Until recently, mainstream economists and policymakers largely dismissed state-led industrial policy – a form of government intervention in the free market – as wasteful and ineffective. Government bureaucrats, the argument went, lack the ability to effectively pick winners among companies or industry sectors. The task is better left to venture capitalists and stock market investors. Moreover, a politicized process of distributing public money is inherently susceptible to rent-seeking and corruption.
If this view is correct, then the US has little to fear from Chinese industrial policy. Let Beijing waste public resources and distort capital allocation, while Washington sticks to its free-market principles, confident that this approach will produce a more competitive economy in the long run.
Today, however, appraisals of China’s trade and commercial practices implicitly grant that its industrial policies are effective. And many economists now agree that this approach can succeed in promoting national leadership in strategic industries. If so, then it’s unreasonable to demand that China abandon policies to promote indigenous development – especially when the US government is actively blocking key Chinese companies like Huawei Technologies Compamy from accessing American-made technology.The US is becoming anti-competitive.
Bill Totten's Weblog
China’s Industrial Policies Work — So Copy Them
China’s Industrial Policies Work — So Copy Them
Gabriel Wildau, Bloomberg (November 17 2019)
2 comments:
I put this out on Twitter. It did well. There are things only the government can do, or direct.
The right have nonsense economics, and an archaic worldview.
If I can find the article I will put it out. The more educated people become, the more liberal they are. Lots of young people go to university now and are turning to the left. They are also very relaxed with multiculturalism.
Protecting US steel makers from foreign competition could be seen as "state-led industrial policy".
Using public funds to upgrade, repair and build infrastructure could be seen as "state-led industrial policy".
On the other hand, dismissing decayed infrastructure is hard too do, even for economists.
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