Writing for The Atlantic, Rob Atkinson argues the economic recovery theories of many economists and policymakers miss the essential point: the loss of U.S. innovation, competitiveness leadership and the origins of the devastating decline in the U.S. manufacturing sector in the last decade. Between 2000 and the peak of employment in January 2008, the number of jobs grew just 5.4 percent, while manufacturing jobs declined by a whopping 32 percent.
Despite these alarming trends, too many policy elites have urged us not to fret, arguing the United States is still strong in "innovation." But manufacturing and innovation are linked. Much of manufacturing (think semiconductors, drugs, medical devices, aerospace, and instruments) is high tech. Moreover, losing high-tech industry (the U.S. has run a trade deficit in high technology since 2000) leads to the loss of the upstream R&D and design jobs as well.