Wow! An industrial-policy ‘investment’ by government fails! This Wall Street Journal headline says it all:
New York State Built Elon Musk a $1 Billion Factory. ‘It Was a Bad Deal.’
New Tesla facility in Buffalo was supposed to house a huge solar-panel operation, but the project hasn’t turned out as planned.
DBx: To be clear, if government were to throw enough subsidies and other special privileges at particular plants, firms, or industries, the results will often be ‘successes’ – ‘successes,’ that is, of the privileged plants, firms, or industries but not of the economy as a whole. The reason the economy-wide results cannot be classified as successful is that the reduced outputs, employment, and wages elsewhere are unseen, and hence unreckoned (except by a handful of retrograde “market fundamentalists” or “neoliberals” who haven’t gotten the memo that Hayek’s ‘knowledge problem’ isn’t really as insurmountable as Hayek’s ‘disciples’ believe it to be – but no serious person pays attention to them).
Yet while in many cases throwing enough special privileges at particular plants, firms, or industries might meet with such ‘successes,’ precisely because politicians and bureaucrats throw money around for political rather than economic reasons, the number of failures – such as the one documented in the above-linked Wall Street Journal report – of industrial-policy projects will nevertheless be substantial and relevant.
