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In September, 2012, five panelists met at the Commonwealth Club to discuss the future of California. Moderator Ross DeVol, Chief Research Officer at the Milken Institute, went around the table asking the panelists their opinion and prognosis of the state’s economy. One by one the guests trotted out their grim visions of a broken California, with abject poverty along many of the state’s central highways, a dysfunctional government, a progressively unaffordable education system, and dwindling hope for the middle class. Finally the moderator turned to his last panelist. “Ro,” he pleaded, “I think we need a shot of good news now.”
Indeed, Ro Khanna, erstwhile Deputy Assistant Secretary of Commerce in the Obama Administration, stands out as a voice of cheery optimism in a state and nation struggling to recover from one of the worst economic downturns in six decades. In his new book, Entrepreneurial Nation: Why Manufacturing Is Still Key to America’s Future, he insists that the ingredients for American success are present and ready to be crafted into an opportunity to restore the country’s reputation as the seat of not just technological, but all-round industrial innovation.
Ro Khanna first came to national prominence in 2009 when he was tapped by the new president to join the Department of Commerce. He had been working as counsel in the firm of O’Melveny as a member of the Antitrust and Competitive Practice Department, and was also active in the firm’s pro bono program, working with the Mississippi Center for Justice on several contractor fraud cases on behalf of Hurricane Katrina victims, at the time.
Khanna’s travels around the country as part of his Commerce department role left him with a healthy respect for the determination of American manufacturers, many of whom compete in a global market against cheaper goods from China. “These companies have succeeded by being innovative and by being at the higher end of the value chain,” he says. In his book he insists, “Despite cheaper labor abroad, currency manipulation, intellectual property theft, and subsidies to foreign competitors, [these] American manufacturers are winning.” He cites the example of the Globe Manufacturing Company, which has the largest factory in the world for making protective clothing for firefighters. The company manages to manufacture in the United States and beat competitors in China by producing high-value products that are also customized.
“Our nation must retain a threshold of manufacturing capacity if it is to continue to invent new products,” he writes in his book, adding the surprising, counter-intuitive statistic that “the weekly wage in manufacturing is currently more than 20 percent higher than the weekly wage in the service sector.”
I asked him about the declining role of unions and their vilification in the current political climate. “Unions help with worker productivity and training,” he pointed out, adding that some of the successful companies mentioned in his book, like the aerospace and steel industries, were unionized. Many of the success stories in his book were also of companies that did not have unions, but the common thread contributing to their success was a willingness to treat employees well, pay them well, and encourage them to be a part of the success of the firm.
Khanna echoes the cautious optimism of the CEOs he has met on the field. “They say the creativity and resolve is there. They just need the right policies in Washington—right loans, right tax credits, right infrastructure, right trade policies.”
Doesn’t that optimism get dented by the partisan politics on the national stage? Khanna points to one of the programs that he has seen have a positive effect in the encouragement of manufacturing in the United States is the Manufacturing Extension Partnership (MEP), a program that works with small and mid-sized U.S. manufacturers to help them create and retain jobs, increase profits, and save time and money. The MEP was a bipartisan effort passed by then-President Reagan with the support of a bipartisan group of Democrats and Republicans. “The current crop of extremists on the right wants to cut this program because they believe any kind of government intervention is wrong.” He believes this rightward shift is because of the recent influx of extremely ideological representatives in Congress in the 2010 midterms. “I think there is still a moderate group that believes in a practical approach to government/private sector collaboration. I hope the threat of being economic competition by countries like China is enough for these factions to recognize that they need to do that.”
Noticing my skeptical expression, he adds, “You have to make the case to the American people who are very smart when they are engaged. When America faced competition from the Soviet Union in the 1950s and 60s we needed a strong government to invest in defense, to invest in the space race and technology. The modern American faces competition from China and we need an equally smart collaboration between the private sector and the government if we want to remain the world’s greatest economy. If we frame it as a case for American exceptionalism and American greatness then people of both sides of the aisle can come together to work on smart, common-sense government.”
Commenting on the current abysmal reputation of government he says, “I think we have to do a better job of telling the public what the government can do for the private sector. One of the reasons I wrote the book is to show that there is a role for government in economic growth. The feeling in the last couple of decades that government has no role is not consistent with American history.”
Khanna’s time spent learning about American manufacturing have convinced him that the skills required in modern manufacturing are of a higher order than previous generations. “How do we educate more people in math and science and programming and have community colleges that train people here to do the job?” he wonders. “We need to prioritize academics in this country and hold up the idea of people excelling in math and science as something worthy. We need to celebrate the nerd.”
I gently probe if he is advocating a Singaporean emphasis on drill- and memory- oriented learning. He demurs. “I think the American emphasis on freedom and creativity and individuality is preferable to a hierarchical system of education where you are just encouraged to memorize.” But he is unequivocal about the need for technology in classrooms and is a fan of the Khan Academy’s online lessons.
He sees a role for government and the private sector to actively collaborate in the growth of the American economy, with a special emphasis on making local manufacturing the crowning jewel of American recovery and prosperity. With the publication of his upbeat book that is a paean to American manufacturing greatness, it is impossible not to ask the question—does he think this country will have an Indian American president one day?
He takes a while to craft a careful reply. “This country has no test of ethnicity or religion for higher office and this president’s election shows that we have come a long way….my sense is sure, it will happen one day, but whether it will be in our lifetime I don’t know.”
ENTREPRENEURIAL NATION: Why Manufacturing Is Still Key to America’s future by Ro Khanna. 272 Pages. Available on Amazon.com. Hardcover $16.08.
Vidya Pradhan is a freelance writer who hosts the weekly radio show Parent Talk on KZDG 1550 AM. She also runs the community blog Water, No Ice and was the editor of India Currents from June 2009 to February 2012.