Recipe for Industrial Policy: Blending Environmentalism and International Competitiveness

Abstract

The answer to the question of whether the United States has an industrial policy is "Yes". It is formed by default by the sum total of the political decisions that affect the economy. Environmentalism, I will argue, is a very substantial determinant of that industrial policy. The issue before the house is not really whether we should have an industrial policy, but to what degree concerns about international competitiveness ought to play a role and be harmonized with our domestic policy goals and concerns. That is another way of saying that I see environmentalism' and international competitiveness as two fundamentally different ways of looking at the world, which are, in a sense, in competition, perhaps in collision. Both will shape the goals for our industrial policy in the next few years. The tension or collision between these two bodies of thought was first reflected by voices of opposition to the North American Free Trade Agreement ("NAFTA") coming in part from the environmental community in the United States. That was one of the first signs of what is really a deeper and more fundamental conflict.