This happens all the time in government, and it is always a very big risk with any government agency under any administration when it starts to hand out money to private companies. Why? Because government decisions about where capital should flow are fundamental political decisions; they aren’t guided by economics, price signals, or profits and losses. This is why many of us are skeptical of the claims that industrial policy can ever work. The whole point of the exercise is that it allocates money to favored industries, sometimes the same industries and firms that have friends in high places, based on the judgement of politicians who aren’t spending their own cash and in order to satisfy their own preferred order of the world.
John Staddon – the James B. Duke Professor of Psychology and Professor of Biology, Emeritus, at Duke University – pushes back eloquently against a presumptuous and ignorant letter written recently by Duke University’s President. Here’s a great line from Prof. Staddon:
Empathy, guilt, and good intentions are a dodgy basis for sweeping resolutions.
How bad is covid really? A slice:
That is why it is nonsensical to compare covid to other major pandemics, like the 1918 pandemic that killed tens of millions of people. Covid will never even come close to those numbers. And yet many countries have shut down their entire economies, stopped children going to school, and made large portions of their population unemployed in order to deal with this disease.
Congress vests presidents with vast discretion for government’s management of trade, so corporations seek protection, and administrations often grant it, regardless of steep and demonstrable social costs. Those who govern us are governed by this principle: Concentrated benefits are visible and appreciated; dispersed costs are invisible and hence not resented.