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The Reality of Industrial Policy

Here’s a letter to the Wall Street Journal:


We Americans are constantly warned that Beijing is cleverly orchestrating the Chinese economy’s eclipse of America’s – and, thus, Washington must respond in kind. But the recent report by Yoko Kubota and Clarence Leong should calm our fears. Your reporters note that the government in China is “encouraging unprofitable carmakers to keep producing as officials try to boost economic growth, preserve jobs and expand China’s role in the global electric-vehicle business” (“Why China Keeps Making More Cars Than It Needs,” April 29).

In other words, in a quest to gain a larger share of global sales in one particular industry, and to keep workers employed in jobs that are not worth their cost, Beijing is urging the continued operation of companies that destroy more economic value than they create. It’s a genuine mystery why the likes of Donald Trump, Joe Biden, Robert Lighthizer, Elizabeth Warren, Josh Hawley, and Oren Cass think that genuine economic growth is achieved by governments commanding their citizens to waste resources.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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