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Quotation of the Day…

… is from pages 61-62 of Marc Levinson’s (uneven) 2020 book, Outside the Box:

The [cargo-shipping] container era began in April 1956, when the Ideal-X, a converted tanker left over from the war, carried fifty-eight aluminum containers on its deck from Newark, New Jersey, to Houston, Texas. No one imagined this concept would turn the world economy upside down. It was conceived with an entirely different purpose in mind: to shave a few dollars off the cost of moving trucks between North Carolina and New York.

DBx: How would such entrepreneurial experimentation and discovery be handled under industrial policy? Not well, for sure.

First, in order to ensure that the particular industrial-policy scheme not be disrupted, experimentation of this sort is likely to be discouraged or outright prohibited. After all, a new way of, say, moving trucks between North Carolina and New York would almost certainly destroy some particular jobs. If those threatened jobs – for example, blue-collar truck-driving jobs – are of the sort that industrial policyists insist must be protected, then this experiment with a new manner of moving trucks from point A to point B must be squelched in the name of keeping the industrial policy intact.

Second, the experiment itself was the result of entrepreneurial alertness (specifically, the alertness of Malcom McLean). With industrial policy in place, it’s less likely than in a free market that entrepreneurs would exhibit such alertness, aware as they would surely be that any new production or distribution plans would either be squelched outright by industrial-policy mandarins, or be approved only after a long and bothersome review process.

Third, even if this particular experiment is permitted, under industrial policy it almost certainly would not have sparked the container revolution that so dramatically reduced the costs of shipping cargo by sea. In reality, for the April 1956 voyage of the Ideal-X to have sparked the container revolution, a number of follow-on entrepreneurial discoveries and innovations had to be made. Any one of these discoveries and innovations might well have been discouraged or quashed had the U.S. then had in place a policy worthy of the name “industrial policy.”


It cannot be said too often: Entrepreneurial innovation is inseparable from capitalism. It is indispensable not only for economic growth but even for the maintenance (if such were our goal) of our current standard of living. (When objective facts on the ground change, innovation is necessary to deal with these changes. If, say, a source of raw materials dries up, innovation is necessary to find new sources or sufficient quantities of acceptable substitutes.) Yet industrial policy necessarily is hostile to innovation because innovation necessarily is not part of the industrial-policy plan. The fact that industrial policyists continue to ignore this reality should embarrass them. Alas, it seems not to do so.

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