Tweet [1]
… is from pages 71-72 of Russ Roberts’s splendid 2014 book, How Adam Smith Can Change Your Life [2]:
Everyone can explain why the stock market rose or fell yesterday. No one can predict what it will do tomorrow.
DBx: Who dares deny the truth this observation? Answer: Proponents of industrial policy.
Proponents of industrial policy pose as prophets possessing special knowledge of what particular, detailed economic processes and outcomes will be best for hundreds of millions of their fellow citizens indefinitely into the future. These soothsayers also behave as though they possess knowledge of all the relevant effects – current and future, near and distant, first-order, second order, third order, nth order – of the implementation of their schemes. Industrial-policy proponents must presume themselves to possess such knowledge, for how else can they be sure that their schemes will not uncork ill unintended consequences?