Page 61 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

further contribute to the depression of consumer spending—a
downward spiral that we described in Chapter 1.
A world in which fiscal and monetary stimulus is needed
over many years will have some important implications for
companies. For one thing, it will be increasingly important to be
close to the government in order to benefit from these pro-
grams—whether through lobbying for electrification as
General Electric did during the Great Depression or by antici-
pating where the government will be spending its money.

The Attempt to Reindustrialize

Over the past decade, millions of jobs were exported from the
United States and the European Union to rapidly developing
economies such as China and India. The backlash has begun,
with protectionist calls to repatriate these jobs. And in the United
States, President Barack Obama announced the withdrawal of
tax breaks for U.S. companies that exported jobs overseas.
More significant, several Western governments seem to be
deciding that it is insufficient to base their economic growth on the
service sector—and that they need to start a program of reindus-
trialization. The rise of the “service economy” was a feature of the
boom. But a one-trick-pony economy does not work. Recognizing
this, some countries are investing aggressively in new industries,
including renewable energy and other green technologies.
In the United States, the United Kingdom, and France (three
countries where there is much talk of reindustrialization), the
manufacturing sector represents around 15 percent of value
added—compared with around 25 percent in Germany and
Japan.
Over the next few years, we expect to see significant govern-
ment interest in stimulating the growth of manufacturing

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