Christie Romer makes all the right arguments against the special treatment of the manufacturing sector.
This theme is one of my pet peevs in Australian economic policy.
In Australia’s present case it is often framed in terms of Manufacturing v. Mining. With Mining framed for pushing up the currency and hurting Manufacturing.
Manufacturing folks are frequently heard arguing that policy should be changed to weaken the AUD, so as to boost manufacturing.
Leaving aside the many things wrong with this argument, let’s not forget the Aussie worker / consumer. The higher AUD is the primary means through which the mining boom is spread across the nation.
The stronger AUD boosts the real consumption wages of the vast majority of Australian workers. A policy to weaken the AUD is a tax on labour, as it lowers real consumption wages.