When I was a boy I was very international. I played with lead soldiers from England, metal airplanes from Japan, Chinese handcuffs and toys made in the USA. My parents joked about the quality of the foreign-made toys, especially those from occupied Japan. I just wanted to have fun.

As an adult, I worked 20 years overseas trying to persuade our companies to export. I know now that our current economic condition is a direct result of our inability to understand the importance of exporting. Most of all it, is a result of three major blunders. The first is a sin of omission, our naiveté. We didn't realize that unchecked outsourcing and exporting of our manufacturing jobs would lead to a massive dependency on foreign-made goods and a top-heavy service economy. Second, because we didn't understand the implications of the first blunder, we failed to offer American industry any reason to keep jobs in the USA. Third, we allowed our rigid, free-market ideology to keep us from creating a national industrial plan, something other mature industrialized countries have.

I can hear the free marketeers' cries now. "Industrial plans are for planned economies. We must be flexible to the needs and demands of the marketplace!" That may be true in a perfect world where everybody plays by the same rules, but it's not true in the real world where countries like China deliberately unlevel the global playing field by manipulating their currency. The GATT and Free Trade Agreements (especially NAFTA) are noble documents that set forth trading regimens supposed to equalize and stabilize commerce, but the reality is they have been repeatedly subverted. On a macroeconomic level, government entities like the EU were supposed to police their member countries by levying penalties on nations not adhering to the EU's minimum economic requirements like debt-to-GNP ratios. France faltered a few years back and was subject to fines from the EU, but to no one's surprise never paid a sou.

What are the solutions?

We can begin our turnaround process by: a.) bringing back many of the manufacturing jobs we lost over the last 30 years by offering American companies incentives like tax rebates, worker retraining and education grants or other inducements and, b.) increasing funding for commercial research and creating a national industrial plan that doesn't pick winner and loser companies, but instead focuses on supporting winning technologies that will help us secure stronger market positions by giving us some much-needed competitive advantages.

What should government's role be?

Government needs industry and industry needs government. That interdependence is more evident now than at any time since the Great Depression. Government can adjust tax rates, set customs duties and tariffs, offer grants, etc. It can be a true partner with industry without embracing socialism and the wholesale ownership of industry. We need to form an "A team" of savvy government and academic experts joined at the hip with private industry and organizations like the U.S. Chamber and the National Association of Manufacturers, to name just two. We need to take a fresh look at our FTAs and our membership in the WTO and artfully begin navigating our way towards a trading regimen that acknowledges our right, and I would argue, responsibility to rebuild our manufacturing sector.

This will not be easy, but we can accomplish much if we realize that we still have time and a good 'bargaining position' vis-à-vis our market size and our foreign manufacturing contracts that routinely come up for renewal.

What should industry's role be?

Industry must trust government's willingness to find the 'third way' to solve our manufacturing hemorrhaging. If we are smart, we will turn our overseas vendors into overseas partners that have a legitimate stake in our own prosperity. By crafting joint venture and technology transfer agreements, R&D-sharing and third-country marketing agreements, we can convince our vendors that there is more to be gained than lost through partnering. By working closely together, we might see the light at the end of the jobs tunnel and recapture the rapture of a vibrant economy by putting Americans back to work — and start making things again.

Stephan Helgesen is former director of the Office of Science and Technology for the State of New Mexico and retired U.S. Foreign Commercial Service officer who served in 20 foreign countries. He is CEO of 2nd Opinion Marketing, an international high-technology consultancy company.