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Some Thoughts on A Twitter Thread

I’m not, and never have been, on Twitter. And each time I visit Twitter, I am reassured that my decision never to be on Twitter is wise.

Because I linked yesterday to a splendid assessment – by my intrepid Mercatus Center colleague, Veronique de Rugy – of a recent American Compass study purporting to show an example of successful industrial policy, a couple of people (not Vero) e-mailed to me this link. It’s to a Twitter thread started by the study’s author, Gabriela Rodriguez, in response to Vero’s demolition of her (Ms. Rodriguez’s) argument and conclusion.

A couple of things strike me about this thread. One is a reminder of how consistently weak are the arguments offered by advocates of protective tariffs and industrial subsidies. It should be embarrassing for people such as Ms. Rodriguez to miss the core of the argument offered by Vero. Yet miss it she does, and by several thousand miles. As Vero says in her response, on Twitter (see below), to Ms. Rodriguez, no serious opponent of industrial policy has ever denied the possibility that government can create a successful firm or even whole industry if the government shovels into that firm or industry enough subsidies and other special privileges.

The argument against industrial policy – an argument that, astonishingly, Ms. Rodriguez seems to be unaware of – is that (1) there’s a cost to using industrial policy to create and sustain a successful firm or industry, and (2) because the forced allocation of resources carried out by industrial policy isn’t guided by market signals, the information that guides resource allocation under industrial policy isn’t as reliable as is the information that guides entrepreneurs and investors in markets, (3) there’s every reason to believe that the cost to the people of the country of creating and sustaining, with industrial policy, the successful firm or industry is higher than is the value to the people of the country of that firm or industry.

For Ms. Rodriguez’s argument to be sound, she would have had, first, to acknowledge the correct case against industrial policy, and, second, then at least to have attempted to present argument or evidence to the effect that the benefits to the people of the country from industrial policy outweigh the costs to the people of the country. Yet she does no such thing. Instead, what we get on Twitter from Ms. Rodriguez is this confirmation of her cluelessness:

The reason libertarians like @veroderugy go on at such length in response to clear examples of successful industrial policy is they *KNOW* the examples are fatal to their ideology.

The reason you get to the end & think “Ok, but it seems like the policy worked” is b/c it did.

As Vero appropriately tweets in reply to Ms. Rodriguez:

This is an unserious response. No one denies that you can produce a company that is viable with hundreds of billions of subsidies and special treatments for decades, especially in a market with few competitors and where politics plays such a large role. The question is “it works but at what costs to taxpayers, consumers, growth, innovation, workers and investors in other industries? Show me this was good for France’s economy overall or Europe’s economy. Not just Airbus’ shareholders, suppliers and workers. And while at it address the trade war consequences of the subsidies and the corruption issue, both common features of industrial policy.

And as Scott Lincicome tweets in reply to Ms. Rodriguez:

Coming soon: “My Arctic Greenhouse Policy Is a Great Success Just Look at All These Oranges”

(Note, by the way, that Vero’s initial response – like her Twitter response – to Ms. Rodriguez isn’t so much “libertarian” or ideological as it is straightforward economics pointing out objective realities.)

The second thing that struck me as I read this Twitter thread is this Tweet, aimed at Vero, by one Towgc:

To be clear, you’re at Mercatus, which is funded by the Koch Bros family, which made it from oil, which is one of the most subsidized industries in US history. Lol and you wonder why no one takes you seriously.

Seriously? If all you’ve got is ad hominem, then you ain’t got anything. (That this particular spasm of ad hominem inaccurately suggests that the Mercatus Center gets most of its funding from the Kochs is here beside the point. Persons who rely upon ad hominem argumentation, not being fussy about logic, tend also not to be fussy about facts.)