David McGarry is no fan of industrial policy. Two slices:
Anybody who has spent any time in the corners of X (formerly Twitter) that favor industrial policy has likely heard laments that America “doesn’t make things anymore.” This is, however, objective nonsense.
As the Cato Institute’s Colin Grabow has detailed at length, individuals and companies within the US makes quite a lot. “In 2021, [the US] ranked second in the share of global manufacturing output at 15.92 percent—greater than Japan, Germany, and South Korea combined—and the [US’s manufacturing] sector by itself would constitute the world’s eighth‐largest economy,” Grabow writes.
Undaunted, advocates of industrial policy seek a dual regime of robust tariffs and domestic manufacturing subsidies. Free marketeers rightly object that these policies often weaken the very companies they seek to protect and ruthlessly gut downstream industries. Central planning invariably misallocates capital, promotes inefficiency and corruption, inflates prices, and lessens consumer choice.
Notwithstanding the importance of investments and liquidity, policy analysts must consider another indispensable, finite resource — human capital. Only so many Americans of working age exist. A worker who takes one job almost invariably cannot take another. A line worker at a shoe factory cannot contribute to the development of advanced microchips. Wasting human capital, or deliberately allocating it inefficiently, benefits neither the economy at large nor the individual worker.
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Grabow notes that manufacturing offers no special opportunity to job seekers and, consequently, merits no myopic affection from labor policy wonks. Today’s production workers in the manufacturing sector earn less on average than the private sector’s average for nonsupervisory positions.
Moreover, many American workers who “make things” do not, as a technicality, belong to the manufacturing sector, which distorts public perception. As Scott Lincicome, another Cato Institute scholar, writes, “Big, innovative US companies like Nike or Nvidia are expressly in the business of ‘making things’ like shoes or semiconductors, and they handle everything — design, R&D, marketing, etc. — except the final stage of production, which they’ve outsourced to other companies in the United States or abroad.”
Regardless of your stance on the prudence or imprudence of U.S. involvement in Ukraine’s struggle to repel Russian invaders, it’s difficult to disagree with Wall Street Journal columnist Gerard Baker’s harsh assessment of “Putin’s apologists on the right.” Baker begins with an accurate summary of these apologists’ views:
Why can’t we be more like Russia?
From state-of-the-art supermarket cart technology to a president who is youthful and vigorous, able to dilate on European history at length, the contrast couldn’t be greater with a technologically backward and collapsing U.S. in the grip of a geriatric autocrat who can’t remember what day it is.
American capitalism is corrupt and exploitative. Russia’s is well-regulated and committed to the common good. In the U.S., tech billionaires and Wall Street fat cats get rich on the surplus value their workers produce. Benevolent Russian oligarchs, cooperating with the state for the benefit of the people, are able to supply all Russians’ needs at a fraction of the exorbitant prices Americans pay. They are so successful that they create demand for hard-pressed sectors of the global economy, such as yachts, luxury London real estate and Swiss casinos.
As predictable as is the arrival in the summer of swarms of mindless blood-thirsty mosquitos in south Louisiana is “Progressives'” knee-jerk opposition these days to mergers – specifically, this time (as rightly ridiculed by the Wall Street Journal‘s Editorial Board) opposition to the announced merger of Capital One with Discover Financial Services. A slice from the Wall Street Journal:
Combining could also make it easier to shoulder increasing regulatory burdens, including the tougher capital requirements that the Federal Reserve last year proposed for banks with more than $100 billion in assets. Bigger government drives businesses to get bigger, not that progressives will admit it.
“The merger of @CapitalOne and @Discover threatens our financial stability, reduces competition, and would increase fees and credit costs for American families,” Ms. Warren tweeted. “This Wall street deal is dangerous and will harm working people.” Where’s the evidence for any of this?
The deal is likely to help Main Street retailers and consumers by increasing competition to the Mastercard and Visa credit-card duopoly. About 90% of credit-card purchase payments flow over one of the two networks. Visa and Mastercard require merchants to pay swipe fees that cover their costs for overhead and fraud protection. Banks return some of the fee proceeds to customers in rewards or points. This is one way credit-card issuers compete for customers. Nonetheless, merchants say that Visa and Mastercard charge excessive swipe fees because they face little competition.
Paul Schwennesen is in awe of emergent order.
Roger Pielke decries “the unstoppable momentum of outdated science.”
el gato malo makes the case for repealing the 17th amendment to the U.S. Constitution.
Just wondering. Did the fact checkers ever correct Tony Fauci, Rochelle Walensky, or Rachel Maddow for saying that the covid vax prevents you from getting and spreading covid? If not, why not? It was one of the biggest lies of the covid era.
