Several weeks ago I was interviewed by a very sharp high-school student in Vermont on the pros and cons of government efforts to encourage green-technology industries. Today the student’s teacher sent me a ridiculously rude e-mail. Here’s my reply.
17 June 2014
Mr. C. M________________
Dear C. M________________:
Were it not for the rudeness and shrillness of your note I would thank you for it. As it is, I merely acknowledge it.
You say, referencing the interview that I gave to your excellent student, that you’re “appalled to find out that a so-called economics professor opposes the U.S. taking the lead in green technology industries.” You misunderstand my position. I’m not at all opposed to U.S.-based companies “taking the lead” in those (or in any other) industries. I am, however, opposed to what you favor – namely, the government subsidizing or dispensing other favors to firms in such industries even if the end result would be that these companies become industry leaders.
The arguments against government picking industrial winners and losers are many, and I’m in no mood to rehearse them here. I’ll simply quote the 19th-century Swiss economist Jean Charles-Leonard Simonde de Sismondi, who wrote in 1815 that “It ought to be recollected that each merchant knows his own business better than the government can do; that the whole nation’s productive power is limited; that in a given time, it has but a given number of hands, and a given quantity of capital; that by forcing it to enter upon a kind of work which it did not previously execute, we almost always at the same time force it to abandon a kind of work which it did execute; whilst the most probable result of such a change is the abandonment of a more lucrative manufacture for another which is less so, and which personal interest had designedly overlooked.”*
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
* Jean Charles-Leonard Simonde de Sismondi, Political Economy (1815), as quoted in translation in Douglas A. Irwin’s superb volume, Against the Tide (Princeton: Princeton University Press, 1996), p. 119.