… is from page 175 of the original edition of Walter Lippmann’s sometimes deeply flawed but profoundly insightful and important 1937 book, The Good Society:
If a planning board announced that, henceforth, machines in factories would be run not by electrical power generated in dynamos but by decrees issued by public officials, it would sound absurd. Yet the pretension to regulate the division of labor by abolishing the market and substituting authoritative planners is an idea of the same order.
DBx: Indeed. And so when you next encounter an advocate of industrial policy announcing a scheme to improve human welfare by substituting plans issued by government officials for patterns of resource allocation determined by the market, understand that any such scheme deserves no more intellectual respect than would an announcement by the same person that he or she proposes that, from this time forward, all transportation vehicles, from motor scooters to jumbo jets, will be powered by decrees issued by public officials.
To believe that the economy’s overall long-run performance can be improved by industrial policy is as scientifically valid as is believing that a Boeing 787 can be powered by pixie dust.