Don’t Converge with the Left on Industrial Policy

By Dominic Pino

Monday, February 06, 2023

 

Tyler Cowen has a warning for industrial-policy advocates in his recent Bloomberg column:

 

Some conservatives criticize globalization while praising industrial policy. They are playing right into the hands of the Davos globalizing elite.

 

Cowen argues that they do so by setting up future globalization. He notes that, “Even the most successful ‘nationalistic’ industrial policies rely on a highly globalized world.” He points to semiconductors and the Covid vaccines as examples, both of which rely on highly globalized industries to produce their alleged industrial-policy successes.

 

I’d add that they also do so by embracing the same central-planning mindset that animates the people they claim to hate. Technocratic attempts to orchestrate economic output are going to run into similar problems whether they come from the left or the right.

 

Having a government official educated at Harvard, Oxford, and Yale spearhead an effort to use “transformational” subsidies to engineer a “better” economic outcome, which is what the CHIPS Act does, is exactly the kind of thing that impresses the people at Davos. That’s who they are. Those are the kind of people they admire. They believe they can do that sort of thing well, if only governments would give them the chance.

 

Left-wing governments have been more likely to give them that chance, on issues such as the environment or income inequality. But if right-wing governments give them that chance, on issues such as trade or manufacturing, they’ll still take it.

 

This point is similar to the one that Grover Norquist makes today about more statist approaches to economics from the right: “Such efforts, however well-intended, will always be outbid and displaced by left-of-center subsidies, taxes, regulations, and laws.” The Left has always believed it can engineer better outcomes than free people can. It’s prepared to attempt to do so at the drop of a hat.

 

The problem with central planning is not the Left. The problem with central planning is central planning. It’s not going to suddenly start working if only “our people” get into positions of power. Embracing the central-planning mindset is not a way to defeat the Left. It’s a way to converge with it.