Showing posts with label industrial policy. Show all posts
Showing posts with label industrial policy. Show all posts

Wednesday, February 22, 2012

Quote of the Day: Industrial Policies

From Bloomberg columnist Caroline Baum

Yes, other countries, such as China, have "industrial policies," with government subsidizing favored industries. History isn't on their side. In the 1980s, Japan was a manufacturing and exporting powerhouse, the envy of the world. Three decades later, where's the evidence of success?

Thursday, August 12, 2010

Beware the Leviathan!

Great words of admonition from the Economist

LISTEN carefully, and you may detect a giant sucking sound across the rich world. In the 1990s this was the sound protectionists in the United States thought (wrongly) would accompany jobs disappearing to Mexico as a result of a free-trade deal. This time, too, there are big worries about jobs and growth, but the source of the noise is different, and real enough: it comes from the tentacles of the state, reaching into more and more areas of business in an effort to get the economy moving. It is the sound of Leviathan Inc. (emphasis added)

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Here’s the kicker....

In the rich world, meanwhile, the record shows, again and again, that industrial policy doesn’t work. The hall of infamy is filled with costly failures like Minitel (a dead-end French national communications network long since overtaken by the internet) and British Leyland (a nationalised car company). However many new justifications are invented for the government to pick winners, and coddle losers, it will remain a bad old idea. Thanks to globalisation and the rise of the information economy, new ideas move to market faster than ever before. No bureaucrat could have predicted the success of NestlĂ©’s Nespresso coffee-capsule system—just as none foresaw that utility vehicles, vacuum cleaners and tufted carpets (to cite examples noted by Charles Schultze, an American opponent of state planning) would have been some of America’s fastest-growing industries in the 1970s. Officials ignore the potential for innovation in consumer products or services and get seduced by the hype of voguish high-tech sectors. (bold emphasis mine)