An Industrial Policy for Good Jobs

Industrial policies have been with us for a long time, but often they have been carried out surreptitiously and without clear motivation. The recent revival of discussions around industrial policy provides a welcome opportunity for self-consciously crafting an improved set of policies. A modern approach to industrial policy must respond to new circumstances. It must target “good-jobs externalities,” in addition to the traditional learning, technological, and national security considerations. Relatedly, industrial policy’s traditional focus on manufacturing and globally competitive industries has to be broadened to service sectors and smaller and medium-sized firms. And the practice of industrial policy will need to rely less on traditional top-down policy instruments—such as subsidies and tax incentives for firms—and more on collaborative, iterative interaction whereby public agencies supply a portfolio of customized public services in exchange for firms undertaking soft commitments on the quantity and quality of employment. With these objectives in mind, this paper develops two types of specific initiatives: one at the local level and the other at the federal level. The local approach builds on existing development and business assistance programs that take the form of collaborative partnerships between local development agencies, firms, and other stakeholders aiming to revitalize local communities and create good jobs. The federal initiative is an Advanced Research Projects Agency (ARPA) focused on the promotion of employment-friendly technologies: ARPA-W(orkers).