Here’s a letter that I sent five days ago to the Washington Post:
George Will rightly warns of the hubris of industrial policy, under which resource allocation guided by market prices is displaced by resource allocation guided by political pretenses (“When government bureaucrats masquerade as financial savants, watch out,” July 22). There is simply no way for government officials charged with carrying out such policy to gain access to all the detailed knowledge they must have – knowledge contained in the market prices that industrial policy ignores – to outperform the market over time.
To advocate improving the economy with industrial policy is akin to advocate improving artists’ abilities to produce beautiful paintings by gouging out artists’ eyes and then having their hands guided across canvases by a committee of art critics. While the art critics might be confident of producing pleasing results, no one else of good sense will share this confidence.
Donald J. Boudreaux
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030