growing international economic challenge, and our national security, which is dependent on these industries, will be jeopardized," Michigan Gov. James J. Blanchard said.
He joined Govs. Bill Clinton of Arkansas and Richard Celeste of Ohio in pressing the case for a national industrial policy--the latest buzzword of congressional Democrats seeking a campaign issue against the Reagan administration--before the House Banking Committee's economic stabilization subcommittee.
Although the governors endorsed the broad concept of industrial policy, they gave few specifics as to its contents. Although the concept has gained great support among Democrats, there is little agreement on what it means.
The Reagan administration attacked the concept last week when White House aide Edwin L. Harper told a U.S. Chamber of Commerce luncheon that industrial policy was not appropriate for the United States, where the free market is the determining factor in the economy.
In testimony yesterday before the Senate science subcommittee, however, Commerce Undersecretary Lionel H. Olmer acknowledged that government policies "have a major influence on innovation, including the direction and rate of technical development."
Among the policies he listed as influencing the shape of the American economy are Reagan administration expenditures of $6.6 billion for basic research and development, government procurement policies, more protective patent policies, tax incentives, education initiatives, and antitrust policies that allow joint ventures in R&D.
To the governors, this uncoordinated mix of tax, trade, regulatory, credit, antitrust, labor and environmental policies come together to form a crazy quilt industrial strategy that fails to meet the vast structural changes in the American economy. Blanchard said that even the recovery will not end high unemployment as many of the workers laid off by the auto and steel industries are unlikely ever to be rehired.
"All told, 700,000 willing workers in Ohio--4.5 million in the eight Great Lakes states--are carrying the weight of unemployment in large part because private and public industrial policies have left this country trailing the rest of the world," Celeste said.
"The issue is not whether this nation should have an industrial policy, because we have had one all along. But the policy we have had has been doing us more harm than good," added Celeste, who was director of the Peace Corps under Carter.
The governors opposed an industrial policy that included central planning, but they said it should include strong cooperation between business, labor and government.
Blanchard warned that there is a limited amount that states can do on their own. "To suggest that each state have its own industrial policy to deal with the challenges we face as a nation is like suggesting that each state have its own foreign policy."