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Quotation of the Day…

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… is from pages 194-195 of the 2016 Mercatus Center re-issue of my late colleague Don Lavoie’s penetrating 1985 volume National Economic Planning: What Is Left? [2] (original emphasis and citations; links added):

Robert Reich paints MITI as an elite of experts who have consistently fostered Japan’s most successful industries.  There have been so many winners like Sony and Honda, we are told, because MITI had the foresight to pick them.  Having spent a lifetime studying the Japanese economy, however, G.C. Allen [3] (1981) points out that MITI’s record in selecting sunrise industries on net has been anything but awe-inspiring.  MITI’s bureaucrats were so unimpressed with the technological possibilities of the transistor in the 1950s that they tried for two years to prevent Sony from buying manufacturing rights from Western Electric (Henderson [4] 1983: 113).  They tried to dissuade Japan’s automobile manufacturers from getting into the export market, then, tried to force its ten auto firms to merge into two, Nissan and Toyota (Gilder 1982: 12-13 [“The Entrepreneur,” Manhattan Report]).  Fortunately for the Japanese economy, all of this advice was ultimately ignored.

DBx: I add – knowing that Don would agree – that it is fortunate also for the American economy, and for other economies that trade with the Japanese, that this advice was ignored.

…..

Once again, Americans on the political left, such as Robert Reich, are at least consistent in their errors when they assume that foreign-government economic planning and interventions improve the performance of foreign economies.  Such Americans, after all, are confident that such planning and intervention in the United States would improve the performance of the American economy.  These Americans are incorrect in their belief in the powers of government, but at least they are consistent in applying their incorrect reasoning.

But many Americans on the political right are both incorrect and inconsistent on this matter of government’s ability to intervene productively into national economies.  Many Americans on the political right correctly understand that the U.S. government cannot out-perform the market at ‘picking’ winners, but they – these many Americans on the political right – nevertheless believe that foreign governments, especially those governments with authoritarian histories and that currently possess authoritarian powers, are invested with uncanny abilities to improve the performance of their economies with subsidies, trade restraints, and industrial policies.

This bizarrely inconsistent – and blind – faith in the government intervention of foreign governments drives many American conservatives to fear trade with foreign governments and, hence, to demand that the American government punitively tax fellow Americans who purchase imports from those foreign countries.

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