… is from page 132 of University of Glasgow Senior Lecturer Craig Smith’s excellent 2020 book, Adam Smith:
Telling people how to use their capital is futile because statesmen will always have less knowledge of the specific circumstances of each individual and less incentive to invest the capital effectively than those individuals have themselves.
DBx: Hey! You advocates of industrial policy, you! Are you listening? Are you aware that for your proposed schemes to have even a remote prospect of working as you advertise, government officials must gather, process, and act on, in efficiency-enhancing ways, an unfathomable amount of detailed and ever-changing knowledge that is dispersed across billions of individuals producing and consuming all over the globe?
Aren’t you at least somewhat troubled that your proposals rest on the ridiculously unrealistic assumption that government officials can obtain such knowledge and have both the ability and the incentive to act on this knowledge in ways that promote the general welfare?
Seriously, all you industrial-policy advocates, left and right, what say you? What miraculous wand do you believe exists that, when waved by industrial-policymakers, will bestow on them the knowledge of how to improve upon the market’s allocation of resources?
Each of you industrial-policy advocates insists that those of us who oppose industrial policy naively – we being ideologically blinded by our stupid devotion to simplistic absolutisms – underestimate the ability of government officials to allocate resources effectively. Okay. So please, tell us: How will government officials obtain the detailed knowledge that they must obtain if they are to have any genuine hope of outperforming competitive markets?
Seriously. Tell us. I’m – we’re – all ears. So far, not one of you has even attempted to offer an answer to this question. Here’s your opportunity. The comments section is open.