PhillyDeals: A bold call to bring American manufacturing back

Andrew Liveris, boss at Dow Chemical Co., is an immigrant engineer with a broad agenda: He wants the U.S. government to make American manufacturing strong again.

Bring back factories? Aren't we a knowledge-based, financially driven, high-level service economy now?

"Denial," Liveris calls that view in his new book, Make It in America, which his handlers pressed on me during a recent Liveris visit to Dow's Advanced Materials division headquarters in Philadelphia.

Liveris slams the "apostles" of postindustrial America - ex-Clinton Labor Secretary Robert Reich, glib writers such as Tom Friedman at the New York Times and Gregg Easterbrook at the New Republic, policy lobbyists at the libertarian Cato Institute and the liberal Center for American Progress - and anyone else who ever called factory shutdowns and offshore outsourcing natural steps on the road to an idea-based capitalist paradise.

"What they are selling is just plain wrong," Liveris writes. "Where manufacturing goes, the ideas follow. . . . If we do nothing, we will be left with nothing."

What's he want? Corporate welfare for the manufacturing sector? "It's a false choice to say that you can either be pro-business or pro-government. They must work in concert."

In Liveris' vision, factories add more jobs than banks, or home builders, or fast-food chains; they breed suppliers, vendors, more factories. They've been leaving America, not so much for cheaper labor, but for Germany, China, and other countries that have learned the value of manufacturing, standardized math, science, and writing education, and offered progressively lower taxes and bigger subsidies to attract companies that make useful things.

Kindles and solar panels were developed here; they should be made here, not just in East Asia, he says. To get them back, "we actually need more government, not less."

Dow still employs more than half its workers in the United States, though most of its sales are overseas. Liveris, an Australian native, says he wants to keep it that way. But he says he won't be able to if manufacturing, now just 12 percent of the U.S. economy, keeps getting paid to move away.

"America has, for decades, neglected the things that matter most to its economic health," destroying millions of jobs and the middle-income lifestyle, he says.

For a lot of people whose families used to live in Philadelphia rowhouse neighborhoods ruined when the factories moved out, that sounds like common sense.

But it also sounds costly. Here's what Liveris wants the United States to do:

Copy Germany and China by boosting tax breaks for solar and wind energy and imposing clean-energy requirements that would create demand for products like Dow's solar shingles.

Start a "National Economic Growth Bank" to subsidize growth industries chosen by a "bipartisan" board of "economists, scientists, engineers," and corporate managers. Plus a "National Infrastructure Bank" that would back highway, port, and broadband projects of national significance. (The implication: U.S. banks, cable firms, turnpike authorities, and other regulated industries charge too much and give poor service.)

Streamline federal regulations and use them to replace the confusion of local business incentives and tax, pollution, and school standards.

Liveris is looking for friends, not enemies, so he doesn't say what we should tax to pay for this. He doesn't call for cuts in the three programs that dominate federal spending: wars in Iraq, Afghanistan, and now Libya; massive federal payments for medical care; and Social Security, which is still self-funding but needs to be adjusted as more people retire.

Here are two suggestions that could pay for Liveris' program: Tax financial transactions, to discourage our economy's swollen emphasis on trading and exploiting consumer and government debt, and tax consumption, through European-style value-added taxes.

Both would be tough to pass: The debt and consumer-dependent industries are powerful, and they'd rather most taxes continue to be paid by profitable companies, rich people, and workers.