Frequent readers of this paper may recall a piece by MIT President Susan J. Hockfield and Harvard President Drew G. Faust in the Boston Globe, titled “Riding the Innovation Wave,” and this columnist’s negative response, “Voodoo Innovationomics.” Well, last Monday, President Hockfield was at it again, this time with a solo piece in the New York Times titled, “Manufacturing a Recovery.”
In her previous article, President Hockfield put forward a thesis that homegrown innovation was at the heart of American economic growth (conveniently ignoring, among other things, the rich American tradition of stealing technology wholesale from the Old World) and used this thesis as a justification to cadge Uncle Sam for R&D funding. In her latest missive, she’s added on a corollary — the key to innovation, Hockfield now claims, is manufacturing, and now she seems to be offering a full-throated defense of what is, in polite company called “strategic trade policy,” what Paul Krugman PhD ’77 once famously derided as “pop internationalism” and what I prefer to term “neo-mercantilism.” Whatever you call it, it’s drivel — a load of economic snakewater sold only by the incompetent and malintentioned. Given Hockfield’s utter lack of economic credentials and her conflict of interest in the matter, you’re free to take your pick. But read the article — it’s an instructive example of how little intellectual rigor exists in Hockfield’s made up system of economics.
First note the mindless proliferation of buzzwords throughout the article. Hockfield laments the loss of “high value” manufactured goods — never mind that the manufactured goods with the highest value per labor hour are simply capital-intensive goods, like cigarettes. She bemoans the loss of economic “competitiveness” — never mind that free trade between nations is nothing like competition between businesses. We need investment in “high tech” “cutting edge” “advanced” “sophisticated” manufacturing to “re-energize” “restart” “rebuild” “replenish” “rebuild” “reassert” and “recommit” in order to “set off a wave of job creation.”
Next, note the absence of any sort of empirical evidence. No proof is offered, either to the contention that “innovation” (a word so broadly defined it could be virtually anything) is responsible for U.S. economic growth, or that a causal effect exists between manufacturing and innovation. It’s not as if economists have turned a blind eye to the issue of economic growth; there are mountains of data, models, and theory on the subject, much of it created right here at MIT. Every graduate of MIT’s economics program knows how to calculate a Solow residual … does Hockfield?
Finally, note the complete irrelevance of the anecdotes that Hockfield provides to back up her argument. She offers three examples of innovators that have produced manufacturing jobs: Cepheid, Lilliputian Systems, and A123 Systems. But her argument is not that innovation creates manufacturing jobs — it’s that manufacturing jobs create innovation. Her contention is that companies like Apple, which source almost all of their manufacturing overseas, are a hairsbreadth away from shipping their labs and development centers to China. The anecdotal evidence that would back up her point would be examples of companies that saw their entire operations, starting with manufacturing and ending with design, engineering, and management, slip from American to foreign hands.
If the presence of manufacturing jobs is what spurs innovation, and innovation spurs growth, then Hockfield has her conclusions backward — she’s using this piece of debunked mercantilism to justify federal outlays to MIT, but the real endpoint of her beliefs is that we should erect trade barriers to prevent manufacturing jobs from going overseas. By her logic, if we prevent the Chinese and other scary boogiemen from manufacturing products for our benefit, then we will innovate faster at their expense — and in that case it’s not MIT that should be getting money, it’s General Motors.
This raises a question: is it really in the best interests of MIT for its president to spend her time writing op-ed’s in the New York Times embracing an ideological position that is, at its core, at odds with modern economics and antithetical to the interests of her own institution? Perhaps President Hockfield would do well to audit a few classes of 14.54 before she writes her next piece.