I realized that I was a little unfair to former vice president Mike Pence’s plan yesterday. I have no principled objections to the way he talks about bringing manufacturing and supply chains back home. He isn’t talking about more regulations and protectionism but about reforms that I think will be good. Here is what he says:
Bring Supply Chains Back Home to America
Global backlogs have driven up prices since the pandemic. We need to reduce the supply chain costs associated with shipping products from overseas by boosting manufacturing here in the United States. The Pence Administration will create the conditions to bring production back to this country by removing regulatory burdens, enacting pro-growth tax policies, and ensuring access to abundant American energy. We will fight inflation by making America the best place to do business again.
What I have a problem with is the notion that we should aspire to bring manufacturing home. I think that is a problem for a bunch of reasons. First, while these good policy improvements could result in much more U.S. manufacturing overall, it doesn’t mean that the entire manufacturing process will be housed here. And that, in my opinion, is a good thing, especially from a resilience perspective. Avoiding single points of failure, which is the aspiration of producing most things here, means it is riskier than most think. Many understand the concept of single point of failure when it comes to China.
Second, the belief that we should bring manufacturing home is often driven by the belief that we aren’t producing anything here anymore. Contrary to popular belief, we manufacture a lot in the United States. Our manufacturing is high value added, not snapping or stitching things together in their final stage of production. That’s also a good thing. It is a reflection of our being an advanced nation. I would prefer that politicians on the campaign trail remind voters of this good news rather than worry them.
Finally, while it is possible that better taxes and regulations will increase manufacturing, they could also reduce it. We Americans overwhelmingly have a comparative advantage at producing services. Better taxes and regulations could result in more of that. That’s yet another good thing.
All that said, Pence is right that we should pursue tax and regulatory reforms because they are good in and of themselves. They will bring about more abundance in the U.S., and not just in the energy sector. Supply abundance will bring about more growth, which not only produces more wealth but also reduces tribalism and intolerance and such.
I am sorry to have reacted too fast to the proposal, and especially to the words “Bring Supply Chains Back Home to America.” However, I am glad that it forced me to think about this issue and to clarify my position. That again is a great benefit of the Pence plan. In a world where vibes are driving politics, it is refreshing to be able to talk about policy. It can be messy, but it is a worthwhile process.