Here’s a letter to the Wall Street Journal.
Editor:
Greg Ip warns that China’s “industrial policy of everything” will leave the “rest of the world in dust” (“Beijing’s ‘Industrial Policy of Everything’ Leaves Rest of the World in the Dust,” May 15).
We’ve seen this movie before. An authoritarian government replaces the allocation of resources by markets with allocation by mandarins. That government boasts that its brilliant central plans will unleash an economic boom that will energize all of its industries and raise them to global dominance. Politicians and pundits in countries with market economies are enchanted by the authoritarian state’s swagger, fine words, and pretty plans; they insist that the only hope for saving their economies from the superpower economy being engineered abroad is for their governments also to suppress free markets and elevate government’s role in the economy.
Yet at the end of every such flick, the governmentalization of the foreign economy is revealed to have produced, not a mighty warrior, but a corrupt, dissolute, and diseased invalid.
If politicians and bureaucrats could reliably outperform markets, China’s economy would have been at peak performance under Mao, India would have enjoyed spectacular economic growth under Nehru, and the Soviet Union would still exist, with the standard of living of its citizens being the highest in the world. We Americans, meanwhile – cursed as we are with our bumbling market economy – would be among the poorest people on earth.
But, of course, reality proved otherwise. Why does Mr. Ip suppose that the conclusion of Pres. Xi’s remake of this tired movie will be different?
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
