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Quotation of the Day…

… is offered on this 33rd anniversary of the glorious fall of the Berlin wall; the quotation is from page 307 of Kristian Niemietz’s important 2019 book, Socialism: The Failed Idea That Never Dies:

Deviations from the government’s economic plan cannot be allowed, because the different components of the plan depend on each other: the plan must be a coherent whole. Planners lack the relevant knowledge, so resources are misallocated and economic chaos ensues.

DBx: Indeed so. And the same reality also poisons industrial policy.

Industrial policy isn’t as damaging as is full-on socialism only because industrial policy is less extensive than is full-on socialism. Industrial policy, more so than full-on socialism, allows resources to escape the grip of its economic engineers. But as with full-on socialism, if industrial policy is to achieve the goals that its advocates proclaim, there must be no disruption of the industrial-policy plan. The plan must be sealed off not only from entrepreneurial innovation and technological advances, but from all genuine change. Somehow, industrial-policy planners must immunize the plan from unanticipated changes in consumer tastes (including such changes that are caused by changing demographics), from unanticipated decreases and increases in supplies of inputs, and from unanticipated economic consequences that stem from changes in law, legislation, the weather, and the global economy.

Until and unless advocates of industrial policy explain how industrial-policy designers and administrators will come to have the power to predict the future in such detail as would be necessary for industrial policy to perform as promised, you are advised to ignore pleas for industrial policy.