Heres’ a letter that I sent yesterday to the Washington Times:
On top of Uncle Sam’s unprecedentedly large bailout plan comes calls from top business executives for “comprehensive industrial policy” (“Ford, Dow execs to discuss national summit in ’09,” September 22).
Let’s keep our heads. Despite the turmoil, Americans today remain incredibly wealthy. This fact is evidence that capitalism works very well even though it is never textbook perfect. Calling for a fundamental restructuring of an economy that produces such widespread prosperity is, at best, an irresponsible overreaction.
More likely, though, this call for industrial policy is a ploy by business executives to escape competition. By trying to plan the economic future, any such policy necessarily tramples innovation and consumer sovereignty. Anything at odds with the policy – such as an unforeseen new product, a creative new technique of production, or simply a change in consumers’ tastes – must be squelched, for otherwise the policy falls apart. Many existing firms (especially large ones such as GM and Dow Chemical, who have the resources to influence government) will benefit from industrial policy – but only because such policy inverts the economy from one in which producers exist to satisfy consumers to one in which consumers (and taxpayers) exist to satisfy producers.
Such a policy will make most of us much, much poorer.
Donald J. Boudreaux