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… is from page 312 of economic historian Deirdre McCloskey’s insight-filled and fact-informed 2019 book, Why Liberalism Works: How True Liberal Values Produce a Freer, More Equal, Prosperous World for All [2]:
Industrial policy has propped up failing industries from Japan to France, such as small-scale retailing, instead of choosing winners who actually win.
DBx: Yes.
Any firm that is observed to “win” as a result of industrial policy is, in practice, like a sprinter who “wins” a foot race as a result both of his being injected with steroids (that will eventually diminish his vigor), and of all of his opponents being prevented at gunpoint from even showing up for the race.
“Observe our success!” boasts industrial-policy advocates pointing proudly to their man who crosses the finish line first. “You can’t argue with our facts. We have science on our side. See!” – still pointing victoriously to the “winning” doped-up sprinter of whom the industrial-policy advocates are so very proud.
The industrial-policy advocates then turn their gaze triumphantly to the crowd. “Applaud, people, applaud! And not just for our champion sprinter. Applaud also for us, who have arranged for you to enjoy such an excellent event. And applaud, too, for yourselves – yes, for yourselves! – for being so fortunate as to have leaders such as us who’ve so wisely and skillfully arranged for you to enjoy such an excellent event!”
Of course, as Deirdre and every other competent economist understands and insists, drawing analogies between economic activity – even economic competition – and sporting events is a confusing business. The differences between sporting events and economic activity (again, including economic competition) are many more in number than are the similarities.
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For those of you too young to remember, the sprinter pictured above is the steroid-stuffed Canadian Ben Johnson [3].