Unmade in America: Policy Contortions of a Misguided Giant

American manufacturing did not collapse because of China, but because policymakers favored Wall Street over Main Street. It needs to foster innovation and education, not refocus on big factories

- EINAR TANGEN

America's decline in manufacturing was not inevitable—it was a choice. In the late 20th century, policymakers prioritized low interest rates and financial speculation over industrial strength. By keeping borrowing cheap and the dollar strong, they diverted capital into Wall Street, consumer debt, and stock buybacks rather than factories, worker training, or technological advancement. This short-term thinking hollowed out the economy, making any attempt to revive traditional manufacturing a near impossibility. America's future now lies in embracing the digital economy and empowering small businesses—sectors far better suited to modern realities.

The genesis of American deindustrialization resides in the late Cold War-era consensus that conflated financial market vitality with national economic strength. The Federal Reserve's strong-dollar policies controlled inflation and attracted foreign investors, but they also made American goods uncompetitive abroad, leading to an influx of cheaper imports. Manufacturing struggled to keep pace.

An appreciating currency rendered US exports prohibitively expensive abroad while flooding domestic markets with cheap imports, eviscerating profit margins for industries from textiles to semiconductors. Concurrently, the Clinton-era embrace of financial deregulation—such as repealing the Glass-Steagall Act, which aimed to protect depositors from the risks of commercial banks' speculative investments, in 1999—encouraged corporations to focus on stock buybacks and mergers instead of upgrading equipment or training workers.