Here’s a letter to “an occasional reader” of Café Hayek:
Mr. Dye:
Irked by what you correctly understand to be my “unconditional denunciation of ALL industrial policy,” you write that I “would be accorded greater seriousness” if I “were to take a less extreme position.”
Is my position really extreme? It’s true that I oppose any and all attempts by government to suppress market forces for the purpose of picking industrial winners and, thereby, government necessarily creating losers out of other industries. Economics tells me that any such attempt is highly unlikely to succeed even on its own professed grounds – that is, is highly unlikely to out-perform the market. Put differently, economics tells me that any attempt at industrial policy will almost certainly make overall economic performance worse. And as I read it, the historical record confirms the economics.
But in addition to the positive case against industrial policy, there’s also a normative one, which is this: How individuals and firms choose to peacefully spend their own money is their business and not that of anyone else, including the state.
I submit, therefore, that my opposition to all industrial policy is no more extreme than is that of someone who opposes, say, all religious policy.
Is the optimal or reasonable position regarding government’s stance toward religion one that tolerates some government effort to pick winning churches or doctrines? Would you be irked by me if, upon my encountering proposals for government to use punitive taxes and subsidies in order to ‘pick’ winning religions, I denounced all such proposals? Would you accuse me of being an “offputting fanatic” if I insist that the best policy is complete freedom of religion? Would you declare that I “lose claim to be taken seriously” if I “dismiss out of hand the possibility that smart people could make a reasonable, workable case for an effective [religious] policy”?
Just as I, like most Americans, support complete freedom of religion as opposed to ‘freedom’ of religion only insofar as permitted by government – just as I, like most Americans, support compete freedom of the press as opposed to ‘freedom’ of the press only insofar as permitted by government – just as I, like many Americans, support complete freedom of speech as opposed to ‘freedom’ of speech only insofar as permitted by government – I support complete freedom of trade as opposed to ‘freedom’ of trade only insofar as permitted by government. If this stance makes me an extremist, so be it.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
