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Quotation of the Day…

… is from page 96 of the 2015 Matthew Dale translation of Weiying Zhang’s excellent 2010 book, The Logic of the Market:

Any policy that leads entrepreneurs to rent-seek is not a good policy.  Industrial policies lead to entrepreneurial rent-seeking.  Many people, including some Americans, praise China’s industrial policies.  Actually, China’s industrial policies have never been very successful.  The premise of industrial policy is that government officials understand the future direction of development, including changes in consumer preferences and technological trends, better than entrepreneurs do.  That assumption is baseless.  Government officials are no more farsighted, or impartial, than are entrepreneurs.

DBx: Indeed, as Zhang goes on to explain, government officials are more biased against the public welfare than are private entrepreneurs operating in markets.  The reason is that government officials are subject to far less competition than are entrepreneurs in markets and, unlike entrepreneurs in markets, government officials – and those business that these officials choose to favor – spend other people’s money.

It would be amusing were the consequences not so dire to witness this: the many American conservatives today who, professing no confidence in government officials in America to outperform private entrepreneurs in the domestic U.S. market, are convinced that government officials in China possess miraculous powers of prescience and will to outperform the market in China.  These imagined economic-planning superpowers in Beijing are believed by many American conservatives to pose a grave threat to America’s freer market and, hence, to Americans’ higher standard of living.  Further, this imagined economic prescience and political will in Beijing is believed by these American conservatives to create in government officials in Washington corresponding superpowers to intervene economically against imports – and in support of exports – in ways that ‘protect’ the American economy and Americans’ standard of living.  Just how this transformation of the bungling into the brilliant occurs is never explained.