The U.S., in peacetime, has historically had only a minimal industrial policy. The state has sometimes protected industry with tariffs and otherwise left the details up to the free market. But the market has of late produced a deindustrialized America. Also a debtor America, in both public and private respects. Maybe we could use a bit of dirigisme. Not socialism, but a capitalism where the state heavily subsidizes and otherwise encourages industrial development. That’s how the Japanese, after the Meiji Restoration, turned a feudal-agrarian society into an industrial power.
You mean corporate welfare.
Too much of that already.
That kind of corporate welfare looks only at preserving the bottom line of established business interests. I’m talking about the government making actual decisions about new directions American industry should go, and helping them get there.
<Anti-Yakov>In Soviet Union, Government directs Industry.
In United States, Industry directs Government.</Anti-Yakov>
Seriously, corruption is this country is so vast that Government cannot concieve of leading the Private sector.
While it is true that industrial policy is not identical to corporate welfare, in practice that’s exactly what it is. The government picks favored companies and hands them stacks of taxpayer money.
These companies become parasites. Factories that lose money by the bucketloads every day stay open, people are paid to sit around and pretend to work, export products are subsidized, which means you’re both paying companies to make products and also paying foreigners to buy those products.
Just look at the mess the Japanese economy has been mired in for the last decade. I don’t see why MITI bureacrats are supposed to be able to steer industry any better than corporate executives. The whole thing results in companies that aren’t allowed to fail, industry that isn’t allowed to restructure, rampant corruption, big government and big companies conspiring to destroy competition and stifle innovation.
I would also argue that putting politicians in charge of businesses is a prescription for disaster. look at the “BIG DIG” highway project in Boston, MA-it is past schedule, hugely over budget, and major sections of just-constructed tunnel are collapsing due to poor workmanship and shoddy materials. this is primarily because;
-local hack politicians were allowed to run the project
-most of the Federal funding was approved by hack politicians in washington
Nope, bad as things are, putting politicians in charge of industry is the worst thing to do. You wind up with high costs, poor products, and high taxes. Oh, and indictments are beginning to be issed against the Big Dig crooks-the legal investigations will go on for years!
I concur with most of the sentiment this far. It does not seem to make sense to put the government in charge of subsidizing industry. There are some industries at which Americans just plain are not very good. This means, if we have the government subsidize this industry, even when it is failing and oozing money from the seams, we invite corporate coruption (of which we already have enough, thank you) and further government coruption (with even more bribes) and higher taxes (which leads to less economic growth). If it is an industry at which Americans ARE good, then its highly unlikely that they’ll need any funds (except for maybe some initial capital through a loan or government grant).
I think in a growing global market, it makes more sense for Americans to specialize industrially, grab a global market share at something we ARE really good at, and out source where it is either significantly cheaper or we just plain don’t have the expertise. In other words, I think that, as limited as it is now, the government STILL has their fingers too far into the inner workings of the economy.
Great idea. Let’s start with Haliburton. BG: Why do you want to give Bush and the Repulbicans more power?
I tend to agree with this assessment. I don’t think government should be steering industry at all. That’s not an effective use of it’s power. What they could do is encourage developing nations to meet some sort of international baseline for working conditions - tax imports from countries that have no protections for workers and gradually ease them up to a free-trade agreement with those that meet the standards.
What worked for the Japanese probably woudln’t work for us. We’re not starting out from a feudal-agrarian society. Rather, we have huge entrenched corporate interests, and they would automatically set out to exploit any program established by the government to encourage general industrial growth. I’m not a free-market dogmatist and I certainly agree that we should do something about the enormous debts of the United States. I am, however, a realist, so I know that the wealthy bastards in corporate boardrooms hijack almost any large government program eventually. They have entire armies of lobbyists in Washington for exactly that purpose.
We do it already in the spirit of the Op already. You just have to know where to look for it. The airline industry is one obvious example. The government fund supports a huge part of the infrastructure and manpower needed to make it work and has even done direct bailouts because we we really want and think we need a huge airline system even within the country. This has arguably steered the U.S. away from train travel and even shape the country as a whole. I don’t know what would happen if we just let the airlines become their own, independent industry but the fare structure certainly wouldn’t look like it does today.
Research is a more subtle example. The U.S. government funds billions of dollars worth of research every year in both universities and private entities. They pick what types of research get focused and it eventually has a huge impact on U.S. industry and the world at large down the line. Just think of GPS, the Internet, and dozens of other high-profile examples. It seems to me that this is a pretty good way to do it even if lots of people eventually get rich off of taxpayer funded ideas.
And note that I’m not opposed to government funding of basic research, public health, or other forms of government intervention that aren’t tailor made for abuse. So setting up a program where you give the auto industry stacks of money to develop fuel cell cars is a dumb idea. Slapping a $3.00/gallon tax on gasoline and letting both consumers and the auto industry figure out the most efficient ways to save gasoline is a reasonable idea.
Taxes on economic “bads” or externalities can work well. Subsidies for certain goods usually leads to money lining the pockets of corporate executives and lobbyists, or situations where farmers buy bread to feed their livestock because bread is cheaper than the grain it’s made from.
Industrial policy is great when you’re playing catch up. But as the Japanese found out in the 1990s, it doesn’t work as well once you’re at the top.
Excellent point. In the former case, you know precisely what you need to do. In the latter case, you don’t. I say let 100 flowers bloom, and the best way to do that is to let the private sector handle future technology growth.
Perhaps **BG **might consider repealing the corporate income tax as a broad-based industrial policy. Few, if any, corporations really pays taxes anway-- they just shuffle the expense off on the consumer.
Point of Order
Ummm…America has all of those problems, to a huge degree, right now.
That’s because we’re living in a corporate welfare stare right now. Only the corporate welfare isn’t “on the books” it’s done privately, as politicians pay off the fat cats who fund their campaigns. It’s an obvious consequence of the removal of federal limits on campaign spending. Mostly, the candidate with the most money wins, so candidates make whatever deals they have to in back rooms to get the money they need to win, then pay off those deals when elected.
Brain Glutton’s idea wouldn’t make a tiny dent in the massive corporate welfare we have now. I say go for it!
Or we could go back to strict limits on election spending. But that would be insane. Not like the feast of pure reason we have now.
I’m thinking even that might be better than what we’ve got now . . . But I was really thinking of industrial policy as an issue the Dems might take and run with. Everybody says the Dems need a New Idea, this could be it.
Let’s put the problem another way: Does anybody see any way America can be re-industrialized without concerted government action? Any ideas?
Suppose the “industrial policy” wonks decide that FORD should not be allowed to go bankrupt: what would ensure?
-massive loans 9backed by the government)
-government buys tons of FORDS
- government shoulders FORD’s debt
The result; in 10 years FORD is worse off than ever (still making big trucks, SUVs)
Industrial Policy does not work!
What we’ve got now doesn’t work either. Have you got a better idea?