… is from page 3 of Charles Schultze’s Fall 1983 Brookings Review article, “Industrial Policy: A Dissent“:
[R]eality does not square with any of the four premises on which the advocates of industrial policy rest their case. America is not de-industrializing. Japan does not owe its industrial success to its industrial policy. Government is not able to devise a “winning” industrial structure. Finally, it is not possible in the American political system to pick and choose among individual firms and regions in the substantive, efficiency-driven way envisaged by advocates of industrial policy.
DBx: Schultze was Chairman of the Council of Economic Advisors for all of Jimmy Carter’s tenure in the White House. And while he here wrote of Japan – for Japan was then the nation that all the Americans then in the know then knew would do in America with its clever state interventions and trade restrictions – his words ring just as true today for China.
My only amendment to Schultze’s quotation is that under no political system is it possible for a government to “pick and choose among individual firms and regions in the substantive, efficiency-driven way envisaged by advocates of industrial policy.”
(I learned of Schultze’s essay from page 760 of Doug Irwin’s remarkable and monumental 2017 volume, Clashing Over Commerce.)
