Here’s another letter to my daily correspondent Mr. Nolan McKinney:
You write: “Since China’s communist regime is working to grab the industries of tomorrow, it is economical suicide for our government to not do the same.”
I disagree. Unlike you, I have no doubt that government efforts to “grab” for their countries “the industries of tomorrow” are destined to fail. Nor do I doubt that any government’s attempt to “grab the industries of tomorrow” also weakens its economy’s performance in the industries of today.
It isn’t that government officials aren’t god, and so they do not possess unique and infallible knowledge of the future. Government officials aren’t even entrepreneurs pursuing hunches by spending their own money. The most successful cutting-edge industries – from Britain’s 18th-century textile industry through America’s 19th-century petroleum industry and 20th-century automobile industry to America’s 21st-century retailing industry – all grew from entrepreneurial experimentation the results of which were continually tested and refined in private, intensely competitive markets.
To the extent that politicians and bureaucrats commandeer resources for industrial development, these resources are directed to a subset of today’s producers – producers who, by the very nature of the matter, are more visible and politically better organized than are tomorrow’s still-nonexistent producers. Inevitably, therefore, government efforts trumpeted as creating the industries of tomorrow result only in stymying the creation of such industries by protecting from the forces of competition politically influential industries of today.
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