A Reason Not to Despair and a Reason to Hope

In contrast to standard remedies that deal with the preproduction (e.g., schooling) or postproduction (e.g., taxation) stages of the economy, our ap­proach directly targets production.

We conclude on two positive notes. First, we argue that the prevailing academic pessimism about job-creating strategies may be misplaced as it is based on conflating treatments with meta-treatments. Second, we note the possibility that the governance arrangements we have sketched out may also help enlarge the constituency for acting on the problems they address.

Consider first the point about policy pessimism. The literature we have re­ferred to when stating the problem suggests there are few, if any, policies that work reliably to expand good jobs. The conclusion that such findings often lead to is either some combination of agnosticism (as in Austin, Glaeser, and Summers 2018) or a call for more randomized evaluations (as in Autor, Li, and Notowidigdo 2019). Under our approach, these mixed results are not a sur­prise. The dual challenge of dealing with uncertainty and contextualization implies there are no fixed, clear-cut remedies. What is important is to get the governance regime right. With the appropriate regime in place, the hope would be that each locality can develop its own set of evolving practices.

Next, there is the point about building constituency. In many discussions of industrial strategy, the principal problem is creating a coalition of pub­lic and private interests in favor of development. The first task is rallying a national or local coalition of private and public actors in favor of a growth strategy with clear, immediate objectives. The formation of consensus and the clarification of objectives lead naturally to the creation of public-private partnerships to advance particular projects. The public actors contribute their expertise and authority in, say, regulation; private actors make comple­mentary contributions with respect to markets and their firms. As long as the state retains sufficient autonomy to avoid capture, the governance of the industrial policy projects is part and parcel of the consensus that underpins the public-private partnerships.

We agree that building political will is a threshold condition for industrial policy. Full deployment of the good jobs strategy would eventually require national mobilization. But under current conditions—when development is as likely to depend on exploring and building domestic capacities as accu­mulating know-how and capital; when uncertainty makes the selection of goals necessarily provisional and the revision of ends and means routine— governance of a good jobs strategy can presume only a thin, initial, back­ground consensus and does not grow directly from it. On the contrary, the fear that, under uncertainty, ambitious and urgently needed programs can­not be effectively and accountably administered could cast a shadow over consensus building, causing some potential members of a coalition in favor of a good jobs strategy to back away from a risky venture.

An attractive feature of the approach here is that the same institutions of interactive governance that enable the parties to specify and solve the prob­lems they face under uncertainty also enable them to develop the trust and mutual reliance they need to deepen and broaden their efforts. The broad coalition needed for the good jobs strategy to succeed need not preexist; it can and will likely be the result of pursuing the strategy. Innovative modes of governance allow the parties, beginning with only a vague understand­ing of the substance and scope of their goals, to assess one another's capaci­ties and good faith in the very process of refining ideas of what the eventual project should be. Trust and coalition building—the acceptance of mutual vulnerability—are as much or more the outcome ofjoint problem solving as its precondition.

A further advantage of this governance approach in coalition building is its compatibility, indeed natural affinity, with efforts at broad mobiliza­tion to address societal problems under uncertainty in other domains. The Green New Deal (GND) is the most prominent example. The GND goes be­yond the classic remedy of carbon pricing to contemplate large-scale in­vestments in green technologies and ambitious programs to foster greater economic opportunities. Every which way it turns—whether confronting environmental problems or creating employment and, most especially, do­ing both together—the GND will wrestle with the contextualization of fa­miliar ideas to countless local settings and the collaborative exploration of the technological frontier that gave rise to the design principles of our good jobs strategy. At bottom, that strategy enlists some of the fundamental gov­ernance lessons of successful environmentalism in the service of employ­ment creation. It would hardly be a surprise if the GND, combining goals that only recently seemed distinct, reached similar conclusions, creating the core of a broad coalition that helps respond effectively to the economic, so­cial, and environmental externalities presently threatening our democracies and our planet.

Notes

We thank Tim Bartik, Josh Cohen, Paul Osterman, William Simon, and participants in the Political Economy and Justice workshop for very useful comments on an earlier draft.

1. Austin, Glaeser, and Summers (2018) consider three sources of economic externalities from nonemployment: fiscal costs on the state through the tax-transfer system, costs imposed on the family, and spillovers that encour­age nonemployment by others in the community. They reckon these costs range 0.21 to 0.36 times the wage of low-income workers. Our focus here is on social and political costs that we believe are much higher.

2. A similar point applies to the relationship between this chapter and the arguments made in the chapters by Henderson and by Salter in this book. We give government agencies a larger role to play because we presume that there will be some but not complete overlap between what firms find to be in their enlightened, long-term interest and what is required for inclusive social prosperity more broadly. We also differ from Weyl (this volume) in advocating a specific kind of government activism, though our approaches are guided by many of the same principles. In particular, we agree with Weyl that we should move beyond a simplistic state-market dichotomy, favor emergent social organizations, and connect social and technological change.

3. Formally cooperation between ARPA-E and recipients of research awards is governed by a cooperation agreement that specifies that the “Prime Recipi­ent... is required to participate in periodic review meetings [to]... enable ARPA-E to assess the work performed under this Award and determine whether the Prime Recipient has timely achieved the technical milestones and deliverables” listed in an attachment. A sample agreement is available at https://arpa-e.energy.gov/?q=site-page/funding-agreements.

4. Frank Knight classically distinguished risk—where an outcome is unknown but its probability can be estimated—from uncertainty—where it is impos­sible even to estimate the probability of future states of the world.

5. Dairy Industry Prospectus Report 2003.

6. See Bord Bia (2016).

7. See Fitzgerald (2019).

8. The Food Harvest 2020 strategy, established in 2010, set a target by 2020 of a 50 percent increase in the volume of milk production over the average of 2007-2009 milk supply (4.93 billion liters). The volume of milk production in 2017 had reached 7.27 billion liters, an increase of 47 percent (“Milk Statis­tics: December 2017,” Central Statistics Office of Ireland, statistical release, January 31, 2018, https://www.cso.ie/en/releasesandpublications/er/ms/ milkstatisticsdecember2017).

9. WFD guidance documents from the European Commission are available at http://ec.europa.eu/environment/water/water-framework/facts_figures/ guidance_docs_en.htm. For detailed discussion of the Common Implemen­tation Strategy (CIS) as an experimentalist institution at the heart of the WFD, see Scott and Holder (2006).

10. On the possibilities for expanding the grounds for derogation beyond “natural conditions” while maintaining pressure to strive for compliance see Water Directors Meeting, "The Future of the Water Framework Directive (WFD)—Water Directors input to the fitness check process on experiences and challenges of WFD's implementation and options for the way forward,” November 15, 2018.

11. On the Agricultural Sustainability Support and Advisory Programme (AS- SAP), see https://www.teagasc.ie/environment/water-quality/farming-for -water-quality-assap/.

12. Unless otherwise indicated, this account of Project QUEST draws on Radem­acher, Bear, and Conway (2001).

13. For the transformative effect of the introduction of a demanding variant of continuous improvement, developed in the US nuclear navy on the regula­tion of nuclear power generation, see Rees (1996).

14. Interview with David T. Harrison, president, Columbus State Community College, Columbus, Ohio, April 18, 2019.

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