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Why America can 'make stuff' again – just not the old stuff

Obama and GOP candidates like Romney and Santorum compete in Rust Belt states like Michigan by promising a return to the heyday of manufacturing. They must instead focus on America's unique receptivity to new ideas for business.

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    Astro Manufacturing & Design operator Aloysius Rosipko checks finished parts. The company in Eastlake, Ohio, cannot find enough skilled workers, despite pay as high as $30 an hour.
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A certain nostalgia has crept into the American presidential campaign. Let’s hope it is not the kind that turns the clock back.

Both President Obama and his GOP rivals have begun to compete in key Rust Belt states like Michigan and Ohio by promising a return to the days when manufacturing drove the economy.

As Mr. Obama put it, the aim is to “create opportunities for hardworking Americans to start making stuff again.” On the GOP side, Rick Santorum, Mitt Romney, and Newt Gringrich have rolled out proposals to revive the kind of factory jobs that were once a ticket to the middle class.

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Their ideas are certainly worthy of a debate on the level of taxes, regulations, and incentives that would allow business to produce more things. Obama, for example, wants to lower the corporate tax rate for manufacturers even more than he does for other businesses.

Even pinning down a definition of manufacturing would be helpful. Otherwise lobbyists for industries from hair salons to app developers might try to fit into this category of industry in order to receive government largess.

But there’s a danger in looking back to the days when factories produced more than 25 percent of US wealth (far more than the current 11.7 percent). This rear-view-mirror approach crowds out a discussion on how Americans should be more receptive and ready for ideas on job creation – whether in manufacturing, service industries, or even agriculture.

As Christina Romer, a former Obama economic adviser, told NPR, “We have to be careful not to hold onto this idea that [if] it was good in the past, it must be what’s going to be good in the future.”

Take laid-off factory workers, for example. Rather than wait for their old jobs to come back, they could act on news that 5 percent of factory jobs – 600,000 jobs – remain unfilled. Employers cannot find enough workers with required skills for new types of “advanced manufacturing” – the kind not found in low-wage, low-innovation China.

Many factory owners have also set up new ways to find and retrain workers, such as the Manufacturing Skills Certification System, or by working closely with local trade schools and community colleges. These manufacturers want to raise the rate of productivity (or the efficiency of inputs such as labor and energy).

Start-ups account for much of recent growth in manufacturing jobs over the past few months. They are the ones that find new ideas and put them into action. Many ideas come from professors of science and technology, although they often need help to commercialize their discoveries.

America remains unique in its openness to an abundance of business ideas. Nearly 6 of 10 people say it is more important for people to be free to pursue their life’s goals without interference from the state, according to a November poll by the Pew Research Center. By comparison, fewer than 4 of 10 people in Britain, Germany, France, and Spain believe the same.

Americans also see themselves as more responsible than most Europeans in acting as individuals who determine their own future. A large majority disagree with the notion that “success in life is pretty much determined by forces outside our control,” the same survey found.

This receptivity to new ways of doing things is based on an abiding faith in an endless source of ideas. The creation of the Internet, for example, which was not foreseen during manufacturing’s heyday, has produced more than twice as many jobs as it has destroyed, according to a survey of small and medium-sized enterprises by McKinsey & Company.

Rather than pine for a disappearing industrial past, the presidential candidates should have more confidence in the ability of Americans to be open-minded about sources of ideas that can create the jobs of tomorrow.

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