This piece originally appeared in the Techno-Industrial Policy Playbook.
Foreword
Is America still the world’s leading technological and industrial power? As late as 2011, when China first surpassed the United States in manufacturing output, the answer would have been an unqualified yes. Today, the picture is far less clear.
As China’s industrial might ascended in recent decades — last year reaching a manufacturing surplus almost equivalent to Britain’s entire GDP — we decided to let ours decline. For too long, our political leadership trusted an "invent here, make there" model that neglected the profound connection between innovation and production. This mistake has cost us dearly.
America is wholly unprepared for wartime production needs. With current manufacturing capacity, it would take at least eight years to replenish major defense program inventories at surge production rates. Nearly all Navy ship construction projects are years behind schedule. Decades of consolidation have reduced the number of defense prime contractors from more than 50 during the Cold War to 6 today, the number of surface ship suppliers from 8 to 2, and the number of tactical missile producers from 13 to 3. Ninety percent of all missiles come from three sources, creating inefficient oligopolies and inflated prices. While our defense industrial base slumbers in peacetime, China’s operates on wartime urgency, generating 23,000 percent more shipbuilding capacity; its Jiangnan Shipyard alone surpasses all US shipyards combined.
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