Ah Yes The Economist Magazine Says You Need A National Industrial Policy
With a picture of Bill Clinton as the lead off speaker.
I could've picked another one of Mr Clinton's ideas, one less likely to raise any hackles, like his call for shortening review periods for government infrastructure projects. I agree with that too. But I'm picking this one because it's difficult. This one is about having a national industrial policy. A lot of readers here are going to reject that idea out of hand. I don't. Judging by the fact that this Rana Foroohar article in Time is on the website's top-ten most-read list, there are a lot of other folks out there who are at least receptive to the idea as well. (Read that article too, by the way. It's really interesting.) And the concentration on Michigan and the car industry here reminds us of the largest recent instance of American industrial policy: the decision to bail out the car industry. That intervention probably saved a couple of million jobs, and left Ford and GM as solid companies. The experience of Germany in the financial crisis and post-crisis recovery (6% unemployment, at the moment) suggests that having an industrial policy and paying companies to keep jobs may be a strategy that has its advantages.
I am tempted to resubscribe, just so I can relive the pleasure of cancelling.
Idiots.
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Dec '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Roberto
KarlUB:
Now that we've gotten that ideological shibboleth out of the way perhaps we can talk about what trade-- and industrial-- policy would be good for the bulk of the citizens that live in THIS nation. · Jun 23 at 4:50am
A pure free trade policy may very well have disadvantages, I will certainly concede that. Such decisions should be made on a nation by nation basis. I still maintain that an industrial policy is a horrible idea; it is a recipe for corruption and crony capitalism. We need look no further than the Obama administration's incestuous dealings with Jeffrey Immelt and GE in his quest for "green jobs" to see where that road takes us. · Jun 23 at 8:43am
Agreed. Crony capitalism is killing us. I don't understand how people who claim to be on the right are so confused over the role of government.
In the original quote, "That intervention probably saved a couple of million jobs, and left Ford and GM as solid companies." Um, wasn't Ford exempt?
Aug '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
OK, but just so you know, this isn't an entirely novel admission on the part of free-traders.
That some trade freedom can be legitimately sacrificed for the sake of national security has long been admitted by, for instance, the likes of Thomas Sowell, who I'm guessing you'd consider a die-hard free-trader.
Likewise, it may be a cultural goal of statecraft to restrict trade with wicked nations.
It may even be possible that a wee tariff here and there is sometimes preferable to increasing domestic taxation, so tariffs might play some role in offsetting the burden of domestic taxation.
However, it's also a slippery slope. Once you admit such things, the temptation is to justify every conceivable impediment to foreign trade as necessary for national security, for reforming international wickedness, or for offsetting damage from domestic taxation (including the regulatory burden tax). This last justification is particularly pernicious, as it gives politicians an excuse to avoid reducing domestic taxation/regulation -- they'll just increase tariffs instead!
Edited on June 24, 2011 at 2:16amDec '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Or Germany, South Korea, Denmark, Taiwan...
Dec '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Duane Oyen
Karl, how do you square this urge for government support of selected "winner" industries with your Ron Paul enthusiasms? This sounds to me more like Pat Buchanan. · Jun 23 at 1:15pm
I refer you to my profile description here on Ricochet:
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Healthcare marketing dilettante and reformed Libertarian who generally takes cues from Pat Buchanan when Ron Paul is wrong.
"Man more often needs to be reminded than taught."
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And that latter quotation is particularly relevant, since with brief interruptions the United States was a pretty protectionist country from 1776 - 1970.
In fact, in some ways our Revolution was one motivated by a desire not to be a nation relegated to being a Colonial backwater cranking out raw materials for a Mercantilist overseer.
Dec '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Western Chauvinist
I don't understand how people who claim to be on the right are so confused over the role of government.
I refer you to my opening comment: We already have an industrial policy. It is a bad one. Government protectionism and investment pretty much created our aviation and semiconductor industries. Was that such a bad idea? How about railroads in the 19th century? Telecom? All shot through with government interventionism.
Fact is, there can be good government intervention and bad government intervention. Even Prof. Rahe agrees with this. What could more more of a government intervention that dozens of military bases scattered around the world?
Much like guns don't kill people, people do; Government intervention doesn't kill the economy. Bad government intervention kills the economy.
Oct '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
And Japan. They have had two "lost decades" from bad industrial policy, multiple stimulus packages for infrastructure, and bailing out the banks. Does any of this sound familiar to anyone?
Jun '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Pseudodionysius:
I am tempted to resubscribe, just so I can relive the pleasure of cancelling.
Idiots. ·
I subscribed a few years ago and had that pleasure. I tried to like it, but just couldn't to it.
Dec '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Ken Sweeney
And Japan. They have had two "lost decades" from bad industrial policy, multiple stimulus packages for infrastructure, and bailing out the banks. Does any of this sound familiar to anyone? · Jun 23 at 3:18pm
Actually, as I posed elsewhere, if you run the GDP numbers for Japan and the US since 1990 and adjust for the amount of people actually working their growth is the same as ours.
They have a demographic problem.
Feb '11
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Roberto
No. The explicit advantage gained from trade policy was against other nations whose industry did not have access to the enormous US consumer base. Neutrals such as India and enemies such as Warsaw Pact nations did not have an equal opportunity to grow their economies by trade with the US.
The implicit advantage they gained was against American competitors and that consisted of being able to do business here without being subjected to our regulatory regime. · Jun 23 at 8:32am
Sorry but I'm not sure why you think I would disagree with this or why you think it contradicts anything I said.
Feb '11
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Is it in the interests of the United States to have (as an example) a successful aviation industry?
I say yes. I believe most Americans would agree.
So what should we do if foreign governments forbid their airlines from buying American aircraft, or disassemble American aircraft to learn the technology with the intend of building their own industry to compete with ours, or simply give their own unsuccessful existing industry bottomless subsidies?
The US government answer- as far as I can tell- is to direct the affected party to file a worthless, time-consuming complaint with the WTO- or go pound sand, to use a polite phrase. And free traders will exhort the affected party to go forth and compete, indifferent to reality, as far as I can tell.
Essentially, to stick with the example of aviation, Boeing is competing not merely with foreign corporations but with the nations of Russia, China, and the EU. Boeing will lose, if slowly.
So am I advocating a US industrial policy if I wish the US government to intercede - government to government - to stop this sort of thing? Instead of just passing the buck to the WTO?
Mar '11
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Xennady
Roberto
No. The explicit advantage gained from trade policy was against other nations whose industry did not have access to the enormous US consumer base. Neutrals such as India and enemies such as Warsaw Pact nations did not have an equal opportunity to grow their economies by trade with the US.
The implicit advantage they gained was against American competitors and that consisted of being able to do business here without being subjected to our regulatory regime. · Jun 23 at 8:32am
Sorry but I'm not sure why you think I would disagree with this or why you think it contradicts anything I said. · Jun 23 at 4:40pm
I am attempting to point out that you are attacking the wrong target. Placing the blame for businesses locating overseas on our trade policy misses the primary reason it is so attractive for them to do so. A bzyantine labyrinth of regulations, which all have the force of law, crafted by the whim of some GS-10, and changing at any time by whichever way the wind blows create a lethal environment for starting up a factory. Go elsewhere and you just have to know who to bribe.
Aug '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
If national industrial policy was necessary to the development of Asia, please explain Hong Kong. Hong Kong did not have a national industrial policy, but it seems to have managed to land on a pretty good economy anyway - better in fact than any of the other countries mentioned, despite starting with no resources to speak of.
The premise of industrial policy assumes that a group of intellectuals can, if given the power to dictate, manipulate the economic direction of a country more efficiently than can the collective wisdom of the people interacting in the marketplace.
The whole rationale of smaller government is that people are capable of governing themselves, and that markets are a better mechanism of coordination and communication than is a central government. Industrial policy should be anathema to small government conservatives and libertarians.
The other conceit of industrial policy is the assumption that not only can the optimal path for the economy be discovered by committee, but that such an optimal path will not be distorted by rent-seeking, graft, corruption, and the capture of the regulatory process by special interests and their allies.
The economy is a self-organizing complex system. Government cannot manage it efficiently.
Edited on June 24, 2011 at 9:03amDec '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
1) If you think a City State like Hong Kong is anything like a country, I would beg to differ...
2) Did you know all land in Hong Kong is owned by the government, and it is leased to the respective residents? That sounds like a gigantic intervention to me.
Jan '11
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
I've been reading Ricochet for about a year and a half. I don't even have to read the 33 responses before me to understand what they probably say, which was probably something lke... When you said that the bail out of GM saved millions of jobs I was thinking: The U.S. buys about 7 or 8 million cars a year. The buyers don't care where they're made. The worse case would be the jobs going overseas; the best case would have been the jobs going to somewhere in America where labor rates are competitive and workers flexible to the needs of the industry. That's not Michigan.
Oct '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
Since the EPA, IRS, NLRB, OSHA, IPAB, EEOC are components of our de facto National Industry Policy, maybe it wouldn't be a bad idea to calculate the effect of all the various regs and agencies on various industries, summarize them, and put them down in black and white.
Much of our current technology is derived form research that was paid for by the government (NASA and the Armed Forces), but not in the form of some overarching national policy. Rather, it was either the government contracting with private firms to fill a specific need, or recruiting the talent so that the government could perform the research on its own.
If the government must play a role in industry, I would prefer it focus on identifying and prioritizing needs (energy alternatives, vaccines/cures for diseases) and contract with private firms, use government resources like NASA and the military, or both.
Instead of enacting protectionist policies for manufacturers of fax machines and compact discs, promote innovation in areas where there's a legitimate national interest.
Oct '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
In the 80s at Rutgers I did economic research on pre-Thatcher industrial policy in Britain which was termed 'Indicative Planning.' I could find no clear evidence of benefit to the British economy. At most the gov't should fund basic research which lacks immediate profit potential so will tend to be underfunded by the private sector.
May '10
Re: Ah Yes The Economist Magazine Says You Need A National Industrial Policy
KarlUB
1) If you think a City State like Hong Kong is anything like a country, I would beg to differ...
2) Did you know all land in Hong Kong is owned by the government, and it is leased to the respective residents? That sounds like a gigantic intervention to me. · Jun 24 at 5:20am
Actually, that describes land in England, and in the US under pure common law, dating back to the fee simple estate allocations to "tenants" by King William as a means of paying off his knight supporters given his lack of cash. What happened here is that the government stake in the property evolved into effectively an indefinite lease that is the practical equivalent of ownership. Under US law, property (including bank accounts, etc.) all devolves to the government if no owner or heir of right to use of the property can be found. That is a direct consequence of the original fee system.
(typos, grrr)
Edited on June 25, 2011 at 1:38am