Today's economic woes, although not remotely close to being as bad as those of the Great Depression, are nevertheless -- like the Great Depression -- causing lots of people to rethink the role of government in the economy. The clamors for more regulation are as loud today as I ever recall them being during my adult lifetime. (I turned 50 this year.)Ah, the slippery slope of the bailout.
Especially scary are the calls for an "industrial policy." This term is jargon for central planning.
In America today the desire for industrial policy springs from the fear of change -- from the anxieties people suffer about competing in a dynamic market economy in which producers serve consumers (rather than vice versa).
Industrial policy reverses this relationship. Consumers would exist for the benefit of producers.
Or, more precisely, consumers would exist for the benefit of already-established producers -- firms, industries and occupations that happen to be dominant at the time the industrial policy is implemented. Tomorrow's producers would be excluded by the policy, prevented from ever emerging.
The firm that would produce the yet-to-be-invented device for curing lung cancer; the industry that would manufacture an amazing but yet-to-be invented automobile engine that runs on tree leaves; specialists who educate us using a yet-to-be-invented remarkable process -- these producers, and countless others similar to them, would be harmed, not helped, by industrial policy.
Thursday, September 25, 2008
When Did American Businessmen Become Socialits
Executives from Ford and Dow Chemical Company want to hold a "summit" in 2009 to talk about the government's industrial policy. Businesses have summits all the time and that is all well and good. But this one wants to figure out a proposal to protect industry through government intervention. Don Beaudreaux talks about the "Industrial Policy" now being discussed among big business leaders.